DATARAM PRESS RELEASE Dataram Contact: Investor Contact: Mark Maddocks, Joe Zappulla Chief Financial Officer Wall Street Investor Relations Corp. 609-799-0071 212-714-2445 info@dataram.com JZappulla@WallStreetIR.com DATARAM REPORTS THIRD QUARTER FINANCIAL RESULTS o Generates $0.09 proforma earnings per share o Prepays $9.8 million of debt PRINCETON, N.J. February 20, 2002 -- Dataram Corporation NASDAQ: DRAM) today reported its financial results for its fiscal third quarter ended January 31, 2002. Revenues for the third quarter were $19.6 million compared to $19.2 million in the prior fiscal quarter and $26.8 million for the third quarter of the previous fiscal year. The Company's proforma net earnings, which excludes one-time charges totaling approximately $5.7 million for intangible asset amortization and interest expense associated with early debt retirement, was $880,000 or $0.09 per diluted share. This compares to proforma net earnings of $456,000 or $0.05 per diluted share in the prior quarter and net earnings of $2.0 million or $0.21 per diluted share for the third quarter of the previous fiscal year. After one-time charges, the current year's third quarter net loss was $4.8 million or $0.57 per share. During this year's third quarter, the Company prepaid its term loan and capital lease obligations, incurring approximately $400,000 in incremental interest expense associated with the prepayment. This action is expected to result in a reduction of future net interest expense of approximately $600,000 annually. Also, consistent with its previous statements, the Company conducted an evaluation of its goodwill and intangible assets in the third quarter of this fiscal year. The evaluation of the carrying value of the Company's goodwill resulted in no change to that value. The evaluation of intangible assets has resulted in a one-time non-cash charge of approximately $5.3 million. As a result, the Company will no longer incur future intangible asset amortization charges, which amounted to approximately $1.4 million, annually. Second Third Nine (In 000's, except per share amounts) Quarter Quarter Months FY2002 FY2002 FY2001 FY2002* FY2001 Revenues $19,173 $19,646 $26,829 $61,389 $104,691 Proforma net earnings (loss) $456 $880 $2,030 $(128) $7,961 Proforma EPS $0.05 $0.09 $0.21 $(0.02) $0.81 Proforma shares outstanding 9,291 9,334 9,745 8,486 9,842 Amortization of intangible assets $296 $5,263 -- $5,856 -- Interest expense on debt prepayment -- $400 -- $400 -- Net earnings (loss) $160 $(4,783) $2,030 $(6,384) $7,961 EPS $0.02 $(0.57) $0.21 $(0.75) $0.81 Shares outstanding 9,291 8,454 9,745 8,486 9,842 * Includes restructuring charges of $1.2 million
Mark Maddocks, Dataram's chief financial officer, commented, "The current low interest rate environment provided an opportunity to significantly reduce our cost of capital. Using cash on hand and $3.9 million of our $15.0 million revolving credit line, we retired our term debt and capital lease obligations, which totaled $13.7 million. While we incurred extra interest expense this quarter as a result of the prepayment, the payback period is short and the Company will benefit from significantly lower interest charges in the future. Our balance sheet remains strong and we have the liquidity and capital resources in place to finance our future operating and capital needs." Mr. Maddocks continued, "We stated in prior quarters that we anticipated the requirement to perform an evaluation of the carrying value of our goodwill and intangible assets. We conducted the analysis this quarter and concluded that no adjustment was necessary to the carrying value of our goodwill. The Company's intangible assets consisted of the carrying value of our fiscal 2001 acquisition's customer base as it existed on the date of acquisition. As a result of our integration activities, the customer base has changed and the future cash flows expected to be generated by the acquired customer base as it existed at the date of acquisition no longer supports a carrying value for those assets. Accordingly, we have fully amortized those assets this fiscal quarter." Robert Tarantino, Dataram's chairman and CEO stated, "The value in our Company lies in our ability to utilize our expanded sales team to market plug compatible workstation and server memory as well as in utilizing our manufacturing expertise and assets to service the memory needs of new and existing OEM customers. We are pleased with the integration of our worldwide sales team, product offering and manufacturing assets and we are on target for our international operations to be accretive to earnings in the current fourth quarter. While we believe, given the current economic environment, domestic customers will continue to be conservative with their near term capital spending on information technology, we remain confident in Dataram's ability grow profitably as the economy recovers." Dataram will conduct a conference call at 4:15 p.m. (EST) today to present its third quarter financial results and to respond to investor questions. Interested shareholders may participate in the call by dialing 800-205-6214 and providing the following reservation number: 20350743. 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 35th year in the computer industry, is a leading provider of computer memory. The Company offers a specialized line of gigabyte-class memory for entry- to enterprise-level servers, workstations and notebooks from Compaq, Dell, Fujitsu/Siemens, HP, IBM, Intel, SGI, Sun and Toshiba. 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 Nine Months Ended 1/31/2002 1/31/2001 1/31/2002 1/31/2001 Revenues $ 19,646 $ 26,829 $ 61,389 $ 104,691 Costs and expenses: Cost of sales 12,547 19,838 40,224 79,453 Engineering and development 438 386 1,446 1,173 Selling, general and administrative 5,293 3,728 16,558 12,134 Intangible asset amortization 5,263 0 5,856 0 Restructuring charges 0 0 1,200 0 _________ _________ _________ _________ 23,541 23,952 65,284 92,760 Earnings (loss) from operations (3,895) 2,877 (3,895) 11,931 Interest income (expense), net (528) 317 (825) 839 _________ _________ _________ _________ Earnings (loss) before income taxes (4,423) 3,194 (4,720) 12,770 Income taxes 360 1,164 1,664 4,809 _________ _________ _________ _________ Net earnings (loss) $ (4,783) $ 2,030 $ (6,384) $ 7,961 ========= ========= ========= ========= Net earnings (loss) per share: Basic $ (0.57) $ .24 $ (.75) $ .94 ========= ========= ========= ========= Diluted $ (0.57) $ .21 $ (.75) $ .81 ========= ========= ========= ========= Average number of shares outstanding: Basic 8,454 8,515 8,486 8,500 ========= ========= ========= ========= Diluted 8,454 9,745 8,486 9,842 ========= ========= ========= ========= DATARAM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) January 31, 2002 April 30, 2001 ASSETS Current assets: Cash and cash equivalents $ 2,838 $ 10,236 Trade receivables, net 11,521 17,641 Inventories 6,568 5,925 Other current assets 1,610 888 _________ _________ Total current assets 22,537 34,690 Property and equipment, net 10,336 13,226 Goodwill 11,144 9,957 Intangible assets, net 0 7,043 Other assets 385 365 _________ _________ $ 44,401 $ 65,281 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 0 $ 2,000 Current portion of capital lease obligations 0 978 Accounts payable 6,547 7,219 Accrued liabilities 1,943 3,960 _________ _________ Total current liabilities 8,490 14,157 Deferred income taxes 948 948 Long-term debt 3,900 8,000 Long-term capital lease obligations 0 4,133 Stockholders' equity 31,063 38,043 44,401 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.