DATARAM PRESS RELEASE Dataram Contact: Investor Contact: Mark Maddocks, Joe Zappulla Chief Financial Officer Wall Street Investor Relations Corp. 609-799-0071 212-973-0883 info@dataram.com JZappulla@WallStreetIR.com DATARAM REPORTS SECOND QUARTER FINANCIAL RESULTS o Company reports after tax earnings before depreciation and amortization of $1.5 million or $0.16 per share o Cash and Equivalents increase $3.1 million or 26 percent over prior quarter PRINCETON, N.J. November 20, 2001 - Dataram Corporation (NASDAQ:DRAM) today reported its financial results for its fiscal second quarter ended October 31, 2001. Revenues for the second quarter were $19.2 million compared to $22.6 million in the prior fiscal quarter and $39.9 million for the second quarter of the previous fiscal year. The Company's net earnings before depreciation and amortization for the second quarter were $1.5 million, or $0.16 per diluted share. Consolidated net earnings increased to $160,000 or $0.02 per diluted share from a loss of $1.8 million or $0.21 in the prior quarter, which included restructuring charges of $1.2 million. (In 000's, except First per share amounts) Second Quarter Quarter Six Months FY2002 FY2001 FY2002* FY2002* FY2001 Revenues $19,173 $39,866 $22,570 $41,744 $77,862 Net earnings (loss) before depreciation and amortization $1,484 $3,476 $(258) $1,226 $6,780 Net earnings (loss) $160 $3,051 $(1,761) $(1,601) $5,931 Net earnings (loss) per diluted share $0.02 $0.31 $(0.21) $(0.19) $0.60 Shares outstanding (diluted) 9,291 9,944 8,524 8,502 9,916 o Includes restructuring charges of $1.2 million "The action we took to restructure our company has reduced operating costs by $1.1 million from the previous quarter. This is in line with our projected annual savings of $4 million," stated Robert Tarantino, Dataram's chairman and CEO. "Although we continued to experience revenue pressure, as memory prices continued to decline in the second quarter, our competitive position, supported by a 34-year reputation for reliability, allowed us to maintain our gross margin dollars." Mr. Tarantino continued, "As part of our integration plan, Lars Marcher, president of Dataram International has also been named a Vice-President of Dataram Corporation and joins our corporate management team. Despite the economic slowdown, our management team is successfully integrating our overseas acquisition and has returned the company to profitability. We are well along in the process of rolling out our server products to our international sales team and expect this to positively impact our future operating results. Our restructuring and integration plans have produced an effective operation that is well positioned to exploit the inevitable economic turnaround." The Company's free cash flow significantly exceeds its net earnings. The Company's non-cash depreciation and amortization charges through the first six months of this fiscal year totaled approximately $2.8 million versus capital expenditures of approximately $0.7 million. These levels of non-cash charges and capital expenditures and their impact on free cash flow are representative of expected future levels for at least the remainder of this fiscal year and next fiscal year. Dataram's chief financial officer, Mark Maddocks, added, "The continuing weakness in demand over the last few quarters has triggered changes in both our operating and competitive strategies. Our new cost structure positions the company to operate and grow profitably today while providing us with the operating leverage to significantly increase our profits as market conditions improve." Mr. Maddocks continued, "Our cash position continues to grow with cash and cash equivalents increasing to $15.0 million during the second quarter from $11.9 million at the end of the prior quarter. During the second quarter, the company purchased 91,250 shares of its common stock at a total price of $599,000 under its existing open market repurchase authorization. We anticipate that we will continue to participate in the market for our shares. While our confidence in Dataram's future is certain, the sustained lack of market visibility makes providing earnings guidance difficult at this time. When economic and industry related developments provide us with more reliable insight, we will provide guidance at that time." Dataram will conduct a conference call at 4:15 p.m. (EST) today to present its second quarter financial results and to respond to investor questions. Interested shareholders may participate in the call by dialing 800-416-4607 and providing the following reservation number: 19996727. It is recommended that participants call 10 minutes before the conference call is scheduled to begin. The conference call can also be accessed over the Internet through Vcall at www.vcall.com. A replay of the call will be available approximately one hour after the completion of the conference call through Vcall and for 24 hours by dialing 800-633-8284 and entering the reservation number listed above. ABOUT DATARAM CORPORATION Dataram Corporation, celebrating its 34th year in the computer industry, is a leading provider of server, workstation, desktop, notebook and flash memory. The Company offers a specialized line of gigabyte-class memory for entry- to enterprise-level servers and workstations from Compaq, HP, IBM, Intel, SGI and Sun as well as desktop, notebook and flash memory for Acer, Apple, IBM, Dell, Compaq, Fujitsu/Siemens, and Toshiba products. Additional information is available on the Internet at www.dataram.com. Financial Tables Follow DATARAM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended 10/31/2001 10/31/2000 10/31/2001 10/31/2000 Revenues $ 19,173 $ 39,866 $ 41,744 $ 77,862 Costs and expenses: Cost of sales 12,052 30,755 27,677 59,616 Engineering and development 413 415 1,007 786 Selling, general and administrative 5,210 4,060 11,266 8,406 Intangible asset amortization 296 0 593 0 Restructuring charges 0 0 1,200 0 _______ _______ _______ ______ 17,971 35,230 41,744 68,808 Earnings from operations 1,202 4,636 0 9,054 Interest income (expense), net (143) 292 (297) 522 _______ _______ _______ ______ Earnings (loss) before income taxes 1,059 4,928 (297) 9,576 Income taxes 899 1,877 1,304 3,645 _______ _______ _______ ______ Net earnings (loss) $ 160 $ 3,051 $ (1,601) $ 5,931 ======= ======= ======= ====== Net earnings (loss) per share: Basic $ .02 $ .36 $ (.19) $ .70 ======= ======= ======= ====== Diluted $ .02 $ .31 $ (.19) $ .60 ======= ======= ======= ====== Average number of shares outstanding: Basic 8,480 8,559 8,502 8,493 ======= ======= ======= ====== Diluted 9,291 9,944 8,502 9,916 ======= ======= ======= ====== DATARAM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) October 31, 2001 April 30, 2001 ASSETS Current assets: Cash and cash equivalents $ 15,006 $ 10,236 Trade receivables, net 9,372 17,641 Inventories 3,371 5,925 Other current assets 1,388 888 __________ __________ Total current assets 29,137 34,690 Property and equipment, net 11,425 13,226 Goodwill and intangible assets, net 16,407 17,000 Other assets 409 365 __________ __________ $ 57,378 $ 65,281 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 2,000 $ 2,000 Current portion of capital lease obligations 1,018 978 Accounts payable 3,678 7,219 Accrued liabilities 2,875 3,960 Income taxes payable 453 0 __________ __________ Total current liabilities 10,024 14,157 Deferred income taxes 948 948 Long-term debt 7,000 8,000 Long-term capital lease obligations 3,687 4,133 Stockholders' equity 35,719 38,043 __________ __________ $ 57,378 $ 65,281 ========== ========== 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, 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.