Dataram: Fiscal 4Q08 Financial Results

Dataram Corporation reported its financial results for its fiscal fourth quarter and full year ended April 30, 2008. Net earnings for the fourth quarter of the current fiscal year were $401,000, or $0.05 per diluted share, which compares to a net loss of $308,000, or a net loss of $0.04 per diluted share for the comparable prior year period. Net earnings for the fiscal year ended April 30, 2008 were $1,608,000, or $0.18 per diluted share, which compares to net earnings of $770,000, or $0.09 per diluted share for the prior fiscal year. Prior year net earnings included a one-time payment of $2.3 million from a DRAM manufacturer related to a settlement agreement. The Company’s earnings from operations for the current fiscal fourth quarter and fiscal year totaled $467,000 and $1,773,000, respectively, and compare to operating losses of $702,000 and $1,854,000 for the comparable prior year periods.

Revenues for the fourth quarter and fiscal year ended April 30, 2008, were $7.0 million and $30.9 million, respectively, which compare to $8.8 million and $38.4 million for the comparable prior year periods.

John H. Freeman, Dataram’s president and CEO commented, “Our fourth quarter and fiscal year operating earnings and net earnings met our profit objectives.”

Mr. Freeman continued, “Our revenues this entire fiscal year have been adversely impacted by reductions in our selling prices as a result of the well-publicized decline in the price of DRAM chips, the primary raw material in our products. Typically, the average selling price (ASP) of DRAMs decline by approximately 25 percent per year. Industry reports estimate the industry decline in ASP was 31 percent in the third quarter alone. Over the last fiscal year, the Company’s purchase cost of the primary DRAMs used in our products declined by over 60 percent. This resulted in a larger than anticipated reduction in our selling prices as we passed our cost savings through to our customers. We do see that the rate of price decline of DRAMs has abated and are hopeful that the recent price trends will continue.”

The Company’s operating expenses for the fourth quarter and current fiscal year totaled $2,487,000 and $10,104,000, respectively, and compare to operating expenses of $2,853,000 and $10,848,000 for the comparable prior year periods. The decline in expenses was primarily the result of cost reductions initiated at the end of the prior fiscal year as well as a reduction in stock-based compensation expense. Prior year fourth quarter operating expenses also included a charge of $265,000, primarily for severance payments.

The Company accrues federal and state income taxes at a combined rate of approximately 39 percent. However, since the Company entered the fiscal year with a federal net operating loss (NOL) carryforward of approximately $4.7 million, the Company actually pays income taxes at a rate of approximately 10 percent as it utilizes the tax benefits of its NOL carryforward. At April 30, 2008, the Company has approximately $1.5 million NOL carryforward remaining.

For the fiscal year ended April 30, 2008, cash provided by operating activities totaled approximately $3.7 million and cash and equivalents increased to $17.6 million from $14.1 million at the end of the prior fiscal year. Working capital at the end of fiscal 2008 amounted to $22.5 million and the Company’s current ratio is 10.0. Tangible book value per share is $2.66, of which cash and equivalents constitutes $1.99 per share.

Mr. Freeman concluded, “We met our profit objective and our financial condition remains strong. However, the Company’s Board of Directors and I firmly believe that achieving meaningful growth is our top priority. We believe that in a reasonable pricing environment, we should grow our memory solutions business. We also believe that in order to achieve our growth objectives, it is necessary that the Company introduce complementary products into our portfolio. That effort will require internal investment in research, development, manufacturing, sales and support. We are also pursuing the acquisition of externally developed intellectual property and products. This activity has already begun with our acquisition of certain patents and other intellectual property of a privately held company in the area of high speed storage systems and we expect to make further investments in this area. The Board of Directors has concluded that these investments will be in the best long-term interests of our shareholders and clients. To ensure that adequate financial resources are available to support these investments, the Board of Directors has decided to suspend the dividend at this time. The Company’s Directors look forward to achievement of our growth goals and will consider reinstituting a dividend at a future time.”