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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 1/31/97 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 February 14, 1997, there were 3,179,410 shares outstanding.
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Dataram Corporation And Subsidiary
Consolidated Balance Sheets
January 31, 1997 and April 30, 1996
(Unaudited) (Audited)
January 31, 1997 April 30, 1996
Assets
Current Assets:
Cash and cash equivalents $ 6,702,754 $ 8,482,447
Trade receivables, less allowance
for doubtful accounts and sales returns
of $800,000 at January 31, 1997
and $800,000 at April 30, 1996 8,731,837 12,077,714
Inventories 2,440,464 2,311,897
Other current assets 521,256 862,709
__________ __________
Total current assets 18,396,311 23,734,767
Property and equipment, at cost:
Land 875,000 875,000
Machinery and equipment 6,513,478 6,190,426
__________ __________
7,388,478 7,065,426
Less: accumulated depreciation
and amortization 5,342,126 4,867,226
__________ __________
Net property and equipment 2,046,352 2,198,200
Other assets 5,730 5,730
__________ __________
$ 20,448,393 $ 25,938,697
========== ==========
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January 31, 1997 April 30, 1996
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,792,052 $ 5,909,262
Accrued liabilities 1,238,941 1,022,404
__________ __________
Total current liabilities 3,030,993 6,931,666
Deferred income taxes 929,000 929,000
Stockholders' Equity:
Common stock, par value $1.00 per share.
Authorized 18,000,000 shares; issued
3,183,310 at January 31, 1997
and 3,824,305 at April 30, 1996 3,183,310 3,824,305
Additional paid-in capital 2,568,807 3,425,142
Retained earnings 10,736,283 10,828,584
__________ __________
Total stockholders' equity 16,488,400 18,078,031
__________ __________
$ 20,448,393 $ 25,938,697
========== ==========
See accompanying notes to consolidated financial statements.
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Dataram Corporation and Subsidiary
Consolidated Statements of Operations
Three and Nine Months Ended January 31, 1997 and 1996
(Unaudited)
1997 1996
3rd Quarter Nine Months 3rd Quarter Nine Months
Revenues $ 17,514,342 $ 52,130,588 $ 28,385,207 $ 85,601,073
Costs and expenses:
Cost of sales 13,944,417 41,165,237 26,910,340 77,689,791
Engineering and development 253,887 732,977 365,935 1,254,249
Selling, general and administrative 1,941,700 5,788,074 1,462,188 4,896,992
__________ __________ __________ __________
16,140,004 47,686,288 28,738,463 83,841,032
Earnings (loss)from operations 1,374,338 4,444,300 (353,256) 1,760,041
Other income (expense), net
Other income, net 1,840 18,447 0 0
Interest income 73,063 201,352 0 0
Interest expense 0 0 (44,691) (101,860)
__________ __________ __________ __________
74,903 219,799 (44,691) (101,860)
Earnings (loss) before income taxes 1,449,241 4,664,099 (397,947) 1,658,181
Income tax expense (benefit) 537,000 1,773,000 (155,000) 656,000
__________ __________ __________ __________
Net earnings (loss) $ 912,241 $ 2,891,099 $ (242,947) $ 1,002,181
========== ========== ========== ==========
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Net earnings (loss) per share of common stock
Primary $ .27 $ .83 $ (.06) $ .26
========== ========== ========== ==========
Fully Diluted $ .27 $ .80 $ (.06) $ .26
========== ========== ========== ==========
Weighted average number of common
shares outstanding
Primary 3,356,920 3,479,844 3,824,305 3,837,807
========== ========== ========= =========
Fully Diluted 3,441,108 3,610,129 3,824,305 3,837,807
========== ========== ========= =========
See accompanying notes to consolidated financial statements.
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Dataram Corporation and Subsidiary
Consolidated Statements of Cash Flows
Nine Months Ended January 31, 1997 and 1996
(Unaudited)
1997 1996
Cash flows from operating activities:
Net earnings $ 2,891,099 $ 1,002,181
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Depreciation and amortization 474,900 500,741
Bad debt expense 251,220 220,795
Changes in assets and liabilities:
Decrease (increase) in
trade receivables 3,094,656 (721,138)
Decrease (increase) in inventories (128,567) 2,576,869
Decrease in other current assets 341,453 277,653
Decrease in other assets 0 9,346
Decrease in accounts payable (4,117,210) (3,600,466)
Increase (decrease) in
accrued liabilities 216,537 (1,121,390)
Increase (decrease) in
deferred income taxes 0 514,000
__________ __________
Net cash provided by (used in)
operating activities 3,024,088 (341,409)
__________ __________
Cash flows from investing activities:
Purchase of property and equipment (323,052) (230,115)
__________ __________
Net cash used in investing activities (323,052) (230,115)
Cash flows from financing activities:
Proceeds from sale of common shares under
stock option plan 21,400 238,000
Purchase of and retirement of common shares (4,502,129) 0
__________ __________
Net cash provided by (used in)
financing activities (4,480,729) 238,000
__________ __________
Net increase (decrease) in cash
and cash equivalents (1,779,693) (333,524)
Cash and cash equivalents at
beginning of year 8,482,447 721,811
__________ __________
Cash and cash equivalents at
end of period $ 6,702,754 $ 388,287
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 0 $ 101,860
Income taxes $ 1,290,000 $ 582,000
See accompanying notes to consolidated financial statements.
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Dataram Corporation and Subsidiary
Notes to Consolidated Financial Statements
January 31, 1997 and April 30, 1996
(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:
1/31/97 4/30/96
Raw Materials $ 1,837,000 $ 1,435,000
Work In Process 98,000 45,000
Finished Goods 505,000 832,000
_________ _________
$ 2,440,000 $ 2,312,000
========= =========
(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, 1998,
unless otherwise amended or extended.
(4) In 1982, the Company adopted an incentive stock option plan. As of
January 31, 1997, no further options may be granted under the plan and options
to purchase 6,000 shares were exercised in fiscal 1997 at an excercise price
of $3.57 per share and no further options remain outstanding.
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, 1997, options to
purchase 479,000 shares at prices ranging from $5.125 to $7.125 per share were
outstanding. As of January 31, 1997 options to purchase 32,000 shares had been
exercised and options to purchase 204,400 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. On September 10, 1996, the
Company granted to a fourth non-employee director five year options to acquire
30,000 shares at an exercise price of $6.9375. As of January 31, 1997, none of
these options had been exercised and options to purchase 112,500 shares were
exercisable.
(5) In June of 1996, the Company announced an open market repurchase plan
providing for the repurchase of up to 250,000 shares of the Company's common
stock. In July of 1996, the plan was amended to provide for the repurchase of
up to 500,000 shares of the Company's common stock. On September 10, 1996 the
Board of Directors authorized the repurchase of an additional 300,000 shares.
As of January 31, 1997 a total of 647,000 shares had been repurchased at a
total cost of $4,503,000.
(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.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As of January 31, 1997, working capital amounted to $15.4 million
reflecting a current ratio of 6.1 compared to working capital of $16.8
million and a current ratio of 3.4 as of April 30, 1996.
The Company's financial condition remains strong. The Company has
renegotiated its line of credit. The new agreement provides for a $12.0
million unsecured line of credit with a bank which expires in October 1998.
The line of credit has not been used during the current fiscal year. With its
current working capital balance and its line of credit, management believes
that it will be able to support its growth and other capital needs for the
foreseeable future.
Results of Operations
Revenues for the three month period ending January 31, 1997 were
$17,514,000 compared to revenues of $28,385,000 for the comparable prior year
period. Fiscal 1997 nine month revenues totaled $52,131,000 versus nine month
revenues of $85,601,000 for the prior fiscal year. The decline in revenues was
the result of declining average selling prices for the Company's products
reflecting an eighty percent decrease in the price of dynamic random access
memory chips (DRAMs)which are the primary raw material in memory boards. As a
result of competitive conditions in the memory board marketplace, the Company
passed these cost savings through to our customers. Increased unit volume
partially offset the reduction in selling prices. Total units shipped have
increased by approximately 180% in this year's third quarter, versus the third
quarter last year.
Cost of sales for the third quarter and nine months of fiscal 1997 were
80% and 79%, respectively of revenues versus 95% and 91% for the same prior
year periods. Included in last years third quarter and nine months cost of
sales was a $1,200,000 charge for a write down to market value of inventory.
The remaining increase in operating margins is the result of increased unit
volume which created significant economies of scale. Prices for the four and
sixteen megabit DRAM continued to decline during the third 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 1997's third quarter and nine
months were $264,000 and $733,000, respectively versus $366,000 and $1,254,000
for the same prior year periods. The decrease in cost was due to modest
reductions in staff, and an overall control of cost primarily associated with
lower product design costs of today's simplified memory boards. The Company
intends to maintain its commitment to timely introduction of new memory
products as new workstations and computers are introduced.
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Selling, general and administrative costs in this year's third quarter
increased to 11% of revenues from 5% for the same prior year period. Three
month total expenditures increased by $480,000 from the comparable prior year
period. Nine month selling, general and administrative costs increased by
$891,000 in fiscal 1997 versus fiscal 1996. These increases are primarily
attributable to certain planned marketing and promotional expenditures and
legal expenses incurred related to a Complaint filed by Sun Microsystems, Inc.
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 third quarter and nine months of
fiscal 1997 consisted primarily of interest income on short term investments.
Prior year other income (expense) consisted of interest expense associated
with the Company's revolving credit line.
PART II: OTHER INFORMATION
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27 (a). Financial Data Schedule
10 (a) Amendment Number One To Loan Agreement
99 (a). Press Release reporting results of Third Quarter, Fiscal Year
1997 (Attached).
B. Reports on Form 8-K
No reports on Form 8-K have been filed during the current quarter.
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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: Feb. 26, 1997 By: MARK E. MADDOCKS
__________________ ___________________
Mark E. Maddocks
Vice President, Finance
(Principal Financial Officer)