f10k12-2009.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-K
(Mark
One)
ý ANNUAL
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For the
fiscal year ended December 31, 2009
OR
o 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 of incorporation or organization)
|
(I.R.S.
Employer 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
Securities
registered pursuant to Section 12(b) of the Act:
Common
Stock, $0.01 par value
|
Nasdaq
Global Market
|
(Title
of Each Class)
|
(Name
of each exchange on which
registered)
|
Securities
registered pursuant to Section 12(g) of the Act: NONE
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
rule 405 of the Securities Act of 1934. Yes o No ý
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o No ý
Indicate
by check mark whether the 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 periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ý No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the
Act). Large accelerated filer o, Accelerated filer
o, Non-accelerated
filer o, Smaller
Reporting Company ý
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes o No ý
The
aggregate market value of common stock held by non-affiliates of the registrant
as of June 30, 2009 was $30,570,411 based on the closing price of our common
stock as reported on the Nasdaq Global Market.
As of
February 16, 2010, 27,269,087 shares of the Registrant's common stock
were outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the registrant's Proxy Statement for the 2010 Annual Meeting of Shareholders
are incorporated by reference into Part III.
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This
Annual Report on Form 10-K and certain information incorporated herein by
reference contain forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934, and, as such, may involve risks and
uncertainties. All statements included or incorporated by reference
in this Annual Report on Form 10-K, other than statements that are purely
historical, are forward-looking statements. 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," "anticipate," "plan," "estimate," and "potential," or other similar
words. Forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from the
results contemplated in our forward-looking statements.
The
forward-looking statements in this Annual Report on Form 10-K are subject to
additional risks and uncertainties further discussed under Part I. Item 1A. Risk
Factors and Part II. Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation and are based on information available to us
on the date hereof. We assume no obligation to update any
forward-looking statements. Readers are cautioned not to place undue
reliance on forward-looking statements, which are made only as of the date of
this Annual Report on Form 10-K.
The
following information should be read in conjunction with the Consolidated
Financial Statements and notes thereto included in Part II. Item 8. Financial
Statements and Supplementary Data of this Annual Report on Form
10-K.
Unless
otherwise indicated by the context, the terms "Ramtron," "the Company," "we,"
"us," and "our," refer to Ramtron International Corporation and our consolidated
entities described in Part II. Item 8. Financial Statements and Supplementary
Data - Note 1 of the Notes to Consolidated Financial Statements.
We are a
fabless semiconductor company that designs, develops and markets specialized
semiconductor memory, microcontroller, and integrated semiconductor solutions,
used in many markets for a wide range of applications. We pioneered the
integration of ferroelectric materials into semiconductor products, which
enabled the development of a new class of nonvolatile memory, called
ferroelectric random access memory (F-RAM). F-RAM products merge the
advantages of multiple memory technologies into a single device that retains
information without a power source, can be read from and written to at very fast
speeds, written to many times, consumes low amounts of power, and can simplify
the design of electronic systems. For many of our customers, we are the sole
provider of F-RAM enabled semiconductor products, which facilitates close
customer relationships, long application lifecycles and the potential for
higher-margin sales.
We also
integrate wireless communication capabilities as well as analog and mixed-signal
functions such as microprocessor supervision, tamper detection, timekeeping, and
power failure detection into our devices. This has enabled new classes of
products that address the growing market need for more functional, efficient and
cost effective semiconductor products.
2009 Product Highlights and
Other Achievements
We
announced the FM24CL32 and FM24L256, which are 32-Kilobit (Kb) and 256Kb, 2.7-
to 3.6-volt nonvolatile F-RAM memory devices with a high-speed serial I2C memory
interface. The devices provide high-performance data collection memory in a
small, 8-pin package, that cuts costs and reduces board space in a range of
applications from multi-function printers to industrial motor
controllers.
We
announced the availability of our 4-megabit (Mb) and 8Mb F-RAM memories in a
streamlined FBGA package. The FM22LD16 and FM23MLD16 are 4Mb and 8Mb,
3-volt, parallel nonvolatile RAMs in 48-pin ball grid array (FBGA) packages that
target battery-backed SRAM replacement in industrial control systems such as
robotics, network and data storage applications, multi-function printers, auto
navigation systems and a host of other SRAM-based system designs.
Our
FM22L16 4-Mbit (Mb) F-RAM was been selected by SBS Science & Technology Co.,
Ltd. (SBS) for use in an innovative solid-state disk (SSD) data storage
device. Headquartered in Shenzhen, China, SBS specializes in the
research, development, and manufacturing of international standards-based
embedded hardware and software that targets industrial automation markets, such
as railway transportation, electric power, medical equipment, and motion control
applications. The unique feature set, combined with 4-megabits of
data storage capacity, makes the Company's FM22L16 a compelling solution for SBS
in their industrial SSD product.
We
launched several new devices in our family of parallel and serial F-RAM products
that offer higher-speed read/write performance, lower voltage operation, and
optional device features. The newest serial devices in our V-Family of F-RAM
products are the 256Kb FM24V02 and FM25V02, the 512Kb FM24V05, and the 1Mb
FM24V10. The devices are drop-in replacements for 256Kb, 512Kb and 1Mb serial
Flash and serial EEPROM memories in industrial controls, metering, medical,
military, gaming, and computing applications, among others. We also launched our
second parallel V-Family F-RAM device. The FM28V020 is a 256-Kilobit (Kb), 2.0
to 3.6-volt, parallel nonvolatile RAM in an industry standard 28-pin SOIC
package that may be used as a drop-in replacement for battery-backed SRAM in
industrial control, metering, medical, automotive, military, gaming, and
computing applications, among others.
We
announced that two of our nonvolatile state savers, the FM1105-GA and FM1106-GA,
have received AEC-Q100 Grade 1 qualification. The state saver device
saves the state of signals on demand and restores them to the correct state
automatically upon power up. F-RAM technology uniquely enables this
capability due to its fast write time, virtually unlimited write endurance, and
low-power requirements. The Grade 1 temperature qualification allows
the FM1105-GA and FM1106-GA to operate over the entire automotive temperature
range of -40 to +125 degrees C, enabling designers to benefit from those F-RAM
products in systems throughout the car.
We
expanded our line of AEC-Q100-specified F-RAM memory devices, qualifying the
FM25L16-GA, a 16Kb serial F-RAM to operate over the Grade 1 automotive
temperature range of -40 to +125 degrees Celsius. The FM25L16-GA is
part of the Company's growing family of Grade 1 and Grade 3 AEC-Q100-qualified
automotive memory products.
We began
beta sampling our first MaxArias™ wireless memory product to customers across
several industries. Our MaxArias wireless memory combines the low
power, high speed, and high endurance features of our nonvolatile F-RAM memory
technology with wireless access to enable innovative data collection
capabilities for a broad range of applications. The Company's first
family of wireless memory devices, named the MaxArias WM710xx product line,
features F-RAM memory with passive UHF EPCglobal Class-1 Generation-2 wireless
access in a transponder IC with 4-, 8-, and 16-Kb user memory
densities. We believe the WM710xx family will be ideal for
applications spanning many industries including aircraft/industrial
manufacturing, inventory control, maintenance tracking, building security,
electronic toll collection, pharmaceutical tracking, and product authentication,
among others.
Financial Information by
Segment
Our
operations are conducted through one business segment, our semiconductor
business. Our semiconductor business designs, develops, markets, and
manufactures specialized semiconductor memories, microcontrollers and integrated
semiconductor solutions.
2009 Overview of
Business
On
February 9, 2009, the Company entered into a foundry services agreement with
International Business Machines Corporation ("IBM"). Pursuant to the agreement,
our F-RAM semiconductor process technology will be installed in IBM's
Burlington, Vermont, advanced wafer manufacturing facility to produce our
products on IBM's standard 180-nanometer CMOS wafer process. We expect the new
foundry supply from IBM to enable the Company to produce its existing products
more cost-effectively and expedite the introduction of new F-RAM semiconductor
products. The first commercial production of our F-RAM products from the IBM
foundry is anticipated in the second half of 2010 or early in
2011. The term of the Custom Sales Agreement extends through December
31, 2016, subject to extension upon mutual agreement or earlier termination
under certain conditions.
IBM is
providing us with facility design and fit up, tool installation and tool
qualification services in support of IBM's manufacture of our F-RAM
products. We are providing certain tools, peripheral equipment,
technology and specifications for IBM's manufacture of our products. We will
also provide our F-RAM technology and engineering expertise to IBM to assist in
the integration and process development of our F-RAM products. We are funding
the capital equipment and development costs for the IBM foundry operations from
our capital, leases, and current loan facility with Silicon Valley
Bank.
On
December 31, 2009, the Company entered into a Semiconductor Services Attachment
No. 4 ("Attachment No. 4"), with IBM supplementing the foundry services
agreement described above. Attachment No. 4 provides for the supply
of equipment and services to be provided respectively by IBM and Ramtron in
connection with IBM’s manufacture of products for Ramtron in future periods and
schedules Ramtron’s payments for equipment Ramtron is to supply and for IBM’s
manufacturing services. Attachment No. 4 also provides for ownership and certain
license rights of the parties with respect to their intellectual properties to
be used and developed in connection with such manufacture and
supply.
On March
11, 2009, the Company implemented certain cost reduction measures to restructure
operations to align its operations with anticipated revenue and reduce costs in
light of the then-current economic conditions. As a result of the
restructuring and cost reduction measures, the Company reduced its previously
projected 2009 costs and operating expenses, excluding impairment related
charges, by approximately $5.1 million. As part of the
restructuring, the workforce of the Company's United States headquarters and its
wholly owned subsidiary, Ramtron Canada Inc., were reduced by 17 employees, or
14%, on March 12, 2009. The functional areas affected by the
reduction included operations, engineering, and administrative support
functions.
As a
result of the restructuring, the Company incurred total charges of approximately
$6.2 million, primarily for severance costs and asset impairment charges, as
well as other exit-related costs, most of which were incurred in the first half
of 2009. Non-cash charges related to asset impairments, primarily to goodwill
and purchased intellectual property, were $5.4 million and were recorded in the
quarter ended March 31, 2009. Severance costs were approximately
$500,000, substantially all of which consisted of cash
expenditures. Other exit-related costs, which were approximately
$350,000, consisted substantially of cash expenditures, related to closure
activities and contract termination costs.
Also, as
a part of the restructuring, the Company reduced salaries for all employees from
5% to 12%, with reductions scaling up for higher paid personnel. The
salary reductions were effective as of March 15, 2009. As a result of
the salary reductions, the annual base salaries of each of the Company's CEO,
Mr. Staunton; the Company's CFO, Mr. Balzer; and the Company's COO, Mr.
Djokovich, were reduced by 12%.
We are in
the process of transiting the manufacture of our products from Fujitsu's foundry
located in Iwate, Japan to our foundry at Texas Instruments in Dallas, Texas and
to our newest foundry at IBM Corporation in Essex Junction, Vermont. The
transition will allow us to enhance our competitive market position and allow
for the design and development of a wider array of products that leverage our
F-RAM technology advantage. We have established a transition plan with Fujitsu
that is designed to meet customer delivery requirements and ensure an orderly
transition of products to the new facilities.
On August
18, 2009, we executed an Amended and Restated Loan and Security Agreement
("Amended Loan Agreement") with Silicon Valley Bank ("SVB"). The
Amended Loan Agreement provides for a $6 million working capital line of credit
with a $1.75 million sublimit for EXIM (Export-Import Bank qualified
receivables) advances, $1.5 million sublimit for eligible foreign accounts
receivables and a sublimit of $3 million for letters of credit and foreign
exchange exposure and cash management services. The Amended Loan
Agreement replaces our Amended and Restated Loan and Security Agreement dated
September 15, 2005. The Amended Loan Agreement provides for interest
at a floating rate equal to the SVB prime lending rate plus 1.75% to 2.25% per
annum depending upon cash balances and loan availability maintained at
SVB. The term is two years expiring on August 18, 2011, with a
commitment fee of $40,000 paid at signing and $40,000 on the first anniversary
of the Agreement. There is also a .375% unused line fee, payable
monthly in arrears. Security for the Amended Loan Agreement includes
all of the Company's assets except for real estate and leased
equipment. The related borrowing base is comprised of the Company's
trade receivables. We plan to draw upon loan facility for working
capital purposes as required.
On August
18, 2009, the Company also entered into an Amended and Restated Intellectual
Property Security Agreement ("Amended IP Security Agreement") with SVB that
secures the Company's obligations under the Amended Loan Agreement by granting
SVB a security interest in all of the Company's right, title and interest in, to
and under its intellectual property.
On
September 4, 2009, we entered into a settlement agreement and mutual release
with one of our customers that resolves all matters related to the previously
announced in-field failures of one of the Company's semiconductor memory
products. As a result of the settlement, and after an insurance
reimbursement and a credit for future product deliveries, we recognized a
benefit of approximately $132,000 on our third-quarter 2009 income statement. We
had previously recorded a charge of $815,000 in connection with the
matter.
In 2009,
we had direct and indirect product sales to over 2,000 customers and
distributors worldwide. We sell products through a direct sales force
and a global network of manufacturer's representatives and
distributors. Our distributors sell our products to numerous end
customers. Principal markets include metering, computing, automotive,
industrial, scientific and medical. We outsource the manufacturing and testing
of our products to foundries and packaging and test companies, allowing us to
focus our efforts on product definition, design, marketing and
sales.
General Industry
Background
Semiconductor
products are typically classified as analog, digital, or mixed signal. Analog
semiconductors are devices that have the ability to sense continuous real-world
parameters like voltage, flow, pressure, temperature, velocity, and time.
Digital semiconductors, such as memories or microcontrollers, store or process
information via circuit-based on and off switches. Digital semiconductors store,
process and manipulate data once the analog components have conditioned the
inputs or signals. Mixed-signal semiconductors are integrated products that
combine analog and digital circuit functions into a single device and are
generally considered the most specialized and complex type of semiconductors in
the market.
Memory
Market
Virtually
all electronic systems incorporate semiconductor memory to enable and enhance
performance. The primary performance characteristics of memory devices include:
speed (the amount of time it takes to read and write data from and to the
device); density (how much data can be stored in the device); power consumption,
(how much power a device consumes when reading or writing data); endurance (how
many times data can be written onto a memory device before it wears out); and
volatility (whether or not the device can retain data without power and without
refreshing). Volatile memory products rely on a random
access memory (RAM) architecture, which requires a constant power source to
retain data but allows data to be written and re-written quickly onto the
device. The most common volatile memories on the market today are dynamic random
access memories (DRAM), which are favored by designers for their density, and
static random access memories (SRAM), which are favored because of their
speed.
Nonvolatile
memories were originally designed using a read only memory (ROM) architecture,
which allows data to be written once and retained even when the power is turned
off or lost. Technology advances in ROM-based memories now allow data to be
written and erased multiple times as well as to retain data without a power
source. Despite these advances, ROM-based devices write operations require a
significant amount of power, are slow, and degrade relatively quickly. The most
common nonvolatile memory on the market today is electrically erasable
programmable read only memory (EEPROM), which is a low density solution that is
generally used because of its relative ease-of-use compared to FLASH memory,
which is used because of its low cost per bit and high density data storage
capability.
In an
effort to create a nonvolatile memory with high read/write speeds, a hybrid
memory, called battery-backed SRAM (BBSRAM) was created. While BBSRAMs allow
higher speed data storage, the battery attachment makes the device larger in
size, more expensive, and introduces battery-related reliability, lifetime and
adverse environmental issues.
EEPROM,
FLASH, and BBSRAMs, are widely used by system designers and are more or less
standardized. As is the case with most commodities, price is the main
differentiator. While these products are widely produced and incorporated in
many applications, technical limitations such as write speed, power consumption,
endurance and ease of use prevent one or more of these nonvolatile memory
devices from being implemented in certain situations.
Due to
the large market for semiconductor memory products and the technical limitations
of existing nonvolatile memory products, a market opportunity for alternative
memory technologies has evolved. This has made F-RAM the most
commercially successful of the alternative nonvolatile memory
technologies. Other emerging technologies, such as magneto resistive
random access memory (MRAM), ovonics and molecular memory, are still in their
early stages of development and have yet to demonstrate commercial viability and
achieve market acceptance.
Microcontroller
Products
Microcontrollers
(MCUs) are highly integrated devices that typically include a central processing
unit (CPU), memory, input/output (I/O) ports and timers. Unlike a
general-purpose computer, which also includes all of these components, an MCU is
designed to control or perform a very specific task within a system. As a
result, the parts can be simplified and shrunk to reduce production
costs.
MCUs are
generally segmented by architectures ranging from 4-bit through 32-bit. 4-bit
MCUs are relatively inexpensive but usually lack the minimum performance and
features required for product differentiation and are typically used only to
produce basic functionality in products. 16- and 32-bit architectures are
typically higher performance but have historically been considered too expensive
for many high-volume applications. As a result, we believe that 8-bit MCUs are
generally perceived as the most cost-effective processing solution for high
volume MCU requirements.
Integration
Trend - Mixed-Signal Devices
In a
typical system design, analog inputs are gathered by sensing devices and then
conditioned for use by digital circuits. Once the analog inputs are converted
into digital data by analog-to-digital conversion circuitry, digital devices
such as microcontrollers and memory are used to manipulate and store the data,
which is used to achieve a desired result or function in the
system.
Until
recently, analog and digital functions were performed by stand-alone components
that worked alongside each other within the system. Due to the increasing
complexity of products, the advancement of product features and the desire among
original equipment manufacturers to decrease the size and cost of electronic
systems, the market has progressed toward integrating analog and digital
components into stand-alone mixed-signal semiconductor devices. Analog products
that are commonly integrated into an electronic system include temperature
sensors, op amps, and regulators. This analog circuitry operates in conjunction
with digital devices such as memories and microcontrollers. Microcontrollers are
digital devices that incorporate many of the same functions as a computer but in
a dramatically simplified form. They are typically designed to
control or perform very specific tasks in a system. Advances in process
technology and design capabilities now allow the integration of analog and
digital devices into a single device by either embedding the functions onto a
single chip or by combining them in a multi-chip package. Integrating functions
in a single device has enabled lower overall system costs while increasing
functionality and reducing board space requirements. As a result, many
integrated semiconductor solutions generally recognize longer product life
cycles and relatively higher product margins.
Wireless
RFID Connectivity
RFID
(Radio Frequency Identification) is used mainly for automated data collection.
RFID is easily integrated with other technologies to optimize data capture and
exchange. RFID uses radio frequency waves to transfer data between a
reader and a tag. As the tag enters the RF field, the RF signal powers the tag
or turns it on. The tag then transmits the ID and data that has been programmed
to the reader. RFID readers (also called Interrogators) translate the radio
frequency information into digital information that can be read by software on
the host computer. The computer determines the required actions and instructs
the reader, which in turn transmits data back to the tag. RFID technologies are
quickly expanding in logistics, supply chain, and asset tracking applications in
almost every conceivable area around the globe.
Our
Products
We
design, develop and market specialized semiconductor memory, microcontroller and
integrated semiconductor solutions used by customers for a wide range of
applications in the metering, computing and information systems, automotive,
communications, consumer and industrial, scientific and medical markets. Our
product portfolio is comprised of stand-alone products, integrated
products and microcontroller devices.
We
pioneered the use of ferroelectric technology to produce nonvolatile
semiconductor memory products in commercial volumes. Our products have distinct
advantages over incumbent nonvolatile memory devices. F-RAM products combine the
nonvolatile data storage capability of ROM with the benefits of RAM, which
include a high number of read and write cycles, high-speed read and write
cycles, and low power consumption. Since demonstrating our first product, we
have expanded our F-RAM product line to include various interfaces and
densities, which include industry-standard serial and parallel interfaces;
industry standard package types; and 4-kilobit, 16-kilobit, 64-kilobit,
256-kilobit, 1-megabit, 2-megabit, and 4-megabit densities.
Memory
Products
Our
serial and parallel memories contain industry-standard interfaces that are
widely used in electronic applications. System designers use serial memories to
collect data due to their relative low cost. Serial memories require fewer
connections to the host system, and because they have a small package footprint,
occupy less space on a circuit board. They are slower than other types of memory
because they deliver data serially through a single port, which can require a
system's processor to wait longer for the data from the memory. Our
serial F-RAM devices are faster than serial EEPROM devices because the fast
write speed of F-RAM allows more frequent data transfers over the serial bus to
the processor in a given period of time.
Our
parallel F-RAM products are drop-in replacements for battery-backed SRAM
products (BBSRAM). F-RAM parallel products offer features and data retention
comparable to BBSRAMs, but without the requirement of a battery, which increases
system reliability, reduces board space and avoids the adverse environmental
effects of batteries. Parallel memory devices transfer data faster
than serial memories because they can deliver data through several ports
simultaneously. Although parallel memory devices are larger and more costly than
serial memory devices, they are well suited for high-performance applications
due to their inherent high read and write speed capability.
Integrated
Mixed-Signal Products
Our
integrated F-RAM products, called processor companions, are single-chip
solutions that replace a number of individual system components to reduce cost
and board space. The processor companion family is the most integrated F-RAM
product line developed to date and provides on a single chip the most commonly
needed system functions for a variety of applications. Processor companions
typically combine nonvolatile F-RAM with analog and mixed-signal circuitry such
as a real-time clock (RTC), a processor supervisor, and other commonly needed
peripheral functions. Processor Companions are available in a variety of memory
density and mixed-signal feature configurations. Processor companions are used
in similar applications to our serial and parallel F-RAM memory technologies but
provide more of the system's functions with a single device.
Microcontroller
Products
Our
integrated F-RAM enhanced microcontrollers are feature-rich, highly-integrated
mixed-signal 8051 microcontrollers that offer a solution for a broad range of
signal conditioning, data acquisition and control applications. These products
include on-chip analog peripherals such as pulse width modulators (can be used
as digital-to-analog (D/A) converters), a voltage reference, a programmable
current source, an uncommitted operational amplifier, digital potentiometers and
an analog switch, making them complete data acquisition System-on-Chip (SoC)
devices.
Wireless
Memory and RFID Products
Our
wireless memory products can be read from and written to via wireless
connections to the host system. We surveyed the current broad market
for semiconductor products that use memory and concluded that a new class of
F-RAM enabled wireless memories could capitalize on the emerging need for
high-performance mobile data collection and storage. One method of enabling
wireless access to F-RAM memory is to add standardized wireless protocols such
as those commonly used for radio frequency identification (RFID)
applications.
As the
range and sensitivity of RFID technologies has dramatically improved, the
technology has rapidly expanded into logistics, supply chain, and asset tracking
applications. Along with this expansion has come the requirement for more data
to be stored on the mobile tags within the system. Thus far, only a few
suppliers have offered tags that offer higher memory capabilities. Most of these
solutions are limited to only a few hundred more bits of data storage than the
traditional RFID tags provide. A few tags may have up to a few thousand bits of
memory but suffer from the slow performance of EEPROM memory technology. Due to
the slow nature of reading and writing to EEPROM-based tags, which can range up
to tens of seconds, tag users and vendors have not developed and marketed such
higher memory tags using standard EEPROM.
Markets
Select Nonvolatile Memory and
Integrated Semiconductor Applications
|
|
|
|
Meters
|
Computing
and Information Systems
|
Electric,
Gas, Waste
|
RAID
systems
|
Taxi
|
Printers
and copiers
|
Flow
|
Printer
cartridges
|
Postage
|
Servers
|
Automated
Meter Reading
|
Network
attached storage
|
|
Storage
area networks
|
|
|
|
Automotive
|
Industrial,
Scientific and Medical
|
Restraint
systems
|
Medical
instruments
|
Smart
airbag systems
|
Test
equipment
|
Auto
Body controls
|
Motor
controls
|
Car
radio/DVD/Navigation systems
|
Home
automation
|
Instrumentation
clusters
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RFID
data logging
|
Our
engineering team has helped many customers develop leading-edge products that
benefit from our F-RAM products' unique technological characteristics, such as
fast write speeds, high write endurance, low power, and accelerated
time-to-market. The following application examples illustrate the use of our
products in certain markets.
Automotive
- Electronic systems and semiconductor content in automobiles has increased
significantly in recent years with the advent of more sophisticated safety,
entertainment, body control, and telematics systems. In addition, the sensor
count in automobiles has grown significantly over the past few years, which
requires processing and storing more data than ever before.
Metering -
The need to monitor power usage has become increasingly important for utility
companies as fuel prices have increased significantly over the past few years.
Worldwide, there is a significant demand for systems that efficiently distribute
power to areas of high demand. These trends have given rise to the need for more
sophisticated digital metering products that can constantly track and report
power usage data for utility companies. As a result of our success in supplying
F-RAM products for one of the world's largest digital metering installations, we
believe that F-RAM products are becoming more widely accepted in time-of-use and
automated meter reading applications.
Computing
- Computing applications for our products have increased significantly in recent
years as we have focused on uses for our products in multi-function printers and
copiers, laser and inkjet printers and hard disk array controllers. The high
write endurance of our F-RAM products is the primary reason multi-function
printer and copier manufacturers use F-RAM products in their products, while the
fast write capability and ability to store information quickly upon power-down
is the primary reason hard disk array controller manufacturers use our
products.
Industrial,
Scientific and Medical - The industrial, scientific and medical market
provides a large opportunity for F-RAM products because it is characterized by
applications that are subject to unique and demanding operating environments.
F-RAM products are well suited for these applications due to their inherent high
reliability features like high endurance and their low power
consumption.
Wireless -
To answer the need for higher performance wireless memory devices, we have
developed a family of products, named the MaxArias WM710xx product line, which
features F-RAM memory with wireless RFID access using a standard UHF EPCglobal
Class-1 Generation-2 protocol. The WM710xx family is ideal for
applications spanning many industries including aircraft/industrial
manufacturing, inventory control, maintenance tracking, building security,
electronic toll collection, pharmaceutical tracking, and product authentication,
among others.
Manufacturing
We are a
fabless semiconductor manufacturer that designs and develops new products for
production by foundries. Outsourcing manufacturing and our foundry
relationships enables us to avoid the large capital expenditures that would
otherwise be required to manufacture our products in commercial
volumes.
Although
we have entered into license agreements with Fujitsu, Rohm, Toshiba Corporation
(Toshiba), Infineon Technologies AG and Texas Instruments that provide for the
potential development and manufacture of F-RAM products, Fujitsu and Texas
Instruments are currently the only manufacturers of our F-RAM
products. In 1999, the Company entered into a manufacturing agreement
with Fujitsu Limited for the supply of its F-RAM products with an initial term
of five years with automatic one-year renewals. The agreement requires Fujitsu
to provide us with a two-year advance notice of any change in its ability or
intention to supply product wafers to us. In October 2009, Fujitsu
notified the Company of their intent to discontinue the manufacture of our F-RAM
products in March of 2010 and agreed to hold inventory to satisfy the Company's
product delivery requirements through the first quarter of 2011. As a
result, we placed wafer purchase orders of approximately $15 million to meet
anticipated product delivery requirements. The purchase orders expire during the
first quarter of 2011 and are currently outstanding and non-cancellable. The
products covered by the purchase orders will be supplied to the Company at
prices to be negotiated based on then-current market conditions.
In 2007,
the Company and Texas Instruments entered into a commercial manufacturing
agreement for F-RAM memory products. The Company will provide design,
testing and other activities associated with product development efforts, and
Texas Instruments will provide foundry services for a minimum period of two
years with one year automatic renewal periods unless a party notifies the other
party thirty (30) days prior to the expiration of any renewal period of their
desire to terminate the agreement. The manufacturing agreement with
Texas Instruments also contains obligations for us with respect to minimum
orders and negotiated pricing.
In
February 2009, the Company and IBM entered into a Custom Sales Agreement for
foundry services agreement. IBM will provide the Company with
facility design and fit up, tool installation and tool qualification services in
support of IBM's manufacture of our F-RAM products. We will provide
tools, peripheral equipment, technology and specifications required for IBM's
manufacture of our products. We will also provide our F-RAM
technology and engineering expertise to IBM to assist in the integration and
process development of our F-RAM products. The term of the Custom
Sales Agreement extends through December 31, 2016, subject to earlier
termination under certain conditions. On December 31, 2009, we
entered into an agreement supplementing the previously disclosed Custom Sales
Agreement with IBM. This agreement provides for the supply of
equipment and services to be provided respectively by IBM and the Company in
connection with IBM’s manufacture of products for Ramtron in future periods and
schedules our payments for equipment we are to supply and for IBM’s
manufacturing services. It also provides for ownership and certain
license rights of the parties with respect to their intellectual properties to
be used and developed in connection with such manufacture and
supply. We do not expect IBM to provide us products in commercial
volumes until the second half of 2010 or early in 2011.
We
believe that manufacturing capabilities and capacity for our existing products,
as well as those we may develop, will be readily available for the foreseeable
future. If the demand for the Company's Fujitsu-supplied products
exceeds the inventory held by Fujitsu and the Company is unable to obtain
products from alternate sources of supply, we will not be able to fill orders
from our customers, which may adversely affect our business.
We
subcontract with non-U.S. companies to assemble, package and test our
manufactured products. Assembly and testing services performed by such
subcontractors are conducted in accordance with processes designed by us or the
third-party manufacturers and are implemented under the supervision of our
product engineers or such third-party manufacturers.
The raw
materials and packaging required for the manufacture of our products are readily
available from multiple sources.
Patents and Proprietary
Rights
We rely
on a combination of patents, copyrights, trademarks and trade secrets to
establish and protect our intellectual property rights. We hold 74 United States
patents covering key aspects of our products and technology. These patents will
expire at various times between May 2010 and August 2026. We have
applied for 5 additional United States patents covering certain aspects of our
products and technology. We have also taken steps to apply for patents in
jurisdictions outside the U.S. on our products and technology. We hold 4
non-U.S. issued patents and have 3 non-U.S. patent applications pending. One
non-U.S. patent is co-owned with Mitsubishi Materials Corporation.
Our
patents cover the critical aspects of F-RAM technology, which we believe is a
significant deterrent to other companies commercializing ferroelectric-based
memory and integrated products without a license from us. We use our
technological and engineering expertise to develop proprietary technologies for
high quality, technologically advanced products that meet the complex and
diverse needs of our customers. Our engineers have specific know-how in F-RAM
technology-based product design.
We have
licensed our F-RAM technology to several companies, including Fujitsu, Toshiba,
Samsung Electronics Company, Ltd. (Samsung), Infineon, NEC and Texas
Instruments. We also have cross-licensing arrangements with National
Semiconductor and Symetrix Corporation. Some of these licensing arrangements
provide us with the right under certain conditions to call on the licensee's
manufacturing capacity as well as to receive royalty payments while others
include only royalty provisions.
Customers
We serve
direct customers worldwide, including OEMs and subcontract manufacturers.
Additionally, our distributors sell to customers worldwide, through which we
indirectly serve a broad base of customers. Our customers include
industry leading OEMs in a broad range of industries.
Our sales
have been relatively balanced across our major sales regions including the
Americas, Europe, Asia/Pacific and Japan. As a result, we believe that we are
not particularly vulnerable to regional economic fluctuations in a specific part
of the world. For fiscal years 2009 and 2008, based upon product shipment
destination, international sales comprised approximately 84% and 86%,
respectively, of our net revenue.
For the
year ended December 31, 2009, approximately 41% of our total product sales
revenue was generated by five, direct sales and distributor,
customers. One customer represented 11% of our total product sales
revenue and no other customers contributed more than 10% of our total product
sales revenue.
Sales and
Marketing
We use a
regionally-based manufacturing representative sales force and a global network
of distributors to sell our semiconductor products. In many cases, our
distributors are responsible for product demand creation through OEM customers
who are not directly served by our internal regional sales managers. For the
year ended December 31, 2009, approximately 65% of our product sales were to our
distributor network, while direct customers accounted for approximately 35% of
our revenue.
In
addition to our Colorado Springs, Colorado, headquarters facility and our
California design and engineering facility, we maintain full-time sales and
customer service personnel in Canada, Japan, United Kingdom, Hong Kong, South
Korea, Singapore, Taiwan and China. We have distribution and/or
manufacturers representative relationships with approximately 60 companies
worldwide, including the Americas, Europe, Japan and Asia/Pacific. These
regionally-focused firms work with our regional sales managers in identifying
new customers, providing technical support and other value-added services to
customers, such as order processing, local inventory stocking, and management of
currency fluctuation risks.
Competition
The
semiconductor industry and, in particular, the semiconductor memory products
business is intensely competitive. We compete with numerous domestic and foreign
companies. Our products primarily compete on the basis of product
price in relation to product functionality. We may be at a
disadvantage in competing with many of our competitors, which have significantly
greater financial, technical, manufacturing and marketing resources, as well as
more diverse product lines that can provide cash flow during downturns in the
semiconductor industry.
We
consider our F-RAM products to be competitive with other nonvolatile memory
devices such as EEPROM and BBSRAM products. Although FLASH memory
products are a class of nonvolatile memory, we do not compete with FLASH due to
its relatively higher storage capacity than F-RAM. Nonvolatile memory products
are manufactured and marketed by major corporations possessing wafer
manufacturing and integrated circuit production facilities such as
ST-Microelectronics N.V., Atmel Corporation, Cypress Semiconductor Corporation,
and by specialized product companies, such as Intersil Corporation, Maxim
Integrated and Integrated Silicon Solution Inc.
Our
microcontroller products compete with industry standard products offered by
established semiconductor manufacturers such as Renasas, Freescale, Microchip,
NEC, Atmel, NXP and Zilog. We intend to use our close customer relationships to
sell in this intensely competitive environment where we have a proven track
record of providing individualized design assistance and after sale support. Due
to the more specialized nature of our mixed signal enhanced microcontrollers,
they are less susceptible to the same level of competition as industry standard
microcontroller products.
Our
licensees may market products that compete with our F-RAM products. Most of our
licensees have the right to manufacture and sell F-RAM products, however, with
the exception of Fujitsu, we are not aware of any licensees that market
competitive F-RAM products. Under our agreements with Rohm, Toshiba, Fujitsu,
Samsung, Infineon, NEC, National Semiconductor, Symetrix Corporation and Texas
Instruments, we granted each of those companies a non-exclusive license to F-RAM
technology, which includes the right to manufacture and sell products using
F-RAM technology. Most of these license agreements provide for the
continuation of the license rights to our technology and know-how after
expiration or termination of the agreements.
Competition
affecting our F-RAM products may also come from emerging alternative nonvolatile
technologies such as magnetic random access memory or phase change memory, or
other developing technologies.
Research and
Development
We use
our technological and engineering expertise to develop proprietary technologies
for high quality, technologically advanced products that meet the complex and
diverse needs of our customers. We intend to continue leveraging and expanding
our technological and engineering expertise to develop new proprietary
technologies and expand our product offerings.
We
continue to make additional investments in research and development for
technologies and products. Current research and development activities are
focused on expanding our product offerings and securing additional foundry
capacity and technology nodes to meet our future needs.
We seek
to maintain our leadership role in F-RAM technology development by working in
cooperation with the world's leading semiconductor manufacturers to further the
development of our proprietary F-RAM technology.
Research
and development expenses, including customer-sponsored research and development,
were $11.3 million in 2009 and $12 million in 2008.
Environmental
Compliance
Federal,
state and local regulations impose various environmental compliance measures on
the discharge of chemicals and gases used in our prototype manufacturing and
research and development processes. We believe that the risk of a
future failure or violation is remote due to the nature of our current
operations and the nature of the substances we use in our testing and failure
analysis at our facility. We believe we have taken all necessary
steps to ensure that our activities comply with all applicable environmental
rules and regulations. Additional risks and uncertainties are further
discussed under Part I. Item 1A. Risk Factors.
Employees
We have
approximately 109 full-time employees and 2 part-time employees. None
of our employees are represented by a collective bargaining agreement, nor have
we ever experienced any work stoppage. None of our non-executive
employees currently have employment contracts or post-employment non-competition
agreements. We believe that our employee relations are
good.
Available
Information
We make
available financial information, news releases and other information on our
website at www.ramtron.com. Such reports are available free of charge
on our website as soon as practicable after we file such reports and amendments
with or furnish them to the Securities and Exchange Commission
(SEC). In addition, our filings are available on the website of the
SEC via the EDGAR database, where our annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and any amendments to those
reports are filed. In addition, such reports are also available free
of cost by contacting Investor Relations, 1850 Ramtron Drive, Colorado Springs,
Colorado 80921. Stockholders can also obtain such reports
directly from the SEC at no charge at the SEC's website (www.sec.gov) or by
visiting the SEC's Public Reference room in Washington, D.C. or by calling the
SEC at 1-800-SEC-0330.
As
previously discussed, our actual results could differ materially from our
forward-looking statements. Factors that might cause or contribute to such
differences include, but are not limited to, those discussed below. These and
many other factors described in this report could adversely affect our
operations, performance and financial condition.
Our achievement of sustained
profitability is uncertain.
We
incurred a net loss during the year ended December 31, 2009 of $5.8 million, of
which $5.4 million was related to non-cash impairment charges. We
recognized net income of $3.7 million for the year ended December 31,
2008. Our ability to reflect a profit from ongoing operations in
future periods 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, to enter into additional technology
development and license arrangements, to obtain sufficient contract
manufacturing capacity and, if and as may be necessary, to raise additional
financing to fund our growth. There is no guarantee that we will be successful
in reducing these risks.
We have
spent substantial amounts of money in developing our products and in our efforts
to obtain commercial manufacturing capabilities for those
products. At December 31, 2009, our accumulated deficit was $219
million. Our ability to increase revenue and achieve profitability in
the future will depend substantially on our ability to increase sales of our
products by gaining new customers and increasing sales to our existing
customers, our success in reducing manufacturing costs, while increasing our
contract manufacturing capacity, our ability to significantly increase sales of
existing products, and our success in introducing and profitably selling new
products.
We may need to raise additional funds
to finance our operations.
In view
of our expected future working capital requirements in connection with the
fabrication and sale of our specialized memory, microcontroller and integrated
semiconductor products, as well as 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 equity
financing is obtained, any issuance of common or preferred stock to obtain
funding would result in dilution of our existing stockholders'
interests.
Expenditures
relating to capital and engineering support for our IBM foundry project are
estimated to be an additional $2.8 million over the next twelve
months. If we cannot generate sufficient cash from operations,
increase our borrowing base on our secured line of credit facility, or obtain
other equity or debt financing, the IBM foundry project could be delayed and
could be at risk of being cancelled, which would have a material adverse effect
on our business operations.
If
we fail to vigorously protect our intellectual property, our competitive
position may suffer.
Our
future success and competitive position depend in part upon our ability to
develop additional and maintain existing 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 non-disclosure and assignment
agreements. We cannot provide assurances that any of our pending 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 costly, and
we cannot be certain that the steps we have taken will prevent the
misappropriation or unauthorized use of our technologies, particularly in
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 semiconductor 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 by others that result in
costly litigation and could harm our business and ability to compete. Our
industry is characterized by the existence of a large number of patents, as well
as frequent claims and related litigation regarding these patents and other
intellectual property rights. In particular, many leading semiconductor memory
companies have extensive patent portfolios with respect to manufacturing
processes, product designs, and semiconductor memory technology, including
ferroelectric memory technology. 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
licensees in connection with their use of our technology. In the
event of claims of infringement against our licensees with respect to our
technology, we may be required to indemnify our licensees, which could be very
costly. 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. 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 would harm our business and result in
significant cash expense to us to cover litigation costs, as well as the
reduction of future license revenue.
Catastrophic
events causing system failures may disrupt our business.
We are a
highly automated business and rely on our network infrastructure and enterprise
applications, internal technology systems and our Web site for our development,
marketing, operational, support, hosted services and sales activities. A
disruption or failure of these systems in the event of a major earthquake, fire,
telecommunications failure, cyber-attack, war, terrorist attack, or other
catastrophic event could cause system interruptions, reputational harm, delays
in our product development, breaches of data security and loss of critical data,
and could prevent us from fulfilling our customers' orders. We have
developed certain disaster recovery plans and certain backup systems to reduce
the potentially adverse effect of such events, but a catastrophic event that
results in the destruction or disruption of any of our data centers or our
critical business or information technology systems could severely affect our
ability to conduct normal business operations and, as a result, our future
operating results could be adversely affected.
Earthquakes,
other natural disasters and power shortages or interruptions may damage our
business.
Some of
our contract manufacturers' facilities are located near major earthquake faults.
If a major earthquake or other natural disaster occurs that damages those
facilities or restricts their operations, or interrupts our and our suppliers'
and customers' communications, our business, financial condition and results of
operations would be materially adversely affected. A major earthquake or other
natural disaster near one or more of our major suppliers could disrupt the
operations of those suppliers, which could limit the supply of our products and
harm our business.
Our
future success depends in part on a relatively small number of key
employees.
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 testing engineers involved in the development and
oversight of the manufacture of our semiconductor products and
processes. The competition for these personnel is intense, and the
loss of key employees, including our 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. In addition, the
substantial breadth of demands on our relatively small number of key management
employees, including new product development, managing supplier and customer
relationships, and seeking new capital sources and other business development
activities are significant, and could divert our management’s attention from our
business operations.
General
economic trends and other factors, including the effects of the recent worldwide
credit crisis, may negatively affect our business.
The
worldwide economic slowdown and tightening of credit in the financial markets
may impact the businesses of our customers, which could have an adverse effect
on our business, financial condition or results of operations. During
fiscal year 2009, we experienced a slowdown in overall order flow, particularly
from automotive customers as the production of high-end navigation and
entertainment systems softened and from our distributors reducing their overall
inventory levels. We anticipate that this trend may continue
throughout 2010 as economic conditions tighten for semiconductor
products.
Adverse
changes in general economic or political conditions in any of the major
countries in which we do business could adversely affect our operating
results.
Our
products are complex and any defects in our products may result in liability
claims, an increase in our costs and a reduction in our revenue.
Our
products are complex and may contain defects, particularly when first introduced
or as new versions are released or defects may result from the manufacturing
process employed by our foundries. We develop integrated
semiconductor products containing functions in addition to memory, thereby
increasing the overall complexity of our products. We rely primarily
on our in-house testing personnel to design test operations and procedures to
detect any defects prior to delivery of our products to our
customers. However, we rely on both in-house personnel and
subcontractors to perform our testing. Because our products are
manufactured by third parties and involve long lead times, we may experience
delays in meeting key introduction dates or scheduled delivery dates to our
customers if problems occur in the manufacture or operation or performance of
our products. These defects also could cause us to incur significant
re-engineering or production costs, divert the attention of our engineering
personnel from our new product development efforts and cause significant
customer relations issues and damage to our business reputation. Any
defects could require product replacement, cost of remediation, or recall or we
could be obligated to accept product returns. Any of the foregoing could cause
us to incur substantial costs and harm our business. Our products are
typically sold at prices that are significantly lower than the cost of the
end-products into which they are incorporated. A defect or failure in
our product could cause failure in our customer's end-product, so we could face
product liability claims for property damage, lost profits damages, or
consequential damages that are disproportionately higher than the revenue and
profits we receive from the products involved. There can be no
assurance that any insurance we maintain will sufficiently protect us from any
such claims.
We
depend on a small number of suppliers for the supply of our products and the
success of our business may be dependent on our ability to maintain and expand
our relationships with foundries and other suppliers.
We
currently rely on foundry services from Fujitsu and Texas Instruments to
manufacture our F-RAM products. Although Fujitsu has discontinued manufacturing
our products, they have provided us with an inventory of products to meet our
anticipated delivery requirements until our new supply of products from IBM
commences. We believe that Fujitsu's inventory, in addition to the products we
acquire from Texas Instruments, will be sufficient to meet our supply
requirements until IBM’s supply of products commences. We do not expect IBM to
provide us products in commercial volumes until the second half of 2010 or early
in 2011 and some products supplied by Fujitsu are not currently available from
Texas Instruments at this time. If IBM’s supply of products is delayed or if our
customers require more products than Fujitsu has inventoried for us, and we are
not able to obtain qualified replacement products from Texas Instruments in a
timely manner, we will be unable to fill our customers’ orders, which may have a
material adverse effect on our revenue and results of operations. If customer
demand for products to be supplied from the Fujitsu inventory falls short of the
wafers we have committed to purchase, the Company may be required to obsolete
excess inventory, which may adversely affect our business.
If
customer demand for products to be supplied from the Fujitsu' inventory falls
short from the wafers we have committed to purchase, the Company may be required
to obsolete excess inventory, which may adversely affect our
business.
Our
foundry agreements with Texas Instruments and IBM may not be renewed at the end
of the contract term or negotiation of new contract terms may not be acceptable
and the engagement of other foundry services will become necessary, which would
require capital investment and related cash funding, and would likely result in
our inability to fill our customers’ orders. In addition, we rely on a small
number of other contract manufacturers and foundries to manufacture our other
products. Reliance on a limited number of foundries 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, variations
in manufacturing yields, dependence on the foundries for quality assurance, and
the potential loss of production and a slowdown in filling our orders due to
seismic activity, other force majeure events and other factors beyond our
control, including increases in the cost of the wafers we purchase from our
foundries.
Although
we continuously evaluate sources of supply and may seek to add additional
foundry capacity in the future, there can be no assurance that such additional
capacity can be obtained at acceptable prices, if at all. Because our
products require the foundries to make specified modifications to their standard
process technologies and integrate our ferroelectric materials into their
processes, transitioning the manufacturing of our products to other foundries or
other facilities of an existing foundry may requires process design changes and
requires substantial lead time. Any delay resulting from such transition could
negatively affect product performance, delivery, and yields or increase
manufacturing costs.
We are
also subject to the risks of service disruptions and raw material shortages
affecting our foundry suppliers, which could also result in additional costs or
charges to us.
We also
rely on domestic and international subcontractors for packaging and testing of
products, and are subject to risks of disruption of these services and possible
quality problems. The occurrence of any supply or other problem
resulting from these risks could have a material adverse effect on our revenue
and results of operations.
We cannot
provide any assurance that foundry or packaging and testing services will be
available to us on terms and conditions, and at the times, acceptable to us. If
we are unable to obtain foundry and packaging and testing services meeting our
needs, we may be unable to produce products at the times and for the costs we
anticipate and our relationships with our customers may be harmed and financial
condition and results of operations may be adversely affected.
We
are a relatively small company with limited resources, compared to some of our
current and potential competitors, and we may not be able to compete effectively
and increase our market share.
Our
nonvolatile memory, microcontroller and integrated semiconductor products, which
presently account for a substantial portion of our revenue, compete against
products offered by current and potential competitors with longer operating
histories, significantly greater financial and personnel resources, better name
recognition and a larger base of customers than we have. In addition, many of
our competitors have their own facilities for the production of semiconductor
memory components or have recently added significant production capacity. As a
result, these competitors may have greater credibility with our existing and
potential customers. They also may be able to adopt more aggressive pricing
policies and devote greater resources to the development, promotion and sale of
their products than we can to ours. In addition, some of our current
and potential competitors have already established supplier or joint development
relationships with the decision makers at our current or potential
customers. These competitors may be able to leverage their existing
relationships to discourage their customers from purchasing products from us or
persuade them to replace our products with their products. These and other
competitive pressures may prevent us from competing successfully against current
or future competitors, and may materially harm our business. Competition could
force us to decrease our prices, reduce our sales, lower our
gross
profits
or decrease our market share, any of which could have a material adverse affect
on our revenues and results of operations. Our competitors include
companies such as ST Microelectronics, Renesas Technology Corporation, Freescale
Semiconductor, Inc., Microchip Technology Inc., NEC Corporation, Atmel
Corporation, Fujitsu, Texas Instruments, and NXP, as well as specialized product
companies such as Intersil Corporation, Maxim Integrated and Integrated Silicon
Solution Inc., which produce products that compete with our current products and
may compete with our future products. Our ability to compete with
these and other competitors will depend on a number of factors, including our
ability to continue to recruit and retain qualified engineers and other
employees, our ability to introduce new and competitive products in a timely
manner, the availability of foundry, packaging and testing services for our
products to meet our customers’ demands, effective utilization and protection of
our intellectual property rights, and general economic and regulatory
conditions.
Emerging
technologies and standards may pose a threat to the competitiveness of our
products.
Competition
affecting our F-RAM products may also come from alternative nonvolatile
technologies such as magnetic random access memory or phase change memory, or
other developing technologies. We cannot provide assurance that we will be able
to identify new product opportunities successfully, develop and bring to market
new products, achieve design wins or respond effectively to new technological
changes or product announcements by our competitors. In addition, we may not be
successful in developing or using new technologies or in developing new products
or product enhancements that achieve market acceptance. Our competitors or
customers may offer new products based on new technologies, new 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.
A memory
technology other than F-RAM nonvolatile memory technology may be adopted or
become generally accepted in integrated semiconductor products, or in
stand-alone memory products, and our competitors may be in a better financial
and marketing position than we are to influence such adoption or
acceptance.
Our
research and development efforts are focused on a limited number of new
technologies and products, and any delay in the development, or the abandonment,
of these technologies or products by industry participants, or their failure to
achieve market acceptance, could compromise our competitive
position.
Our F-RAM
semiconductor memory, microcontroller and integrated semiconductor products are
used as components in electronic devices in various markets. As a result, we
have devoted and expect to continue to devote a large amount of resources to
develop products based on new and emerging technologies and standards that will
be commercially introduced in the future. Our research and
development expense, including customer-sponsored research and development
expenses, for the year ended December 31, 2009, was $11.3 million, or 24% of our
total revenue.
If we do
not accurately anticipate new technologies and standards, or if the products
that we develop based on new technologies and standards fail to achieve market
acceptance, our competitors may be better positioned to satisfy market demand
than us. Furthermore, if markets for new technologies and standards develop
later than we anticipate, or do not develop at all, demand for our products that
are currently in development would suffer, resulting in lower sales of these
products or lower sale prices, or both, than we currently anticipate, which
would adversely affect our revenue and gross profits. We cannot be certain that
any products we may develop based on new technologies or for new standards will
achieve market acceptance.
If
we do not continually develop new products that achieve market acceptance, our
revenue may decline.
We need
to develop new products and new process and manufacturing
technologies. We believe that our ability to compete in the markets
in which we expect to sell our F-RAM based microcontroller and integrated
semiconductor products will depend, in part, on our ability to produce products
that address customer needs efficiently and in a cost-effective manner and also
our ability to incorporate effectively other semiconductor functions with our
F-RAM products. Our inability to successfully develop and have
manufactured new products would harm our ability to compete and have a negative
impact on our operating results.
If we
fail to introduce new products in a timely manner or are unable to manufacture
such products successfully, or if our customers do not successfully introduce
new systems or products incorporating our products, or if market demand for our
new products does not develop as anticipated, our business, financial condition
and results of operations could be seriously harmed.
Our
expansion into new products and markets may be unsuccessful.
We plan
to introduce new products into new markets in 2010. We do not have experience in
the markets our new products will address and these products may not achieve
acceptance in those markets because they do not solve a substantial market need
or are not competitively priced. Even if our new products achieve
substantial market penetration, we may not be able to produce them in sufficient
quantities or at prices that will enable us to generate profits for several
years. The introduction of new products into new markets also
increases the demands on our management and key employees, who may fail to
manage those demands successfully.
We will
depend on IBM and Texas Instruments, our two primary contract manufacturers, to
supply components of the new products, and, if the new products are ordered in
substantial quantities, or, if for any other reason, those contract
manufacturers are not able timely to supply sufficient components for the new
products, our new products may be unsuccessful in the markets, which would
result in our not achieving expected revenue from the new products.
We
compete in certain markets with some of our F-RAM technology licensees, which
may reduce our product sales.
We have
licensed the right to fabricate products based on our F-RAM technology and
memory architecture to certain independent semiconductor device manufacturers.
Fujitsu and Texas Instruments, who we currently depend on for our F-RAM wafer
supply, market certain F-RAM memory products that compete with certain of our
F-RAM products. Some of our licensees have suspended or terminated
their F-RAM initiatives, while others may still be pursuing a possible F-RAM
based technology initiative or product development without our knowledge. We
expect manufacturers that develop products based on our technology to sell such
products worldwide. We are entitled to royalties from sales of F-RAM products by
some but not all of these licensees, and we have the right under certain of our
licensing agreements to negotiate an agreement for a portion of the licensee's
F-RAM product manufacturing capacity. Our licensees may, however, give the
development and manufacture of their own F-RAM products a higher priority than
ours. Any competition in the marketplace from F-RAM products
manufactured and marketed by our licensees could reduce our product sales and
harm our operating results.
We
may not be able to replace our expected revenue from significant customers,
which could adversely affect our business.
Our
success depends upon continuing relationships with significant customers who,
directly or indirectly, purchase significant quantities of our
products. For the year ended December 31, 2009, approximately 41% of
our total product sales revenue was generated by five, direct sales and
distributor, customers. Any reduction of product sales to our
significant customers, without a corresponding increase in revenue from existing
and new customers, may result in significant decreases in our revenue, which
would harm our cash flows, operating results and financial
condition. We cannot assure you that we would be able to replace
these relationships in a timely manner or at all.
We
expect that international sales will continue to represent a significant portion
of our product sales in the future. As a result, we are subject to a
number of risks resulting from such operations.
International
sales comprise a significant portion of our product sales, which exposes us to
foreign political and economic risks. 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. Competitors based in the
countries where we have substantial sales, such as Japan, may be able to supply
products to customers in those countries more efficiently and at lower prices
than we are able to do. 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.
The
majority of our revenue, expense and capital purchases are transacted in U.S.
dollars. We purchase wafers from Fujitsu in Japanese Yen and have limited
accounts payable transactions in Canadian dollars. At this time, we
do not use financial derivatives to hedge our prices, therefore, we have some
exposure to foreign currency price fluctuations. However, payments from Japanese
customers and the Company's purchase of Yen on the open market for payment of
our Yen invoices provides Yen currency for approximately 60% of our wafer
purchase costs. 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.
Our
business is also subject to risks generally associated with doing business with
third-party manufacturers in non-U.S. jurisdictions including, but not limited
to 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
are subject to environmental laws that are subject to change and may restrict
the marketability of certain of our products, which could adversely impact our
financial performance or expose us to future liabilities.
We are
subject to laws and regulations relating to the use of and human exposure to
hazardous materials. Our failure to comply with these laws and regulations could
subject us to future liabilities or result in the limitation or suspension of
the sale or production of product, including without limitation, products that
do not meet the various regulations relating to use of lead-free components in
products. These regulations include the European Union's Restrictions on
Hazardous Substances ("RoHS"), Directive on Waste Electrical and Electronic
Equipment ("WEEE"), and the directive on End of Life for Vehicles (ELV);
California's SB20 and SB50 which mimic RoHS; and China's WEEE adopted by the
State Development and Reform Commission. New electrical and electronic equipment
sold in the European Union may not exceed specified concentration levels of any
of the six RoHS substances (lead, cadmium, hexavalent chromium, mercury, PBB,
and PBDE) unless the equipment falls outside the scope of RoHS or unless one of
the RoHS exemptions is satisfied. Our products as manufactured
contain lead, but in ceramic form (the "ferroelectric memory capacitor") are at
levels below the threshold concentration levels specified by RoHS and similar
directives. However, these directives are still subject to amendment and such
changes may be unfavorable to our products. Any supply of products that infringe
applicable environmental laws may subject us to penalties, customer litigation
or governmental sanctions, which may result in significant costs to us, which
could adversely impact our results of operations.
Our
business operations are also 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 the manufacturing processes of our
third-party foundry and contract manufacturers. 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 foundries 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 our
foundries or contract manufacturers to suspend manufacturing operations, which
could seriously harm our business, financial condition and results of
operations.
In
addition to the costs of complying with environmental, health and safety
requirements, in the future we may incur costs defending against environmental
litigation brought by government agencies and private parties. We may
be defendants in lawsuits brought by parties in the future alleging
environmental damage, personal injury or property damage. A significant judgment
against us could harm our business, financial condition and results of
operations.
If
our amortized intangible assets become impaired, we may be required to record a
significant charge to earnings.
Under
GAAP, we review the carrying value of amortized intangible assets for impairment
when events or changes in circumstances indicate the carrying value may not be
recoverable. Factors that may be considered a change in circumstances indicating
that the carrying value of our amortizable intangible assets may not be
recoverable include a decline in stock price and market capitalization, future
cash flows, and slower growth rates in our industry. We may be required to
record a significant charge to earnings in our financial statements during the
period in which any impairment of our amortizable intangible assets is
determined, resulting in an impact on our results of operations. We
recorded such an impairment charge during 2009.
Our
stock price is extremely volatile and you may not be able to resell your shares
at or above the price you paid.
The
market price of our common stock has fluctuated widely in recent periods and is
likely to continue to be volatile. A number of other factors and
contingencies can affect the market price for our common stock, including the
following:
·
|
actual
or anticipated variations in our operating results;
|
·
|
the
low daily trading volume of our stock, which has in recent years traded at
prices below $5 per share;
|
·
|
announcements
of technological innovations or new products by us or our
competitors;
|
·
|
competition,
including pricing pressures and the potential impact of competitors'
products on our sales;
|
·
|
conditions
or trends in the semiconductor memory products
industry;
|
·
|
unexpected
design or manufacturing difficulties;
|
·
|
any
announcement of potential design or manufacturing defects in our
products;
|
·
|
changes
in financial estimates or recommendations by stock market analysts
regarding us or our competitors;
|
·
|
announcements
by us or our competitors of acquisitions, strategic partnerships or joint
ventures; and additions or departures of our senior management;
and
|
·
|
one
shareholder owning 6% of our outstanding common stock, the sale of which
could affect the stock price.
|
In
addition, in recent years the stock market in general, and shares of technology
companies in particular, have experienced extreme price and volume
fluctuations. These fluctuations have often been unrelated or
disproportionate to the operating performance of these technology companies.
These broad market and industry fluctuations may harm the market price of our
common stock, regardless of our operating results.
We
are subject to certain covenants related to our bank loan and such covenants may
be challenging to the Company.
We are
required to comply with certain covenants under the loan agreement, as amended,
including requirements to maintain a minimum net worth and maintain certain
leverage ratios, and restrictions on certain business actions without the
consent of Silicon Valley Bank. If we are not able to comply with
such covenants at a point of time in the future, the Company's outstanding loan
balance will be due and payable immediately, our existing line of credit could
be cancelled, and unless we are able to obtain a waiver from the bank for such
covenant violations, our business, financial condition and results of operations
would be harmed.
Provisions
in our certificate of incorporation and preferred shares rights agreement may
have anti-takeover effects and could affect the price of our common
stock.
Our board
of directors has the authority to issue up to 10,000,000 shares of preferred
stock in one or more series and to fix the voting powers, designations,
preferences and relative rights, qualifications, limitations or restrictions of
the preferred stock, without any vote or action by our
stockholders. Our authority to issue preferred stock with rights
preferential to those of our common stock could be used to discourage attempts
by others to obtain control of or acquire us, including an attempt in which the
potential purchaser offers to pay a per share price greater than the current
market price for our common stock, by making those attempts more difficult or
costly to achieve. In addition, we may seek in the future to obtain
new capital by issuing shares of preferred stock with rights preferential to
those of our common stock. This provision could limit the price that
investors might be willing to pay in the future for our common
stock.
We also
entered into a preferred shares rights agreement with Citicorp N.A., as rights
agent on April 19, 2001, which gives our stockholders certain rights that would
likely delay, defer or prevent a change of control of us in a transaction not
approved by our board of directors. On July 1, 2007, Computershare
Trust Company, N.A. assumed these duties as rights agents.
None
We own a
building in Colorado Springs, Colorado, which serves as our world headquarters
and principal executive offices. The building has a testing facility
to support research and development, prototype manufacturing, advanced materials
development and customer quality assurance and failure analysis
support. The building is encumbered.
Our
leased space within the United States is located in California.
Our
leased space outside the United States is located in United Kingdom, Japan,
Canada, China/Hong Kong, Thailand, Taiwan, Korea and Singapore.
We
believe that our existing facilities are adequate for our needs in the
foreseeable future. If additional leased space is required in the
future, such leased space is readily available.
On
September 4, 2009, we entered into a settlement agreement and mutual release
with one of our customers that resolved all matters related to the previously
announced in-field failures of one of the Company's semiconductor memory
products.
During
the three months ended June 30, 2009, the Company received a summons by the
trustee in the bankruptcy of Finmek S.p.A. and its affiliates (Finmek) to appear
before the Padua, Italy court overseeing the bankruptcy. The claims
of the trustee in bankruptcy are that payments totaling approximately $2.8
million made to the Company for products shipped to Finmek prior to its
bankruptcy filing in May 2004 are recoverable based on an alleged awareness of
the Finmek affiliates' insolvency at the time the payments were
made. The first hearing in the Finmek cases was to be held in January
2010 and at the request of both parties, the hearing was moved to April
2011. We are unable to estimate a range of possible liability, if
any, that we may incur as result of the trustee's claims and have not recorded
any expense or liability in the consolidated financial statements as of December
31, 2009.
None
Our
common stock trades on the Nasdaq Global Market under the symbol "RMTR." The
following table sets forth the 2009 and 2008 quarterly ranges of the high and
low closing sales prices for the common stock as reported on the Nasdaq Global
Market.
2009
|
|
High
|
|
Low
|
First
Quarter
|
|
$2.24
|
|
$0.91
|
Second
Quarter
|
|
$1.37
|
|
$1.00
|
Third
Quarter
|
|
$2.53
|
|
$1.08
|
Fourth
Quarter
|
|
$2.55
|
|
$1.63
|
2008
|
|
High
|
|
Low
|
First
Quarter
|
|
$4.81
|
|
$3.54
|
Second
Quarter
|
|
$4.57
|
|
$3.98
|
Third
Quarter
|
|
$4.29
|
|
$2.75
|
Fourth
Quarter
|
|
$2.60
|
|
$1.42
|
Record
Holders
As of
February 16, 2010, there were approximately 1,046 record holders of
our common stock.
Dividend
Policy
We have
not paid any dividends since our inception and do not intend to pay any cash
dividends in the foreseeable future. We intend to retain any earnings
to finance operations.
Pursuant
to our Amended and Restated Loan and Security Agreement dated August 18, 2009,
as amended, with Silicon Valley Bank, we will not pay any dividends without
Silicon Valley Bank's prior written consent for so long as the bank has an
obligation to lend and there are any outstanding obligations by the
Company.
As a
"smaller reporting company" as defined by Item 10 of Regulation S-K, the Company
is not required to provide this information.
The
following discussion and analysis 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. You should not
place undue reliance on these forward-looking statements for reasons including
those risks discussed under Part I - Item 1A "Risk Factors," elsewhere in our
Annual Report on Form 10-K for the year ended December 31,
2009. 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.
CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
Significant
Estimates. The preparation of our consolidated financial
statements and related disclosures in conformity with generally accepted
accounting principles in the United States requires us to make estimates and
judgments that affect the amounts reported in our financial statements and
accompanying notes. By their nature, these estimates and judgments are subject
to an inherent degree of uncertainty. On an ongoing basis we re-evaluate our
judgments and estimates including those related to bad debts and sales returns
and allowances, inventories, long-lived assets, intangible assets (including
goodwill), income taxes, accrued expenses, stock compensation accruals, and
other contingencies. We base our estimates and judgments on our historical
experience, market trends, financial forecasts and projections and on other
assumptions that we believe are reasonable under the circumstances, and apply
them on a consistent basis. Any factual errors or errors in these estimates and
judgments may have a material impact on our financial condition and operating
results.
Recognition of
Revenue. Revenue from product sales to direct customers and distributors
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 based upon both historical data and management
estimates.
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.
Inventory
Valuation/Scrap. We write-down our inventory, with a resulting increase
in our scrap expense, 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.
Allowance for Doubtful
Accounts and Returns. We seek to maintain a stringent credit approval
process although our management must make significant judgments 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. If we are aware of a customer's inability to meet its financial
obligations to us, we record an allowance to reduce the receivable to the amount
we believe we will be able to collect from the customer. For all
other customers, we record an allowance based upon the amount of time the
receivables are past due. If actual accounts receivable collections differ from
these estimates, an adjustment to the allowance may be necessary with a
resulting effect on operating expense. We continue to monitor customers' credit
worthiness, and use judgment in establishing the estimated amounts of customer
receivables which will ultimately not be collected.
In
addition, our distributors have a right to return products under certain
conditions. We recognize revenue on shipments to distributors at the time of
shipment, along with a reserve for estimated returns based on historical data
and future estimates.
Deferred Income
Taxes. As part of the process of preparing our consolidated financial
statements in conformity with accounting principles generally accepted in the
United States of America, we are required to estimate our income taxes on a
consolidated basis. 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 is
dependent upon our generating sufficient taxable income 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 up or down in future periods if
estimates of future taxable income are changed. Future adjustments could
materially affect our financial results as reported in conformity with
accounting principles generally accepted in the United States of America and,
among other effects, could cause us not to achieve our projected
results.
In
assessing the potential to realize our deferred tax assets, we consider whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. We consider the scheduled
reversal of deferred tax assets and liabilities, projected future taxable
income, and tax planning strategies in making this assessment. Based upon the
level of historical taxable income and projections for future taxable income
over the periods in which the deferred tax assets are deductible, management
believes it is more likely than not that we will realize the benefits of these
deductible differences. The amount of the deferred tax assets considered
realizable, however, could be reduced if estimates of future taxable income
during the carryforward period are reduced.
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. During the
quarter ended March 31, 2009, we concluded an impairment had occurred and
recorded an impairment charge of $5.4 million. This assessment
required 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.
Share-based Payment
Assumptions. We estimate volatility, forfeitures, and expected
term of our options granted based upon historical data. All of these
variables have an effect on the estimated fair value of our share-based
awards.
RESULTS
OF OPERATIONS
Overview
We are a
fabless semiconductor company that designs, develops and markets specialized
semiconductor memory, microcontroller, and integrated semiconductor solutions,
used in many markets for a wide range of applications. We pioneered the
integration of ferroelectric materials into semiconductor products, which
enabled the development of a new class of nonvolatile memory, called
ferroelectric random access memory (F-RAM). F-RAM products merge the
advantages of multiple memory technologies into a single device that retains
information without a power source, can be read from and written to at very fast
speeds, written to many times, consumes low amounts of power, and can simplify
the design of electronic systems. In many cases, we are the sole provider of
F-RAM enabled semiconductor products, which facilitates close customer
relationships, long application lifecycles and the potential for higher-margin
sales.
We also
integrate wireless communication capabilities as well as analog and mixed-signal
functions such as microprocessor supervision, tamper detection, timekeeping, and
power failure detection into our devices. This has enabled a new classes of
products that address the growing market need for more functional, efficient and
cost effective semiconductor products.
In 2009,
we introduced 12 new products, which included stand-alone memory, integrated,
and custom devices.
Our total
revenue for the year ended December 31, 2009 was $47.5 million. In 2009, 95% of
our revenue was derived from sales of our products and 5% of our revenue was
derived from customer-sponsored research and development programs, royalties and
other income.
Financial Highlights for the
Year Ended December 31, 2009
•
|
Total
revenue in 2009 was $47.5 million, a decrease of 25% from $63.6 million in
2008.
|
•
|
Total
product revenue in 2009 was $45.2 million, a decrease of 27% from $62.1
million in 2008.
|
•
|
Integrated
product revenue in 2009 was $12.7 million, a decrease of 29% from $17.9
million in 2008.
|
•
|
Product
gross margin in 2009 was 48%, compared to 52% in 2008.
|
•
|
On
September 4, 2009, we entered into a settlement agreement and mutual
release with one of our customers that resolved all matters related to the
previously announced in-field failures of one of our semiconductor memory
products. As a result of the settlement and related insurance
reimbursement, we recorded a $132,000 credit against cost of sales during
the quarter ended September 30, 2009.
|
•
|
By
region, sales in 2009 were as follows: Asia Pacific (35% of sales),
Americas (28% of sales), Japan (15% of sales), and Europe (22% of
sales). These sales are based on the location of the design
program that uses the Company's devices.
|
•
|
The
$846,000 of other revenue on the income statement reflects a reimbursement
to Ramtron in the DRAM Antitrust Litigation. In December of 2009, the fund
paid to Defendants, of which Ramtron was part of the Class, for direct
purchases of DRAM from the Defendants in the litigation during the period
of April 1, 1999 through June 30, 2002.
|
•
|
Due
to a change in economic conditions, the Company performed impairment tests
of its goodwill, intangible assets and long-lived assets associated with
our subsidiary in Canada. Based upon that testing, the Company
incurred non-cash impairment charges of $5.4 million during the first
quarter of 2009.
|
•
|
During
the first quarter of 2009, the Company implemented a restructure plan,
which entailed a 14% reduction in the Company's workforce and the closure
of our Montreal design center. Restructuring charges for the
year were $844,000.
|
2010 Financial
Outlook
The
following statements are based on the Company's financial targets for full-year
2010. These statements are forward looking, and actual results may differ
materially from those set forth in these statements. Ramtron intends to continue
its policy of not updating forward-looking statements other than in publicly
available documents, even if experience or future changes show that anticipated
results or events will not be realized.
For the
full-year 2010, management is currently targeting:
•
|
Total
revenue between $60 and $65 million, representing growth of 25% to 37%
over 2009 respectively.
|
•
|
GAAP
net income between 2% and 3% of total revenue.
|
•
|
Gross
margin of 49%
|
•
|
Total
operating expenses of 45% of total revenue. By expense line item, sales
and marketing to be 13% of total revenue, research and development to be
23% of total revenue, and general and administrative to be 9% of total
revenue.
|
•
|
Stock-based
compensation expense of approximately 2.4% of total revenue and non-cash
tax expense of approximately 1.5% of total
revenue.
|
2010 Business
Outlook
With
distributor inventories back to desired levels across all regions, strong demand
for our products, and current booking activity considerably ahead of last year,
we expect a rebound in revenue in 2010.
During
2010 management plans to:
•
|
Execute
our cost-reduction initiative, which is already driving increased market
share.
|
•
|
Begin
selling the first production devices in our family of MaxArias wireless
memory products. We believe MaxArias devices are poised to revolutionize
the RFID industry by enabling previously unachievable applications with
their symmetric read and write performance over longer distances and with
less power.
|
•
|
Introduce
groundbreaking ultra low-power devices that will use a fraction of the
active energy used by products of our competitors.
|
•
|
New
product initiatives intended to accelerate new product development and
enlarge the market opportunities that leverage our manufacturing process
know-how and product design
expertise.
|
RESULTS
OF OPERATIONS FOR THE YEAR ENDED
DECEMBER
31, 2009 AS COMPARED TO DECEMBER 31, 2008
Revenue
|
|
|
|
(in
thousands, except average selling price)
|
2009
|
|
2008
|
|
|
|
|
Product
sales
|
$45,182
|
|
$62,101
|
%
change compared to prior period
|
(27%)
|
Units
shipped
|
56,667
|
|
87,927
|
%
change compared to prior period
|
(35%)
|
Average
selling price
|
$0.80
|
|
$0.71
|
%
change compared to prior period
|
13%
|
Other
revenue
|
$2,335
|
|
$1,453
|
%
change compared to prior period
|
61%
|
Total
revenue
|
$47,517
|
|
$63,554
|
%
change compared to prior period
|
(25%)
|
2009 to
2008:
Average
Selling Price (ASP) increased 13% in 2009 compared to the year ended December
31, 2008. This increase was due to a lower percentage of total sales
being unpackaged chip sales, which have a lower ASP and a higher percentage of
sales being our high density products that have a higher ASP. Product
revenue was $45.2 million, which was a decrease of $16.9 million from
2008. This decrease was due primarily to the poor world-wide economic
conditions combined with our distributors reducing their overall inventory
levels, which resulted in significantly lower unit sales compared to the prior
year ended December 31, 2008.
Other
revenue, consisting of license and development fees, royalty income,
customer-sponsored research and development, and other revenue was $2.3 million,
which was an increase of $882,000 from 2008. The $846,000 of other
revenue, which was the primary reason for the increase, reflects a reimbursement
paid to Ramtron in the DRAM Antitrust Litigation. In December of 2009, the fund
paid to Defendants, of which Ramtron was part of the Class, for direct purchases
of DRAM from the Defendants in the litigation during the period of April 1, 1999
through June 30, 2002. We do not anticipate any further significant
reimbursement relating to this settlement or other non-recurring income
items.
Cost of Product Sales
|
|
|
|
(in
thousands)
|
December
31, 2009
|
|
December
31, 2008
|
|
|
|
|
Cost
of product sales
|
$23,277
|
|
$29,583
|
Gross
margin percentage
|
48%
|
|
52%
|
2009 to
2008:
Cost of
product sales was $23.3 million, which was a decrease of $6.3 million from
2008. This decrease was due to a $16.9 million decrease in product
sales. Gross product margin decreased to 48%. The gross
product margin decrease was due to higher raw material prices because of the
stronger Japanese Yen currency compared to the US Dollar and increased fixed
overhead variances due to less production volume to absorb these
costs. The year 2008 also included a $815,000 charge for product
defects, and 2009 included a $132,000 credit as an adjustment to this
estimate.
Research and Development
Expense
|
|
|
|
(in
thousands)
|
December
31, 2009
|
|
December
31, 2008
|
|
|
|
|
Research
and development expense (including customer-sponsored research and
development)
|
$11,320
|
|
$11,959
|
Percent
of total revenue
|
24%
|
|
19%
|
2009 to
2008:
Research
and development expense, including customer-sponsored research and development
expense, was $11.3 million, which was a decrease of $639,000 from
2008. This decrease was due primarily to a $1.2 million reduction in
intellectual property amortization, depreciation, rent and compensation expenses
as a result of the first-quarter 2009 restructuring, reduction in
variable compensation accruals of $333,000, combined with less overall salary
expense due to headcount, and salary reductions of $325,000, offset by
processing support expenses of $1.2 million related to our IBM foundry
project.
Sales and Marketing Expense
|
|
|
|
(in
thousands)
|
December
31, 2009
|
|
December
31, 2008
|
|
|
|
|
Sales
and marketing expense
|
$7,458
|
|
$8,804
|
Percent
of total revenue
|
16%
|
|
14%
|
2009 to
2008:
Sales and
marketing expense was $7.5 million, which was a decrease of $1.3 million from
2008. This decrease was due primarily to a $300,000 decrease in
commission and salary expenses combined with a $400,000 reduction in travel
expenses, and a $400,000 reduction in tradeshow and promotion expenses, compared
to the prior year period. The commission and salary expense reduction
were the result of lower sales in 2009 combined with salary reductions initiated
during the first quarter of 2009.
General and Administrative
Expense
|
|
|
|
(in
thousands)
|
December
31, 2009
|
|
December
31, 2008
|
|
|
|
|
General
and administrative expense
|
$5,518
|
|
$6,578
|
Percent
of total revenue
|
12%
|
|
10%
|
2009 to
2008:
General
and administrative expenses were $5.5 million, which was a decrease of $1
million from 2008. This decrease was due primarily to a $1.1 million
decrease in management and employee variable compensation accruals compared to
the year ended December 31, 2008, due to the obligations of the variable
compensation plan not being met.
Restructuring and
Impairment
|
|
|
|
(in
thousands)
|
December
31, 2009
|
|
December
31, 2008
|
|
|
|
|
Restructuring
expense
|
$844
|
|
--
|
Impairment
charge
|
$5,372
|
|
--
|
2009 to
2008:
Restructuring
expenses of $844,000 for the year ended December 31, 2009 resulted from the
termination benefits paid to employees as part of our 14% reduction in our
workforce, combined with contract termination costs associated with our building
lease at our Montreal design center, and certain employee relocation
charges.
Due to
the economic conditions during the fourth quarter of 2008 and the first quarter
of 2009 and the decision to close our Montreal design center, we tested for
impairment our purchased intellectual property associated with our Montreal
design center, certain long-lived assets located at the design center, and the
carrying amount of goodwill during the first quarter of 2009. We
tested these assets for impairment using discounted and undiscounted cash flow
analysis combined with a market approach and wrote-off the carrying value of
these assets to zero, which resulted in the non-cash impairment charge of $5.4
million recorded in the first quarter of 2009.
Other Non-Operating Income
(Expenses)
|
|
|
|
(in
thousands)
|
December
31, 2009
|
|
December
31, 2008
|
|
|
|
|
Interest
expense
|
$(384)
|
|
$(368)
|
Other
income (expense)
|
$208
|
|
$(358)
|
Income
tax benefit (provision)
|
$621
|
|
$(2,244)
|
2009 to
2008:
Interest
expense was $384,000 for the year ended December 31, 2009, which was an increase
of $16,000 from 2008. We no longer have our term loan outstanding and
principal balances were lower on our remaining loans offset by increased
interest on our capital leases.
Other
income was $208,000 for the year ended December 31, 2009 compared to a $358,000
expense in the same period in 2008. This change was due primarily to
foreign exchange transaction gains of $6,000 compared to $577,000 of foreign
currency losses during the same period in 2008.
For the
year ended December 31, 2009, the Company recorded a $621,000 income tax
benefit. This benefit was primarily a non-cash transaction and our
effective tax rate was approximately 10%. This lower effective rate
was due to the write-off of approximately $5.4 million in goodwill and other
intangible assets in which the Company did not have a tax
basis. During the year ended December 31, 2008, the Company recorded
a $2.2 million non-cash tax provision as the Company generated pre-tax income of
$5.9 million compared to a pre-tax loss of $6.4 million for the year ended
December 31, 2009.
LIQUIDITY
AND CAPITAL RESOURCES
Cash Flow
Summary
Our cash
flows from operating, investing and financing activities, as reflected in the
consolidated statements of cash flows for the year ended December 31, 2009 and
2008, are summarized as follows:
(in
thousands)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Cash
provided by (used for):
|
|
|
|
|
|
|
Operating
activities
|
|
$ |
5,476 |
|
|
$ |
4,188 |
|
Investing
activities
|
|
|
(7,019 |
) |
|
|
(2,637 |
) |
Financing
activities
|
|
|
(717 |
) |
|
|
1,555 |
|
Effect
of exchange rate changes on cash
|
|
|
(99 |
) |
|
|
(34 |
) |
Net
(decrease) increase in cash and cash equivalents
|
|
$ |
(2,359 |
) |
|
$ |
3,072 |
|
Cash Flow from Operating
Activities
The net
amount of cash provided by operating activities during 2009 was $5.5 million and
was primarily due to earnings from operations after adjusting for non-cash
items, and reductions in inventory and accounts receivable. This was
offset in part by a decrease in account payable and accrued
liabilities.
The net
amount of cash provided by operating activities during 2008 was $4.2 million and
was primarily due to the earnings from operations after adjusting for non-cash
items and an increase in accounts payable. This was offset in part by
an increase in accounts receivable supporting the increased sales and an
increase in inventory.
Cash Flows from Investing
Activities
The net
amount of cash used for investing activities during 2009 was $7 million, which
was primarily relating to capital purchases associated with our IBM foundry
initiative.
The net
amount of cash used for investing activities during 2008 was $2.6 million
relating to capital expenditures. Included in capital expenditures
was approximately $1 million relating to test equipment.
Cash Flow from Financing
Activities
The net
amount of cash used by financing activities during 2009 was
$717,000. The primary use of cash for financing activities was
principal payments on our outstanding debt.
The net
amount of cash provided by financing activities during 2008 was $1.5
million. The primary source of cash was the exercise of stock options
and warrants. This was offset by principal payments on our
outstanding debt.
Liquidity
We had
$7.5 million in cash and cash equivalents at December 31, 2009, which included
$2.3 million in our money market account. Our future liquidity
depends on revenue growth, steady gross margins and control of operating
expenses. In addition to operating cash flow from product sales, we
currently have approximately $2.5 million available to us under the $6 million
secured line of credit facility. This secured line of credit facility
expires on August 18, 2011. As of December 31, 2009, no balance was
outstanding on the secured line of credit facility.
We have
given extended payment terms to our largest customer. Progress
payments have been paid in accordance with such commitment; however, the
receivable is not presently fully eligible for the existing borrowing base under
the terms of the loan agreement governing our secured line of credit
facility. This could have an adverse effect on the amount of funds we
could borrow on the secured line of credit facility, unless that customer's
receivables becomes fully eligible to include in our borrowing
base.
At the
time we agreed to extend payment terms, we reviewed the criteria for revenue
recognition. Based on the following facts, we determined that we were
able continue to recognize revenue in accordance with our existing
policy.
We have
been selling to this customer for over five years. During the latter
half of 2008, we extended their payment terms to net 60 days. While
our standard payment terms are net 30, we agreed to extended payment terms due
to our customer’s underlying customer base paying at greater
terms. Thus it was in our best interest to work with a loyal customer
to assist them with their cash flow.
As part
of granting extended payment terms, we have established a thorough monitoring
program to ensure that collectability is reasonably assured at the time of
sale. This program includes a weekly review of the customers balance
by the controller and staff accountant in charge of accounts
receivable. In addition, we have semi-monthly teleconferences between
the Company's controller and the customer’s CFO. The purpose of the
teleconference is to agree on the payment schedule for the following
month. Weekly wire payments have been made since January 2009 in
accordance with the agreed upon plan and the customer has never missed a
promised payment. Last, we obtained and reviewed recent financial
statements from the non-public customer to assess their liquidity and have noted
no deterioration in their working capital.
Our sales
price to our customer is both fixed and determinable with no right of
return. We obtain purchase orders and/or confirmation of quotes from
this customer that state that the product is both non-cancellable and
non-returnable as the parts are built specifically for this
customer.
The
manufactured parts are direct sales to our largest customer and are not sold
through a distribution channel.
We
believe we have sufficient resources to fund current operations through at least
the end of 2010.
We have
contracted with IBM to provide us with facility design and fit up, tool
installation and tool qualification services in support of IBM's manufacture of
our F-RAM products. We will provide certain tools, peripheral
equipment, technology and specifications for IBM's manufacture of our products.
We will also provide our F-RAM technology and engineering expertise to IBM to
assist in the integration and process development of our F-RAM
products. Expenditures relating to capital and engineering support
for our IBM foundry project paid to date are approximately $11.9 million and we
estimate an additional $2.8 million will be needed over the next
year. Engineering wafers and additional capital that we have not
committed to could increase the requirements to an additional $2.3
million. If we do not generate enough cash from our operations or
have sufficient available borrowings under our secured line of credit facility,
or if actual expenditures for capital and engineering support for our IBM
foundry project are higher than estimated, the IBM foundry project could be
delayed and could be at risk of being cancelled.
If net
cash flow is not sufficient to meet our cash requirements, we may use the credit
facility mentioned above or any other credit facility we may
obtain. We may, however, be required to seek additional equity or
debt financing. Any issuance of common or preferred stock or
convertible securities to obtain additional funding would result in dilution of
our existing stockholders' interests.
Debt
Instruments
On August
18, 2009, we executed an Amended and Restated Loan and Security Agreement
("Amended Loan Agreement") with Silicon Valley Bank ("SVB"). The
Amended Loan Agreement provides for a $6 million working capital line of credit
with a $1.75 million sublimit for EXIM advances, $1.5 million sublimit for
foreign accounts receivable, and a sublimit of $3 million for letters of credit
and foreign exchange exposure and cash management services. The
Amended Loan Agreement replaces the Company's Amended and Restated Loan and
Security Agreement dated September 15, 2005. The Amended Loan
Agreement provides for interest at a floating rate equal to the SVB prime
lending rate plus 1.75% to 2.25% per annum depending upon cash balances and loan
availability maintained at SVB. The term is two years expiring on
August 18, 2011, with a commitment fee of $40,000 paid at signing and $40,000 on
the first anniversary. There is also a .375% unused line fee, payable
monthly in arrears. Security for the Amended Loan Agreement includes
all of our assets except for real estate and leased equipment. The
related borrowing base is comprised of the Company's trade
receivables. We plan to draw upon our loan facility for working
capital purposes as required. The net availability under our secured
line of credit facility as of December 31, 2009 was $2.5 million reflecting the
$1.1 million of letters of credit outstanding. An insufficient amount
of funds available under our secured line of credit facility could cause of us
to delay or cancel the IBM foundry project.
We are
using equipment leases for the required equipment to support our IBM foundry
project. We have obtained $2.9 million of lease financing secured by
specific equipment with terms averaging 30 months. Additionally, we
are currently in the process of obtaining an additional 30-month lease totaling
approximately $1.4 million, which we expect to close during the first quarter of
2010. We expect to issue a letter of credit for the benefit of the
lessor of approximately $1.4 million.
On
December 15, 2005, we, through our subsidiary, Ramtron LLC, for which we serve
as sole member and sole manager, closed a mortgage loan facility with American
National Insurance Company. Ramtron LLC entered into a promissory
note evidencing the loan with the principal amount of $4.2 million, with a
maturity date of January 1, 2016, bearing interest at 6.17%. As of
December 31, 2009, approximately $3.8 million was outstanding on the mortgage
loan facility. Ramtron LLC also entered into an agreement for the
benefit of American National Insurance Company granting it a mortgage over real
estate as collateral for the mortgage loan facility.
We
continue to investigate the benefit of selling our headquarters or leasing a
portion of our headquarters that we do not currently use.
Legal
Matters
We are
party to legal proceedings arising in the ordinary course of our
business. Although the outcomes of any such legal actions cannot be
predicted, our management believes that there are no pending legal proceedings
against or involving us for which the outcome would likely have a material
adverse effect upon our financial position or results of
operations.
New Accounting
Standards
The
information required by this Item is provided in Part II. Item
8. Financial Statements and Supplementary Data - Note 1 of the Notes
to Consolidated Financial Statements.
As a
"smaller reporting company" as defined by Item 10 of Regulation S-K, the Company
is not required to provide this information.
Index
to Financial Statements
|
|
Page
|
|
|
|
F-1 |
|
F-2 |
|
F-3 |
|
F-4 |
|
F-5 |
|
F-6 |
Stockholders
and Board of Directors
Ramtron
International Corporation
Colorado
Springs, Colorado
We have
audited the accompanying consolidated balance sheets of Ramtron International
Corporation and subsidiaries (the "Company") as of December 31, 2009 and 2008,
and the related consolidated statements of operations and comprehensive income,
stockholders’ equity and cash flows for each of the years then
ended. The Company’s management is responsible for these consolidated
financial statements. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinions.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Ramtron
International Corporation and subsidiaries as of December 31, 2009 and 2008, and
the results of their operations and their cash flows for each of the years then
ended, in conformity with accounting principles generally accepted in the United
States of America.
/s/ Ehrhardt
Keefe Steiner & Hottman PC
Ehrhardt
Keefe Steiner & Hottman PC
February
17, 2010
Denver,
Colorado
RAMTRON
INTERNATIONAL CORPORATION
For the
years ended December 31, 2009 and 2008
(in
thousands, except share data)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
7,541 |
|
|
$ |
9,900 |
|
Accounts
receivable, less allowances of $1,069 and $811,
respectively
|
|
|
7,979 |
|
|
|
11,274 |
|
Inventories
|
|
|
6,838 |
|
|
|
9,992 |
|
Deferred
income taxes, net
|
|
|
294 |
|
|
|
266 |
|
Other
current assets
|
|
|
1,360 |
|
|
|
1,110 |
|
Total
current assets
|
|
|
24,012 |
|
|
|
32,542 |
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment, net
|
|
|
15,341 |
|
|
|
5,635 |
|
Goodwill,
net
|
|
|
-- |
|
|
|
1,971 |
|
Intangible
assets, net
|
|
|
2,800 |
|
|
|
6,470 |
|
Deferred
income taxes, net
|
|
|
5,499 |
|
|
|
5,174 |
|
Other
assets
|
|
|
263 |
|
|
|
212 |
|
Total
assets
|
|
$ |
47,915 |
|
|
$ |
52,004 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
5,275 |
|
|
$ |
4,930 |
|
Accrued
liabilities
|
|
|
1,759 |
|
|
|
3,131 |
|
Deferred
revenue
|
|
|
645 |
|
|
|
645 |
|
Current
portion of long-term debt
|
|
|
1,341 |
|
|
|
382 |
|
Total
current liabilities
|
|
|
9,020 |
|
|
|
9,088 |
|
Deferred
revenue
|
|
|
564 |
|
|
|
1,209 |
|
Long-term
debt, less current portion
|
|
|
5,873 |
|
|
|
4,577 |
|
Total
liabilities
|
|
|
15,457 |
|
|
|
14,874 |
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies (Notes 10 and 15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Preferred
stock, $.01 par value, 10,000,000 shares authorized: 0 shares issued and
outstanding
|
|
|
-- |
|
|
|
-- |
|
Common
stock, $.01 par value, 50,000,000 shares authorized: 27,190,152 and
27,687,927 shares issued, respectively and 27,169,587 and 27,687,927
shares outstanding, respectively
|
|
|
272 |
|
|
|
275 |
|
Additional
paid-in capital
|
|
|
251,287 |
|
|
|
249,875 |
|
Accumulated
other comprehensive loss
|
|
|
(304 |
) |
|
|
(50 |
) |
Accumulated
deficit
|
|
|
(218,797 |
) |
|
|
(212,970 |
) |
Total
stockholders' equity
|
|
|
32,458 |
|
|
|
37,130 |
|
Total
liabilities and stockholders' equity
|
|
$ |
47,915 |
|
|
$ |
52,004 |
|
See
accompanying notes to consolidated financial statements.
RAMTRON
INTERNATIONAL CORPORATION
For the
years ended December 31, 2009 and 2008
(in
thousands, except per share amounts)
|
|
2009
|
|
|
2008
|
|
Revenue:
|
|
|
|
|
|
|
Product
sales
|
|
$ |
45,182 |
|
|
$ |
62,101 |
|
License
and development fees
|
|
|
717 |
|
|
|
717 |
|
Royalties
|
|
|
672 |
|
|
|
646 |
|
Customer-sponsored
research and development
|
|
|
100 |
|
|
|
90 |
|
Other
revenue
|
|
|
846 |
|
|
|
-- |
|
|
|
|
47,517 |
|
|
|
63,554 |
|
Costs
and expenses:
|
|
|
|
|
|
|
|
|
Cost
of product sales
|
|
|
23,409 |
|
|
|
28,768 |
|
Provision
for loss contingency
|
|
|
(132 |
) |
|
|
815 |
|
Research
and development
|
|
|
11,207 |
|
|
|
11,912 |
|
Customer-sponsored
research and development
|
|
|
113 |
|
|
|
47 |
|
General
and administrative
|
|
|
5,518 |
|
|
|
6,578 |
|
Sales
and marketing
|
|
|
7,458 |
|
|
|
8,804 |
|
Restructuring
charge
|
|
|
844 |
|
|
|
-- |
|
Impairment
charge
|
|
|
5,372 |
|
|
|
-- |
|
|
|
|
53,789 |
|
|
|
56,924 |
|
Operating
income (loss)
|
|
|
(6,272 |
) |
|
|
6,630 |
|
Interest
expense
|
|
|
(384 |
) |
|
|
(368 |
) |
Other
income (expense), net
|
|
|
208 |
|
|
|
(358 |
) |
Income
(loss) before income tax (provision) benefit
|
|
|
(6,448 |
) |
|
|
5,904 |
|
Income
tax (provision) benefit
|
|
|
621 |
|
|
|
(2,244 |
) |
Net
income (loss)
|
|
$ |
(5,827 |
) |
|
$ |
3,660 |
|
|
|
|
|
|
|
|
|
|
Other
comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustments
|
|
|
(254 |
) |
|
|
(1,351 |
) |
Comprehensive
income (loss)
|
|
$ |
(6,081 |
) |
|
$ |
2,309 |
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
(0.22 |
) |
|
$ |
0.14 |
|
Diluted
|
|
$ |
(0.22 |
) |
|
$ |
0.13 |
|
Weighted
average common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
26,845 |
|
|
|
26,353 |
|
Diluted
|
|
|
26,845 |
|
|
|
27,551 |
|
See
accompanying notes to consolidated financial statements.
RAMTRON
INTERNATIONAL CORPORATION
For the
years ended December 31, 2009 and 2008
(in
thousands, except par value amounts)
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($.01
Par Value)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Additional
Paid-in Capital
|
|
|
Accumulated
Other Comprehensive Income
|
|
|
Accumulated
Deficit
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances,
December 31, 2007
|
|
|
26,125 |
|
|
$ |
262 |
|
|
$ |
246,272 |
|
|
$ |
1,301 |
|
|
$ |
(216,630 |
) |
|
$ |
31,205 |
|
Exercise
of options
|
|
|
143 |
|
|
|
1 |
|
|
|
306 |
|
|
|
-- |
|
|
|
-- |
|
|
|
307 |
|
Exercise
of warrants
|
|
|
1,153 |
|
|
|
10 |
|
|
|
2,304 |
|
|
|
-- |
|
|
|
-- |
|
|
|
2,314 |
|
Repurchase
of common stock
|
|
|
(15 |
) |
|
|
-- |
|
|
|
(55 |
) |
|
|
-- |
|
|
|
-- |
|
|
|
(55 |
) |
Common
stock issued from treasury
|
|
|
-- |
|
|
|
-- |
|
|
|
29 |
|
|
|
-- |
|
|
|
-- |
|
|
|
29 |
|
Stock-based
compensation expense
|
|
|
-- |
|
|
|
-- |
|
|
|
1,021 |
|
|
|
-- |
|
|
|
-- |
|
|
|
1,021 |
|
Issuance
of restricted stock
|
|
|
282 |
|
|
|
2 |
|
|
|
(2 |
) |
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Cumulative
foreign currency translation adjustments
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
(1,351 |
) |
|
|
-- |
|
|
|
(1,351 |
) |
Net
income
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
3,660 |
|
|
|
3,660 |
|
Balances,
December 31, 2008
|
|
|
27,688 |
|
|
|
275 |
|
|
|
249,875 |
|
|
|
(50 |
) |
|
|
(212,970 |
) |
|
|
37,130 |
|
Exercise
of options
|
|
|
4 |
|
|
|
-- |
|
|
|
7 |
|
|
|
-- |
|
|
|
-- |
|
|
|
7 |
|
Repurchase
of common stock
|
|
|
(20 |
) |
|
|
-- |
|
|
|
(35 |
) |
|
|
-- |
|
|
|
-- |
|
|
|
(35 |
) |
Stock-based
compensation expense
|
|
|
-- |
|
|
|
-- |
|
|
|
1,451 |
|
|
|
-- |
|
|
|
-- |
|
|
|
1,451 |
|
Cancellation
of restricted stock
|
|
|
(575 |
) |
|
|
(5 |
) |
|
|
5 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Shares
and cash issued for restricted stock and restricted stock
units
|
|
|
73 |
|
|
|
2 |
|
|
|
(16 |
) |
|
|
-- |
|
|
|
-- |
|
|
|
(14 |
) |
Cumulative
foreign currency translation adjustments
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
(254 |
) |
|
|
-- |
|
|
|
(254 |
) |
Net
loss
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
(5,827 |
) |
|
|
(5,827 |
) |
Balances,
December 31, 2009
|
|
|
27,170 |
|
|
$ |
272 |
|
|
$ |
251,287 |
|
|
$ |
(304 |
) |
|
$ |
(218,797 |
) |
|
$ |
32,458 |
|
See
accompanying notes to consolidated financial statements.
RAMTRON
INTERNATIONAL CORPORATION
For the
years ended December 31, 2009 and 2008
(in
thousands)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
(5,827 |
) |
|
$ |
3,660 |
|
Adjustments
used to reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
1,851 |
|
|
|
1,864 |
|
Amortization
|
|
|
294 |
|
|
|
598 |
|
Gain
from asset disposition
|
|
|
(69 |
) |
|
|
-- |
|
Provision
for bad debts
|
|
|
96 |
|
|
|
17 |
|
Stock-based
compensation
|
|
|
1,451 |
|
|
|
1,021 |
|
Deferred
income taxes
|
|
|
(353 |
) |
|
|
2,146 |
|
Impairment
charge
|
|
|
5,372 |
|
|
|
-- |
|
Imputed
interest on note payable
|
|
|
54 |
|
|
|
65 |
|
Provision
for inventory write-off, warranty charge, and scrap
|
|
|
536 |
|
|
|
442 |
|
Loss
on abandonment of intangible assets
|
|
|
-- |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
3,199 |
|
|
|
(1,801 |
) |
Inventories
|
|
|
2,618 |
|
|
|
(4,092 |
) |
Accounts
payable and accrued liabilities
|
|
|
(2,800 |
) |
|
|
1,477 |
|
Deferred
revenue
|
|
|
(645 |
) |
|
|
(949 |
) |
Other
|
|
|
(301 |
) |
|
|
(303 |
) |
Net
cash provided by operating activities
|
|
|
5,476 |
|
|
|
4,188 |
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase
of property, plant and equipment
|
|
|
(7,051 |
) |
|
|
(2,608 |
) |
Proceeds
from insurance and sale of assets
|
|
|
87 |
|
|
|
-- |
|
Purchase
of intellectual property
|
|
|
(55 |
) |
|
|
(29 |
) |
Net
cash used in investing activities
|
|
|
(7,019 |
) |
|
|
(2,637 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Net
purchase of treasury stock
|
|
|
(48 |
) |
|
|
(55 |
) |
Principal
payments on debt
|
|
|
(675 |
) |
|
|
(1,040 |
) |
Issuance
of common stock
|
|
|
6 |
|
|
|
2,650 |
|
Net
cash (used) provided by financing activities
|
|
|
(717 |
) |
|
|
1,555 |
|
|
|
|
|
|
|
|
|
|
Effect
of foreign currency
|
|
|
(99 |
) |
|
|
(34 |
) |
Net
increase (decrease) in cash and cash equivalents
|
|
|
(2,359 |
) |
|
|
3,072 |
|
Cash
and cash equivalents, beginning of period
|
|
|
9,900 |
|
|
|
6,828 |
|
Cash
and cash equivalents, end of period
|
|
$ |
7,541 |
|
|
$ |
9,900 |
|
|
|
|
|
|
|
|
|
|
Supplemental
information:
|
|
|
|
|
|
|
|
|
Property,
plant and equipment financed by capital leases
|
|
$ |
2,876 |
|
|
$ |
-- |
|
Amounts
included in capital expenditures but not yet paid
|
|
$ |
2,163 |
|
|
$ |
390 |
|
See
accompanying notes to consolidated financial statements.
RAMTRON
INTERNATIONAL CORPORATION
December
31, 2009 and 2008
NOTE
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Description of
Business. We are a fabless semiconductor company that designs,
develops and markets specialized semiconductor memory, microcontroller, and
integrated semiconductor solutions, used in many markets for a wide range of
applications. We pioneered the integration of ferroelectric materials into
semiconductor products, which enabled the development of a new class of
nonvolatile memory, called ferroelectric random access memory (F-RAM). F-RAM
products merge the advantages of multiple memory technologies into a single
device that retains information without a power source, can be read from and
written to at very fast speeds, written to many times, consumes low amounts of
power, and can simplify the design of electronic systems. In many cases, we are
the sole provider of F-RAM enabled semiconductor products, which facilitates
close customer relationships, long application lifecycles and the potential for
high-margin sales.
We also
integrate analog and mixed-signal functions such as microprocessor supervision,
tamper detection, timekeeping, and power failure detection onto a single device
with our F-RAM products. This has enabled a new class of products that addresses
the growing market need for more efficient and cost effective semiconductor
products.
Our
revenue is derived from the sale of our products and from license and
development arrangements entered into with a limited number of established
semiconductor manufacturers involving the development of specific applications
of the Company's technologies. Other revenue is generated from
customer-sponsored research and development and for the year ended 2009, the
settlement to the Company from the DRAM anti-trust litigation relating to direct
purchase of DRAM during the period from April 1999 through June
2002. Product sales have been made to various customers for use in a
variety of applications including utility meters, office equipment, automobiles,
electronics, telecommunications, disk array controllers, and industrial control
devices, among others.
Use of
Estimates. The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
periods. Significant items subject to such estimates and assumptions
include the carrying amounts of property, plant and equipment, and
intangibles; valuation of allowances for receivables, inventories,
returns associated primarily with our sales to distributors, and
deferred income taxes; product liability accruals; and valuation of share-based
payment arrangements, and fair value estimates used in our goodwill and
intangible asset impairment tests. When no estimate in a given range
is deemed to be better than any other when estimating contingent liabilities,
the low end of the range is accrued. Actual results could differ from
those estimates.
Principles of
Consolidation. The accompanying financial statements include
the consolidation of accounts for the Company's wholly owned subsidiaries,
Ramtron LLC, Ramtron Canada, Inc., Ramtron Kabushiki Kaisha (Ramtron K.K.),
Ramtron UK Limited, Ramtron Asia Ltd., and Ramtron Asia Pte. Ltd. All
significant inter-company accounts and transactions have been eliminated in
consolidation.
Cash and Cash
Equivalents. We consider all cash and highly liquid
investments purchased with an average maturity of three months or less to be
cash equivalents.
Accounts
Receivable. Accounts receivable consists of amounts billed and
currently due from customers. We extend credit to customers in the
normal course of business and maintains an allowance for bad debts and an
allowance for returns and discounts. The bad debt allowance is based
upon specific customer collection issues. The allowance for returns
and discounts is based primarily on historical experience.
Inventories.
Inventories are stated at the lower of cost or market value. Cost is
determined using average costs. We provide for an allowance 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.
Deferred Income
Taxes. Deferred income taxes are recorded to reflect the tax
consequences of differences between the tax basis of assets and liabilities and
their financial reporting basis and operating loss and tax credit carry
forwards. Refer to Note 14 for the types of differences that give
rise to significant portions of deferred income tax assets and
liabilities. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Deferred
income taxes are classified as a net current or non-current asset or liability
based on the classification of the related asset or liability for financial
reporting purposes. A deferred tax asset or liability that is not
related to an asset or liability for financial reporting is classified according
to the expected reversal date. We record a valuation allowance to
reduce deferred tax assets to an a amount we believe is more likely than not
expected to be realized.
Property, Plant and
Equipment. Property, plant and equipment are stated at cost,
less accumulated depreciation. Depreciation and amortization are
provided using the straight-line method over the estimated useful lives of the
respective assets and commence once the assets are ready for their intended
use. Leased assets will be depreciated over the shorter of their
estimated useful lives or the lease term. Leases that contain a
bargain purchase option are depreciated over the estimated useful
life. Assets are initially charged to construction in progress until
they are ready for their intended use. Maintenance and repairs are
expensed as incurred and improvements are capitalized.
Goodwill and Intangible
Assets. Goodwill represents the excess of the costs over the
fair value of assets of businesses acquired. Goodwill and intangible
assets acquired in a business combination and determined to have an indefinite
useful life are not amortized, but instead are tested for impairment at least
annually, or more frequently if events or changes in circumstances indicate that
goodwill may be impaired. Due to change in circumstances, the Company
performed goodwill impairment testing and intangible asset impairment testing as
of March 1, 2009 and recorded an impairment charge for all of our recorded
goodwill and certain intangible and long-term assets. See Note 7 for
additional information. Intangible assets are recorded at cost and
are amortized on a straight-line basis over their estimated useful lives,
ranging from 15 to 17 years, and reviewed for impairment when events or changes
in circumstances indicate that the intangible asset may be
impaired. The amounts capitalized for patents are primarily the cost
of acquiring the patent. Expenditures incurred to renew
or extend the life of intangible assets are expensed.
Impairment of Long-Lived
Assets. Long-lived assets held and used us and intangible
assets subject to amortization are reviewed for impairment, whenever events or
changes in circumstances indicate that carrying amounts of assets may not be
recoverable. We evaluate recoverability of assets to be held and used
by comparing the carrying amount of an asset to the future net undiscounted cash
flows to be generated by the asset. If such assets are considered to
be impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceed the estimated fair value of the asset
calculated using a future discounted cash flow analysis. Considerable
judgment is required to project such cash flows and, if required, estimate the
fair value of the impaired long-lived asset.
Accrued
Liabilities. Accrued liabilities consist of the
following:
(in
thousands)
|
|
December
31, 2009
|
|
|
December
31, 2008
|
|
|
|
|
|
|
|
|
Restructuring
liability
|
|
$ |
242 |
|
|
$ |
-- |
|
Accrued
property taxes
|
|
|
196 |
|
|
|
176 |
|
Compensation
related
|
|
|
555 |
|
|
|
1,853 |
|
Product
liability warranty
|
|
|
144 |
|
|
|
815 |
|
Other
|
|
|
622 |
|
|
|
287 |
|
Total
|
|
$ |
1,759 |
|
|
$ |
3,131 |
|
Revenue
Recognition. We recognize revenue from product sales when
title transfers, the customer takes ownership and assumes risk of loss,
collection of the relevant receivable is probable, persuasive evidence of an
arrangement exists and the sales price is fixed or determinable, which is
generally at the time of shipment. 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 based upon both historical data and management
estimates.
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 are recognized as the
services are performed.
At the
time we enter into technology licensing agreements where we receive cash at the
time of signing, we credit deferred revenue, a liability account. We will then
recognize revenue over the term of the agreement on a straight-line
basis. There are no deferred costs associated with our present
agreement. The deferred revenue shown on our balance sheet at
December 31, 2009 relates to a licensing agreement entered into during 2001 in
which we received $6.5 million during 2001 through 2003 and subsequently
amortized the deferred revenue balance over 10 years, the term of this
agreement. At December 31, 2009, there were two more years remaining
on this agreement.
Revenue
from royalties is recognized upon the notification to us of shipment of product
from our technology license partners to direct customers.
Shipping and Handling Fees
and Costs. The majority of our customers pay their freight
charges. Freight charges billed are offset against selling expenses;
the category where the freight expenses are charged. These charges
are immaterial.
Warranty
Costs. We make periodic provisions for expected warranty
costs. Historically warranty costs have been
insignificant.
Advertising. We
expense advertising costs as incurred. Advertising expenses for the years ended
December 31, 2009 and 2008 were $171,000 and $246,000,
respectively.
Earnings (Loss) Per
Share. Basic earnings (loss) per share is computed by dividing
reported income (loss) available to common stockholders by weighted average
number of common shares outstanding during the period. Diluted
earnings (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 record 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.
The
following table sets forth the calculation of net income (loss) per common
share:
(in
thousands, except per share amounts)
|
|
December
31, 2009
|
|
|
December
31, 2008
|
|
|
|
|
|
|
|
|
Net
income (loss) applicable to common shares
|
|
$ |
(5,827 |
) |
|
$ |
3,660 |
|
|
|
|
|
|
|
|
|
|
Common
and common equivalent shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
common shares outstanding at beginning of year (not including unreleased
restricted stock)
|
|
|
26,840 |
|
|
|
25,469 |
|
Weighted
average common equivalent shares issued during year
|
|
|
5 |
|
|
|
884 |
|
Weighted
average common shares-basic
|
|
|
26,845 |
|
|
|
26,353 |
|
Weighted
average common equivalent shares outstanding during year
|
|
|
-- |
|
|
|
1,198 |
|
Weighted
average common shares-diluted
|
|
|
26,845 |
|
|
|
27,551 |
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per basic share
|
|
$ |
(0.22 |
) |
|
$ |
0.14 |
|
Net
income (loss) per diluted share
|
|
$ |
(0.22 |
) |
|
$ |
0.13 |
|
For the
years ended December 31, 2009 and 2008, we had several equity instruments or
obligations that could cause future dilution to our common stockholders and
which were not classified as outstanding common shares of the
Company. The following table details the various equity awards that
were excluded from the earnings per common share calculation because their
inclusion would have been anti-dilutive. These various equity awards
could become dilutive in the future if the average share price increases or we
generate net income:
(in
thousands)
|
December
31, 2009
|
|
December
31, 2008
|
|
|
|
|
Options
|
5,864
|
|
3,077
|
Restricted
stock
|
465
|
|
575
|
Stock-Based
Compensation. At December 31, 2009, we had one stock-based
compensation plan, which is more fully described in Note 11 of these Notes of
Consolidated Financial Statements below.
The
estimated value of our stock-based option and award plans, less expected
forfeitures, is amortized over the awards' respective vesting period on a
straight-line basis.
We
granted restricted stock awards with a vesting period of one year and a
condition of service. Restricted stock awards are valued using the
fair market value of our common stock as of the grant date. We also
granted restricted stock units, restricted by a service condition and a vesting
period of three years. The units vest in three equal annual
installments, commencing on the anniversary date of the grant. One unit equals
one share of stock upon vesting, and the units have a contractual term of ten
years. Restricted stock units are valued using the fair market value
of our common stock as of the grant date. We recognize compensation
expense, net of estimated forfeitures, on a straight-line basis over the vesting
period. Estimated forfeitures are reviewed periodically and changes
to the estimated forfeitures are adjusted through current period
earnings. The remaining unvested shares are subject to forfeiture and
restrictions on sale or transfer up until the vest date.
We also
granted nonqualified stock options at an exercise price equal to the fair market
value of our common stock on the grant date. We applied the
Black-Scholes valuation method to compute the estimated fair value of the stock
options and recognizes compensation expense, net of estimated forfeitures on a
straight-line basis so that the award is fully expensed at the vesting
date. Generally, stock options vest 25 percent on each anniversary of
the grant date, are fully vested four years from the grant date, and have a
contractual term of ten years.
Treasury
Stock. The Company uses the cost method when it acquires stock
for treasury. Since the ultimate disposition of treasury stock has
not been decided, the cost has been reflected as a reduction to additional
paid-in capital.
Fair Value of Financial
Instruments. The fair value of financial instruments are
determined based on quoted market prices and market interest rates as of the end
of the reporting period. Our financial instruments consist of cash
and cash equivalents, short-term trade receivables, payables and long-term
debt. The carrying values of cash and cash equivalents, and
short-term trade receivables and payables approximate fair value due to their
short-term nature.
New Accounting
Standards. On September 30, 2009, we adopted changes issued by
Financial Accounting Standards Board ("FASB") to the authoritative hierarchy of
generally accepted accounting principles in the United States
("GAAP"). These changes established the FASB Accounting Standards
Codification™
("Codification") as the source of authoritative accounting principles recognized
by the FASB to be applied by non-governmental entities in the preparation of
financial statements in conformity with GAAP. Rules and interpretive
releases of the Securities and Exchange Commission ("SEC") under authority of
federal securities laws are also sources of authoritative GAAP for SEC
registrants. The FASB will no longer issue new standards in the form
of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts;
instead the FASB will issue Accounting Standard Updates. Accounting
Standards Updates will not be authoritative in their own right as they will only
serve to update the Codification. These changes and the Codification
itself do not change GAAP. Other than the manner in which new
accounting guidance is referenced, the adoption of these changes had no impact
on our consolidated financial statements.
On June
30, 2009, we adopted changes issued by the FASB related to fair value
disclosures of financial instruments. These changes require a
publicly traded company to include disclosures about the fair value of its
financial instruments whenever it issues summarized financial information for
interim reporting periods. Such disclosures include the fair value of
all financial instruments, for which it is practicable to estimate that value,
whether recognized or not recognized in the statement of financial positions;
the related carrying amount of these financial instruments; and the method(s)
and significant assumptions used to estimate the fair value. Other
than the required disclosures (see Note 9), the adoption of these changes had no
impact on our consolidated financial statements.
NOTE
2. BASIS OF PRESENTATION
The
accompanying audited consolidated financial statements for the years ended
December 31, 2009 and 2008 have been prepared from the books and records of
Ramtron International Corporation (the "Company," "we," "our," or
"us"). On June 30, 2009, we adopted changes issued by the FASB to
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued,
otherwise known as "subsequent events." Specifically, these changes
set forth the period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements, the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements, and the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. As of January 28, 2010, our
bank increased our eligible foreign accounts receivable sublimit, which will
serve to increase our borrowing base on our line of credit. See Note
9 for further information. We evaluated for disclosure subsequent events that
have occurred up to February 18, 2010, the date of issuance of our financial
statements. The preparation of our consolidated financial statements
and related disclosures are in conformity with generally accepted accounting
principles in the United States.
Certain
amounts reporting in prior periods have been reclassified to conform to the
current presentation.
NOTE
3. CHANGE IN ESTIMATE
During
the year ended December 31, 2008, we adjusted our estimate relating to the total
compensation charge for the management performance based challenge
awards. The awards represented 575,000 shares relating to a
performance condition of satisfying both a minimum sales goal and a minimum
percentage of sales by December 31, 2009. We reversed all prior
accruals and did not accrue any further expense for this performance-based
restricted stock award effective for the quarter ended December 31,
2008. This adjustment was due to the estimate that we would not meet
the minimum net income target compared to the target net income for the year
ending December 31, 2009 required for any portion of the award to
vest. Based upon the revised estimate, we made a cumulative
adjustment of $892,000 for the year ended December 31, 2008. The
effect of this adjustment was to reduce expense as follows:
(in
thousands)
|
|
Year
Ended December 31, 2008
|
|
|
|
|
|
General
and administrative expense
|
|
$ |
(512 |
) |
Sales
and marketing
|
|
|
(211 |
) |
Research
and development
|
|
|
(169 |
) |
Total
|
|
$ |
(892 |
) |
This
change also reduced our additional paid-in capital by $892,000 for the year
ended December 31, 2008 and increased operating income by $892,000 and net
income by $580,000. This change in estimate also increased net income
per basic and diluted shares by $0.02 for the year ended December 31,
2008.
NOTE
4. RESTRUCTURING EXPENSE
During
the three months ended March 31, 2009, we developed and implemented a
restructuring plan in an effort to reduce costs and strengthen our operations
due to the current economic climate. The charge incurred during the
three months ended March 31, 2009, was primarily one-time termination benefits
associated with a 14% reduction in our workforce. We also incurred
charges in the quarter ended September 30, 2009 primarily relating to employee
relocation costs and contract termination costs related to our building lease
associated with the closing of our Montreal design center.
During
the quarter ended December 31, 2009, we incurred additional termination benefit
charges associated with the final reduction in force at our Montreal design
center, which was offset by the present value of the partial sublease obtained
at our leased facility in Montreal. Our lease and sublease continue
until the first quarter of March 2012.
The
following table sets forth the accounting and balances of our restructuring
expenses and expected charges for the duration of the plan:
(in
thousands)
|
|
Termination
Benefits
|
|
|
Contract
Termination Costs
|
|
|
Other
Costs
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2008
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
Provision/(Adjustments)
recorded for year ended December 31, 2009
|
|
|
517 |
|
|
|
215 |
|
|
|
112 |
|
|
|
844 |
|
Cash
payments
|
|
|
(462 |
) |
|
|
(28 |
) |
|
|
(112 |
) |
|
|
(602 |
) |
Balance
at December 31, 2009
|
|
$ |
55 |
|
|
$ |
187 |
|
|
$ |
-- |
|
|
$ |
242 |
|
NOTE
5. INVENTORIES
Inventories
consist of:
(in
thousands)
|
|
December
31, 2009
|
|
|
December
31, 2008
|
|
|
|
|
|
|
|
|
Finished
goods
|
|
$ |
2,147 |
|
|
$ |
3,409 |
|
Work
in process
|
|
|
4,691 |
|
|
|
6,583 |
|
|
|
$ |
6,838 |
|
|
$ |
9,992 |
|
NOTE
6. PROPERTY, PLANT AND EQUIPMENT
Property,
plant and equipment consists of:
(in
thousands)
|
|
Estimated
Useful Lives (In Years)
|
|
|
December
31,
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
-- |
|
|
$ |
668 |
|
|
$ |
668 |
|
Buildings
and improvements
|
|
18
and 7
|
|
|
|
9,212 |
|
|
|
8,924 |
|
Equipment
|
|
3
and 5
|
|
|
|
14,397 |
|
|
|
14,003 |
|
Office
furniture and equipment
|
|
5
and 7
|
|
|
|
739 |
|
|
|
789 |
|
Construction
in progress (1)
|
|
|
-- |
|
|
|
10,807 |
|
|
|
610 |
|
|
|
|
|
|
|
|
35,823 |
|
|
|
24,994 |
|
Less
accumulated depreciation
|
|
|
|
|
|
|
(20,482 |
) |
|
|
(19,359 |
) |
|
|
|
|
|
|
$ |
15,341 |
|
|
$ |
5,635 |
|
|
|
(1) Property
under capital leases of $2.9 million is included in construction in
progress.
|
|
Depreciation
expense for property, plant and equipment was $1,851,000 and $1,864,000 for 2009
and 2008, respectively. Maintenance and repairs expense was $2,180,000 and
$2,031,000 for 2009 and 2008, respectively. Included in maintenance
are software maintenance contracts.
NOTE
7. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
and other intangible assets consist of:
(in
thousands)
|
|
December
31, 2009
|
|
|
December
31, 2008
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
-- |
|
|
$ |
5,914 |
|
Accumulated
amortization
|
|
|
-- |
|
|
|
(3,943 |
) |
Goodwill,
net
|
|
|
-- |
|
|
$ |
1,971 |
|
|
|
|
|
|
|
|
|
|
Patents
and core technology
|
|
$ |
6,185 |
|
|
$ |
10,603 |
|
Accumulated
amortization
|
|
|
(3,385 |
) |
|
|
(4,133 |
) |
Intangible
assets, net
|
|
$ |
2,800 |
|
|
$ |
6,470 |
|
Long-lived
assets, including property, plant and equipment and finite-lived intangible
assets are tested for recoverability whenever events indicate the carrying
amount may not be recoverable. Factors that may trigger an impairment
review include changes in the use of the assets, the strategy for the overall
business and significant negative industry or economic trends. Based
upon economic conditions during the fourth quarter of 2008 and the first quarter
of 2009, and our decision to close its Montreal design center, we evaluated the
potential impairment of finite-lived acquired intangible assets and certain
fixed assets at our Montreal design center. The intangible assets
were purchased intellectual property acquired as part of our acquisition of Goal
Semiconductor in 2005. As part of the decision to close the Montreal
design center, it was determined to no longer pursue the design and manufacture
of the products related to this intellectual property. If the
carrying amount of the asset is not recoverable based on a
forecasted-undiscounted cash flow analysis, such asset should be reduced by the
shortfall of estimated fair value to recorded value. We determined
the fair value was zero for the intangible assets and selected equipment located
at our Montreal design center based primarily upon management's assumptions in
regards to future cash flows. This was a Level III input as defined
in the Codification. Based upon the results of an impairment analysis
performed as of March 1, 2009, we recorded an impairment charge for finite-lived
assets as follows:
|
|
(in
thousands)
|
|
|
|
|
|
Intangible
assets
|
|
$ |
3,317 |
|
Property,
plant and equipment
|
|
|
130 |
|
Total
|
|
$ |
3,447 |
|
We do not
amortize goodwill, but test for impairment on an annual basis. Our
tests are typically completed during the fourth quarter of each
year. Due to the change of circumstances, as mentioned above and a
sustained and significant decline in our stock price, we tested goodwill for
impairment on March 1, 2009. Specifically, goodwill impairment is determined
using a two-step process. The first step of the goodwill impairment
test is used to identify potential impairment by comparing the fair value of a
reporting unit with its carrying amount, including goodwill. We have
only one reportable operating segment and the goodwill impairment testing was
performed at the reporting unit level, which was defined as the consolidated
company. If the carrying amount of a reporting unit exceeds its fair
value, the second step of the goodwill impairment test is performed to measure
the amount of impairment loss, if any. The second step of the
goodwill impairment test compares the implied fair value of the reporting unit's
goodwill with the carrying amount of that goodwill. If the carrying
amount of the reporting unit's goodwill exceeds the implied fair value of that
goodwill, an impairment loss is recognized in an amount equal to that
excess. The implied fair value of goodwill is determined by comparing
the estimated fair value of our assets and liabilities as of the date of the
impairment testing to the carrying amount of the net assets, after taking into
account the impairment of the long-lived assets noted above.
Based on
the results of the first step of the goodwill analysis, it was determined that
our net book value exceeded our estimated fair value. As a result, we
performed the second step of the impairment test to determine the implied fair
value of goodwill. Under step two, the difference between the
estimated fair value of the Company and the sum of the estimated fair value of
the identified net assets results in the residual value of
goodwill. Specifically, we allocated the estimated fair value of the
Company as determined in the first step of the goodwill analysis to recognized
and unrecognized net assets, including allocations to intangible
assets. Based on the analysis performed under step two, there was no
remaining implied value attributable to goodwill and accordingly, we recognized
goodwill impairment charges of approximately $1.925 million in the first quarter
of 2009. This amount is not equal to the carrying value of goodwill
at December 31, 2008 due to certain foreign currency translation adjustments
with respect to goodwill recorded at our wholly owned subsidiary in
Canada.
Fair
value of our reporting unit was determined by our market capitalization, which
was determined using Nasdaq quoted market values for Step 1 of the
test. This was a Level I input.
We
assigned fair value to our long-lived assets and liabilities using Level II and
Level III inputs. Level II inputs, which include inputs that are
derived principally from or corroborated by observable market data or other
means, were used to value our land and building. Level III inputs
were used to estimate the fair value for our patents and our contingent
liability concerning product warranty for in-field failures. All
other assets and liabilities were valued at their current book
value.
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Carrying
Value as of March 1, 2009 (date our impairment testing
performed)
|
|
|
Level
1: Quoted Prices in Active Markets for Identical
Assets
|
|
|
Level
2: Significant Other Observable Inputs
|
|
|
Level
3: Significant Unobservable Inputs
|
|
|
Total
Impairment Charges for Year Ended December 31, 20X2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible
assets
|
|
$ |
3,317 |
|
|
|
|
|
|
|
|
|
x |
|
|
$ |
3,317 |
|
Net
Property, Plant and Equipment
|
|
|
130 |
|
|
|
|
|
|
x |
|
|
|
x |
|
|
|
130 |
|
Goodwill
|
|
|
1,925 |
|
|
|
x |
|
|
|
x |
|
|
|
x |
|
|
|
1,925 |
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,372 |
|
______________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
x =
Inputs used in the Company's fair value analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
expense for intangible assets was $294,000 and $598,000 in 2009 and 2008,
respectively. Estimated amortization expense for intangible assets is
$250,000 annually for the years ending 2010 through 2014 and a total of $1.6
million thereafter.
NOTE
8. SIGNIFICANT CUSTOMERS
For the
years ended December 31, 2009 and 2008, sales, accounts receivable and customer
specific inventory for our largest direct customer are detailed as
follows:
|
Percentage
of Company Total
|
|
2009
|
|
2008
|
|
|
|
|
Sales
|
11%
|
|
15%
|
Accounts
receivable
|
28%
|
|
34%
|
Inventory
|
19%
|
|
9%
|
NOTE
9. LONG-TERM DEBT
(in
thousands)
|
|
December
31, 2009
|
|
|
December
31, 2008
|
|
|
|
|
|
|
|
|
Long-term
debt:
|
|
|
|
|
|
|
Capitalized
lease
|
|
$ |
2,582 |
|
|
$ |
-- |
|
National
Semiconductor promissory note
|
|
|
904 |
|
|
|
1,100 |
|
Mortgage
note
|
|
|
3,728 |
|
|
|
3,859 |
|
|
|
|
7,214 |
|
|
|
4,959 |
|
|
|
|
|
|
|
|
|
|
Long-term
debt current maturities
|
|
|
(1,341 |
) |
|
|
(382 |
) |
Total
|
|
$ |
5,873 |
|
|
$ |
4,577 |
|
On August
18, 2009, we executed an Amended and Restated Loan and Security Agreement
("Amended Loan Agreement") with Silicon Valley Bank ("SVB"). The
Amended Loan Agreement provides for a $6 million working capital line of credit
with a $1.75 million sublimit for EXIM (Export-Import Bank qualified
receivables) advances, $1.5 million sublimit for foreign accounts receivable,
and a sublimit of $3 million for letters of credit and foreign exchange exposure
and cash management services. The Amended Loan Agreement replaces our
Amended and Restated Loan and Security Agreement dated September 15,
2005. The Amended Loan Agreement provides for interest at a floating
rate equal to the SVB prime lending rate plus 1.75% to 2.25% per annum depending
upon cash balances and loan availability maintained at SVB. The term
is two years expiring on August 18, 2011, with a commitment fee of $40,000 paid
at signing and $40,000 on the first anniversary. There is also a
.375% unused line fee, payable monthly in arrears. Security for the
Amended Loan Agreement includes all of the Company's assets except for real
estate and leased equipment. The related borrowing base is comprised
of the Company's trade receivables. The Company plans to draw upon
loan facility for working capital purposes as required. The net
availability under our secured line of credit facility as of December 31, 2009
was $2.5 million reflecting the $1.1 million of letters of credit
outstanding.
On
January 28, 2010, SVB approved an increase of $1.9 million over the sublimit for
our eligible foreign accounts receivable from $1.5 million to $3.4 million based
upon us obtaining foreign account receivable credit insurance. We
obtained this insurance with an effective date of November 1, 2009.
We are
required to comply with certain covenants under the loan agreement, including
minimum EBITDA measured quarterly and minimum quick ratio measured
monthly. We were in compliance with all of our debt covenants as of
December 31, 2009.
On August
18, 2009, we also entered into an Amended and Restated Intellectual Property
Security Agreement with SVB that secures our obligations under the Amended Loan
Agreement by granting SVB a security interest in all of our right, title and
interest in, to and under its intellectual property.
We have
entered into three capital leases during 2009 totaling approximately $2.9
million with terms between two and three years with effective interest rates of
approximately 10%. We have obtained standby letter of credit in favor
of two of the three lessors for approximately $1.1 million.
In April
2004, we entered into a patent interference settlement agreement with National
Semiconductor Corporation. The Company is required to pay National
Semiconductor Corporation $250,000 annually through 2013. As of
December 31, 2009, the present value of this promissory note is
$904,000. We discounted the note at 5.75%. The face value
of this note as of December 31, 2009 was $1,000,000.
On
December 15, 2005, the Company, through its subsidiary, Ramtron LLC, for which
Ramtron International Corporation serves as sole member and sole manager, closed
on its mortgage loan facility with American National Insurance
Company. Ramtron LLC entered into a promissory note evidencing the
loan with the principal amount of $4,200,000, with a maturity date of January 1,
2016, bearing interest at 6.17%. We are obligated to make monthly
principal and interest payments of $30,500 until January 2016 and a balloon
payment of $2,757,000 in January 2016. Ramtron LLC also entered into
an agreement for the benefit of American National Insurance Company securing our
real estate as collateral for the mortgage loan facility.
Payments
of our outstanding promissory notes and leases are as follows as of December 31,
2009:
(in
thousands)
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
Thereafter
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Promissory
notes
|
|
$ |
390 |
|
|
$ |
325 |
|
|
$ |
390 |
|
|
$ |
414 |
|
|
$ |
179 |
|
|
$ |
2,934 |
|
|
$ |
4,632 |
|
Capital
leases
|
|
|
1,167 |
|
|
|
988 |
|
|
|
792 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
2,947 |
|
Less
amount representing interest on the capital leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(365 |
) |
Total
debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
7,214 |
|
The
carrying amounts and estimated fair values of our long-term debt, which are our
only material financial instruments, are as follows:
|
|
December
31, 2009
|
|
|
December
31, 2008
|
|
(in
thousands)
|
|
Carrying
Amount
|
|
|
Estimated
Fair Value
|
|
|
Carrying
Amount
|
|
|
Estimated
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
leases
|
|
$ |
2,582 |
|
|
$ |
2,582 |
|
|
$ |
-- |
|
|
$ |
-- |
|
National
semiconductor promissory note
|
|
|
904 |
|
|
|
879 |
|
|
|
1,100 |
|
|
|
1,094 |
|
Mortgage
note
|
|
|
3,728 |
|
|
|
3,571 |
|
|
|
3,859 |
|
|
|
3,921 |
|
|
|
$ |
7,214 |
|
|
$ |
7,032 |
|
|
$ |
4,959 |
|
|
$ |
5,015 |
|
The above
fair values were estimated based on discounted future cash
flows. Differences from carrying amounts are attributable to interest
rate changes subsequent to when the transactions occurred.
NOTE
10. COMMITMENTS
Lease
Commitments
The
Company has commitments under non-cancelable operating leases expiring through
2013 for various equipment, software, and facilities. Minimum future
annual lease payments for leases that have initial or remaining non-cancelable
terms in excess of one year as of December 31, 2009 are as follows:
|
|
(in
thousands)
|
|
|
|
|
|
2010
|
|
$ |
1,778 |
|
2011
|
|
|
1,631 |
|
2012
|
|
|
705 |
|
2013
|
|
|
17 |
|
Total
|
|
$ |
4,131 |
|
Total
rent expense on all operating leases was $1.9 million, and $1.7 million for 2009
and 2008, respectively.
Manufacturing
Alliances
In 1999,
we entered into a manufacturing agreement with Fujitsu Limited for the supply of
its F-RAM products with an initial term of five years with automatic one-year
renewals. The agreement requires Fujitsu to provide us with a two-year advance
notice of any change in its ability or intention to supply product wafers to
us. In October 2009, Fujitsu notified us of their intent to
discontinue the manufacture of our F-RAM products in March of 2010 and agreed to
hold inventory to satisfy our product delivery requirements through the first
quarter of 2011. As a result, we placed wafer purchase orders of
approximately $15 million to meet anticipated product delivery
requirements. The purchase orders expire during the first quarter of
2011 and are currently outstanding and non-cancellable. The product
will be supplied to us at prices negotiated based on current market
conditions. If the demand for our Fujitsu-supplied products exceeds
the inventory held by Fujitsu and we are unable to obtain products from
alternate sources of supply, our business could be adversely
affected.
In 2007,
the Company and Texas Instruments entered into a commercial manufacturing
agreement for F-RAM memory products. The Company will provide design,
testing and other activities associated with product development efforts, and
Texas Instruments will provide foundry services for a minimum period of two
years with one year automatic renewal periods unless a party notifies the other
party thirty (30) days prior to the expiration of any renewal period of their
desire to terminate the agreement. The manufacturing agreement also
contains obligations for us with respect to minimum orders and negotiated
pricing.
In
February 2009, the Company and IBM entered into an agreement in which IBM will
provide ferroelectric RAM (F-RAM) manufacturing services to us on a purchase
order basis. The Company and IBM also entered into Inbound Equipment
and Program Loan Agreement, pursuant to which we will loan specialized equipment
to IBM to use in manufacturing products for us. IBM will provide us
with facility design and fit up, tool installation and tool qualification
services in support of IBM's manufacture of our F-RAM products. We
will provide tools, peripheral equipment, technology and specifications required
for IBM's manufacture of our products. We will also provide our F-RAM technology
and engineering expertise to IBM to assist in the integration and process
development of our F-RAM products. The term of the agreement extends
through December 31, 2016, subject to earlier termination under certain
conditions. On December 31, 2009, we entered into an agreement
supplementing the previously disclosed Custom Sales Agreement with
IBM. This agreement provides for the supply of equipment and services
to be provided respectively by IBM and the Company in connection with IBM’s
manufacture of products for Ramtron in future periods and schedules our payments
for equipment we are to supply and for IBM’s manufacturing services. As of
December 31, 2009, we have outstanding commitments relating to process support
of $2.8 million, including amounts accrued but not yet paid.
NOTE
11. STOCK-BASED COMPENSATION
Stock-based Compensation
Plans
We has
one active stock option plan: the 2005 Incentive Award Plan (the "2005
Plan"). The expired 1995 Stock Option Plan and 1999 Stock Option
Plan, as amended, are only relevant to grants outstanding under these plans or
in respect of the 1995 Stock Option Plan, forfeitures that increase the
available shares under the 2005 Plan. The 2005 Plan reserves a total
of 6,603,544 shares of our common stock for issuance. In November
2009, the reserve under the 2005 Plan was increased by 1,603,544 shares of
common stock. The additional shares were previously available for
issuance under our 1995 Stock Option Plan, as such shares had not been issued,
or were subject to awards under the 1995 Plan that had expired, were forfeited
or became unexercisable for any reason, and were carried forward to and included
in the reserve of shares available for issuance pursuant to the 2005
Plan in accordance with the terms of the 2005 Plan. The exercise
price of all non-qualified stock options must be no less than 100% of the Fair
Market Value on the effective date of the grant in 2005 Plans. The
maximum term of each grant is ten years under the Plan. The 2005 Plan
permits the issuance of incentive stock options, the issuance of restricted
stock, and other types of awards. Restricted stock grants generally
vest one to three years from the date of grant. Options granted
become exercisable in full or in installments pursuant to the terms of each
agreement evidencing options granted. The exercise of stock options
and issue of restricted stock is satisfied by issuing authorized unissued common
stock or treasury stock. As of December 31, 2009, we had not granted
any incentive stock options.
The
number of shares available for future grant under the 2005 plan was 2,102,822 as
of December 31, 2009.
Total
stock-based compensation recognized in our consolidated statement of income are
as follows:
Income
Statement Classifications
|
|
|
|
|
|
|
(in
thousands)
|
|
December
31, 2009
|
|
|
December
31, 2008
|
|
|
|
|
|
|
|
|
Income
Statement Classifications:
|
|
|
|
|
|
|
Cost
of product sales
|
|
$ |
73 |
|
|
$ |
161 |
|
Research
and development
|
|
|
308 |
|
|
|
235 |
|
Sales
and marketing
|
|
|
213 |
|
|
|
91 |
|
General
and administrative
|
|
|
857 |
|
|
|
534 |
|
Total
|
|
$ |
1,451 |
|
|
$ |
1,021 |
|
During
the year ended December 31, 2008, we reduced our compensation expense by
$892,000 due to a change in estimate relating to performance-based restricted
stock awards. See Note 3 for additional information.
Stock
Options
As of
December 31, 2009, there was approximately $1.8 million of unrecognized
compensation cost, adjusted for estimated forfeitures, related to non-vested
options granted to our employees and directors, which will be recognized over a
weighted-average period of 2 years. Total unrecognized compensation
cost will be adjusted for future changes in estimated forfeitures.
For
grants issued during 2009, the fair value for stock options was estimated at the
date of grant using the Black-Scholes option pricing model, which requires
management to make certain assumptions. Expected volatility was
estimated based on the historical volatility of our stock over the past 6 years,
which was the calculated expected term of our options over the past ten years, a
period we considered a fair indicator of future exercises. We based
the risk-free interest rate that we use in the option valuation model on U.S.
Treasury Notes with remaining terms similar to the expected terms on the
options. Forfeitures are estimated at the time of grant based upon
historical experience. We do not anticipate paying any cash dividends
in the foreseeable future and therefore use an expected dividend yield of zero
in the option pricing model.
The
assumptions used to value option grants for the years ended December 31, 2009
and 2008 are as follows:
|
December
31, 2009
|
|
December
31, 2008
|
|
|
|
|
Risk
free interest rate
|
2.8%
|
|
3.03%
|
Expected
dividend yield
|
0%
|
|
0%
|
Expected
term (in years)
|
6
yrs
|
|
6.25
yrs
|
Expected
volatility
|
68%
|
|
67%
|
The
weighted average fair value per share of shares granted during the years ended
December 31, 2009 and 2008 were $1.04 and $1.27, respectively.
The
following table summarizes stock option activity related to our Plans for the
year ended December 31, 2009:
|
|
Number
of Stock Options
|
|
|
Weighted
Average Exercise Price Per Share
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2008
|
|
|
6,201 |
|
|
|
|
Granted
|
|
|
142 |
|
|
$ |
1.65 |
|
Forfeited
|
|
|
(48 |
) |
|
$ |
3.21 |
|
Exercised
|
|
|
(4 |
) |
|
$ |
1.88 |
|
Expired
|
|
|
(427 |
) |
|
$ |
2.89 |
|
Outstanding
at December 31, 2009
|
|
|
5,864 |
|
|
|
|
|
The total
intrinsic value, which is the amount by which the stock price exceeded the
exercise price of the options on the date of exercise, of options exercised
during the years December 31, 2009 and 2008 was $1,000 and $239,000,
respectively.
The
following table sets forth the exercise price range, number of shares, weighted
average exercise price and remaining contractual lives by groups of
options:
|
|
|
|
Weighted
Average
|
|
Exercise
Price Range
|
|
Number
of Options Outstanding
|
Exercise
Price
|
Remaining
Contractual Life
|
Aggregate
Intrinsic Value
|
|
|
|
(in
thousands)
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
$1.02
|
$2.22
|
|
1,052
|
$1.71
|
6.47
|
|
$2.29
|
$2.29
|
|
1,274
|
$2.29
|
5.91
|
|
$2.32
|
$3.71
|
|
1,244
|
$3.09
|
4.68
|
|
$3.72
|
$4.07
|
|
1,694
|
$3.88
|
6.39
|
|
$4.15
|
$17.81
|
|
600
|
$6.31
|
1.26
|
|
Ending
outstanding
|
|
5,864
|
$3.23
|
5.41
|
$136
|
Ending
vested and expected to vest
|
|
5,832
|
$3.23
|
5.39
|
$131
|
Ending
exercisable
|
|
4,810
|
$3.31
|
4.79
|
$30
|
Exercise
Price Range
|
Number
of Options Exercisable
|
Weighted
Average Exercise Price
|
|
|
(in
thousands)
|
|
|
|
|
|
$1.02
|
$2.22
|
579
|
$1.82
|
$2.29
|
$2.29
|
1,273
|
$2.29
|
$2.32
|
$3.71
|
1,184
|
$3.08
|
$3.72
|
$4.07
|
1,203
|
$3.85
|
$4.15
|
$17.81
|
571
|
$6.41
|
|
4,810
|
$3.31
|
The
intrinsic value is calculated as the difference between the market value as of
December 31, 2009 and the exercise price of the options. The closing
market value as of December 31, 2009 was $1.77 as reported by the Nasdaq Global
Market.
Cash
received from option exercises for the year ended December 31, 2009 was
$7,000. The actual tax benefit realized for the tax deduction from
option exercises was $1,000.
Restricted
Stock
In 2009,
we granted 50,000 shares of restricted stock at an average market value of $1.85
per share. These awards vest in one year based on continued
service. As of December 31, 2009, there was approximately $257,000 of
unrecognized compensation cost related to non-vested restricted shares, which
will be recognized over a weighted-average period of 1.55 years.
A summary
of non-vested restricted shares during the year ended December 31, 2009 are as
follows:
|
|
Number
of Restricted Shares
|
|
|
Weighted
Average Grant Date Fair Value Per Share
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2008
|
|
|
848 |
|
|
$ |
2.36 |
|
Granted
|
|
|
50 |
|
|
$ |
1.85 |
|
Forfeited
|
|
|
(575 |
) |
|
$ |
2.81 |
|
Vested/Released
|
|
|
(91 |
) |
|
$ |
1.42 |
|
Outstanding
at December 31, 2009
|
|
|
232 |
|
|
$ |
1.51 |
|
The
forfeited restricted stock awards of 575,000 shares related to a performance
condition of satisfying both a minimum sales goal and a minimum percentage of
sales by December 31, 2009. The goals were not achieved and the
Company stopped accruing stock-based compensation expense relating to these
awards during the year ended December 31, 2008.
Restricted Stock
Units
On
December 15, 2009, the Company granted 166,500 restricted stock units that vest
over a three year period in three equal annual
installments. Restricted stock units represent rights to receive
shares of common stock at a future date. There is no exercise price
and no cash payment is required for receipt of restricted stock units on the
shares issued in settlement of the award. The fair market value of
the Company's common stock at the time of the grant, which was $1.68 at the
effective date of these grants, is amortized to expense on a straight-line basis
over the vesting period.
A summary
of the Company's restricted stock units as of December 31, 2009 are as
follows:
(in
thousands)
|
|
Number
of Restricted Units
|
|
|
Weighted
Average Remaining Contractual Term
|
|
|
Aggregate
Intrinsic Value
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2008
|
|
|
118 |
|
|
|
|
|
|
|
Grants
|
|
|
166 |
|
|
|
|
|
|
|
Forfeited
|
|
|
(17 |
) |
|
|
|
|
|
|
Vested/Released
|
|
|
(34 |
) |
|
|
|
|
|
|
Outstanding
at December 31, 2009
|
|
|
233 |
|
|
|
1.82 |
|
|
$ |
412 |
|
Vested
and expected to vest
|
|
|
220 |
|
|
|
1.81 |
|
|
$ |
389 |
|
As of
December 31, 2009, there was approximately $326,000 remaining in unrecognized
compensation costs. The cost is expected to be recognized through
2012 with a weighted-average recognition period of 2.67 years.
Warrants
Warrants
to purchase shares of the Company's common stock are as follows:
|
|
Number
of Shares
|
|
|
Exercise
Price Per Share
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
and exercisable at December 31, 2008
|
|
|
100 |
|
|
$ |
1.42 |
|
Cancelled
|
|
|
(100 |
) |
|
|
|
|
Outstanding
balance at December 31, 2009
|
|
|
-- |
|
|
|
|
|
NOTE
12. RELATED PARTY TRANSACTIONS
The
National Electrical Benefit Fund (the "Fund") is a principal stockholder of the
Company.
Pursuant
to a Stock and Warrant Purchase Agreement dated March 13, 1989 between the
Company and the Fund, as amended, the Company agreed to pay to the Fund, for as
long as the Fund owns at least 5% of the outstanding shares of the Company's
common stock, a reasonable monthly consulting fee of not more than $5,000 and to
reimburse the Fund for all out-of-pocket expenses incurred in monitoring the
Fund's investment in the Company. During 2009 and 2008, the Company
was obligated to pay to the Fund approximately $60,000 per year in payment of
such fees and expenses. The amounts of $210,000 and $150,000 related
to this obligation were included in accrued liabilities as of December 31, 2009
and 2008, respectively.
NOTE
13. SUPPLEMENTAL CASH FLOW INFORMATION
(in
thousands)
|
2009
|
|
2008
|
|
|
|
|
Cash
paid for interest
|
$372
|
|
$368
|
Cash
paid for income taxes
|
$70
|
|
$230
|
NOTE
14. INCOME TAXES
The
sources of income (loss) before income taxes and after discontinued operations
were as follows:
(in
thousands)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
United
States
|
|
$ |
(1,952 |
) |
|
$ |
5,642 |
|
Foreign
|
|
|
(4,496 |
) |
|
|
262 |
|
Income
(loss) before income taxes
|
|
$ |
(6,448 |
) |
|
$ |
5,904 |
|
Income
tax expense (benefit) attributable to income (loss) before income taxes
consisted of:
Current:
(in
thousands)
|
|
2009
|
|
|
2008
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$ |
(289 |
) |
|
$ |
28 |
|
State
|
|
|
(5 |
) |
|
|
24 |
|
Foreign
|
|
|
29 |
|
|
|
46 |
|
|
|
|
(265 |
) |
|
|
98 |
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(336 |
) |
|
|
1,764 |
|
State
|
|
|
(20 |
) |
|
|
382 |
|
Foreign
|
|
|
-- |
|
|
|
-- |
|
|
|
|
(356 |
) |
|
|
2,146 |
|
Income
Tax expense (benefit)
|
|
$ |
(621 |
) |
|
$ |
2,244 |
|
Total
income tax expense (benefit) from continuing operations differs from the amount
computed by applying the statutory federal income (loss) tax rate of 35% to
income before taxes. The reasons for this difference for the years
ended December 31, were as follows:
(in
thousands)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Computed
expected tax expense (benefit)
|
|
$ |
(2,257 |
) |
|
$ |
2,060 |
|
Increase
(reduction) in income taxes resulting from:
|
|
|
|
|
|
|
|
|
State
income taxes, net of federal impact
|
|
|
(129 |
) |
|
|
118 |
|
Non-deductible
differences
|
|
|
45 |
|
|
|
51 |
|
Foreign
operations
|
|
|
(7 |
) |
|
|
(13 |
) |
Refundable
credits
|
|
|
(78 |
) |
|
|
(102 |
) |
Non-deductable
impairment charges
|
|
|
2,016 |
|
|
|
-- |
|
Alternative
minimum tax
|
|
|
(211 |
) |
|
|
130 |
|
Impact
of change in income tax rates on deferred taxes
|
|
|
-- |
|
|
|
1,756 |
|
Impact
of change in income tax rates on valuation
allowance
|
|
|
-- |
|
|
|
(1,756 |
) |
Income
tax expense (benefit)
|
|
$ |
(621 |
) |
|
$ |
2,244 |
|
In
assessing the realizability of deferred tax assets, management considers whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Based upon the level of
historical taxable income and projections for future taxable income over the
periods in which the deferred tax assets are deductible, management believes it
is more likely than not that the Company will realize the benefits of these
deductible differences, net of the existing valuation allowances at December 31,
2009. The amount of the deferred tax asset considered realizable, however, could
be reduced in the near term if estimates of future taxable income during the
carryforward period are reduced.
Management
has determined, based on all available evidence, it is more likely than not that
deferred tax assets of approximately $5.8 million will be realized as of
December 31, 2009.
The
components of deferred income taxes are as follows:
(in
thousands)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
Deferred
revenue
|
|
$ |
239 |
|
|
$ |
239 |
|
Accrued
liabilities, not deducted until paid for tax purposes
|
|
|
690 |
|
|
|
734 |
|
U.S.
net operating loss carryovers
|
|
|
512 |
|
|
|
895 |
|
|
|
|
1,441 |
|
|
|
1,868 |
|
Less
valuation allowance
|
|
|
(1,147 |
) |
|
|
(1,602 |
) |
|
|
|
294 |
|
|
|
266 |
|
Non-current:
|
|
|
|
|
|
|
|
|
U.S.
net operating loss carryovers
|
|
|
22,394 |
|
|
|
30,344 |
|
Foreign
net operating loss carryovers
|
|
|
1,442 |
|
|
|
1,617 |
|
Deferred
revenue
|
|
|
209 |
|
|
|
447 |
|
Fixed
assets
|
|
|
1,141 |
|
|
|
1,117 |
|
Share-based
payments
|
|
|
1,618 |
|
|
|
1,140 |
|
Alternative
minimum tax credit
|
|
|
119 |
|
|
|
323 |
|
Other
|
|
|
59 |
|
|
|
113 |
|
|
|
|
26,982 |
|
|
|
35,101 |
|
Less
valuation allowance
|
|
|
(21,483 |
) |
|
|
(29,927 |
) |
|
|
|
5,499 |
|
|
|
5,174 |
|
Net
deferred tax assets
|
|
$ |
5,793 |
|
|
$ |
5,440 |
|
As of
December 31, 2008, the Company had a valuation allowance against its deferred
tax assets of $31.5 million. As of December 31, 2009, the valuation
allowance decreased to $22.6 million. This decrease of $8.9 million
is primarily due to expiring net operating losses.
As of
December 31, 2009, the Company had unrestricted federal net operating loss
carryforwards of approximately $62 million to reduce future taxable income,
which expire as follows:
Expiration
Date
|
|
Regular
Tax Net Operating Losses
|
|
|
|
|
|
2011
|
|
$ |
3,749 |
|
2012
|
|
|
9,287 |
|
2013
|
|
|
12,264 |
|
2014
through 2029
|
|
|
36,606 |
|
|
|
$ |
61,906 |
|
During
2009 and 2008, net operating loss carryovers of approximately $20 million and
$17 million, respectively, expired.
We have a
requirement of reporting of taxes based on tax positions which meet a more
likely than not standard and which are measured at the amount that is more
likely than not to be realized. Differences between financial and tax
reporting which do not meet this threshold are required to be recorded as
unrecognized tax benefits. This standard also provides guidance on
the presentation of tax matters and the recognition of potential IRS interest
and penalties.
During
2008, we recognized approximately $1.26 million decrease in the deferred tax
asset for unrecognized tax benefits. A reconciliation of the
beginning and ending amounts of unrecognized tax liability were as
follows:
(in
thousands)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Balance
at January 1, 2009
|
|
$ |
1,260 |
|
|
$ |
-- |
|
Additions
based on tax positions related to current year
|
|
|
-- |
|
|
|
|
|
Additions
for tax positions of prior years
|
|
|
-- |
|
|
|
1,260 |
|
Reductions
for tax positions of prior years
|
|
|
(238 |
) |
|
|
|
|
Settlements
|
|
|
-- |
|
|
|
|
|
Balance
at December 31, 2008
|
|
$ |
1,022 |
|
|
$ |
1,260 |
|
The
Company classifies penalty and interest expense related to income tax
liabilities as an income tax expense. There are no interest and
penalties recognized in the statement of operations or accrued on the balance
sheet.
The
Company files tax returns in the United States, in the states of California,
Colorado, Texas and Vermont and in several foreign countries. The tax
years 2006 through 2009 remain open to examination by the major taxing
jurisdictions to which the Company is subject, including 2005 in
California.
NOTE
15. CONTINGENCIES
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. We cannot be certain that third parties will not
make a claim of infringement against us or against its semiconductor company
licensees 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 its semiconductor manufacturing licensees in connection with use of our
technology could materially impact the Company's results of
operations.
During
the three months ended June 30, 2009, the Company received a summons by the
trustee in the bankruptcy of Finmek S.p.A. and its affiliates (Finmek) to appear
before the Padua, Italy court overseeing the bankruptcy. The claims
of the trustee in bankruptcy are that payments totaling approximately $2.8
million made to the Company for products shipped to Finmek prior to its
bankruptcy filing in May 2004 are recoverable based on an alleged awareness of
the Finmek affiliates' insolvency at the time the payments were
made. The first hearing in the Finmek cases was held in January 2010
and at the request of both parties, the hearing was moved to April
2011. We intend to vigorously contest the trustee's
claims. We are unable to estimate a range of possible liability, if
any, that we may incur as result of the trustee's claims and have not recorded
any expense or liability in the consolidated financial statements as of December
31, 2009.
The
Company is involved in other legal matters in the ordinary course of
business. Although the outcomes of any such legal actions cannot be
predicted, management believes that there are no pending legal proceeding
against or involving the Company for which the outcome would likely to have a
material adverse effect upon the Company's financial position or results of
operations.
None
Evaluation of Disclosure
Controls and Procedures and Related CEO and CFO
Certifications
The
Company maintains disclosure controls and procedures that are designed to ensure
that information required to be disclosed in the Company's reports under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), are recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission'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 Annual Report on Form 10-K, as of
December 31, 2009, 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
this evaluation, our management, including our Chief Executive Officer and Chief
Financial Officer, concluded that our disclosure controls and procedures are
effective.
Management's Report on
Internal Control Over Financial Reporting
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.
Under the
supervision and with the participation of management, including the principal
executive officer and the principal financial officer, the Company's management
has evaluated the effectiveness of its internal control over financial reporting
as of December 31, 2009 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 maintained effective internal control over
financial reporting as of December 31, 2009.
This
annual report does not include an attestation report of the Company's registered
public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the
Company's independent registered public accounting firm under temporary rules of
the Securities and Exchange Commission that permit the Company to provide only
management's report in this annual report.
Changes in Internal Control
and Financial Reporting
There
were no changes in the Company's internal control over financial reporting
during its most recently completed fiscal quarter that have materially affected
or are reasonably likely to materially affect the Company's internal control
over financial reporting.
None
Information
regarding our directors is incorporated by reference from the information
contained under the caption "Election of Directors" to be included in our 2010
Proxy Statement for the 2010 Annual Meeting of
Stockholders. Information regarding our audit committee
members, including the designated audit committee financial expert, is
incorporated by reference from the information contained under the caption
"Audit Committee Members" to be included in our 2010 proxy statement and
information regarding current executive officers, is incorporated by reference
from the information contained under the caption "Executive Officers of the
Registrant" to be included in our 2010 Proxy Statement for the 2010 Annual
Meeting of Stockholders. Information regarding Section 16 reporting
compliance is incorporated by reference from information contained under the
caption "Executive Compensation - Section 16(a) Beneficial Ownership Reporting
Compliance" to be included in our 2010 Proxy Statement.
Code of
Conduct
We have
adopted a Code of Conduct that applies to all of our directors, officers and
employees. This code is publicly available on our web site at
www.ramtron.com. Any substantive amendments to the code and any grant
of waiver from a provision of the code requiring disclosure under applicable SEC
or Nasdaq rules will be disclosed by us in a report on Form 8-K.
The
information required by this item is incorporated by reference from the
information contained under the captions "Executive Compensation"
and Director Compensation" to be included in our 2010 Proxy
Statement.
The
information required by this item is incorporated by reference from the
information contained under the caption "Security Ownership of Principal
Stockholders and Management" and "Equity Compensation Plan Information" to be
included in our 2010 Proxy Statement.
The
information required by this item is incorporated by reference from the
information contained under the caption "Certain Transactions" and
"Director Independence" to be included in our 2010 Proxy
Statement.
The
information required by this item is incorporated by reference from the
information contained under the caption "Ratification of Appointment of
Independent Auditors" to be included in our 2010 Proxy Statement.
(a) The
following documents are filed as a part of this report:
(1) Financial
Statements:
See index
to financial statements contained in Item 8 - Financial Statements and
Supplementary Data
(2) Financial
Statement Schedules:
All other
schedules are omitted because they are not required, or not applicable, or
because the required information is included in the financial statements or
notes thereto.
(3) Exhibits. The
Exhibits listed on the accompanying Index to Exhibits are filed as part of, or
incorporated by reference into, this report.
INDEX
TO EXHIBITS
|
Exhibit
Number
|
|
3.1
|
Certificate
of Incorporation of Registrant, as amended.(4)
|
3.2
|
Bylaws
of Registrant, as amended.(15)
|
|
|
4.2
|
Amended
and Restated Warrant to purchase 100,000 shares of common stock issued by
the Registrant to the National Electrical Fund dated August 6,
1999.(3)
|
4.5
|
Form
of Rights Agreement, dated April 19, 2001, between Ramtron International
Corporation and Citibank, N.A.(6)
|
|
|
10.3
|
1995
Stock Option Plan and forms of Incentive Stock Option Agreement and
Non-statutory Stock Option Agreement.(2)
|
10.6
|
Amendment
No. 1 to Registrant's 1995 Stock Option Plan dated October 24,
1996.(1)
|
10.7*
|
Second
Amendment to F-RAM Technology License Agreement between Fujitsu Limited
and the Registrant dated September 20, 1999.(4)
|
10.8
|
Amendment
No. 2 to Registrant's 1995 Stock Option Plan dated December 22,
1999.(4)
|
10.9
|
Registrant's
1999 Stock Option Plan.(4)
|
10.17
|
Amendment
No. 3 to Registrant's 1995 Stock Option Plan, as amended, dated July 25,
2000.(5)
|
10.18
|
Amendment
No. 1 to Registrant's 1999 Stock Option Plan, as amended, dated July 25,
2000.(5)
|
10.19*
|
Technology
and Service Agreement between Infineon Technologies AG and the Registrant,
dated December 14, 2000.(5)
|
10.21*
|
Joint
Development and License Agreement between the Registrant and Texas
Instruments, dated August 14, 2001.(7)
|
10.22*
|
F-RAM
Technology License Agreement between the Registrant and NEC Corporation,
dated November 15, 2001.(8)
|
10.31*
|
Settlement
Agreement between National Semiconductor Corporation and the Registrant
dated April 6, 2004. (9)
|
10.32
|
Patent
Purchase Agreement between Purple Mountain Server LLC and the Registrant
dated April 13, 2004.(9)
|
10.36
|
Promissory
note between Ramtron LLC and American National Insurance Company dated
December 8, 2005.(11)
|
10.37
|
Deed
of Trust, Security Agreement and Financing Statement between Ramtron LLC
and American National Insurance Company dated December 8,
2005.(11)
|
10.39
|
Loan
Modification Agreement between Ramtron International Corporation and
Silicon Valley Bank dated December 30, 2005.(12)
|
10.48
|
Amended
and Restated Loan and Security Agreement between Ramtron International
Corporation and Silicon Valley Bank, dated September 15,
2005.(10)
|
10.49
|
Intellectual
Property Security Agreement between Ramtron International Corporation and
Silicon Valley Bank, dated September 15, 2005.(10)
|
10.50
|
Third
Amendment to Amended and Restated Loan and Security Agreement between
Ramtron International Corporation and Silicon Valley Bank, dated December
29, 2006.(13)
|
10.51
|
Fourth
Amendment to Amended and Restated Loan and Security Agreement between
Ramtron International Corporation and Silicon Valley
Bank.(14)
|
10.53*
|
Manufacturing
Agreement between the registrant and Texas Instruments dated March 6,
2007.(16)
|
10.54
|
Amendment
No. 2 to Registrant's 1999 Stock Option Plan.
(17)
|
10.55
|
Amended
and Restated 2005 Incentive Award Plan.(17)
|
10.56
|
Form
of Amended and Restated Change in Control Agreement Between Registrant and
its executive officers dated December 23, 2008.(17)
|
10.57
|
Fifth
Amendment to Amended and Restated Loan and Security Agreement between
Ramtron International Corporation and Silicon Valley Bank dated March 13,
2009.(18)
|
10.58*
|
Custom
Sales Agreement between Registrant and International Business Machines
Corporation dated February 9, 2009. (19)
|
10.59
|
Sixth
Amendment to Amended and Restated Loan and Security Agreement between
Ramtron International Corporation and Silicon Valley Bank dated June 24,
2009. (20)
|
10.60
|
Amended
and Restated Loan and Security Agreement between the Registrant and
Silicon Valley Bank dated August 18, 2009.(21)
|
10.61
|
Amended
and Restated Intellectual Property Security Agreement between the
Registrant and Silicon Valley Bank dated August 18,
2009.(21)
|
10.62
|
Loan
and Security Agreement (EX-IM Loan Facility) between the Registrant and
Silicon Valley Bank dated August 18, 2009.(21)
|
10.63
|
Export-Import
Bank of the United States Working Capital Guarantee Program Borrower
Agreement between the Registrant and Silicon Valley Bank dated August 18,
2009.(21)
|
10.64*
|
Semiconductor
Services Attachment No. 4 to Custom Sales Agreement between Registrant and
International Business Machines Corporation dated December 31,
2009.
|
|
|
21.1
|
Subsidiaries
of Registrant.
|
|
|
23.1
|
Consent
of Independent Registered Public Accounting Firm
|
|
|
31.1
|
Certification
of Principal Executive Officer pursuant to 18 U.S.C. SECTION 1350, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2
|
Certification
of Principal Financial Officer pursuant to 18 U.S.C. SECTION 1350, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
|
32.1
|
Certification
of Principal Executive Officer pursuant to 18 U.S.C. SECTION 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
32.2
|
Certification
of Principal Financial Officer pursuant to 18 U.S.C. SECTION 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
* Confidential
treatment has been granted or requested with respect to portions of this
exhibit, and such confidential portions have been deleted and separately filed
with the Securities and Exchange Commission.
(1)
|
Incorporated
by reference to our Annual Report on Form 10-K (Commission File No.
0-17739) for the year ended December 31, 1996 filed with the Securities
and Exchange Commission on March 26, 1997.
|
(2)
|
Incorporated
by reference to our Form S-1 Registration Statement (Registration No.
33-99898) filed with the Securities and Exchange Commission on December 1,
1995.
|
(3)
|
Incorporated
by reference to our Form 8-K (Commission File No. 0-17739) filed with the
Securities and Exchange Commission on August 31, 1999.
|
(4)
|
Incorporated
by reference to our Annual Report on Form 10-K (Commission File No.
0-17739) for the year ended December 31, 1999 filed with the Securities
and Exchange Commission on March 29, 2000.
|
(5)
|
Incorporated
by reference to our Annual Report on Form 10-K (Commission File No.
0-17739) for the year ended December 31, 2000 filed with the Securities
and Exchange Commission on March 30, 2001.
|
(6)
|
Incorporated
by reference to our Form 8-K (Commission File No. 0-17739) filed with the
Securities and Exchange Commission on May 9, 2001.
|
(7)
|
Incorporated
by reference to our Amendment No. 1 to Form 10-Q (Commission File No.
0-17739) for the quarter ended September 30, 2001 filed with the
Securities and Exchange Commission on November 13, 2001, as amended on
August 2, 2002.
|
(8)
|
Incorporated
by reference to our Annual Report on Form 10-K (Commission File No.
0-17739) for the year ended December 31, 2001 filed with the Securities
and Exchange Commission on March 29, 2002, as amended on June 17,
2002.
|
(9)
|
Incorporated
by reference to our Form 10-Q (Commission File No. 0-17739) for the
quarter ended June 30, 2004 filed with the Securities and Exchange
Commission on August 12, 2004.
|
(10)
|
Incorporated
by reference to our Form 8-K (Commission File No. 0-17739) filed with the
Securities and Exchange Commission on September 21,
2005.
|
(11)
|
Incorporated
by reference to our Form 8-K (Commission File No. 0-17739) filed with the
Securities and Exchange Commission on December 21,
2005.
|
(12)
|
Incorporated
by reference to our Form 8-K (Commission File No. 0-17739) filed with the
Securities and Exchange Commission on January 5, 2006.
|
(13)
|
Incorporated
by reference to our Annual Report on Form 10-K (Commission File No.
0-17739) for the year ended December 31, 2006 filed with the Securities
and Exchange Commission on February 21, 2007.
|
(14)
|
Incorporated
by reference to our Form 8-K (Commission File No. 0-17739) filed with the
Securities and Exchange Commission on April 4, 2007.
|
(15)
|
Incorporated
by reference to our Form 8-K (Commission File No. 0-17739) filed with the
Securities and Exchange Commission on May 1, 2007.
|
(16)
|
Incorporated
by reference to our Form 10-Q (Commission File No. 0-17739) for the
quarter ended June 30, 2007 filed with the Securities and Exchange
Commission on May 8, 2007.
|
(17)
|
Incorporated
by reference to our Annual Report on Form 10-K (Commission File No.
0-17739) for the year ended December 31, 2008 filed with the Securities
and Exchange Commission on February 2, 2009.
|
(18)
|
Incorporated
by reference to our Form 8-K (Commission File No. 0-17739) filed with the
Securities and Exchange Commission on March 17, 2009.
|
(19)
|
Incorporated
by reference to our Form 10-Q (Commission File No. 0-17739) for the
quarter ended March 31, 2009 filed with the Securities and Exchange
Commission on May 8, 2009.
|
(20)
|
Incorporated
by reference to our Form 8-K (Commission File No. 0-17739) filed with the
Securities and Exchange Commission on June 29, 2009.
|
(21)
|
Incorporated
by reference to our Form 8-K (Commission File No. 0-17739) filed with the
Securities and Exchange Commission on August 24,
2009.
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) 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, on February 18, 2010.
RAMTRON
INTERNATIONAL CORPORATION
|
|
By: /s/ William W. Staunton,
III
|
William
W. Staunton, III
|
Director
and Chief Executive Officer (Principal Executive
Officer)
|
POWER
OF ATTORNEY
KNOW ALL
PERSONS BY THESE PRESENTS, that each individual whose signature appears below
constitutes and appoints William W. Staunton, III and Eric A. Balzer, his true
and lawful attorneys-in-fact each acting alone, with full power of substitution
and re-substitution, for him and in his name, place and stead in any and all
capacities to sign any or all amendments to this report on Form 10-K, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact, or
their substitutes, each acting alone, may lawfully do or cause to be done by
virtue hereof.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the Registrant and in the
capacities and on the date indicated.
Signature
|
Title
|
Date
|
|
|
|
/s/
William G. Howard, Jr.
|
Chairman
of the Board
|
2-18-2010
|
William
G. Howard, Jr.
|
|
|
|
|
|
/s/
William L. George
|
Director
|
2-18-2010
|
William
L. George
|
|
|
|
|
|
/s/
Jack L. Saltich
|
Director
|
2-18-2010
|
Jack
L. Saltich
|
|
|
|
|
|
/s/
Theodore J. Coburn
|
Director
|
2-18-2010
|
Theodore
J. Coburn
|
|
|
|
|
|
/s/
Eric Kuo
|
Director
|
2-18-2010
|
Eric
Kuo
|
|
|
|
|
|
/s/
William W. Staunton, III
|
Director
and Chief Executive Officer (Principal Executive Officer)
|
2-18-2010
|
William
W. Staunton, III
|
|
|
|
|
|
/s/
Eric A. Balzer
|
Director
and Chief Financial Officer (Principal Accounting Officer)
|
2-18-2010
|
Eric
A. Balzer
|
|
|