RMTR: when daytraders get out of the way and dust is settled, RMTR is worthy to look at
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Ramtron International
CEO's Excerpts from Fourth Quarter and
Year-End 1999 Teleconference
3:00 p.m. MT
March 14, 2000
DAVID SIKES:
Good afternoon. Thank you for joining us today for our fourth quarter and year-end 1999 teleconference.
Statements made in the course of this conference call that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements for several reasons, including production slowdowns, higher costs or market weakness. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings.
Before I provide an overview of our fourth-quarter and year-end results, I would like to introduce LuAnn Hanson, the Company's newly appointed Acting Chief Financial Officer, who replaces Rich Mohr. LuAnn is a 7-year veteran of Ramtron, most recently serving as our Vice President of Finance and Controller. LuAnn is extending her responsibilities in her new capacity as Acting CFO, and we are pleased she has chosen to accept this new challenge.
Now, I'll provide an update on the overall business and the progress we're making against our business goals for 2000. First, our 5 FRAM goals.
FRAM Objective 1. Introduce 3 new, stand-alone FRAM memory products.
We have introduced a 64K serial product, a 64K parallel product and on February 14th, we announced our 256K parallel FRAM, the FM1808. The two parallel products are designed to compete with and replace battery-backed SRAM devices. All three of these products are manufactured on the Fujitsu 0.5-micron FRAM production line in Iwata, Japan.
Since November, we have sampled over 300 potential customers for these new products. Our sampled customers include many notable names, such as Kodak, Ricoh, Lucky Goldstar, Robert Bosch, Sony, ABB, Motorola, Tektronix, Siemens, IGT, Ericcson, Xerox, and Lucent.
Potential applications encompass: automotive data collection, personal photo booths in China, laser printers, set-top boxes, electric meters, electronic test equipment, copiers, process control equipment, car radios, slot machines, and pachinko machines.
We believe that several of our potential customers could place orders over time, but we do not expect production volumes until end of 2000, or early 2001.
FRAM Objective 2. Introduce at least 2 new FRAM-based logic products.
The design for our first two octal latch products has been completed and first silicon from Rohm is expected this week. These are very unique devices and, while the ASP is modest, we believe there is potential for a broad base of applications across a large percentage of all printed circuit boards.
FRAM Objective 3. Introduce 3-volt FRAM products.
We have now defined 3-volt process and product development plans with both Rohm and Fujitsu. We hope to complete the development phase by late Q3, followed by the introduction of first market-ready products by the end of the year.
FRAM Objective 4. Double the size of our sales and marketing staff from 5 to 10.
We have added 2 new hires to our sales and marketing organization since our last teleconference and continue to recruit additional people. We have also initiated a new ad campaign in cooperation with our largest distributor, Future Electronics. This was followed by a direct mail campaign to introduce our new 64K and 256K products. The ad campaign and direct mail pieces carry the theme, "Welcome to the future, where RAM is nonvolatile and batteries are not included."
FRAM Objective 5. Triple our FRAM billing run rate.
We have been selling $500K-$1M of FRAM products per quarter since mid-1999. Our goal is to end this year with a run rate in excess of $1M per month. The addition of 5-7 new products mentioned earlier, along with a path to future 3-volt and 1 transistor/1 capacitor device architecture, we believe will pave the way for increased FRAM product revenues by year-end.
Now let's turn to the Enhanced Memory Systems' organization and its top five goals.
EMS Objective 1. Close a major memory partnership for access to advanced manufacturing fab lines.
We completed this objective in early February with full access to Infineon's best DRAM technology and manufacturing expertise. We are excited about the opportunities we can now pursue with our EDRAM technology. The Infineon transaction provides our EMS subsidiary with three building blocks: (1) guaranteed product supply up to a minimum of $200 million per year; (2) access to one of the latest and greatest manufacturing lines in the industry today; and (3) use of existing standard Infineon DRAM designs as a starting base for our design team. This could potentially cut new design cycles by more than half -- from 12 months to 4 to 6 months.
EMS Objective 2. Secure a product co-development program for an EDRAM-based SRAM replacement memory product.
We completed this objective soon after our third quarter teleconference call through the signing of Cypress as a product co-development partner.
EMS Objective 3. Launch an EDRAM product line dedicated to the communications sector.
Leveraging our Infineon agreement, we are planning to launch our own line of EDRAM-based memories for the communications applications arena. We are in on-going discussions with several hardware suppliers in this space to help direct our efforts, and we hope to make announcements on specific products in the future.
EMS Objective 4. Ship 64Mb ESDRAM samples.
We expect to complete the 64Mb design this quarter, which should put us on track for first silicon in the second quarter. We delayed the 64Mb so we could put it into the 0.2 micron standard DRAM line at Infineon and take advantage of cost and performance improvements over the .25 micron process.
EMS Objective 5. Introduce next-generation HSDRAM products.
This objective is on-going, as higher density/higher performance discrete components become available. We have been reasonably successful in selling directly to "over clocker" individuals, realizing about $100K in sales each month. During the last two months, the sweet spot has been a 128MB module built with 64Mb devices. We have just completed a North American and European tour to train our rep force how to sell these products to industrial and communications OEM system manufacturers. And, earlier this year, we introduced our 256MB and 512MB HSDRAM modules based on 256Mb discrete units. Most systems are not yet ready for these densities.
In conclusion, I would like to summarize our 1999 and recent year 2000 accomplishments. In 1999, we completed the following:
ú Fujitsu $8M funding of our FRAM R&D
ú Capital restructuring to resolve issues associated with the convertible preferred stock
ú A favorable settlement with NEC on the unfair trade case before the ITC
ú $5.4M in new capital funding via a straight equity private placement with potential additional funding of $26M when all warrants are exercised; and
ú A product co-development deal with Cypress.
More recently, we have seen:
ú Infineon take a 20% equity position in our EMS subsidiary
ú The conversion of $3.4 million of debt into equity by Dimensional Fund Advisors
ú A significant reduction in the overhang of the Benton Bankruptcy shares and warrants held by PriceWaterhouseCoopers for the NTC Liquidating Trust
ú A favorable ruling from the Court of Appeals on one of our patent interference issues with National Semiconductor
ú Initial exercise of the 2X share price warrants from the December private placement; and
ú Most importantly, yesterday's announcement of the demonstration of a production worthy process at Fujitsu, capable of utilizing a single transistor/single capacitor (1T/1C) cell design. We believe this will pave the way for megabit and eventually gigabit FRAM products in the future.
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