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 01/31/96 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 (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):
PART 1: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Dataram Corporation And Subsidiary
Consolidated Balance Sheets
January 31, 1996 and April 30, 1995
Unaudited Audited
January 31, 1996 April 30, 1995
Current Assets:
Cash and cash equivalents $ 388,287 $ 721,811
Trade receivables, less allow-
ance for doubtful accounts
and sales returns of $506,000
at January 31, 1996 and
$495,000 at April 30, 1995 15,421,367 14,921,024
Inventories 5,483,938 8,060,807
Other current assets 851,977 1,129,630
__________ __________
Total current assets 22,145,569 24,833,272
__________ __________
Property and equipment, at cost:
Land 875,000 875,000
Machinery and equipment 6,182,619 5,952,504
__________ __________
7,057,619 6,827,504
Less: accumulated depreciation
and amortization 4,697,899 4,197,158
__________ __________
Net property and equipment 2,359,720 2,630,346
Other assets 5,730 15,076
$24,511,019 $27,478,694
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 5,177,583 $ 8,778,049
Accrued liabilities 947,958 2,069,348
__________ __________
Total current liabilities 6,125,541 10,847,397
__________ __________
Deferred income taxes 753,822 239,822
Stockholders' Equity:
Common stock, par value
$1.00 per share.
Authorized 18,000,000 shares;
issued 3,824,305 at January 31,
1996 and 3,792,305 at
April 30, 1995 3,824,305 3,792,305
Additional paid-in capital 3,425,142 3,219,142
Retained earnings 10,382,209 9,380,028
__________ __________
Total stockholders' equity 17,631,656 16,391,475
__________ __________
$24,511,019 $27,478,694
========== ==========
See accompanying notes to consolidated financial statements
Dataram Corporation and Subsidiary
Consolidated Statements of Operations
Three and Nine Months Ended January 31, 1996 and 1995
(Unaudited)
1995 1996
3rd Nine 3rd Nine
Quarter Months Quarter Months
_________ ________ _________ ________
Revenues $28,385,207 $85,601,073 $26,272,891 $75,797,153
Costs and expenses:
Cost of sales 26,910,340 77,689,791 22,477,326 63,752,346
Engineering and development 365,935 1,254,249 613,824 1,919,597
Selling, general and adminis-
trative 1,462,188 4,896,992 2,738,958 8,294,367
__________ __________ __________ __________
28,738,463 83,841,032 25,830,108 73,966,310
Earnings (loss) from operations (353,256) 1,760,041 442,783 1,830,843
Other income (expense):
Other income (expense), net 0 0 5,800 64,002
Interest expense (44,691) (101,860) (85,475) (215,037)
___________ __________ _________ _________
(44,691) (101,860) (79,675) (151,035)
_________ __________ _________ __________
Net earnings (loss) before income
taxes (397,947) 1,658,181 363,108 1,679,808
Income tax provision (benefit) (155,000) 656,000 148,000 671,000
_________ __________ _________ __________
Net earnings (loss) $ (242,947) $ 1,002,181 $ 215,108 $ 1,008,808
========== ========== ========== ==========
Net earnings (loss) per common and
common equivalent share:
Primary $ (.06) $ .26 $ .06 $ .26
=========== ========== ========== ==========
Fully Diluted $ (.06) $ .26 $ .06 $ .26
Weighted average number of common
and common equivalent shares
outstanding:
Primary 3,824,305 3,837,807 3,829,726 3,837,754
========== ========== ========== ==========
Fully Diluted 3,824,305 3,837,807 3,829,726 3,837,754
========== ========== ========== ==========
Consolidated Statements of Cash Flows
Nine Months Ended January 31, 1996 and 1995
(Unaudited)
1996 1995
Sources of working capital:
Net earnings $ 1,002,181 $ 1,008,808
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 500,741 632,998
Bad debt expense 220,795 143,641
Changes in assets and liabilities:
Increase in trade receivables (721,138) (3,354,995)
Decrease(increase) in inventories 2,576,869 (342,260)
Decrease in other current assets 277,653 1,112,933
Decease in other assets 9,346 5,577
Decrease in accounts payable (3,600,466) (1,436,084)
Decrease in accrued liabilities (1,121,390) (168,538)
Increase in deferred income taxes 514,000 0
_________ _________
Total adjustments (1,343,590) (3,406,728)
Net cash used in operating activities (341,409) (2,397,920)
_________ _________
Cash flows from investing activities:
Purchase of fixed assets (230,115) (394,855)
_________ _________
Net cash used in investing activities (230,115) (394,855)
_________ _________
Cash flows from financing activities:
Proceeds from sale of common shares
under stock option plan 238,000 2,438
Purchase of treasury stock 0 (468,751)
Increase in long-term debt 0 3,100,000
_________ _________
Net cash provided by financing
activities 238,000 2,633,687
_________ _________
Net decrease in cash and cash
equivalents (333,524) (159,088)
Cash and cash equivalents at beginning
of year 721,811 437,779
_________ _________
Cash and cash equivalents at end of
period $ 388,287 $ 278,691
========= =========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 101,860 $ 215,037
Income taxes $ 582,000 $ 5,238
========= =========
See accompanying notes to consolidated financial statements
/TABLE
Dataram Corporation and Subsidiary
Notes to Consolidated Financial Statements
January 31, 1996 and April 30, 1995
(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:
01/31/96 4/30/95
________ _______
Raw Materials $ 2,698,000 $ 4,726,000
Work In Process 287,000 648,000
Finished Goods 2,499,000 2,687,000
_________ _________
$ 5,484,000 $ 8,061,000
========= =========
(3) The Company has an agreement with a bank which provides for
a total unsecured line of credit of $11,000,000 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, 1997, unless otherwise amended or extended.
(4) In 1982, the Company adopted an incentive stock option plan.
As of January 31, 1996, no further options may be granted
under the plan and options to purchase 6,000 shares were
outstanding and exercisable at an excercise price of $3.57
per share.
In September 1992, an incentive and nonstatutory 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, 1996, options to purchase
362,000 shares at prices ranging from $5.125 to $7.125 per
share were outstanding. As of January 31, 1996 options to
purchase 32,000 shares had been exercised and options to
purchase 139,500 shares were exercisable.
In November 1992 and March 1993, 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 an exercise price of $11.25 per share. As of
January 31, 1996, none of these options had been exercised
and options to purchase 82,500 shares were exercisable.
(5) Certain amounts in the fiscal year 1995 consolidated
financial statements have been reclassified to conform to
the fiscal year 1996 presentation.
(6) Information furnished reflects all adjustments which are, in
the opinion of management, necessary to a fair presentation
of the results of this interim statement.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As of January 31, 1996, working capital amounted to $16.0
million reflecting a current ratio of 3.6 compared to working
capital of $14.0 million and a current ratio of 2.3 as of April
30, 1995.
The Company's financial condition remains strong. The
Company has a $11.0 million unsecured line of credit with a bank
which expires in October 1997. The line of credit was used during
the quarter to deal with peak cash demands. 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 revenue
growth and other capital needs for the foreseeable future.
Results of Operations
Revenues for the three month period ending January 31, 1996
were $28,385,000 compared to revenues of $26,272,000 for the
comparable prior year period, an increase of 11%. Nine month
revenues of $85,601,000 reflected an increase of 13% over the
prior fiscal year's nine month revenues of $75,797,000.
Cost of sales for the second quarter and nine months were
95% and 91% of revenues, respectively versus 86% and 84% for the
same prior year periods. Included in this year's second quarter
and nine months cost of sales is a $1,200,000 charge for a write
down to market value primarily of 16 megabit dynamic random
access memory (DRAM) chips in inventory. DRAMs are the primary
raw material in computer memory boards and comprise approximately
95% of memory product cost. In the second half of the third
quarter, the DRAM market underwent dramatic change. For
approximately the last two years DRAMs have been in tight supply.
Starting in late December, that situation changed. Spot market
prices for 16 megabit DRAMs fell below contract prices indicating
an oversupply situation. Contract prices for DRAMs also fell
suddenly, approximately 15% from late December through January.
The DRAM marketplace has not yet stabilized. Prices for DRAMs are
continuing to fall. As a result of this change in the
marketplace, the Company has been able to significantly reduced
its inventory levels while still meeting its customer delivery
requirements.
Engineering and development costs in fiscal 1996's third
quarter and nine months were $366,000 and $1,254,000 versus
$614,000 $1,920,000 for the same prior year periods. Today's
workstation, server and personal computer memories have simple
design characteristics. 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
second quarter and nine months declined to 5% and 6% of revenues,
respectively from 10% and 11% for the same prior year periods.
Three and nine month total expenditures decreased by $1,277,000
and $3,397,000, respectively from the prior year. This decrease
is primarily the result of a restructuring of the Company's
operations related to a discontinued product line which occurred
at the end of the fourth quarter of last fiscal year. As a result
of the restructuring, the Company's engineering and development
expenses and selling, general and administrative expenses have
been significantly reduced.
Other income (expense), net for the third quarter and nine
months of fiscal 1996 consisted primarily of interest expense
associated with the Company's revolving credit line. Prior year
other income (expense) consisted of interest expense offset by
income from salvage of certain obsolete equipment and inventory
items.
PART II: OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Annual Meeting of Dataram Corporation was held on September
12, 1995. At that meeting, all of the directors nominated by the
Board of Directors were elected and the shareholders ratified the
selection of KPMG Peat Marwick LLP as the independent certified
public accounts of the Company. The voting on the election of
directors was as follows:
NAME FOR WITHHELD
Richard Holzman 3,495,810 20,952
John J. Cahill 3,495,932 20,855
Robert V. Tarantino 3,480,227 36,560
Thomas A. Majewski 3,495,210 21,552
Bernard L. Riley 3,486,515 30,247
The voting on the ratification of accountants was as follows:
FOR: 3,502,672
AGAINST: 24,865
ABSTAIN: 16,800
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27 (a). Financial Data Schedule (Attached)
28 (a). Press Release reporting results of Third Quarter,
Fiscal Year 1996 (Attached).
B. Reports on Form 8-K
No reports on Form 8-K have been filed during the current
quarter.
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 7, 1996 By: MARK E. MADDOCKS
___________________
Mark E. Maddocks
Vice President, Finance
(Principal Financial Officer)