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 10/31/95 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 8, 1995, there were 3,824,305 shares outstanding.
PART 1: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Dataram Corporation and Subsidiary
Consolidated Balance Sheets
October 31, 1995 and April 30, 1995
Unaudited Audited
Assets October 31, 1995 April 30, 1995
Current Assets: $ 459,856 $ 721,811
Cash and cash equivalents
Trade receivables, less allowance for doubtful
accounts and sales returns of $585,000 at
October 31, 1995 and $495,000 at
April 30, 1995 19,394,821 14,921,024
Inventories 12,927,209 8,060,807
Other current assets 591,861 1,129.630
Total current assets 33,373,747 24,833,272
Property and equipment, at cost:
Land 875,000 875,000
Machinery and equipment 6,106,751 5,952,504
6,981,751 6,827,504
Less: accumulated depreciation
and amortization 4,530,799 4,197,158
Net property and equipment 2,450,952 2,630,346
Other assets 5,730 15,076
$ 35,830,429 $27,478,694
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $14,175,184 $ 8,778,049
Accrued liabilities 1,126,820 2,069,348
Total current liabilities 15,302,004 10,847,397
Deferred income taxes 753,822 239,822
Long-term debt 1,900,000 0
Stockholders' Equity
Common stock, par value $1.00 per share.
Authorized 18,000,000 shares; issued
3,824,305 at October 31, 1995
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 10,625,156 9,380,028
Total stockholders' equity 17,874,603 16,391,475
$35,830,429 $27,478,694
See accompanying notes to consolidated financial statements.
Dataram Corporation and Subsidiary
Consolidated Statements of Earnings
Three and Six Months Ended October 31, 1995 and 1994
(Unaudited)
1995 1994
2nd Quarter Six Months 2nd Quarter Six Months
Revenues $ 32,331,119 $57,215,866 $ 27,361,305 $49,524,262
Costs and expenses:
Cost of sales 28,925,556 50,779,451 22,788,189 41,275,020
Engineering and development 453,351 888,314 676,903 1,305,773
Selling, general and
administrative 1,743,759 3,434,804 2,958,212 5,555,409
31,122,666 55,102,569 26,423,304 48,136,202
Earnings from operations 1,208,453 2,113,297 938,001 1,388,060
Other income (expense):
Other income (expense), net 0 0 25,000 58,202
Interest expense (38,638) (57,169) (93,422) (129,562)
(38,638) (57,169) (68,422) (71,360)
Net earnings before income taxes 1,169,815 2,056,128 869,579 1,316,700
Income tax provision 462,000 811,000 344,000 523,000
Net earnings $ 707,815 $ 1,245,128 $ 525,579 $ 793,700
Net earnings per common and common
equivalent share:
Primary $ .18 $ .33 $ .14 $ .21
Fully Diluted $ .18 $ .32 $ .14 $ .21
Weighted averaged number of common and
common equivalent shares outstanding:
Primary 3,883,626 3,829,633 3,821,109 3,822,162
Fully Diluted 3,900,168 3,876,660 3,821,109 3,822,162
See accompanying notes to consolidated financial statements
Dataram Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Six Months Ended October 31, 1995 and 1994
(Unaudited)
1995 1994
Sources of working capital:
Net earnings $ 1,245,128 $ 793,700
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 333,641 421,999
Bad debt expense 143,771 106,286
Changes in assets and liabilities:
Increase in trade receivables (4,617,568) (3,454,201)
Increase in inventories (4,866,402) (1,004,557)
Decrease in other current assets 537,769 616,657
Decrease in other assets 9,346 2,934
Increase (decrease) in accounts
payable 5,397,135 (3,268,288)
Decrease in accrued liabilities (942,528) (271,565)
Increase in deferred income taxes 514,000 0
Total adjustments (3,490,836) (6,850,735)
Net cash used in operating
activities (2,245,708) (6,057,035)
Cash flows from investing activities:
Purchase of fixed assets (154,247) (224,656)
Net cash used in investing activities (154,247) (224,656)
Cash flows from financing activities:
Proceeds from sale of common shares under stock
option plan 238,000 2,438
Increase in long-term debt 1,900,000 5,900,000
Net cash provided by financing
activities 2,138,000 5,902,438
Net increase in cash and cash equivalents (261,955) (379,253)
Cash and cash equivalents at beginning
of year 721,811 437,779
Cash and cash equivalents at end of
period $ 459,856 $ 58,526
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 57,169 $ 129,562
Income taxes $ 402,000 $ 0
See accompanying notes to consolidated financial statements.
Dataram Corporation and Subsidiary
Notes to Consolidated Financial Statements
October 31, 1995 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:
10/31/95 4/30/95
Raw Materials $ 8,150,000 $ 4,726,000
Work In Process 579,000 648,000
Finished Goods 4,198,000 2,687,000
$12,927,000 $ 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
October 31, 1995, 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 October 31, 1995, options to
purchase 322,000 shares at prices ranging from $5.125 to $7.125 per share were
outstanding. As of October 31, 1995 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 October 31, 1995,
none of these options had been exercised and options to purchase 60,000 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 October 31, 1995, working capital amounted to $18.1 million
reflecting a current ratio of 2.2 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 $1.9 million was outstanding under the
line of credit. The funds were primarily used to support growth in accounts
receivable associated with increased revenue levels. 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 October 31, 1995 were
$32,331,000 compared to revenues of $27,361,000 for the comparable prior year
period, an increase of 18%. Six month revenues of $57,216,000 reflected an
increase of 16% over the prior fiscal year's six month revenues of $49,524,000.
Revenues from overseas markets for the second quarter and six months of fiscal
1996 amounted to 28% and 27%, respectively of total revenues.
Cost of sales for the second quarter and six months were 89% of revenues
versus 83% for the same prior year periods. Computer memory products have
become commodity items and as such command low operating margins. The
Company has successfully transformed its organizational structure to compete in
a computer memory market characterized by high volume, pricing pressures and low
operating margins. Toward the end of this year's second quarter, there were
indications that the market for Dynamic Rams (DRAMS), the primary raw material
in computer memory boards, had changed. Spot prices for four megabit DRAMS
had softened. However, the vast majority of the Company's products are used in
workstations and high end personal computers and servers. As a consequence
these products primarily use 16 megabit DRAMS. Contract and spot market prices
for these DRAMS remained firm throughout the quarter. While management
believes that it is possible that prices for 16 megabit DRAMS could decline
towards the end of the the third quarter of fiscal 1996, it is unclear at
this time what the magnitude of that change, if any, will be.
Engineering and development costs in fiscal 1996's second quarter and six
months were $453,000 and $888,000 versus $677,000 $1,305,000 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
six months declined to 6% of revenues from 11% for the same prior year periods.
Three and six month total expenditures decreased by $1,214,000 and
$2,121,000, respectively from the prior year. This decrease is primarily the
result of the 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 as a percentage of revenue. Management expects that
ongoing cost control measures will further reduce these expenditures as a
percentage of revenue on comparable revenues.
Other income (expense),net for the second quarter and six 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
A. Backlog
The Company's backlog released for shipment as of October 31, 1995, was
$1.3 million compared to a backlog of $3.4 million on October 31,1994. The
Company normally fills most of its orders within one day or less after
receipt and its backlog at any point in time is not necessarily indicative of
future financial performance.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27 (a). Financial Data Schedule
28 (a). Press Release reporting results of Second 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
BERNARD L. RILEY
Date:December 8, 1995 By:
Bernard L. Riley
Vice President, Finance
(Principal Financial Officer)
MARK E. MADDOCKS
Date:December 8, 1995 By:
Mark E. Maddocks
Controller
(Principal Accounting Officer)