Path: utzoo!dptcdc!jarvis.csri.toronto.edu!mailrus!uflorida!gatech!prism!cccdcga From: cccdcga@prism.gatech.EDU (Glen Alexander) Newsgroups: comp.sys.cdc,comp.arch Subject: Control Data Closes ETA Systems, Inc. Keywords: supercomputers Message-ID: <492@hydra.gatech.EDU> Date: 17 Apr 89 21:52:05 GMT Organization: Control Data Corporation Lines: 96 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.edu