-----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, AnxOpq4heQ0hwQvHvMdYPG09eZC0SzgNnqdALhAuLGjbnRIFmB06KNkGt5JRMx7Y Gf4kS3tfO6OS5qtAhHHnNw== 0000026999-96-000006.txt : 19960513 0000026999-96-000006.hdr.sgml : 19960513 ACCESSION NUMBER: 0000026999-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960330 FILED AS OF DATE: 19960510 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: 96559301 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 Q2 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 March 30, 1996 -------------- 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 incorporation or organization) Identification Number) 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 April 26, 1996: Common Stock, par value $.01 38,955,311 ---------------------------- ---------------- (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 three and six months ended March 30, 1996 and March 25, 1995, condensed consolidated balance sheets as of March 30, 1996 and September 30, 1995, condensed consolidated statements of cash flows for the six months ended March 30, 1996 and March 25, 1995, and the related notes to condensed consolidated financial statements, are incorporated herein by reference to pages 3 through 6 of the company's Second Quarter 1996 Interim Report. The Second 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 or through the company's world wide web site at: http://www.dg.com. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Financial Condition Cash and temporary cash investments as of March 30, 1996 were $130.4 million, an increase of $13.2 million from the end of fiscal 1995. In addition, the company holds $60.3 million in marketable securities, a net decrease of $11.3 million during the current six-month period. In total, cash and temporary cash investments along with marketable securities were relatively flat for the current six-month period. The securities, which supplement cash and temporary cash investments, are primarily invested in United States treasury bills and notes. The marketable securities include an equity security of $15.4 million recorded at fair market value and classified as available for sale. The unrealized gain on marketable securities of $14.0 million is recorded as a separate component of shareholders' equity. Net cash provided from operations for the six months ended March 30, 1996 totaled $39.6 million; expenditures for property, plant, and equipment were $50.7 million; capitalized software development costs totaled $14.5 million; and cash provided from stock plans totaled $5.3 million. The effect of foreign currency exchange rate fluctuations on cash and temporary cash investments was a decrease of $.9 million. Net receivables were $256.2 million, an increase of $5.1 million from $251.1 million at fiscal year-end 1995 due to increased revenue. Total inventories at March 30, 1996 were $125.2 million, an increase of $1.1 million from fiscal year-end 1995 levels primarily due to an increase in end- of-quarter inventory procurements. Fixed asset dispositions for the current six-month period totaled $5.9 million, primarily due to the sale of demonstration equipment. Management expects that sales of demonstration equipment will continue. Less 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 $2.7 million in accounts payable from fiscal year-end 1995 levels was attributed mainly to the increase in inventory levels and the timing of payments relating to this activity. Other current liabilities decreased $11.8 million from fiscal year-end 1995. This decrease was primarily 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 from fiscal 1995 year-end as a result of the company reacquiring a portion of the 8 3/8% Sinking Fund Debentures due in 2002. 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 six-month period of fiscal 1996. The following table sets forth the company's restructuring activities for the period ended March 30, 1996. All charges, excluding asset writedowns and certain other charges, are cash in nature and funded from operations. SIX MONTHS ENDED SEPT. 30, 1995 MAR. 30, 1996 MAR. 30, 1996 (in millions) BALANCE CHARGES BALANCE - ------------------------------------------------------------------------------- Provisions related to terminated employees $13.9 $ (7.6) $ 6.3 Provisions for leases 17.4 (5.2) 12.2 Writedown of assets to be sold or discarded and other 5.6 (4.1) 1.5 ----- ------- ----- Total $36.9 $(16.9) $20.0 ===== ======= ===== During the first six months of the current year there were approximately 94 employee terminations relating to the 1995 restructuring charges. The remaining reserves at March 30, 1996 are for the future termination of approximately 116 employees as part of the continuing realignment of the company's worldwide sales, service, and other operations. The number of employee terminations noted above refers 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 in Europe. Results of Operations Total revenues for the quarter ended March 30, 1996 increased 18% to $335.2 million from the same quarter of the previous year. Domestic revenues, excluding U.S. direct export sales, were $194.8 million for the current quarter, a 30% increase from $150.1 million for the comparable period of fiscal 1995. Domestic revenues represented 58% of total revenues for the current quarter and 53% of total revenues for the second quarter of fiscal 1995. European revenues, including U.S. direct export sales into the European marketplace, were $95.1 million, an increase of 3% from $92.2 million for the comparable period in fiscal 1995. This increase is primarily a result of increased U.S. direct export sales. European revenues represented 28% and 32% of total revenues in the current and prior-year periods, respectively. Other international revenues, including U.S. direct export sales, were $45.3 million for the current quarter, a 9% increase from $41.5 million for the comparable period in fiscal 1995. Other international revenues represented 14% of total revenues for the current quarter and 15% for the comparable prior-year period. Total domestic revenues of $383.6 million for the six months ended March 30, 1996 increased 24% from $310.1 million for the first six-month period of fiscal 1995. Domestic revenues were 58% of total revenues for the current six-month period and 55% of total revenues for the comparable prior-year period. European revenues, including U.S. direct export sales into the European marketplace, were $192.6 million, an increase of 10% from $175.0 million for the comparable period in fiscal 1995. This increase is primarily a result of increased U.S. direct export sales. European revenues represented 29% and 31% of total revenues in the current six-month and comparable prior-year periods, respectively. Other international revenues, including U.S. direct export sales, were $86.6 million for the current six-month period, a 7% increase from $80.9 million for the comparable prior-year period. Other international revenues represented 13% and 14% of total revenues for the current six-month period and the comparable prior-year period, respectively. Product revenues of $236.7 million for the current quarter ended March 30, 1996 increased 29% from the comparable prior-year period. Revenues from the company's AViiON family of open systems server products remained relatively unchanged at $115.2 million from the comparable period of the prior year. In the current quarter, the company experienced continued revenue growth in its Intel-based AViiON systems while experiencing a modest decline in the Motorola-based AViiON systems revenue as compared to the previous quarter. The company expects the Motorola-based AViiON systems revenue will continue to decline. Product revenues from the company's Open CLARiiON storage systems nearly tripled from the comparable prior-year period and accounted for 41% of total product revenues in the current quarter. Open CLARiiON product revenues in the second quarter of fiscal year 1996 remained relatively unchanged as compared with the first quarter of the current fiscal year. 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. The reduction of these inventory levels during the recent quarter impacted product revenues. Product revenues have been concentrated in a limited number of customers. For the current quarter, a significant portion of the company's Open CLARiiON product revenues were to a single OEM. Open CLARiiON product revenues in any quarter may not be indicative of future Open CLARiiON product revenues. Proprietary MV system revenues declined $5.7 million from the same period in the prior-year and currently represent 3% of total product revenues compared to 7% for the comparable prior-year period. The company expects to see a continued decline in its proprietary MV product line as it completes its transition to Open systems. Product revenues from personal computers and peripheral equipment declined $4.4 million from the same period in the prior-year and currently represent 7% of total product revenues compared to 12% for the comparable prior-year period. Domestic product revenues, which were $137.8 million for the current quarter, increased 47% from $93.6 million for the comparable period in fiscal 1995. Domestic product revenues were 58% of total product revenues for the current quarter and 51% of total product revenues in the comparable prior- year period. European product revenues were $63.5 million for the current quarter, a 6% increase from $59.8 million in the comparable prior-year period. European product revenues represented 27% of total product revenues for the current quarter and 33% for the comparable prior-year period. Other international product revenues were $35.4 million for the current quarter, an increase of 15% from $30.6 million for the comparable period in fiscal 1995. Other international product revenues represented 15% of total product revenues in the current quarter and 17% 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. Product revenues of $464.4 million for the six months ended March 30, 1996 increased 27% from $365.2 million for the first six-month period of fiscal 1995. Domestic product revenues of $269.7 million for the first six-month period of the current year increased 37% from $197.1 million for the first six-month period of fiscal 1995. Domestic product revenues represented 58% of total product revenues in the current six-month period and 54% of total product revenues in the prior-year period. European product revenues of $128.6 million for the first six-month period of the current year increased 17% from $110.0 million for the first six-month period of fiscal 1995. European product revenues represented 28% of total product revenues in the current six-month period and 30% of total product revenues in the comparable prior-year period. Other international product revenues were $66.1 million for the current six-month period, compared with $58.1 million for the comparable period in fiscal 1995. Other international product revenues represented 14% and 16% of total product revenues for the current six-month and prior-year periods, respectively. Service revenues for the current quarter were $98.5 million, a decrease from $99.8 million in the comparable period of fiscal 1995. Domestic service revenues for the current quarter were $57.0 million, relatively unchanged from $56.5 million in the comparable prior-year period. European service revenues were $31.6 million, a decrease from $32.4 million for the comparable prior-year period. Other international service revenues for the current quarter were $9.9 million, a decrease from $10.9 million for the comparable prior-year period. Service revenues for the current six-month period were $198.4 million, compared to $200.8 million for the first six-month period of fiscal year 1995. For the current six-month period, domestic service revenues were $113.8 million, a slight increase from $113.0 million in the first six-month period of fiscal 1995. European service revenues for the current six-month period were $64.0 million, a slight decrease from $65.0 million reported for the first six-month period of fiscal 1995. Other international service revenues were $20.6 million for the current six-month period, a 10% decrease compared to $22.8 million reported for the first six-month period of fiscal year 1995. Cost of revenues increased to 67% of total revenues for the current quarter and current six-month period ended March 30, 1996, compared with 66% for the same periods in fiscal 1995. Cost of product revenues increased to 68% of product revenues for the current quarter and current six-month period, compared with 66% of product revenues for the same periods of the prior year. The increase in 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, as well as continued price competition in the commercial server marketplace. Cost of service revenues was 65% of service revenues for the current quarter and current six-month period, compared with approximately 64% for the same periods in fiscal 1995. 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 for the current quarter were $23.9 million, a 22% increase from $19.6 million for the second quarter of fiscal 1995. Research and development expenses represented 7% of total revenues for both the current quarter and the same prior-year period. Research and development expenses for the current six-month period were $45.6 million, an 11% increase from $41.3 million for the same period of the prior-year. 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 six-month period, gross expenditures on research and development and software development before capitalization, were $60.1 million, an increase of 11% from $54.0 million for the comparable prior-year period. Selling, general, and administrative expenses for the current quarter were $78.2 million, a decrease of 10% from $87.1 million for the comparable quarter of fiscal 1995. Selling, general, and administrative expenses represented 23% and 31% of total revenues in the current quarter and in the comparable prior-year period, respectively. Selling, general, and administrative expenses for the current six-month period were $155.4 million, a decrease of 10% from $173.1 million for the prior-year period. The decrease in expenses was a result of ongoing cost reductions that the company had undertaken to maintain its competitive position. At March 30, 1996 the number of employees totaled 4,945, a reduction of approximately 85 and 640 employees from September 30, 1995 and March 25, 1995, respectively. Interest income for the current quarter was $1.8 million, a 31% decrease from $2.6 million for the comparable period of fiscal 1995, due to lower levels of invested cash. Interest expense for the current quarter was $3.4 million, a slight decrease from $3.5 million for the comparable period of fiscal 1995. The income tax provision for the current quarter was $1.0 million compared to $.5 million for the comparable prior-year period. The current year provision relates primarily to foreign and state taxes. 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 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 11. Computation of primary and fully diluted earnings per share. 19. Second Quarter 1996 Interim Report of Data General Corporation. (b) No reports on Form 8-K were filed during the current quarter ended March 30, 1996 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: May 9, 1996 EXHIBITS Index to Exhibits. 11. Computation of primary and fully diluted earnings per share. 19. Second Quarter 1996 Report of Data General Corporation. EX-11 2 Q2 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 Six Months Ended ----------------- ----------------- Mar. 30 Mar. 25 Mar. 30 Mar. 25 1996 1995 1996 1995 ------- -------- ------- ------- Primary earnings per share: Net income (loss) . . . . . . . . . . . $6,334 $(11,061) $11,043 $13,145 ====== ======== ======= ======= Weighted average shares outstanding . . . 38,563 36,906 38,322 36,728 Incremental shares from use of treasury stock method for stock options. . . . . 2,795 -- 2,511 831 ----- ----- ----- ----- Common and common equivalent shares, where applicable . . . . . . . 41,358 36,906 40,833 37,559 ====== ====== ====== ====== Net income (loss) per share . . . . . . . $0.15 $(0.30) $0.27 $0.35 ===== ====== ===== ===== Earnings per share assuming full dilution: (a) Net income (loss) . . . . . . . . . . . . $6,334 $(11,061) $11,043 $13,145 ====== ======== ======= ======= Weighted average shares outstanding . . . 38,563 36,906 38,322 36,728 Incremental shares from use of treasury stock method for stock options. . . . . 2,801 -- 2,514 867 ----- ----- ----- ----- Common and common equivalent shares assuming full dilution, where applicable. . . . . . . . . . . . . . . 41,364 36,906 40,836 37,595 ====== ====== ====== ====== Net income (loss) per share . . . . . . . $0.15 $(0.30) $0.27 $0.35 ==== ====== ===== ===== - ------------------------------------------------------------------------------- (a) For the quarters and six-month periods ended March 30, 1996, and March 25, 1995, the assumed conversion of convertible debentures, giving effect to the incremental shares and the adjustment to reduce interest expense, results in anti-dilution and has therefore been excluded from the computation. For the quarter ended March 25, 1995, the assumed exercise of options outstanding under the company's stock options plan using the treasury stock method, is anti-dilutive and has been excluded from the computation. EX-19 3 2ND QUARTER 1996 INTERIM REPORT EXHIBIT 19 TO OUR STOCKHOLDERS, CUSTOMERS AND EMPLOYEES: Data General reported net income of $6.3 million, or $.15 per share, on revenues of $335.2 million for its second quarter of fiscal 1996, which ended March 30. The second quarter revenues were 18 percent higher than revenues for last year's comparable quarter of $283.8 million. For the second quarter last year, the company reported a net loss of $11.1 million, or $.30 per share. The second quarter results were encouraging, with total revenues up 18 percent over the prior year, and with profitability for the third consecutive quarter. Product revenues increased 29 percent over the comparable quarter last year based on increased revenues from our Open CLARiiON storage line. Total revenues from the AViiON server line were approximately the same as last year's second quarter. We have seen a continued ramp up in revenues of our new Intel processor- based AViiON server line, although the majority of our AViiON sales this past quarter continued to be from our Motorola based server line. We are well positioned for AViiON revenue growth from our powerful new Intel based products. Our Open CLARiiON storage line again posted solid results nearly tripling the revenues reported in last year's second quarter. CLARiiON continues to be the leading provider of advanced high availability and data integrity storage capabilities to the open enterprise. Since the end of the first quarter, we have made three significant AViiON- related announcements. In late January we said that Data General would work with Dolphin Interconnect Solutions Inc. to develop a standard interconnect technology for large-scale computing. Our two companies are working with Intel Corporation to promote the technology, which will allow companies throughout the industry to link multiple Intel SHV (Standard High Volume) servers into commercial systems that perform at levels far beyond today's most powerful symmetric multi-processing systems. The first interconnect products will be available later this year. We also announced that we are partnering with BDM International, Inc. to provide the industry's highest level of security to enterprises wishing to conduct business over the Internet, and internally via Intranets. In addition, we joined with other industry leaders, including Intel, Compaq, ICL, NCR and Unisys, to announce support for SCO UnixWare as the first shrink- wrapped, enterprise-level UNIX operating system for Intel servers. Our ability to offer three operating systems - our own DG/UX UNIX operating system, SCO UnixWare, as well as Windows NT Server - will open new opportunities for Data General. Since the close of the first quarter, our CLARiiON Business Unit also has expanded its market reach with a number of announcements, including an agreement with Sequent Computer Systems, which will resell CLARiiON disk arrays with its high-end line of Symmetry 5000 servers. The CLARiiON unit also announced agreements with Everex Systems, Inc. and Tech Data Corporation to resell CLARiiON storage subsystems into the fast growing NT server marketplace. In addition, the CLARiiON unit announced support for NCR's UNIX based servers. CLARiiON now supports all major UNIX platforms. Our financial position continues to be strong with cash and marketable securities of $190.7 million at the end of the second quarter. For the first six months of fiscal 1996, Data General reported net income of $11.0 million, or $.27 per share. For the same period last year Data General reported net income of $13.1 million, or $.35 per share. The 1995 figures included a one-time, pre-tax gain of $44.5 million resulting from the settlement of a software copyright and infringement and trade secret lawsuit against Northrop Grumman Corporation. Revenues for the first two quarters of 1996 totaled $662.8 million, compared to $566.0 for the first six months of fiscal 1995. While we are still in a period of product transition and remain cautious for the short term, the positive results thus far in fiscal 1996 are reinforcement of our strategy. We have solidified our position as a technology leader with both our AViiON server and CLARiiON storage lines. AViiON is positioned to take full advantage of the industry's move to Intel as the dominant platform for large-scale commercial computing and CLARiiON has a wide breadth of opportunity in the UNIX and NT marketplaces. Respectfully submitted, Ronald L. Skates President and Chief Executive Officer May 9, 1996 DATA GENERAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Quarter Ended Six Months Ended ------------------ ------------------ Mar. 30, Mar. 25, Mar. 30, Mar. 25, in thousands, except net income (loss) per share 1996 1995 1996 1995 - ------------------------------------------------------------------------------ Revenues: Product . . . . . . . . . . . . .$236,707 $184,031 $464,361 $365,224 Service . . . . . . . . . . . . . 98,488 99,760 198,443 200,772 -------- -------- -------- -------- Total revenues . . . . . . . 335,195 283,791 662,804 565,996 -------- -------- ------- ------- Costs and expenses: Cost of product revenues. . . . . 159,984 122,273 316,696 241,731 Cost of service revenues. . . . . 64,187 64,474 129,179 128,969 Research and development. . . . . 23,909 19,588 45,632 41,252 Selling, general, and administrative. . . . . . . . . 78,198 87,098 155,365 173,088 -------- -------- -------- -------- Total costs and expenses . . . 326,278 293,433 646,872 585,040 -------- -------- -------- -------- Income (loss) from operations . . . 8,917 (9,642) 15,932 (19,044) Interest Income . . . . . . . . . . 1,782 2,581 3,926 4,773 Interest expense. . . . . . . . . . 3,365 3,500 6,815 7,056 Other income, net . . . . . . . . . -- -- -- 41,972 -------- -------- -------- -------- Income (loss) before income taxes . 7,334 (10,561) 13,043 20,645 Income tax provisions . . . . . . . 1,000 500 2,000 7,500 -------- -------- -------- -------- Net income (loss) . . . . . . . . .$ 6,334 $(11,061) $ 11,043 $ 13,145 ======== ========= ======== ======== Net income (loss) per share . . . . $0.15 $(0.30) $0.27 $0.35 ===== ====== ===== ===== Weighted average shares outstanding, including common stock equivalents, where applicable. . . . . . . . . 41,358 36,906 40,833 37,559 No cash dividends have been declared or paid since inception. The accompaning Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. DATA GENERAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) Mar. 30, Sept. 30, dollars in thousands 1996 1995 - ----------------------------------------------------------------------------- Assets Current Assets: Cash and temporary cash investments. . . . . . . . .$130,389 $117,201 Marketable securities. . . . . . . . . . . . . . . . 60,336 71,617 Receivables, net . . . . . . . . . . . . . . . . . . 256,180 251,123 Inventories. . . . . . . . . . . . . . . . . . . . . 125,200 124,145 Other current assets . . . . . . . . . . . . . . . . 30,089 27,399 -------- -------- Total current assets . . . . . . . . . . . . . 602,194 591,485 Property, plant, and equipment, net. . . . . . . . . . 177,875 174,914 Other assets . . . . . . . . . . . . . . . . . . . . . 67,690 65,619 -------- -------- $847,759 $832,018 ======== ======== Liabilities and stockholders' equity Current liabilities: Notes payable. . . . . . . . . . . . . . . . . . . .$ 1,994 $ 2,033 Accounts payable . . . . . . . . . . . . . . . . . . 119,014 116,313 Other current liabilities. . . . . . . . . . . . . . 240,147 251,880 -------- -------- Total current liabilities. . . . . . . . . . . 361,155 370,226 -------- -------- Long-term debt . . . . . . . . . . . . . . . . . . . . 151,886 153,457 -------- -------- Other liabilities. . . . . . . . . . . . . . . . . . . 24,364 28,791 -------- -------- Stockholders' equity Common Stock: Outstanding - 38,891,000 shares at Mar. 30, 1996 and 37,933,000 shares at Sept. 30, 1995 (net of deferred compensation of $9,405 at Mar. 30, 1996 and $9,588 at Sept. 30, 1995) . . . 454,105 446,762 Accumulated deficit. . . . . . . . . . . . . . . . . .(152,583) (163,626) Unrealized gains on marketable securities. . . . . . . 13,959 -- Cumulative translation adjustment. . . . . . . . . . . (5,127) (3,592) -------- -------- Total stockholders' equity. . . . . . . . . . . . . . 310,354 279,544 -------- -------- $847,759 $832,018 ======== ======== The accompaning Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. DATA GENERAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended ---------------------- Mar. 30, Mar. 25, in thousands 1996 1995 - --------------------------------------------------------------------------- Cash flows from operating activities: Net income. . . . . . . . . . . . . . . . . . . $ 11,043 $ 13,145 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation. . . . . . . . . . . . . . . . 41,142 36,371 Amortization of capitalized software development costs. . . . . . . . . . . . . 8,107 8,200 Other non-cash items, net . . . . . . . . . 5,153 14,088 Change in operating assets and liabilities. (25,835) 18,489 -------- -------- Net cash provided from operating activities 39,610 90,293 -------- -------- Cash flows from investing activities: Expenditures for property, plant, and equipment. . . . . . . . . . . . . . . . . (50,670) (48,223) Net proceeds from the sales of (purchases of) marketable securities. . . . . . . . . . . . . 26,672 (63,144) Capitalized software development costs. . . . . (14,493) (12,733) Other . . . . . . . . . . . . . . . . . . . . . 10,599 (600) -------- --------- Net cash used by investing activities . . . (27,892) (124,700) -------- --------- Cash flows from financing activities: Cash provided from stock plans. . . . . . . . . 5,347 3,696 Repayment of long-term debt . . . . . . . . . . (3,000) (2,700) --------- --------- Net cash provided from financing activities. 2,347 996 --------- --------- Effect of foreign currency rate fluctuations on cash and temporary cash investments. . . . . (877) 1,515 --------- --------- Increase (decrease) in cash and temporary cash investments . . . . . . . . . . . . . . . . . . 13,188 (31,896) Cash and temporary cash investments - beginning of period . . . . . . . . . . . . . . 117,201 142,448 -------- -------- Cash and temporary cash investments - end of period . . . . . . . . . . . . . . . . . $130,389 $110,552 ======== ======== Supplemental disclosure of cash flow information: Interest paid . . . . . . . . . . . . . . . . . $ 6,187 $ 6,373 Income taxes paid . . . . . . . . . . . . . . . $ 1,450 $ 1,117 The accompaning 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 Mar. 30, Sept. 30, in thousands 1996 1995 - ----------------------------------------------------------------------------- Inventories: Raw materials. . . . . . . . . . . . . . . . . . .$ 9,568 $ 9,173 Work in process. . . . . . . . . . . . . . . . . . 41,318 28,309 Finished systems . . . . . . . . . . . . . . . . . 40,008 51,199 Field engineering parts and components . . . . . . 34,306 35,464 ---------- -------- $ 125,200 $ 124,145 ========= ========= Property, plant, and equipment: Property, plant, and equipment . . . . . . . . . .$ 644,544 $ 635,000 Accumulated depreciation . . . . . . . . . . . . . (466,669) (460,086) --------- --------- $ 177,875 $ 174,914 ========= ========= Note 2. Accounting Policies In March 1996, a certain equity security, held by the company as an investment and previously accounted for under the cost method, began trading on a public stock exchange. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 115, this security is now considered to be readily marketable and is accounted for at fair market value. The security is classified as available for sale with the corresponding unrealized holding gain included as a separate component of shareholders' equity. Note 3. Basis of Presentation and Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. 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 March 30, 1996 are not necessarily indicative of the results of the entire fiscal year. EX-27 4 ART.5 FDS 2ND QUARTER 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Q2 FY96 CONDENSED CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS SEP-28-1996 MAR-30-1996 130,389 60,336 256,180 0 125,200 602,194 644,544 466,669 847,759 361,155 151,886 454,105 0 0 (143,751) 847,759 464,361 662,804 316,696 445,875 0 0 6,815 13,043 2,000 11,043 0 0 0 11,043 0.27 0.27
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