Data General Reports Net Income of $3.7 Million, Revenues of $383.7 Million for Fourth Quarter
WESTBORO, Mass.--(BUSINESS WIRE)--Oct. 29, 1998--Data General
Corporation today reported net income of $3.7 million, or $.07 per
share on a diluted basis, on revenues of $383.7 million, for its
fourth quarter of fiscal 1998, which ended September 26.
The company reported net income of $17.0 million, or $.35 per
share on a diluted basis, on revenues of $404.1 million for the fourth
quarter of fiscal 1997.
"We are pleased that we have been able to return to profitability
earlier than anticipated," said Data General President and Chief
Executive Officer Ronald L. Skates. "The positive results were driven by the solid performance of both our full Fibre CLARiiON storage and AViiON server lines. We also benefited from cost savings resulting from the worldwide restructuring we announced in June."
"The fourth quarter results are a confirmation that our focus on
providing storage and enterprise computing solutions is on target,"
added Mr. Skates.
Commenting on the fourth quarter CLARiiON business, Mr. Skates said, "CLARiiON revenues again were sequentially higher with our full fibre channel products posting an 86 percent increase over the prior quarter. Full Fibre Channel based systems now represent over 40 percent of our current storage business."
"Data General is the only major storage vendor that is currently
shipping full fibre RAID disk arrays. We are the leader in this
advanced technology, which industry analysts believe will soon become
the dominant storage architecture," said Mr. Skates. "The growth
opportunity we see for the next several years with our full Fibre
CLARiiON may be the best since we launched the product family in the
early 1990's."
Data General's fibre channel technology received a significant
endorsement when Dell Computer Corporation, the industry's fastest
growing server company, unveiled its high-end enterprise storage
system this Summer. The Dell PowerVault 650F is based on CLARiiON Fibre technology.
Data General plans to increase its investment in CLARiiON during
fiscal 1999, primarily through the hiring of additional research and
development and sales and marketing professionals. Mr. Skates said,
"While the increased investment will impact growth in near-term
profitability, we believe that it is imperative if we are to take full
advantage of the market opportunity before us."
During the fourth quarter, the CLARiiON product line was enhanced
with the introduction of Navisphere, the industry's most advanced
storage management software. Navisphere, which is available with all
the leading open systems platforms, allows system administrators to
manage their storage installations from a single management platform
located anywhere in the world.
Commenting on the AViiON server business, Mr. Skates noted that
revenues increased by nine percent over the third quarter.
"Our NT business continued to be strong and now represents nearly
two-thirds of our total Intel based AViiON revenues," said Mr. Skates.
Data General is the worldwide marketshare leader in NT server
systems priced between $100,000 and one million dollars, according to
1997 revenue figures from International Data Corporation.
The AViiON NT line was strengthened during the quarter. The
company introduced the AV 3700, its first server to use Intel's
400-MHz Pentium II Xeon processors, and the AV 2700R server, which can
be rackmounted in high-density configurations using up to 12 dual-
processor servers. Both servers can be utilized in Data General's
successful "in-a-Box" NT packaging.
Further augmenting its high-end NT position, Data General
introduced its NTerprise Total Care services offering earlier this
month, featuring a 99.9 percent uptime guarantee for businesses
running Windows NT as their enterprise operating system on AViiON
systems.
"Our more traditional UNIX business also posted solid results
with a strong performance from our AV 20000 NUMA technology based
server line," said Mr. Skates.
The AViiON NUMA family was further strengthened last week as the
company announced it had begun shipments of its new high-end AV 25000
server. In addition, the company unveiled its AVFlex architecture.
AVFlex includes services and products that will allow customers to
partition an AV 25000 server into multiple independent DG/UX and NT
systems.
For the full 1998 fiscal year, Data General reported a net loss
of $152.4 million or $3.11 per share on revenues of $1.5 billion. The
1998 results include a charge of $135 million, or $2.76 per share
related to the worldwide corporate restructuring which was announced
June 1. For fiscal 1997, the company reported net income of $55.9
million, or $1.26 per share on a diluted basis, on revenues of $1.5
billion.
The corporate-wide restructuring involved all areas of the
company, and included the transfer of approximately 100 people from
throughout the company to the CLARiiON Advanced Storage Division.
Overall, the restructuring resulted in a net reduction in force of
approximately 400 people, the consolidation of certain facilities and
the write-off of non-strategic assets. As a result of the
restructuring, Data General said it expects net savings in the range
of $40 to $45 million annually.
Mr. Skates concluded, "We are pleased that we have returned to
profitability. Going forward, we are well positioned to grow revenues
as we benefit from increased investment in, and a growing market for,
our fibre channel storage systems, and implement our enterprise server
strategy."
Statements concerning the company's business outlook, anticipated
profitability, revenues or expenses, and product line growth, together
with other statements made in this press release which are not
historical facts, are "forward-looking statements," as that term is
defined under the Federal Securities Laws. Such statements are subject
to risks and uncertainties which could cause actual results to differ
materially from those projected. Such risks and uncertainties 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 Data General's
Report on Form 10-K for the 1997 fiscal year which ended September 27,
1997 and third quarter 10-Q.
NOTE - Information on Data General, its products and services,
can be accessed on the Internet at dg.com. Additional
information on the CLARiiON Advanced Storage Division can be accessed
at clariion.com.
AViiON and CLARiiON are registered trademarks of Data General
Corporation.
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DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions except per share amounts)
Quarter Ended Year Ended
Sep. 26, Sep. 27, Sep. 26, Sep. 27,
1998 1997 1998 1997
Revenues:
Product $283.2 $306.6 $1,067.9 $1,142.6
Service 100.5 97.5 394.2 390.6
Total revenues 383.7 404.1 1,462.1 1,533.2
Costs and expenses:
Cost of product
revenues (Note 1) 201.8 209.5 826.0 772.7
Cost of service revenues 62.3 60.9 245.5 248.9
Research and development 30.7 28.9 118.7 110.0
Selling, general, and
administrative 83.9 86.9 338.1 338.4
Restructuring charge -- -- 82.4 --
Total costs and expenses 378.7 386.2 1,610.7 1,470.0
Income (loss) from operations 5.0 17.9 (148.6) 63.2
Interest income 3.3 4.3 13.4 10.6
Interest expense 3.6 4.6 14.4 15.5
Other income, net -- -- .2 --
Income (loss) before
income taxes 4.7 17.6 (149.4) 58.3
Income tax provision 1.0 .6 3.0 2.4
Net income (loss) $3.7 $17.0 $(152.4) $55.9
Basic income (loss) per share $.07 $.38 $(3.11) $1.35
Weighted average shares
outstanding - Basic 49.5 44.9 49.0 41.3
Diluted income (loss) per share $.07 $.35 $(3.11) $1.26
Weighted average shares
outstanding - Diluted 50.5 48.2 49.0 44.2
Note 1: Includes a one-time restructuring related charge of
$52.6m for the year ended September 26, 1998
DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
Sep. 26, Sep. 27,
1998 1997
Assets:
Current assets:
Cash and temporary cash investments $158.2 $216.8
Marketable securities 160.4 151.4
Receivables, net 307.4 296.4
Inventories 141.6 166.0
Other current assets 28.4 27.6
Total current assets 796.0 858.2
Property, plant, and equipment, net 180.5 180.4
Other assets 88.6 96.3
$1,065.1 $1,134.9
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable $160.9 $154.6
Other current liabilities 269.8 237.2
Total current liabilities 430.7 391.8
Long-term debt 212.8 212.8
Other liabilities 36.6 11.5
Total stockholders' equity 385.0 518.8
$1.065.1 $1,134.9
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CONTACT:
Data General Corporation
Jim Dunlap, 508/898-6546
jim_dunlap@dg.com |
