Data General Reports Financial Results for Second Quarter of Fiscal 1999
WESTBORO, Mass.--(BUSINESS WIRE)--April 22, 1999--Data General
Corporation today reported net income of $1.7 million, or $.03 per
share on a diluted basis, on revenues of $355.3 million, for its
second quarter of fiscal 1999, which ended March 27.
The company reported a net loss of $4.5 million, or $.09 per
share, on revenues of $361.8 million, for the second quarter of fiscal
1998.
Data General President and Chief Executive Officer Ronald L.
Skates said, "The results were driven by improved product margins,
fueled primarily by sales of our high-end NUMA technology based AViiON
servers. In addition, our CLARiiON full Fibre Channel storage products
continued to show revenue growth and now represent approximately 60
percent of our storage business."
Commenting on the overall CLARiiON business, Mr. Skates said,
"Year over year CLARiiON revenues were up twelve percent during the
second quarter even though revenues from our largest OEM customer,
Hewlett-Packard Company, continued to decline. Excluding revenues from
Hewlett-Packard, CLARiiON revenues grew approximately 50 percent year
over year for the second consecutive quarter. As we become
increasingly less dependent on this relationship, we believe we have
the opportunity for strong revenue growth going forward."
"Data General is also now aggressively addressing significant
areas of the storage market that are not reached by our OEM business
partners: the Sun, IBM and NT markets. We are dramatically expanding
our direct sales force effort in these markets and we are starting to
see a revenue contribution from those efforts," said Mr. Skates. "When
combined with our OEM business, the additional market potential we can
target with our direct sales force provides excellent growth potential
for our CLARiiON business. For the short-term, however, the
investments we are making in the CLARiiON sales and marketing areas
will continue to put pressure on earnings."
"Data General continues to be the only major storage vendor
shipping full fibre channel RAID disk arrays," noted Mr. Skates. "We
are the leader in this advanced technology, which is essential for
storage area networks, the fastest growing storage market."
Data General strengthened its position in storage area networking
during the quarter with the announcement of the CLARiiON FC5700
Series, its most powerful Fibre Channel disk array to date; and
CLARiiON Remote Mirroring which prevents the loss of data even in the
event of power failures and natural disasters. Over the balance of the
year, the company plans to introduce a series of additional CLARiiON
storage area networking products.
During the second quarter, Data General also announced that
Hyundai Information Technology would resell the full line of CLARiiON
Fibre Channel storage products in the Korean marketplace.
Commenting on the AViiON business, Mr. Skates said, "We continue
to see solid demand from our customers for our high-end AV 25000 and
AV 20000 NUMA technology based UNIX servers."
In addition, the company's NT server business posted a year over
year revenue increase of 13 percent and currently represents nearly 60
percent of Data General's total Intel based AViiON server revenues.
The AViiON line was further enhanced during the quarter as the
company announced that its high-end AV 25000 NUMA and AV 8700 NT
servers and mid-range AV 3700 and AV 3704R systems are shipping with
Intel's powerful new 500-MHz Pentium III Xeon processors.
Also during the quarter, the company reinforced its leading
position in the healthcare marketplace with a number of announcements,
including an expansion of its Internet capabilities through agreements
with HealthGate Data Corp and the Harmonie Group, and an alliance with
MarkCare Medical Systems and WorldCare Technologies to provide
clinical information management solutions combining telemedicine and
PACS (Picture Archiving and Communications Systems).
Earlier this week, Data General played a major role in support of
Microsoft's Windows 2000 Beta 3 operating system launch at the Spring
Comdex trade show. The company announced its Jump Start services
program that is designed to take customers from analysis and planning
through the actual deployment of the forthcoming Microsoft enterprise
operating system. For the first six months of fiscal 1999, Data
General reported net income of $18.2 million, or $.35 per share on a
diluted basis. For the same period last year, the company reported a
net loss of $1.0 million or $.02 per share.
The results include a gain of $7.5 million, or $.15 per share,
resulting from a settlement with the Internal Revenue Service related
to taxes paid during the company's 1983 through 1991 fiscal years, and
an additional gain of $6 million or $.12 per share, from the sale of
an investment.
Revenues for the first two quarters of fiscal 1999 totaled $720.9
million, compared to $727.1 million for the first six months of 1998.
Mr. Skates added, "Data General is well positioned to resume
revenue growth with our leadership position in fibre channel storage
technology and storage-area networking, and 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 1998 fiscal year which ended September 26,
1998, and first 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 Six Months Ended
Mar. 27, Mar. 28, Mar. 27, Mar 28,
1999 1998 1999 1998
Revenues:
Product $ 257.7 $ 263.7 $ 526.5 $ 530.9
Service 97.6 98.1 194.4 196.2
Total revenues 355.3 361.8 720.9 727.1
Costs and expenses:
Cost of product
revenues 177.1 190.7 361.3 379.9
Cost of service
revenues 61.4 63.1 122.2 123.3
Research and
development 28.6 28.9 57.5 56.3
Selling, general,
and administrative 86.3 85.1 172.8 169.5
Total costs and
expenses 353.4 367.8 713.8 729.0
Income (loss)
from operations 1.9 (6.0) 7.1 (1.9)
Interest income 3.1 3.4 6.1 6.9
Interest expense 3.5 3.6 7.3 7.2
Other income .6 2.2 6.0 2.2
Income (loss)
before income taxes 2.1 (4.0) 11.9 0.0
Income tax
provision (benefit) .4 .5 (6.3) 1.0
Net income (loss) $ 1.7 $ (4.5) $ 18.2 $ (1.0)
Basic income
(loss) per share $ 0.03 $ (0.09) $ 0.36 $ (0.02)
Weighted average
shares outstanding
- Basic 50.3 48.9 50.1 48.8
Diluted income
(loss) per share $ 0.03 $ (0.09) $ 0.35 $ (0.02)
Weighted average
shares outstanding
- Diluted 51.6 48.9 51.4 48.8
DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
Mar. 27, Sep. 26,
1999 1998
Assets:
Current assets:
Cash and temporary cash investments $ 137.7 $ 158.2
Marketable securities 152.6 160.4
Receivables, net 293.3 307.4
Inventories 128.9 141.6
Other current assets 30.7 28.4
Total current assets 743.2 796.0
Property, plant, and equipment, net 194.2 180.5
Other assets 95.2 88.6
$ 1,032.6 $ 1,065.1
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable $ 119.8 $ 160.9
Other current liabilities 263.1 269.8
Total current liabilities 382.9 430.7
Long-term debt 212.8 212.8
Other liabilities 26.3 36.6
Total stockholders' equity 410.6 385.0
$ 1,032.6 $ 1,065.1
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CONTACT:
Data General Corp.
Jim Dunlap, 508/898-6546
jim_dunlap@dg.com |
