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 1/31/03 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
_____ _____
Indicate by check mark whether the registrant is an accelerated filer.
Yes No X
_____ _____
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 February 28, 2003, there were 8,504,519 shares outstanding.
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Dataram Corporation and Subsidiaries
Consolidated Balance Sheets
January 31, 2003 and April 30, 2002
(Unaudited)
January 31, 2003 April 30, 2002
Assets
Current Assets:
Cash and cash equivalents $ 3,096,542 $ 3,656,150
Trade receivables, less allowance
for doubtful accounts and sales returns
of $320,000 5,892,175 11,477,098
Income tax receivable 1,140,000 700,000
Inventories 2,913,360 5,435,069
Other current assets 720,524 531,680
__________ __________
Total current assets 13,762,601 21,799,997
Property and equipment, at cost:
Land (held for sale) 875,000 875,000
Machinery and equipment 16,883,895 17,150,925
__________ __________
17,758,895 18,025,925
Less: accumulated depreciation
and amortization 10,917,422 8,816,049
__________ __________
Net property and equipment 6,841,473 9,209,876
Other assets 480,626 407,626
Goodwill 11,144,000 11,144,000
__________ __________
$ 32,228,700 $ 42,561,499
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,719,871 $ 6,598,601
Accrued liabilities 1,397,576 1,688,119
__________ __________
Total current liabilities 4,117,447 8,286,720
Deferred income taxes 646,000 647,000
Long-term debt 0 3,800,000
__________ __________
Total liabilities 4,763,447 12,733,720
Stockholders' Equity:
Common stock, par value $1.00 per share.
Authorized 54,000,000 shares; issued and
outstanding 8,504,519 at January 31, 2003
8,493,819 at April 30, 2002 8,504,519 8,493,819
Additional paid in capital 4,587,234 4,405,296
Retained earnings 13,682,500 16,829,242
Accumulated other comprehensive income - 691,000 99,422
foreign currency translation adjustment __________ __________
Total stockholders' equity 27,465,253 29,827,779
__________ __________
$ 32,228,700 $ 42,561,499
========== ==========
See accompanying notes to consolidated financial statements.
Dataram Corporation and Subsidiary
Consolidated Statements of Operations
Three and Nine Months Ended January 31, 2003 and 2002
(Unaudited)
2003 2002
3rd Quarter Nine Months 3rd Quarter Nine Months
Revenues $ 12,757,992 $ 41,009,492 $ 19,645,752 $ 61,389,278
Costs and expenses:
Cost of sales 9,285,697 29,795,530 12,546,709 40,223,842
Engineering and development 374,941 1,156,442 438,417 1,445,862
Selling, general and administrative 4,341,588 13,147,878 5,292,441 16,558,307
Restructuring charges 0 740,000 0 1,200,000
Intangible asset amortization 0 0 5,263,000 5,856,000
__________ __________ __________ __________
14,002,226 44,839,850 23,540,567 65,284,011
Loss from operations (1,244,234) (3,830,358) (3,894,815) (3,894,733)
Interest income 7,102 28,357 85,709 279,003
Interest expense (8,959) (84,035) (613,851) (1,104,564)
__________ __________ __________ __________
Loss before income taxes (1,246,091) (3,886,036) (4,422,957) (4,720,294)
Income tax provision (benefit) (453,000) (1,017,000) 360,000 1,664,000
__________ __________ __________ __________
Net loss $ (793,091) $ (2,869,036) $ (4,782,957) $ (6,384,294)
========== ========== ========== ==========
Net loss per share of common stock
Basic $ (.09) $ (.34) $ (.57) $ (.75)
========== ========== ========== ==========
Diluted $ (.09) $ (.34) $ (.57) $ (.75)
========== ========== ========== ==========
Weighted average number of common
shares outstanding
Basic 8,509,611 8,498,980 8,453,669 8,485,924
========== ========== ========= =========
Diluted 8,509,611 8,498,980 8,453,669 8,485,924
========== ========== ========= =========
See accompanying notes to consolidated financial statements.
Dataram Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Nine Months Ended January 31, 2003 and 2002
(Unaudited)
2003 2002
Cash flows from operating activities:
Net loss $ (2,869,036) $ (6,384,294)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization 3,007,003 9,174,519
Bad debt expense (recovery) 91,359 (104,863)
Decrease in deferred income taxes 75,000 0
Changes in assets and liabilities:
Decrease in trade receivables 5,865,564 6,225,064
Increase in income tax receivable (440,000) 0
Decrease (increase) in inventories 2,699,709 (642,838)
Increase in other current assets (317,844) (721,306)
Increase in other assets (149,000) (19,466)
Decrease in accounts payable (3,969,730) (671,491)
Decrease in accrued liabilities (441,543) (2,017,374)
__________ __________
Net cash provided by
operating activities 3,551,482 4,837,951
__________ __________
Cash flows used in investing activities-
Additions to property and equipment (638,600) (428,431)
Cash flows from financing activities:
Principal payments of term loan 0 (10,000,000)
Borrowings (payments) under revolving
credit line (3,800,000) 3,900,000
Principal payments under capital
lease obligations 0 (5,111,000)
Proceeds from sale of common shares under
stock option plan, (including tax benefits) 403,375 345,183
Purchase and subsequent cancellation
of common stock (488,443) (649,976)
__________ __________
Net cash used in financing (3,885,068) (11,515,793)
activities __________ __________
Effect of foreign currency translation
on cash and cash equivalents 412,578 (290,578)
__________ __________
Net decrease in cash and
cash equivalents (559,608) (7,396,851)
Cash and cash equivalents at
beginning of period 3,656,150 10,235,321
__________ __________
Cash and cash equivalents at
end of period $ 3,096,542 $ 2,838,470
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 115,827 $ 1,104,564
Income taxes $ 88,200 $ 1,640,000
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
January 31, 2003 and 2002
(Unaudited)
Basis of Presentation
The information for the three and nine months ended January 31, 2003 and 2002,
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
accounting principles generally accepted in the United States of America. The
interim results are not necessarily indicative of results to be expected for
the full fiscal year. These financial statements should be read in conjunction
with the audited financial statements for the year ended April 30, 2002
included in the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission.
Comprehensive Income (loss)
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income ("SFAS No. 130") requires that items defined as other comprehensive
income, such as unrealized investment gains and losses and translation gains
and losses, be seperately classified in the consolidated financial statements
and that the accumulated balance of other comprehensive income (loss) be
reported separately from retained earnings and additional paid in capital in
the equity section of the consolidated balance sheet. Comprehensive loss for
the three and nine months ended January 31, 2003 was ($587,000) and
($2,277,000) respectively. Comprehensive loss for the three and nine months
ended January 31, 2002 was ($4,743,000) and ($6,675,000), respectively.
Restructuring charges
In fiscal 2003's first quarter, the Company initiated a restructuring of its
operations, which resulted in a workforce reduction of approximately 24% and
certain other cost efficiencies. The Company recorded a restructuring charge
of $740,000, in the quarter ended July 31, 2002, which primarily relates to
severance payments. As of January 31, 2003, the Company had paid out
approximately $608,000 of the charges with the balance expected to be paid in
the quarter ended April 30, 2003.
Also, in the first quarter of the prior fiscal year, the Company initiated a
restructuring of its operations, which resulted in a workforce reduction of
approximately 25%. The Company recorded a restructuring charge of $1,200,000,
in the quarter ended July 31, 2001, which primarily related to severance
payments. All of the payments associated with the restructuring have been
paid.
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, 2003 and April
30, 2002 consist of the following categories:
January 31, 2003 April 30, 2002
________________ ______________
Raw material $ 1,382,000 $ 3,118,000
Work in process 210,000 182,000
Finished goods 1,321,000 2,135,000
________________ ______________
$ 2,913,000 $ 5,435,000
================ ==============
Financial information by geographic location
The Company operates in one business segment and develops, manufactures and
markets a variety of memory systems for use with servers, workstations,
desktop and notebook computers which are manufactured by various companies.
Revenues for the three and nine month periods ended January 31, 2003 and 2002
by geographic region is as follows:
Three months ended Nine months ended
January 31, 2003 January 31, 2003
________________ ________________
United States $ 5,900,000 $ 22,955,000
Europe 4,262,000 12,077,000
Other (prinicipally Asia Pacific Region) 2,596,000 5,977,000
________________ ________________
Consolidated $ 12,758,000 $ 41,009,000
================ ================
Three months ended Nine months ended
January 31, 2002 January 31, 2002
________________ ________________
United States $ 10,310,000 $ 31,035,000
Europe 7,023,000 18,982,000
Other (prinicipally Asia Pacific
Region) 2,313,000 11,372,000
________________ ________________
Consolidated $ 19,646,000 $ 61,389,000
================ ================
Long-lived assets (which consist of property and equipment, and goodwill) and
total assets by geographic region as of January 31, 2003 and 2002 is as
follows:
January 31, 2003
Long-lived assets Total assets
_________________ ______________
United States $ 4,509,000 $ 12,276,000
Europe 13,415,000 18,649,000
Other 61,000 1,304,000
_________________ ______________
Consolidated $ 17,985,000 $ 32,229,000
================= ==============
January 31, 2002
Long-lived assets Total assets
_________________ ______________
United States $ 5,651,000 $ 16,964,000
Europe 15,610,000 24,138,000
Other 219,000 3,299,000
_________________ ______________
Consolidated $ 21,480,000 $ 44,401,000
================= ==============
Long-term Debt
On April 16, 2001 the Company entered into a $10,000,000 term note ("term
note") and a $15,000,000 revolving credit line ("credit line") with a
commercial bank (together, referred to as the "credit facility"). The credit
facility contains financial covenants as defined in the agreement, which were
ammended in January 2002 and which the Company was in compliance with at
January 31, 2003. The term note was due in twenty quarterly installments of
$500,000 until March 31, 2006. The Company repaid the term loan in its
entirety in January, 2002. As of January 31, 2003, the amount borrowed under
the revolving credit line was nil, and $15,000,000 remains available for
borrowing. The revolving credit line is scheduled to expire in April 2004.
Significant New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 143, "Accounting for Retirement Obligations" ("SFAS 143"). SFAS 143
establishes accounting standards for the recognition and measurement of an
asset retirement obligation and its associated asset retirement cost. It also
provides accounting guidance for legal obligations associated with the
retirement of tangible long-lived assets. SFAS 143 is effective for fiscal
years beginning after June 15, 2002, with early adoption permitted. The
Company currently is evaluating the provisions of SFAS 143, but expects that
the provisions will not have a material impact on its operations and financial
position upon adoption.
In July 2002, the FASB issued SFAS no. 146, Accounting for Costs Associated
with Exit or Disposal Activities ("FAS 146"). FAS 146 reconsiders all of the
guidance contained in EITF 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). FAS 146 applies to costs associated with
(a) certain termination benefits (so - called one-time termination benefits),
(b) costs to terminate a contract that is not a capital lease, and (c) other
associated costs including costs to consolidate facilities or relocate
employees. FAS 146, which may be adopted early, is effective for exit and
disposal activities initiated after December 31, 2002. The Company has adopted
FAS 146 and it did not have an effect on its consolidated financial
statements.
In December 2002, the FASB issued SFAS no. 148, Accounting for Stock-Based
Compensation, Transition and Disclosure ("FAS 148"). FAS 148 provides
alternative methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee compensation. FAS 148 also
requires that disclosures of the pro forma effect of using the fair value
method of accounting for stock-based employee compensation be displayed more
prominently and in a tabular format. Additionally, FAS 148 requires
disclosure of the pro forma effect in interim financial statements. As of
January 31, 2003, the Company is not required, nor has it adopted the
provisions of FAS 148. However, the Company does not expect FAS 148 to have a
material effect on the consolidated financial statements, upon adoption
because it will continue to account for options under APB 25.
In November 2002, the FASB issued Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements No.
5, 57 and 107 and a rescission of FASB Interpretation No. 34. This
interpretation elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under guarantees
issued. The interpretation also clarifies that a guarantor is required to
recognize at inception of a guarantee, a liability for the fair value of the
obligation undertaken. The initial recognition and measurement provisions of
the interpretation are applicable to guarantees issued or modified after
December 31, 2002 and are not expected to have a material effect on the
Company's financial statements. The disclosure requirements are effective for
financial statements of interim and annual periods ending after December 31,
2002. The Company maintains a warranty reserve of $54,000 at April 30, 2002
and January 31, 2003.
In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors in the entity do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 is
effective for all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or acquired prior to
February 1, 2003, the provisions of FIN 46 must be applied for the first
interim or annual period beginning after June 15, 2003. The Company does not
expect FIN 46 to have a material effect on its consolidated financial
statements.
Concentration of credit risk
Financial instruments that potentially subject the Company to concentration 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.
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. 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.
Liquidity and Capital Resources
The Company's cash and working capital position remain strong. As of
January 31, 2003, cash and equivalents amounted to $3.1 million and working
capital amounted to $9.6 million, reflecting a current ratio of 3.3 compared
to cash and equivalents of $3.7 million and working capital of $13.5 million
and a current ratio of 2.6 as of April 30, 2002.
During the quarter ended January 31, 2003, the Company purchased and
retired 25,800 shares of its common stock under its open market repurchase
plan at a total cost of $92,000. The total number of shares purchased and
retired in fiscal 2003 is 149,300, at a total cost of $488,000. On December 4,
2002 the Company announced that the Board of Directors had authorized an
additional share repuchase program of 500,000 shares. As of January 31, 2003,
the total number of remaining shares authorized for purchase is 548,450
shares. Management expects that the Company will continue to repurchase shares
in fiscal 2003.
On April 16, 2001 the Company entered into a $10,000,000 term note ("term
note") and a $15,000,000 revolving credit line ("credit line") with a
commercial bank (together, referred to as the "credit facility"). On January
21, 2002 the Company amended and restated its credit facility. The credit
facility contains financial covenants as defined in the agreement which the
Company was in compliance with at January 31, 2003. The term note was due in
twenty quarterly installments of $500,000 until March 31, 2006. The Company
repaid the term loan in its entirety in January, 2002. As of January 31, 2003,
the amount borrowed under the revolving credit line was nil. The $15,000,000
revolving credit line is scheduled to expire in April 2004. Management
believes that the Company's operating cash flows and availability under
borrowings will be sufficient to meet short term liquidity needs including
contractual obligations as the Company does not expect any unforeseen demands
beyond general operating requirements for cash. Management further believes
that its working capital together with internally generated funds from its
operations and its bank line of credit are adequate to finance the Company's
long term operating needs and future capital requirements.
On July 29, 2002, the Company entered into an agreement to sell its
undeveloped land for a price of $3.0 million. The agreement provides for
closing to occur no later than 30 months from the date of the contract.
Additionally, the agreement is subject to certain contingencies and as such
may be terminated prior to closing. The land is carried at cost on the
Company's balance sheet at a value of $875,000 and is shown as an asset held
for sale. The resulting gain on the sale will be recorded upon consumation of
the transaction and when all contingencies have been satisfied.
Future minimum lease payments under noncancellable operating leases (with
initial or remaining lease terms in excess of one year) as of April 30, 2002
are as follows:
Operating leases
Year ending April 30: ________________
2003 $ 1,312,000
2004 1,108,000
2005 1,127,000
2006 1,113,000
2007 855,000
Thereafter 2,214,000
Total minimum lease payments $ 7,729,000
The Company has no other material commitments.
Results of Operations
Revenues for the three month period ending January 31, 2003 were
$12,758,000 compared to revenues of $19,646,000 for the comparable prior year
period. Fiscal 2003 nine month revenues totaled $41,009,000 versus nine month
revenues of $61,389,000 in the prior year. The decrease in revenues was the
result of decreased demand, primarily in the United States and Europe for our
memory products, driven by the economic slow down. Volume measured as
gigabytes shipped decreased 38% for the third quarter of fiscal 2003 as
compared to the same prior year quarter. Nine month volume decreased 32% in
fiscal 2003 as compared to the same prior year period. There was also a
decrease in average selling prices caused by the decline in price of Dynamic
Random Access Memory (DRAM) chips, the primary raw material used in the
Company's product. As a result of this decline, average selling prices for the
Company's products in this year's first nine months have declined by
approximately 4% from the comparable prior year period. Revenues for the three
and nine month periods ended January 31, 2003 and 2002 by geographic region
were:
Three months ended Nine months ended
January 31, 2003 January 31, 2003
________________ ________________
United States $ 5,900,000 $ 22,955,000
Europe 4,262,000 12,077,000
Other (prinicipally Asia Pacific Region) 2,596,000 5,977,000
________________ ________________
Consolidated $ 12,758,000 $ 41,009,000
================ ================
Three months ended Nine months ended
January 31, 2002 January 31, 2002
________________ ________________
United States $ 10,310,000 $ 31,035,000
Europe 7,023,000 18,982,000
Other (prinicipally Asia Pacific Region) 2,313,000 11,372,000
________________ ________________
Consolidated $ 19,646,000 $ 61,389,000
================ ================
Cost of sales for the third quarter and nine months were 73% of revenues,
versus 64% and 66% for the same prior year periods. The increase in cost of
sales as a percentage of revenues is primarily the result of manufacturing
capacity that is not being fully utilized, therefore all fixed cost are not
being absorbed at current production levels.
Engineering and development costs in fiscal 2003's third quarter and nine
months were $375,000 and $1,156,000, respectively, versus $438,000 and
$1,446,000 for the same prior year periods. The decrease in expense is
primarily attributable to the reduced number of employees as a result of the
restructurings. The Company intends to maintain its commitment to the timely
introduction of new memory products as new computers are introduced.
Selling, general and administrative costs in fiscal 2003's third quarter
and nine months increased to 34% and 32% of revenues, respectively versus 27%
for the same prior year periods. Third quarter and nine month total
expenditures decreased by $951,000 and $3,410,000 from the comparable prior
year periods. The reduction of total expenses is mainly the result of the
aforementioned reduction in workforce. The majority of selling, general and
administrative costs are fixed, therefore as revenue decreases the percent to
revenue of these cost increases.
In fiscal 2002's first quarter and again in fiscal 2003's first quarter,
the Company initiated restructurings of its operations which resulted in
workforce reductions of approximately 25% and 24%, respectively as well as
certain other cost efficiencies. The Company recorded a restructuring charge
of $740,000 in the quarter ended July 31, 2002, which primarily relates to
severance payments. As of January 31, 2003, the Company had paid out
approximately $608,000 of the charges with the majority of the balance
expected to be paid in the quarter ended April 30, 2003. In fiscal 2002's
first quarter, the Company recorded a restructuring charge of $1,200,000,
which primarily related to severance payments. All of the payments associated
with that restructuring have been paid.
Intangible asset amortization recorded in fiscal 2003's third quarter and
nine months was nil versus $5,300,000 and $5,900,000, respectively. The
Company conducted an evaluation of its intangible assets in the third quarter
of fiscal 2002. The evaluation resulted in a charge of $5,300,000, which
reduced the carrying value of its intangible assets to zero. The Company is
required to conduct an impairment analysis of its acquired goodwill, currently
$11,144,000, annually. The Company will conduct the analysis in its fourth
quarter ended April 30, 2003. It is not practical to reasonably estimate the
impact of the reassessment at this time. However, with the economic slow down
continuing and in light of the Company's losses from operations and the
decline in the Company's stock price, the Company is assessing its business
plan and projections and considering how its acquired operations are being
utilized.
Other income (expense), net for the third quarter and nine months totaled
($2,000) and ($56,000) for fiscal 2003 and ($528,000) and ($826,000) for the
same periods in fiscal 2002. Other income (expense), net in fiscal 2003's
three and nine months consisted of interest expense of ($9,000) and ($84,000)
offset by interest income of $7,000 and $28,000. Fiscal 2002's three and nine
months consisted of interest expense of ($614,000) and ($1,105,000) offset by
interest income of $86,000 and $279,000. Interest expense has decreased due to
the reduction of debt.
Income tax expense (benefit) for the third quarter and nine months ended
January 31, 2003 was ($453,000) and ($1,017,000), respectively versus $360,000
and $1,664,000 in the comparable prior year periods. In both fiscal years,
income tax expense (benefit) was recognized in the United States at an
effective rate of 38%. Tax benefit has been recognized at an effective rate of
34% on losses incurred in international operations beginning in Fiscal 2003's
second quarter, as a result of a change in ownership structure of the foreign
operations.
Critical Accounting Policies
The Company's accounting policies are described in Note 1 to the notes to the
April 30, 2002 Consolidated Financial Statements filed on the Company's most
recent Form 10-K and there have been no material changes to such policies.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company does not invest in market risk sensitive instruments. The
Company's investments during the past fiscal year have consisted of overnight
deposits with banks. The Company's rate of return on its investment portfolio
changes with short-term interest rates, although such changes will not effect
the value of its portfolio. The Company's objectives in connection with its
investment strategy is to maintain the security of its cash reserves without
taking market risk with principal.
The Company purchases and sells primarily in U.S. dollars. The Company
sells in foreign currency to a limited number of customers and as such incurs
some foreign currency risk. At any given time, approximately 15 to 20 percent
of the Company's accounts receivable are denominated in currencies other than
U.S. dollars. The Company also incurs expenses in these same currencies,
primarily payroll and facilities costs which hedge these assets. At present,
the Company does not purchase forward contracts as hedging instruments, but
intends to do so as circumstances warrant.
ITEM 4. CONTROLS AND PROCEDURES
During the period covered by this interim report, the Company's chief
executive officer and its chief financial officer have evaluated the
effectiveness of the Company's disclosure controls and procedures and have
determined that they are adequate to insure a fair presentation, in all
material respects, of the financial position, results of operations and
statements of cash flows of the Company and there have been no material
changes to such controls and procedures.
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27 (a). Press Release reporting results of Third Quarter, Fiscal Year
2003 (Attached).
27 (b). Press release announcing 500,000 share stock repurchase program
(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: March 6, 2003 By: _____________________
Mark E. Maddocks
Vice President, Finance
(Principal Financial Officer)
CERTIFICATIONS
I, Robert Tarantino, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Dataram Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: March 6, 2003
ROBERT TARANTINO
_______________________
Robert Tarantino
President and Chief Executive Officer
I, Mark Maddocks, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Dataram Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: March 6, 2003
MARK MADDOCKS
_______________________
Mark Maddocks
Vice President, Finance
Page 8 of 8
Page 8 of 8
Page 8 of 8