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|d|i|g|i|t|a|l| Worldwide News LIVE WIRE
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Digital reports year-end results
Digital today announced operating results for the fourth quarter and full
fiscal year that ended June 27, 1992.
For the quarter, the Company absorbed an operating loss of $188,069,000,
before a restructuring charge of $1.5 billion. This charge was primarily
for employee separations, facility consolidations, and related
administrative costs. The net result for the quarter was a loss of
$ 1,855,132,000 or $14.76 a share, compared with a loss of $871,318,000 or
$7.08 per share for the same period a year ago.
For the full fiscal year ended June 27, 1992, net loss was $2,795,507,000
compared with a loss of $617,427,000 last year. The current year's loss
includes a charge of $485,495,000, applied retroactively to the first
quarter of the fiscal year, for the one-time cumulative effect of an
accounting change, created by the implementation of an Employer's Accounting
Digital reports year-end results, cont'd.
for Postretirement Benefits other than Pensions. Results for the first three
quarters also have been restated to reflect the impact of $51 million
additional expense resulting from the change in accounting as of the
beginning of the fiscal year. On a per share basis, the loss for the year
was $22.39, including $3.89 for the one-time cumulative effect of the
accounting change. This compares with a loss of $5.08 last year.
For the quarter, the Company reported total operating revenues of
$3,905,784,000 down 1% from the $3,944,859,000 of a year ago. For the full
fiscal year, total operating revenues were $13,930,872,000, essentially flat
with $13,911,004,000 last year.
Kenneth H. Olsen, President, said: "In 1992 Digital unveiled the fastest and
most powerful chip technology in the industry. At the same time, our
financial results continue to disappoint us. We face an economic slowdown
Digital reports year-end results, cont'd.
in virtually every major geography, particularly in Europe and Asia. We are
taking actions designed to increase revenues, increase market share, reduce
costs and improve our efficiency."
Product revenues declined due to several factors including a continuation of
weak economic conditions, highly competitive pricing, and the negative
impact of foreign exchange rate movements. The Company continued to ship
more computer systems compared with the prior year, at a lower average price
per system. The Company's services revenues continued to grow, so total
revenues were essentially flat year-to-year. The Company's overall costs
remain too high for this level of revenue, resulting in operating losses for
both the quarter and the year.
John F. Smith, Senior Vice President, Operations, commented on the results.
"Our game plan for recovery remains intact: continue cost reductions,
Digital reports year-end results,
generate revenue growth, and manage the balance sheet. While we've made
progress in some areas, we need to continue the effort and do more. We
intend to continue the cost reduction efforts," he added. "As a result, the
Company absorbed a restructuring charge of $1.5 billion to be used for
employee separations, plant consolidations and associated costs. While our
goal is to return to profitability as soon as possible, for the remainder of
1992 we remain cautious about both revenues and profits due to the
uncertainties in both the industry and worldwide economies."
"To generate revenue growth in the current environment, we have several
efforts under way," Smith continued. "We demonstrated our industry solutions
to over 30,000 existing and new customers at our DECworld exhibition in May.
Recently we laid out a clear and consistent upgrade path to take our
customers into the future with Alpha, and we are encouraged by the customer
response. Last week we announced new VAX systems that are board upgradeable
Digital reports year-end results, to the Alpha platform."
"Our cost reduction efforts continue," Smith added. "Total headcount was
126,000 at the end of fiscal year 1989. Over the last two years, we have
added an additional 11,000 employees primarily through acquisitions while
reducing overall headcount. At the end of this year headcount was 113,800,
for a total reduction of more than 23,000 since 1989. This included 3,700
people in the U.S. who left through a special early retirement program last
quarter. In addition, over the past few years, total occupied floor space
has declined by 9.2 million square feet, due to facilities that have been
closed or consolidated," Smith added.
"While total cash was reduced from $1.9 billion at the beginning of the year,
to $1.3 billion due primarily to restructuring costs, acquisitions,
investments and the operating loss, we have a focused effort on cash
Digital reports year-end results,
conservation through management of receivables, inventories and working
capital. In addition, the Company's substantial debt capacity leaves it well
positioned to ensure adequate cash balances to support operations while
continuing to maintain a conservative capital structure."
FOURTH QUARTER ENDED:
JUNE 27, 1992 JUNE 29, 1991
PRODUCT SALES $2,143,345,000 $2,343,195,000
SERVICE & OTHER REVENUES 1,762,439,000 1,601,664,000
TOTAL OPERATING REVENUES 3,905,784,000 3,944,859,000
COST OF PRODUCT SALES 1,220,059,000 1,113,891,000
SERVICE EXPENSE 1,085,419,000 910,255,000
TOTAL COST OF SALES 2,305,478,000 2,024,146,000
RESEARCH & ENGINEERING 485,241,000 445,572,000
SELLING
GENERAL & ADMINISTRATIVE 1,303,134,000 1,281,016,000
RESTRUCTURING CHARGE 1,500,000,000 1,100,000,000
NET INTEREST (INCOME)/EXPENSE (13,783,000) (16,091,000)
LOSS BEFORE INCOME TAXES (1,674,286,000) (889,784,000)
INCOME TAXES 180,846,000 (18,466,000)
NET LOSS (1,855,132,000) (871,318,000)
AVERAGE NUMBER OF SHARES
OUTSTANDING 125,691,368 122,986,814
NET LOSS PER SHARE $(14.76) $(7.08)
OPERATING RESULTS FOR THE TWELVE MONTHS ENDED:
JUNE 27, 1992 JUNE 29, 1991
PRODUCT SALES $7,696,029,000 $8,298,515,000
SERVICE & OTHER REVENUES 6,234,843,000 5,612,489,000
TOTAL OPERATING REVENUES 13,930,872,000 13,911,004,000
COST OF PRODUCT SALES 4,248,118,000 3,905,355,000
SERVICE EXPENSE 3,883,705,000 3,373,025,000
TOTAL COST OF SALES 8,131,823,000 7,278,380,000
RESEARCH & ENGINEERING 1,753,898,000 1,649,380,000
SELLING
GENERAL & ADMINISTRATIVE 4,680,822,000 4,471,629,000
RESTRUCTURING CHARGE 1,500,000,000 1,100,000,000
NET INTEREST (INCOME)/EXPENSE (57,659,000) (68,665,000)
LOSS BEFORE INCOME TAXES&
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE (2,078,012,000) (519,720,000)
INCOME TAXES 232,000,000 97,707,000
LOSS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING
PRINCIPLE (2,310,012,000) (617,427,000)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF TAX (485,495,000) ---
NET LOSS (2,795,507,000) (617,427,000)
AVERAGE NUMBER OF SHARES
OUTSTANDING 124,864,122 121,557,705
LOSS PER SHARE AFTER TAXES
BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $(18.50) $(5.08)
LOSS PER SHARE ON CUMULATIVE
EFFECT OF ACCOUNTING CHANGE $ (3.89) ---
NET LOSS PER SHARE $(22.39) $(5.08)
Q4 - FY92
PRODUCT SALES................................... $2,143,345,000
SERVICE AND OTHER REVENUES...................... 1,762,439,000
TOTAL OPERATING REVENUES........................ 3,905,784,000
COST OF PRODUCT SALES........................... 1,220,059,000
SERVICE EXPENSE................................. 1,085,419,000
TOTAL COST OF SALES............................. 2,305,478,000
GROSS MARGIN.... 41%
RESEARCH & ENGINEERING.......................... 485,241,000
SG&A (SELLING, GENERAL & ADMINISTRATIVE)........ 1,303,134,000
RESTRUCTURING CHARGE............................ 1,500,000,000
OPERATING INCOME/(LOSS)......................... (1,688,069,000)
INTEREST INCOME................................. (24,447,000)
INTEREST EXPENSE................................ 10,664,000
INCOME/(LOSS) BEFORE INCOME TAXES............... (1,674,286,000)
TAXES (TOTAL FEDERAL, STATE & FOREIGN).......... 180,846,000
NET INCOME/(LOSS)............................... (1,855,132,000)
EPS............................................. $(14.76)
AVERAGE SHARES OUTSTANDING...................... 125,691,368
BALANCE SHEET/CASH FLOWS - Q4 FY92
CASH & TEMPORARY CASH INVESTMENTS............... $1,337,172,000
ACCOUNTS RECEIVABLE (NET)....................... 3,594,268,000
(RE: A.R. DAYS SALES OUTSTANDING).............. 83 days
INVENTORIES: RAW MATERIALS........ 264,871,000
WORK IN PROCESS...... 495,632,000
FINISHED GOODS....... 853,531,000
TOTAL INVENTORIES $1,614,034,000
PREPAID EXPENSES................................ 352,570,000
DEFERRED INCOME TAX CHARGES, NET................ 222,794,000
TOTAL CURRENT ASSETS............................ 7,120,838,000
NET PROPERTY, PLANT & EQUIPMENT................. 3,569,702,000
TOTAL ASSETS.................................... 11,284,309,000
SHORT TERM DEBT (CURRENT PORTION OF LTD)........ 49,061,000
TOTAL CURRENT LIABILITIES....................... 5,106,048,000
DEFERRED TAX CREDITS NET........................ 23,033,000
LONG TERM DEBT.................................. 41,636,000
POSTRETIREMENT BENEFITS......................... 1,182,658,000
TOTAL LIABILITIES............................... 6,353,375,000
STOCKHOLDER'S EQUITY............................ 4,930,934,000
BOOK VALUE PER SHARE............................ $38.58
CAPITAL SPENDING (ADDITION TO PP&E) - QUARTER... 260,987,000
DEPRECIATION & AMORTIZATION - QUARTER... 205,198,000
CAPITAL SPENDING (ADDITION TO PP&E) - YEAR...... 710,436,000
DEPRECIATION & AMORTIZATION - YEAR...... 832,828,000
NON U.S. REVENUES - QUARTER... 2,479,764,000
or 63%
NON U.S. REVENUES - YEAR...... 8,798,864,000
or 63%
TOTAL EMPLOYEE POPULATION APPROXIMATELY......... 113,800
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