DATARAM CORP (DRAM)
Quarterly Report (SEC form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities and Exchange Act of 1934, as amended. Actual results could differ materially from those projected in the forward looking statements.
Liquidity and Capital Resources
As of October 31, 2000, working capital amounted to $30.0 million reflecting a current ratio of 3.3 compared to working capital of $27.7 million and a current ratio of 2.8 as of April 30, 2000.
During fiscal 2001, the Company amended and restated its $12 million unsecured revolving credit line with its bank. On October 31, 2001, $6 million of the facility is scheduled to expire and on October 31, 2002, the remaining $6 million of the facility is scheduled to expire. The Company intends to renew any expiring portion of the facility by the expiration date and maintain a $12 million total facility. As of October 31, 2000 there was no amount outstanding under the line of credit.
Management believes that its working capital together with internally generated funds and its bank line of credit are adequate to finance the Company's operating needs and future capital requirements.
Results of Operations
Revenues for the three month period ending October 31, 2000 increased 36% to $39,866,000 compared to revenues of $29,386,000 for the comparable prior year period. Unit volume measured in gigabytes shipped increased by approximately 22% over the prior comparable year period. The increase in revenues was the result of increased demand for the Company's memory products driven by the growth both in shipments of network servers and memory content per server. Revenue for Intel processor based server memory, introduced last year, increased by approximately 125% from second quarter fiscal 2000. Fiscal 2001 six month revenues totaled $77,862,000 versus six month revenues of $50,550,000 for the prior fiscal year, an increase of 54%.
Cost of sales for the second quarter and first six months of fiscal 2001 were 77% and 76%, respectively of revenues versus 75% and 74% for the same prior year periods. The increase in cost of sales as a percentage of revenues is primarily attributable to the growth of shipments of memory for the Intel processor based servers. These products typically carry smaller margins than the remainder of the Company's memory products.
Engineering and development costs in fiscal 2001's second quarter and first six months were $414,000 and $786,000, respectively versus $343,000 and $676,000 for the same prior year periods. The Company intends to maintain its commitment to the timely introduction of new memory products as new servers are introduced.
Selling, general and administrative costs in this year's second quarter and first six months decreased to 10% and 11%, respectively of revenues from 13% and 14% for the same prior year periods. Year-to-date selling, general and administrative costs increased by $1,498,000 in fiscal 2001 versus fiscal 2000. The increase in costs is primarily attributable to planned increases in sales staff and marketing programs.
Interest income, net sfor the second quarter and six months of fiscal 2001 and 2000 consisted primarily of interest income on short term investments.
Safe Harbor Statement
The information provided in this interim report may include forward-looking statements relating to future events, such as the development of new products, the commencement of production 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 for workstations and servers, increased competition in the memory systems industry, 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 sec.gov.
-------------------------------------------------------------------------------- |
