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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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
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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
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______________________________
Data General Corporation
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(Exact name of registrant as specified in its charter)
Delaware 04-2436397
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4400 Computer Drive, Westboro, Massachusetts 01580
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(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
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(Title of each class) (Number of shares)
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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.
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
==== ====== ===== =====
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(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.
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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> 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.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-END> MAR-30-1996
<CASH> 130,389
<SECURITIES> 60,336
<RECEIVABLES> 256,180
<ALLOWANCES> 0
<INVENTORY> 125,200
<CURRENT-ASSETS> 602,194
<PP&E> 644,544
<DEPRECIATION> 466,669
<TOTAL-ASSETS> 847,759
<CURRENT-LIABILITIES> 361,155
<BONDS> 151,886
<COMMON> 454,105
0
0
<OTHER-SE> (143,751)
<TOTAL-LIABILITY-AND-EQUITY> 847,759
<SALES> 464,361
<TOTAL-REVENUES> 662,804
<CGS> 316,696
<TOTAL-COSTS> 445,875
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,815
<INCOME-PRETAX> 13,043
<INCOME-TAX> 2,000
<INCOME-CONTINUING> 11,043
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,043
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.27
</TABLE>
