Intermolecular Announces First Quarter 2013 Financial Results

Intermolecular Announces First Quarter 2013 Financial Results

Recent CDP and IP Agreements With Micron and Epistar -- Further Expanding in
Memory, and Diversifying Into LED

SAN JOSE, Calif., April 25, 2013 (GLOBE NEWSWIRE) -- Intermolecular, Inc.
(Nasdaq:IMI) — accelerating research and development (R&D) for semiconductor
and clean energy industries — today announced results for its first quarter
ended March 31, 2013.

Revenue for the first quarter of 2013 was $17.4 million, representing 6%
growth on a year-over-year basis. Collaborative development program (or CDP)
revenue was $10.9 million for the quarter, compared to $12.2 million in the
prior year. Licensing and royalty revenue was $3.4 million, compared to $3.5
million for the same period a year ago. Product revenue was $3.1 million
compared to $0.7 million reported in the year-ago period.

Gross margin in the first quarter of 2013 was 55.0%, as compared to 62.5% in
the fourth quarter of 2012. The decline primarily reflected a sequential
change in revenue mix, as the fourth quarter of 2012 benefited from an IP
asset sale, which contributed to higher-margin licensing and royalty revenue
of $5.8 million, or 33.3% of total revenue, compared to $3.4 million, or 19.6%
of total revenue, in the first quarter of 2013.

For the first quarter of 2013, the Company reported a net loss of $(1.5)
million or $(0.03) per share, compared to a net loss of $(0.2) million, or
$(0.00) per share for the first quarter of 2012.

Intermolecular reports revenue, costs 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 measure, 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.

On a non-GAAP basis, the Company reported a net loss of $(0.1) million or
$(0.00) per share, compared to net income of $0.6 million, or $0.01 per share
in the first quarter of 2012.

"So far in 2013, we've made significant progress expanding and diversifying
the business — in April, we announced a milestone, multi-year CDP and IP
licensing agreement with Micron, which ensures monetization of our developed
technology and IP in DRAM, and expands our licensing opportunity to Micron's
non-volatile memory products," said David Lazovsky, President and CEO of
Intermolecular, Inc. "By signing Epistar, a top five LED device manufacturer,
to a CDP and royalty-bearing IP licensing agreement, we continue to execute on
our growth and diversification strategy. In addition, in Q2 we expect to
re-align our CDP engagement with GLOBALFOUNDRIES to focus on their highest
priority projects. While this would be expected to reduce our near-term CDP
revenue from GLOBALFOUNDRIES it should facilitate future growth of royalty
revenue from them as we will be more focused on their critical path projects."

Cash flows from operations for the first quarter of 2013 were $3.8 million,
primarily resulting from licensing and scheduled service prepayments. The
Company invested $1.5 million in capital expenditures in the first quarter,
and ended the quarter with cash and investments of $81.0 million.

Outlook for Second Quarter 2013

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

  *The Company projects revenue in the range of $16.0 to $17.0 million. This
    revenue projection includes $12.3 million from reported backlog as of
    March 31, 2013, and also takes into account the expected re-alignment of
    the Company's CDP program with GLOBALFOUNDRIES.
    
  *Non-GAAP net income, excluding stock-based compensation expense, is
    projected between a non-GAAP net loss of ($1.0) million and breakeven, or
    between ($0.02) per share to $0.00 per share, on approximately 45 million
    basic and 49 million diluted 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 first quarter 2013
results and other business developments.

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™) 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.

Forward-Looking Statements

Statements made in this press release and the related earnings conference call
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
and non-GAAP net income for the second quarter of 2013; the extent to which
second quarter 2013 revenue will incorporate backlog from the end of the first
quarter; the anticipated closing of Micron's acquisition of Elpida; the scope
of the opportunities with Micron and Epistar under the new agreements; the
extent to which the new agreements with Micron and Epistar can demonstrate the
value of the HPC platform and our ability to develop innovative technology and
IP that yield a sustained, competitive advantage for our customers; the impact
of the narrower scope of CDP activities with GLOBALFOUNDRIES. 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 revenue mix; the extent to which our backlog will convert to revenue;
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
scalability of our financial model and future earnings leverage; the pending
acquisition of Elpida by Micron and the anticipated impact to our business if
the acquisition closes; the size of potential market opportunities in the
semiconductor and clean energy industries in general, as well as in particular
market segments (including but not limited to LED) within each industry; our
anticipated successful expansion into some of these market segments, and
anticipated growth in our current markets through expansion of existing
customer CDPs and the entry into CDPs with new customers; the results of
future discussions with GLOBALFOUNDRIES regarding the scope of our CDP; 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
2012 Form 10-K as filed with the SEC and available at www.sec.gov,
particularly in the section 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 March 31,
                                                 2013           2012
Revenue:                                                        
Collaborative development program and services    $ 10,903       $ 12,195
revenue
Product revenue                                   3,104          678
Licensing and royalty revenue                     3,426          3,509
Total revenue                                     17,433         16,382
Cost of revenue                                   7,843          7,188
Gross profit                                      9,590          9,194
                                                               
Operating expenses:                                             
Research and development                          6,172          5,068
Sales and marketing                               1,637          1,240
General and administrative                        2,992          2,818
Total operating expenses                          10,801         9,126
                                                               
Operating (loss) income                           (1,211)        68
Interest expense, net                             (250)          (249)
Other expense, net                                (19)           (6)
Loss before provision for income taxes            (1,480)        (187)
Income tax provision (benefit)                    6              (1)
Net loss                                          $(1,486)      $(186)
                                                               
Basic and diluted net loss per common share       $(0.03)       $(0.00)
                                                               
Shares used in basic and diluted net loss per     44,139         42,241
common share



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


                                           As of March 31, As of December 31,
                                           2013            2012
ASSETS                                                     
Current assets:                                            
Cash and cash equivalents                   $ 79,981        $ 78,283
Marketable securities                       1,001           —
Total cash, cash equivalents and marketable 80,982          78,283
securities
Accounts receivable, net                    7,559           8,330
Inventory, current portion                  1,625           1,631
Prepaid expenses and other current assets   1,399           1,361
Total current assets                        91,565          89,605
                                                          
Inventory, net of current portion           4,230           3,160
Property and equipment, net                 23,368          24,058
Intangible assets, net                      6,836           6,671
Other assets                                180             191
Total assets                                $ 126,179       $ 123,685
                                                          
LIABILITIES AND STOCKHOLDERS' EQUITY                       
Current liabilities:                                       
Accounts payable                            $ 1,522         $ 971
Accrued compensation and employee benefits  2,452           3,397
Deferred revenue                            5,281           3,130
Accrued liabilities                         3,951           3,386
Note payable                                26,276          26,514
Total current liabilities                   39,482          37,398
                                                          
Other long-term liabilities                 621             770
Total liabilities                           40,103          38,168
                                                          
Stockholders' equity:                                      
Common stock                                45              44
Additional paid-in capital                  188,822         186,778
Accumulated deficit                         (102,791)       (101,305)
Total stockholders' equity                  86,076          85,517
Total liabilities and stockholders' equity  $ 126,179       $ 123,685



Intermolecular,Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands, Unaudited)


                                                 Three Months Ended March 31,
                                                 2013           2012
Cash flows from operating activities:                           
Net loss                                          $(1,486)      $(186)
Adjustments to reconcile net loss to net cash                   
provided by
Depreciation and amortization                     2,201          1,852
Stock-based compensation                          1,400          827
Changes in operating assets and liabilities:                    
Prepaid expenses and other assets                 (10)           385
Inventory                                         (671)          (1,698)
Accounts receivable                               771            5,096
Accounts payable                                  9              (412)
Accrued and other liabilities                     (525)          (1,044)
Deferred revenue                                  2,151          (3,071)
Net cash provided by operating activities         3,840          1,749
Cash flows from investing activities:                           
Purchase of short-term investments                (1,001)        (1,251)
Purchase of property and equipment                (1,423)        (333)
Capitalized intangible assets                     (108)          (327)
Net cash used in investing activities             (2,532)        (1,911)
Cash flows from financing activities:                           
Payment of debt                                   (238)          (114)
Proceeds from exercise of common stock options    628            121
Net cash provided by financing activities         390            7
Net increase (decrease) in cash and cash          1,698          (155)
equivalents
Cash and cash equivalents at beginning of period  78,283         81,002
Cash and cash equivalents at end of period        $ 79,981       $ 80,847

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. 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 March 31, 2013
                           GAAP Results    Stock-based     Non-GAAP
                                            Compensation     Results
Revenue:                                                   
Collaborative development
program and services        $ 10,903        —               $ 10,903
revenue
Product revenue             3,104           —               3,104
Licensing and royalty       3,426           —               3,426
revenue
Total revenue               17,433          —               17,433
Cost of revenue (a)         7,843           (374)            7,469
Gross profit                9,590           374              9,964
                                                          
Operating expenses:                                        
Research and development    6,172           (395)            5,777
(a)
Sales and marketing (a)     1,637           (280)            1,357
General and administrative  2,992           (351)            2,641
(a)
Total operating expenses    10,801          (1,026)          9,775
                                                          
Operating (loss) income     (1,211)         1,400            189
Interest expense, net       (250)           —               (250)
Other expense, net          (19)            —               (19)
Loss before provision for   (1,480)         1,400            (80)
income taxes
Income tax provision        6               —               6
Net loss                    $(1,486)       1,400            $(86)
                                                          
Basic and diluted net loss  $(0.03)                        $(0.00)
per common share
                                                          
Shares used in basic and
diluted net loss per common 44,139                          44,139
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 March 31,
                                       2013                 2012
                                                           
GAAP cost of net revenue                $ 7,843              $ 7,188
Stock-based compensation expense(a)    (374)                (284)
Non-GAAP cost of net revenue            $ 7,469              $ 6,904
                                                           
GAAP gross profit                       $ 9,590              $ 9,194
Stock-based compensation expense (a)    374                  284
Non-GAAP gross profit                   $ 9,964              $ 9,478
                                                           
As a percentage of net revenue:                             
GAAP gross margin                       55.0%                56.1%
Non-GAAP gross margin                   57.2%                57.9%
                                                           
GAAP operating (loss) income            $(1,211)            $ 68
Stock-based compensation expense (a):                       
Cost of net revenue                     374                  284
Research and development                395                  209
Sales and marketing                     280                  125
General and administrative              351                  209
Non-GAAP operating income               $ 189                $ 895
                                                           
GAAP net loss                           $(1,486)            $(186)
Stock-based compensation expense (a)    1,400                827
Non-GAAP net (loss) income              $(86)               $ 641
                                                           
Shares used in computing Non-GAAP basic 44,139               42,241
earnings per share
                                                           
Shares used in computing Non-GAAP       44,139               46,875
diluted earnings per share
                                                           
Non-GAAP earnings per share:                                
Basic net (loss) income per common      $(0.00)             $ 0.02
share
                                                           
Diluted net (loss) income per common    $(0.00)             $ 0.01
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.


CONTACT: Press Contact
         David Moreno
         MCA Public Relations
         dmoreno@mcapr.com
         +1.650.968.8900 x125
        
         Investors
         Gary Hsueh
         Intermolecular, Inc.
         Sr. Director of Corporate Development and Investor Relations
         gary.hsueh@intermolecular.com
         +1.408.582.5635

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