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 07/31/97 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 September 10, 1997, there were 3,000,905
shares outstanding.
2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Dataram Corporation And Subsidiary
Consolidated Balance Sheets
July 31, 1997 and April 30, 1997
(Unaudited) (Audited)
July 31, 1997 April 30, 1997
Assets
Current Assets:
Cash and cash equivalents $ 6,707,850 $ 6,835,671
Trade receivables, less allowance
for doubtful accounts and sales returns
of $800,000 at July 31, 1997
and $800,000 at April 30, 1997 8,780,623 8,473,228
Inventories 2,991,135 4,395,813
Other current assets 680,510 572,376
__________ __________
Total current assets 19,160,118 20,277,088
Property and equipment, at cost:
Land 875,000 875,000
Machinery and equipment 7,444,123 6,840,378
__________ __________
8,319,123 7,715,378
Less: accumulated depreciation
and amortization 5,586,732 5,461,632
__________ __________
Net property and equipment 2,732,391 2,253,746
Other assets 7,280 5,730
__________ __________
$ 21,899,789 $ 22,536,564
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,231,513 $ 4,144,946
Accrued liabilities 612,324 1,093,380
Income taxes payable 391,000 0
__________ __________
Total current liabilities 4,234,837 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
3,050,405 at July 31, 1997
and 3,077,449 at April 30, 1997 3,050,405 3,077,449
Additional paid-in capital 2,430,284 2,452,677
Retained earnings 11,171,263 10,755,112
__________ __________
Total stockholders' equity 16,651,952 16,285,238
__________ __________
$ 21,899,789 $ 22,536,564
========== ==========
See accompanying notes to consolidated financial statements.
TABLE/
3
Dataram Corporation and Subsidiary
Consolidated Statements of Earnings
Three Months Ended July 31, 1997 and 1996
(Unaudited)
1997 1996
Revenues $18,147,292 $17,448,290
Costs and expenses:
Cost of sales 14,634,977 13,887,973
Engineering and development 223,578 229,682
Selling, general and administrative 2,280,159 1,833,752
__________ __________
17,138,714 15,951,407
Earnings from operations 1,008,578 1,496,883
Other income (expense), net
Other income 2,000 0
Interest income 64,694 68,568
Interest expense 0 0
__________ __________
66,694 68,568
Earnings before income taxes 1,075,272 1,565,451
Income tax expense 406,000 601,000
__________ __________
Net earnings $ 669,272 $ 964,451
========== ==========
Net earnings per share of common stock $ .21 $ .26
========== ==========
Weighted average number of common
shares outstanding 3,213,864 3,721,093
========== ==========
See accompanying notes to consolidated financial statements.
<TABLE/>
4
Dataram Corporation and Subsidiary
Consolidated Statements of Cash Flows
Three Months Ended July 31,1997 and 1996
(Unaudited)
1997 1996
Cash flows from operating activities:
Net earnings $ 669,272 $ 964,451
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Depreciation and amortization 125,100 174,900
Bad debt expense 87,649 220,795
Changes in assets and liabilities:
(Increase)decrease in trade receivables (395,044) 2,518,025
Decrease in inventories 1,404,678 712,558
(Increase)decrease in other current assets (108,134) 489,786
Increase in other assets (1,550) 0
Decrease in accounts payable (913,433) (2,409,897)
Decrease in accrued liabilities (481,056) (140,189)
Increase in income taxes payable 391,000 0
__________ __________
Net cash provided by
operating activities 778,482 2,530,429
__________ __________
Cash flows from investing activities:
Purchase of property and equipment (603,745) (61,360)
Disposal of fixed assets 0 0
__________ __________
Net cash used in investing activities (603,745) (61,360)
Cash flows from financing activities:
Proceeds from sale of common shares under
stock option plan 57,000 21,400
Purchase and cancellation of common stock (359,558) (2,071,485)
__________ __________
Net cash used in financing activities (302,558) (2,050,085)
__________ __________
Net increase (decrease) in cash
and cash equivalents (127,821) 418,984
Cash and cash equivalents at
beginning of year 6,835,671 8,482,447
__________ __________
Cash and cash equivalents at
end of period $ 6,707,850 $ 8,901,431
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 37,453 $ 0
Income taxes $ 43,058 $ 0
<TABLE/>
See accompanying notes to consolidated financial statements.
5
Dataram Corporation and Subsidiary
Notes to Consolidated Financial Statements
July 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:
7/31/97 4/30/97
Raw Materials $ 2,209,000 $ 3,369,000
Work In Process 146,000 98,000
Finished Goods 636,000 929,000
_________ _________
$ 2,991,000 $ 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, 1998,
unless otherwise amended or extended.
(4) 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 July 31, 1997, options
to purchase 510,000 shares at prices ranging from $5.125 to $10.375 per share
were outstanding. During the quarter ended July 31, 1997 options to purchase
30,000 shares were granted at the fair market value on the grant date and
options to purchase 8,000 shares were exercised. As of July 31, 1997, options
to purchase 289,800 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
the quarter ended July 31, 1997 30,000 of these outstanding options were
cancelled in accordance with the terms of the plan. As of July 31, 1997, none
of these options had been exercised and options to purchase 90,000 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: 7/31/97 7/31/96
-------- -------
Net earnings as reported $ 669 $ 964
Net earnings pro forma 628 939
Net earnings per share as reported .21 .26
Net earnings per share pro forma .20 .25
(6) 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 July 31, 1997, no shares had been purchased under the plan.
(7) Information furnished reflects all adjustments which are, in the
opinion of management, necessary to a fair presentation of the results of this
interim statement.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As of July 31, 1997, working capital amounted to $14.9 million reflecting
a current ratio of 4.5 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 is scheduled
to expire in October 1997 and $6 million expires in October 1998. The Company
intends to renew any expiring portion of the facility by the expiration date
and maintain a $12 million total facility. At the end of the quarter there was
no amount outstanding under the line of credit. With its current working
capital balance and the 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 July 31, 1997 were $18,147,000
compared to revenues of $17,448,000 for the comparable prior year period.
Increased unit volume and an expanded customer base have offset the decline in
average selling prices for the Company's products associated with declining
dynamic random access memory (DRAM) chip prices. Total megabytes shipped have
increased by approximately 66% in the first quarter versus the same period
last year.
Cost of sales for the first quarter were 81% of revenues versus 80% for
the same prior year period. The increase in the cost of sales was mainly the
result of reduced margins for 64 megabit DRAM based memory boards. Prices for
64 megabit DRAM based memory boards are now priced competitively with 16
megabit DRAM based products.
Engineering and development costs in fiscal 1997's first quarter were
$223,000 versus $230,000 for the same prior year period. The Company continues
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 first quarter
were 12% of revenues versus 11% for the same prior year period. Three month
total expenditures increased by $446,000 from the prior year period. This
increase is primarily the result of increased legal expense associated with a
previously announced complaint filed by Sun Microsystems, Inc. The Company has
also continued to expand its sales organization this quarter to accelerate our
ability to service new and existing customers.
Other income (expense),net for the first quarter of fiscal 1998 and
fiscal 1997, consists primarily of interest income on short term investments.
7
PART II: OTHER INFORMATION
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27 (a). Financial Data Schedule
28 (a). Press Release reporting results of First Quarter, Fiscal Year
1998 (Attached).
B. Reports on Form 8-K
No reports on Form 8-K have been filed during the current quarter.
8
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: ______________________ By:________________________________
Mark E. Maddocks
Vice President, Finance
(Principal Financial Officer)