DATARAM Dataram Contact: Investor Contact:
Mark Maddocks, Joe Zappulla
Vice President-Finance, CFO Wall Street Investor
Relations
PRESS RELEASE 609-799-0071 212-681-4100
info@ataram.com JZappulla@WallStreetIR.com
DATARAM REPORTS SECOND QUARTER
FISCAL 2006 FINANCIAL RESULTS
Board of Directors Declares Regular Quarterly $0.05 Per Share Dividend
PRINCETON, N.J. November 16, 2005 -- Dataram Corporation (NASDAQ: DRAM) today
reported its financial results for its fiscal second quarter ended October 31,
2005. Revenues for the second quarter of the current fiscal year were $9.9
million, which compares to $20.3 million for the second quarter of the prior
fiscal year and $13.9 million in this year's first quarter. Last year's
fiscal second quarter and this year's first quarter included approximately
$8.4 million and $3.2 million, respectively of revenues from shipments to a
single OEM customer. In the second quarter of this fiscal year, the Company
derived no revenues from shipments to that customer. Revenues for the first
six months of the current fiscal year were $23.8 million versus $36.1 million
for the comparable prior year period. Prior year revenues included
approximately $14.1 million in revenue derived from shipments to the same
customer. This customer has been undergoing a restructuring of their business
including reducing their procurement costs for goods and services.
Consequently, the Company only competes for their business on a selective
basis making it uncertain whether the Company will be receiving or accepting
new orders from this customer in the near future.
Earnings before income taxes were $565,000 compared to $1.5 million for the
first quarter of the current fiscal year and $1.6 million for the second
quarter of the previous fiscal year. Net earnings for the second quarter were
$352,000 or $0.04 per diluted share. This compares to net earnings of $931,000
or $0.11 per diluted share for the first quarter of the current fiscal year
and $1.5 million or $0.17 per diluted share for last year's second quarter.
Earnings in the second quarter of last fiscal year were taxed at an effective
rate of 6.5%, while the Company's effective tax rate for financial reporting
purposes in fiscal 2006 is approximately 37.5%. For the first six months of
the current fiscal year, the Company's net earnings totaled $1.3 million or
$0.15 per diluted share compared to net earnings of $2.7 million or $0.29 per
diluted share for the comparable prior year period.
The Company has net operating loss (NOL) carryforwards totaling approximately
$10.8 million and the Company will continue to make cash payments for income
taxes at an approximate rate of 6.5% of pretax earnings until it utilizes all
of its NOL carryforwards. Utilizing the Company's current effective tax rate
of 37.5%, comparable diluted earnings per share were $0.11 and $0.19,
respectively for the second quarter and six months of last fiscal year. A
reconciliation of GAAP to comparable net earnings and comparable diluted
earnings per share for the second quarter and six months of last fiscal year
is presented in the following table:
(In 000s except per
share amounts) Quarter Ended Six Months Ended
____________________________ __________________
Oct. 31 Oct. 31 July 31 Oct. 31 Oct. 31
2005 2004 2005 2005 2004
_______ _______ _______ _______ _______
Earnings before
income taxes $ 565 $ 1,632 $ 1,489 $ 2,055 $ 2,880
Income tax expense
as reported 213 106 558 771 187
Adjustment to income
tax expense(1) 0 506 0 0 893
Comparable income
tax expense(1) 213 612 558 771 1,080
Comparable net earnings(1) $ 352 $ 1,020 $ 931 $ 1,284 $ 1,800
Comparable diluted EPS(1) $ 0.04 $ 0.11 $ 0.11 $ 0.15 $ 0.19
__________________________________________________
(1)Assumes comparable effective tax rate of 37.5%.
Gross margins during the second quarter were approximately 30 percent, which
compares to approximately 30 percent in the first quarter and compares to
approximately 22 percent for the second quarter of the prior fiscal year.
Margins have been higher than the Company's historical norm and reflect a
higher than normal shipment percentage of larger capacity memory, which
typically command higher margins. The Company considers 25 percent gross
margins with quarterly fluctuations of as much as 3 percent to be normal. The
Company's backlog at the end of the second quarter was $770,000 compared to
$1.5 million at the end of the previous quarter.
During the second quarter, the Company paid approximately $421,000 in cash
dividends. Nevertheless, the Company's cash and cash equivalents has increased
to $12.7 million from $10.5 million at the end of the first quarter and $9.3
million at the beginning of the fiscal year. As of October 31, 2005, there
were 8,465,146 common shares outstanding.
Robert V. Tarantino, Dataram's chairman and CEO commented, "Our business model
and current cost structure allow us to operate profitably, even in a down
quarter. We generated significant cash flow from operating activities in the
second quarter and expect our quarterly operating results to improve as we
move forward. Today, the Company's board of directors approved a $0.05 per
share regular quarterly dividend. The dividend will be payable on December 14,
2005, to shareholders of record as of November 30, 2005."
As announced in a press release dated November 9, 2005, Dataram will conduct a
conference call today at 4:30 p.m. (EST) to present its second quarter
financial results and to respond to investor questions. Interested
shareholders may participate in the call by dialing 800-263-9160 and providing
the following reservation number: 21268898. 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 or 402-977-9140 and entering the reservation number
listed above.
USE OF NON-GAAP MEASURES
Management believes that "comparable" net earnings and "comparable" diluted
earnings per share, which are non-GAAP measurements, are meaningful to
investors because they provide a view of the Company with respect to ongoing
operating results. These results exclude significant charges or credits which
are important to an understanding of the Company's overall operating results
in the period presented. Such non-GAAP measurements are not recognized in
accordance with generally accepted accounting principles (GAAP) and should not
be viewed as an alternative to GAAP measures of performance. A reconciliation
of GAAP measurements to non-GAAP has been presented in this press release.
ABOUT DATARAM CORPORATION
Dataram is a worldwide leader in the design and manufacture of high capacity,
reliable and innovative memory solutions. With over 38 years of experience,
Dataram provides customized memory solutions for OEMs and compatible memory
for leading brands including HP, Dell, IBM, SGI, Sun Microsystems and Intel.
For more information about Dataram, visit www.dataram.com
The information provided in this press release may include forward-looking
statements relating to future events, such as the development of new products,
pricing and availability of raw materials 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, order
cancellations, 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.
***** Financial Tables Follow *****
DATARAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)
Second Quarter Ended Six Months
October 31, October 31,
____________________ _______________
2005 2004 2005 2004
_______ ________ ________ ________
Revenues $ 9,858 $ 20,322 $ 23,802 $ 36,114
Costs and expenses:
Cost of sales 6,886 15,816 16,632 27,557
Engineering and development 293 312 559 631
Selling, general
and administrative 2,282 2,575 4,775 5,123
_______ _______ _______ ________
9,461 18,703 21,966 33,311
_______ _______ _______ ________
Earnings from operations 397 1,619 1,836 2,803
Other income 168 13 219 77
_______ _______ _______ ________
Earnings before income taxes 565 1,632 2,055 2,880
Income tax provision 213 106 771 187
_______ _______ _______ ________
Net earnings $ 352 $ 1,526 $ 1,284 $ 2,693
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Net earnings per share:
Basic $ 0.04 $ 0.18 $ 0.15 $ 0.31
======= ======= ======= ========
Diluted $ 0.04 $ 0.17 $ 0.15 $ 0.29
======= ======= ======= ========
Weighted average number of shares
outstanding:
Basic 8,441 8,599 8,411 8,581
======= ======= ======= ========
Diluted 8,941 9,216 8,829 8,265
======= ======= ======= ========
DATARAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
October 31, 2005 April 30, 2005
________________ ______________
ASSETS
Current assets
Cash and cash equivalents $ 12,710 $ 9,281
Trade receivables, net 5,052 8,397
Inventories 1,980 2,369
Deferred income taxes 2,191 3,258
Other current assets 330 130
_________ _________
Total current assets 22,263 23,435
Deferred income taxes (non-current) 1,130 630
Property and equipment, net 1,784 2,028
Other assets 60 54
_________ _________
Total assets $ 25,237 $ 26,147
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 1,404 $ 2,528
Accrued liabilities 933 1,438
_________ _________
Total current liabilities 2,337 3,966
Stockholders' equity 22,900 22,181
_________ _________
Total liabilities and stockholders' equity $ 25,237 $ 26,147
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