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 10/31/97 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)
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 December 3, 1997, there were 2,922,805 shares outstanding.
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Dataram Corporation And Subsidiary
Consolidated Balance Sheets
October 31, 1997 and April 30, 1997
(Unaudited) (Audited)
October 31, 1997 April 30, 1997
Assets
Current Assets:
Cash and cash equivalents $ 7,395,644 $ 6,835,671
Trade receivables, less allowance
for doubtful accounts and sales returns
of $647,000 at October 31, 1997
and $800,000 at April 30, 1997 9,824,276 8,473,228
Inventories 3,242,908 4,395,813
Other current assets 565,551 572,376
__________ __________
Total current assets 21,028,379 20,277,088
Property and equipment, at cost:
Land 875,000 875,000
Machinery and equipment 7,845,959 6,840,378
__________ __________
8,720,959 7,715,378
Less: accumulated depreciation
and amortization 5,711,832 5,461,632
__________ __________
Net property and equipment 3,009,127 2,253,746
Other assets 7,380 5,730
__________ __________
$ 24,044,886 $ 22,536,564
========== ==========
October 31, 1997 April 30, 1997
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 5,601,534 $ 4,144,946
Accrued liabilities 575,637 1,093,380
__________ __________
Total current liabilities 6,177,171 5,238,326
Deferred income taxes 1,013,000 1,013,000
Stockholders' Equity:
Common stock, par value $1.00 per share.
Authorized 18,000,000 shares; issued
2,965,605 at October 31, 1997
and 3,077,449 at April 30, 1997 2,965,605 3,077,449
Additional paid-in capital 2,303,069 2,452,677
Retained earnings 11,586,041 10,755,112
__________ __________
Total stockholders' equity 16,854,715 16,285,238
__________ __________
$ 24,044,886 $ 22,536,564
========== ==========
See accompanying notes to consolidated financial statements.
Dataram Corporation and Subsidiary
Consolidated Statements of Operations
Three and Six Months Ended October 31, 1997 and 1996
(Unaudited)
1997 1996
2nd Quarter Six Months 2nd Quarter Six Months
Revenues $ 20,067,735 $ 38,215,027 $ 17,167,956 $ 34,616,246
Costs and expenses:
Cost of sales 15,402,781 30,037,758 13,332,847 27,220,820
Engineering and development 301,389 524,967 249,408 479,090
Selling, general and administrative 2,908,762 5,188,921 2,012,622 3,846,374
__________ __________ __________ __________
18,612,932 35,751,646 15,594,877 31,546,284
Earnings from operations 1,454,803 2,463,381 1,573,079 3,069,962
Other income (expense), net
Other income, net 0 2,000 16,607 16,607
Interest income, net 75,053 139,747 59,721 128,289
__________ __________ __________ __________
75,053 141,747 76,328 144,896
Earnings before income taxes 1,529,856 2,605,128 1,649,407 3,214,858
Income tax provision 585,000 991,000 635,000 1,236,000
__________ __________ __________ __________
Net earnings $ 944,856 $ 1,614,128 $ 1,014,407 $ 1,978,858
========== ========== ========== ==========
Net earnings per share of common stock
Primary $ .30 $ .51 $ .30 $ .56
========== ========== ========== ==========
Fully Diluted $ .30 $ .51 $ .30 $ .55
========== ========== ========== ==========
Weighted average number of common
shares outstanding
Primary 3,134,128 3,161,913 3,391,312 3,554,602
========== ========== ========= =========
Fully Diluted 3,134,128 3,161,913 3,422,084 3,593,519
========== ========== ========= =========
See accompanying notes to consolidated financial statements.
Dataram Corporation and Subsidiary
Consolidated Statements of Cash Flows
Six Months Ended October 31, 1997 and 1996
(Unaudited)
1997 1996
Cash flows from operating activities:
Net earnings $ 1,614,128 $ 1,978,858
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Depreciation and amortization 250,200 349,800
Bad debt expense 172,992 191,283
Changes in assets and liabilities:
Decrease (increase) in
trade receivables (1,524,040) 2,536,059
Decrease in inventories 1,152,905 107,046
Decrease in other current assets 6,825 401,963
Increase in other assets (1,650) 0
Increase (decrease)in accounts payable 1,456,588 (2,959,089)
Increase (decrease) in
accrued liabilities (517,743) 168,948
Increase in income taxes payable 0 177,169
__________ __________
Net cash provided by operating activities 2,610,205 2,952,037
__________ __________
Cash flows from investing activities:
Purchase of property and equipment (1,005,581) (147,916)
__________ __________
Net cash used in investing activities (1,005,581) (147,916)
Cash flows from financing activities:
Proceeds from sale of common shares under
stock option plan 57,000 21,400
Purchase of and retirement of common shares (1,101,651) (3,571,539)
__________ __________
Net cash used in financing activities (1,044,651) (3,550,139)
__________ __________
Net increase (decrease) in cash
and cash equivalents 559,973 (746,018)
Cash and cash equivalents at
beginning of year 6,835,671 8,482,447
__________ __________
Cash and cash equivalents at
end of period $ 7,395,644 $ 7,736,429
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 0 $ 26,586
Income taxes $ 923,000 $ 560,000
See accompanying notes to consolidated financial statements.
Dataram Corporation and Subsidiary
Notes to Consolidated Financial Statements
October 31, 1997 and April 30, 1997
(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:
10/31/97 4/30/97
________ ________
Raw Materials $ 1,683,000 $ 3,369,000
Work In Process 72,000 98,000
Finished Goods 1,488,000 929,000
_________ _________
$ 3,243,000 $ 4,396,000
========= =========
(3) The Company has an agreement with a bank which provides for a total
unsecured line of credit of $12,000,000 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, 1999,
unless otherwise amended or extended.
(4) In September 1992, an incentive 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 October 31, 1997, options to purchase 539,000
shares at prices ranging from $5.125 to $10.75 per share were outstanding. As
of October 31, 1997 options to purchase 63,000 shares had been exercised and
options to purchase 246,400 shares were exercisable.
In November 1992, March 1993 and September 1996, the Company granted to
four non-employee directors of the Company and the Company's outside general
counsel five year options to acquire a total of 150,000 shares of the
Company's common stock at prices ranging from $6.94 to $11.25 per share. In
fiscal 1998, 30,000 of these outstanding options were cancelled in accordance
with the terms of the plan. As of October 31, 1997, none of these options had
been exercised and options to purchase 96,000 shares were exercisable.
The Company has adopted the disclosure-only provisions of SFAS No. 123,
and applies APB Opinion 25 in accounting for its plans and, accordingly, cost
for stock option plans and stock purchase plans in its financial statements.
Had the Company determined compensation cost based on the fair value at the
grant date consistent with the provisions of SFAS No. 123, the Company's net
earnings would have been reduced to the pro forma amounts indicated below:
(In thousands, except per share amounts)
Quarter ended: 10/31/97 10/31/96
-------- --------
Net earnings as reported $ 945 $ 1,014
Net earnings pro forma 904 989
Net earnings per share as reported .30 .30
Net earnings per share pro forma .29 .29
Six months ended: 10/31/97 10/31/96
-------- --------
Net earnings as reported $ 1,614 $ 1,979
Net earnings pro forma 1,532 1,929
Net earnings per share as reported .51 .55
Net earnings per share pro forma .48 .54
(5) In July of 1997, the Company announced an open market repurchase plan
providing for the repurchase of up to 300,000 shares of the Company's common
stock. As of October 31, 1997, 84,800 shares had been purchased under the
plan.
(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 October 31, 1997, working capital amounted to $14.9 million
reflecting a current ratio of 3.4 compared to working capital of $15.0 million
and a current ratio of 3.9 as of April 30, 1997.
The Company's financial condition remains strong. The Company has a $12
million unsecured line of credit with a bank, of which $6 million was
scheduled to expire in October 1997 and $6 million in October 1998. During the
current quarter, the agreement was amended to extend the expiration dates to
October 1998 and 1999. The line of credit has not been used during the current
fiscal year. Management believes that the Company's working capital together
with internally generated funds and its bank line of credit are sufficient to
finance the Company's operating needs and future capital requirements.
Results of Operations
Revenues for the three month period ending October 31, 1997 were
$20,068,000 compared to revenues of $17,168,000 for the comparable prior year
period. Fiscal 1998 six month revenues totaled $38,215,000 versus six month
revenues of $34,616,000 for the prior fiscal year. The increase in revenues
was the result of increased unit volume offset by declining average selling
prices for the Company's products reflecting a decrease in the price of
dynamic random access memory chips (DRAMs)which are the primary raw material
in memory boards. Total units shipped have increased by approximately 44% in
this year's second quarter, versus the second quarter last year.
Cost of sales for the second quarter and six months of fiscal 1998 were
77% and 79%, respectively of revenues versus 78% and 79% for the same prior
year periods. Prices for the sixty four and sixteen megabit DRAM continued to
decline during the quarter. To minimize the impact of the changes in raw
material values, the Company has maintained tight control over inventory
levels, while still meeting customer delivery requirements.
Engineering and development costs in fiscal 1998's second quarter and six
months were $301,000 and $525,000, respectively versus $249,000 and $479,000
for the same prior year periods. 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 six months increased to 14% of revenues from 13% and 11%% for the same
prior year periods. Three month total expenditures increased by $896,000 from
the comparable prior year period. Six month selling, general and
administrative costs increased by $1,343,000 in fiscal 1998 versus fiscal
1997. These increases are primarily attributable to legal expenses incurred
related to a Complaint filed by Sun Microsystems, Inc. Additionally, the
Company has continued to strategically add to its sales department this year
to accelerate our ability to service new and existing customers.
Other income (expense),net for the second quarter and six months of
fiscal 1998 and 1997 consisted primarily of interest income on short term
investments.
PART II: OTHER INFORMATION
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27 (a). Financial Data Schedule
99 (a). Press Release reporting results of Second Quarter, Fiscal Year
1998 (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
MARK E. MADDOCKS
Date: December 8, 1997 By:_____________________________________
Mark E. Maddocks
Vice President, Finance
(Principal Financial Officer)