-----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, HCOUuKFZD8aLTKN3KB0GPrTKozOUWpf2RxkzMqngs/QKYaRu0kHTn2OcJaCFgKBr FeVX2otNB+TgHF7sLAJhrQ== 0000026999-97-000001.txt : 19970225 0000026999-97-000001.hdr.sgml : 19970225 ACCESSION NUMBER: 0000026999-97-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970206 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: 97519278 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 FY97 FORM 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 28, 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 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 24, 1997: Common Stock, par value $.01 39,942,680 ---------------------------- ---------- (Title of each class) (Number of shares) ================================================================================ PART I -- FINANCIAL INFORMATION Item 1. Financial Statements. DATA GENERAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Quarter Ended ---------------------------- Dec. 28, Dec. 30, in thousands, except net income per share 1996 1995 - -------------------------------------------------------------------------------- Revenues: Product ........................................ $249,800 $227,654 Service ........................................ 98,653 99,955 -------- -------- Total revenues ........................... 348,453 327,609 -------- -------- Costs and expenses: Cost of product revenues ....................... 165,062 156,712 Cost of service revenues ....................... 64,408 64,992 Research and development ....................... 26,238 21,723 Selling, general, and administrative ........... 80,509 77,167 -------- -------- Total costs and expenses ................. 336,217 320,594 -------- -------- Income from operations .............................. 12,236 7,015 Interest income ..................................... 1,982 2,144 Interest expense .................................... 3,203 3,450 -------- -------- Income before income taxes .......................... 11,015 5,709 Income tax provisions ............................... 600 1,000 -------- -------- Net income .......................................... $ 10,415 $4,709 ======== ======== Net income per share ................................ $ 0.25 $ 0.12 ======== ======== Weighted average shares outstanding, including common stock equivalents, where applicable ............ 42,054 40,308 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. 28, Sept. 28, dollars in thousands 1996 1996 - --------------------------------------------------------------------------------------- Assets Current Assets: Cash and temporary cash investments .................... $ 95,891 $ 178,997 Marketable securities .................................. 88,453 25,624 Receivables, net ....................................... 276,880 257,815 Inventories ............................................ 127,993 129,783 Other current assets ................................... 27,682 24,593 --------- --------- Total current assets ............................ 616,899 616,812 Property, plant, and equipment, net ........................ 168,742 167,672 Other assets ............................................... 78,736 75,959 --------- --------- $ 864,377 $ 860,443 ========= ========= Liabilities and stockholders' equity Current liabilities: Notes payable .......................................... $ 1,902 $ 1,943 Accounts payable ....................................... 132,958 121,625 Other current liabilities .............................. 226,393 242,616 --------- --------- Total current liabilities ....................... 361,253 366,184 --------- --------- Long-term debt ............................................. 147,998 149,971 --------- --------- Other liabilities .......................................... 13,890 15,224 --------- --------- Stockholders' equity: Common stock: Outstanding - 39,794,000 shares at Dec. 28, 1996 and 39,601,000 shares at Sept. 28, 1996 (net of deferred compensation of $10,485 at Dec. 28, 1996 and $7,812 at Sept. 28, 1996) .................. 462,126 460,312 Accumulated deficit .................................... (125,066) (135,481) Unrealized gains on marketable securities .............. 9,086 9,708 Cumulative translation adjustment ...................... (4,910) (5,475) --------- --------- Total stockholders' equity ...................... 341,236 329,064 --------- --------- $ 864,377 $ 860,443 ========= ========= 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. 28, Dec. 30, in thousands 1996 1995 - ----------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income ............................................................. $ 10,415 $ 4,709 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation .......................................... 19,560 20,924 Amortization of capitalized software development costs 5,057 3,375 Other non-cash items, net ............................. 4,255 3,905 Change in operating assets and liabilities ............ (23,429) (16,939) --------- --------- Net cash provided from operating activities ........... 15,858 15,974 --------- --------- Cash flows from investing activities: Expenditures for property, plant, and equipment ........................ (23,994) (23,497) Net proceeds from the sales (purchases) of marketable securities ....... (63,450) 10,626 Capitalized software development costs ................................. (8,160) (8,033) Other .................................................................. -- 4,250 --------- --------- Net cash used by investing activities ................. (95,604) (16,654) --------- --------- Cash flows from financing activities: Cash provided from stock plans ......................................... 623 1,271 Repayment of long-term debt ............................................ (3,900) (3,000) --------- --------- Net cash used by financing activities ................. (3,277) (1,729) --------- --------- Effect of foreign currency rate fluctuations on cash and temporary cash investments ............................................................ (83) (457) --------- --------- Decrease in cash and temporary cash investments ................................ (83,106) (2,866) Cash and temporary cash investments - beginning of period ...................... 178,997 117,201 --------- --------- Cash and temporary cash investments - end of period ............................ $ 95,891 $ 114,335 ========= ========= Supplemental disclosure of cash flow information: Interest paid .......................................................... $ 4,961 $ 4,944 Income taxes paid ...................................................... $ 246 $ 379 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. 28, Sept. 28, in thousands 1996 1996 - ----------------------------------------------------------- Inventories: Raw materials ............ $ 6,114 $ 4,560 Work in process .......... 44,392 50,769 Finished systems ......... 47,339 43,710 Field engineering parts and components ......... 30,148 30,744 --------- --------- $ 127,993 $ 129,783 ========= ========= Property, plant, and equipment: Property, plant, and equipment .............. $ 640,825 $ 638,972 Accumulated depreciation .......... (472,083) (471,300) --------- --------- $ 168,742 $ 167,672 ========= ========= Note 2. 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 1996 Annual Report. The results of operations for the quarter ended December 28, 1996 are not necessarily indicative of the results of the entire fiscal year. Note 3. Letter of Credit and Reimbursement Agreement On December 11, 1996, the company's $30 million unsecured letter of credit facility with a group of banks was amended. This facility is available to secure issuances 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 28, 1996 there were $8 million letters of credit secured by this facility. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Financial Condition Cash and temporary cash investments as of December 28, 1996 were $95.9 million, a decrease of $83.1 million from the end of fiscal 1996. At the same date, the company held $88.5 million in marketable securities, a net increase of $62.9 million during the current three-month period. In total, cash, temporary cash investments and marketable securities decreased $20.2 million for the current three-month period. The securities held, which supplement cash and temporary cash investments, include United States treasury bills and notes, as well as an equity security of $10.3 million recorded at fair market value and classified as available-for-sale. The unrealized gain on marketable securities of $9.1 million is recorded as a separate component of stockholders' equity. Net cash provided from operations for the quarter ended December 28, 1996 totaled $15.9 million; expenditures for property, plant, and equipment were $24 million; capitalized software development costs totaled $8.2 million; and cash provided from stock plans totaled $.6 million. The effect of foreign currency exchange rate fluctuations on cash and temporary cash investments for the quarter ended December 28, 1996 was a decrease of less than $.1 million. Net receivables were $276.9 million, an increase of $19.1 million from $257.8 million at fiscal year-end 1996 due primarily to increased revenues. Total inventories at December 28, 1996 were $128 million, a decrease of $1.8 million from fiscal year-end 1996 levels. Fixed asset dispositions for the current three-month period totaled $3.9 million, primarily due to the sale of demonstration equipment. Management expects that sales of demonstration equipment will continue. The increase of $11.3 million in accounts payable from fiscal year-end 1996 levels was attributed mainly to the timing of payments related to material purchases. Other current liabilities, excluding the current portion of long-term debt, decreased $14.3 million from fiscal year-end 1996. 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 $3.9 million from fiscal 1996 year-end as a result of the company reacquiring a portion of its 8 3/8% Sinking Fund Debentures due in 2002. On December 11, 1996, the company's $30 million unsecured letter of credit facility with a group of banks was amended. This facility is available to secure issuances 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 28, 1996 there were $8 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 material changes in estimates to prior provisions or additional charges were recorded during fiscal 1996 or the first three-month period of fiscal 1997. The following table sets forth the company's restructuring activities for the three-month period ended December 28, 1996. All charges, excluding asset writedowns and certain other charges, are cash in nature and funded from operations. THREE MONTHS ENDED SEPT. 28, DEC.28, DEC. 28, 1996 1996 1996 (in millions) BALANCE CHARGES BALANCE - ------------------------------------------------------------------------------ Provisions related to terminated employees $ 2.5 $ .5 $ 2.0 Provisions for leases .................... 10.0 1.1 8.9 Writedown of assets to be sold or discarded and other .................. 2.0 .5 1.5 ------- ------ ------- Total .......................... $ 14.5 $ 2.1 $ 12.4 ======= ====== ======= The employee terminations related to the 1995 restructuring charges were substantially completed during fiscal 1996. The remaining reserves at December 28, 1996 are for the remaining severance payments due to employees impacted by the restructuring actions. 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 December 28, 1996 increased 6% to $348.5 million from the same quarter of the previous year. Domestic revenues, excluding U.S. direct export sales, were $207.3 million for the current quarter, a 10% increase from $188.7 million for the comparable period of fiscal 1996. Domestic revenues represented 59% of total revenues for the current quarter and 58% of total revenues for the first quarter of fiscal 1996. European revenues, including U.S. direct export sales into the European marketplace, were $92.7 million, a decrease from $97.5 million for the comparable period in fiscal 1996. European revenues represented 27% and 30% of total revenues in the current and prior-year periods, respectively. Other international revenues, including U.S. direct export sales, were $48.5 million for the current quarter, a 17% increase from $41.4 million for the comparable period in fiscal 1996. Other international revenues represented 14% of total revenues for the current quarter and 12% for the comparable prior-year period. Product revenues of $249.8 million for the current quarter ended December 28, 1996 increased 10% from the comparable prior-year period. Revenues of $121.8 million from the company's AViiON family of open systems server products increased 15% from the comparable period of the prior year. In the current quarter, revenues from the company's Intel-based AViiON systems more than tripled, while revenues from the Motorola-based AViiON systems declined by 35% as compared with the comparable period of the prior year. The company expects the Motorola-based AViiON systems revenue will continue to decline. Product revenues from the company's Open CLARiiON storage systems increased 5% from the comparable prior-year period and accounted for 42% 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 sales cycles and inventory levels of the company's customers. Open CLARiiON product revenues have been concentrated in a limited number of customers, with a significant portion of the company's Open CLARiiON product revenues to a single OEM. Proprietary MV system revenues declined $1.8 million from the same period in the prior-year and currently represent 3% of total product revenues compared to 4% for the comparable prior-year period. The company expects to see a continued decline in its proprietary MV product line revenues. Product revenues from personal computers and peripheral equipment increased $3.2 million from the same period in the prior-year and represent 7% of total product revenues for both the current and comparable prior-year periods. Domestic product revenues, which were $150.5 million for the current quarter, increased 14% from $131.9 million for the comparable period in fiscal 1996. Domestic product revenues were 60% of total product revenues for the current quarter and 58% of total product revenues in the comparable prior-year period. The increase in domestic product revenues was primarily a result of increased shipments of the company's Intel-based AViiON systems, increased Open CLARiiON shipments, as well as increased personal computers and peripheral equipment shipments. European product revenues were $61.3 million for the current quarter, a 6% decrease from $65.1 million in the comparable prior-year period. European product revenues represented 25% of total product revenues for the current quarter and 29% for the comparable prior-year period. Other international product revenues were $38 million for the current quarter, an increase of 24% from $30.6 million for the comparable period in fiscal 1996. Other international product revenues represented 15% of total product revenues in the current quarter and 13% of total product revenues in the comparable prior-year period. Service revenues for the current quarter were $98.7 million, a slight decrease from $100.0 million in the comparable period of fiscal 1996. Domestic service revenues for the current quarter were $56.7 million, relatively unchanged from $56.8 million in the comparable prior-year period. European service revenues were $31.4 million, a 3% decrease from $32.4 million for the comparable prior-year period. Other international service revenues for the current quarter were $10.5 million, a slight decrease from $10.8 million for the comparable prior-year period. Cost of revenues decreased to 66% of total revenues for the current quarter compared with 68% for the comparable period in fiscal 1996. For the current three-month period ended December 28, 1996, cost of product revenues decreased to 66% of product revenues compared with 69% for the comparable prior-year period. The decrease in the cost as a percentage of product revenues was the result of increasing volumes of higher margin Intel-based AViiON systems, manufacturing cost reductions and higher overall production volume. Cost of service revenues was 65% of service revenues for both the current quarter and the first quarter of fiscal 1996. Research and development expenses for the current quarter were $26.2 million, a 21% increase from $21.7 million for the first quarter of fiscal 1996. Research and development expenses represented 8% of total revenues in the current quarter and 7% of total revenues for the comparable prior-year period. 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 three-month period, gross expenditures on research and development and software development before capitalization, were $34.4 million, an increase of 16% from $29.7 million for the comparable prior-year period. The increase in research and development expenditures is being driven by investment in the next generation of CLARiiON products, in the company's Non Uniform Memory Access (NUMA) architecture for high-end servers and in THiiN Line products for the internet. Selling, general, and administrative expenses for the current quarter were $80.5 million, an increase of 4% from $77.2 million for the comparable quarter of fiscal 1996. Selling, general, and administrative expenses represented 23% and 24% of total revenues in the current quarter and in the comparable prior-year period, respectively. The moderate increase in expenses was the result of increased sales and marketing efforts in the server and storage businesses. At December 28, 1996 the number of employees totaled 4,884, a net increase of 21 employees from September 28, 1996. Interest income for the current quarter was $2 million, a slight decrease from $2.2 million for the comparable period of fiscal 1996, due primarily to lower levels of invested cash. Interest expense for the current quarter was $3.2 million, a decrease from $3.5 million for the comparable period of fiscal 1996. The income tax provision for the current quarter was $.6 million compared to $1.0 million for the comparable prior-year period. The current year provision relates primarily to foreign, state and federal alternative minimum taxes. Statements concerning the company's business outlook or future economic performance; anticipated profitability, revenues, expenses or other financial items; product or service line growth, plans or objectives; and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters, are "forward-looking statements", as that term is defined under the Federal Securities Laws. Forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from those stated in such statements. Such risks, uncertainties and factors include, but are not limited to, fluctuations in customer demand, order patterns and inventory levels, changes and delays in product development plans and schedules, customer acceptance of new products, changes in pricing or other actions by competitors, general economic conditions, as well as other risks detailed in the company's filings with the Securities and Exchange Commission, including this Quarterly Report on Form 10-Q for the first fiscal quarter of 1997, which ended December 28, 1996. PART II -- OTHER INFORMATION Item 1. Legal Proceedings. The company's patent infringement suit against IBM Corporation commenced in 1994, and IBM's countersuit against the company, are 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. The company alleges, among other matters, that IBM's AS/400 CISC-based and System/390 computer product lines infringe certain of the company's patents, and seeks, among other relief, compensatory damages. IBM's countersuit alleges that certain of the company's AViiON and CLARiiON products infringe various IBM patents. The company's second patent infringement suit against IBM Corporation which commenced in May 1996, is 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 June 29, 1996. The company alleges, among other matters, that several IBM products, including IBM's AS/400 RISC-based computer product line, infringe certain of the company's patents and seeks, among other relief, injunctive and compensatory damages. The company believes its claims are valid, but it cannot predict the outcome of either litigation. Item 4. Submission of Matters to a Vote of Security-Holders (a) The Annual Meeting of Stockholders of Data General Corporation was held January 29, 1997. (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 34,090,343 932,441 Colloredo-Mansfeld 34,289,104 733,680 McElwee 34,281,645 741,139 Skates 34,296,731 726,053 Thorndike 34,298,152 724,632 Trautlein 34,281,409 741,375 Tucker 34,301,671 721,113 (c) During the meeting, stockholders also voted to approve an amendment to the company's Employee Qualified Stock Purchase Plan to increase the number of shares that may be issued thereunder from 8,600,000 shares to 11,100,000 shares. The numbers of votes cast were as follows: Votes For: 26,210,498 Votes Against: 2,033,370 Abstentions: 79,669 Broker Non-Votes: 6,699,247 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 10. (aa) Summary of 1997 Fiscal Year Bonus Opportunity for Chief Executive Officer. 10. (bb) Amendment dated December 11, 1996 to Letter of Credit and Reimbursement Agreement. 11. Computation of primary and fully diluted earnings per share. (b) No reports on Form 8-K were filed during the current quarter ended December 28, 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: February 6, 1997 EXHIBITS Index to Exhibits. 10.(aa) Summary of 1997 Fiscal Year Bonus Opportunity for Chief Executive Officer. 10.(bb) Amendment dated December 11, 1996 to Letter of Credit and Reimbursement Agreement. 11. Computation of primary and fully diluted earnings per share. EX-10 2 SUMMARY OF 1997 FISCAL YEAR BONUS OPPORTUNITY EXHIBIT 10 (aa) Summary of Cash Bonus Opportunity --------------------------------- for the President and Chief Executive Officer --------------------------------------------- The Company provided Ronald L. Skates, President and Chief Executive Officer of the Company, a bonus opportunity by which Mr. Skates would be entitled to earn a cash bonus for the 1997 fiscal year based on the Company's performance, as measured against goals relating to earnings-per-share, with a maximum of 250% of base salary, or, if greater, a cash bonus equal to 1.5% of the increase in the Company's market capitalization during the fiscal year. The Board reserved the right to award other bonuses and to adjust the bonus opportunity in the event of extraordinary corporate transactions. EX-10 3 AMENDMENT NO.3 TO LETTER OF CREDIT FACILITY EXHIBIT 10 (bb) AMENDMENT NO. 3 TO LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT THIS AMENDMENT NO. 3 TO LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT (this "Agreement") is made and entered into as of this 11th day of December, 1996 among: DATA GENERAL CORPORATION, a Delaware corporation ("Borrower"), NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION, a national banking association, THE BANK OF NEW YORK and FLEET NATIONAL BANK, formerly known as Fleet Bank of Massachusetts, N.A. (each individually, a "Lender" and collectively, the "Lenders"); and NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION, a national banking association, in its capacity as agent for the Lenders (in such capacity, the "Agent"); W I T N E S S E T H: -------------------- WHEREAS, the Borrower, the Lenders and the Agent have entered into a Letter of Credit and Reimbursement Agreement dated as of December 21, 1994, as amended by Amendment No. 1 to Letter of Credit and Reimbursement Agreement dated as of October 5, 1995, as further amended by Amendment No. 2 to Letter of Credit and Reimbursement Agreement dated as of December 10, 1995 among the Borrower, the Lenders and the Agent and as hereby amended (as amended, the "Credit Agreement"), pursuant to which the Lenders agreed to issue certain letters of credit on behalf of the Borrower; and WHEREAS, the Borrower has requested that the Credit Agreement be amended in the manner set forth herein and the Agent and the Lenders are willing to agree to such amendment; NOW, THEREFORE, in consideration of the mutual covenants and the fulfillment of the conditions set forth herein, the parties hereto do hereby agree as follows: 1. Definitions. Any capitalized terms used herein without definition shall have the meaning set forth in the Credit Agreement. 2. Amendment. Subject to the terms and conditions set forth herein, the Credit Agreement is hereby amended as follows: (a) The definitions of "Commitment Termination Date" shall be amended and restated in its entirety to read as follows: "Commitment Termination Date" means the earliest to occur of (i) December 17, 1997 (364 days after the Commitment Termination Date established pursuant to Amendment No. 2 to Letter of Credit and Reimbursement Agreement dated as of December 10, 1995 among all parties hereto), or (ii) the date of termination of Lenders' obligations pursuant to Section 8.01 hereof upon the occurrence of an Event of Default, or (iii) such date as the Borrower may voluntarily and permanently terminate the Letter of Credit Facility by causing all Obligations of the Borrower to NationsBank and the Lenders to be Fully Satisfied and terminating all obligations of NationsBank and the Lenders with respect to Letters of Credit and Participations; 3. Amendment Fee. The Borrower shall pay to the Agent for the pro rata benefit of the Lenders based on their Applicable Commitment Percentages, a fee (the "Facility Fee") equal to the product of the Total Letter of Credit Commitment multiplied by 1/8 of 1% (.125%). 4. Effectiveness. This Agreement shall become effective as of the date hereof upon receipt by the Agent of (a) seven fully executed copies of this Agreement (which may be signed in counterparts) and (b) payment in full of the Facility Fee to be held by the Agent for the pro rata benefit of the Lenders. 5. Representations and Warranties. In order to induce the Agent and the Lender to enter into this Agreement, the Borrower represents and warrants to the Agent and the Lenders as follows: (a) The representations and warranties made by Borrower in Article V of the Credit Agreement are true and correct on and as of the date hereof, except to the extent that such representations and warranties expressly relate to an earlier date and except that the financial statements referred to in Section 5.01(e)(i) of the Credit Agreement shall be deemed to be those financial statements most recently delivered to the Agent and the Lenders pursuant to Section 6.01 of the Credit Agreement; (b) There has been no material adverse change in the condition, financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole, since the date of the most recent financial reports of the Borrower received by the Agent and the Lenders under Section 6.01(a) of the Credit Agreement, other than changes in the ordinary course of business; (c) The business and properties of the Borrower and its Subsidiaries, taken as a whole, are not, and since the date of the most recent financial report of the Borrower and its Subsidiaries received by the Agent and the Lenders under Section 6.01(a) of the Credit Agreement, have not been, adversely affected in any substantial way as the result of any fire, explosion, earthquake, accident, strike, lockout, combination of workers, flood, embargo, riot, activities of armed forces, war or acts of God or the public enemy, or cancellation or loss of any major contracts; and (d) No event has occurred and is continuing which constitutes, and no condition exists which upon the consummation of the transaction contemplated hereby would constitute, a Default or an Event of Default on the part of the Borrower under the Credit Agreement, either immediately or with the lapse of time or the giving of notice, or both. 6. Entire Agreement. This Agreement sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. 7. Full Force and Effect of Agreement. Except as hereby specifically amended, modified or supplemented, the Credit Agreement and all other Letter of Credit Documents are hereby confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms. 8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. 9. Governing Law. This Agreement shall in all respects be governed by the laws and judicial decisions of the State of New York. 10. Enforceability. Should any one or more of the provisions of this Agreement be determined to be illegal or unenforceable as to one or more of the parties hereto, all other provisions nevertheless shall remain effective and binding on the parties hereto. 11. Credit Agreement. All references in any of the Letter of Credit Documents to the Credit Agreement shall mean the Credit Agreement as amended hereby. [Signature page follows.] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers, all as of the day and year first above written. BORROWER: DATA GENERAL CORPORATION By: Name: Title: LENDERS: NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION By: Name: Title: THE BANK OF NEW YORK By: Name: Title: FLEET NATIONAL BANK By: Name: Title: AGENT: NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION as Agent for the Lenders By: Name: Title: EX-11 4 Q1 FY97 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. 28, Dec. 30, 1996 1995 -------- -------- Primary earnings per share: Net income ............................................. $10,415 $ 4,709 ======= ======= Weighted average shares outstanding .................... 39,694 38,081 Incremental shares from use of treasury stock method for stock options ....................... 2,360 2,227 ------- ------- Common and common equivalent shares, where applicable ............................. 42,054 40,308 ======= ======= Net income per share ................................... $ 0.25 $ 0.12 ======= ======= Earnings per share assuming full dilution: (a) Net income ............................................. $10,415 $ 4,709 ======= ======= Weighted average shares outstanding .................... 39,694 38,081 Incremental shares from use of treasury stock method for stock options ....................... 2,493 2,639 ------- ------- Common and common equivalent shares assuming full dilution, where applicable ............. 42,187 40,720 ======= ======= Net income per share ................................... $ 0.25 $ 0.12 ======= ======= - -------------------------------------------------------------------------------- (a) For the quarters ended December 28, 1996 and December 30, 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.
EX-27 5 ART.5 FDS FOR 1ST QUARTER 1997 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE Q1 FY97 CONDENSED CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS SEP-27-1997 DEC-28-1996 95,891 88,453 276,880 0 127,993 616,899 640,825 472,083 864,377 361,253 147,998 0 0 462,126 (120,890) 864,377 249,800 348,453 165,062 229,470 106,747 0 3,203 11,015 600 10,415 0 0 0 10,415 0.25 0.25
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