Intermolecular Announces Full Year and Fourth Quarter 2012 Results

Intermolecular Announces Full Year and Fourth Quarter 2012 Results

Addition and Expansion of Customer Programs Drove 24% Year-Over-Year Revenue
Growth, and Non-GAAP Net Income in 2012

SAN JOSE, Calif., Feb. 7, 2013 (GLOBE NEWSWIRE) -- Intermolecular, Inc.
(Nasdaq:IMI)-accelerating research and development (R&D) for semiconductor and
clean energy industries-today announced results for its full year and fourth
quarter ended December 31, 2012.

Full Year 2012 Results

For the year ended December 31, 2012, revenue was $66.8 million, representing
24% growth over revenue of $53.8 million in 2011. Net loss for 2012 was $(0.8)
million, or $(0.02) per share, compared with a net loss of $(38.7) million, or
$(3.99) per share for 2011.

Intermolecular reports revenue, cost of revenue, gross margin, operating
income (loss), net income (loss) and earnings (loss) per share in accordance
with GAAP and additionally on a non-GAAP basis. A reconciliation of the
non-GAAP financial measures with the most directly comparable GAAP measures,
as well as a description of the items excluded from the non-GAAP measures, is
included in the financial statements portion of this press release.

Non-GAAP net income for the year ended December 31, 2012 was $2.9 million or
$0.06 per share. This compared with non-GAAP net loss of $(0.8) million or
$(0.09) per share for 2011.

"We executed our plan in 2012, making significant progress across our
portfolio of customer collaborative development programs, diversifying our
business with nearly 180% year-over-year growth in clean energy, and further
strengthening our world-class team and capabilities of our HPC innovation
platform," said David Lazovsky, President and CEO of Intermolecular. "We are
well-positioned for continued growth over the next several years. As customers
commercialize technologies resulting from our collaborations, licensing and
royalties will continue to grow as a percentage of revenue. We are proud of
the results achieved by our team in 2012, reflected, in part, by the Company's
patent portfolio which has grown to 1,000 US patents and applications, and was
recently ranked 7^th in IEEE's Patent Power scorecard for semiconductor
manufacturing."

Fourth Quarter 2012 Results

Revenue for the fourth quarter of 2012 was $17.4 million, representing 15%
growth over revenue of $15.1 million in the same period a year ago.
Collaborative development program (CDP) revenue was $11.6 million for the
quarter, compared to $10.6 million in the prior year, reflecting the ramp of
Intermolecular's development program for advanced logic semiconductors, and
significant expansion of its clean energy business. Licensing and royalty
revenue was $5.8 million, compared to $3.9 million for the same period a year
ago, and included a buy-out of IP by First Solar.

As reported under U.S. generally accepted accounting principles (GAAP), the
Company reported net income of $0.5 million or $0.01 per share for the fourth
quarter of 2012, compared to a net loss of $(25.6) million, or $(1.19) per
share for the fourth quarter of 2011. Net loss for the fourth quarter of 2011
included a $25.3 million, non-recurring expense that the Company recognized
upon completion of its IP asset purchase agreement with Symyx.

Non-GAAP net income for the fourth quarter of 2012 was $1.5 million or $0.03
per share. This compared with non-GAAP net income of $0.2 million or $0.00 per
share for the fourth quarter of 2011.

The Company ended 2012 with total backlog of $77.2 million, of which $44.6
million is expected to be recognized as revenue in 2013. This backlog amount
does not include any incremental bookings since December 31, 2012 or any
forecast for future volume-based royalty streams.

Outlook for First Quarter 2013

The following statements are based on current expectations for the first
quarter of 2013.

  *Intermolecular projects revenue in the range of $16.5 to $17.0 million.
    This revenue projection includes $13.7 million from reported backlog as of
    December 31, 2012.
  *Non-GAAP net loss, which excludes stock-based compensation expense, is
    projected between $(0.5) million and breakeven, or between $(0.01) to
    $0.00 per share, on approximately 49 million shares outstanding.

Conference Call Today

Intermolecular will hold a conference call at 4:30 p.m. Eastern Time/1:30 p.m.
Pacific Time today with David Lazovsky, President and Chief Executive Officer,
and Peter Eidelman, Chief Financial Officer, to discuss the business.

The call can be accessed by dialing (877) 251-1860; international callers
should dial (224) 357-2386. Please dial-in ten minutes prior to the scheduled
conference call time. A live and archived webcast of the call will be
available on Intermolecular's Website at http://ir.intermolecular.com for up
to 30 days after the call.

About Intermolecular, Inc.

Intermolecular® has pioneered a proprietary approach to accelerate research
and development, innovation, and time-to-market for the semiconductor and
clean energy industries. The approach consists of the Company's proprietary
High Productivity Combinatorial (HPC^TM) platform, coupled with its
multi-disciplinary team. Through paid collaborative development programs
(CDPs) with its customers, Intermolecular develops proprietary technology and
intellectual property for its customers focused on advanced materials,
processes, integration and device architectures. Founded in 2004,
Intermolecular is based in San Jose, California. "Intermolecular" and the
Intermolecular logo are registered trademarks; and "HPC" is a trademark of
Intermolecular, Inc.; all rights reserved. Learn more at
www.intermolecular.com.

The Intermolecular, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=11116

Forward-Looking Statements

Statements made in this press release and the earnings call referencing the
press release that are not statements of historical fact are forward-looking
statements. Forward-looking statements are subject to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements relate to, but are not limited to, expectations
regarding our future revenue; our revenue mix as a result of the ramping of
our licensing and royalty revenues; our net income; our backlog and our
expectations that it will convert to revenue; our prospects for, and
visibility with respect to, increased licensing and royalty revenue, and in
particular, volume-based royalties from multiple customers; our general
prospects for continued growth over the next several years; the ability of our
business model to generate long-term shareholder returns; technical progress
under our collaborative development programs with our customers; expectations
of customers with respect to their business and technology in 2013 and beyond,
including but not limited to implementation of their technology roadmaps
(including timing), performance relative to the competitors in their
respective fields, and successful volume manufacturing and commercialization
of products that incorporate our technology; the impact of the Kingdom of
Saudi Arabia's announced commitment to invest heavily in solar power on our
micro-CDP with KAUST; the scalability of our financial model and future
earnings leverage; the proposed acquisition of Elpida by Micron and the
anticipated benefits to our business if the acquisition closes; the
anticipated market positioning of Micron if the acquisition is completed; the
size of market opportunities in the semiconductor and clean energy industries
in general, as well as in particular market segments (including but not
limited to thin-film PV and LED) within each industry; the total addressable
end markets for our HPC platform; our anticipated successful expansion into
some of these market segments; anticipated growth in our current markets
through expansion of existing customer CDPs and the entry into CDPs with new
customers; and our goal of increasing commercial transaction with both foundry
and integrated device manufacturing leaders in advanced logic, including but
not limited to broadening our existing relationship with TSMC. Forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from expectations, including but not limited to:
our ability to execute on our strategy, prove our business model and remain
technologically competitive in rapidly evolving industry conditions;
commercial acceptance of our HPC platform and methodology as effective R&D
tools; our ability to achieve and sustain profitability; the ability of our
customers to achieve their announced product roadmaps in a timely manner; the
extent to which we are able to successfully extend and expand relationships
with existing customers; our ability to manage the growth of our business; the
rapid technology changes and volatility in the semiconductor industry; the
early stage of development of the clean energy industry; our potential need
for future capital to finance our operations; and other risks described in our
2011 Form 10-K and our subsequent Forms 10-Qs, as filed with the SEC and
available at www.sec.gov, particularly in the sections titled "Risk Factors."
Forward-looking statements speak only as of the date the statements are made
and are based on information available to us at the time those statements are
made and/or management's good faith belief as of that time with respect to
future events. We assume no obligation to update forward-looking statements to
reflect actual performance or results, changes in assumptions or changes in
other factors affecting forward-looking information, except to the extent
required by applicable securities laws. Accordingly, investors should not
place undue reliance on any forward-looking statements.

Intermolecular, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts, Unaudited)

                         Three Months Ended December Years Ended December 31,
                          31,
                         2012         2011           2012        2011
Revenue:                                                       
                                                              
Collaborative development
program and services      $11,632    $10,564      $47,468   $36,733
revenue
Product revenue           —           679           3,495      2,717
Licensing and royalty     5,811       3,889         15,864     14,380
revenue
Total revenue             17,443      15,132        66,827     53,830
Cost of revenue           6,537       7,470         28,403     25,469
Gross profit              10,906      7,662         38,424     28,361
Operating expenses:                                            
Research and development  5,837       4,659         21,839     19,260
Sales and marketing       1,599       1,056         5,433      4,285
General and               2,678       2,378         10,868     8,534
administrative
Total operating expenses  10,114      8,093         38,140     32,079
Operating income (loss)   792         (431)         284        (3,718)
Interest (expense)        (250)       (103)         (1,004)    (87)
income, net
Other income (expense),   (1)         (24,993)      15         (26,167)
net
Income (loss) before
provision for income      541         (25,527)      (705)      (29,972)
taxes
Income tax provision      39          24            51         43
Net income (loss)         502         (25,551)      (756)      (30,015)
Accretion on redeemable
convertible preferred     —           —             —          (8,660)
stock
Net income (loss)
attributable to common    $502       $(25,551)    $(756)    $(38,675)
stockholders
Basic net income (loss)   $0.01      $(1.19)      $(0.02)   $(3.99)
per common share
Diluted net income (loss) $0.01      $(1.19)      $(0.02)   $(3.99)
per common share
                                                              
Shares used in basic and
diluted net loss per      43,684      21,519        42,966     9,699
common share
                                                              
Shares used in basic and
diluted net loss per      47,726      21,519        42,966     9,699
common share


Intermolecular,Inc.
Condensed Consolidated Balance Sheets
(In thousands, Unaudited)

                                As of December         As of December 31,
                                 31,2012               2011
ASSETS                                                 
Current assets:                                        
Cash and cash equivalents        $78,283              $81,002
Accounts receivable, net         8,330                 11,162
Inventory, current portion       1,631                 —
Prepaid expenses and other       1,361                 1,763
current assets
Total current assets             89,605                93,927
Inventory, net of current        3,160                 2,532
portion
Property and equipment, net      24,058                25,128
Intangible assets, net           6,671                 6,067
Other assets                     191                   160
Total assets                     $123,685             $127,814
LIABILITIES AND STOCKHOLDERS'                          
EQUITY
Current liabilities:                                   
Accounts payable                 $971                 $1,079
Accrued compensation and         3,397                 2,452
employee benefits
Deferred revenue, current        3,130                 11,168
portion
Accrued liabilities              3,386                 3,759
Note payable, current portion    26,514                804
Total current liabilities        37,398                19,262
Note payable, net of current     —                     26,514
portion
Deferred revenue, net of current —                     716
portion
Other long-term liabilities      770                   1,149
Total liabilities                38,168                47,641
Stockholders' equity:                                  
Common stock                     44                    42
Additional paid-in capital       186,778               180,680
Accumulated deficit              (101,305)             (100,549)
Total stockholders' equity       85,517                80,173
Total liabilities and            $123,685             $127,814
stockholders' equity


Intermolecular,Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands, Unaudited)
                                                                
                                                     Years Ended December 31,
                                                     2012        2011
Cash flows from operating activities:                            
Net loss                                              $(756)    $(30,015)
Adjustments to reconcile net loss to net cash                    
provided by (used in) operating activities:
Depreciation and amortization                         7,995      7,079
Stock-based compensation                              3,652      2,442
Impairment of long-lived assets                       949        —
Revaluation of preferred stock warrant liability      —          554
Revaluation of derivative liability                   —          24,476
Common stock warrant charge (contra revenue)          —          312
Loss on disposal of property and equipment            2          65
Changes in operating assets and liabilities:                     
Prepaid expenses and other assets                     371        (2,677)
Inventory                                             (1,459)    (343)
Accounts receivable                                   2,788      (7,030)
Accounts payable                                      (177)      (203)
Accrued and other liabilities                         (369)      5,446
Deferred revenue                                      (9,510)    (8,262)
                                                                
Net cash provided by (used in) operating activities   3,486      (8,156)
Cash flows from investing activities:                            
Purchase of short-term investments                    (2,201)    (750)
Redemption of short-term investments                  2,201      750
Purchase of property and equipment                    (6,560)    (12,806)
Capitalized intangible assets                         (1,274)    (835)
Decrease in restricted cash                           —          173
Net cash used in investing activities                 (7,834)    (13,468)
Cash flows from financing activities:                            
Payment of debt                                       (804)      —
Proceeds from exercise of common stock options        2,433      476
Payment of selling stockholder offering costs         —          (1,389)
Proceeds from exercise of common stock warrants       —          6,376
Proceeds from initial public offering, net of         —          49,217
expenses
Proceeds from issuance of redeemable convertible      —          24,882
preferred stock, net of issuance costs
Net cash provided by financing activities             1,629      79,562
Net (decrease) increase in cash and cash equivalents  (2,719)    57,938
Cash and cash equivalents at beginning of period      81,002     23,064
Cash and cash equivalents at end of period            $78,283   $81,002

Non-GAAP Financial Measures

To supplement the financial data presented on a GAAP basis, we also disclose
certain non-GAAP financial measures, which exclude the effect of stock-based
compensation and, for certain 2011 periods, a common stock warrant charge
against revenue, preferred stock warrant and derivative charges, transaction
costs related to our acquisition of Symyx and accretion on redeemable
convertible preferred stock. These non-GAAP financial measures are not
prepared in accordance with GAAP, do not serve as an alternative to GAAP and
may be calculated differently than non-GAAP financial information disclosed by
other companies. These results should only be used to evaluate our results of
operations in conjunction with the corresponding GAAP measures. We believe
that our non-GAAP financial information provides useful information to
management and investors regarding financial and business trends relating to
our financial condition and results of operations because the non-GAAP
measures exclude charges that management considers to be outside of
Intermolecular's core operating results. We believe that the non-GAAP measures
of revenue, cost of revenue, gross margin, operating income (loss), net income
(loss) and earnings (loss) per share, viewed in combination with our financial
results calculated in accordance with GAAP, provide investors with additional
perspective and a more meaningful understanding of our ongoing operating
performance. In addition, management uses these non-GAAP measures to review
and assess financial performance, to determine executive officer incentive
compensation and to plan and forecast performance in future periods.

Intermolecular,Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts, Unaudited)

                              Three Months Ended December 31,
                              GAAP           Stock-based       Non-GAAP
                               Results        Compensation      Results
Revenue:                                                      
                                                             
Collaborative development      $11,632      $—              $11,632
program and services revenue
Product revenue                —             —                —
Licensing and royalty revenue  5,811         —                5,811
Total revenue                  17,443        —                17,443
Cost of revenue ^(a)           6,537         (231)            6,306
Gross profit                   10,906        231              11,137
Operating expenses:                                           
Research and development ^ (a) 5,837         (230)            5,607
Sales and marketing ^(a)       1,599         (224)            1,375
General and administrative     2,678         (280)            2,398
^(a)
Total operating expenses       10,114        (734)            9,380
Operating income               792           965              1,757
Interest (expense) income, net (250)         —                (250)
Other income (expense), net    (1)           —                (1)
Income before provision for    541           965              1,506
income taxes
Income tax provision           39            —                39
Net income                     $502         $965            $1,467
Basic net income per common    $0.01                         $0.03
share
Diluted net income per common  $0.01                         $0.03
share
Shares used in basic net       43,684                         43,684
income per common share
Shares used in diluted net     47,726                         47,726
income per common share
                                                             
(a)Stock-based Compensation reflects expense recorded relating to stock based
awards. The Company excludes this item when it evaluates the continuing
operational performance of the Company, as management believes this GAAP
measure is not indicative of its core operating performance.


Intermolecular,Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts, Unaudited)

                              Year Ended December 31, 2012
                              GAAPResults     Stock-based      Non-GAAP
                                                Compensation     Results
Revenue:                                                       
                                                              
Collaborative development      $47,468        $—             $47,468
program and services revenue
Product revenue                3,495           —               3,495
Licensing and royalty revenue  15,864          —               15,864
Total revenue                  66,827          —               66,827
Cost of revenue ^(a)           28,403          (1,011)         27,392
Gross profit                   38,424          1,011           39,435
Operating expenses:                                            
Research and development ^ (a) 21,839          (872)           20,967
Sales and marketing ^ (a)      5,433           (774)           4,659
General and administrative     10,868          (995)           9,873
^(a)
Total operating expenses       38,140          (2,641)         35,499
Operating income               284             3,652           3,936
Interest (expense) income, net (1,004)         —               (1,004)
Other income (expense), net    15              —               15
(Loss) income before provision (705)           3,652           2,947
for income taxes
Provision for income taxes     51              —               51
Net (loss) income              $(756)         $3,652         $2,896
Basic net (loss) income per    $(0.02)                        $0.07
common share
Diluted net (loss) income per  $(0.02)                        $0.06
common share
                                                              
Shares used in basic net       42,966                          42,966
(loss) income per common share
                                                              
Shares used in diluted net     42,966                          47,493
(loss) income per common share

(a) Stock-based Compensation reflects expense recorded relating to stock
based awards. The Company excludes this item when it evaluates the continuing
operational performance of the Company, as management believes this GAAP
measure is not indicative of its core operating performance.


Intermolecular,Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts and percentages, Unaudited)
                                                              
                      Three Months Ended December   Years Ended December 31,
                       31,
                      2012          2011            2012         2011
GAAP revenue           $17,443     $15,132       $66,827    $53,830
Common stock warrant
charge (contra         —            —              —           312
revenue) ^(a)
Non-GAAP revenue       $17,443     $15,132       $66,827    $54,142
GAAP cost of net       $6,537      $7,470        $28,403    $25,469
revenue
Stock-based
compensation expense   (231)        (204)          (1,011)     (622)
^(b)
Non-GAAP cost of net   $6,306      $7,266        $27,392    $24,847
revenue
GAAP gross profit      $10,906     $7,662        $38,424    $28,361
Common stock warrant
charge (contra         —            —              —           312
revenue) ^(a)
Stock-based
compensation expense   231          204            1,011       622
^(b)
Non-GAAP gross profit  $11,137     $7,866        $39,435    $29,295
As a percentage of net                                         
revenue:
GAAP gross margin      62.5 %        50.6 %          57.5 %       52.7 %
Non-GAAP gross margin  63.8 %        52.0 %          59.0 %       54.1 %
                                                              
GAAP operating income  $792        $(431)        $284       $(3,718)
(loss)
Common stock warrant
charge (contra         —            —              —           312
revenue) ^(a)
Stock-based
compensation expense                                           
^(b):
Cost of net revenue    231          204            1,011       622
Research and           230          135            872         462
development
Sales and marketing    224          143            774         770
General and            280          157            995         588
administrative
Non-GAAP operating     $1,757      $208          $3,936     $(964)
income (loss)
                                                              
GAAP net income (loss)
attributable to common $502        $(25,551)     $(756)     $(38,675)
stockholders
Stock-based
compensation expense   965          639            3,652       2,442
^(b)
Symyx related
transaction charges    —            25,256         —           25,865
^(d)
Preferred stock
warrant and derivative —            (140)          —           554
charges ^ (c)
Common stock warrant
charge (contra         —            —              —           312
revenue) ^ (a)
Accretion on
redeemable convertible —            —              —           8,660
preferred stock
Non-GAAP net income
(loss) attributable to $1,467      $204          $2,896     $(842)
common stockholders
Shares used in
computing Non-GAAP     43,684       21,519         42,966      9,699
basic net income
(loss) per share ^(d)
Shares used in
computing Non-GAAP     47,726       44,074         47,493      9,699
diluted net income
(loss) per share ^(d)
Non-GAAP earnings per                                          
share:
Basic net income
(loss) per common      $0.03      $0.01        $0.07     $(0.09)
share
Diluted net income
(loss) per common      $0.03      $0.00        $0.06     $(0.09)
share
                                                              
(a) Reduction in revenue as a result of common stock warrants issued in
connection with a customer agreement.
(b) Reflects the stock-based compensation expense recorded relating to stock
based awards. The Company excludes this item when it evaluates the continuing
operational performance of the Company, as management believes this GAAP
measure is not indicative of its core operating performance.
(c) Changes in fair value ofthe Company'spreferred stock warrant prior to
its exercise in connection withthe Company'sinitial public offering and the
revaluation oftheCompany'sderivative liability prior to the consummation of
the asset purchase transaction with Symyx Technologies, Inc.
(d) Increase in share count year over year includes the conversion of
preferred shares to common in connection with the Company's initial public
offering in November 2011 as well as new shares issued as part of the
Company's Series E Preferred Stock financing and the Company's initial public
offering completed in 2011.  

CONTACT: Press Contact
         Ed Korczynski
         Intermolecular, Inc.
         Marketing Communications Director
         edk@intermolecular.com
         +1.408.582.5629
        
         Investor Contact
         Gary Hsueh
         Intermolecular, Inc.
         Sr. Director of Corporate Development and Investor Relations
         gary.hsueh@intermolecular.com
         +1.408.582.5635

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