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
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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.