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 1/31/01 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
incorporation or organization) Identification No.)
P.O. Box 7528, Princeton, NJ 08543
______________________________________________________________________
(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 March 5, 2001, there were 8,480,219 shares
outstanding.
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Dataram Corporation and Subsidiary
Consolidated Balance Sheets
January 31, 2001 and April 30, 2000
(Unaudited) (Audited)
January 31, 2001 April 30, 2000
Assets
Current Assets:
Cash and cash equivalents $ 20,822,683 $ 13,649,601
Trade receivables, less allowance
for doubtful accounts and sales returns
of $500,000 at January 31, 2001
and $450,000 at April 30, 2000 12,247,972 16,241,229
Inventories 4,365,580 4,651,277
Other current assets 1,381,290 584,428
__________ __________
Total current assets 38,817,525 35,126,535
Property and equipment, at cost:
Land 875,000 875,000
Machinery and equipment 10,597,030 8,009,925
__________ __________
11,472,030 8,884,925
Less: accumulated depreciation
and amortization 5,033,643 3,877,476
__________ __________
Net property and equipment 6,438,387 5,007,449
Other assets 18,160 17,160
__________ __________
$ 45,274,072 $ 40,151,144
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 4,690,385 $ 9,537,747
Accrued liabilities 2,481,686 2,878,550
__________ __________
Total current liabilities 7,172,071 12,416,297
Deferred income taxes 841,000 841,000
Stockholders' Equity:
Common stock, par value $1.00 per share.
Authorized 54,000,000 shares; issued and
outstanding 8,480,219 at January 31, 2001
and 8,278,403 at April 30, 2000 8,480,219 8,278,403
Additional paid in capital 4,012,708 980,461
Retained earnings 24,768,074 17,634,983
__________ __________
Total stockholders' equity 37,261,001 26,893,847
__________ __________
$ 45,274,072 $ 40,151,144
========== ==========
See accompanying notes to consolidated financial statements.
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Dataram Corporation and Subsidiary
Consolidated Statements of Earnings
Three and Nine Months Ended January 31, 2001 and 2000
(Unaudited)
2001 2000
3rd Quarter Nine Months 3rd Quarter Nine Months
Revenues $ 26,828,999 $ 104,690,762 $ 25,727,507 $ 76,277,881
Costs and expenses:
Cost of sales 19,837,798 79,453,658 19,456,699 56,811,517
Engineering and development 386,366 1,172,757 371,643 1,047,705
Selling, general and administrative 3,728,176 12,133,757 3,076,099 9,983,215
__________ __________ __________ __________
23,952,340 92,760,172 22,904,441 67,842,437
Earnings from operations 2,876,659 11,930,590 2,823,066 8,435,444
Interest income, net 317,387 838,987 123,432 348,119
__________ __________ __________ __________
Earnings before income taxes 3,194,046 12,769,577 2,946,498 8,783,563
Income tax provision 1,164,000 4,809,000 1,121,000 3,346,000
__________ __________ __________ __________
Net earnings $ 2,030,046 $ 7,960,577 $ 1,825,498 $ 5,437,563
========== ========== ========== ==========
Net earnings per share of common stock
Basic $ .24 $ .94 $ .23 $ .69
========== ========== ========== ==========
Diluted $ .21 $ .81 $ .19 $ .56
========== ========== ========== ==========
Weighted average number of common
shares outstanding
Basic 8,515,316 8,500,481 7,983,154 7,867,180
========== ========== ========= =========
Diluted 9,745,422 9,842,041 9,780,524 9,658,011
========== ========== ========= =========
See accompanying notes to consolidated financial statements.
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Dataram Corporation and Subsidiary
Consolidated Statements of Cash Flows
Nine Months Ended January 31, 2001 and 2000
(Unaudited)
2001 2000
Cash flows from operating activities:
Net earnings $ 7,960,577 $ 5,437,563
Adjustments to reconcile net earnings
to net cash provided by
operating activities:
Depreciation and amortization 1,156,167 939,000
Bad debt expense 61,470 38,819
Changes in assets and liabilities:
Decrease in trade receivables 3,931,787 879,042
Decrease (increase) in inventories 285,697 (679,844)
Increase in other current assets (796,862) (574,228)
Increase in other assets (1,000) (555)
(Decrease)increase in accounts payable (4,847,362) 1,404,205
(Decrease)increase in accrued liabilities (396,864) 130,956
Decrease in income taxes payable 0 (250,408)
__________ __________
Net cash provided by
operating activities 7,353,610 7,324,550
__________ __________
Cash flows from investing activities:
Purchase of property and equipment (2,587,105) (1,260,608)
__________ __________
Net cash used in investing activities (2,587,105) (1,260,608)
Cash flows from financing activities:
Proceeds from sale of common shares under
stock option plan (including tax benefits) 3,434,301 1,631,713
Purchase and cancellation of common stock (1,027,724) (3,382,630)
__________ __________
Net cash provided by (used in) financing 2,406,577 (1,750,917)
activities __________ __________
Net increase in cash
and cash equivalents 7,173,082 4,313,025
Cash and cash equivalents at
beginning of year 13,649,601 8,092,527
__________ __________
Cash and cash equivalents at
end of period $ 20,822,683 $ 12,405,552
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 32,603 $ 40,484
Income taxes $ 2,885,000 $ 3,340,000
See accompanying notes to consolidated financial statements.
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Notes to Consolidated Financial Statements
January 31, 2001 and 2000
(Unaudited)
Basis of Presentation
The information at January 31, 2001 and for the three and nine months
ended January 31, 2001 and 2000, 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, 2000 included in the
Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission.
Stock Split
On November 10, 1999, the Company's Board of Directors announced a
three-for-two stock split effected in the form of a dividend for
shareholders of record at the close of business on November 24, 1999
and payable December 15, 1999. The stock split has been charged to
additional paid in capital in the amount of $263,000 and retained
earnings in the amount of $2,377,000. Weighted average shares
outstanding and net earnings per share in the accompanying financial
statements have been restated to give retroactive effect to 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 January
31, 2001 and April 30, 2000 consist of the following categories:
January 31, 2001 April 30, 2000
________________ ______________
Raw material $ 1,958,000 $ 2,454,000
Work in process 499,000 223,000
Finished goods 1,909,000 1,974,000
________________ ______________
$ 4,366,000 $ 4,651,000
================ ==============
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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.
Concentration of credit risk
Financial instruments that potentially subject the Company to concen-
tration 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.
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Long-term debt
During the second quarter of fiscal 2001, the Company amended and
restated its credit facility with its bank. Under the agreement, the
Company maintains a revolving credit facility of $12,000,000 through
October 31, 2001, at which point it will decrease to $6,000,000 through
October 31, 2002. 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 3/4%. 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 2001 and 2000. As of January 31,
2001, the amount available for borrowing under the revolving credit
facility was $12,000,000.
Stock repurchase plan
On June 15, 1999, the Company announced an open market repurchase plan
providing for the repurchase of up to 500,000 shares of the Company's
common stock. During the third quarter ended January 31, 2001, the
Company repurchased 87,400 shares at a total cost of $1,028,000. The
remaining number of shares authorized for purchase under the program is
294,700 shares.
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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 and 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 January 31, 2001, working capital amounted to $31.6 million
reflecting a current ratio of 5.4 compared to working capital of $22.7
million and a current ratio of 2.8 as of April 30, 2000.
During fiscal 2001, the Company amended and restated its $12
million unsecured revolving credit line with its bank. On October 31,
2001, $6 million of the facility is scheduled to expire and on October
31, 2002, the remaining $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. As of January 31, 2001, there was no amount outstanding under
the line of credit.
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.
Results of Operations
Revenues for the three month period ended January 31, 2001 were
$26,829,000 compared to revenues of $25,728,000 for the comparable
prior year period. Unit volume measured as gigabytes shipped increased
29% in the third quarter as compared to the prior year period. However,
average selling price per gigabyte shipped declined by 19% as compared
to the prior year period. The decline in selling prices was industry
wide and was the result of the continued reduction of the purchase cost
of DRAMs. Fiscal 2001 nine month revenues totaled $104,691,000 versus
nine month revenues of $76,278,000 for the prior fiscal year.
Cost of sales for the third quarter and nine months of fiscal 2001
were 74% and 76%, respectively of revenues versus 73% and 70% for the
same prior year periods. The increase in cost of sales is primarily the
result of product mix.
Engineering and development costs in fiscal 2001's third quarter
and nine months were $386,000 and $1,173,000, respectively, versus
$372,000 and $1,048,000 for the same prior year periods. The Company
intends to maintain its commitment to the timely introduction of new
memory products as new workstations and computers are introduced.
Selling, general and administrative costs in fiscal 2001's third
quarter and nine months were 14% and 12% of revenues, respectively,
versus 14% and 16% of revenues, for the comparable prior year periods.
Three month total expenditures increased by $652,000 from the
comparable prior year period. Nine month selling, general and
administrative costs increased by $2,151,000 in fiscal 2001 versus
fiscal 2000. The increase in cost is primarily the result of the
planned increases in sales staff, including expansion of the Company's
facility in the United Kingdom, and marketing programs.
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Interest income, net for the third quarter and nine months of
fiscal 2001 and 2000 consisted primarily of interest income on short
term investments.
Safe Harbor Statement
The information provided in this interim report 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.
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PART II: OTHER INFORMATION
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27 (a). Press Release reporting results of Third Quarter, Fiscal
Year 2001 (Attached).
B. Reports on Form 8-K
No reports on Form 8-K have been filed during the current quarter.
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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 6, 2001 By: MARK E. MADDOCKS
_______________________ __________________________
Mark E. Maddocks
Vice President, Finance
(Principal Financial Officer)
By: ANTHONY M. LOUGEE
__________________________
Anthony M. Lougee
Controller
(Principal Accounting Officer)
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