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DIGITAL EQUIPMENT CORPORATION REPORTS FIRST QUARTER OPERATING RESULTS

 MAYNARD, Mass., Oct. 20 /PRNewswire/ -- Digital Equipment Corporation (NYSE:DEC), the world's leader in open client/server solutions from personal computing to integrated worldwide information systems, today reported results for its first quarter, which ended Oct. 2, 1993.
 For the quarter, the corporation reported a net loss of $83,185,000 or $.62 per share, compared with a loss of $260,546,000 or $2.04 per share for the first quarter a year ago. The loss for the first quarter 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. For the quarter, the corporation reported total operating revenues of $3,014,948,000 down from $3,314,299,000 for the comparable quarter a year ago.
 Digital President and Chief Executive Officer, Robert B. Palmer commented, "We reduced the operating loss in the quarter by more than $162,000,000 compared with the first quarter of last year, through continued focus on cost controls. Even so, we were disappointed by the revenue declines from last year. The revenue decline in the seasonally soft September quarter was attributable primarily to continued weakness in Europe -- Germany and Italy in particular -- as well as negative effects of foreign currency fluctuations. A slight decline in the U.S. also hurt us. Our operations in Asia continued to show good growth, both in products and services, but not enough to offset declines in other areas," he added.
 "Our focus for this fiscal year remains unchanged," Palmer added. "We are committed to improving profitability while successfully growing the Alpha AXP business."
 William M. Steul, chief financial officer said, "For the fourth consecutive quarter we showed improving operating results over the comparable period of the prior year, driven by a strong emphasis on cost controls and improved efficiency. The effects of the company's restructuring program are on schedule. As a result, Research and Engineering spending declined 22% or $90,760,000 and Selling, General and Administrative spending was down 23%, or $258,980,000 vs. the comparable quarter a year ago."
 "Product gross margins declined five points from last year due primarily to the revenue decline and a continued shift in revenue mix to lower priced, lower margin products. While we achieved double digit growth in both dollars and units in personal computers and in our UNIX workstations businesses, our competitive pricing for PC's and Alpha AXP systems is contributing to lower margins. Service gross margins improved slightly compared with the first quarter of last year," he added.
 Edward E. Lucente, vice president Worldwide Sales and Marketing, noted, "We have several programs taking advantage of our product strengths which are focused on accelerating our growth in key areas. We have initiated targeted programs aimed at selling open client/server products such as workstations, servers and networking products." "Just one week ago, nearly 3000 chief information officers and ee?cutives from our major customers around the world attended announcement events to learn about Digital's open client/server strategy," Lucente added. "The Company's initiative included more than 200 new products and services, major enhancements to the OSF/1 and OpenVMS operating systems, new Alpha AXP and VAX systems all very competitively priced. We also announced symmetric multiprocessing under UNIX, integration software products such as LinkWorks and Tuxedo and industry leading network management software. All of these offerings enable customers to easily move to open client/server computing. Customer reaction was very positive and we expect these capabilities to open up many new opportunities for our Alpha AXP systems," he added. Digital Equipment Corporation is the world's leader in open client/server solutions from personal computing to integrated worldwide information systems. Digital's Alpha AXP platforms, storage, networking, software and services, together with industry-focused solutions from business partners, help organizations compete and win in today's global marketplace.
 /Note To Editors: Alpha AXP, LinkWorks and OpenVMS are trademarks of Digital Equipment Corporation. UNIX and Tuxedo are registered trademarks of UNIX System Laboratories, Inc. OSF/1 is a registered trademark of Open Software Foundation, Inc./
 Digital Equipment Operating Results for the First Quarter Ended:
 Oct. 2, 1993 Sept. 26, 1992
 PRODUCT SALES $1,557,004,000 $1,767,821,000
 SERVICE & OTHER REVENUES 1,457,944,000 1,546,478,000
 TOTAL OPERATING REVENUES 3,0l4,948,000 3,314,299,000
 COST OF PRODUCT SALES 981,4l5,000 1,019,957,000
 SERVICE EXPENSE AND
 COST OF OTHER REVENUES 943,877,000 1,017,650,000
 TOTAL COST OF SALES 1,925,292,000 2,037,607,000
 GROSS MARGIN 36.1 percent 38.5 percent
 RESEARCH & ENGINEERING 3l4,7l7,000 405,477,000
 SELLING GENERAL &
 ADMINISTRATIVE 872,207,000 1,131,187,000
 OPERATING LOSS (97,268,000) (259,972,000)
 OPERATING MARGIN (3.2 percent) (7.8 percent)
 INTEREST INCOME 17,213,000 13,216,000
 INTEREST EXPENSE 19,636,000 3,790,000
 LOSS BEFORE INCOME TAXES AND
 CUMULATIVE EFFECT OF CHANGE
 IN ACCOUNTING PRINCIPLE (99,691,000) (250,546,000)
 PRE-TAX MARGIN (3.3 percent) (7.6 percent)
 INCOME TAXES 3,536,000 10,000,000
 EFFECTIVE TAX RATE 3.5 percent 4.0 percent
 LOSS BEFORE CUMULATIVE
 EFFECT OF CHANGE IN
 ACCOUNTING PRINCIPLE (103,227,000) (260,546,000)
 CUMULATIVE EFFECT OF CHANGE
 IN ACCOUNTING PRINCIPLE,
 NET OF TAX (20,042,000) 0
 NET LOSS (83,185,000) (260,546,000)
 LOSS PER SHARE
 BEFORE CUMULATIVE EFFECT OF
 CHANGE IN ACCOUNTING PRINCIPLE $(0.76) $(2.04)
 EARNINGS PER SHARE ON CUMULATIVE
 EFFECT OF CHANGE IN ACCOUNTING
 PRINCIPLE 0.14 0
 NET LOSS PER SHARE $(0.62) $(2.04)
 AVERAGE NUMBER OF SHARES
 OUTSTANDING 135,010,377 128,001,937
 SELECTED BALANCE SHEET/CASH FLOW DATA - Q1 FY94
 BALANCE SHEET:
 CASH & CASH EQUIVALENTS $ 1,273,830,000
 ACCOUNTS RECEIVABLE, NET 2,858,832,000
 A/R DAYS SALES OUTSTANDING 85 days
 INVENTORIES: RAW MATERIALS $416,384,000
 WORK IN PROCESS 593,833,000
 FINISHED GOODS 910,606,000
 TOTAL 1,920,823,000
 PREPAID EXPENSES & DEFERRED INCOME TAXES 465,822,000
 TOTAL CURRENT ASSETS 6,519,307,000
 NET PROPERTY, PLANT & EQUIPMENT 3,174,490,000
 OTHER ASSETS, NET 931,806,000
 TOTAL ASSETS 10,625,603,000
 BANK LOANS AND CURRENT PORTION OF LTD 19,782,000
 TOTAL CURRENT LIABILITIES 3,607,159,000
 NONCURRENT DEFERRED INCOME TAXES 26,369,000
 LONG-TERM DEBT 1,018,354,000
 POSTRETIREMENT BENEFITS 1,153,854,000
 TOTAL LIABILITIES 5,805,736,000
 STOCKHOLDERS' EQUITY 4,819,867,000
 BOOK VALUE PER SHARE $ 35.68
 CASH FLOW:
 CASH FLOWS FROM OPERATING ACTIVITIES, (247,034,000)
 INCLUDING DEPREC. & AMORT. OF 174,560,000
 CASH FLOWS FROM INVESTING ACTIVITIES, (133,167,000)
 INCLUDING INVESTMENTS IN PP&E OF (167,001,000)
 CASH FLOWS FROM FINANCING ACTIVITIES 10,836,000
 NET DECREASE IN CASH AND CASH EQUIVALENTS (369,365,000)
 NON U.S. REVENUES - QTR 1,810,459,000
 or 60 percent
 EMPLOYEE POPULATION: REGULAR 88,800
 OTHER 4,400
 -0- 10/20/93
 /CONTACT: Bradley D. Allen, 508-493-7182 or Jim Chiafery, 508-493-8009, both of Digital Equipment/
 (DEC)


CO: Digital Equipment Corporation ST: Massachusetts IN: CPR SU: ERN

DD -- NE003 -- 4347 10/20/93 07:58 EDT
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Date:Oct 20, 1993
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