<PAGE 1>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One) FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 1998.
[ ] 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: 1-8266
DATARAM CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-1831409
---------------------- ----------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
P.O. Box 7528, Princeton, New Jersey 08543-7528
-------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 799-0071
Securities registered pursuant to section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $1.00 Par Value American Stock Exchange
Securities registered pursuant to section 12(g) of the Act: None
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 period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark 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 the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the Common Stock held by non-affiliates of
the registrant on July 17, 1998 was $30,993,973.
The number of shares of Common Stock outstanding on July 24, 1998:
2,781,405 shares.
DOCUMENTS INCORPORATED BY REFERENCE:
(1) Definitive Proxy Statement for Annual Meeting of Shareholders to be
held on September 9, 1998 (the "Definitive Proxy Statement") to be filed
within 120 days of the end of the fiscal year.
(2) 1998 Annual Report to Security Holders.
<PAGE 2>
DATARAM CORPORATION
INDEX
Part I Page
Item 1. Business . . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . 8
Item 3. Legal Proceedings . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . 9
Part II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters. . . . . . . . . 9
Item 6. Selected Financial Data. . . . . . . . . . . . . 9
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . 10
Item 8. Financial Statements and Supplementary Data. . . 10
Item 9. Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . 13
Part III
Item 10. Directors and Executive Officers of
the Registrant . . . . . . . . . . . . . . . . . 13
Item 11. Executive Compensation . . . . . . . . . . . . . 13
Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . 13
Item 13. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . . 13
Part IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K . . . . . . . 14
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE 3>
PART I
Item 1. BUSINESS
(a) General Development of Business.
Dataram develops, manufactures and markets computer memory
products for use with workstations and network servers. The
Company's memory products expand the capacity and extend the economic
useful life of the installed base of computers manufactured by Sun
Microsystems, Inc. ("Sun"), Hewlett-Packard Company ("HP"), Digital
Equipment Corporation ("DEC"), Silicon Graphics, Inc. ("SGI"),
International Business Machines Corporation ("IBM")and Compaq
Computer ("Compaq"). Dataram products are not intended for use with
high-end mainframe computers.
In fiscal 1998 the Company saw a continuing decline in the price
it pays for dynamic random access memory ("DRAM"), which is the
principal component of the memory boards it sells. As a direct
consequence, the prices for the memory boards the Company sells also
declined. Notwithstanding these price drops, Company revenues have
increased as the Company has substantially increased unit volume.
DRAM has been readily available from various manufacturers on a rapid
basis. Consequently, the Company does not need to maintain large
inventory levels to service its customers.
The Company was incorporated in New Jersey in 1967 and made an
initial public offering in 1968. Its Common Stock has been listed
for trading on the American Stock Exchange since 1981. The
Company's principal executive office is located at 186 Princeton-
Hightstown Road, West Windsor, New Jersey 08543 and its telephone
number is (609) 799-0071, its fax is (609) 799-6734 and its website
is http://www.dataram.com.
(b) Financial Information about Industry Segments.
The Company operates in one industry segment.
(c) Narrative Description of Business.
Dataram develops, manufactures and markets a variety of
memory products for use with workstations and network servers,
including those sold by Sun, HP, DEC, SGI, IBM and Compaq. The
Company sells memory products both for new machines and for the
installed base of these classes of computers at prices less than the
computer manufacturer. The Company's customers are primarily
distributors, value added resellers and larger end-users.
<PAGE 4>
Industry Background
The market for independently manufactured memory began in the
early 1970's with the introduction of core magnetic memory expansions
for DEC computers. During the late 1970's semiconductor technology
emerged as the dominant technology for use in computer memories,
displacing magnetic core memories.
The minicomputer was pioneered by DEC in the late 1960's and
early 1970's as a lower cost, localized system which could be used to
service a small department of a company and provide independence from
centralized mainframes. This decentralized approach to satisfying
computing needs gained immediate popularity with the engineering and
scientific community and later with the general business community.
A large installed base of minicomputer systems remains in place,
although this base is now declining.
The workstation, like the PC, is designed to provide computer
resources to individual users. The workstation differs from the PC
in providing substantially greater computational performance,
input/output capability and graphic display. Workstations are nearly
always networked. As a result of this networking capability, a new
class of computer system, the network server, has emerged.
Network servers are computer systems on a network which provide
dedicated functions accessible by all workstations and other systems
on the same network. Examples of different types of network servers
in use today are: file servers, communication servers, computation
servers, database servers, print servers and storage servers.
Dataram designs, produces and markets memory products to end
users of the installed base of workstations and network servers sold
by Sun, HP, DEC, Silicon Graphics, IBM and Compaq.
The "open system" philosophy espoused by most of the general
computer industry has played a part in enlarging the market for third
party vendors. Under the "open system" philosophy, manufacturers
adhere to industry design standards, enabling users to "mix and
match" hardware and software products from a variety of vendors so
that a system can be configured for the user's application in the
most economical manner with reduced concern for compatibility and
support. Memory products for workstations and network servers have
become commodities with substantial competition from OEMs and a
number of independent memory manufacture suppliers.
Generally, growth in memory markets closely follows both the
growth in unit shipments of system vendors and the growth of memory
requirements per system.
<PAGE 5>
Business Strategy
In addition to taking advantage of the growing market for
workstations and network servers, Dataram has a two pronged strategy
to increase sales.
Market Penetration
Management estimates that sales by system vendors constitute 75%
of the memory market in fiscal 1998. Thus, there is an opportunity
for growth through penetration of the system vendor's market share.
To successfully compete with system vendors, Dataram must continue to
respond to customers' needs in a short time frame. To support
customers' needs, the Company has established a dedicated and highly
automated manufacturing facility that is designed to produce and ship
customer orders within twenty-four hours or less.
Geographic Expansion
Approximately 71% of Dataram's fiscal 1998 revenues were derived
from sales in the United States with the remainder principally in
Western Europe, Canada and the Asian Pacific region. The Company
intends to capitalize on the system vendors' growth of business in
Europe and Asia by providing memory for the systems being sold in
these markets.
Products
The Company's principal business is the development, manufacture
and marketing of memory boards and modules which can be added to
workstations and network servers to upgrade or expand the
capabilities of such systems. When vendors produce computer systems
adhering to open system industry standards, the development effort
for Dataram and other independent memory manufacturers is
straightforward and allows for the use of many standard components.
Distribution Channels
Dataram sells its memory products in the United States to
distributors, value-added resellers and larger end-users principally
through its staff located in Princeton, New Jersey. The Company also
markets its memory products in Canada, Western Europe and the Asian
Pacific region through a network of independent distributors.
<PAGE 6>
Product Warranty and Service
Management believes that the Company's reputation for the
reliability of its memory products and the confidence of prospective
purchasers in Dataram's ability to provide service over the life of
the product are important factors in making sales. As a consequence,
the Company adopted many years ago a Lifetime Warranty program for
its memory products. The economic useful life of the computer
systems to which Dataram's memory equipment is attached is almost
always substantially less than the physical useful life of the
equipment itself. Thus, memory systems are unlikely to "wear out."
The Company's experience is that less than 1% of all the products it
sells are returned under the Lifetime Warranty.
Engineering and Development
The Company's ability to compete successfully depends upon its
ability to identify new memory needs of its customers. To achieve
this goal, the Company's engineering group continually monitors
computer system vendors' new product developments, and the Company
evaluates and tests major components as they become available.
Dataram designs prototype memory products and subjects them to
reliability testing procedures. During its fiscal year ended April
30, 1998, the Company incurred costs of $1,113,000 for engineering
and product development compared to $1,030,000 in fiscal 1997 and
$1,584,000 in fiscal 1996.
Manufacturing
The Company purchases standard dynamic random access memory
("DRAM") chips. The costs of such chips is approximately 85% of the
total manufacturing cost of memory products. Fluctuations in the
availability or prices of memory chips can have a significant impact
on the Company's profit.
Dataram has created close relationships with primary suppliers
while qualifying and developing alternate sources as a back up. The
qualification program consists of extensive evaluation of process
capabilities, on-time delivery performance and financial stability of
each supplier. Alternative sources are qualified to normally assure
supply in the event of a problem with the primary source or to handle
surges in demand. The Company assembles its memory boards at a
leased site. Memory boards are then rigorously tested in the
Company's quality assurance program.
Backlog
The Company expects that all backlog on hand will be filled
during the current fiscal year. The Company believes that backlog is
generally not material to its business since the Company usually
ships its memory products on the same day an order is received.
<PAGE 7>
Competition
The intensely competitive computer industry is characterized by
rapid technological change and constant pricing pressures. These
characteristics are equally applicable to the third party memory
market, where pricing is a major consideration in the buying
decision. Dataram competes with Sun, HP, DEC, Silicon Graphics, IBM
and Compaq, as well as with a number of third party memory suppliers,
including Kingston Technology.
Although many of Dataram's competitors possess significantly
greater financial, marketing and technological resources, the
Company competes favorably based on the buying criteria of
price/performance, time-to-market, product quality, reliability,
service/support, breadth of product line and compatibility with
computer system vendors' technology. Dataram's objective is to
continue to remain strong in all of these areas with particular
focus in price/performance and time-to-market, which management
believes are two of the more important criteria in the selection
of third party memory product suppliers. Market research and
analysis capability by the Company is necessary to ensure timely
information on new products and technologies coming from the
computer system vendors and from the overall memory market.
Dataram must continue low cost, high volume production while
remaining flexible to satisfy the time-to-market requirement.
The Company believes that its 31-year reputation for providing
quality products is an important factor to its customers when making
a purchase decision. To strengthen this reputation, the Company has
a comprehensive lifetime warranty and service program which provides
customers with added confidence in buying from Dataram. See
"Business-Product Warranty and Service."
Patents, Trademarks and Licenses
The Company believes that its success depends primarily upon the
price and performance of its products rather than on ownership of
copyrights or patents.
Sale of memory products for systems that use proprietary memory
design can from time to time give rise to claims of copyright or
patent infringement. In such instances the Company has obtained the
opinion of patent counsel that its products do not violate such
patents or copyrights or obtained a license from the original
equipment manufacturer.
To the best of the Company's knowledge and belief, no Company
product infringes any valid copyright or patent. However, because of
rapid technological development in the computer industry with
concurrent extensive patent coverage and the rapid rate of issuance
of new patents, questions of infringement may continue to arise in
<PAGE 8>
the future. If such patents or copyrights are perfected in the
future, the Company believes, based upon industry practice, that any
necessary licenses would be obtainable upon the payment of reasonable
royalties.
Employees
As of April 30, 1998, the Company had 88 full-time employees.
On July 1, 1998, when the Company assumed direct operation of its
assembly plant, the number of employees increased to 137. The
Company believes it has satisfactory relationships with its
employees. None of the Company's employees are covered by a
collective bargaining agreement.
Environment
Compliance with federal, state and local provisions which have
been enacted or adopted to regulate the protection of the environment
does not have a material effect upon the capital expenditures,
earnings and competitive position of the Company. The Company does
not expect to make any material expenditures for environmental
control facilities in either the current fiscal year (fiscal 1999) or
the succeeding fiscal year (fiscal 2000).
(d) Financial Information about Foreign and Domestic Operations
and Export Sales.
REVENUES (000's)
Fiscal U.S. Europe Other Consolidated
1998 54,989 14,860 7,437 77,286
1997 50,147 12,988 5,845 68,980
1996 76,072 21,630 9,925 107,627
PERCENTAGES
Fiscal U.S. Europe Other Consolidated
1998 71.2% 19.2% 9.6% 100.0%
1997 72.7% 18.8% 8.5% 100.0%
1996 70.7% 20.1% 9.2% 100.0%
Item 2. Properties
The Company occupies approximately 24,000 square feet of
space for administrative, sales, research and development and
manufacturing support in West Windsor Township, New Jersey under a
lease expiring on June 30, 2001.
The Company leases a 24,000 square foot assembly plant in
Northampton Township, Pennsylvania. The lease expires on January 31,
2000 but the Company has two two-year renewal options.
<PAGE 9>
The Company also leases one sales office located in
California, and a distribution center in England.
On September 29, 1980, the Company purchased approximately
81 acres of undeveloped property in West Windsor Township, New
Jersey. The purchase price of $875,000 was paid in cash. This
property is approximately five miles from the Company's current
leased facilities.
Item 3. Legal Proceedings
SUN MICROSYSTEMS, INC. V. DATARAM CORPORATION, United
States District Court for the Northern District of California, San
Jose Division. In August of 1996 the plaintiff filed suit alleging
infringement of five U.S. Patents allegedly infringed by Dataram in
the manufacture of single in-line memory modules ("SIMM's") for use
in workstations and network servers manufactured by Sun Microsystems,
Inc. The plaintiff sought both an injunction and damages. The
Company answered this complaint denying the infringement as a matter
of fact and also alleging the invalidity of the patents both in light
of prior art in the field and for fraud upon the U.S. Patent Office
by the plaintiff. The Company also filed counterclaims against the
plaintiff alleging among other matters anti-trust violations,
intentional interference with contractual relationships, and product
disparagement by the Plaintiff. This matter was settled during the
fourth quarter of fiscal 1998 with the Company agreeing to commence
the payment of royalties on certain Sun Microsystems, Inc. memory
systems and each party releasing one another from past claims.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of Security Holders in
the fourth quarter of the year covered by this report.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Incorporated by reference herein is the information set
forth in the Company's 1998 Annual Report to Security Holders under
the caption "Common Stock Information" at page 7.
Item 6. Selected Financial Data
Incorporated by reference herein is the information set
forth in the 1998 Annual Report to Security Holders under the caption
"Selected Financial Data" at page 19.
<PAGE 10>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Incorporated by reference herein is the information set
forth in the 1998 Annual Report to Security Holders under the caption
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" at page 5 through page 7.
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements and Schedule Page in
Annual
Report*
Consolidated Financial Statements:
Consolidated Balance Sheets as of April 30, 1998 and 1997. 8
Consolidated Statements of Earnings - Years ended
April 30, 1998, 1997 and 1996. . . . . . . . . . . . . 9
Consolidated Statements of Cash Flows -
Years ended April 30, 1998, 1997 and 1996. . . . . . . 10
Consolidated Statements of Stockholders' Equity -
Years ended April 30, 1998, 1997 and 1996. . . . . . . 11
Notes to Consolidated Financial Statements -
April 30, 1998, 1997 and 1996. . . . . . . . . . . . . 12
Independent Auditors' Report on Financial Statements. . . . 18
Page in
Financial Statement Schedule: 10-K
Valuation and Qualifying Accounts -
Years ended April 30, 1998, 1997 and 1996 . . . . . . 11
Independent Auditors' Report on
Financial Statement Schedule . . . . . . . . . . . . 12
All other schedules are omitted as the required information
is inapplicable or because the required information is shown in
the financial statements or notes thereto.
- --------------
*Incorporated herein by reference.
<PAGE 11>
<TABLE>
Schedule VIII
DATARAM CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended April 30, 1998, 1997 and 1996
Additions
charged Deduc-
Balance at to costs tions Balance
beginning and from at close
Description of period expenses reserves* of period
___________ _________ ________ _________ _________
<S> <C> <C> <C> <C>
Year ended April 30, 1996:
Allowance for doubtful accounts $ 695,000 485,000 380,000 800,000
Reserve for inventory obsolescence $ 300,000 -- 300,000 --
Year ended April 30, 1997:
Allowance for doubtful accounts $ 800,000 263,000 263,000 800,000
Reserve for inventory obsolescence $ -- -- -- --
Year ended April 30, 1998:
Allowance for doubtful accounts $ 800,000 435,000 785,000 450,000
Reserve for inventory obsolescence $ -- 50,000 -- 50,000
___________________________
*Represents write-offs of specifically identifiable amounts.
</TABLE
<PAGE 12>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Dataram Corporation:
Under date of May 20, 1998, we reported on the consolidated balance
sheets of Dataram Corporation and subsidiary as of April 30, 1998 and
1997, and the related consolidated statements of earnings,
stockholders' equity, and cash flows for each of the years in the
three-year period ended April 30, 1998. These consolidated financial
statements and our report thereon are incorporated by reference in
the annual report on Form 10-K for the year 1998. In connection with
our audits of the aforementioned consolidated financial statements,
we also have audited the related financial statement schedule as
listed in the accompanying index. This financial statement schedule
is the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statement
schedule based on our audits.
In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set
forth therein.
KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Princeton, New Jersey
May 20, 1998
<PAGE 13>
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Incorporated by reference herein is the information set
forth in the Definitive Proxy Statement under the captions "Executive
Officers of the Company," "Nominees for Director" and "Section 16
Compliance."
Item 11. Executive Compensation
Incorporated by reference herein is the information set
forth in the Definitive Proxy Statement under the caption "Executive
Compensation."
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Incorporated by reference herein is the information set
forth in the Definitive Proxy Statement under the caption "Security
Ownership of Certain Beneficial Owners and Management."
Item 13. Certain Relationships and Related Transactions
Incorporated by reference herein is the information set
forth in the Definitive Proxy Statement under the captions "Executive
Compensation" and "Board of Directors."
<PAGE 14>
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on
Form 8-K
(a) The following documents are filed as part of this
report:
1. Financial Statements incorporated by
reference into Part II of this Report.
2. Financial Statement Schedule included in
Part II of this Report.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the last
quarter of the year covered by this report.
(c) Exhibits:
The Exhibit Index appears on page 16.
<PAGE 15>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DATARAM CORPORATION
(Registrant)
Date: July 24, 1998 By: ROBERT V. TARANTINO
________________________________
Robert V. Tarantino, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on behalf
of the Company and in the capacities and on the dates indicated.
Date: July 24, 1998 By: ROBERT V. TARANTINO
________________________________
Robert V. Tarantino, President
Chief Executive Officer and
Director (Principal Executive
Officer)
Date: July 24, 1998 By: RICHARD HOLZMAN
________________________________
Richard Holzman, Director
Date: July 24, 1998 By: THOMAS A. MAJEWSKI
________________________________
Thomas A. Majewski,
Director
Date: July 24, 1998 By: BERNARD L. RILEY
________________________________
Bernard L. Riley, Director
Date: July 24, 1998 By:
________________________________
Roger C. Cady, Director
Date: July 24, 1998 By: MARK E. MADDOCKS
________________________________
Mark E. Maddocks
Vice President, Finance
(Principal Financial
and Accounting Officer)
<PAGE 16>
EXHIBIT INDEX
Page Page Page Page
of this of 1996 of 1995 of 1994
this 10-K 10-K 10-K 10-K
_______ _______ _______ _______
3(a) Certificate of Incorporation 27
3(b) By-Laws 70
4(a) Loan Agreement with New Jersey 23
National Bank
4(b) 1995 Letter Amendments to Loan 93
Agreement
4(c) 1996 Letter Amendments to Loan
Agreement 18
4(d) 1997 Letter Amendment to Loan
Agreement 17
10(a) 1992 Incentive and Non-Statutory 127
Stock Option Plan
10(b) Lease 133
10(c) 1998 Lease Amendment 19
10(d) Savings and Investment Retirement Plan 146
10(e) Employment Agreement of 227
Robert V. Tarantino
13(a) 1998 Annual Report to Shareholders 28
24(a) Independent Auditors' Consent for 22
S-8 Registration No. 33-56282
27 Financial Data Schedule 23
28(a) Earnings Press Release 24
28(b) Termination of Sun Litigation
Press Release 27
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Stockholders
Dataram Corporation:
We consent to incorporation by reference in the
Registration Statement (No. 33-56282) on Form S-8 of
Dataram Corporation of our report dated May 20, 1998,
relating to the consolidated balance sheets of Dataram
Corporation and subsidiary as of April 30, 1998 and 1997,
and the related consolidated statements of earnings,
stockholders' equity, and cash flows for each of the years
in the three-year period ended April 30, 1998 and our
report dated May 20, 1998 relating to the schedule as
listed in Item 8 of Form 10-K, which reports appear in the
1998 annual report on Form 10-K of Dataram Corporation.
KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Princeton, New Jersey
July 24, 1998
<PAGE>
Dataram Ends Year With Strong Fourth Quarter
PRINCETON, N.J., May 20/PRNewswire/-- Dataram Corporation (Amex:
DTM) continued its earnings momentum, achieving solid gains in
revenues, net earnings and earnings per share for the fourth quarter
of fiscal 1998, Robert V. Tarantino, president and chief executive
officer, announced today.
For the fourth quarter ended April 30, 1998, revenues increased
14% to $19.2 million compared to $16.9 million in the year earlier
period. Net earnings rose 22% to $1,075,000, or $.35 per share,
versus $879,000, or $.27 per share, for last year's comparable
quarter.
For the fiscal year ended April 30, 1998, revenues increased 12%
to $77.3 million compared to the $69.0 million reported in fiscal
1997. Net earnings were $3,722,000 in fiscal 1998 versus $3,769,000
in fiscal 1997. Dataram reported improved earnings per share of
$1.19 in 1998 versus $1.10 earnings per share in 1997. During the
fourth quarter, Dataram completed the Open Market Repurchase Plan
announced on July 11, 1997 which provided for the repurchase of up to
300,000 shares of the Company's common stock. The Company purchased
the full 300,000 shares at a total cost of $2,989,000.
Dataram achieved its third consecutive quarter of strong
earnings growth. "In the first quarter, we revamped out product line
to focus exclusively on high capacity memory products, which
significantly contributed to improved margins and earnings growth,"
Tarantino stated. "We have been consistently 'first to market' with
new product introductions which also improved margins. Additionally,
we invested heavily during the year to expand our domestic and
international sales force resulting in a broadened customer base.
Paced by increased demand in Dataram's key markets - for high
performance workstations and servers - volume remained strong. "For
the fourth quarter and fiscal year, we increased revenues. Volume
increases have more than offset reduced product selling prices,"
Tarantino said. "Our continuing commitment to invest in our
manufacturing facility has enabled us to profitably achieve this
growth. Additionally, our new distribution center in the United
Kingdom is allowing us to profitably serve a rapidly expanding
European Union customer base."
Tarantino noted another significant event in the fourth quarter,
a licensing agreement enabling Dataram to use Sun Microsystems, Inc.
patented memory module technology, which should enhance sales to the
Sun market. The agreement resolved litigation between Sun and
Dataram that began in August 1996, in which the Company has incurred
considerable legal expense.
Earlier in the year, the Company entered into a licensing
agreement with Silicon Graphics, Inc. which resulted in increased
favorable customer acceptance of the Company's product offerings in
that market.
"Looking ahead, we see continued strong volume growth, a
broadened product line in our markets and an expanding customer
base," Tarantino said. "We are confident of revenue and earnings
growth in fiscal 1999."
Dataram develops, manufactures and markets gigabyte memory
boards for the UNIX and Windows NT workstations and server markets.
(more)
<PAGE>
-2-
Dataram Corporation and Subsidiary
Consolidated Summary Information
(In thousands except per share amounts)
Quarter Ended Year Ended
April 30 April 30
1998 1997 1998 1997
Revenues $19,227 $16,850 $77,286 $68,980
Net Earnings $ 1,075 $ 879 $ 3,722 $ 3,769
Earnings Per Share
- - Basic $.38 $.28 $1.26 $1.12
- - Diluted $.35 $.27 $1.19 $1.10
Average Shares Outstanding
- - Basic 2,836 3,137 2,958 3,361
- - Diluted 3,072 3,299 3,118 3,432
DATARAM CORPORATION AND SUBSIDIARY
Fourth Quarter and Fiscal Year 1998 and 1997
CONSOLIDATED SUMMARY OF EARNINGS
(In thousands, except per share amounts)
Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
April 30 April 30 April 30 April 30
Revenues $19,227 $16,850 $77,286 $68,980
Costs and expenses:
Cost of sales 13,879 13,245 58,608 54,409
Engineering and
Development 305 297 1,113 1,030
Selling, general and
Administrative 3,321 1,885 11,766 7,674
17,505 15,427 71,487 63,113
Earnings from Operations 1,722 1,423 5,799 5,867
Other income, net 43 8 268 227
Earnings before income taxes 1,765 1,431 6,067 6,094
Income taxes 690 552 2,345 2,325
Net earnings $1,075 $879 $3,722 $3,769
Net earnings per share
Basic $0.38 $0.28 $1.26 $1.12
Diluted $0.35 $0.27 $1.19 $1.10
Average number of shares Outstanding
Basic 2,836 3,137 2,958 3,361
Diluted 3,072 3,299 3,118 3,432
(more)
<PAGE>
-3-
CONSOLIDATED BALANCE SHEETS
(in thousands)
April 30 April 30
1998 1997
Assets
Current assets:
Cash and cash equivalents $ 7,530 $ 6,836
Trade receivables, net 10,076 8,473
Inventories 2,923 4,396
Other current assets 493 572
Total current assets 21,022 20,277
Property and equipment, net 3,435 2,254
Other assets 7 6
$24,464 $22,537
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 4,699 $ 4,145
Accrued liabilities 1,548 1,093
Income taxes payable 236 0
Total current liabilities 6,483 5,238
Deferred income taxes 1,013 1,013
Stockholders' equity:
Common stock 2,781 3,078
Additional paid-in capital 2,126 2,453
Retained earnings 12,061 10,755
Total stockholders' equity 16,968 16,286
$24,464 $22,537
SOURCE Dataram Corporation
-0- 05/20/98
/CONTACT: Mark Maddocks, Vice-President, Finance of Dataram, 609-
799-0071/
(DTM)
<PAGE>
Dataram Licenses Sun Microsystems, Inc. Memory
Technology
PRINCETON, N.J., April 1/PRNewswire/ -- Dataram
Corporation (Amex: DTM) has entered into a license
agreement that allows Dataram to use Sun Microsystems,
Inc.'s (Nasdaq: SUNW) patented memory module technology,
Robert V. Tarantino, president and chief executive officer,
announced today. The license agreement resolves litigation
between Sun and Dataram that has been pending since August,
1996.
"We are pleased that this matter has been resolved
amicably," Tarantino declared. "While terms and conditions
are confidential, the agreement has no adverse impact on
the company's reported consolidated financial condition,
results of operations and liquidity. We are confident that
this agreement will enhance our position as a leading
independent supplier of memory products."
Dataram develops, manufactures and markets gigabyte
memory boards for the UNIX and Windows NT workstations and
server memory markets.
SOURCE Dataram Corporation
-0- 04/0198
/CONTACT: Mark Maddocks, Vice-President, Finance of
Dataram, 609-799-0071/
(DTM SUNW)
<PAGE>
[DATARAM LOGO]
1998 ANNUAL REPORT
[PICTURE OF MEMORY BOARD WITH DESCRIPTION OF VARIOUS TECHNICAL
FEATURES]
<PAGE 1>
A Closer Look At Memory.
When you look at a memory board you usually see a small,
rather modest looking device with some neatly arranged chips
on it. But this apparent simplicity is misleading. The modern
high-capacity memory board like the one shown on our cover is
complex and carefully designed to get the most performance
and greatest reliability from one of the most valuable
elements of the computer: the DRAM chip. The memory board
circuitry with the DRAM chips is designed to receive programs
and data from the computer bus, store them, condition them,
present them to the CPU, all at the fastest possible speed
and with no errors. The memory is the workhorse in a
computer. It carries the heavy load. The more memory a user
has, the more work they will be able to do and the more
pleasant that work will be.
Financial Highlights
(Dollar figures in thousands, except per share amounts)
Fiscal Year 1998 1997 1996 1995
_______ _______ _______ _______
Revenues $ 77,286 $ 68,980 $107,627 $103,028
Net earnings (loss) 3,722 3,769 1,450 (1,299)
Net earnings (loss) per
common and common share
equivalent (diluted) 1.19 1.10 0.38 (0.34)
Working capital 14,539 15,039 16,803 14,061
Stockholders' equity 16,968 16,286 18,078 16,390
Long-term debt 0 0 0 0
Revenue per employee $ 1,017 $ 1,437 $ 2,031 $ 920
TABLE OF CONTENTS
2 A MESSAGE FROM
THE PRESIDENT
3 COMPANY PROFILE
5 MANAGEMENT'S
DISCUSSION AND
ANALYSIS OF
FINANCIAL CONDITION
AND RESULTS OF
OPERATIONS
8 FINANCIAL REVIEW
19 SELECTED
FINANCIAL DATA
<PAGE 2>
[PICTURE OF ROBERT TARANTINO]
A Message from the President
I am pleased to present this report on the financial results and
business activities of Dataram Corporation for fiscal 1998.
Expanding Customer Base
Dataram is in the forefront as the "first to market" independent
manufacturer of high performance memory for computer workstations
and network servers. In fiscal 1998, we successfully met the
challenge inherent in a very competitive memory marketplace,
growing profitably, while making essential investments to insure
our future growth. We committed considerable resources to
strengthen our sales team, manufacturing and distribution
capabilities.
We have improved the effectiveness and scope of our sales force
by adding skilled professionals who are servicing new and
existing customers in the United States, Western Europe and Asia.
Capitalizing on our reputation as a reliable, quality supplier of
computer memory for more than three decades, we were able to
significantly expand our customer base in both domestic and
foreign markets.
We take pride in our ability to ship products to customers the
same day of their order. Our distribution facility, established
this year in the United Kingdom, insures that European customers
will receive service rivaling that given their American
counterparts.
Multi-task, business and engineering oriented software, which
requires increasing amounts of memory to operate productively is
driving the enormous demand for cost-efficient memory in computer
workstations and network servers.
In the Forefront of Memory Technology
We improved revenues in fiscal 1998 by achieving substantial
volume increases, thereby overcoming the declining cost of DRAM
chips which lowered product selling prices. We reinforced our
commitment to our automated manufacturing facility, expanding
capacity and fine tuning production lines to accommodate the unit
volume increase. Since 1995, we have invested approximately $5
million in capital equipment which has improved production
efficiencies helping us to increase operating margins.
Dataram has long enjoyed a reputation for exceptional product
quality and new product development excellence. We are committed
to continuing our investment in manufacturing technology and
product development to maintain our competitive advantage.
A Profitable Future
The investments we are making will provide sustained profitable
results. There are several reasons for our positive outlook:
1. Volume Growth to Continue. We anticipate that demand for our
products will accelerate as Internet business applications
continue to grow. Agreements signed with Sun Microsystems and
Silicon Graphics - giving Dataram "licensed manufacturer" status
- - will generate increased demand for our products in these
markets.
2. Infrastructure is Solid. Strategic Additions to our team -
supported by ongoing capital investments - has enhanced our
marketing, selling, manufacturing and engineering capabilities.
These capabilities will provide a solid foundation for our
profitable growth.
3. Strong Financial Condition. With a reputation for financial
strength and fiscal responsibility, we have financed all capital
requirements from operation cash flow. The Company has no long-
term debt, with sufficient leverage to comfortably finance our
plans.
For these important reasons, we confidently anticipate a strong
fiscal 1999.
July 14, 1998
Robert V. Tarantino
President and Chief Executive Officer
<PAGE 3>
Company Profile [PICTURE OF PICK AND PLACE MACHINE
PLACING COMPONENTS ON A MEMORY BOARD]
Introduction
Dataram creates and markets computer memory upgrade products to a
global market of advanced workstation and network server users.
Our products increase the performance of virtually all Compaq,
Digital, Hewlett-Packard, IBM, Silicon Graphics and Sun
Microsystems workstation and network server platforms by
providing high-quality memory at prices significantly lower than
the computer manufacturers. Our products are in every way similar
to the original equipment manufacturers in form, fit and
function. The high quality and value advantage we offer has
earned us a reputation as an excellent company supplying a
product of critical importance to our customers for more than 30
years.
We are a quality and service oriented company supporting our
customers throughout the world in diverse productive enterprises
including engineering and manufacturing, business and finance,
science and education, government and utilities, and arts and
entertainment. In these areas and others we help increase group
and individual productivity.
The Computer Industry and Dataram
Dataram's 30+ years of success and growth is grounded in solid
engineering, quality-oriented manufacturing, the highest possible
level of customer service, value pricing and the maintenance of a
solid corporate financial condition. All of these are integrated
into a vision that recognizes the nature of the computer
revolution and the contemporary computer industry. From that
vision, we have positioned ourselves as a significant strategic
resource to an important market sector that will grow strongly
for the next decade and beyond.
Dataram's strength is our ability to acknowledge the volatility
in our industry and to take creative steps to profit from what it
offers us. At Dataram we know the difficult truth that any of our
hard-won advantages and our most treasured strengths can become
liabilities. We constantly assess our ideas and our resources for
their relevance to tomorrow's Dataram, not today's.
Doing the Fundamentals Right
The one constant in what we do and the source of our ability to
respond is a concentration on the fundamentals. For us, the first
fundamental is maintaining a powerful and flexible engineering
team. Our engineering asset is the very best, creating advanced
memory products for the finest enterprise-wide computer-based
information and production infrastructures in the world. Dataram
engineering designs superior
[PICTURE OF FINISHED
PRODUCT BEING INSPECTED]
<PAGE 4>
[PICTURE OF COMPONENTS BEING INSPECTED]
memory-in form, fit and function every bit and byte as good as
the original equipment version. Radical changes in the state of
the memory art and rapidly emerging technical trends are what we
thrive on; that's where we find our opportunities. Powerful,
flexible Dataram engineering responds with quality and speed so
we can be the first to provide our customers with an affordable
upgrade they can count on.
Our second fundamental is service and support. We saw early that
cost reductions and technical advancement in telecommunications,
the spread of computer-based high-definition communications media
such as the Internet, the burgeoning package shipping industry
and the heightened service expectations of customers throughout
the world would provide a competitive opportunity for us. We've
capitalized on that opportunity with a fully developed and
constantly evolving customer service and support infrastructure
that includes: direct and immediate telephone access to memory
and service consultants, a family of worldwide distributors, the
creation of a European distribution center, a record of 97% for
shipment of product within 24 hours of order, a lifetime
guarantee and an internet-based Virtual Sales Office for direct
ordering and tracking every hour of every day.
Our third fundamental is the maintenance of a strong corporate
financial condition, one achieved through prudent investment in
our operating infrastructure, the avoidance of debt and the
resolve to make whatever changes in human or material resources
are required to remain healthy and grow.
Our financial condition is itself a strategic resource that gives
substance to all that we do. It lets us take advantage of
important opportunities such as new demand, whether created by
emerging products among manufacturers for whom our products are
designed or by emerging and maturing market sectors.
Financial health lets us defend against the hazards that are a
natural part of our business environment and our position as a
midsize company among larger companies. Financial health lets us
develop and maintain economically favorable relationships with
suppliers, financial institutions and the business community in
general. It helps us attract skilled and motivated staff at every
level of the company. It supports thorough and confident
implementation of our short-range and long-range plans. Our
financial condition is the corporate "fitness" that enables us to
chase down opportunity and escape adversity.
[PICTURE OF STENCIL PRINTER]
<PAGE 5>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
Dataram is a developer, manufacturer and marketer of quality
memory products for use with computer workstations and network
servers. The Company's memory products, principally for
workstations and servers manufactured by Sun Microsystems,
Hewlett-Packard, Digital Equipment Corporation, Silicon Graphics,
IBM, and COMPAQ are sold worldwide to distributors, value-added
resellers and end users.
The Company is an independent memory manufacturer specializing in
high capacity memory and competes with several other large
independent memory manufacturers as well as the original
equipment manufacturers mentioned above. The primary raw material
used in producing memory boards are dynamic random access memory
(DRAM) chips. The purchase cost of DRAM chips typically
represents approximately 85% of the total cost of a finished
workstation memory board. Consequently, average selling prices
for computer memory boards are significantly dependent on the
pricing and availability of DRAM chips.
Results of Operations
The following table sets forth consolidated operating data
expressed as a percentage of revenues for the periods indicated.
Years Ended April 30, 1998 1997 1997
_____________________ ____ ____ ____
Revenues 100.0% 100.0% 100.0%
Cost of sales 75.8 78.9 90.0
_____ ______ _____
Gross profit 24.2 21.1 10.0
Engineering and development 1.5 1.5 1.5
Selling, general and administrative 15.2 11.1 6.2
_____ ______ _____
Earnings from operations 7.5 8.5 2.3
Other income (expense), net 0.3 0.3 (0.1)
_____ ______ _____
Earnings before income tax expense 7.8 8.8 2.2
Income tax expense 3.0 3.4 0.9
_____ ______ _____
Net earnings 4.8 5.4 1.3
===== ====== ======
Fiscal 1998 Compared With Fiscal 1997
During fiscal 1998 DRAM chips continued to dramatically decline
in price. At the beginning of the fiscal year, 64 megabit and 16
megabit DRAMs cost approximately $48 and $8, respectively. By the
end of the year these same DRAMs were approximately $10 and $2.
As a result of this decline and the competitive nature of the
industry, average selling prices for most of the Company's
products have declined commensurately. However, unit volume
measured as gigabytes shipped has offset the selling price
decline. Workstation and server users are increasingly purchasing
larger capacity memory boards based on 64 megabit DRAM technology
as these products have become more cost effective.
Revenues in 1998 totaled $77.3 million, an increase of 12% from
1997 revenues of $69.0 million. The increase in fiscal 1998 was
the result of increased unit volume offset by reduced average
selling prices. In fiscal 1998, the Company implemented a planned
expansion of its domestic and international sales force. This
enhanced resource has led to an expanded customer base and
increased volume. As in prior years, the majority of the
Company's revenues have been generated by products designed for
SUN, Hewlett-Packard and DEC platforms. In fiscal 1998, the
Company entered into a licensing agreement with Silicon Graphics,
Inc. which has resulted in increased revenue generated by
products designed for that market. In the fourth quarter of
fiscal 1998, the Company entered into a licensing agreement with
Sun Microsystems, Inc. which allows the Company to use Sun's
patented memory module technology. In fiscal 1998, approximately
71% of revenues were derived from domestic sales, 19% from sales
into Europe, with the majority of the remaining sales coming from
Pacific Rim countries.
Cost of sales increased $4.2 million in fiscal 1998 from fiscal
1997. However, cost of sales as a percentage of revenue decreased
by 3.1% in fiscal 1998 from fiscal 1997. The decrease in
percentage
<PAGE 6>
is primarily attributable to a decision made by the Company in
the beginning of fiscal 1998 to focus exclusively on higher
capacity memory products which command higher margins.
Engineering and development costs amounted to $1.1 million and
$1.0 million in 1998 and 1997, respectively. The Company intends
to maintain its commitment to timely introduction of new memory
products.
Selling, general and administrative costs were $11.8 million in
fiscal 1998 versus $7.7 million in fiscal 1997. In fiscal 1998,
the Company incurred approximately $2.0 million in legal expenses
associated with a previously announced complaint filed by Sun
Microsystems, Inc. Prior year expenses related to this matter
totaled approximately $400,000. The litigation was resolved in
fiscal 1998 and all expenses associated with the litigation have
either been paid or accrued as of the end of fiscal 1998. The
remainder of the year over year increase is primarily the result
of the previously mentioned expansion of the Company's sales
force.
Other income, net totaled $268,000 and $227,000 in 1998 and 1997,
respectively. Other income in both years consists primarily of
net interest income.
Fiscal 1997 Compared With Fiscal 1996
Fiscal 1997 was a year characterized by the continued rapid
decline in DRAM prices. The primary memory chip used in the
Company's products during the fiscal year was the 16 megabit
DRAM. At the beginning of the year, these chips cost
approximately $25 each. By the fourth quarter of the fiscal year,
they were generally available at less than $8 each. As a result
of competitive pressures in the industry, average selling prices
for the Company's products declined throughout the year generally
in line with the decline in DRAM prices. However, lower pricing
for memory products resulted in a significant increase in unit
demand. During the second half of fiscal 1997, the Company
started producing workstation products incorporating the next
generation of DRAMs, 64 megabit.
Revenues in 1997 totaled $69.0 million, a decrease of 36% from
1996 revenues of $107.6 million. As discussed, the decline in
revenues in fiscal 1997 was the result of declining average
selling prices for the Company's products offset by increased
unit shipments. Revenues from the sale of products for Sun and
Hewlitt-Packard workstations and computers were the leading
contributors totaling 71.3% of revenues.
Cost of sales decreased $42.5 million in fiscal 1997 from fiscal
1996. Cost of sales as a percentage of revenues decreased by
11.1% in fiscal 1997 from fiscal 1996. With the change in the
DRAM market, vendors could no longer charge independent memory
manufacturers premiums to what the original equipment
manufacturers were being charged for DRAMs.
Engineering and development costs amounted to $1.0 million in
1997, a decrease of $0.6 million from fiscal 1996 expenditures of
$1.6 million.
Selling, general and administrative costs were $7.7 million in
fiscal 1997 versus $6.7 million in fiscal 1996. In fiscal 1997,
the Company incurred increased legal expenses associated with a
previously announced complaint filed by Sun Microsystems, Inc. as
well as planned increases in marketing and promotional
expenditures.
Other income, net totaled $227,000 in 1997 versus other expense,
net of $61,000 in 1996. Fiscal 1997 other income consists
primarily of net interest income and fiscal 1996 expense consists
primarily of net interest expense.
Liquidity and Capital Resources
During fiscal 1998 the Company purchased and retired 335,000
shares of its common stock at a total price of $3.3 million
financed entirely by operating earnings.
<PAGE 7>
Working capital at the end of fiscal 1998 amounted to $14.5
million, including cash and cash equivalents of $7.5 million,
compared to working capital of $15.0 million, including cash and
cash equivalents of $6.8 million in fiscal 1997. Current assets
at year end were 3.2 times current liabilities compared to 3.9 at
the end of fiscal 1997.
Inventories at the end of fiscal 1998 were $2.9 million compared
to fiscal 1997 year-end inventories of $4.4 million. Currently,
DRAMs remain readily available and the Company maintains only the
required level of inventory necessary to support its customer
base. At the end of fiscal 1997, the price of DRAMs increased and
the Company temporarily elected to increase its inventory
commitment.
Capital expenditures were $1,966,000 in fiscal 1998 compared to
$650,000 in fiscal 1997. Capital expenditures in both years
included approximately $200,000 for leasehold improvements and
facility renovation. Subsequent to the end of the fiscal year,
approximately $515,000 of the capital equipment purchased for the
Company's manufacturing operation in fiscal 1998 was placed on an
operating lease, which is consistent with prior year's practices.
Remaining fiscal 1998 and fiscal 1997 capital expenditures were
primarily for automated testing equipment and management
information systems upgrades. At the end of fiscal 1998,
contractual commitments for capital purchases were nil. Fiscal
1999 capital expenditures are not expected to exceed fiscal 1998
expenditures.
The Company's products are all year 2000 compliant. The Company
has reviewed its information systems and intends to complete the
upgrade of any non year 2000 compliant systems in fiscal 1999.
Management estimates that the financial impact of the upgrade
will not have a material effect on the Company's consolidated
financial condition, results of operations and liquidity.
Inflation has not had a significant impact on the Company's
revenue and operations.
During fiscal 1998, the Company amended and restated its $12
million unsecured revolving credit line with its bank. The credit
facility was unused during fiscal 1998. Annually, $6 million of
the facility is scheduled to expire. The Company intends to renew
any expiring portion of the facility by the expiration date and
maintain a $12 million total facility.
Management believes that its working capital together with
internally generated funds and its bank line of credit are
adequate to finance the Company's operating needs and future
capital requirements.
Common Stock Information
The Common Stock of the Company is traded on the American Stock
Exchange under the symbol "DTM". The following table sets forth,
for the periods indicated, the high and low closing prices for
the Common Stock as reported by the American Stock Exchange.
1998 1997
___________________ __________________
High Low High Low
___________________ __________________
First Quarter 10 7/8 9 6 11/16 5 1/2
Second Quarter 10 3/8 8 1/8 8 1/8 6 1/8
Third Quarter 9 11/16 8 11 1/4 7 5/8
Fourth Quarter 12 11/16 9 13/16 11 7/8 8 1/2
At April 30, 1998 there were approximately 2,000 shareholders.
The Company has never paid a dividend and does not at present
have an intention to pay a dividend in the foreseeable future.
<PAGE 8>
DATARAM CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
April 30, 1998 and 1997
(In thousands, except share amounts)
1998 1997
______ ______
Assets
Current assets:
Cash and cash equivalents $ 7,530 $ 6,836
Trade receivables, less allowance for
doubtful accounts of $450
$800 in 1998 and in 1997, respectively 10,076 8,473
Inventories:
Raw materials 1,759 3,369
Work in process 61 98
Finished goods 1,103 929
______ ______
2,923 4,396
Income tax receivable (note 3) -- 48
Deferred income taxes (note 3) 425 423
Other current assets 68 101
______ ______
Total current assets 21,022 20,277
______ ______
Property and equipment, at cost:
Land 875 875
Machinery and equipment 8,806 6,840
______ ______
9,681 7,715
Less accumulated depreciation 6,246 5,461
______ ______
Net property and equipment 3,435 2,254
Other assets 7 6
______ ______
$24,464 $22,537
====== ======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 4,699 $ 4,145
Accrued liabilities (note 6) 1,784 1,093
______ ______
Total current liabilities 6,483 5,238
Deferred income taxes (note 3) 1,013 1,013
______ ______
Total liabilities 7,496 6,251
______ ______
Stockholders' equity (note 4):
Common stock, par value $1.00 per share.
Authorized 18,000,000 shares; issued
and outstanding 2,781,405 in 1998
and 3,077,449 in 1997 2,781 3,078
Additional paid-in capital 2,126 2,453
Retained earnings 12,061 10,755
______ ______
Total stockholders' equity 16,968 16,286
______ ______
Commitments and Contingencies(notes 5 and 9)
$24,464 $22,537
====== ======
See accompanying notes to consolidated financial statements.
<PAGE 9>
DATARAM CORPORATION AND SUBSIDIARY
Consolidated Statements of Earnings
Years ended April 30, 1998, 1997 and 1996
(In thousands, except per share amounts)
1998 1997 1996
_______ _______ _______
Revenues $ 77,286 $ 68,980 $107,627
_______ _______ _______
Costs and expenses:
Cost of sales 58,608 54,409 96,929
Engineering and development 1,113 1,030 1,584
Selling, general and administrative 11,766 7,674 6,661
_______ _______ _______
71,487 63,113 105,174
_______ _______ _______
Earnings from operations 5,799 5,867 2,453
Other income (expense):
Other income (expense), net 3 18 (2)
Interest income 305 276 41
Interest expense (40) (67) (100)
_______ _______ _______
268 227 (61)
_______ _______ _______
Earnings before income tax expense 6,067 6,094 2,392
Income tax expense (note 3) 2,345 2,325 942
_______ _______ _______
Net earnings $3,722 $3,769 $1,450
======= ======= =======
Net earnings per common share:
Basic $ 1.26 $ 1.12 $ .38
======= ======= =======
Diluted $ 1.19 $ 1.10 $ .38
======= ======= =======
See accompanying notes to consolidated financial statements.
<PAGE 10>
DATARAM CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended April 30, 1998, 1997 and 1996
(In thousands)
1998 1997 1996
______ _____ ______
Cash flows from operating activities:
Net earnings $3,722 $3,769 $1,450
Adjustments to reconcile net earnings
to net cash provided by
operating activities:
Depreciation and amortization 785 594 693
Loss on disposition of property
and equipment - - 2
Bad debt expense 435 263 485
Deferred income tax expense
(benefit) (2) 50 710
Changes in assets and liabilities:
(Increase) decrease in trade
receivables (2,038) 3,342 2,333
(Increase) decrease in
inventories 1,473 (2,084) 5,749
Decrease in income tax
receivable 48 376 252
(Increase) decrease in
other current assets 33 (51) (6)
(Increase) decrease in
other assets (1) - 9
Increase (decrease) in
accounts payable 554 (1,764) (2,871)
Increase (decrease) in
accrued liabilities 691 70 (1,021)
_____ _____ _____
Net cash provided by
operating activities 5,700 4,565 7,785
_____ _____ _____
Cash flows from investing activities:
Proceeds from sale of property
and equipment - - 7
Purchase of property and equipment (1,966) (650) (270)
_____ _____ _____
Net cash used in investing activities (1,966) (650) (263)
_____ _____ _____
Cash flows from financing activities:
Purchase and subsequent cancellation
of shares of common stock (3,318) (5,671) -
Proceeds from sale of common shares
under stock option plan (including
tax benefits) 278 110 238
_____ _____ _____
Net cash provided by (used in)
financing activities (3,040) (5,561) 238
_____ _____ _____
Net increase (decrease) in cash and
cash equivalents 694 (1,646) 7,760
Cash and cash equivalents at
beginning of year 6,836 8,482 722
_____ _____ _____
Cash and cash equivalents at end
of year $ 7,530 $ 6,836 $ 8,482
===== ===== =====
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 52 $ 43 $ 125
Income taxes $ 2,033 $ 1,881 $ 582
===== ===== =====
See accompanying notes to consolidated financial statements.
<PAGE 11>
DATARAM CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Years ended April 30, 1998, 1997 and 1996
(In thousands, except share amounts)
Total
Additional stock-
Common paid-in Retained holders'
stock capital earning equity
______ ________ _______ ________
Balance at April 30, 1995 $3,792 $3,219 $9,379 $16,390
Issuance of 32,000 shares
under stock option plans 32 206 - 238
Net earnings - - 1,450 1,450
______ ________ _______ ______
Balance at April 30, 1996 3,824 3,425 10,829 18,078
Issuance of 19,000 shares
under stock option plans 19 91 - 110
Purchase and subsequent
cancellation of
765,856 shares (765) (1,063) (3,843) (5,671)
Net earnings - - 3,769 3,769
______ ________ _______ ______
Balance at April 30, 1997 3,078 2,453 10,755 16,286
Issuance of 39,000 shares
under stock option plans 39 239 - 278
Purchase and subsequent
cancellation of
335,044 shares (336) (566) (2,416) (3,318)
Net earnings - - 3,722 3,722
______ ________ _______ ______
Balance at April 30, 1998 $ 2,781 $ 2,126 $12,061 $16,968
====== ======== ======= =======
See accompanying notes to consolidated financial statements.
<PAGE 12>
Notes to Consolidated Financial Statements
April 30, 1998, 1997 and 1996
(1) Significant Accounting Policies
Principles of consolidation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Dataram International
Sales Corporation (a Domestic International Sales Corporation
(DISC)). All significant intercompany transactions and balances
have been eliminated.
Cash and cash equivalents
Cash and cash equivalents consist of unrestricted cash, money
market preferred stock and commercial paper with original
maturities of three months or less.
Inventory valuation
Inventories are valued at the lower of cost or market, with costs
determined by the first-in, first-out method.
Property and equipment
Property and equipment is recorded at cost. Depreciation is
generally computed on the straight-line basis. Depreciation rates
are based on the estimated useful lives which range from three to
five years for machinery and equipment. When property or
equipment is retired or otherwise disposed of, related costs and
accumulated depreciation are removed from the accounts.
Repair and maintenance costs are charged to operations as
incurred.
Repair and maintenance costs are charged to operations as
incurred.
Revenue recognition
Revenue from product sales is recognized when the related goods
are shipped to the customer and all significant obligations of
the Company have been satisfied. Estimated warranty costs are
accrued.
Product development and related engineering
The Company expenses product development and related engineering
costs as incurred. Engineering effort is directed to development
of new or improved products as well as ongoing support for
existing products.
Income taxes
The Company follows the asset and liability method of accounting
for income taxes in accordance with the provisions of Statement
of Financial Accounting Standards SFAS No. 109, "Accounting for
Income Taxes". Under the asset and liability method of SFAS No.
109, deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates
in effect for the year in which those temporary differences are
expected to be recovered or settled. Under SFAS No. 109, the
effect on deferred tax assets and liabilities of a change in tax
rates is recognized in earnings in the period that the tax rate
changes.
Concentration of credit risk
Financial instruments that potentially subject the Company to
concentration of credit risk consist primarily of cash and cash
equivalents. The Company maintains its cash and cash equivalents
in financial institutions and brokerage accounts. To the extent
that such deposits exceed the maximum insurance levels, they are
uninsured. The Company performs ongoing evaluations of its
customers' financial condition, as well as general economic
conditions and, generally, requires no collateral from its
customers.
Net earnings per share
In February 1997, the FASB issued SFAS No. 128, "Earnings Per
Share". SFAS 128 establishes standards for computing and
presenting earnings per share and is effective for financial
statements for both interim and annual periods ending after
December 15, 1997. Accordingly, the accompanying net earnings per
share information has been calculated and presented in accordance
with the provisions of SFAS 128.
Basic net earnings per share was calculated by dividing net
earnings by the weighted average number of common shares
outstanding during the period. Diluted net earnings per share was
calculated in a manner consistent with Basic net earnings per
share except that the weighted average number of common shares
outstanding also includes the dilutive effect of stock options
outstanding (using the treasury stock method).
The following presents a reconciliation of the numerator and
denominator used in computing Basic and Diluted net earnings per
share:
<PAGE 13>
(Earnings in thousands)
Year ended April 30, 1998
___________________________________
Earnings Shares Per share
(numerator) (denominator) amount
_________ ___________ _________
Basic net earnings per share
- -net earnings and weighted
average common shares
outstanding $ 3,722 2,958,015 $ 1.26
Effect of dilutive securities
- -stock options - 160,310
_______ _________ ______
Diluted net earnings per share
- -net earnings, weighted
average common shares
outstanding and effect of
stock options $ 3,722 3,118,325 $ 1.19
======= ========= ======
Year ended April 30, 1997
___________________________________
Earnings Shares Per share
(numerator) (denominator) amount
_________ ___________ _________
Basic net earnings per share
- -net earnings and weighted
average common shares
outstanding $ 3,769 3,360,975 $ 1.12
Effect of dilutive securities
- -stock options - 71,286
_______ _________ ______
Diluted net earnings per share
- -net earnings, weighted
average common shares
outstanding and effect of
stock options $ 3,769 3,432,261 $ 1.10
======= ========= ======
Year ended April 30, 1996
___________________________________
Earnings Shares Per share
(numerator) (denominator) amount
_________ ___________ _________
Basic net earnings per share
- -net earnings and weighted
average common shares
outstanding $ 1,450 3,816,261 $ 0.38
Effect of dilutive securities
- -stock options - 16,354
_______ _________ ______
Diluted net earnings per share
- -net earnings, weighted
average common shares
outstanding and effect of
stock options $ 1,450 3,832,615 $ 0.38
======= ========= ======
Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Fair value of financial instruments
SFAS No. 107, "Disclosure about Fair Value of Financial
Instruments", defines the fair value of a financial instrument as
the amount at which the instrument could be exchanged in a
current transaction between willing parties. The Company believes
that there is no material difference between the fair value and
the reported amounts of financial instruments in the consolidated
balance sheets.
Impairment of long-lived assets and long lived-assets to be
disposed of
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of", requires that
long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used
is measured by a comparison of the carrying amount of an asset to
future net cash flows expected to be generated by
<PAGE 14>
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 fair value of the
assets. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell. Adoption of
this Statement has had no material impact on the Company's
financial position, results of operations, or liquidity.
Accounting for stock based compensation
SFAS No. 123, "Accounting for Stock-based Compensation", requires
companies to make pro forma disclosures in a footnote of net
earnings as if the fair value based method of accounting for
stock options, as defined in the statement, had been applied. The
accounting requirements of this statement are effective for
transactions entered into during 1996 and ensuing years (see note
4).
Impact of Recent Accounting Standards
In June 1997, FASB issued SFAS No. 130, "Reporting Comprehensive
Income", and SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information".
SFAS 130 establishes standards for the reporting and display of
comprehensive earnings in the financial statements. Comprehensive
earnings is the total of net earnings and all other non-owner
changes in equity. SFAS 131 requires that companies disclose
segment data based on how management makes decisions about
allocating resources to segments and measuring their performance.
SFAS 130 and 131 are effective for fiscal 1999. Adoption of these
standards is expected to result in additional disclosures, but
will not have an effect on the Company's consolidated financial
position or results of operations.
(2) Long-Term Debt
On November 1, 1997, the Company amended and restated its credit
facility with its bank. Under the amended agreement, the Company
modified certain financial covenants and increased its revolving
credit facility to $12,000,000 until October 31, 1998, at which
point it will decrease to $6,000,000 until October 31, 1999. The
agreement provides for Eurodollar rate loans, CD rate loans and
base rate loans at an interest rate no higher than the bank's
base commercial lending rate less 1/2%. The Company is required
to pay a commitment fee equal to 1/16 of one percent per annum on
the unused commitment. The agreement contains certain restrictive
financial covenants including a minimum current ratio, minimum
tangible net worth requirement, minimum interest coverage ratio,
maximum debt to equity ratio and certain other covenants, as
defined by the agreement. There were no borrowings during fiscal
1998 and 1997. The maximum and average balances outstanding at
any time during fiscal 1996 were $5,500,000 and $1,200,000,
respectively. The average interest rate was 8% in fiscal year
1996. As of April 30, 1998, the amount available for borrowing
under the revolving credit facility was $12,000,000.
(3) Income Taxes
Income tax expense for the years ended April 30 consists of the
following:
(In thousands) 1998 1997 1996
_____ _____ _____
Current:
Federal $ 1,889 $ 1,889 $ 232
State 458 386 -
_____ _____ _____
2,347 2,275 232
_____ _____ _____
Deferred:
Federal (1) (26) 598
State (1) 76 112
_____ _____ _____
(2) 50 710
_____ _____ _____
Total income tax expense $ 2,345 $ 2,325 $ 942
===== ===== =====
The actual income tax expense differs from "expected" tax expense
(computed by applying the U. S. corporate tax rate of 34% to
earnings before income taxes) as follows:
(In thousands) 1998 1997 1996
_____ _____ _____
Computed "expected' tax
expense $ 2,063 $ 2,072 $ 813
State income taxes(net
of Federal income tax
benefit) 303 303 (74)
Other (21) (50) 55
_____ _____ _____
$ 2,345 $ 2,325 $ 942
===== ===== =====
The tax effect of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities are presented below:
<PAGE 15>
(In thousands) 1998 1997
____ ____
Deferred tax assets:
Compensated absences, principally due
to accrual for financial reporting
purposes $ 125 $ 88
Accounts receivable, principally due
to allowance for doubtful accounts 176 312
Property and equipment, principally
due to differences in depreciation 104 23
Inventory, principally due to
reserve for obsolescence 20 -
____ ____
Total gross deferred tax assets 425 423
Less valuation allowance - -
____ ____
Net deferred tax assets 425 423
____ ____
Deferred tax liabilities:
Investment in wholly-owned subsidiary,
principally due to unremitted
earnings of DISC (663) (663)
Other (350) (350)
____ ____
Total gross deferred tax liabilities (1,013) (1,013)
____ ____
Net deferred tax liabilities $(588) $(590)
==== ====
(4) Stock Option Plans
During 1982, the Company adopted an incentive stock option plan.
In 1997, 6,000 options were exercised under this plan at an
exercise price of $3.567. No further options may be granted under
the plan and there are no options outstanding under the 1982
plan.
In September 1992, the Company adopted an incentive and
nonstatutory stock option plan for the purpose of permitting
certain key employees to acquire equity in the Company and to
promote the growth and profitability of the Company by attracting
and retaining key employees. In general, the plan allows granting
of up to 950,000 shares of the Company's common stock at an
option price to be no less than the fair market value of the
stock on the date such options are granted. The holder of the
option may purchase 20% of the common stock with respect to which
the option has been granted on or after the first anniversary of
the date of the grant and an additional 20% of such shares on or
after each of the four succeeding anniversary dates. At April
30, 1998, 239,400 of the outstanding options are exercisable.
The status of the 1992 plan for the three years ended April 30,
1998 is as follows:
Options Outstanding
___________________________
Exercise price
Shares per share
______ _______________
Balance April 30, 1995 320,000 $ 7.125
Granted 142,000 5.125-6.75
Exercised (32,000) 7.125
Cancelled (78,000) 7.125
________ ____________
Balance April 30, 1996 352,000 5.125-7.125
Granted 167,000 6.938
Exercised (13,000) 5.125-7.125
Cancelled (10,000) 7.125
________ ____________
Balance April 30, 1997 496,000 5.125-7.125
Granted 232,000 8.438-10.75
Exercised (39,000) 7.125
Cancelled (22,000) 5.125-7.125
________ ____________
Balance April 30, 1998 667,000 $5.125-10.75
======== ============
The Company also grants nonqualified stock options to nonemployee
directors of the Company. These options are granted for the
purpose of retaining the services of directors who are not
employees of the Company and to provide additional incentive for
such directors to work to further the best interests of the
Company and its shareholders. The options granted to these
nonemployee directors are exercisable at a price representing the
fair value at the date of grant. Of each option, 25% is first
exercisable on or after the date of the grant and an additional
25% on each of three succeeding anniversary dates. At April 30,
1998, 36,000 of the outstanding options are exercisable.
The status of the nonemployee director options for the three
years ended April 30, 1998 is as follows:
Options Outstanding
___________________________
Exercise price
Shares per share
______ _______________
Balance April 30, 1995 150,000 $ 11.25
Granted _ _
Exercised - -
Cancelled (30,000) 11.25
________ ____________
Balance April 30, 1996 120,000 11.25
Granted 30,000 6.938
Exercised - -
Cancelled - -
________ ____________
Balance April 30, 1997 150,000 6.938-11.25
Granted 120,000 8.438
Exercised - -
Cancelled (120,000) 11. 25
________ ____________
Balance April 30, 1998 150,000 $6.938-11.25
======== ============
<PAGE 16>
The following table summarizes information about stock options
outstanding at April 30, 1998:
Options outstanding Options exercisable
____________________________________________ ___________________
Number Weighted Number
out- average Weighted exercis- Weighted
Range of standing remaining average able at average
exercise at April contractual exercise April 30, exercise
price 30, 1998 life price 1998 price
____________ ________ ___________ ________ _________ ________
$ 5.125-6.75 122,000 7.28 $ 5.66 48,800 $ 5.66
6.938-7.125 313,000 6.33 7.03 190,600 7.09
8.438-10.75 382,000 9.49 8.92 36,000 8.82
____________ ________ ___________ _______ _________ ________
$5.125-10.75 817,000 7.95 7.71 275,400 7.07
============ ======= ==== ==== ======= ====
The Company has adopted the disclosure-only provisions of SFAS
No. 123, and applies APB Opinion 25 in accounting for its plans
and, accordingly, compensation cost for stock options is measured
as the excess, if any, of the quoted market price at the date of
the grant over the amount an employee must pay to acquire the
stock. Because the Company grants options at a price equal to the
market price of stock at the date of grant, no compensation
expense is recorded. Had the Company determined compensation cost
based on the fair value at the grant date consistent with the
provisions of SFAS No. 123, the Company's net earnings would have
been reduced to the pro forma amounts indicated below:
(In thousands, except per share amounts)
1998 1997 1996
____ ____ ____
Net earnings as reported $ 3,722 $ 3,769 $ 1,450
Net earnings pro forma 3,517 3,667 1,418
Net earnings per share as reported:
Basic 1.26 1.12 .38
Diluted 1.19 1.10 .38
Net earnings per share pro forma:
Basic 1.19 1.07 .37
Diluted 1.13 1.06 .37
The pro forma amounts as noted above may not be representative of
the effects on reported earnings for future years. Pro forma net
earnings reflects only options granted in 1998, 1997 and 1996.
Therefore, the full impact of calculating compensation cost for
stock options under SFAS No. 123 is not reflected in the pro
forma net earnings amounts presented above because compensation
cost is reflected over the options' vesting period of 5 years and
compensation cost for options granted prior to April 30, 1995 is
not considered.
The fair value of the stock options granted in 1998, 1997 and
1996 is estimated at grant date using the Black-Scholes option
pricing model with the following weighted average assumptions:
for 1998 - expected dividend yield 0.0%, risk free interest rate
of 6.5%, expected volatility of 37%, and an expected life of 7.5
years; 1997 - expected dividend yield 0.0%, risk free interest
rate of 7%, expected volatility of 41%, and an expected life of 7
years; for 1996 - expected dividend yield 0.0%, risk free
interest rate of 6.5%, expected volatility of 19%, and an
expected life of 7.5 years. The weighted average estimated fair
value of options granted in 1998, 1997 and 1996 was $4.86, $4.14
and $2.42, respectively.
(5) Commitments
The Company and its subsidiary occupy various facilities and
operate various equipment under operating lease arrangements.
Rents charged to operations amounted to approximately $593,000 in
1998, $612,000 in 1997 and $555,000 in 1996.
Minimum annual rental commitments for all noncancellable
operating leases as of April 30, 1997 are approximately as
follows:
(In thousands)
1999 $ 761
2000 703
2001 358
2002 125
2003 -
_____
$1,947
=====
<PAGE 17>
During the year ended April 30, 1998, the Company signed
licensing agreements with Silicon Graphics, Inc. and Sun
Microsystems, Inc. (SUN) to manufacture memory upgrades for
certain high performance servers and workstations. Under these
agreements, the Company is obligated to pay a royalty based on
sales of such products.
(6) Accrued Liabilities
Accrued liabilities consist of the following:
(In thousands) 1998 1997
____ ____
Payrolls, including
vacations $ 474 $ 329
Commissions and bonuses 563 559
Royalties (note 5) 364 -
Other 383 205
______ ______
$1,784 $1,093
====== ======
(7) Employee Benefit Plan
The Company has a defined contribution plan (the Plan) which is
available to all qualified employees. Employees may elect to
contribute a portion of their compensation to the Plan, subject
to certain limitations. The Company contributes a percentage of
the employee's contribution, subject to a maximum of 6 percent of
the employee's eligible compensation, based on the employee's
years of service. The Company's matching contributions aggregated
approximately $133,000, $121,000 and $127,000 in 1998, 1997 and
1996, respectively.
(8) Revenues by Geographic Location
The Company operates in one business segment and develops,
manufactures and markets a variety of memory systems for use with
workstations and servers which are manufactured by various
computer systems companies. Revenues for 1998, 1997 and 1996 by
geographic region is as follows:
(in thousands) Export
______
Years ended April 30, United States Europe Other Consolidated
_____________ ______ _____ ____________
1998 $54,989 $14,860 $7,437 $ 77,286
1997 50,147 12,988 5,845 68,980
1996 76,072 21,630 9,925 107,627
(9)Litigation
In August 1996, SUN filed a complaint alleging patent
infringement against the Company in the Federal District Court
asserting the infringement of five specific patents related to
single in-line memory module (SIMM) technology. In October 1996,
the Company filed its answer and affirmative defenses and
asserted several anti-trust and other anti-competitive
counterclaims against SUN in addition to its affirmative
defenses.
This case was settled and dismissed with prejudice by the court
in April 1998. The Company and SUN entered into a licensing and
settlement agreement which resulted in resolution of all claims
for damages. The license agreement provides for payment of
royalties by the Company on sales of certain defined memory
modules.
<PAGE 18>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Dataram Corporation:
We have audited the accompanying consolidated balance sheets of
Dataram Corporation and subsidiary as of April 30, 1998 and 1997,
and the related consolidated statements of earnings,
stockholders' equity, and cash flows for each of the years in the
three-year period ended April 30, 1998. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes 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 opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Dataram Corporation and subsidiary as of April 30,
1998 and 1997, and the results of their operations and their cash
flows for each of the years in the three-year period ended April
30, 1998, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Princeton, New Jersey
May 20, 1998
<PAGE 19>
<TABLE>
Selected Financial Data
(Not covered by independent auditors' report)
(In thousands, except per share amounts)
Years Ended April 30, 1998 1997 1996 1995 1994
______________________ ____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C>
Revenues $ 77,286 $ 68,980 $107,627 $103,028 $ 79,573
Net earnings 3,722 3,769 1,450 (1,299) (732)
Basic earnings (loss)
per share 1.26 1.12 .38 (.34) (.19)
Diluted earnings (loss)
per share 1.19 1.10 .38 (.34) (.19)
Current assets 21,022 20,277 23,735 24,710 27,027
Total assets 24,464 22,537 25,939 27,355 30,135
Current liabilities 6,483 5,238 6,932 10,649 11,487
Long-term debt 0 0 0 0 0
Total stockholders'
equity 16,968 16,286 18,078 16,390 17,903
Cash dividends - - - - -
Note: Net loss for 1994 included income of $118,000 or $0.03 per share related
to adoption of SFAS 109, Accounting for Income Taxes
</TABLE>
Quarterly Financial Data (Unaudited)
(In thousands, except per share amounts)
Quarter Ended
____________________________________________
Fiscal 1998 July 31 October 31 January 31 April 30
___________ _______ __________ __________ ________
Revenues $18,147 $20,068 $19,844 $19,227
Gross profit 3,512 4,665 5,153 5,348
Net earnings 669 945 1,032 1,076
Net earnings (diluted) per common
and common equivalent share .21 .30 .34 .35
Quarter Ended
____________________________________________
Fiscal 1997 July 31 October 31 January 31 April 30
___________ _______ __________ __________ ________
Revenues $17,448 $17,168 $17,514 $16,850
Gross profit 3,560 3,835 3,570 3,606
Net earnings 964 1,014 912 878
Net earnings (diluted) per common
and common equivalent share .26 .30 .27 .27
Earnings per share is calculated independently for each quarter and therefore
does not equal the total for the year.
<PAGE 20>
DIRECTORS AND CORPORATE OFFICERS
Directors
Robert V. Tarantino
President and Chief Executive Officer
of Dataram Corporation
Richard Holzman*
Private Investor
Thomas A. Majewski*
Principal, Walden Inc.
Bernard L. Riley*
Private Investor
Roger Cady*
Principal, Arcadia Associates
*Member of audit committee
Corporate Officers
Robert V. Tarantino
President and Chief Executive Officer
Mark E. Maddocks
Vice President, Finance and
Chief Financial Officer
Jeffrey H. Duncan
Vice President of Manufacturing
and Engineering
Hugh F. Tucker
Vice President, Sales
Thomas J. Bitar
Secretary
Partner, Dillon, Bitar & Luther
Corporate Headquarters
Dataram Corporation
186 Princeton-Hightstown Road
West Windsor, NJ 08543
609-799-0071
Auditors
KPMG Peat Marwick LLP
Princeton, NJ
General Counsel
Dillon, Bitar & Luther
Morristown, NJ
Transfer Agent and Registrar
First Union National Bank
Customer Information Center
1525 West W.T. Harris Boulevard
Building 3C3
Charlotte, NC 28288
Stock Listing
Dataram's common stock is listed on
the American Stock Exchange with the
trading symbol DTM.
Annual Meeting
The annual meeting of shareholders
will be held on Wednesday, September 9,
1998, at 2:00 p.m. at Dataram's
corporate headquarters at:
186 Princeton-Hightstown Road
West Windsor Business Park
West Windsor, NJ 08543
Form 10-K
A copy of the Company's annual report
on Form 10-K filed with the Securities
& Exchange Commission is available
without charge to shareholders.
Address requests to:
Vice President, Finance
Dataram Corporation
P.O. Box 7528
Princeton, NJ 08543-7528
[PICTURE OF MEMORY BOARD WITH DESCRIPTION OF VARIOUS TECHNICAL
FEATURES]
Dataram Corporation
Princeton, NJ 08543-7528 USA
Voice: 1-609-799-0071
Fax: 1-609-799-6734
www/dataram.com
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<CASH> 7,530
<SECURITIES> 0
<RECEIVABLES> 10,526
<ALLOWANCES> 450
<INVENTORY> 2,923
<CURRENT-ASSETS> 21,022
<PP&E> 9,681
<DEPRECIATION> 6,246
<TOTAL-ASSETS> 24,464
<CURRENT-LIABILITIES> 6,483
<BONDS> 0
0
0
<COMMON> 2,781
<OTHER-SE> 14,187
<TOTAL-LIABILITY-AND-EQUITY> 24,464
<SALES> 77,286
<TOTAL-REVENUES> 77,286
<CGS> 58,608
<TOTAL-COSTS> 58,608
<OTHER-EXPENSES> 1,113
<LOSS-PROVISION> 435
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,067
<INCOME-TAX> 2,345
<INCOME-CONTINUING> 3,722
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,722
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 1.19
</TABLE>
<PAGE>
Core States
Bank
October 22, 1997
Mr. Mark Maddocks, Vice President/Finance
Dataram Corporation
Route 571 and Slayback Road
West Windsor, NJ 08543
Dear Mr. Maddocks:
This letter will serve as an amendment to the Amendment
Number One to Loan Agreement dated November 1, 1996 by and
between New Jersey National Bank (New Jersey National Bank
has merged with CoreStates Bank, N.A.) And Dataram
Corporation.
WHEREAS, the Borrower and the Bank agreed on
November 1, 1996 to amend the Loan Agreement to increase
the amount of the Revolver Credit Advance Limit and
Revolver Note from $10,000,000 to $12,000,000 until October
31, 1997, then decrease the Revolver Credit Advance Limit
to $6,000,000 on November 1, 1997, extend the Revolving
Credit Maturity Date to October 31, 1998 and correct the
Agreement
Page 1 (Section 1) is amended to:
1. The Revolving Credit Maturity Date is hereby
extended to October 31, 1999. To that end, the definition
of Revolving Credit Maturity Date contained in Section 1.01
of the Agreement is hereby amended to read in its entirety
as follows:
"Revolving Credit Maturity Date" means
October 31, 1999.
Page 1 Section 2) is amended to:
2. The amount of the Revolver Credit Advance Limit
is maintained at $12,000,000 until October 31, 1998, then
decreased to $6,000,000 on November 1, 1998 until the
Revolver Credit Maturity Date. To that end, the definition
of Revolving Credit Advance Limit Contained in Section 1.01
of the Agreement is hereby amended to read in its entirety
as follows:
"Revolving Credit Advance Limit" means the sum of
Twelve Million Dollars ($12,000,000) through October 31,
1998 and the sum of Six Million Dollars ($6,000,000 from
November 1, 1998 until the Revolving Credit Maturity Date.
All other terms and conditions remain unchanged.
<PAGE>
Mr. Mark Maddocks
Page Two
Please sign below to acknowledge these changes.
Sincerely,
STEPHEN F. BAYER
Stephen F. Bayer
Vice President
Acknowledged this 28th day of October, 1997.
MARK MADDOCKS
__________________
Mark Maddocks
Vice President, Finance
Attest:
JEFFREY DUNCAN
_________________
VP Engineering & Manufacturing
Print Name and Title
Jeff Duncan
<PAGE>
May 12, 1998
Third Amendment to Lease Agreement
Between G.S. Developers and Dataram Corporation
The Lease Agreement dated January 31, 1995,
between G.S. Developers, and the Dataram Corporation, as
amended, is hereby further amended as follows:
The demised premise is hereby expanded to add 25
Richards Road Ivyland, Montgomery County Pennsylvania. The
leased premise now consists of all 25, 27 and 29 Richards
Road.
The lessee shall take possession immediately. The
minimum rental which lessee agrees to pay is $3000.00 per
month for the additional space commencing from day of May
1, 1998 possession to the end of the current lease to
January 31, 2000. The new aggregate monthly minimum rental
shall be $9000.00 for the total space occupied by Dataram.
The additional space is being rented in an "as is"
condition and lessee shall be responsible for securing a
certificate of occupancy and to make such renovations as it
may require. All proposed renovations shall be first
submitted to the landlord for landlord's approval.
Landlord will not unreasonably withhold its consent.
<PAGE>
Continued
In exchange for Lessor's permitting the Lessee to
install air conditioning and other equipment on the roof of
the leased premises, to the extent that the Lessee or their
agents cause damage to the roof in the installation of such
equipment and in the maintenance thereof, Lessee will be
responsible for the cost of such repairs and Lessor's
responsibility to maintain the roof is modified
accordingly.
The lessee agrees to install carry pads or similar
product on the roof from the edge of the roof to the
various units that Lessee shall maintain on the roof to
create a walkway to and around the said installation.
The Security Deposit is to be increased to $9000.00.
The option to renew is hereby amended to read as
follows:
G.S. Developers will give Dataram an option for two
more years at a aggregate minimum monthly rental of
$10,000.00. Total $120,000 annual rate from Februaury 1,
2000 to January 31, 2002
G.S. Developers will also give Dataram a second option
for two more years at a $3500.00 per month per each bay 25,
27 & 29 totaling $10,500 per month from February 1, 2002 to
January 31, 2004.
<PAGE>
Continued
ALL OTHER TERMS AND CONDITIONS OF THE ORIGINAL Lease,
except as modified by this amendment, shall remain in full
force and effort.
IN WITNESS WHEREOF, the parties have hereunto executed
these presents this 1st day of May 1998.
SEALED AND DELIVERED
IN THE PRESENCE OF:
WITNESS: MARK MADDOCKS
_______________
BY: JEFFREY H. DUNCAN WITNESS: WITNESSED
_______________________ _______________
WITNESS: WITNESSED
________________
BY: HARRY SILVER WITNESS: WITNESSED
______________________ _______________
Harry Silver
G.S. Developers
