Amdahl Announces Fourth-Quarter and 1996 Financial Results.

SUNNYVALE, Calif.--(BUSINESS WIRE)--Jan. 29, 1997--Amdahl Corporation today reported fourth-quarter financial results that included a profit from operations but a loss as a result of restructuring charges. Revenues were up substantially from the fourth quarter a year ago, reflecting the introduction of several new hardware products in the latter half of 1996 and the acquisition and internal growth of major new services businesses.

"This has obviously been a very difficult year financially, but it has also been a year of sweeping change and significant progress toward the achievement of long-range strategic goals," noted John C. Lewis, Amdahl chairman and chief executive officer.

The restructuring charge of $40 million, or approximately 33 cents per share, covers costs of reducing certain sectors of its workforce and facilities as Amdahl continues to make the transition to being a more service- and solutions-oriented company. The restructuring will reduce general, administrative, and support costs to levels more appropriate to current business requirements.

For the three months ended December 27, 1996, the net loss amounted to $33,890,000 or 28 cents per share on revenues of $491,848.000. In the fourth-quarter a year ago, the company reported a net loss of $38,366,000 or 32 cents per share, which included charges of roughly $53 million to write down the value of certain hardware assets and write off in-process research and development associated with Amdahl's acquisition of DMR Group Inc., a major consulting and professional services company. Fourth-quarter revenues in 1995 totaled $416,180,000.

Earlier in 1996, Amdahl also took nonrecurring charges of approximately $151 million or $1.25 per share to further reduce the value of hardware assets as the introduction of new models neared and to write off in-process research and development after it acquired TRECOM Business Systems, another major consulting and services firm. For 1996 as a whole, net losses including all special charges amounted to $326,682,000 or $2.71 per share on revenues of $1,631,549,000. That compares to net income of $28,527,000 or 24 cents per share and revenues of $1,516,388,000 in 1995.

"We entered 1996 knowing we would be undergoing transitions to new products in virtually every one of our hardware product lines, something that's never occurred before," Lewis said. "At substantial cost, we've now successfully completed those transitions and exit the year with complete new lines of mainframe computers, storage products, and servers.

"Moreover," he added, "our long-range strategy is to be a more complete supplier of total business solutions based on information technology. Our assimilation of DMR and TRECOM during 1996 represents significant progress toward that goal. Over the past year, we've evolved from being primarily a manufacturer of computer hardware to being a much less capital-intensive company. In that same period, our service and software businesses have grown to the point where they now contribute two-thirds of revenues."

As part of its evolution, Amdahl's operational requirements have changed, necessitating the restructuring charge announced today as the company better aligns employee mix and operating expenses with its new business model. Lewis pointed out, however, that the restructuring does not represent an overall downsizing and that growth as well as profitability remain a priority for 1997.

Amdahl's total workforce has grown in each of the last three years and is expected to continue growing in 1997. The company exited 1996 with approximately 9,900 employees, up from 8,200 at the end of 1995 and 5,600 at the end of 1994. Most of the hiring in 1997 will be in the services sectors of its businesses, particularly the growing organization that modifies software programs to accommodate computational changes associated with arrival of the year 2000. -0-

Note: Certain of the statements contained in this news release are forward looking and involve risks and uncertainties, including the degree of success of new product introductions and service company acquisitions and their effect on strategic goals, profitability, growth, or other matters that may be detailed in Amdahl's reports filed with the U.S. Securities and Exchange Commission, including the report on Form 10-Q for the quarter ended September 27, 1996.

Amdahl Corporation (AMEX: AMH)
Fourth Quarter Ended          December 27, 1996    December 29, 1995
Revenues                      $    491,848,000     $     416,180,000
Income (Loss) Before Taxes    $    (32,891,000)    $     (35,766,000)
Net Income (Loss)             $    (33,890,000)    $     (38,366,000)
Average Shares Outstanding         121,370,000           119,116,000
Net Income (Loss) Per Share   $           (.28)    $            (.32)
Year Ended                    December 27, 1996    December 29, 1995
Revenues                      $  1,631,549,000     $   1,516,388,000
Income (Loss) Before Taxes    $   (313,682,000)    $      49,977,000
Net Income (Loss)             $   (326,682,000)    $      28,527,000
Average Shares Outstanding         120,510,000        120,383,000(a)
Net Income (Loss) Per Share   $          (2.71)    $          .24(a)

(a)Fully Diluted. (Note: Results of operations in 1995 included fourth-quarter charges of $27,296,000 to write off in-process R&D associated with the acquisition of DMR Group Inc. and $26,000,000 to reduce the book value of certain processor inventories to estimated market value, charges equal to approximately 44 cents per share. Results of operations in 1996 included second-quarter charges of $20,700,000 to write off in-process R&D after acquiring TRECOM Business Systems and $130,000,000 to further write down book value of processor assets and a fourth-quarter charge of $40,000,000 to cover restructuring expenses associated with changes in the company's mix of businesses, charges that combined equal approximately $1.58 per share.)

CONTACT: Amdahl Corporation 

William Stewart, 408/746-6076