<PAGE 1>
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 07/31/99 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)
186 Princeton Road (Route 571), West Windsor, New Jersey 08550
______________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 799-0071
______________
______________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
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 August 18, 1999, there were 5,237,910 shares outstanding.
<PAGE 2>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Dataram Corporation And Subsidiary
Consolidated Balance Sheets
July 31, 1999 and April 30, 1999
(Unaudited) (Audited)
July 31, 1999 April 30, 1999
Assets
Current Assets:
Cash and cash equivalents $ 9,508,529 $ 8,092,527
Trade receivables, less allowance
for doubtful accounts and sales returns
of $400,000 at July 31, 1999
and $450,000 at April 30, 1999 9,781,766 12,016,106
Inventories 4,303,244 3,290,300
Other current assets 645,689 475,387
__________ __________
Total current assets 24,239,228 23,874,320
Property and equipment, at cost:
Land 875,000 875,000
Machinery and equipment 5,695,586 5,188,696
__________ __________
6,570,586 6,063,696
Less: accumulated depreciation
and amortization 2,872,993 2,572,993
__________ __________
Net property and equipment 3,697,593 3,490,703
Other assets 8,655 8,655
__________ __________
$ 27,945,476 $ 27,373,678
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 4,203,211 $ 4,344,179
Accrued liabilities 969,352 1,840,647
Income taxes payable 507,408 250,408
__________ __________
Total current liabilities 5,679,971 6,435,234
Deferred income taxes 919,000 919,000
Stockholders' Equity:
Common stock, par value $1.00 per share.
Authorized 18,000,000 shares; issued
and outstanding 5,237,110 at July 31, 1999
and 5,236,810 at April 30, 1999 5,237,110 5,236,810
Additional paid-in capital 347,813 0
Retained earnings 15,761,582 14,782,634
__________ __________
Total stockholders' equity 21,346,505 20,019,444
__________ __________
$ 27,945,476 $ 27,373,678
========== ==========
See accompanying notes to consolidated financial statements.
<PAGE 3>
Dataram Corporation and Subsidiary
Consolidated Statements of Earnings
Three Months Ended July 31, 1999 and 1998
(Unaudited)
1999 1998
Revenues $ 21,164,684 $ 17,750,162
Costs and expenses:
Cost of sales 15,414,747 12,269,849
Engineering and development 332,975 331,610
Selling, general and administrative 3,049,836 2,936,961
__________ __________
18,797,558 15,538,420
Earnings from operations 2,367,126 2,211,472
Interest income, net 107,682 116,497
__________ __________
Earnings before income taxes 2,474,808 2,328,239
Income tax expense 944,000 911,000
__________ __________
Net earnings $ 1,530,808 $ 1,417,239
========== ==========
Net earnings per share of common stock:
Basic $ .29 $ .25
========== ==========
Diluted $ .25 $ .23
========== ==========
Weighted average number of common
shares outstanding:
Basic 5,218,327 5,562,810
========== ==========
Diluted 6,176,246 6,126,308
========== ==========
See accompanying notes to consolidated financial statements.
<PAGE 4>
Dataram Corporation and Subsidiary
Consolidated Statements of Cash Flows
Three Months Ended July 31,1999 and 1998
(Unaudited)
1999 1998
Cash flows from operating activities:
Net earnings $ 1,530,808 $ 1,417,239
Adjustments to reconcile net earnings
to net cash provided by
operating activities:
Depreciation and amortization 300,000 342,000
Bad debt expense (recovery) (55,782) 103,580
Changes in assets and liabilities:
Decrease in trade receivables 2,290,122 2,350,308
Decrease (increase) in inventories (1,012,944) 553,437
Increase in other current assets (170,302) (150,912)
Increase in other assets 0 (3,000)
Decrease in accounts payable (140,968) (1,548,152)
Increase (decrease)in accrued liabilities (871,295) 99,284
Increase in income taxes payable 257,000 572,577
__________ __________
Net cash provided by
operating activities 2,126,639 3,736,361
__________ __________
Cash flows from investing activities:
Purchase of property and equipment (506,890) (556,350)
__________ __________
Net cash used in investing activities (506,890) (556,350)
Cash flows from financing activities:
Proceeds from sale of common shares under
stock option plan (including tax benefits) 417,813 0
Purchase and subsequent cancellation
of common stock (621,560) 0
__________ __________
Net cash used in financing activities (203,747) 0
__________ __________
Net increase in cash and
cash equivalents 1,416,002 3,180,011
Cash and cash equivalents at
beginning of period 8,092,527 7,529,906
__________ __________
Cash and cash equivalents at
end of period $ 9,508,529 $ 10,709,917
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 36,682 $ 38,751
Income taxes $ 525,200 $ 365,200
See accompanying notes to consolidated financial statements.
<PAGE 5>
Notes to Consolidated Financial Statements
July 31, 1999 and 1998
(Unaudited)
Basis of Presentation
The information at July 31, 1999 and for the three months ended July 31, 1999
and 1998, is unaudited but includes all adjustments (consisting only of normal
recurring adjustments) which, in the opinion of management, are necessary to
state fairly the financial information set forth therein in accordance with
generally accepted accounting principles. The interim results are not
necessarily indicative of results to be expected for the full fiscal year.
These financial statements should be read in conjuction with the audited
financial statements for the year ended April 30, 1999 included in the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
Stock Split
On November 11, 1998 the Company's Board of Directors announced a two-for-one
stock split effected in the form of a dividend for shareholders of record at
the close of business on November 23, 1998 and payable December 3, 1998.
Weighted average shares outstanding and net earnings per share have been
retroactively adjusted to reflect the stock split.
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. Inventories at July 31, 1999 and April 30,
1999 consist of the following categories:
July 31, 1999 April 30, 1999
________________ ______________
Raw materials $ 1,858,000 $ 1,335,000
Work in process 337,000 508,000
Finished goods 2,108,000 1,447,000
________________ ______________
$ 4,303,000 $ 3,290,000
================ ==============
<PAGE 6>
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.
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.
Common Stock
During the quarter ended July 31, 1999, the Company purchased and retired
69,700 shares of its common stock.
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.
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.
<PAGE 7>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. Actual results could differ
materially from those projected in the forward looking statements.
Liquidity and Capital Resources
As of July 31, 1999, working capital amounted to $18.6 million reflecting
a current ratio of 4.3 compared to working capital of $17.4 million and a
current ratio of 3.7 as of April 30, 1999.
The Company's financial condition remains strong. The Company has a $12
million unsecured line of credit with a bank, of which $6 miilion is scheduled
to expire in October 1999 and $6 million expires in October 2000. The Company
intends to renew any expiring portion of the facility by the expiration date
and maintain a $12 million total facility. At the end of the quarter there was
no amount outstanding under the line of credit. With its current working
capital balance and the line of credit, management believes that it will be
able to support its growth and other capital needs for the foreseeable future.
The Company's products are all year 2000 compliant. The Company has
upgraded its manufacturing, accounting, production and inventory control
systems and software and management believes that these systems and software
are now or will be year 2000 compliant by year end. The Company has numerous
personal computers and peripheral devices used in information technology and
non-information technology applications which have been tested for year 2000
compliance. The Company has upgraded or replaced any known non year 2000
compliant devices and management believes that these devices are now year 2000
compliant. 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.
As part of the Company's Year 2000 readiness program, the Company has
identified its key vendors and suppliers and is attempting to ascertain their
stage of year 2000 readiness primarily through questionnaires and interviews.
The Company has a diverse customer base, with no single customer accounting
for 10% or more of its revenue. At this time, the Company has no plans to
ascertain the stage of year 2000 readiness of its current customers.
The possible consequences of the Company, its key vendors, certain
customers, governments or government agencies, financial institutions,
utilities, etc. of not being year 2000 compliant by January 1, 2000 include
but are not limited to, among other things, a temporary plant closing, delays
in the delivery of products, delays in collection of receivables and supply
disruption. Because of the widespread nature of this problem, no assurances
can be made that the Company will not be materially adversely affected by a
temporary inability of the Company to conduct its business in the ordinary
course for a period of time after January 1, 2000. At this time the Company
has no contingincy plan in place to deal with the possible consequences listed
above. However, management believes that the actions it has taken should
significantly reduce the adverse effect any such disruptions may have.
On September 10, 1998, the Company announced an open market repurchase
program providing for the repurchase of up to 500,000 shares of its common
stock. On June 15, 1999, the Company announced an additional open market
repurchase plan providing for the repurchase of up to 500,000 shares of the
Company's common stock. During the quarter ended July 31, 1999, the Company
purchased 69,700 shares of its common stock at an average price of $8.90 per
share. As of July 31, 1999 there are 592,300 shares remaining available for
purchase under the two programs.
<PAGE 8>
Results of Operations
Revenues for the three month period ending July 31, 1999 were $21,165,000
compared to revenues of $17,750,000 for the comparable prior year period.
Volume, measured in gigabytes shipped, increased 60% in the first quarter
compared to the prior year period. The volume increase was mitigated by a 25%
reduction in average selling prices due to lower average DRAM prices. The
Company continues to expand its sales with existing customers as well as
securing new customers.
Cost of sales for the first quarter were 73% of revenues versus 69% for
the same prior year period. The increase in the cost of sales was mainly the
result of
reduced sales of certain of the Company's Digital Equipment Corporation (now
Compaq) compatible memory products which command high margins.
Engineering and development costs in fiscal 1999's first quarter were
$333,000 versus $332,000 for the same prior year period. The Company continues
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 first quarter
were 14% of revenues versus 17% for the same prior year period. Three month
total expenditures were comparable to the prior year period.
Interest income, net for the first quarter of fiscal 2000 and fiscal
1999, consists primarily of interest income on short term investments.
<PAGE 9>
PART II: OTHER INFORMATION
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27 (a). Financial Data Schedule
28 (a). Press Release reporting results of First Quarter, Fiscal Year
1999 (Attached).
B. Reports on Form 8-K
No reports on Form 8-K have been filed during the current quarter.
<PAGE 10>
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: 8/26/99 By: MARK E. MADDOCKS
_____________________ ________________________
Mark E. Maddocks
Vice President, Finance
(Principal Financial and Accounting Officer)
Page 8 of 8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FINANCIAL DATA SCHEDULE
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-END> JUL-31-1999
<CASH> 9,508,529
<SECURITIES> 0
<RECEIVABLES> 10,181,766
<ALLOWANCES> 400,000
<INVENTORY> 4,303,244
<CURRENT-ASSETS> 24,239,228
<PP&E> 6,570,586
<DEPRECIATION> 2,872,993
<TOTAL-ASSETS> 27,945,476
<CURRENT-LIABILITIES> 5,679,971
<BONDS> 0
0
0
<COMMON> 5,237,110
<OTHER-SE> 16,109,395
<TOTAL-LIABILITY-AND-EQUITY> 27,945,476
<SALES> 21,164,684
<TOTAL-REVENUES> 21,164,684
<CGS> 15,414,747
<TOTAL-COSTS> 15,414,747
<OTHER-EXPENSES> 332,975
<LOSS-PROVISION> (55,782)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,474,808
<INCOME-TAX> 944,000
<INCOME-CONTINUING> 1,530,808
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,530,808
<EPS-BASIC> .29
<EPS-DILUTED> .25
</TABLE>
<PAGE>
APPROVED BY: Mark E. Maddocks
Chief Financial Officer
Dataram Corporation
(609) 799-0071
CONTACT: Investor Relations:
Cheryl Schneider/John Blackwell
Press: Michael McMullan
Morgen-Walke Associates, Inc.
(212) 850-5600
DATARAM REPORTS RECORD FIRST QUARTER EARNINGS
PRINCETON, NJ, August 12, 1999 -- Dataram Corporation (AMEX: DTM)
today reported record earnings for its first quarter ended July 31,
1999.
For the fiscal 2000 first quarter, net earnings increased to
$1,531,000, or $0.25 per diluted share, versus $1,417,000, or $0.23
per diluted share for the first quarter of fiscal 1999. Revenues of
$21.2 million were up 19% versus $17.8 million in the prior year's
first quarter.
The Company noted that volume, measured in gigabytes shipped,
increased 60% in the first quarter compared to the prior year period.
The volume increase was mitigated by a 25% reduction in average
selling prices due to lower average DRAM prices.
Robert V. Tarantino, Dataram's president and chief executive
officer, commented, "We are pleased to have once again achieved record
earnings marking our seventh consecutive quarter of year-over-year
earnings improvement. The market for high capacity memory products
remains strong and we continue to play an important role in meeting
the needs of the Internet server and workstation markets."
Mr. Tarantino added, "We are on track to achieve our current year
goal of 20% annual earnings growth as the market for faster more
complex computer memory products continues to expand. DRAM prices have
recently stabilized and we are anticipating continued pricing
stability for the upcoming quarter. We have built a strong brand name
in the computer memory industry by producing quality products and
providing superior service and we will continue to stay focused on
using this strong brand recognition to further penetrate the gigabyte
memory market with high quality memory products."
-more-
<PAGE>
DATARAM REPORTS RECORD FIRST QUARTER EARNINGS Page: 2
Mr. Tarantino continued, "We are making progress in expanding our
market presence with existing customers such as Access Graphics,
America Online and Wal-Mart as well as securing important new
customers such as Bell Microproducts, Nortel and Philips
Semiconductors. We have maintained our first to market advantage with
new product introductions, including recently, the highly promising
two gigabyte memory option for Sun Microsystems Inc.'s flagship
Enterprise server line."
"In addition to expanding our core business, we continued to
foster new relationships with channel assemblers and original
equipment manufacturers (OEMs) during the first quarter. This market
segment offers substantial growth opportunities and, as we build
volume, will provide us with significant operating leverage allowing
us to maximize our manufacturing capabilities."
Mr. Tarantino concluded, "In another important development this
quarter, we entered into a licensing agreement with Dense-Pac
Microsystems allowing us to stack DRAMs (which doubles the amount of
memory we can place on a board) in our manufacturing facility versus
subcontracting this process. This action improves our competitiveness
by reducing the cost of these assemblies and increasing our ability to
respond to large OEM opportunities."
During the first quarter of fiscal 1999, the Company increased
its share repurchase program. The Company purchased 69,700 shares of
its common stock in the first quarter bringing the total number of
shares purchased under the current program to 407,700 shares.
Dataram Corporation is a leading provider of gigabyte memory
upgrades for workstations and network servers. The Company
specializes in the manufacture of large-capacity memory boards for
Compaq/Digital, Dell, Hewlett-Packard, IBM, Intel, Silicon Graphics
and Sun Microsystems computers.
The information provided in this press release may include forward-
looking statements relating to future events, such as the development of new
products, the commencement of production, or the future financial performance
of the Company. Actual results may differ from such projections and are
subject to certain risks including, without limitation, risks arising from:
changes in the price of memory chips, changes in the demand for memory systems
for workstations and servers, increased competition in the memory systems
industry, delays in developing and commercializing new products and other
factors described in the Company's most recent Annual Report on Form 10-K
filed with the Securities and Exchange Commission which can be reviewed at
http://www.sec.gov.
(Financial Tables To Follow)
<PAGE>
DATARAM CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share amounts)
Three Months Ended
7/31/99 7/31/98
_________ _________
(Unaudited)
Revenues $ 21,165 $ 17,750
Costs and expenses:
Cost of sales 15,415 12,270
Engineering and development 333 331
Selling, general and administrative 3,050 2,937
_________ _________
18,798 15,538
Earnings from operations 2,367 2,212
Interest income, net 108 116
Earnings before income taxes 2,475 2,328
Income taxes 944 911
_________ _________
Net earnings $ 1,531 $ 1,417
========= =========
Net earnings per share
Basic $ 0.29 $ 0.25
========= =========
Diluted $ 0.25 $ 0.23
========= =========
Average number of shares outstanding
Basic 5,218 5,563
========= =========
Diluted 6,176 6,126
========= =========
-more-
<PAGE>
DATARAM CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands)
July 31, 1999 April 30, 1999
_____________ ______________
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 9,508 $ 8,093
Trade receivables, net 9,782 12,016
Inventories 4,303 3,290
Other current assets 646 475
_____________ ______________
Total current assets 24,239 23,874
Property and equipment, net 3,698 3,491
Other assets 9 9
_____________ ______________
$ 27,946 $ 27,374
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,203 $ 4,344
Accrued liabilities 1,477 2,092
_____________ ______________
Total current liabilities 5,680 6,436
Deferred income taxes 919 919
Stockholders' equity 21,347 20,019
_____________ ______________
$ 27,946 $ 27,374
============= ==============
# # #
