================================================================================

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                              --------------------

                                    FORM 10-Q

(Mark one)

[ X ]  Quarterly  Report  Pursuant  to  Section  13 or 15(d)  of the  Securities
Exchange Act of 1934 For the quarterly period ended June 26, 1999

                                                                  OR

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act  of  1934  For  the  transition  period  from   _______________________   to
__________________________

                          Commission File Number 1-7352
                         ------------------------------

                            Data General Corporation
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


          Delaware                                      04-2436397
-------------------------------         ---------------------------------------
(State or other jurisdiction of         (I.R.S. Employer Identification Number)
 incorporation or organization)


4400 Computer Drive, Westboro, Massachusetts                       01580
--------------------------------------------                     ----------
  (Address of principal executive offices)                       (Zip Code)

       Registrant's telephone number, including area code (508) 898-5000

Former name, former address and former fiscal year if changed since last report:
                                 Not Applicable

                      ------------------------------

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  outstanding  of each of the  registrant's  classes  of common
stock, as of July 23, 1999:


Common Stock, par value $.01                                      50,705,171
----------------------------                                 ------------------
   (Title of each class)                                     (Number of shares)

================================================================================
<PAGE>

PART I -- FINANCIAL INFORMATION



Item 1. Financial Statements.
<TABLE>

DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

<CAPTION>
                                                                     Quarter Ended                 Nine Months Ended
                                                                ----------------------          ----------------------
                                                                June 26,      June 27,         June 26,      June 27,
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS                            1999          1998             1999          1998
----------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>           <C>              <C>           <C>
REVENUES:
    Product.................................................   $259,630     $ 253,802        $  786,145    $  784,723
    Service.................................................     96,189        97,468           290,613       293,632
                                                               --------     ---------        ----------    ----------
         Total revenues.....................................    355,819       351,270         1,076,758     1,078,355
                                                               --------     ---------        ----------    ----------

COSTS AND EXPENSES:
    Cost of product revenues (Note A).......................    180,329       244,270           541,662       624,139
    Cost of service revenues................................     60,286        59,881           182,483       183,171
    Research and development................................     28,802        31,655            86,321        88,048
    Selling, general, and administrative....................     90,904        84,736           263,696       254,190
    Restructuring charge....................................       --          82,400              --          82,400
                                                               --------     ---------        ----------    ----------
         Total costs and expenses...........................    360,321       502,942         1,074,162     1,231,948
                                                               --------     ---------        ----------    ----------


Income (loss) from operations...............................     (4,502)     (151,672)            2,596      (153,593)
Interest income.............................................      2,675         3,181             8,720        10,072
Interest expense............................................      3,555         3,599            10,855        10,814
Other income (expense)......................................      2,965        (2,000)            8,979           240
                                                               --------     ---------        ----------    ----------

Income (loss) before income taxes...........................     (2,417)     (154,090)            9,440      (154,095)
Provision (benefit) for income taxes........................        600         1,000            (5,700)        2,000
                                                               --------     ---------        ----------    ----------


Net income (loss)...........................................   $ (3,017)    $(155,090)       $   15,140    $ (156,095)
                                                               ========     =========        ==========    ==========


BASIC NET INCOME (LOSS) PER SHARE:

    Net income (loss) per share.............................     $(0.06)       $(3.15)            $0.30        $(3.19)
                                                                 ======        ======             =====        ======

    Weighted average shares outstanding.....................     50,622        49,159            50,249        48,895
                                                                 ======        ======            ======        ======

DILUTED NET INCOME (LOSS) PER SHARE:

    Net income (loss) per share.............................     $(0.06)       $(3.15)            $0.30        $(3.19)
                                                                 ======        ======             =====        ======

    Weighted average shares outstanding, including
    common stock equivalents, where applicable..............     50,622        49,159            51,163        48,895
                                                                 ======        ======            ======        ======
<FN>
Note A: Included in the quarter and nine-month period ended June 27, 1998, is a
charge of $52,600 for capitalized software and inventory write-downs.

No cash dividends have been declared or paid since inception.

The accompanying  Notes to Condensed  Consolidated  Financial  Statements are an
integral part of these financial statements.
</FN>
</TABLE>

<PAGE>

DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
                                                                                        (Unaudited)
                                                                                          June 26,            Sept. 26,
DOLLARS IN THOUSANDS, EXCEPT PAR VALUE                                                      1999                 1998
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>                   <C>
ASSETS
Current assets
    Cash and temporary cash investments............................................      $133,600              $158,220
    Marketable securities..........................................................       135,486               160,354
    Receivables, net...............................................................       292,611               307,428
    Inventories....................................................................       126,667               141,639
    Other current assets...........................................................        30,441                28,320
                                                                                       ----------            ----------

         Total current assets......................................................       718,805               795,961

Property, plant, and equipment, net................................................       198,856               180,454

Other assets.......................................................................       100,405                88,649
                                                                                       ----------            ----------
         Total assets..............................................................    $1,018,066            $1,065,064
                                                                                       ==========            ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
    Accounts payable...............................................................      $120,341              $160,940
    Other current liabilities......................................................       249,188               269,774
                                                                                       ----------            ----------
         Total current liabilities.................................................       369,529               430,714
                                                                                       ----------            ----------

Long-term debt.....................................................................       212,750               212,750
                                                                                       ----------            ----------

Other liabilities..................................................................        24,831                36,645
                                                                                       ----------            ----------

Stockholders' equity
    Common stock, $0.01 par value
         Outstanding - 50,653,000  shares at June 26, 1999 and 49,689,000 shares
         at Sept. 26, 1998 (net of deferred  compensation of $16,570 at June 26,
         1999 and $15,444 at Sept. 26, 1998).......................................       639,149               626,137
Accumulated deficit................................................................      (216,836)             (231,976)
Unrealized gains on marketable securities..........................................         9,770                 8,513
Equity adjustment for minimum pension liability....................................        (6,252)               (6,252)
Cumulative translation adjustment..................................................       (14,875)              (11,467)
                                                                                       ----------            ----------
         Total stockholders' equity................................................       410,956               384,955
                                                                                       ----------            ----------
         Total liabilities and stockholders' equity................................    $1,018,066            $1,065,064
                                                                                       ==========            ==========

<FN>
The accompanying  Notes to Condensed  Consolidated  Financial  Statements are an
integral part of these financial statements.
</FN>
</TABLE>
<PAGE>

<TABLE>
DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>


                                                                                                 Nine Months Ended
                                                                                           -----------------------------
                                                                                            June 26,          June 27,
IN THOUSANDS                                                                                  1999              1998
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income (loss)..................................................................     $15,140          $(156,095)
    Adjustments to reconcile net income (loss) to
     net cash provided from operating activities
         Depreciation..................................................................      58,082             75,583
         Amortization of capitalized software development costs........................      13,221             56,498
         Gain on sale of marketable securities.........................................      (8,979)            (2,239)
         Other non-cash items, net.....................................................         106             16,903
         Change in operating assets and liabilities....................................     (22,818)            39,451
                                                                                          ---------          ---------

         Net cash provided from operating activities...................................      54,752             30,101
                                                                                          ---------          ---------

CASH FLOWS FROM INVESTING ACTIVITIES
    Expenditures for property, plant, and equipment....................................     (93,106)           (94,326)
    Net proceeds from the purchases and sales of marketable securities.................      35,104            (15,916)
    Capitalized software development costs.............................................     (26,146)           (28,709)
                                                                                          ---------          ---------

         Net cash used by investing activities.........................................     (84,148)          (138,951)
                                                                                          ---------          ---------

CASH FLOWS FROM FINANCING ACTIVITIES
    Cash provided from stock plans.....................................................       7,771              5,853
                                                                                          ---------          ---------

         Net cash provided from financing activities...................................       7,771              5,853
                                                                                         ----------          ---------

Effect of foreign currency rate fluctuations
 on cash and temporary cash investments................................................      (2,995)            (1,671)
                                                                                         ----------          ---------

Decrease in cash and temporary cash investments........................................     (24,620)          (104,668)
Cash and temporary cash investments - beginning of period..............................     158,220            216,814
                                                                                         ----------          ---------
Cash and temporary cash investments - end of period....................................    $133,600           $112,146
                                                                                         ==========          =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
    Interest paid......................................................................     $13,272            $13,502
    Income taxes paid..................................................................      $5,741             $1,194

<FN>
The accompanying  Notes to Condensed  Consolidated  Financial  Statements are an
integral part of these financial statements.
</FN>
</TABLE>

<PAGE>

DATA GENERAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
<TABLE>


Note 1. Consolidated Balance Sheet Details
                                                                                           June 26,           Sept. 26,
in thousands                                                                                 1999               1998
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>               <C>
Inventories
    Raw materials......................................................................    $  5,506           $  1,420
    Work in process....................................................................      60,730             64,200
    Finished systems...................................................................      38,109             50,632
    Field engineering parts and components.............................................      22,322             25,387
                                                                                           --------           --------
                                                                                           $126,667           $141,639
                                                                                           ========           ========

Property, plant, and equipment
    Property, plant, and equipment.....................................................    $660,952           $641,612
    Accumulated depreciation...........................................................    (462,096)          (461,158)
                                                                                           --------           --------
                                                                                           $198,856           $180,454
                                                                                           ========           ========
</TABLE>

Note 2.  Earnings Per Share

         The  following  data show the amounts  used in  computing  earnings per
share and the  effect on income  and the  weighted  average  number of shares of
potentially dilutive common stock.
<TABLE>
                                                                        Quarter Ended
                                         -------------------------------------------------------------------------------
                                                      June 26, 1999                          June 27, 1998
                                         -------------------------------------  ----------------------------------------
                                             Loss         Shares     Per-Share      Loss         Shares       Per-Share
in thousands, except per share amounts    (Numerator)  (Denominator)   Amount    (Numerator)  (Denominator)     Amount
                                          -----------  ------------- ---------   -----------  -------------   ---------
<S>                                          <C>            <C>        <C>           <C>            <C>            <C>
Basic Earnings Per Share

Net loss available to
  common stockholders                      $(3,017)       50,622      $(0.06)     $(155,090)      49,159        $(3.15)
                                           =======        ======      ======      =========       ======        ======


Diluted Earnings Per Share

Net loss available to
  common stockholders and
  assumed conversions                      $(3,017)       50,622      $(0.06)     $(155,090)      49,159        $(3.15)
                                           =======        ======      ======      =========       ======        ======

</TABLE>

<TABLE>

                                                                        Nine Months Ended
                                         -------------------------------------------------------------------------------
                                                      June 26, 1999                                June 27, 1998
                                         -------------------------------------   ---------------------------------------
                                            Income        Shares     Per-Share       Loss        Shares       Per-Share
in thousands, except per share amounts    (Numerator)  (Denominator)   Amount    (Numerator)  (Denominator)     Amount
                                          -----------  ------------- ---------   -----------  -------------   ---------
<S>                                          <C>         <C>             <C>         <C>            <C>            <C>
Basic Earnings Per Share

Net income (loss) available to
  common stockholders                      $15,140        50,249        $0.30      $(156,095)       48,895      $(3.19)
                                                                        =====                                   ======

Effect of Dilutive Securities

Stock options                                 --             914                        --             --
                                           -------        ------                   ---------        ------

Diluted Earnings Per Share

Net income (loss) available to
  common stockholders and
  assumed conversions                      $15,140        51,163        $0.30      $(156,095)       48,895      $(3.19)
                                           =======        ======        =====      =========        ======      ======
<FN>

<PAGE>

         For the quarter and nine-month periods ended June 26, 1999 and June 27,
1998, the assumed conversion of the convertible debentures, giving effect to the
incremental   shares  and  the  adjustment  to  reduce  interest   expense,   is
anti-dilutive  and has therefore  been excluded  from the  computation.  For the
quarter ended June 26, 1999 and for the quarter and nine-month period ended June
27,  1998,  the  assumed  exercise  of  stock  options,  giving  effect  to  the
incremental  shares,  is anti-dilutive  and has therefore been excluded from the
computation.
</FN>
</TABLE>

Note 3.  Basis of Presentation and Use of Estimates

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from these estimates.

         In the opinion of  management,  the  accompanying  unaudited  condensed
consolidated financial statements reflect all adjustments,  consisting of normal
recurring accruals, considered necessary for a fair presentation.  The Company's
accounting  policies  are  described  in the  Notes  to  Consolidated  Financial
Statements in the Company's  1998 Annual  Report.  The results of operations for
the interim periods are not necessarily  indicative of the results of the entire
fiscal year.

Note 4.  Restructuring Charge

         During  fiscal  year  1998, the  Company  approved  and  implemented  a
restructuring  program designed to strengthen the Company's focus on storage and
enterprise  computing  solutions and reduce costs in  non-strategic  areas.  The
restructuring was adopted in response to the increasing price competition within
the  computer  hardware  industry.  Accordingly,  during  fiscal year 1998,  the
Company  recorded  a  charge  of  approximately  $135  million  related  to  the
restructuring  program and certain asset write-downs resulting from the program.
The charge  included  $82.4 million  related to employee  termination  benefits,
asset write-downs,  and other exit costs which the Company recorded in operating
expenses, and $52.6 million for capitalized  software and inventory  write-downs
which  were  included  in product  cost of  revenues.  A summary of the  accrued
liability balance related to the $82.4 million charged to operating  expenses is
as follows:
<TABLE>

-----------------------------------------------------------------------------------------------------------------------
                                                                             Less: Fiscal Year 1999
                                                         Sept. 26, 1998         Cash Payments and        June 26, 1999
 in millions                                                Balance             Asset Write-downs           Balance
-----------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                    <C>                     <C>
Employee termination benefits                               $ 27.0                  $ 12.7                 $ 14.3
Asset write-downs                                              6.7                     5.7                    1.0
Lease abandonments                                            10.6                     1.7                    8.9
Other exit costs                                               3.7                     2.6                    1.1
                                                            ------                  ------                 ------
          Total                                             $ 48.0                  $ 22.7                 $ 25.3
                                                            ======                  ======                 ======
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

         The  provision   included  severance  benefits  for  approximately  480
employees,  of which  approximately  65% were based in the United States and the
remainder in Europe and Asia/Pacific.  Of the 480 employees identified, 451 were
terminated as of June 26, 1999.  The remaining  terminations  are expected to be
complete by the end of the fiscal year. Asset write-downs are composed primarily
of fixed assets,  including leasehold  improvements and demonstration  equipment
which are being disposed of in connection with the restructuring  program. There
were no material changes in estimates to prior provisions or additional  charges
recorded during the nine-month period ended June 26, 1999.

<PAGE>

Note 5.  Comprehensive Income

         In the first  quarter of fiscal 1999,  the Company  adopted SFAS Number
130, "Reporting  Comprehensive Income." This statement establishes standards for
reporting and displaying  comprehensive  income and its components in a full set
of  general  purpose   financial   statements.   This  statement   requires  the
classification  of items of comprehensive  income by their nature in a financial
statement and the accumulated balance of other  comprehensive  income separately
from retained  earnings and additional  paid-in capital in the equity section of
the balance sheet. The Company's total comprehensive income is as follows:

<TABLE>
                                                                    Quarter Ended                        Nine Months Ended
                                                             --------------------------              ---------------------------
                                                               June 26,       June 27,                June 26,        June 27,
in thousands                                                     1999           1998                    1999            1998
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>            <C>                      <C>            <C>
Net income (loss)......................................        $(3,017)      $(155,090)                $15,140       $(156,095)

Other comprehensive income (expense):

    Unrealized gains (losses) on
       marketable securities...........................          2,252          (3,019)                  1,257           5,183
    Cumulative translation adjustment..................         (1,195)         (1,157)                 (3,408)         (1,606)
                                                               -------       ---------                 -------       ---------

Total other comprehensive income (loss)..............            1,057          (4,176)                 (2,151)          3,577
                                                               -------       ---------                 -------       ---------


Total comprehensive income (loss).......................       $(1,960)      $(159,266)                $12,989       $(152,518)
                                                               =======       =========                 =======       =========

</TABLE>

<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.


Results of Operations

         The Company reported a net loss of $3.0 million for the current quarter
ended June 26,  1999,  compared  with a net loss of $155.1  million for the same
period of the prior year.  The net income was $15.1  million for the nine months
ended  June  26,  1999,  compared  with a net  loss of  $156.1  million  for the
comparable  nine-month  period ended June 27, 1998. The net loss for the quarter
and  nine-month  periods  ended  June  27,  1998  includes  certain  charges  of
approximately $135.0 million related to the Company's  restructuring program and
asset write-downs  resulting from the restructuring  program. The net income for
the current  nine-month  period includes a gain of $7.5 million resulting from a
settlement  with the Internal  Revenue  Service related to taxes paid during the
Company's  1983 through 1991 fiscal years and  additional  gains of $9.0 million
resulting from sales of investments.
<TABLE>

Revenues (in millions)

------------------------------------------------------------------------------------------------------------------------
                                              Quarter Ended                               Nine Months Ended
                                  --------------------------------------------------------------------------------------
                                  6/26/99         Change        6/27/98         6/26/99         Change         6/27/98
                                  -------         ------        -------         -------         ------         -------
<S>                                <C>              <C>           <C>              <C>            <C>            <C>
Product                           $259.6            2%           $253.8          $786.2           --            $784.7
  % of Total Revenues                73%                            72%             73%                            73%

Service                             96.2           (1%)            97.5           290.6          (1%)            293.7
  % of Total Revenues                27%                            28%             27%                            27%

Total                             $355.8            1%           $351.3        $1,076.8           --          $1,078.4
------------------------------------------------------------------------------------------------------------------------
</TABLE>

         In the fiscal  quarter ended June 26, 1999,  product  revenues from the
Company's  AViiON family of open systems  server  products  were $138.3  million
compared with $131.5 million in the comparable  period of the prior year. In the
current  quarter,  revenues  from the  Company's  Intel  processor-based  AViiON
systems  increased  10% to  $129.8  million  while  revenues  from the  Motorola
processor-based  AViiON systems declined by 39% compared with the same period of
the prior year.  The Company  anticipates  that the percentage of server product
revenues generated by the Intel processor-based AViiON products will continue to
increase, while the Motorola processor-based AViiON system revenues are expected
to continue to decline.

         Product revenues from the Company's  CLARiiON storage systems increased
10% in the current  quarter to $105.7 million despite a decline in revenues from
CLARiiON's largest original equipment manufacturer (OEM) customer by nearly 53%.
Excluding revenues from this customer,  CLARiiON revenues grew approximately 47%
from the same period of the prior year.  CLARiiON  revenues from direct end-user
sales  increased  significantly  from  the same  period  of the  prior  year and
currently  represent  approximately 13% of total CLARiiON product revenues.  The
Company  anticipates  that revenues from direct  end-user sales will continue to
increase  in  future  periods  as a result  of the  on-going  investment  in the
CLARiiON  direct sales force.  CLARiiON has been sold primarily  through OEM and
distributor channels; thus sales in any given period are subject to sales cycles
and inventory levels of the Company's customers. CLARiiON revenues accounted for
41% of total product revenues in the current quarter.

         Within the  CLARiiON  family of  storage  systems,  full fibre  channel
product  revenues  represented  approximately  62%  of  total  CLARiiON  product
revenues in the current quarter.  The Company anticipates that the percentage of
revenues  from full fibre channel  products will continue to increase  while the
percentage of revenues from SCSI-based products will decline.

         Product revenues from personal computers and other equipment  decreased
3% in the  current  quarter as compared to the same period in the prior year and
represent  6% of total  product  revenues  for the quarter  ended June 26, 1999.
Product revenues from VALiiANT, the Company's contract manufacturing  operation,
decreased by approximately  $10.4 million from the comparable  quarter in fiscal
1998  to $0.1  million  as  certain  contracts  have expired. VALiiANT  revenues
represent less than 1% of total product  revenues for the quarter ended June 26,
1999.

         For the nine months  ended June 26,  1999,  product  revenues  from the
Company's  AViiON family of open systems  server  products  were $411.0  million
compared with $398.3 million in the comparable  period of the prior year. In the
current  nine-month  period,  revenues from the Company's Intel  processor-based
AViiON systems  increased 13% to $382.4 million while revenues from the Motorola
processor-based AViiON systems declined by 52% compared with the same nine-month
period of the prior year.  Revenues from AViiON systems running the Microsoft NT
operating system increased by approximately  14% from the comparable  nine-month
period of the prior year.

         Product revenues from the Company's  CLARiiON storage systems increased
10% to $322.4  million from the comparable  prior-year  period and accounted for
41% of total  product  revenues in the  current  nine-month  period.  Within the
CLARiiON  family  of  storage  systems,  full  fibre  channel  product  revenues
increased nearly four times from the comparable  nine-month  period of the prior
year and represented approximately 56% of total CLARiiON product revenues in the
current  nine-month  period.  Product revenues from personal computers and other
equipment  decreased 24% from the same  nine-month  period in the prior year and
represented  6% of total  product  revenues  compared  to 8% for the  comparable
prior-year period.

<TABLE>
Revenues by Geographic Marketplace

-------------------------------------------------------------------------------------------------------------------------------
                                                  Percentage of                                Percentage Change of
                                              Consolidated Revenues                                $ of Revenues
                             --------------------------------------------------------------------------------------------------
                                   Quarter Ended             Nine Months Ended                   6/26/99 - 6/27/98
                             --------------------------------------------------------------------------------------------------
                               6/26/99       6/27/98       6/26/99        6/27/98      Quarter Ended    Nine Months Ended
                             --------------------------------------------------------------------------------------------------
<S>                              <C>           <C>           <C>            <C>               <C>                <C>
Domestic
Product                          61%           65%           61%            61%              (4%)                (1%)
Service                          60%           60%           59%            60%              (2%)                (3%)
Total                            61%           64%           60%            61%              (4%)                (1%)

Europe
Product                          23%           22%           24%            24%               8%                  2%
Service                          31%           31%           32%            31%              (3%)                 2%
Total                            25%           24%           26%            26%               4%                  2%

Other International
Product                          16%           13%           15%            15%              26%                  2%
Service                           9%            9%            9%             9%               8%                 (2%)
Total                            14%           12%           14%            13%              22%                  1%
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

         The decrease in domestic  product  revenues for the current quarter and
nine-month  period  ended  June 26,  1999 was  primarily  a result of  decreased
shipments of Motorola  processor-based  AViiON  systems and  VALiiANT  products,
which was partially offset by increased shipments of CLARiiON products and Intel
processor-based AViiON systems.

         The increase in European product revenues,  including U.S direct export
sales,  for the  current  quarter  ended  June  26,  1999  was due to  increased
shipments  of Intel and Motorola  processor-based   AViiON  systems  as well  as
CLARiiON storage systems,  offset,  in part, by decreases in personal  computers
and other equipment.

         The increase in other  international  product revenues,  including U.S.
direct export sales,  for the current  quarter and nine-month  period ended June
26, 1999 is attributable to increased shipments of Intel processor-based  AViiON
systems  and  personal  computers  and  other  equipment,  offset,  in part,  by
decreased shipments of CLARiiON storage products.

         In the  service  business,  the Company  experienced  an 8% decrease in
contract  maintenance  revenues  in the current  quarter  ended June 26, 1999 as
compared  with the same period in fiscal  1998 due to a decline in the  contract
maintenance  service base. This decrease was offset,  in part, by a 21% increase
in professional  services revenues in the current quarter ended June 26, 1999 as
compared with the quarter ended June 27, 1998.  Professional  services  revenues
represent  approximately  28% of total service  revenues in the current quarter.
For the  nine-month  period  ended June 26,  1999 the Company  experienced  a 5%
decrease in contract maintenance revenues offset, in part, by an 11% increase in
professional services revenue. Professional services revenues represented 27% of
total service revenues in the current nine-month period.

         Foreign exchange  negatively  impacted total  international  revenue by
approximately 2% in the current quarter.

<PAGE>
Cost of Revenues (in millions)
<TABLE>
---------------------------------------------------------------------------------------------------------------------------
                                             Quarter Ended                                Nine Months Ended
                            -----------------------------------------------------------------------------------------------
                                6/26/99         Change          6/27/98         6/26/99         Change         6/27/98
                            -----------------------------------------------------------------------------------------------
<S>                                <C>            <C>             <C>             <C>             <C>            <C>
Product                         $180.3           (26%)          $244.3          $541.7          (13%)          $624.2
 % of Product Revenues             69%                             96%             69%                            80%

Service                           60.3             1%             59.9           182.4            --            183.2
 % of Service Revenues             63%                             61%             63%                            62%

Total Cost of Revenues          $240.6           (21%)          $304.2          $724.1          (10%)          $807.4
 % of Total Revenues               68%                             87%             67%                            75%
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

         During  the  quarter  ended  June 27,  1998,  certain  charges of $52.6
million related to the Company's restructuring program were included in the cost
of product revenues. Without the charges, the pro forma cost of product revenues
was 76% and 73% for the quarter and  nine-month  period ended June 27, 1998. The
decrease in the product cost as a percentage  of product  revenues  from the pro
forma product cost as a percentage  of product  revenues  during the  comparable
prior year  periods was a result of the shift in product  mix to  high-end  NUMA
technology  based  AViiON  systems  which have lower  product  cost.  During the
quarter ended June 26, 1999, an increased percentage of direct end-user CLARiiON
sales also  contributed  to the  decrease  in product  cost as a  percentage  of
product  revenues.  The increase in the service cost as a percentage  of service
revenues  for the  current  quarter  ended June 26, 1999 as compared to the same
period of the prior  year is a result of the shift in service  revenue  mix from
contract maintenance revenues to professional services revenues.


Operating Expenses (in millions)
<TABLE>
---------------------------------------------------------------------------------------------------------------------------
                                                        Quarter Ended                         Nine Months Ended
                                            -------------------------------------------------------------------------------
                                              6/26/99      Change       6/27/98      6/26/99       Change       6/27/98
                                            -------------------------------------------------------------------------------
<S>                                              <C>          <C>         <C>          <C>           <C>          <C>
Research & Development                         $28.8         (9%)        $31.7        $86.3         (2%)         $88.1
  % of Total Revenues                             8%                        9%           8%                         8%

Selling, general & administrative              $90.9          7%         $84.7       $263.7          4%         $254.2
  % of Total Revenues                            26%                       24%          24%                        24%

Restructuring charge                             --           --         $82.4          --           --          $82.4
  % of Total Revenues                            --                        23%          --                          8%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

         The Company continues to focus its research and development  efforts on
its core  business  technology:  multi-user  computer  systems and mass  storage
devices.  In the current nine-month  period,  gross expenditures on research and
development and software development before  capitalization were $112.4 million,
a decrease of 4% from $116.8 million for the comparable prior-year period. Gross
expenditures on research and development  before  capitalization for the quarter
ended June 26,  1999 were $38.4  million,  a decrease  of 2% from $39.1  million
expended  during the quarter ended June 27, 1998. For both the  three-month  and
nine-month  periods  ended June 26,  1999,  continued  increases in research and
development expenditures in CLARiiON fibre channel products and NUMA technology,
were  offset by savings  associated  with the  Company's  restructuring  program
implemented in fiscal year 1998.

         For the current  quarter and  nine-month  period  ended June 26,  1999,
selling,   general,  and  administrative   expenses  increased  by  7%  and  4%,
respectively,  from the comparable  prior-year  periods. In the current quarter,
the Company  announced plans to  significantly  increase its sales and marketing
investments in its CLARiiON storage  business.  This  investment,  which will be
implemented over the next eighteen months,  is expected to result in an increase
of approximately  450 people, of which the majority will be direct sales people.
This expense,  and related marketing efforts, is expected to cost more than $100
million over the  eighteen-month  period.  The increase in selling,  general and
administrative  expenses in the current quarter and nine-month period ended June
26,  1999 from the  comparable  prior-year  periods is  primarily  the result of
marketing efforts  associated with this investment,  partially offset by savings
in the server business  resulting from the Company's  fiscal 1998  restructuring
program.

<PAGE>

         During  fiscal  year 1998,  the  Company  approved  and  implemented  a
restructuring  program designed to strengthen the Company's focus on storage and
enterprise  computing  solutions and reduce costs in  non-strategic  areas.  The
restructuring was adopted in response to the increasing price competition within
the  computer  hardware  industry.  Accordingly,  during  fiscal year 1998,  the
Company  recorded  a  charge  of  approximately  $135  million  related  to  the
restructuring  program and certain asset write-downs resulting from the program.
The charge  included  $82.4 million  related to employee  termination  benefits,
asset write-downs,  and other exit costs which the Company recorded in operating
expenses, and $52.6 million for capitalized  software and inventory  write-downs
which  were  included  in product  cost of  revenues.  A summary of the  accrued
liability balance related to the $82.4 million charged to operating  expenses is
as follows:
<TABLE>

--------------------------------------------------------------------------------------------------------------------------
                                                                             Less: Fiscal Year 1999
                                                         Sept. 26, 1998         Cash Payments and        June 26, 1999
 in millions                                                Balance             Asset Write-downs           Balance
--------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                     <C>                    <C>
Employee termination benefits                               $ 27.0                  $ 12.7                 $ 14.3
Asset write-downs                                              6.7                     5.7                    1.0
Lease abandonments                                            10.6                     1.7                    8.9
Other exit costs                                               3.7                     2.6                    1.1
                                                            ------                  ------                 ------
          Total                                             $ 48.0                  $ 22.7                 $ 25.3
                                                            ======                  ======                 ======

--------------------------------------------------------------------------------------------------------------------------
</TABLE>

The provision included  severance  benefits for approximately 480 employees,  of
which  approximately  65% were based in the United  States and the  remainder in
Europe and Asia/Pacific. Of the 480 employees identified, 451 were terminated as
of June 26, 1999. The remaining  terminations are expected to be complete by the
end of the fiscal  year.  Asset  write-downs  are  composed  primarily  of fixed
assets,  including leasehold improvements and demonstration  equipment which are
being disposed of in connection with the  restructuring  program.  There were no
material changes in estimates to prior provisions or additional charges recorded
during the nine-month period ended June 26, 1999.

         At June 26, 1999, the number of employees totaled  approximately 4,950,
which are a net increase of  approximately  250 and 150 employees from September
26, 1998 and June 27, 1998, respectively.

         Interest  income  for the  current  quarter  was  $2.7  million,  a 16%
decrease  from $3.2 million for the  comparable  period of fiscal  1998,  due to
lower  interest  yields and levels of invested cash.  Interest  expense was $3.6
million  for both the current  quarter  and the same  quarter of the prior year.
Interest  expense relates  primarily to interest on the Company's 6% Convertible
Subordinated  Notes due 2004.  Other income for the current  quarter  includes a
gain of $3.0  million  from the sales of equity  investments.  Interest  income,
interest  expense and other  income were $8.7  million,  $10.9  million and $9.0
million, respectively, for the nine-month period ended June 26, 1999 as compared
to  $10.1  million,  $10.8  million  and  $0.2  million,  respectively, for  the
comparable  period of the prior year.  Other  income for the current  nine-month
period  relates to gains on sales of equity  investments.  Other  income for the
nine-month  period ended June 27, 1998 relates to gains of $2.2 million on sales
of  equity  investments  offset,  in part,  by a loss of $2.0  million  from the
write-off of an investment in a non-affiliated company.

         The  current  quarter  income  tax  expense  of  $0.6  million  relates
primarily  to foreign  and state  income tax,  as well as,  federal  alternative
minimum taxes. The Company has a valuation allowance which offsets substantially
all deferred tax assets as of June 26, 1999 and September  26, 1998.  The amount
of the deferred tax assets  considered  realizable is subject to change based on
estimates of future  income  during the  carryforward  period.  The Company will
assess the need for the valuation  allowance at each balance sheet date based on
all available evidence and may adjust the level of the valuation  allowance,  if
appropriate.  The income tax benefit for the  nine-month  period  ended June 26,
1999 of $5.7 million includes a gain of $7.5 million resulting from a settlement
with the  Internal  Revenue  Service  for taxes paid during the  Company's  1983
through 1991 fiscal years.

<PAGE>

Financial Condition

         Cash and  temporary  cash  investments  as of June 26, 1999 were $133.6
million,  a decrease of $24.6  million from the end of fiscal 1998.  At the same
date, the Company held $135.5 million in marketable  securities,  a net decrease
of $24.9 million from the end of fiscal 1998. In total,  cash and temporary cash
investments  along with  marketable  securities  decreased $49.5 million for the
current nine-month period. The decrease was mainly attributable to the purchases
of equipment required for the Company's server and storage businesses,  payments
reducing employee and vendor related accruals, payments related to the Company's
investment  in the  CLARiiON  storage  business,  and  payments  related  to the
restructuring  program implemented in June 1998. The marketable securities held,
which  supplement  cash and temporary  cash  investments,  include United States
treasury bills and notes, notes issued by U.S. government  agencies,  commercial
paper and  certificates  of deposit,  as well as equity  securities  recorded at
their  fair   market   value  of  $11.0   million   which  are   classified   as
available-for-sale. The unrealized gain on marketable securities of $9.8 million
as of June 26, 1999 is recorded as a separate component of stockholders' equity.
During the current  three-month and nine-month  periods ended June 26, 1999, the
Company  recorded  gains of $3.0 million and $9.0 million,  respectively, on the
sales of investments in marketable securities. Net cash provided from operations
for the nine months ended June 26, 1999 totaled $54.8 million;  expenditures for
property,  plant,  and equipment  totaled $93.1  million;  capitalized  software
development costs totaled $26.1 million.  Cash provided from stock plans totaled
$7.8 million  during the current  nine-month  period  ended June 26,  1999.  The
effect of foreign currency exchange rate fluctuations on cash and temporary cash
investments was a decrease of $3.0 million.

         Net  receivables as of June 26, 1999 were $292.6 million  compared with
$307.4  million as of September 26, 1998.  This decrease in net  receivables  of
$14.8  million  from  September  26, 1998 is  primarily  attributable  to higher
revenues  in the  quarter  ended  September  26, 1998 as compared to the current
quarter  ended  June 26,  1998.  Inventories  as of June 26,  1999  were  $126.7
million,  a decrease of $15.0 million from  September  26, 1998,  primarily as a
result of reduced  inventory levels related to improved supply  management.  Net
property,  plant, and equipment  increased $18.4 million from September 26, 1998
to $198.9  million  primarily  due to the  purchases  of  equipment  and capital
expenditures for developing both operating and financial  systems and to support
the new product  initiatives in the server and storage  businesses.  Fixed asset
dispositions related to the sale of demonstration equipment totaled $5.4 million
for  the  current   nine-month   period.   Management   expects  that  sales  of
demonstration equipment will continue.

         The increase of $11.8  million in other assets from  September 26, 1998
to $100.4 million at June 26, 1999 was attributed  mainly to the  capitalization
of software development costs net of related amortization.

         The decrease of $40.6  million in accounts  payable from  September 26,
1998 levels was attributed mainly to the timing of payments related to purchases
of material.  Other  current and other  liabilities  decreased by  approximately
$32.4  million from  September  26, 1998 to $274.0  million.  This  decrease was
primarily related to funding of the Company's domestic pension plan and payments
related to the Company's restructuring program. Long-term debt of $212.8 million
remained unchanged from September 26, 1998.

<PAGE>

Year 2000 Information and Readiness Disclosure

         The "Year 2000 issue" arises because many computer hardware systems and
software programs use only two digits to represent the year. As a result,  these
systems and programs may not  correctly  handle dates beyond 1999,  resulting in
errors in  information  or  program  or  systems  failures.  Assessments  of the
potential  effects  of the  Year  2000  issues  vary  markedly  among  different
companies,  governments,  consultants,  economists, and commentators.  It is not
possible to  accurately  predict what the actual impact may be. In this context,
the Company offers the following statements concerning the Year 2000 issues. All
statements made and referred to here are Year 2000 readiness  disclosures  under
the U.S. Year 2000 Information and Readiness Disclosure Act. Except as otherwise
noted, all statements in this Year 2000 Information and Readiness Disclosure are
stated as of June 26, 1999.

         To  better  address  the  Year  2000  issue  in  a  comprehensive   and
coordinated  manner,  across all of Data  General's  operations  worldwide,  the
Company  has  created  a  cross-functional  corporate  Year 2000  project  team,
reporting and  responsible  to the senior  management of the Company.  A project
plan has been adopted and is guiding the Company's efforts to assess and address
Year 2000 issues  pertaining to each of the identified  functional  areas of the
company's operations.

1.       Product Readiness and Customer Communications

         The Company is  communicating  with its customers  concerning  the Year
2000  issue.  The  primary  means  of  communication  are the Data  General  and
CLARiiON   Year  2000  Internet  web  sites at   http://www.dg.com/year2000  and
http://www.clariion.com/year2000/index.html,    where   Year   2000    readiness
disclosures  concerning various products and the Company's Year 2000 program are
made available to customers and the general public.

         The Company has  assessed  the Year 2000  readiness  of Data  General's
AViiON  computer  systems   and  CLARiiON storage  products,  as well as of Data
General Pentium  processor-based and later generation personal computers.  Based
on these efforts, the Company has determined that Data General's AViiON computer
systems and CLARiiON  storage products are either Year 2000 Ready or may be made
so by means of Year 2000 updates or patches available from the Company. As well,
the Company offers a Year 2000 support strategy for the current releases of Data
General's DG/UX  operating  system  software, the details of which are available
on the Data  General  Year 2000 web site.  Most other  active  Data  General and
CLARiiON-branded  products, including  many 32-bit ECLIPSE MV  computer systems,
have also been  evaluated  for Year 2000  readiness.  Consistent  with  industry
practices,  inquiries  concerning  Year 2000 readiness of  third-party  products
resold by Data General are being referred to the  third-party  suppliers of such
products.  The Company has determined not to test certain products for Year 2000
Readiness.  As well,  some Data General  products have been determined to not be
Year 2000 Ready. For the most current information concerning products' Year 2000
readiness, customers are directed to the Data General Year 2000 web sites, since
the Company is making no statement regarding Year 2000 readiness for any product
except as noted on the Company's Year 2000 web sites.

2.       Data General's Internal Systems, Manufacturing Processes and Facilities

         Data General has been preparing for Year 2000 since  mid-1996,  and has
established  teams to  coordinate  solutions  to the Year 2000 issue for its own
internal  information systems and applications  across the Company's  operations
worldwide.  Generally,  the Company has structured the Year 2000 project in four
phases:  inventory and  assessment;  remediation  and/or  avoidance;  compliance
confirmation; and (as and when appropriate) contingency planning. As of December
31, 1998, Data General had substantially  completed the assessment and inventory
phase of its Year 2000 project relative to the Company's key information  system
and  applications.  As of June 26, 1999,  approximately 80% of the Company's key
business  systems have been  qualified  by the Company as Year 2000 Ready.  Data
General continues to address known Year 2000 issues,  and is committed to making
its key  internal  information  systems  Year  2000  Ready  in time to meet  the
Company's critical business requirements. Based on existing plans and schedules,
and  subject  to  the   possibility  of  delays,   the  Company  plans  to  have
substantially  all of its key business  systems Year 2000 Ready by September 30,
1999.  Although  Data  General's  Year 2000  project  relative  to its  critical
information  management  systems is still in process,  the Company believes that
the impact of the Year 2000 issues on its core business systems and applications
should not have a material adverse impact on future results.

         The  Company  has  assessed  the  Year  2000  issue as  related  to its
manufacturing  facilities and processes.  Projects are underway to address those
Year 2000 issues  which have been  identified.  The Company is not aware at June
26, 1999, of any material  Year 2000 concerns with respect to its  manufacturing
facilities and processes.

         The Company is also continuing its assessment of the possible impact of
Year 2000 issues on the operations of its offices and facilities (including such
matters  as  security  systems,  PBX and  voicemail  systems,  and  heating  and
air-conditioning  systems).  Projects  are  underway to address  those Year 2000
issues that have been identified.  The Company is not aware at June 26, 1999, of
any material Year 2000 concerns with respect to the operation of its offices and
facilities.

         The  Company  has  sought to assess the Year 2000  risks  arising  from
external  factors,  such as potential  interruptions  of  telecommunications  or
transportation  services  or  utilities,  for  the  Company's  key  geographical
locations based on currently available data. However,  the likelihood and extent
of widespread or persistent  interruptions  to such  infrastructure  services is
generally difficult to predict. As more accurate  information becomes available,
the Company will be  completing  and tuning its  contingency  plans  intended to
support the continued operation of the Company's critical functions in the event
of interruptions to infrastructure services.

3.       Data General's Suppliers

         The Company's procurement organizations are seeking to monitor the Year
2000  readiness of the  Company's  key  suppliers.  The Company is assessing the
responses to Year 2000  readiness  questionnaires  sent in December  1998, to an
extensive  list of  suppliers,  including  those  suppliers  which  the  Company
considers most critical to its operations. Each of 124 suppliers considered most
critical to the Company's  manufacturing  operations  has provided  satisfactory
assurances  concerning the supplier's  Year 2000 readiness.  In addition,  as of
June 26, 1999, more than 80% of the Company's 253 largest  suppliers  (excluding
those  mentioned  above)  have also  given the  Company  satisfactory  Year 2000
assurances.  The Company is  following up with these and other  suppliers  where
appropriate.   Since  the  Company's   suppliers'  Year  2000  preparations  and
assessments  are  ongoing,  Data  General's  efforts  to  monitor  the Year 2000
readiness of key suppliers will be continuing. If Year 2000 readiness issues are
identified,  the Company intends to take reasonable actions as needed to address
the Company's business requirements.

         Since  determining  the Year 2000  readiness of suppliers  depends upon
their  cooperation  and upon their  disclosure  of often  imprecise or estimated
information,  it is likely  that the  Company's  inquiries  will not be entirely
successful,  and it remains  possible that the actual  outcomes may deviate from
the suppliers'  assurances to the Company.  It is possible that  notwithstanding
the Company's efforts, interruptions of key components or services could have an
adverse impact on the Company's operations and future results.

         The  Company  is  evaluating  contingency  plans to  mitigate  or avoid
potential  interruptions to normal business operations.  It is likely,  however,
that not every  potential  Year  2000  exposure  will be  avoided;  for  example
alternative  sources of supply for  single-sourced  components may not always be
readily  available.  A measure of  reasonable  business  risk will be undertaken
relative to the Year 2000 problem, both by Data General and by other companies.

4.       Risks of Claims

         There may be a potential  for claims  against the Company  arising from
products and services  that were not Year 2000 Ready.  Because the Company is in
the business of selling  computer system  products,  the Company's risk of being
subjected  to lawsuits  relating to Year 2000 issues with its products is likely
to be greater than that of companies in other  industries.  Although the Company
believes  that it has valid  defenses to Year 2000  claims  which may be brought
against it by its customers,  the outcomes of Year 2000 claims and the impact of
such  claims on the  Company  cannot be  determined  at this  time.  The  actual
outcomes will depend on the facts and  circumstances of each situation and on an
evolving  state of law as Year  2000  claims  are  addressed  by  legal  systems
worldwide.

5.       Costs Associated with the Year 2000 Project

         The cost of  addressing  Year 2000 issues is funded  through  operating
cash flows. The Company does not expect the amounts to have a material effect on
its financial position or results of operations.  The Company has incurred costs
of approximately  $10.5 million  directly  associated with Year 2000 projects to
date as of June 26, 1999.

6.       Certain Additional Risk Factors

         It is unknown  how the  Company's  sales may be  impacted  by Year 2000
issues. As the Company's  customers focus on preparing their businesses for Year
2000,  capital  budgets in the near term may be  redirected  toward  remediation
efforts,  potentially  delaying the purchase or  implementation  of new systems,
thereby creating less demand for the Company's  products and services.  As well,
customers'  procurement  efforts may be temporarily  delayed as a result of Year
2000 readiness testing within  customers'  operations.  Alternatively,  sales of
Year 2000 Ready Data General  products  could be  increased,  as Year 2000 Ready
products are  purchased to replace older  products.  Service  revenues  could be
reduced if  customers  discontinue  support of products  which are not Year 2000
Ready, or perhaps increased as customers  purchase new, Year 2000 Ready systems.
As well,  the  Company's  sales during 1999 could be affected by the  customers'
perceptions  of Data  General's  own  state of Year  2000  readiness.  All these
factors could affect the Company's future revenues.

         Overriding  any  preparations  taken  by  the Company,  the  Year  2000
issue  presents  risks  and uncertainties  that could  affect the Company; these
include  unexpected Year 2000 issues, or unexpected  problems arising from plans
implemented to anticipate Year 2000 problems;  interruptions to power,  water or
telecommunications  utility  services;  potential  unavailability  of skilled or
critical  personnel;  delays or interruptions  in  transportation  systems;  and
potential  governments'  responses  to  Year  2000  emergencies,  among  others.
Further,  there  can be no  assurance  that  there  will not be  delays  in,  or
increased costs associated with, the Company's Year 2000 readiness  efforts,  or
that the Company's  suppliers and other parties will adequately  prepare for the
Year 2000.  Notwithstanding  the Company's diligent efforts,  one can anticipate
that Data  General  will not be able in all cases to  identify  and avoid  every
possible Year 2000 impact.

         The Company is working to assess and evaluate  likely Year 2000 problem
scenarios and to evaluate Year 2000 contingency plans in appropriate  cases. The
Company expects that this contingency  planning effort will continue  throughout
1999 as the Company completes its preparations for the Year 2000 and learns more
about the Year 2000 preparations and vulnerabilities of third parties.

         The nature of the uncertainties surrounding the Year 2000 issue is such
that it remains  possible  that Year 2000 issues  could have a material  adverse
impact on the Company's operations and financial results. While the Company does
not currently  expect that this will be the case and  continues to  aggressively
pursue  its  preparations  for Year 2000,  the  Company  can offer no  assurance
whether or to what extent the  Company  may be affected by matters  which it has
not  anticipated  or by matters  outside of the Company's  control.  The Company
recognizes  the need to  continue  its  analysis,  assessment,  monitoring,  and
planning for the various Year 2000 issues, across its businesses worldwide,  and
to  address  Year 2000  issues as they are  identified.  Within  that  uncertain
context,  however,  and  subject to the various  factors  discussed  above,  the
Company believes as of June 26, 1999, that the impact of Year 2000 issues on its
business  should not have a material  adverse effect on the Company's  financial
position or results of operations.


Market Risk

         The Company is exposed to market risk primarily in its cash and foreign
currency transactions. Because a substantial portion of the Company's operations
and  revenue  occur  outside the United  States,  the  Company's  results can be
significantly  impacted  by changes  in foreign  currency  exchange  rates.  The
Company  manages its foreign  currency  risk through the use of forward  foreign
currency contracts. The Company does not hold or enter into derivative financial
instruments for trading  purposes.  At inception,  the forward foreign  currency
contracts  are  designated as hedges of  intercompany  accounts  receivable  and
foreign  sales  which  are  firmly  committed  or  forecasted.  These  contracts
generally  mature  within  three-months.  Market value gains and losses on these
contracts  are  included in the cost of product  revenues and  generally  offset
exchange gains or losses on the related transactions.

         As of June 26,  1999,  the  Company had entered  into  forward  foreign
currency  contracts to purchase  $26.0 million and sell $71.9 million in various
foreign  currencies  with  maturity  dates  of July 26 and July  27,  1999.  The
potential gain or loss from a  hypothetical  10% beneficial or adverse change in
foreign  currency  exchange  rates on the  forward  foreign  currency  contracts
maturing  after June 26,  1999 would  result in a gain or loss of  approximately
$4.6 million.  The Company  expects that exchange gains or losses on the related
hedged transactions would offset this gain or loss.


Euro Conversion

         On  January  1,  1999,  11 of the 15  members  of  the  European  Union
established  fixed  conversion  rates between their existing  currencies and the
"Euro." The Euro will trade on currency exchanges and the legacy currencies will
remain legal tender for a transition  period between January 1, 1999 and January
1, 2002. During the transition period,  public and private companies may pay for
goods  and  services  using  the  Euro  or the  participating  country's  legacy
currency.  The participating  countries will issue sovereign debt exclusively in
Euros, and will redenominate outstanding sovereign debt. Participating countries
no longer control their own monetary policies by directing  independent interest
rates for their legacy  currencies.  Instead,  the authority to direct  monetary
policy,  including money supply and official interest rates will be exercised by
the new European Central Bank.

         The  Company  has  established  plans  and  has  begun  developing  the
necessary modifications for the technical adaptation of its internal information
technology and other systems to accommodate Euro-denominated  transactions.  The
Company is also  assessing the business  implications  of the  conversion to the
Euro, including long-term competitive implications and the effect of market risk
with  respect to  financial  instruments.  The  Company is  currently  unable to
determine the ultimate financial impact of these matters, if any, on its results
of  operations,  financial  condition or cash flows.  However,  the Company will
continue  to assess  the  impact  of Euro  conversion  issues as the  applicable
accounting, tax, legal, and regulatory guidance evolves.

         Statements concerning the Company's business outlook or future economic
performance;  Year 2000 readiness; currency market risk; Euro conversion issues;
anticipated profitability,  revenues, expenses or other financial items; product
or  service  line  growth,  plans  or  objectives;   and  statements  concerning
assumptions   made  or  expectations  as  to  any  future  events,   conditions,
performance or other matters, are "forward-looking  statements", as that term is
defined  under the  Federal  securities  laws.  Forward-looking  statements  are
subject to risks,  uncertainties  and other  factors  which could  cause  actual
results to differ  materially from those stated in such statements.  Such risks,
uncertainties  and factors  include,  but are not limited  to,  fluctuations  in
customer  demand,  order  patterns and inventory  levels,  changes and delays in
product  development plans and schedules,  customer  acceptance of new products,
changes in pricing or other actions by competitors, general economic conditions,
as well as other risks detailed in the Company's filings with the Securities and
Exchange  Commission,  including Data General's Report on Form 10-K for the 1998
fiscal year-ended  September 26, 1998 and this Quarterly Report on Form 10-Q for
the third fiscal quarter of 1999, which ended June 26, 1999.

<PAGE>

PART II -- OTHER INFORMATION



Item 1.  Legal Proceedings.

         The Company has been engaged in patent infringement  litigation against
IBM Corporation since November 1994. Two lawsuits, both in the discovery stages,
are  pending  in  the  United  States   District   Court  for  the  District  of
Massachusetts  in  Worcester.  The Company  alleges  that  several IBM  products
including the AS/400 midrange systems and the AS/400 RISC-based computer product
line infringe various Company patents. Both suits seek compensatory damages and,
where  appropriate,  injunctive  relief.  IBM has answered both complaints,  has
denied  the  Company's  infringement  claims  and has  interposed  counterclaims
alleging that the Company's  AViiON and CLARiiON  computer  systems infringe IBM
patents.

         Although the Company  believes its claims are valid,  it cannot predict
the  outcome  of  the  litigation.  In  the  opinion  of  management,  based  on
preliminary  evaluation  of the IBM  patents  covered in the  counterclaims  and
subject to the risks of litigation,  the  counterclaims  are without merit,  the
Company  will  prevail  thereon and the  counterclaims  will not have a material
adverse  impact on the results of operations  or the  financial  position of the
Company.

         The  Company and certain of its  subsidiaries  are  involved in various
other patent  infringement,  contractual,  and proprietary  rights suits. In the
opinion of  management,  the  conclusion of these suits will not have a material
adverse effect on the financial position or results of operations and cash flows
of the Company and its subsidiaries.







<PAGE>

Item 6.  Exhibits and Reports on Form 8-K.

(a)      Exhibits:

     3.  (c)     By-Laws of the Company, as amended through November 4, 1998,
                 previously filed as Exhibit 3(c) to the Company's  Quarterly
                 Report on Form 10-Q for the quarter ended December 26, 1998,
                 which is incorporated herein by reference.

     3.  (e)     Amendment to Certificate of Incorporation of the Company,
                 filed January 28, 1999, previously filed as Exhibit 3(e) to
                 the Company's  Quarterly Report on Form 10-Q for the quarter
                 ended December 26, 1998, which is incorporated herein by
                 reference.

     10. (w)     Employee Qualified Stock Purchase Plan, as amended, previously
                 filed as Exhibit 10(w) to the Company's Quarterly Report on
                 Form 10-Q for the quarter ended March 27, 1999 which is
                 incorporated herein by reference.

     10. (jj)    1998 Employee Stock Option Plan, previously filed as Exhibit
                 4.1 to the Company's Registration Statement on Form S-8,
                 Registration Number 333-69559, which is incorporated herein by
                 reference.

     10. (kk)    Form of (Key Executive) 1998 Employee Stock Option Agreement,
                 previously filed as Exhibit 10(kk) to the Company's Quarterly
                 Report on Form 10-Q for the quarter ended December 26, 1998,
                 which is incorporated herein by reference.

     10. (ll)    Form of Amendment to Employment Agreements between the Company
                 and its key executives previously filed as Exhibit 10(ll) to
                 the Company's  Quarterly Report on Form 10-Q for the quarter
                 ended December, 26, 1998, which is incorporated herein by
                 reference.

     10. (mm)    1998 Non-Employee Director Stock Option Plan, previously filed
                 as Exhibit 4.2 to the Company's Registration Statement on Form
                 S-8, Registration Number 333-69559, which is incorporated
                 herein by reference.

     10. (nn)    Form of 1998 Non-Employee Director Stock Option Agreement,
                 previously filed as Exhibit 10(nn) to the Company's  Quarterly
                 Report on Form 10-Q for the quarter ended December 26, 1998,
                 which is incorporated herein by reference.

     10. (oo)    Summary of 1999 Fiscal Year Bonus Opportunity for Chief
                 Executive Officer, previously filed as Exhibit 10(oo) to the
                 Company's  Quarterly  Report on Form 10-Q for the quarter
                 ended December 26, 1998, which is incorporated herein by
                 reference.

     10. (pp)    Amendment to Supplemental Pension and Retiree Medical
                 Agreement dated December 2, 1998, between the Company and its
                 President and Chief Executive Officer, previously filed as
                 Exhibit 10(pp) to the Company's  Quarterly Report on Form 10-Q
                 for the quarter ended December 26, 1998, which is incorporated
                 herein by reference.


(b) No reports on Form 8-K were filed during the current  quarter ended June 26,
1999.



<PAGE>

                                    SIGNATURE



       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.



                                            DATA GENERAL CORPORATION
                                                  (Registrant)

                                              /s/ John J. Gavin Jr.
                                    --------------------------------------------
                                                  John J. Gavin Jr.
                                    Chief Financial Officer, Vice President, and
                                               Corporate Controller





    Dated:  August 5, 1999




<PAGE>

                                    EXHIBITS


Index to Exhibits.

     3.  (c)     By-Laws of the Company, as amended through November 4, 1998,
                 previously filed as Exhibit 3(c) to the Company's  Quarterly
                 Report on Form 10-Q for the quarter ended December 26, 1998,
                 which is incorporated herein by reference.

     3.  (e)     Amendment to Certificate of Incorporation of the Company,
                 filed January 28, 1999, previously filed as Exhibit 3(e) to
                 the Company's  Quarterly Report on Form 10-Q for the quarter
                 ended December 26, 1998, which is incorporated herein by
                 reference.

     10. (w)     Employee Qualified Stock Purchase Plan, as amended, previously
                 filed as Exhibit 10(w) to the Company's Quarterly Report on
                 Form 10-Q for the quarter ended March 27, 1999, which is
                 incorporated herein by reference.

     10. (jj)    1998 Employee Stock Option Plan, previously filed as Exhibit
                 4.1 to the Company's Registration Statement on Form S-8,
                 Registration Number 333-69559, which is incorporated herein by
                 reference.

     10. (kk)    Form of (Key Executive) 1998 Employee Stock Option Agreement,
                 previously filed as Exhibit 10(kk) to the Company's Quarterly
                 Report on Form 10-Q for the quarter ended December 26, 1998,
                 which is incorporated herein by reference.

     10. (ll)    Form of Amendment to Employment Agreements between the Company
                 and its key executives previously filed as Exhibit 10(ll) to
                 the Company's  Quarterly Report on Form 10-Q for the quarter
                 ended December, 26, 1998, which is incorporated herein by
                 reference.

     10. (mm)    1998 Non-Employee Director Stock Option Plan, previously filed
                 as Exhibit 4.2 to the Company's Registration Statement on Form
                 S-8, Registration Number 333-69559, which is incorporated
                 herein by reference.

     10. (nn)    Form of 1998 Non-Employee Director Stock Option Agreement,
                 previously filed as Exhibit 10(nn) to the Company's  Quarterly
                 Report on Form 10-Q for the quarter ended December 26, 1998,
                 which is incorporated herein by reference.

     10. (oo)    Summary of 1999 Fiscal Year Bonus Opportunity for Chief
                 Executive Officer, previously filed as Exhibit 10(oo) to the
                 Company's  Quarterly  Report on Form 10-Q for the quarter
                 ended December 26, 1998, which is incorporated herein by
                 reference.

     10. (pp)    Amendment to Supplemental Pension and Retiree Medical
                 Agreement dated December 2, 1998, between the Company and its
                 President and Chief Executive Officer, previously filed as
                 Exhibit 10(pp) to the Company's  Quarterly Report on Form 10-Q
                 for the quarter ended December 26, 1998, which is incorporated
                 herein by reference.