Financial: Data General Reports Results for First Quarter of Fiscal 1999 - Company Financial Information

EDGE, On & About AT&T, Jan 25, 1999

Data General Corporation Wednesday reported net income of $16.5 million, or $.32 per share on a diluted basis, on revenues of $365.6 million, for its first quarter of fiscal 1999, which ended December 26, 1998. The results include a gain of $7.5 million, or $.15 per diluted 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 $5.4 million or $.10 per diluted share, from the sale of an investment.

The company reported net income of $3.5 million, or $.07 per diluted share, on revenues of $365.3 million for the first quarter of fiscal 1998. Operating income for the first quarter was $5.2 million, compared with operating income of $4.1 million for the comparable quarter of fiscal 1998. Data General President and Chief Executive Officer Ronald L. Skates said, "The operating results were driven by improved product margins, primarily from increased sales of our high-end NUMA technology based AViiON servers. We also benefited from the cost savings that resulted from the worldwide restructuring that we implemented last year." "Our CLARiiON full fibre channel storage products also continued to show solid growth, and now represent approximately half of our storage business," added Mr. Skates. Further commenting on the AViiON business, Mr. Skates said, "We are pleased with the continuing demand we are seeing for our high-end servers. This includes our enterprise NT servers, our AV 20000 NUMA technology based UNIX servers, and our new AV 25000 NUMA servers which began shipping in volume during the first quarter." The AV 25000, which can support up to 64 processors, also serves as the platform for the company's AVFlex architecture which was introduced this past October. With AVFlex, an AV 25000 server can be partitioned into multiple independent UNIX and NT systems operating simultaneously. "Our NT server business again grew year over year and currently represents 60 percent of our total Intel based AViiON revenues," said Mr. Skates. During the quarter, the AViiON NT line was strengthened by a number of new products, including a new high-end server, the AV 8700, the industry's first NT server designed specifically for clustering. In addition, Data General announced it would be the first company to guarantee 99.9 percent uptime for businesses using Microsoft's new SQL Server 7.0 database software with their Windows NT based AViiON servers. Also, in conjunction with Microsoft, Data General dedicated the industry's first Healthcare Solutions Center last month at the company's headquarters. The center features a laboratory that allows software developers and healthcare organizations to test the scalability of Microsoft SQL Server 7.0 applications and the interoperability of ActiveX for Healthcare-compliant solutions on Data General's server platform. Data General and Microsoft also showcased a powerful demonstration of SQL Server 7.0 scalability with a multi-Terabyte medical data warehouse at Comdex, the industry's largest trade show, in November. Commenting on the CLARiiON business, Mr. Skates said, "As the only major storage vendor shipping full fibre RAID disk arrays, Data General is the leader in this advanced technology. Fibre channel is fast becoming the industry's primary storage interface and is the underlying technology for storage area networks." Mr. Skates added, "We have been increasing our investment in CLARiiON by adding additional sales, marketing and research and development resources. While this investment will impact growth in near-term profitability, it is imperative that we add these additional resources so that we can fully capitalize on the huge fibre channel and storage-area networking market opportunities before us." Data General strengthened its position in the storage-area networking (SAN) marketplace during the quarter with the announcement of a technology alliance with networking leader 3Com Corporation. The two companies are working together to deliver the technologies necessary to integrate SANs into existing Windows NT enterprise network infrastructures. The CLARiiON fibre channel product line also was enhanced late in the quarter with the introduction of the FC 5703, a powerful storage solution that gives users enterprise-level features at entry-level prices. Mr. Skates concluded, "Our strategic focus is on providing storage and high-end computing solutions. With our enterprise server strategy and the growing market for our fibre channel storage systems and storage-area networks, we are well positioned for revenue growth." Information on Data General, its products and services, can be accessed on the Internet at http://www.dg.com. Additional information on the CLARiiON Advanced Storage Division can be accessed at http://www.clariion.com.