-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, e/hOfh9ET4cOIhxD3DBzkiNQQ4VyZLfgMqhiAeunRtZBxAQp4X4X91KJNeduyrfC 0uTUpP+MOHg/jFxa96OmuA== 0000028887-94-000020.txt : 19940422 0000028887-94-000020.hdr.sgml : 19940422 ACCESSION NUMBER: 0000028887-94-000020 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940421 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 19940421 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIGITAL EQUIPMENT CORP CENTRAL INDEX KEY: 0000028887 STANDARD INDUSTRIAL CLASSIFICATION: 3570 IRS NUMBER: 042226590 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05296 FILM NUMBER: 94523720 BUSINESS ADDRESS: STREET 1: 146 MAIN ST CITY: MAYNARD STATE: MA ZIP: 01754 BUSINESS PHONE: 6178975111 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: (Date of earliest event reported): April 15, 1994 Digital Equipment Corporation ________________________________________________________________ (Exact name of registrant as specified in its charter) Massachusetts 0-5296 04-2226590 _______________________________________________________________________ (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification No.) 146 Main Street, Maynard, Massachusetts 01754 _______________________________________________________________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (508) 493-5111 ----------------------------------------------------------------------- (Former name or former address, if changed since last report) -1- Item 5. Other Information. On April 15, 1994, the registrant released its operating results for the quarter ended April 2, 1994. On April 18, 19 and 20, 1994, the registrant was named as a defendant in class action lawsuits filed in the U.S. District Court for the Southern District of New York and the U.S. District Court for the District of Massachusetts involving alleged violations of the Federal securities laws in connection with its offering of Depositary Shares representing its Series A 8 7/8% Cumulative Preferred Stock and trading in its securities prior to the release of its financial results for the quarter ended April 2, 1994. The directors and certain officers of the registrant were also named as defendants in one or more of these actions. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. Exhibit No. 99 Relevant portions of press release of registrant dated April 15, 1994 announcing the registrant's operating results for the quarter ended April 2, 1994. -2- SIGNATURE Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. DIGITAL EQUIPMENT CORPORATION (Registrant) By /s/ Gail S. Mann Gail S. Mann Assistant General Counsel, Clerk and Secretary Date: April 21, 1994 -3- EX-99 2 EXHIBIT 99 EXHIBIT 99 For Further Information: Bradley D. Allen James A. Chiafery (508) 493-7182 (508) 493-8009 DIGITAL EQUIPMENT CORPORATION ANNOUNCES THIRD QUARTER OPERATING RESULTS MAYNARD, MA -- APRIL 15, 1994 Digital Equipment Corporation (NYSE::DEC) today reported results for its third quarter, which ended April 2, 1994. For the quarter, the Corporation reported total operating revenues of $3,258,789,000, down 6% from $3,453,676,000 for the comparable quarter a year ago. This includes product revenues of $1,749,621,000, down 1% and service and other revenues of $1,509,168,000, down 11% from the comparable quarter a year ago. For the quarter, the Corporation reported a net loss of $183,306,000, or $1.34 per share, compared with a net loss of $30,121,000, or $.23 per share for the comparable quarter a year ago. For the nine months ending April 2, 1994, the Corporation reported total operating revenues of $9,527,816,000, down 9% from $10,457,418,000, from the comparable period a year ago. This includes product revenues of $4,966,549,000, down 10% and service and other revenues of $4,561,267,000, down 8% from $4,954,991,000 of the comparable period a year ago. For the nine months ended April 2, 1994, the Corporation reported a net loss of $338,635,000, or $2.50 per share, compared with a net loss of $364,526,000, or $2.81 per share for the comparable period a year ago. The net loss for the first nine months of fiscal 1994 includes a one-time benefit of $20,042,000, or $.14 per share, related to the adoption of a change in accounting principle for income taxes. Robert B. Palmer, President and CEO said, "The financial results are unacceptable to this management and obviously disappointing. This is especially true because results of the quarter stand in contrast to the progress Digital people have made on so many fronts and the five quarters in a row of improved year over year results. Growth in our new products is beginning to overtake the declines in our other products, but we have not yet achieved a competitive cost structure. I remain absolutely committed to restoring Digital to profitability. We need to achieve a competitive cost structure as quickly as possible." "As a consequence, I have instructed our senior managers to take actions to achieve competitive lead times for high demand products, to accelerate our on-going restructuring efforts, to further sharply reduce spending, to conserve cash and to do all this without losing our emphasis on building demand and supporting our customers. We will also consider further restructuring to achieve our goals." "The changing nature of our business continues to present both challenges and opportunities. We are experiencing significant growth, in both revenues and in units, at the highly-competitive low end of our product line. In fact, one contributor to our disappointing results was our inability to satisfy rapidly increasing customer demand for personal computers, Alpha AXP workstations and some storage products," he said. "Our total workstation business is now growing again both in units and in revenues, driven by the success of our Alpha AXP systems. Alpha systems now represent nearly 50 percent of total system revenues excluding PC's, and are almost equivalent to VAX system revenues," Palmer added. "We are providing leadership products at very competitive prices, revenues from low end products and indirect channels are expanding, but product gross margins continue to decline. Similar pressures on revenue mix and margins are also having an impact on our services business. As a result, our cost structure is not yet competitive for the level of revenues we are generating." William M. Steul, Vice President and CFO said, "Product revenues were essentially flat with the third quarter of last year, much improved from the double digit declines we experienced in the first half of the fiscal year. In fact, while VAX revenues continued to decline, total product revenues increased 5 percent from the December quarter led by strong growth in personal computers, Alpha AXP workstations, storage products and networking products. With continued mix shift to low-end products and aggressive pricing actions taken on some products in the quarter, we experienced a product gross margin decline of nearly 10 points year over year." "Service revenues overall declined nearly 11 percent compared with last year. While we are winning multivendor customer service business, increasing product reliability and the erosion of our traditional systems installed base is putting pressure on revenues and margins. We expect the pressures on our service revenues and margins to continue," Steul added. "On a geographic basis, we achieved slight revenue growth in the U.S., all in the product revenue line. The Asia Pacific region continued to show robust growth, and Europe declined compared with last year, but at a slower rate of decline than we experienced in the first half. We did experience some revenue declines due to the adverse effect of foreign currency fluctuations, but less so than in the first half of the fiscal year," he concluded. "Earlier this week the Company announced the Digital 2100 Server, that provides commercial users with large system features with small system advantages and technical users with supercomputing performance at workstation prices," Palmer added. "The new Alpha platforms and software operating system enhancements give us an extremely competitive offering in the fast growing commercial UNIX market and provide our VMS customers with functional equivalence in OpenVMS on VAX and Alpha AXP systems. Along with new software capabilities, we offer customers the most innovative and productive technical computing environment available in the marketplace today. We have more than 5,000 applications shipping on Alpha AXP in OpenVMS, UNIX and Windows NT, and we believe we have reached the critical mass of application availability for many users," he concluded. THREE MONTHS ENDED APRIL 2, 1994 MARCH 27, 1993 ______________ _______________ PRODUCT SALES $1,749,621,000 $ 1,767,372,000 SERVICE & OTHER REVENUES 1,509,168,000 1,686,304,000 TOTAL OPERATING REVENUES 3,258,789,000 3,453,676,000 COST OF PRODUCT SALES 1,210,478,000 1,049,969,000 SERVICE EXPENSE 946,800,000 1,030,728,000 TOTAL COST OF SALES 2,157,278,000 2,080,697,000 RESEARCH & ENGINEERING 316,767,000 350,423,000 SELLING, GENERAL & ADMIN. 954,903,000 1,050,600,000 NET INTEREST (INCOME)/EXPENSE 7,846,000 77,000 LOSS BEFORE INCOME TAXES (178,005,000) ( 28,121,000) PROVISION FOR INCOME TAXES 5,301,000 2,000,000 NET LOSS (183,306,000) ( 30,121,000) DIVIDENDS ON PREFERRED SHARES 1,775,000 - NET LOSS APPLICABLE TO COMMON STOCK $ (185,081,000) $ ( 30,121,000) WEIGHTED AVG SHARES O/S 137,897,533 131,553,881 NET LOSS PER COMMON SHARE $ ( 1.34) $ ( .23) NINE MONTHS ENDED APRIL 2, 1994 MARCH 27, 1993 _______________ _______________ PRODUCT SALES $4,966,549,000 $ 5,502,427,000 SERVICE & OTHER REVENUES 4,561,267,000 4,954,991,000 TOTAL OPERATING REVENUES 9,527,816,000 10,457,418,000 COST OF PRODUCT SALES 3,304,185,000 3,186,464,000 SERVICE EXPENSE 2,859,150,000 3,106,648,000 TOTAL COST OF SALES 6,163,335,000 6,293,112,000 RESEARCH & ENGINEERING 962,432,000 1,160,743,000 SELLING, GENERAL & ADMIN. 2,735,798,000 3,359,093,000 NET INTEREST (INCOME)/EXPENSE 13,596,000 (11,004,000) LOSS BEFORE INCOME TAXES & CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (347,345,000) (344,526,000) PROVISION FOR INCOME TAXES 11,332,000 20,000,000 LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (358,677,000) (364,526,000) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 20,042,000 - NET LOSS (338,635,000) (364,526,000) DIVIDENDS ON PREFERRED SHARES 1,775,000 - NET LOSS APPLICABLE TO COMMON STOCK $(340,410,000) $ (364,526,000) WEIGHTED AVG SHARES O/S 136,312,098 129,570,101 NET LOSS PER COMMON SHARE BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE $ (2.64) $ (2.81) EARNINGS PER SHARE ON CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE .14 - NET LOSS PER COMMON SHARE $ (2.50) $ (2.81) SELECTED BALANCE SHEET/CASH FLOW DATA - Q3FY94 ______________________________________________ BALANCE SHEET: _____________ CASH & CASH EQUIVALENTS........................ $ 1,263,551,000 ACCOUNTS RECEIVABLE, NET....................... 2,925,188,000 A/R DAYS SALES OUTSTANDING 81 DAYS INVENTORIES: RAW MATERIALS............. $ 497,340,000 WORK IN PROCESS........... 640,798,000 FINISHED GOODS............ 1,026,695,000 TOTAL......................... 2,164,833,000 PREPAID EXPENSES AND DEFERRED INCOME TAXES..... 402,218,000 TOTAL CURRENT ASSETS........................... 6,755,790,000 NET PROPERTY, PLANT & EQUIPMENT................ 3,136,489,000 OTHER ASSETS, NET.............................. 902,822,000 TOTAL ASSETS................................... 10,795,101,000 BANK LOANS AND CURRENT PORTION OF LTD.......... 10,620,000 RESTRUCTURING RESERVE ......................... 276,341,000 TOTAL CURRENT LIABILITIES...................... 3,473,509,000 NONCURRENT DEFERRED INCOME TAXES............... 26,369,000 LONG-TERM DEBT................................. 1,017,427,000 POSTRETIREMENT BENEFITS........................ 1,239,573,000 TOTAL LIABILITIES.............................. 5,756,878,000 STOCKHOLDERS' EQUITY........................... 5,038,223,000 BOOK VALUE PER COMMON SHARE.................... $ 33.73 CASH FLOW: QTR YTD _________ ______________ _____________ CASH FLOWS FROM OPERATING ACTIVITIES, $(125,406,000) (366,054,000) INCLUDING DEPREC. & AMORT. OF......... 160,223,000 522,941,000 CASH FLOWS FROM INVESTING ACTIVITIES, (144,555,000) (475,760,000) INCLUDING INVESTMENTS IN PP&E OF...... 166,312,000 5l4,382,000 CASH FLOWS FROM FINANCING ACTIVITIES.. 386,255,000 462,170,000 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS...................... 116,294,000 (379,644,000) NON U.S. REVENUES .................... 2,041,303,000 5,896,648,000 OR 63% 62% EMPLOYEE POPULATION: REGULAR.................. 85,700 OTHER.................. 6,300 Note to Editors: Alpha AXP, Digital, the Digital logo, OpenVMS and VAX are trademarks of Digital Equipment Corporation. UNIX is a registered trademark of Unix System Laboratories, Inc., a wholly-owned subsidiary of Novell, Inc. Windows NT is a trademark of Microsoft Corporation. -----END PRIVACY-ENHANCED MESSAGE-----