<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/ X / Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the quarterly period ended 1/31/98 or
/ / 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 or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P.O. Box 7528, Princeton, NJ 08543
_______________________________________ __________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 799-0071
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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the last practicable date. Common Stock
($1.00 par value): As of March 3, 1998, there were 2,864,305 shares
outstanding. <PAGE>
<PAGE> 2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Dataram Corporation And Subsidiary
Consolidated Balance Sheets
January 31, 1998 and April 30, 1997
(Unaudited) (Audited)
January 31, 1998 April 30, 1997
Assets
Current Assets:
Cash and cash equivalents $ 6,692,677 $ 6,835,671
Trade receivables, less allowance
for doubtful accounts and sales returns
of $700,000 at January 31, 1998
and $800,000 at April 30, 1997 9,512,976 8,473,228
Inventories 3,495,679 4,395,813
Other current assets 508,587 572,376
__________ __________
Total current assets 20,209,919 20,277,088
Property and equipment, at cost:
Land 875,000 875,000
Machinery and equipment 8,264,507 6,840,378
__________ __________
9,139,507 7,715,378
Less: accumulated depreciation
and amortization 5,956,932 5,461,632
__________ __________
Net property and equipment 3,182,575 2,253,746
Other assets 7,380 5,730
__________ __________
$23,399,874 $22,536,564
========== ==========
<PAGE>
<PAGE> 3
January 31, 1998 April 30, 1997
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,371,754 $ 4,144,946
Accrued liabilities 1,324,810 1,093,380
Income taxes payable 34,116 0
__________ __________
Total current liabilities 4,730,680 5,238,326
Deferred income taxes 1,013,000 1,013,000
Stockholders' Equity:
Common stock, par value $1.00 per share.
Authorized 18,000,000 shares; issued
2,938,805 at January 31, 1998
and 3,077,449 at April 30, 1997 2,938,805 3,077,449
Additional paid-in capital 2,464,687 2,452,677
Retained earnings 12,252,702 10,755,112
__________ __________
Total stockholders' equity 17,656,194 16,285,238
__________ __________
$23,399,874 $22,536,564
========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE> 4
<TABLE>
Dataram Corporation and Subsidiary
Consolidated Statements of Earnings
Three and Nine Months Ended January 31, 1998 and 1997
(Unaudited)
<S> <C> <C> <C> <C>
1998 1997
3rd Quarter Nine Months 3rd Quarter Nine Months
Revenues $ 19,844,043 $ 58,059,070 $ 17,514,34 $ 52,130,588
Costs and expenses:
Cost of sales 14,690,712 44,853,570 13,944,417 41,165,237
Engineering and development 283,608 808,575 253,887 732,977
Selling, general and administrative 3,255,737 8,319,558 1,941,700 5,788,074
__________ __________ __________ __________
18,230,057 53,981,703 16,140,004 47,686,288
Earnings from operations 1,613,986 4,077,367 1,374,338 4,444,300
Other income (expense), net
Other income, net 1,200 3,200 1,840 18,447
Interest income, net 81,094 220,841 73,063 201,352
__________ __________ __________ __________
82,294 224,041 74,903 219,799
Earnings before income taxes 1,696,280 4,301,408 1,449,241 4,664,099
Income tax provision 664,000 1,655,000 537,000 1,773,000
__________ __________ __________ __________
Net earnings $ 1,032,280 $ 2,646,408 $ 912,241 $2,891,099
========== ========== ========== ==========
Net earnings per share of common stock
Basic $ .35 $ .88 $ .28 $ .84
========== ========== ========== ==========
Diluted $ .34 $ .85 $ .27 $ .80
========== ========== ========== ==========
Weighted average number of common
shares outstanding
Basic 2,936,205 2,997,390 3,234,002 3,433,219
========== ========== ========= =========
Diluted 3,075,079 3,128,837 3,441,108 3,610,129
========== ========== ========= =========
See accompanying notes to consolidated financial statements
</TABLE> <PAGE>
<PAGE> 5
Dataram Corporation and Subsidiary
Consolidated Statements of Cash Flows
Nine Months Ended January 31, 1998 and 1997
(Unaudited)
1998 1997
Cash flows from operating activities:
Net earnings $ 2,646,408 $ 2,891,099
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Depreciation and amortization 495,300 474,900
Bad debt expense 271,086 251,220
Changes in assets and liabilities:
Decrease (increase) in
trade receivables (1,310,834) 3,094,656
Decrease(increase) in inventories 900,134 (128,567)
Decrease in other current assets 63,789 341,453
Increase in other assets (1,650) 0
Decrease in accounts payable (773,192) (4,117,210)
Increase in accrued liabilities 231,430 216,537
Increase in income taxes payable 34,116 0
__________ __________
Net cash provided by operating activities 2,556,587 3,024,088
__________ __________
Cash flows from investing activities:
Purchase of property and equipment (1,424,129) (323,052)
__________ __________
Net cash used in investing activities (1,424,129) (323,052)
Cash flows from financing activities:
Proceeds from sale of common shares under
stock option plan (including tax benefits) 329,875 0
Purchase and cancellation of common shares (1,605,327) (4,480,729)
__________ __________
Net cash used in financing activities (1,275,452) (4,480,729)
__________ __________
Net decrease in cash
and cash equivalents (142,994) (1,779,693)
Cash and cash equivalents at
beginning of year 6,835,671 8,482,447
__________ __________
Cash and cash equivalents at
end of period $ 6,692,677 $ 6,702,754
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 0 $ 0
Income taxes $ 1,473,058 $ 1,290,000
See accompanying notes to consolidated financial statements. <PAGE>
<PAGE> 6
Dataram Corporation and Subsidiary
Notes to Consolidated Financial Statements
January 31, 1998 and April 30, 1997
(1) Cash and cash equivalents consist of unrestricted cash, bankers
acceptances, commercial paper and other short term investments. All
investments are convertible to cash within a period of
approximately thirty days or less.
(2) Inventories consist of the following categories:
1/31/98 4/30/97
_________ _________
Raw Materials $ 2,275,000 $ 3,369,000
Work In Process 101,000 98,000
Finished Goods 1,120,000 929,000
_________ _________
$ 3,496,000 $ 4,396,000
========= =========
(3) The Company has an agreement with a bank which provides for a total
unsecured line of credit of $12,000,000 with interest at no higher
than one-half percent below the bank's base commercial lending
rate. Borrowings under the line of credit are at the convenience of
Company management and may be repaid at any time. The line of
credit agreement expires in October, 1999, unless otherwise amended
or extended.
(4) In September 1992, an incentive and non-statutory stock option plan
was adopted by the shareholders which provides for the granting of
up to 950,000 shares of common stock to key employees. As of
January 31, 1998, options to purchase 635,000 shares at prices
ranging from $5.125 to $10.75 per share were outstanding. As of
January 31, 1998 options to purchase 84,000 shares had been
exercised and options to purchase 233,400 shares were exercisable.
In November 1992, March 1993 and September 1996, the Company
granted to four non-employee directors of the Company and the
Company's outside general counsel five year options to acquire a
total of 150,000 shares of the Company's common stock at prices
ranging from $6.94 to $11.25 per share. As of January 31, 1998,
options to purchase 120,000 shares have expired and options to
purchase 6,000 shares were exercisable. In November 1997, the
Company granted to three non-employee directors of the Company and
the Company's outside general counsel five year options to acquire
a total of 120,000 shares of the Company's common stock at a price
of $8.4375. As of January 31, 1998, none of these options had been
exercised and options to purchase 30,000 shares were exercisable.
(5) The Company adopted Financial Accounting Standards No. 128 (FAS
128), "Earnings Per Share" in the third quarter of fiscal 1998.
Share and per share amounts for all periods presented have been
restated to comply with FAS 128.
(6) In July of 1997, the Company announced an open market repurchase
plan providing for the repurchase of up to 300,000 shares of the
Company's common stock. As of January 31, 1998, 142,600 shares had
been purchased under the plan.
(7) Information furnished reflects all adjustments which are, in the
opinion of management, necessary to a fair presentation of the
results of this interim statement.<PAGE>
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As of January 31, 1998, working capital amounted to $15.5 million
reflecting a current ratio of 4.3 compared to working capital of $15.0
million and a current ratio of 3.9 as of April 30, 1997.
The Company's financial condition remains strong. The Company has
a $12 million unsecured line of credit with a bank, of which $6 million
was scheduled to expire in October 1998 and $6 million in October 1999.
The line of credit has not been used during the current fiscal year.
Management believes that the Company's working capital together with
internally generated funds and its bank line of credit are sufficient
to finance the Company's operating needs and future capital
requirements.
Results of Operations
Revenues for the three month period ending January 31, 1998 were
$19,844,000 compared to revenues of $17,514,000 for the comparable
prior year period. Fiscal 1998 nine month revenues totaled $58,059,000
versus nine month revenues of $52,131,000 for the prior fiscal year.
The increase in revenues was the result of increased unit volume offset
by declining average selling prices for the Company's products
reflecting a decrease in the price of dynamic random access memory
chips (DRAMs)which are the primary raw material in memory boards. Total
units shipped have increased by approximately 63% in this year's third
quarter, versus the third quarter last year.
Cost of sales for the third quarter and nine months of fiscal 1998
were 74% and 77%, respectively of revenues versus 80% and 79% for the
same prior year periods. The increase in gross margin in the current
quarter is primarily attributable to the introduction of new high
capacity memory products where the primary competition is the original
equipment manufacturer, and therefore the products can command higher
selling prices than would be possible if there was extensive third
party competition. Prices for the sixty-four and sixteen megabit DRAM
continued to decline during the quarter. However, at the end of the
quarter, sixteen megabit DRAM prices increased from December lows. At
this point, it is uncertain as to whether DRAM pricing will stabilize
or continue to fall, and if so, what the magnitude will be. To minimize
the impact of the changes in raw material values, the Company has
maintained tight control over inventory levels, while still meeting
customer delivery requirements.
Engineering and development costs in fiscal 1998's third quarter
and nine months were $284,000 and $809,000, respectively versus
$254,000 and $733,000 for the same prior year periods. The Company
intends to maintain its commitment to timely introduction of new memory
products as new workstations and computers are introduced.
Selling, general and administrative costs in this year's third
quarter and nine months increased to 16% and 14%, respectively of
revenues from 11% for the same prior year periods. Three month total
expenditures increased by $1,314,000 from the comparable prior year
period. Nine month selling, general and administrative costs increased
by $2,531,000 in fiscal 1998 versus fiscal 1997. These increases are
primarily attributable to legal expenses incurred related to a
Complaint filed by Sun Microsystems, Inc. The current years quarter and
nine months include approximately $500,000 and $1,400,000, respectively
related to this litigation. Additionally, the Company has continued to
strategically add to its sales department this year to accelerate our
ability to service new and existing customers.
Other income (expense),net for the third quarter and nine months
of fiscal 1998 and 1997 consisted primarily of interest income on short
term investments.<PAGE>
<PAGE> 8
PART II: OTHER INFORMATION
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27 (a). Financial Data Schedule
99 (a). Press Release reporting results of Third Quarter, Fiscal
Year 1998 (Attached).
B. Reports on Form 8-K
No reports on Form 8-K have been filed during the current quarter.
<PAGE>
<PAGE> 9
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
DATARAM CORPORATION
Date: March, 4, 1998 By: MARK E. MADDOCKS
_____________________ __________________
Mark E. Maddocks
Vice President, Finance
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> JAN-31-1998
<CASH> 6,692,677
<SECURITIES> 0
<RECEIVABLES> 10,212,976
<ALLOWANCES> 700,000
<INVENTORY> 3,495,679
<CURRENT-ASSETS> 20,209,919
<PP&E> 9,139,507
<DEPRECIATION> 5,956,932
<TOTAL-ASSETS> 23,399,874
<CURRENT-LIABILITIES> 4,730,680
<BONDS> 0
0
0
<COMMON> 2,938,805
<OTHER-SE> 14,717,389
<TOTAL-LIABILITY-AND-EQUITY> 23,399,874
<SALES> 58,059,070
<TOTAL-REVENUES> 58,059,070
<CGS> 44,853,570
<TOTAL-COSTS> 44,853,570
<OTHER-EXPENSES> 808,575
<LOSS-PROVISION> 271,086
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,301,408
<INCOME-TAX> 1,655,000
<INCOME-CONTINUING> 2,646,408
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,646,408
<EPS-PRIMARY> .88
<EPS-DILUTED> .85
</TABLE>
<PAGE>
FOR IMMEDIATE RELEASE CONTACT: Mark Maddocks
Vice-President, Finance
Telephone: (609) 799-0071
IMPROVED VOLUME BOOSTS DATARAM INCOME, REVENUES
FOR FISCAL 1998 THIRD QUARTER
PRINCETON, NJ, February 6, 1998 Dataram Corporation
(AMEX:DTM) achieved higher revenues and earnings for the third
quarter of fiscal 1998, reflecting brisk demand for both
established computer memory products and new offerings, Robert V.
Tarantino, president and chief executive officer, announced
today.
For the third quarter ended January 31, 1998, Dataram
reported revenues of $19.8 million compared to $17.5 million for
the year earlier period. Net earnings were $1,032,000, or $.34
per share versus $912,000, or $.27 per share for last year's
comparable quarter.
For the nine months ended January 31, 1998, revenues were
$58.1 million compared to $52.1 million for the year earlier
period. Net earnings totaled $2,646,000, or $.85 per share
compared to $2,891,000, or $.80 per share for the prior year.
Continued....
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<PAGE> 2
Dataram Earnings Release - Page 2
The Company's gross margin percentages this fiscal quarter
and nine months have increased compared to the prior year. This
is attributable to the introduction and favorable market
acceptance of new higher capacity memory products which command
higher margins. "Remaining focused on the workstation and high-
end server market has allowed us to maintain our first-to-market
advantage," Tarantino declared. "Our objective is to achieve both
earnings and revenue growth and we remain confident that we can
accomplish this goal," Tarantino said.
Demand for the Company's products remained strong.
Tarantino reported that gigabytes of memory shipped have
increased 63% on a comparable quarterly basis. During the
quarter, we continued our program of expanding our sales force.
"This team is obtaining many new customers and increasing
business with existing customers in U.S. and international
markets," Tarantino declared. "Investments to expand
manufacturing capacity and establish a distribution center in
the United Kingdom are enabling us to maintain our high service
level while we grow."
Continued....
<PAGE>
<PAGE> 3
Dataram Earnings Release - Page 3
"We're participating in an industry that continues to
exhibit dynamic growth which shows no signs of abating,"
Tarantino declared. "Business remains strong both here and
abroad, including the Pacific Rim, where we have not experienced
any fallout from the 'Asian crisis.' I fully expect that Dataram
will sustain its solid financial performance throughout fiscal
1998."
During the quarter, the Company continued its stock
repurchase program and, as of the end of the quarter, has
purchased 142,600 shares of the current 300,000 share
authorization.
Dataram develops, manufactures and markets gigabyte memory
boards for the UNIX and windows NT workstation and server memory
markets.
Continued....
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<PAGE> 4
Dataram Earnings Release - Page 4
Dataram Corporation and Subsidiary
Consolidated Summary Information
(In thousands except per share amounts)
Quarter Ended Nine Months Ended
January 31 January 31
1998 1997 1998 1997
Revenues $19,844 $17,514 $58,059 $52,130
Net Earnings $1,032 $912 $2,646 $2,891
Earnings Per Share
- -Basic $.35 $.28 $.88 $.84
- -Diluted $.34 $.27 $.85 $.80
Average Shares Outstanding
- -Basic 2,936 3,234 2,997 3,433
- -Diluted 3,075 3,441 3,129 3,610
