-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JH6CnCPbF18YtDdugu4acTWKwUb/ZMGckUmypsC9ILhyw16thBrBqDRpgdGL7B/w o53lTLKZjw79EXhzGMAD+A== 0000026999-96-000001.txt : 19960213 0000026999-96-000001.hdr.sgml : 19960213 ACCESSION NUMBER: 0000026999-96-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951230 FILED AS OF DATE: 19960212 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATA GENERAL CORP CENTRAL INDEX KEY: 0000026999 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER & OFFICE EQUIPMENT [3570] IRS NUMBER: 042436397 STATE OF INCORPORATION: DE FISCAL YEAR END: 0925 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07352 FILM NUMBER: 96515905 BUSINESS ADDRESS: STREET 1: 4400 COMPUTER DR CITY: WESTBORO STATE: MA ZIP: 10580 BUSINESS PHONE: 5088985000 MAIL ADDRESS: STREET 1: 4400 COMPUTER DRIVE CITY: WESTBORO STATE: MA ZIP: 10580 10-Q 1 Q1 FY96 10-Q - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- 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 December 30, 1995 ----------------- 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 1-7352 ______________________________ DATA GENERAL CORPORATION ---------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 04-2436397 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification Number) Incorporation or organization) 4400 Computer Drive, Westboro, Massachusetts 01580 - -------------------------------------------- --------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (508) 898-5000 Former name, former address and former fiscal year if changed since last report: Not Applicable ______________________________ 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 ---- ---- Number of shares outstanding of each of the registrant's classes of common stock, as of January 26, 1996: Common Stock, par value $.01 38,281,880 - ---------------------------- ---------------- (Title of each class) (Number of Shares) - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- PART I -- FINANCIAL INFORMATION Item 1. Financial Statements. The condensed consolidated financial statements of Data General Corporation (the "company"), consisting of condensed consolidated statements of operations for the quarters ended December 30, 1995 and December 24, 1994, condensed consolidated balance sheets as of December 30, 1995 and September 30, 1995, condensed consolidated statement of cash flows for quarters ended December 30, 1995 and December 24, 1994, and related notes to condensed consolidated financial statements, are incorporated herein by reference to pages 3 through 6 of the company's First Quarter 1996 Interim Report. The First Quarter 1996 Interim Report has been included as Exhibit 19 to copies of this Report filed with the Securities and Exchange Commission. Copies of the Interim Report may be obtained by written request to the company, Attn: Investor Relations, MS 9S, 3400 Computer Drive, Westboro, MA 01580. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Financial Condition. Cash and temporary cash investments as of December 30, 1995 were $114.3 million, a decrease of $2.9 million from the end of fiscal 1995. In addition, the company holds $61.0 million in marketable securities, a net decrease of $10.6 million during the current three-month period. These securities, which supplement cash and temporary cash investments, are primarily invested in United States treasury bills and notes. Net cash provided from operations for the quarter ended December 30, 1995 totaled $16.0 million, expenditures for property, plant, and equipment were $23.5 million, capitalized software development costs totaled $8.0 million, and cash provided from stock plans totaled $1.3 million. The company repaid $3.0 million of long-term debt during the current three-month period. The effect of foreign currency rate fluctuations on cash and temporary cash investments was a decrease of $0.5 million. Net receivables for the current quarter were $250.2 million, relatively unchanged from $251.1 million from fiscal year-end 1995. Total inventories at December 30, 1995 increased $19.9 million, to $144.0 million, from fiscal year-end 1995 levels due to an increase in domestic work in process inventory, primarily related to orders for the company's Open CLARiiON product line. Open CLARiiON sales cycles require inventory purchasing patterns to be earlier than those of the traditional server procurement cycles. Fixed asset dispositions for the current quarter totaled $2.5 million, primarily due to the sale of demonstration equipment to end users. Management expects that sales of demonstration equipment will continue in the future. Fewer than 15% of the company's total net fixed assets relate to the company's proprietary ECLIPSE MV ("MV") family of products; these assets are primarily comprised of spare parts required to support the MV service base of over 19,000 installed units worldwide as well as those MVs which are serviced by third parties. The increase of $18.9 million in accounts payable from fiscal year-end 1995 levels was mainly attributed to the increase in end of quarter inventory procurements and the timing of payments relating to this activity. Other current liabilities decreased $15.9 million from fiscal year-end 1995. This decrease was primarily as a result of reduced employee related accruals and the payments made relating to the previously recorded restructuring accruals. Long-term debt, including the current portion of long-term debt, decreased a total of $3.0 million during the current quarter as a result of the company reacquiring a portion of the 8 3/8% Sinking Fund Debentures due in 2002. On October 5, 1995, the company's $30 million unsecured letter of credit facility with a group of banks was amended. This facility is available to secure issuance of letters of credit. The current agreement has a duration of 364 days. The facility contains certain covenants, including restrictions on the sale or pledge of certain assets, the declaration of dividends, and the incurrence of other debt. At December 30, 1995 there were $11.0 million in letters of credit secured by this facility. During fiscal years 1995 and 1994, the company recorded restructuring charges of $43 million and $35 million, respectively. No additional charges or material changes in estimates to prior provisions were recorded during the first quarter of fiscal 1996. The following table sets forth the company's restructuring activities for the current quarter ended December 30, 1995. All charges, excluding asset writedowns and certain other charges, are cash in nature and funded from operations. THREE MONTHS ENDED SEPT. 30, 1995 DEC. 30, 1995 DEC. 30, 1995 (in millions) BALANCE CHARGES BALANCE Provision related to terminated employees $ 13.9 $(5.0) $ 8.9 Provisions for leases 17.4 (2.7) 14.7 Writedown of assets to be sold or discarded and other 5.6 (2.7) 2.9 ----- ------- ----- Total $36.9 $(10.4) $26.5 ===== ======= ===== During the first quarter of the current year there were approximately 75 employee terminations, primarily relating to the 1995 restructuring charges. The remaining reserves at December 30, 1995 are for the future termination of approximately 135 employees as part of the continuing realignment of the company's worldwide sales, service, and other operations. The number of employee terminations noted above refer only to those impacted by restructuring actions. They are not indicative of the change in total worldwide headcount which also reflects attrition and new hires. The charges and remaining provisions for leases are for the closure of various domestic branch sales offices and excess vacant rental properties, primarily located throughout Europe. Results of Operations Total revenues for the quarter ended December 30, 1995 increased 16% to $327.6 million from the same quarter of the previous year. Domestic revenues, excluding U.S. direct export sales, were $188.7 million for the current quarter, an 18% increase from $160.0 million for the comparable period of fiscal 1995. Domestic revenues were 58% of total revenues for the current quarter and 57% of total revenues for the first quarter of fiscal 1995. European revenues, including U.S. direct export sales into the European marketplace, were $97.5 million, an increase of 18% from $82.3 million for the comparable period in fiscal 1995. This increase is primarily a result of increased U.S. direct export sales. European revenues represented 30% and 29% of total revenues in the current and prior-year periods, respectively. Other international revenues, including U.S. direct export sales, were $41.4 million for the current quarter, a 4% increase from $39.9 million for the comparable period in fiscal 1995. Other international revenues represented 12% of total revenues for both the current quarter and the 14% for the comparable prior-year period. Product revenues of $227.6 million for the current quarter ended December 30, 1995 increased 26% from the comparable prior-year period. Revenues from the company's AViiON family of open systems server products decreased 8% from the comparable period of the prior year. Although, the company began shipping its new Intel-based AViiON systems, the company expects to continue to see an impact from the product transition to the Intel-based AViiON products until these new products begin to ship in volume during the second half of the fiscal 1996. Revenues from the company's Open CLARiiON storage systems more than quadrupled from the comparable prior- year period and accounted for 43% of total product revenues in the current quarter. Open CLARiiON is sold primarily through the company's Original Equipment Manufacturer ("OEM") and distributor channels, thus sales in any given period are subject to customer sales cycles and inventory levels. Revenues have been concentrated in a limited number of customers. For the current quarter, a significant portion of the company's Open CLARiiON revenues were to a single OEM. Open CLARiiON revenue in any quarter may not be indicative of future Open CLARiiON revenues. Proprietary MV system revenues declined $7.6 million from the same period in the prior year and currently represent 4% of total product revenues compared to 9% for the comparable prior-year period. The company will continue to see a decline in its proprietary MV product line as it completes its transition to Open systems. Revenues from personal computers and peripheral equipment declined $12.7 million from the same period in the prior year and currently represent 7% of total product revenues compared to 15% for the comparable prior-year period. Domestic product revenues, which were $131.9 million for the current quarter, increased 27% from $103.6 million for the comparable period in fiscal 1995. Domestic product revenues were 58% of total product revenues and 57% of total product revenues in the comparable prior-year period. European product revenues were $65.1 million for the current quarter, a 30% increase from $49.7 million in the comparable prior-year period. European product revenues represented 29% of total product revenues for the current quarter and 28% for the comparable prior-year period. Other international product revenues were $30.6 million for the current quarter, an increase of 10% from $27.9 million for the comparable period in fiscal 1995. Other international product revenues represented 13% of total product revenues in the current quarter and 15% of total product revenues in the comparable prior-year period. The increase in Domestic and European product revenues is primarily a result of Open CLARiiON shipments to these marketplaces. Service revenues for the current quarter were $100.0 million, a slight decrease from $101.0 million in the comparable period of fiscal 1995. Domestic service revenues for the current quarter were $56.8 million, relatively unchanged from $56.5 million in the comparable prior-year period. European service revenues were $32.4 million, a slight decrease from $32.6 million for the comparable prior-year period. Other international service revenues for the current quarter were $10.8 million, compared to $11.9 million for the comparable prior-year period. Cost of revenues increased to 68% of total revenues for the current quarter, compared with 65% for the comparable period in fiscal 1995. Cost of product revenues increased to 69% of product revenues for the current quarter, compared with 66% of product revenues, for the same periods of the prior year. The increase in the cost of product revenues was the result of increased sales volume of Open CLARiiON storage systems, which have lower relative gross margins because of the distribution channels in which they are sold, and continued price competition in the commercial server marketplace. Cost of service revenues was 65% and 64% of service revenues for the current quarter and first quarter of fiscal 1995, respectively. The company continues to see a shift in service revenues towards increased Professional Service sales, which yield a lower margin than traditional maintenance contract revenues. Research and development expenses remained relatively unchanged at $21.7 million for both the current quarter and the comparable quarter of fiscal 1995, respectively. Research and development expenses represented 7% of total revenues in the current quarter and 8% of total revenues for the same prior-year period, respectively. The company continued to focus its research and development efforts on its core business technology, multi-user computer systems, servers, and mass storage devices. In the current quarter, gross expenditures on research and development and software development, before capitalization, were $29.7 million, an increase of 10% from $27.0 million for the comparable quarter of fiscal 1995. The increase in expenditures was primarily a result of material purchases relating to the prototyping of the new Intel-based product line and the porting of DG/UX (Data General's UNIX Operating System) to the new architecture. Selling, general, and administrative expenses for the current quarter were $77.2 million, a decrease of 10% from $86.0 million for the comparable quarter of fiscal 1995. Selling, general, and administrative expenses represented 24% and 31% of total revenues in the current quarter and in comparable prior-year period, respectively. The company has responded to increasingly competitive preconditions through ongoing cost reductions. At December 30, 1995 the number of employees totaled 4,930, a reduction of approximately 100 employees from September 30,1995. Interest income of $2.2 million remained relatively unchanged from the comparable period of fiscal 1995. Interest expense for the current quarter was $3.5 million, a slight decrease from $3.6 million for the comparable period of fiscal 1995. The income tax provisions for the current quarter was $1.0 million and $7.0 million for the comparable prior-year periods. The current year provision relates primarily to foreign and state taxes. The provision in the first quarter of the prior year resulted primarily from the settlement of the Grumman lawsuit, deferred tax on undistributed earnings for certain foreign subsidiaries, and foreign and state taxes. In March 1995, the Financial Accounting Standards Boards ("FASB") issued SFAS 121, "Accounting for Impairment for Long-Lived Assets and for Long- Lived Assets to be Disposed Of". In October 1995, the FASB issued SFAS 123, "Accounting for Stock-based Compensation". The company will implement SFAS 123 using the proforma disclosure method described in the pronouncement. SFAS 121 and 123 are effective for fiscal years beginning after December 15, 1995. The company will implement these statements as required. The future adoption of SFAS 121 and 123 is not expected to have a material effect on the company's consolidated financial position or results of operations. PART II -- OTHER INFORMATION Item 1. Legal Proceedings. The company's patent infringement suit against IBM Corporation, and IBM's counterclaim against the company, remain in the discovery stage in the United States District Court in Worcester, Massachusetts. See Part II, Item 1, "Legal Proceedings" to the company's Quarterly Report on form 10-Q for the quarter ended December 24, 1994. Item 4. Submission of Matters to a Vote of Security-Holders (a) The Annual Meeting of Stockholders of Data General Corporation was held January 31, 1996. (b) During the meeting, stockholders elected the following as directors of Data General: Frederick R. Adler Ferdinand Colloredo-Mansfeld John G. McElwee Ronald L. Skates W. Nicholas Thorndike Donald H. Trautlein Richard L. Tucker The directors were elected by the following voting breakdowns: Director Votes For Votes Withheld Adler 32,484,315 201,578 Colloredo-Mansfeld 32,513,889 172,004 McElwee 32,498,593 187,300 Skates 32,476,218 209,675 Thorndike 32,515,801 170,092 Trautlein 32,502,107 183,786 Tucker 32,505,949 179,944 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 11. Computation of primary and fully diluted earnings per share. 19. First Quarter 1996 Interim Report of Data General Corporation. (b) No reports on Form 8-K were filed during the current quarter ended December 30, 1995. SIGNATURE 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. DATA GENERAL CORPORATION (Registrant) /s/ Arthur W. DeMelle --------------------- Arthur W. DeMelle Vice President Chief Financial Officer Chief Accounting Officer Dated: February 8, 1996 EXHIBITS Index to Exhibits. 11. Computation of primary and fully diluted earnings per share. 19. First Quarter 1996 Interim Report of Data General Corporation. EX-11 2 Q1 FY96 EARNINGS PER SHARE EXHIBIT 11 DATA GENERAL CORPORATION COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE (Unaudited) (In thousands except per share amounts) Quarter Ended -------------------- Dec. 30, Dec. 24 1995 1994 ------- ------- Primary earnings per share: Net income . . . . . . . . . . . . . . . . . . $ 4,709 $24,206 ======= ======= Weighted average shares outstanding . . . . . . 38,081 36,550 Incremental Shares from use of treasury stock method for stock options . . . . . . . . 2,227 1,663 ------ ------ Common and common equivalent shares, where applicable. . . . . . . . . . . . . . . . . . 40,308 38,213 ====== ====== Net income per share . . . . . . . . . . . . . $.12 $.63 ==== ==== Earnings per share assuming full dilution: Net income . . . . . . . . . . . . . . . . . . . $4,709 $24,206 Interest on convertible debentures, net of income taxes . . . . . . . . . . . . . --(a) 2,422 ---- ------ Net income for purposes of calculating earnings per share assuming full dilution . . . . . . . . . . . . . . . . . . $4,709 $26,628 ====== ======= Weighted average shares outstanding . . . . . . 38,081 36,550 Incremental shares from use of treasury stock method for stock options . . . . . . . . 2,227 1,735 Incremental shares from assumed conversion of convertible debentures . . . . . . . . . . --(a) 6,510 ----- ------ Common shares, assuming issuance of all dilutive contingent shares, were applicable . . . . . . 43,308 44,795 ====== ====== Net income per share . . . . . . . . . . . . . . $.12 $.59 ==== ==== - ---------------------------------------------------------------------------- (a) For the quarter ended December 30, 1995, the assumed conversion of convertible debentures and the use of treasury stock method for stock options, giving effect to the incremental shares and the adjustment to reduce interest expense, results in anti-dilution and have therefore been excluded from the computation. EX-19 3 FIRST QUARTER 1996 INTERIM REPORT OF DATA GENERAL CORPORATION TO OUR STOCKHOLDERS, CUSTOMERS, AND EMPLOYEES: Data General Corporation reported net income of $4.7 million, or $.12 per share, on revenues of $327.6 million for its first quarter of fiscal 1996, which ended December 30, 1995. The first quarter revenues were 16 percent higher than last year's first quarter revenues of $282.2 million. Income from operations was $7.0 million, compared to a loss from operations of $9.4 million for the first quarter of 1995. For the first quarter last year, the company reported net income of $24.2 million, or $.63 per share ($.59 per share assuming full dilution). The 1995 first quarter net income included a one-time, pre-tax gain of $44.5 million resulting from the settlement of litigation with Northrop Grumman Corporation. We are encouraged by the results as the first quarter traditionally is not a strong period for us. Both our AViiON(R) server and CLARiiON(R) storage businesses turned in solid performances and our operating expenses were in line with our targeted goals. Operating expenses during the first quarter were 8 percent below those of last year's first quarter. While the majority of our AViiON sales this quarter were from our Motorola based server line, we are very pleased with the reception by our customers to the first systems in our Intel based AViiON server line, which were introduced and began shipping during the quarter. With the confidence being shown in our AViiON product family by our customer base, we believe we are well positioned to see AViiON revenues grow as we continue to roll out new products during the year. The new Intel based AViiON servers range from a powerful, eight-processor enterprise server, the AV 5800; to single- and dual-processor VAR and application workgroup servers, the AV 2000 and AV 3000. In a recent test of its enterprise computing capabilities, an AV 5800 running Oracle7 Release 7.3, produced the best Transaction Processing Council Benchmark C (TPC-C) performance and price/performance results ever achieved on an Intel Processor based system. To date, CLARiiON has been extrememly successful, growing from less than $10 million per quarter to more than $90 million in the quarter just ended. The results again strongly confirm our focus on providing leading-edge high availability and data integrity storage capabilities to the open enterprise. CLARiiON growth came from all our reseller channels: Original Equipment Manufacturers (OEMs), private labelers and distributors. We do not expect that this extraordinary growth rate can be maintained. Moreover, since the bulk of this business is through OEM relationships, sales in any given period are very much subject to our customer's sales cycles and their inventory levels. In January, our CLARiiON Business Unit and one of its key partners, Hewlett-Packard Company, announced the signing of an expanded agreement whereby HP will continue to OEM the CLARiiON line. During the past two years, several thousand CLARiiON systems have been shipped to Hewlett- Packard. In addition, the CLARiiON unit has joined with Oracle Corporation and NEC Corporation to support a world-record-size commercial data warehouse. The three companies combined to demonstrate a 2.5-terabyte decision support solution at Oracle Open World, which was held in Japan. Data General's financial position continues to be strong with cash and marketable securities of $175.3 million at the end of the first quarter. The first quarter results are a solid reinforcement of our marketplace strategy. We believe we are well positioned with our AViiON line to capitalize on the industry's move to Intel as the dominant platform for mission-critical enterprise servers. As with any major product transition, we remain cautious for the short-term. However, with the steps we are taking to generate AViiON and CLARiiON revenues while controlling our costs, we are making progress toward our goal of sustained profitability. Respectfully submitted, Ronald L. Skates President and Chief Executive Officer February 9, 1996 ANNUAL MEETING HIGHLIGHTS The Annual Meeting of Stockholders of Data General Corporation was held in Boston on January 31, 1996. Stockholders elected the following as directors: Frederick R. Adler, Retired Senior Partner, Fulbright & Jaworski L.L.P., Attorneys at Law; Ferdinand Colloredo-Mansfeld, Chairman and Chief Executive Officer, Cabot Partners Limited Partnership; John G. McElwee, Retired Chairman and Chief Executive Officer, John Hancock Mutual Life Insurance Company; Ronald L. Skates, President and Chief Executive Officer, Data General Corporation; W. Nicholas Thorndike, Corporate Director and Trustee; Donald H. Trautlein, Retired, Chairman and Chief Executive Officer, Bethlehem Steel Corporation; and Richard L. Tucker, Managing Director, Trinity Investment Management Corporation. In remarks to stockholders, Data General President and CEO Ronald L. Skates said, "Technology decisions we made in the late 1980s set the direction for our business today. We focused on designing servers for commercial business computing. We chose UNIX as the operating system that would be capable of handling high-end commercial applications for our customers. We specifically targeted the commercial market, not the technical market which characterized most UNIX vendors. We utilized symmetric multiprocessing to provide customers with highly efficient systems for running commercial applications. We made high availability a major differentiator in our systems and a key element of our marketing efforts. And we incorporated RAID storage technology to offer our customers the best option for managing their data. "The open systems business model dictated an entirely different structure for Data General", said Skates as he described the changes that re-shaped Data General over the past several years. "Fundamentally, it meant changing our business model on the fly, and we think we have done that. In 1989, more than 90 percent of our product revenues came from our ECLIPSE MV family of proprietary minicomputers. In our most recent quarter, more than 95 percent of product revenues came from AViiON servers, CLARiiON storage systems, and PCs attached to open systems." "To date, CLARiiON has been extremely successful, growing from less than $10 million per quarter to more than $90 million in the quarter just ended. We do not expect that this extraordinary growth rate can be maintained. Moreover, since the bulk of this business is through OEM relationships, sales in any given period are very much subject to our customers' sales cycles and their inventory levels. With this in mind, our focus today is not on quarterly sales but on year-to-year growth." "The mission for Data General in 1996 is clear: we must grow AViiON revenues with our new Intel processor based servers; we must transition from the Motorola 88000 to Intel successfully; we must continue to grow our CLARiiON business; and we must keep costs in line. The challenge for Data General is to be consistently profitable in a fast changing and highly competitive industry. We believe that our strategy is on target and we are confident that Data General can implement this strategy in 1996." The full text of remarks made by Mr. Skates is being sent to all stockholders and is also available electronically on the worldwide web (www.dg.com) or by calling 1-800-941-2382. AMENDMENT TO SHAREHOLDER RIGHTS PLAN The Corporation's Shareholder Rights Plan has been amended, in conjunction with the appointment of The Bank of New York as transfer agent for Data General's common stock, to appoint The Bank of New York as "Rights Agent" under and for the Plan, replacing Morgan Shareholder Services Trust Company in that capacity. DATA GENERAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Quarter Ended --------------------- Dec. 30, Dec. 24, in thousands, except net income per share 1995 1994 - --------------------------------------------------------------------------- Revenue: Product . . . . . . . . . . . . . . . . . . . $227,654 $181,193 Service . . . . . . . . . . . . . . . . . . . 99,955 101,012 -------- -------- Total revenue . . . . . . . . . . . . . . . . 327,609 282,205 -------- -------- Costs and expenses: Costs of product revenues . . . . . . . . . . . 156,712 119,458 Costs of service revenues . . . . . . . . . . . 64,992 64,495 Research and development . . . . . . . . . . . 21,723 21,664 Selling, general, and administrative. . . . . . 77,167 85,990 -------- -------- Total costs and expenses . . . . . . . . . . 320,594 291,607 -------- -------- Income (loss) from operations . . . . . . . . . . 7,015 (9,402) Interest income. . . . . . . . . . . . . . . . . . 2,144 2,192 Interest expense . . . . . . . . . . . . . . . . . 3,450 3,556 Other income, net . . . . . . . . . . . . . . . . -- 41,972 ------- -------- Income before income taxes . . . . . . . . . . . . 5,709 31,206 Income tax provision . . . . . . . . . . . . . . . 1,000 7,000 -------- -------- Net income . . . . . . . . . . . . . . . . . . . $ 4,709 $ 24,206 ======== ======== Primary net income per share: Net income per share . . . . . . . . . . . . . . . $0.12 $0.63 ===== ===== Weighted average shares outstanding . . . . . . . 40,308 38,213 Net income per share assuming full dilution: Net income per share . . . . . . . . . . . . . . . $0.12 $0.59 ===== ===== Weighted average shares outstanding . . . . . . . 40,308 44,795 No cash dividends have been declared or paid since inception. The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. DATA GENERAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) Dec. 30, Sept. 30, dollars in thousands 1995 1995 - --------------------------------------------------------------------------- Assets Current Assets: Cash and temporary cash investments . . . . . . . $114,335 $117,201 Marketable securities . . . . . . . . . . . . . . 60,991 71,617 Receivables, net. . . . . . . . . . . . . . . . . 250,194 251,123 Inventories . . . . . . . . . . . . . . . . . . . 144,012 124,145 Other current assets . . . . . . . . . . . . . . 25,246 27,399 -------- -------- Total current assets . . . . . . . . . . . . . 594,778 591,485 Property, plant, and equipment, net. . . . . . . . . 174,637 174,914 Other assets . . . . . . . . . . . . . . . . . . . . 69,899 65,619 -------- -------- $839,314 $832,018 ======== ======== Liabilities and stockholders' equity Current liabilities: Notes payable . . . . . . . . . . . . . . . . . . 2,040 2,033 Accounts payable . . . . . . . . . . . . . . . . 135,233 116,313 Other current liabilities . . . . . . . . . . . . 236,021 251,880 ------- ------- Total current liabilities. . . . . . . . . . . 373,294 370,226 ------- ------- Long-term debt . . . . . . . . . . . . . . . . . . . 152,034 153,457 ------- ------- Other liabilities. . . . . . . . . . . . . . . . . . 27,969 28,791 ------- ------- Stockholders' equity: Common stock: Outstanding - 38,185,000 shares at Dec. 30, 1995 and 37,933,000 shares at Sept. 30, 1995 (net of deferred compensation of $10,464 at Dec. 30, 1995 and $9,588 at Sept. 30, 1995) . . . . . . . . 449,011 446,762 Accumulated deficit. . . . . . . . . . . . . . . . . (158,917) (163,626) Cumulative translation adjustment. . . . . . . . . . (4,077) (3,592) ------- ------- Total stockholders' equity . . . . . . . . . . 286,017 279,544 ------- ------- $839,314 $832,018 ======== ======== The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. DATA GENERAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Quarter Ended -------------------------- Dec. 30, Dec. 24, in thousands 1995 1994 - -------------------------------------------------------------------------- Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . $ 4,709 $ 24,206 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation . . . . . . . . . . . . . . 20,924 18,530 Amortization of capitalized software development costs. . . . . . . . . . . 3,375 4,201 Other non-cash items, net . . . . . . . 3,905 5,834 Change in operating assets and liabilities. . . . . . . . . . . . . . (16,939) 205 Net cash provided from ------- ------- operating activities . . . . . . . . 15,974 52,976 ------- ------- Cash flows from investing activities: Expenditures for property, plant, and equipment . . . . . . . . . . . . . (23,497) (23,680) Net proceeds from the sales of (purchases of) marketable securities . . . . . . . . 10,626 (43,595) Capitalized software development costs . . . . . . . . . . . . . . . . . . (8,033) (5,350) Other . . . . . . . . . . . . . . . . . . . 4,250 (600) Net cash used by investing ------- ------- activities . . . . . . . . . . . . (16,654) (73,225) Cash flows from financing activities: Cash provided from stock plans . . . . . . 1,271 751 Repayment of long-term debt . . . . . . . (3,000) (2,700) Net cash used by financing ------ ------ activities . . . . . . . . . . . . . (1,729) (1,949) ------ ------ Effect of foreign currency rate fluctuations on cash and temporary cash investments. . . (457) (1,077) ------ ------- Decrease in cash and temporary cash investments . . . . . . . . . . . . . . . . (2,866) (23,275) Cash and temporary cash investments - beginning of period . . . . . . . . . . . . 117,201 142,448 Cash and temporary cash investments - -------- -------- end of period . . . . . . . . . . . . . . . $114,335 $119,173 ======== ======== Supplemental disclosure of cash flow information: Interest paid . . . . . . . . . . . . . . . $ 4,944 $ 5,054 Income taxes paid . . . . . . . . . . . . . $ 379 $ 883 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. DATA GENERAL CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. Consolidated Balance Sheet Details Dec. 30, Sept. 30, in thousands 1995 1995 - ---------------------------------------------------------------------------- Inventories: Raw materials. . . . . . . . . . . . . . . . . . $ 12,688 $ 9,173 Work in process . . . . . . . . . . . . . . . . 45,235 28,309 Finished systems . . . . . . . . . . . . . . . . 50,703 51,199 Field engineering parts and components . . . . . 35,386 35,464 -------- -------- $144,012 $124,145 ======== ======== Property, plant, and equipment: Property, plant, and equipment . . . . . . . . . $638,666 $635,000 Accumulated depreciation . . . . . . . . . . . . (464,029) (460,086) -------- -------- $174,637 $174,914 ======== ======== Note 2. Letter of Credit and Reimbursement Agreement On October 5, 1995, the company's $30 million unsecured letter of unsecured letter of credit facility with a group of banks was amended. This facility is available to secure issuance of letters of credit. The current agreement has a duration of 364 days. The facility contains certain covenants including restriction on the sale or pledge of certain assets, the declaration of dividends, and the incurrence of other debt. At December 30, 1995 there were $11.0 million letters of credit secured by this facility. Note 3. Basis of Presentation In March 1995, the Financial Accounting Standards Boards ("FASB") issued SFAS 121, "Accounting for Impairment for Long-Lived Assets and for Long- Lived Assets to be Disposed Of". In October 1995, the FASB issued SFAS 123, "Accounting for Stock-based Compensation". The company will implement SFAS 123 using the proforma disclosure method described in the pronouncement. SFAS 121 and 123 are effective for fiscal years beginning December 15, 1995. The company will implement these statements as required. The future adoption of SFAS 121 and 123 is not expected to have a material effect on the company's consolidated financial position or results of operations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation. The company's accounting policies are described in the Notes to Consolidated Financial Statements in the company's 1995 Annual Report. The results of operations for the quarter ended December 30, 1995 are not necessarily indicative of the results for the entire fiscal year. EX-27 4 ART.5 FDS 1ST QUARTER 10-Q
5 1,000 3-MOS SEP-28-1996 DEC-30-1995 114,335 60,991 250,194 14,481 144,012 594,778 638,666 464,029 839,314 373,294 152,034 444,935 0 0 (130,949) 839,314 227,654 327,609 156,712 320,594 0 0 3,450 5,709 1,000 (158,917) 0 0 0 4,709 0.12 0.12
-----END PRIVACY-ENHANCED MESSAGE-----