-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, lLmmLOw5VLsyEiDO2FPYw+M3zoe6OdLNSp7D08xqWJB1ZbWjZ8EjPbrlKXcvLpJW VcBseVOJpV5Ffur+bnfMng== 0000004427-94-000080.txt : 19941116 0000004427-94-000080.hdr.sgml : 19941116 ACCESSION NUMBER: 0000004427-94-000080 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMDAHL CORP CENTRAL INDEX KEY: 0000004427 STANDARD INDUSTRIAL CLASSIFICATION: 3571 IRS NUMBER: 941728548 STATE OF INCORPORATION: DE FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07713 FILM NUMBER: 94559161 BUSINESS ADDRESS: STREET 1: 1250 E ARQUES AVE CITY: SUNNYVALE STATE: CA ZIP: 94088 BUSINESS PHONE: 4087466000 MAIL ADDRESS: STREET 1: 1250 E ARQUES AVE CITY: SUNNYVALE STATE: CA ZIP: 94088 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended September 30, 1994 Commission file no. 1-7713 AMDAHL CORPORATION (Exact name of registrant as specified in its charter) Delaware 94-1728548 (State of incorporation) (I.R.S. Employer Identification No.) 1250 East Arques Avenue Sunnyvale, California 94088-3470 (Address of principal executive offices)(Zip code) Registrant's telephone number: (408) 746-6000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Number of shares of common stock, $.05 par value, outstanding at November 9, 1994: 116,480,633. PART I. FINANCIAL INFORMATION AMDAHL CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) The following unaudited consolidated financial statements reflect, in the opinion of management, all adjustments (which, other than the restructuring charges described in Management's Discussion and Analysis of Financial Condition and Results of Operations, include only normal recurring adjustments) necessary to present fairly the financial position as of the dates and results of operations for the periods indicated. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the Securities and Exchange Commission rules and regulations. Amdahl Corporation (the Company) believes the information included in the following report on Form 10-Q, when read in conjunction with the financial statements and related notes included in the Company's 1993 Annual Report to Stockholders, not to be misleading. The results of operations for the nine months ended September 30, 1994, are not necessarily indicative of results for the entire year ending December 30, 1994. AMDAHL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1994 AND DECEMBER 31, 1993 ---------------------------------------- (Dollars in thousands)
1994 1993 ----------- ----------- Assets Current assets: Cash and cash equivalents $ 425,007 $ 149,484 Short-term investments 169,700 103,585 Receivables, net of allowances 251,377 307,747 Inventories - Purchased materials 71,271 134,615 Systems in process 167,890 233,560 Finished goods 98,054 142,527 Prepaid expenses and deferred tax benefit 40,623 53,629 ----------- ----------- Total current assets 1,223,922 1,125,147 ----------- ----------- Long-term receivables and other assets 38,687 45,620 ----------- ----------- Property and equipment, at cost Leased systems 47,088 60,229 System spares 387,541 418,057 Production and data processing equipment 464,750 667,137 Office furniture, equipment, and improvements 148,315 158,062 Land and buildings 129,755 177,791 ----------- ----------- 1,177,449 1,481,276 Less - Accumulated depreciation and amortization (814,428) (979,856) ----------- ----------- Property and equipment, net 363,021 501,420 ----------- ----------- $ 1,625,630 $ 1,672,187 =========== =========== Liabilities and stockholders' equity Current liabilities: Notes payable and short-term debt $ 18,148 $ 137,056 Accounts payable 58,323 54,331 Accounts payable - stockholder (Fujitsu Limited) 55,787 18,092 Accrued liabilities 497,331 561,281 ----------- ----------- Total current liabilities 629,589 770,760 ----------- ----------- Long-term debt - stockholder (Fujitsu Limited) 80,000 - ----------- ----------- Long-term liabilities 45,923 52,208 ----------- ----------- Deferred income taxes 39,192 59,013 ----------- ----------- Stockholders' equity: Common stock, $.05 par value - Authorized - 200,000,000 shares Outstanding - 115,990,000 at September 30, 1994 and 114,578,000 shares at December 31, 1993 5,800 5,729 Additional paid-in capital 515,901 507,895 Retained earnings 301,583 267,664 Cumulative translation adjustments 9,375 8,918 Unrealized holding losses on securities (1,733) - ----------- ----------- Total stockholders' equity 830,926 790,206 ----------- ----------- $ 1,625,630 $ 1,672,187 =========== ===========
AMDAHL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- (In thousands, except per common share amounts)
FOR THE THREE MONTHS ENDED SEPT. 30, 1994 SEPT. 24, 1993 --------------- --------------- REVENUES Equipment sales $ 218,941 $ 256,822 Equipment lease, maintenance and other 145,269 136,851 -------------- -------------- 364,210 393,673 -------------- -------------- COST OF REVENUES Equipment sales 149,604 206,301 Equipment lease, maintenance and other 76,461 82,108 -------------- -------------- 226,065 288,409 -------------- -------------- Gross margin 138,145 105,264 -------------- -------------- OPERATING EXPENSES Engineering and development 49,068 84,449 Marketing, general and administrative 77,943 84,596 Restructuring charges - 235,000 -------------- -------------- 127,011 404,045 -------------- -------------- Income (loss) from operations 11,134 (298,781) -------------- -------------- INTEREST Income 7,032 5,983 Expense (2,673) (4,132) -------------- -------------- 4,359 1,851 -------------- -------------- Income (loss) before provision for (benefit from) income taxes 15,493 (296,930) PROVISION FOR (BENEFIT FROM) INCOME TAXES 1,200 (21,200) -------------- -------------- NET INCOME (LOSS) $ 14,293 $ (275,730) ============== ============== PER COMMON SHARE AMOUNTS: Net income (loss) $ .12 $ (2.41) ============== ============== Average outstanding shares 119,234 114,219 ============== ============== DIVIDENDS PER COMMON SHARE - - ============== ==============
AMDAHL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- (In thousands, except per common share amounts)
FOR THE NINE MONTHS ENDED SEPT. 30, 1994 SEPT. 24, 1993 --------------- --------------- REVENUES Equipment sales $ 708,379 $ 831,476 Equipment lease, maintenance and other 431,531 406,116 ------------- ------------- 1,139,910 1,237,592 ------------- ------------- COST OF REVENUES Equipment sales 493,665 655,200 Equipment lease, maintenance and other 238,517 255,017 ------------- ------------- 732,182 910,217 ------------- ------------- Gross margin 407,728 327,375 ------------- ------------- OPERATING EXPENSES Engineering and development 155,851 259,200 Marketing, general and administrative 225,824 260,475 Restructuring charges - 478,000 ------------- ------------- 381,675 997,675 ------------- ------------- Income (loss) from operations 26,053 (670,300) ------------- ------------- INTEREST Income 16,915 18,824 Expense (7,199) (15,406) ------------- ------------- 9,716 3,418 ------------- ------------- Income (loss) before provision for (benefit from) income taxes 35,769 (666,882) PROVISION FOR (BENEFIT FROM) INCOME TAXES 1,850 (119,000) ------------- ------------- Income (loss) before change in accounting principle 33,919 (547,882) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE - 8,746 ------------- ------------- NET INCOME (LOSS) $ 33,919 $ (539,136) ============= ============= PER COMMON SHARE AMOUNTS: Income (loss) before change in accounting principle $ .29 $ (4.82) Effect of change in accounting principle - .08 ------------- ------------- Net income (loss) $ .29 $ (4.74) ============= ============= Average outstanding shares 118,851 113,729 ============= ============= DIVIDENDS PER COMMON SHARE $ - $ .0250 ============= =============
AMDAHL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (In thousands)
FOR THE NINE MONTHS ENDED SEPT. 30, 1994 SEPT. 24, 1993 --------------- --------------- Cash and cash equivalents at beginning of period $ 149,484 $ 173,012 ------------ ------------ Cash flows from operating activities: Net income (loss) 33,919 (539,136) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 106,204 161,238 Restructuring charges - 478,000 Deferred income tax provision (19,652) (66,087) (Gain) loss on dispositions of property, plant and equipment (4,688) 1,895 Decrease in receivables 54,673 306,369 Decrease in inventories 211,859 48,196 Decrease in prepaid expenses and deferred tax benefit 12,389 1,144 Decrease in long-term receivables and other assets 6,157 16,090 Increase (decrease) in accounts payable 42,624 (97,332) Decrease in accrued liabilities (62,605) (132,159) Decrease in long-term liabilities (5,999) (2,738) -------------- -------------- Net cash provided by operating activities 374,881 175,480 -------------- -------------- Cash flows from investing activities: Increase in short-term investments (67,848) (33,524) Capital expenditures: Leased systems (15,091) (12,943) System spares (2,804) (50,100) Other property and equipment (34,556) (31,311) Proceeds from dispositions of property, plant and equipment 47,944 37,650 -------------- ------------- Net cash used for investing activities (72,355) (90,228) -------------- -------------- Cash flows from financing activities: Increase (decrease) in notes payable and short-term debt 11,958 (80,005) Repayments of borrowings under revolving credit agreement (130,000) (120,000) Long-term borrowings 80,000 - Sale of common stock and exercise of options 8,076 7,207 Dividends paid - (5,676) -------------- -------------- Net cash used for financing activities (29,966) (198,474) -------------- -------------- Effect of exchange rate changes on cash 2,963 (463) -------------- -------------- Net increase (decrease) in cash and cash equivalents 275,523 (113,685) -------------- -------------- Cash and cash equivalents at end of period $ 425,007 $ 59,327 ============== ==============
AMDAHL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The accompanying interim financial statements and related notes should be read in conjunction with the financial statements and related notes included in the Company's 1993 Annual Report to Stockholders. RELATIONSHIP WITH FUJITSU LIMITED During the third quarter of 1994 the Company recognized equipment sales to Fujitsu Limited (Fujitsu) under distributorship arrangements which contributed $6,049,000 and $2,602,000 to equipment sales and gross margin, respectively, compared to $5,575,000 and $2,871,000 in the third quarter of 1993 ($24,575,000 and $9,279,000 for the first nine months of 1994 and $7,844,000 and $4,104,000 for the first nine months of 1993). In the third quarters of 1994 and 1993 the Company charged engineering and development expense $241,000 and $3,974,000 ($2,279,000 and $5,696,000 for the first nine months of 1994 and 1993), respectively, for services and materials supplied by Fujitsu. Amounts due from Fujitsu included in receivables were $17,127,000 and $35,931,000 as of September 30, 1994 and December 31, 1993, respectively. In January 1994 the Company and Fujitsu entered into an agreement under which Fujitsu would provide loans to the Company in an aggregate amount not to exceed $100,000,000. Such loans bear interest at a rate based upon the London Interbank Offered Rate. Any outstanding loan balance is payable to Fujitsu on January 28, 1997. At September 30, 1994, $80,000,000 was outstanding under this agreement. Interest expense associated with the loan was $1,284,000 and $2,888,000 in the third quarter and first nine months of 1994, respectively. SUPPLEMENTARY CASH FLOW DISCLOSURE Income taxes of $585,000 were paid by the Company in the first nine months of 1994, and income taxes of $13,278,000 were refunded to the Company in the first nine months of 1993. Interest paid on all borrowings was $6,394,000 and $15,169,000 for the first nine months of 1994 and 1993, respectively. AMDAHL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management's Discussion and Analysis should be read in conjunction with the Management's Discussion and Analysis included in the Company's 1993 Annual Report to Stockholders. Results of Operations Third quarter of 1994 compared to third quarter of 1993: Revenues decreased 7% to $364,210,000 in the third quarter of 1994 from $393,673,000 in the third quarter of 1993, and decreased 8% in the first nine months of 1994 as compared to the first nine months of 1993. Equipment sales decreased 15% in the third quarter of 1994 from the third quarter of 1993 as well as in the first nine months of 1994 from the first nine months of 1993. Equipment sales of the 5995M mainframe computers increased in the third quarter of 1994 as increased revenues from higher shipment volumes more than offset the impact of pricing declines when compared to the third quarter of 1993. The rate of price declines in 1994 was less severe than the declines experienced in 1992 and 1993, which the Company believes indicates an improved balance between supply and demand in the mainframe marketplace. Storage product equipment sales decreased as customers awaited shipments of the Company's new storage products, which will begin shipping in the fourth quarter of 1994. Equipment sales of the older lines of mainframe computers also decreased. Equipment lease, maintenance and other revenues increased 6% in the third quarter of 1994 from the third quarter of 1993 as well as in the first nine months of 1994 as compared to the first nine months of 1993, reflecting increased maintenance revenues from a larger customer installed base as well as increased sales of Huron software licenses. The gross margin was 38% of revenues in the third quarter of 1994 and 27% in the third quarter of 1993 and was 36% of revenues in the first nine months of 1994 and 26% in the first nine months of 1993. The improvement in margins was primarily due to lower production costs resulting from reductions in excess manufacturing capacity. Also, gross margins on maintenance service revenues improved, reflecting benefits from the cost reduction actions taken in the field service organization in 1993 and 1994. Operating expenses, excluding third quarter 1993 restructuring charges of $235,000,000, declined $42 million or 25% from the third quarter of 1993 to the third quarter of 1994 and were 35% and 43% of revenues in the third quarters of 1994 and 1993 respectively. Year-to-date operating expenses in 1994 and 1993, excluding first and third quarter 1993 restructuring charges of $478,000,000, declined $138 million or 27% and were 33% and 42% of revenues in 1994 and 1993 respectively. Third quarter 1994 engineering and development expenses decreased $35 million or 42% when compared to the third quarter of 1993, primarily due to cancellation of certain of the Company's product development activities and a reduction in the scope of other development projects. Engineering and development expenses also decreased due to the November 1993 agreement with Fujitsu for the joint development of the next generation of IBM compatible systems. Third quarter 1994 net interest income increased $2,508,000 from the third quarter of 1993 due primarily to an increase in average net cash. Although the Company's financial performance improved during the third quarter of 1994, near-term profitability will depend on sustained favorable economic conditions in the Company's primary markets, continued stabilization of pricing for large mainframe systems, and the ability of the market for mainframe systems to grow in the face of competition from smaller, less costly computer systems. Also, stabilization of pricing is dependent on continued balance between the supply of mainframe systems and customer demand. In the latter part of 1993 the Company reorganized along lines of business consisting of its compatible processors, storage products, maintenance and consulting services, open systems and Huron software businesses, in order to enable the Company to more effectively enhance and expand its product offerings. Because of the factors noted above affecting its traditional mainframe business, the Company intends to rely increasingly on its ability to utilize lower cost technologies in future compatible processor products and on the ability of its other lines of business to contribute a higher percentage of revenues and profits to overall operations. Successful implementation of this strategy is, however, subject to the inherent risks associated with the introduction of new technologies and with the entry into new markets not related to the Company's traditional compatible processor business. In July 1994 International Business Machines Corporation (IBM) gave the European Commission one year's advance notice of IBM's intention to terminate the Undertaking which it entered into with the Commission in 1984. The Undertaking called upon IBM to disclose interface specifications related to its System 370/390 mainframes to qualified competitors, including Amdahl. Since 1986 the Company has utilized specifications made available pursuant to the Undertaking in maintaining compatibility with new features and functions which IBM has announced from time to time. At the present time the Company has no reason to believe that, upon termination of the Undertaking, IBM will depart from its past practice of disclosing interface specifications. However, a failure by IBM to continue to disclose required information on a timely basis would require Amdahl to rely extensively on technically difficult reverse engineering procedures. In such a case, should IBM continue to introduce significant architectural changes to its System 390 mainframes, the ability of the Company's products to remain compatible in the future on a timely basis could be adversely impacted. The Company is unable to predict what effect this would have on future operating results. Financial Condition September 30, 1994, compared to December 31, 1993: The Company's net cash and investment position (cash and short-term investments net of short-term and long-term borrowings) improved by $381 million, from $117 million at December 31, 1993 to $498 million at September 30, 1994. Cash, cash equivalents and short- term investments increased $342 million and borrowings decreased $39 million. Receivables decreased $56 million primarily due to the collection of income tax refunds and a decrease in amounts due from Fujitsu. The Company's continued efforts to reduce inventory levels resulted in a decline of $173 million. Net property and equipment decreased $138 million due primarily to the downsizing of internal data centers as well as ongoing depreciation charges. Accrued liabilities decreased $64 million due primarily to charges against accrued restructuring costs, which decreased from $146 million at December 31, 1993 to $92 million at September 30, 1994. At December 31, 1993, $130,000,000 classified as short-term debt was outstanding under the Company's revolving credit agreement with a group of banks. This amount was repaid by the Company upon expiration of the facility on January 31, 1994. At September 30, 1994, $80,000,000 was outstanding under the Fujitsu loan agreement (see Notes to the Consolidated Financial Statements). Liquidity The nature of the computer industry, combined with the current economic environment, makes it very difficult for the Company to predict future liquidity requirements with certainty. However, the Company believes that existing cash and borrowings under its loan agreement with Fujitsu will be adequate to finance continuing operations, investments in plant and equipment, inventories and spare parts, and expenditures for the development of new products at least through the next twelve months. The Company also expects that other sources of capital will be available to meet any additional financing requirements during and beyond 1994. PART II. OTHER INFORMATION Item 1. Legal Proceedings: Not applicable. Item 2. Changes in Securities: Not applicable. Item 3. Defaults upon Senior Securities: Not applicable. Item 4. Submission of Matters to a Vote of Security Holders: Not applicable. Item 5. Other information: Not applicable. Item 6. Exhibits and Reports on Form 8-K: (a) Exhibits: Not applicable. (b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter ended September 30, 1994. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMDAHL CORPORATION Date: November 11, 1994 By: /s/ E. Joseph Zemke E. Joseph Zemke President and Chief Executive Officer Date: November 11, 1994 By: /s/ Ernest B. Thompson Ernest B. Thompson Vice President and Controller (Principal Accounting Officer) EX-27 2
5 1,000 9-MOS DEC-30-1994 SEP-30-1994 425,007 169,700 251,377 0 337,215 1,223,922 1,177,449 814,428 1,625,630 629,589 80,000 5,800 0 0 825,126 1,625,630 708,379 1,139,910 493,665 732,182 381,675 0 7,199 35,769 1,850 33,919 0 0 0 33,919 .29 .29
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