cccdcga@prism.gatech.EDU (Glen Alexander) (04/18/89)
CONTROL DATA ANNOUNCES A SERIES
OF ACTIONS TO IMPROVE PROFITABILITY
MINNEAPOLIS, April 17, 1989 -- Control Data Corporation today
announced a series of actions that will improve its profitability.
The actions include the discontinuance of ETA Systems (ETA), the
Company's supercomputer business, the streamlining of its CYBER
mainframe business, reducing the size of the corporate staff, and a
temporary realignment of its bank financing agreements.
The actions will result in restructuring charges of approximately
$490 million and a workforce reduction of approximately 3,100
employees. Of the estimated charges, $350 million is associated
with the discontinuance of ETA. Actual charges will be recorded in
the second quarter.
In announcing the actions, Robert M. Price, Control Data's
chairman and chief executive officer, said, "By eliminating the
ongoing losses in supercomputers and streamlining the computer
systems business, the Company will be able to focus its energies on
providing CYBER products and services to meet the needs of its
customers.
"At the same time," he said, "we will build on our strengths in
the government systems business, the Imprimis Technology data
storage business, and continue to move aggressively in Control
Data's profitable and growing services businesses such as Arbitron,
Micrognosis and Energy Management Systems."
Price said that the Company's actions should result in a
profitable second half of 1989 and "set the stage for sustained and
growing profitability in 1990 and beyond."
The Company said that while ETA was a technological success, the
operation sustained significant losses and was not expected to be
profitable in the near future. In 1988, the supercomputer business
had operating losses of approximately $100 million.
Control Data will continue to support its current ETA customers,
Price explained. In addition, the Company is evaluating how
selective parts of the ETA technology can be used in future products
to enhance the performance of the upper-end CYBER mainframes.
"In disposing of the ETA assets and in licensing ETA
technology," Price said, "every effort will be made to achieve the
maximum benefit, taking into account the continuing needs of
existing customers and the value of the proprietary technology
involved."
Control Data will focus its computer systems business on the
needs of its current customer base and specific segments of the
engineering, scientific and information markets where it has
significant strengths for future growth. The Company said that this
will allow it to increase the value-added content of its CYBER
mainframes to serve its customers better, while substantially
improving the financial performance of the CYBER business.
Control Data said that an agreement has been reached which
temporarily modifies the earnings and net worth tests under its
current bank agreement. The interim bank arrangement, which is
valid through May 31, 1989, limits borrowings to $30 million and the
letter of credit facility to levels currently outstanding of
$105 million. This facility plus current cash balances are adequate
to meet the Company's immediate needs. The cash requirements of the
Company's restructuring actions are significantly less than the
charges against the results of operations and will occur over time.
However, they will require financing beyond that available under the
current agreement. The Company has begun discussions for a new
financing arrangement which, together with operating cash flows and
asset sales, is expected to satisfy longer-term needs.
In looking to the future, Price said, "We are building a new
Control Data based on the concept of using computers to solve
important and complex problems."
Price said that despite the difficulties of the past three
years, Control Data has made excellent progress in services,
especially in the area of application-specific systems integration.
"Revenues from such businesses have nearly doubled during that
time," he said. "Micrognosis revenues, for example, have grown
40 percent on average over each of the past five years. And, last
year, the Company's Government Systems group received its first
major systems integration contract with the award of the U.S. Air
Force's Advanced Tactical Air Reconnaissance System."
Other services businesses continue to grow as well, Price said.
Business Management Services has rapidly expanded its customer bases
for tax filing and human resources management systems. The
acquisition of SAMI in 1987 strengthened the position of Arbitron
Ratings in marketing information services.
"The potential of all these businesses is such that they should
continue to see excellent growth in revenues and profits," Price
said. "Today's announcement is a declaration that Control Data is
committed to realizing that potential and achieving our stated goal
of sustained profitability."
- 0 -
--
Glen Alexander
Control Data Corporation, Atlanta Georgia, 30328
uucp: ...!{allegra,amd,hplabs,seismo,ut-ngp}!gatech!prism!cccdcga
ARPA: cccdcga@prism.gatech.edurbthomas@athos.rutgers.edu (Rick Thomas) (04/18/89)
Press Release
17 April 1989
The John von Neumann National Supercomputer Center (JvNC) today
acknowledged the announcement by Control Data Corporation of the
discontinuance of its supercomputer business, ETA Systems, Inc. "Naturally,
we are disappointed with the announcement," said Dr. Doyle Knight, President
of the Consortium for Scientific Computing and Director of the JvNC. "However,
the JvNC will continue to support its more than 1300 academic and industrial
users with the ETA10 and CYBER 205 supercomputers currently in operation at the
Center. Control Data Corporation has indicated that it will continue to
support its current ETA customers," Knight added, "and therefore, the JvNC
remains fully operational and capable of supporting the research needs of its
national community of academic and industrial scientists."
As a result of the Control Data Corporation announcement, the JvNC will
work closely with the National Science Foundation to revise its long term
program plan for supercomputer systems. "We serve a large national community
of supercomputer users, and our first commitment will be to continue to
provide them with leading edge supercomputing technology," said Dr. Bruce
Ekstrand, Chairman of the Board of Trustees of the Consortium for Scientific
Computing and Vice Chancellor for Academic Affairs at the University of
Colorado. "We will have to modify our long range plan for hardware, but our
overall mission remains unchanged. The JvNC has provided outstanding service
and has made significant contributions to software development, education,
training, technology transfer, and science. The announcement by Control
Data Corporation will simply require evaluation of other vendors for future
supercomputer systems at the JvNC."
The JvNC currently operates four supercomputers: an eight-processor
ETA10, a four-processor ETA10, and two CYBER 205s. Major research projects
are supported by these systems in a wide range of scientific disciplines
including biology, chemistry, physics, engineering and mathematics. "There
is a great amount of exciting research being performed on the JvNC super-
computers," said Knight. "For example, Prof. Juri Toomre of the University
of Colorado is investigating the nature of solar turbulence using the ETA10.
This work has provided new insights into the mechanics of solar activity.
Prof. Ronald Levy of Rutgers University utilizes the ETA10 to explore the
structure and dynamics of biopolymers in solution, leading to improved
knowledge of protein structure, which is critical to the design of new
drugs.
Established in 1985, the JvNC is funded by the National Science
Foundation and the New Jersey Commission on Science and Technology. The
JvNC is managed by the Consortium for Scientific Computing, an organization
of thirteen academic research institutions including the University of
Arizona, Brown University, University of Colorado, Columbia University,
Harvard University, Institute for Advanced Study, Massachusetts Institute
of Technology, New York University, Pennsylvania State University,
University of Pennsylvania, Princeton University, University of Rochester
and Rutgers University -- The State University of New Jersey.
* For further information, contact Dr. Doyle Knight, President, Consortium
for Scientific Computing, the John von Neumann National Supercomputer Center,
--
Rick Thomas
uucp: {ames, cbosgd, harvard, moss, seismo}!rutgers!caip.rutgers.edu!rbthomas
arpa: rbthomas@CAIP.RUTGERS.EDU