Gross margins during the third quarter averaged 20 percent, which is lower than what the Company considers its normal range. This was primarily the result of reduced absorption of factory costs in the third quarter that was a result of the lower sequential quarterly volume. The Company considers gross margins of 25 percent, plus or minus 3 percent, normal.
Robert V. Tarantino, Dataram's chairman and CEO, commented, "The third quarter is normally a seasonally weak quarter and the sequential quarterly revenue decline is not unusual. We are making progress. On a comparable quarterly basis we have achieved revenue growth of two percent and for the year to date nine-month period, we have achieved a six percent increase in revenue over the preceding sequential nine-month period. As we enter our fourth quarter, our order rate has improved, which is also typical. We anticipate that our margins will return to normal in the fourth quarter as well."
The Company incurred a net loss of $298,000 or $0.03 per share for the third quarter of fiscal 2007. This compares to net earnings of $1.4 million or $0.16 per diluted share for the second quarter of the current fiscal year, which included a payment of $2.3 million from a DRAM manufacturer related to a settlement agreement that the Company entered into during the quarter. This compares to net earnings of $1.4 million or $0.16 per diluted share for the third quarter of the previous fiscal year, which included a gain of $1.9 million from the sale of undeveloped land owned by the Company. For the first nine months of the current fiscal year, net earnings totaled $1.1 million or $0.12 per diluted share versus $2.7 million or $0.30 per diluted share for the comparable prior fiscal year period. The $2.3 million settlement payment is recorded as other income in the Company's financial statements for the nine months ended January 31, 2007. The $1.9 million gain on sale of the land was recorded as other income in the comparable prior year period.
Third quarter and nine month expenses of the current fiscal year include $95,000 and $346,000, respectively, of stock option expense compared to zero in the prior year comparable periods. The Company was required to commence expensing stock options at the beginning of the current fiscal year. Excluding stock option expense, selling, general and administrative costs for the third quarter of both the current and prior fiscal year totaled $2.2 million.
The Company's backlog at the end of the third quarter was $1,028,000, which compares to $961,000 at the end of the second quarter and $635,000 at the end of the third quarter of the prior fiscal year.
Mr. Tarantino concluded, "Our financial condition is strong and we are highly liquid. The Company's Board of Directors has declared a quarterly dividend of $0.06 per common share. The dividend will be payable on March 21, 2007, to shareholders of record as of March 7, 2007."
As announced in a previously issued press release, Dataram will conduct a conference call today at 4:30 p.m. (EST) to present its third quarter financial results and to respond to investor questions. Interested shareholders may participate in the call by dialing 800-732-9382, providing the following reservation number: 21330162. 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.
ABOUT DATARAM CORPORATION
Dataram is a worldwide leader in the design and manufacture of high capacity, reliable and innovative memory solutions. With over 39 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 www.sec.gov
DATARAM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Third Quarter Nine Months Ended
Ended January 31, January 31,
2007 2006 2007 2006
--------- -------- -------- --------
Revenues $ 9,366 $ 9,220 $29,574 $33,022
Costs and expenses:
Cost of sales 7,505 6,520 22,730 23,152
Engineering and development 295 287 922 847
Selling, general and
administrative 2,155 2,175 6,727 6,950
Stock option expense* 95 0 346 0
--------- -------- -------- --------
10,050 8,892 30,725 30,949
--------- -------- -------- --------
Earnings (loss) from operations (684) 238 (1,151) 2,073
Other income 213 2,030 2,885 2,249
--------- -------- -------- --------
Earnings (loss) before income
taxes (471) 2,268 1,734 4,322
Income tax provision (benefit) (173) 863 655 1,634
--------- -------- -------- --------
Net earnings (loss) $ (298) $ 1,405 $ 1,079 $ 2,688
========= ======== ======== ========
Net earnings (loss) per share:
Basic $ (0.03) $ 0.17 $ 0.13 $ 0.32
========= ======== ======== ========
Diluted $ (0.03) $ 0.16 $ 0.12 $ 0.30
========= ======== ======== ========
Weighted average number of shares
outstanding:
Basic 8,669 8,472 8,549 8,431
========= ======== ======== ========
Diluted 8,669 8,831 8,800 8,825
========= ======== ======== ========
* Stock option expense is recorded as a component of selling, general
and administrative expenses in the Company's financial statements
filed with the Securities and Exchange Commission on Form 10-Q.
DATARAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
January 31, April 30,
2007 2006
----------- ---------
ASSETS
Current assets
Cash and cash equivalents $ 13,881 $ 14,044
Trade receivables, net 4,309 4,893
Inventories 2,539 2,189
Deferred income taxes 1,365 1,365
Note receivable 1,537 1,537
Other current assets 285 80
----------- ---------
Total current assets 23,916 24,108
Deferred income taxes 685 1,176
Property and equipment, net 831 847
Other assets 105 105
----------- ---------
Total assets $ 25,537 $ 26,236
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 1,180 $ 2,057
Accrued liabilities 625 653
----------- ---------
Total current liabilities 1,805 2,710
Stockholders' equity 23,732 23,526
----------- ---------
Total liabilities and stockholders' equity $ 25,537 $ 26,236
=========== =========
Contact:
Dataram
Mark Maddocks, 609-799-0071
Vice President-Finance, CFO
Email Contact
or
Investors:
Grannus
Financial Advisors, Inc.
Joe Zappulla, 212-681-4100
Email Contact