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

                       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 27, 1998
                                                    -----------------
                                       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 24, 1998:

  Common Stock, par value $.01                          49,502,402
  ----------------------------                      ------------------
     (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
                                                               Jun. 27,      Jun. 28,       Jun. 27,       Jun. 28,
in thousands, except net income (loss) per share                 1998           1997          1998           1997
---------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>              <C>           <C>           <C>
Revenues:
    Product.................................................$  253,802       $294,170      $  784,723     $  835,992
    Service.................................................    97,468         97,087         293,632        293,098
                                                              --------     ----------      ----------      ---------
         Total revenues.....................................   351,270        391,257       1,078,355      1,129,090
                                                              --------      ---------      ----------      ---------

Costs and expenses:
    Cost of product revenues (Note A).......................   244,270        199,422         624,139        563,178
    Cost of service revenues................................    59,881         61,392         183,171        187,967
    Research and development................................    31,655         27,783          88,048         81,065
    Selling, general, and administrative....................    84,736         85,531         254,190        251,584
    Restructuring charge....................................    82,400             --          82,400             --
                                                               -------      ---------       ---------      ---------
         Total costs and expenses...........................   502,942        374,128       1,231,948      1,083,794
                                                              --------       --------       ---------      ---------

Income (loss) from operations...............................  (151,672)        17,129        (153,593)        45,296

Interest Income.............................................     3,181          2,695          10,072          6,268
Interest Expense............................................     3,599          4,479          10,814         10,823
Other Expense (income), net.................................     2,000             --            (240)            --
                                                              --------      ---------        ---------     ---------


Income (loss) before income taxes...........................  (154,090)        15,345        (154,095)        40,741
Income tax provisions.......................................     1,000            600           2,000          1,800
                                                              --------    -----------        ---------     ---------

Net income (loss)...........................................$ (155,090)       $14,745      $ (156,095)    $   38,941
                                                            ==========      =========       ==========     =========

Net income (loss) per share.................................    $(3.15)         $0.34          $(3.19)         $0.91
                                                               =======          =====         =======          =====

Weighted average shares outstanding, including
common stock equivalents, where applicable..................    49,159         43,576          48,895         42,858

<FN>
Note A: Included in the quarter and nine-month  period ended June 27, 1998, is a
        one-time restructuring related charge of $52.6.

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>



<TABLE>
DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>

                                                                                       (Unaudited)
                                                                                       Jun. 27,             Sept. 27, 
dollars in thousands                                                                     1998                 1997
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                    <C>
Assets
Current Assets
    Cash and temporary cash investments............................................   $   112,146           $   216,814
    Marketable securities..........................................................       175,426               151,455
    Receivables, net...............................................................       270,315               296,375
    Inventories....................................................................       145,424               166,008
    Other current assets...........................................................        34,191                27,584
                                                                                       ----------           -----------
         Total current assets......................................................       737,502               858,236
Property, plant, and equipment, net................................................       184,657               180,410
Other assets.......................................................................        66,310                96,222
                                                                                       ----------           -----------
                                                                                      $   988,469           $ 1,134,868
                                                                                        =========             =========

Liabilities and stockholders' equity
Current liabilities
    Accounts payable...............................................................   $   130,718           $   154,624
    Other current liabilities......................................................       256,746               237,198
                                                                                      -----------           -----------
         Total current liabilities.................................................       387,464               391,822
                                                                                      -----------           -----------
Long-term debt.....................................................................       212,750               212,750
                                                                                      -----------           -----------
Other liabilities..................................................................         9,192                11,516
                                                                                      -----------           -----------

Stockholders' equity
    Common stock
         Outstanding - 49,218,000 shares at Jun. 27, 1998
         and 48,588,000 shares at Sept. 27, 1997 (net of
         deferred compensation of $13,166 at Jun. 27, 1998
         and $14,157 at Sept. 27, 1997)............................................       619,931               607,130
Accumulated deficit................................................................      (235,676)              (79,581)
Unrealized gains on marketable securities..........................................         7,995                 2,812
Cumulative translation adjustment..................................................       (13,187)              (11,581)
                                                                                      -----------           -----------
         Total stockholders' equity................................................       379,063               518,780
                                                                                      -----------           -----------
                                                                                      $   988,469           $ 1,134,868
                                                                                      ===========            ==========

<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)
                                                                                               Nine Months Ended
                                                                                           Jun. 27,           Jun. 28,
in thousands                                                                                  1998               1997
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>                   <C>
Cash flows from operating activities
    Net income (loss).................................................................. $   (156,095)         $ 38,941
    Adjustments to reconcile net income (loss) to
     net cash provided from operating activities
         Depreciation and write-down of fixed assets...................................       75,583            60,331
         Amortization and write-down of
          capitalized software development costs.......................................       56,498            14,633
         Other non-cash items, net.....................................................       14,664            12,721
         Change in operating assets and liabilities....................................       39,451           (62,647)
                                                                                         -----------          --------

         Net cash provided from operating activities...................................       30,101            63,979
                                                                                         -----------          --------

Cash flows from investing activities
    Expenditures for property, plant, and equipment....................................      (94,326)          (82,629)
    Net proceeds from the sales (purchases) of marketable securities...................      (15,916)           (6,828)
    Capitalized software development costs ............................................      (28,709)          (25,942)
                                                                                          ----------          --------

         Net cash used by investing activities.........................................     (138,951)         (115,399)
                                                                                           ---------          --------

Cash flows from financing activities
    Cash provided from stock plans.....................................................        5,853             8,099
    Decrease in notes payable..........................................................           --            (1,794)
    Net proceeds from issuance of long-term debt.......................................           --           207,218
    Repayment of long-term debt........................................................           --           (26,901)
                                                                                           ---------          --------

         Net cash provided from financing activities...................................        5,853           186,622
                                                                                           ---------          --------

Effect of foreign currency rate fluctuations
 on cash and temporary cash investments................................................       (1,671)           (3,410)
                                                                                           ---------          --------

Increase (decrease) in cash and temporary cash investments.............................     (104,668)          131,792
Cash and temporary cash investments - beginning of period..............................      216,814           178,997
                                                                                          ----------          --------
Cash and temporary cash investments - end of period.................................... $    112,146          $310,789
                                                                                          ==========         =========

Supplemental disclosure of cash flow information
    Interest paid...................................................................... $     13,502          $ 11,420
    Income taxes paid.................................................................. $      1,194          $  5,590

<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)

Note 1. Consolidated Balance Sheet Details

                                                       Jun. 27,        Sept. 27,
in thousands                                             1998             1997
-------------------------------------------------------------------------------

Inventories
    Raw materials.................................    $  7,697       $  16,169
    Work in process...............................      64,174          78,335
    Finished systems..............................      48,538          44,349
    Field engineering parts and components........      25,015          27,155
                                                    ----------      ----------
                                                      $145,424         166,008
                                                      ========       =========

Property, plant, and equipment
    Property, plant, and equipment..................  $652,788        $657,351
    Accumulated depreciation........................  (468,131)       (476,941)
                                                     ---------        --------
                                                      $184,657        $180,410
                                                      ========        ========


Note 2.  Accounting Policies

         In the first quarter of fiscal 1998, the Company  adopted  Statement of
Financial  Accounting  Standards No. 128 ("SFAS 128") "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>
<CAPTION>
                                                                                        Quarter Ended
                                                  ---------------------------------------------------------------------------------
                                                              June  27, 1998                          June  28, 1997
                                                  ---------------------------------------     -------------------------------------
                                                      Loss         Shares     Per-Share        Income         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                               $(155,090)      49,159     $(3.15)        $14,745         40,625        $0.36
                                                                               =======                                      =====

Effect of Dilutive Securities

Stock Options                                            --           --                         --            2,951              
                                                     --------     --------                   --------       --------

Diluted Earnings Per Share

Net income (loss) available to
  common stockholders and
  assumed conversions                               $(155,090)      49,159     $(3.15)        $14,745         43,576         $0.34
                                                    =========     ========     =======        =======         ======         =====
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                                                                                  Nine Months Ended
                                                  ---------------------------------------------------------------------------------
                                                               June  27, 1998                           June  28, 1997
                                                  -----------------------------------        ---------------------------------------
                                                     Loss        Shares     Per-Share          Income         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                             $(156,095)       48,895     $(3.19)          $38,941        40,155       $0.97
                                                                               =====                                       =====  

Effect of Dilutive Securities

Stock Options                                         --              --                          --           2,703
                                                  ----------       -------                     -------        ------

Diluted Earnings Per Share

Net income (loss) available to
  common stockholders and
  assumed conversions                             $(156,095)       48,895     $(3.19)          $38,941        42,858       $0.91
                                                  ==========      =======     ======           =======        ======       =====
</TABLE>

         For the quarter and nine-month periods ended June 27, 1998 and June 28,
1997, 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 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.


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  1997 Annual  Report.  The results of operations for
the quarter ended June 27, 1998 are not necessarily indicative of the results of
the entire fiscal year.


Note 4.  Other Recent Pronouncements

         In June 1998,  the FASB issued  SFAS 133,  "Accounting  for  Derivative
Instruments and Hedging Activities".  This statement is effective for all fiscal
quarters of all fiscal years  beginning  after June 15,  1999.  The Company will
implement this statement as required.  The Company is evaluating the effect,  if
any,  the future  adoption of SFAS 133 will have on the  consolidated  financial
position or results of operations.



<PAGE>



Note 5.  Restructuring Charge

         In  the  quarter  ended  June  27,  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.  The program included a net
reduction of the Company's  worldwide  workforce  by approximately 400 employees
which  included  approximately  480  employee terminations, offset by additional
employees  hired  to  support  the  Company's storage business initiatives.  The
program also included the discontinuation  of  the Company's THiiN Line internet
server  products  and  of  the development and manufacturing of certain  low-end
AViiON server products, a restructuring of research  and  development activities
and the cancellation  of  certain  development and vendor supply agreements with
various third parties.  As a result  of  the  employee  terminations  and  other
actions noted above,  the Company will also close  certain  offices  related  to
sales and marketing activities.

         Accordingly,  during the current quarter, the Company recorded a charge
of approximately $135 million related to the  restructuring  program and certain
asset  write-downs  resulting from the plan. The charge  included  approximately
$82.4 million related to employee  termination  benefits,  asset write-downs and
other exit costs which the  Company  has  recorded  in  operating  expenses  and
approximately  $52.6 million for capitalized  software and inventory write-downs
which are included in product cost of sales.

         This  provision  includes  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,
approximately 270 were terminated during the quarter ended June 27, 1998 and the
remaining  terminations are expected to be substantially  complete by the end of
calendar year 1998. Asset  write-downs are comprised  primarily of fixed assets,
including  leasehold  improvements  and  demonstration  equipment  which will be
disposed of in  connection  with the  restructuring  program.  The provision for
lease  abandonments  relates to vacated lease  properties,  mainly in Europe and
Asia,  and includes a change in estimate of $1.3  million for lease  abandonment
costs accrued in prior years.

         In addition,  the Company recorded charges related to the write-down of
certain  capitalized  software  costs ($43 million) and inventory  ($10 million)
which have been recorded in product cost of sales for the quarter ended June 27,
1998.  Changes in the Company's focus for its server products resulting from the
restructuring  program  significantly lowered the future gross revenue estimates
for  certain   software-based   solutions,   requiring  that  these   previously
capitalized  costs be reduced to their net realizable  value.  Also, the Company
disposed of  inventory  related to its THiiN Line  business  and  certain  other
discontinued products.


<PAGE>



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

Financial Condition

         Cash and  temporary  cash  investments  as of June 27, 1998 were $112.1
million,  a decrease of $104.7  million from the end of fiscal 1997. At the same
date, the Company held $175.4 million in marketable  securities,  a net increase
of $24  million  during  the  current  nine-month  period.  In  total,  cash and
temporary cash investments  along  with  marketable  securities  decreased $80.7
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  and  payments  reducing  employee-related  accruals.  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 $9.3 million and classified as
available-for-sale.  The unrealized gain on marketable  securities of $8 million
is recorded as a separate component of stockholders' equity.  During the current
nine-month period, the Company recorded a gain of $2.2 million on the sale of an
equity security.  Net cash provided from operations for  the  nine  months ended
June 27, 1998 totaled  $30.1 million;  expenditures  for  property,  plant,  and
equipment were $94.3 million;  capitalized  software  development  costs totaled
$28.7 million;  and  cash  provided  from stock plans totaled $5.9 million.  The
effect of foreign currency exchange rate fluctuations on cash and temporary cash
investments was a decrease of $1.7 million.

         Net  receivables  at June 27, 1998 were $270.3  million,  a decrease of
$26.1 million from $296.4  million at September 27, 1997,  primarily as a result
of decreasing revenues.  Total inventories at June 27, 1998 were $145.4 million,
a decrease of $20.6 million from  September  27, 1997,  primarily as a result of
the write-down of inventory related to the Company's  restructuring  program and
improved supply management.  Net property,  plant, and equipment  increased $4.2
million from September 27, 1997,  principally  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
offset,  in part,  by the  write-down  of  non-strategic  assets  which  will be
disposed  of  in  connection  with  the  restructuring   program.   Fixed  asset
dispositions related to the sale of demonstration equipment totaled $5.6 million
for  the  current   nine-month   period.   Management   expects  that  sales  of
demonstration equipment will continue.

         The decrease of $29.9  million in other assets from  September 27, 1997
was attributed  mainly to the  write-down to net realizable  value of previously
capitalized software development costs due to changes in the Company's focus for
certain server products' software-based solutions.

         The decrease of $23.9  million in accounts  payable from  September 27,
1997 levels was attributed  mainly to the timing of payments related to material
purchases.  Other current liabilities increased $19.5 million from September 27,
1997,  primarily as a result of charges related to employee termination benefits
and  provisions  for lease  abandonments  related  to vacated  lease  properties
resulting  from the Company's  restructuring  program.  Long-term debt of $212.8
million remained unchanged from September 27, 1997.





<PAGE>



Results of Operations

         The  Company  reported  a net loss of $155.1  million  for the  current
quarter  ended June 27, 1998,  compared with net income of $14.7 million for the
same  period  of the  prior year.  The  net  loss  was  $156.1  million  for the
nine-month period ended June 27, 1998, compared with net income of $38.9 million
for the same nine-month period ended June 28, 1997.
<TABLE>
<CAPTION>
Revenues (in millions)

-------------------------------------------------------------------------------------------------------------------------------
                                              Quarter ended                                  Nine months ended
                              ----------------------------------------------        -------------------------------------------
                               6/27/98         Change         6/28/97                 6/27/98         Change         6/28/97
                              ----------------------------------------------        -------------------------------------------
<S>                             <C>             <C>            <C>                   <C>              <C>           <C>           
Product                         $253.8          (14%)          $294.2                $ 784.7          (6%)          $ 836.0
  % of Total Revenues              72%                            75%                    73%                            74%

Service                           97.5           --              97.1                  293.7           --             293.1
  % of Total Revenues              28%                            25%                    27%                            26%

Total                           $351.3          (10%)          $391.3               $1,078.4          (4%)         $1,129.1
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

         In the fiscal quarter ended June 27, 1998, product revenues were $131.4
million  from the  Company's  AViiON  family  of open  systems  server  products
compared with product revenues of $131.1 million in the comparable period of the
prior year. In the current  quarter,  revenues  from the  Company's  Intel-based
AViiON systems  increased 41%,  while  revenues from the  Motorola-based  AViiON
systems  declined by 71%  compared  with the same period of the prior year.  The
Company  anticipates that the percentage of server product revenues generated by
the Intel-based  AViiON products will continue to increase in fiscal 1998, while
the  Motorola-based  AViiON system revenues are expected to continue to decline.
Product revenues from the Company's  CLARiiON storage systems decreased 31% from
the comparable prior-year period and accounted for 38% of total product revenues
in the current quarter.  This decline is primarily the result of the longer than
anticipated  product  transition from SCSI-based  systems to the Company's newer
fibre-based  storage products.  CLARiiON is sold primarily through the Company's
original  equipment  manufacturer  and distributor  channels;  thus sales in any
given period are subject to sales cycles and  inventory  levels of the Company's
customers.  CLARiiON product revenues have been concentrated in a limited number
of customers, with a significant portion of the Company's CLARiiON product sales
to a single OEM customer.  Product  revenues  from personal  computers and other
equipment  decreased 36% from the same period in the prior year and  represented
6% of  total  product  revenues  compared  to 9% for the  comparable  prior-year
period.  In fiscal  1996,  the Company  formed the  VALiiANT  Business  Unit,  a
contract   manufacturing   operation,   to  take   advantage  of  the  Company's
manufacturing  expertise  and  facilities.  VALiiANT  product  revenues  for the
quarter ended June 27, 1998 represented 4% of total product revenues.


<PAGE>



         For the  nine-month  period  ended June 27, 1998,  product  revenues of
$398.2 million from the Company's  AViiON family of open systems server products
increased 5% from $379.5 million for the first nine-month period of fiscal 1997.
For the current  nine-month  period,  the Company's  Intel-based AViiON revenues
increased 51%,  while product  revenues from the  Motorola-based  AViiON systems
declined by 62% as compared  with the first  nine-month  period of fiscal  1997.
Product  revenues  from the Company's  CLARiiON  storage  systems  decreased 22%
compared to the same  nine-month  period in fiscal 1997.  Product  revenues from
personal computers and other equipment decreased by 20% from the same nine-month
period in the prior year and  represent  8% of total  product  revenues  for the
current nine-month period compared to 10% for the comparable  prior-year period.
The  VALiiANT  product  revenues for the  nine-month  period ended June 27, 1998
represented 4% of total product revenues.

         In the service business, the Company experienced an 8% and 12% increase
in professional  service  revenues in the current quarter and nine-month  period
ended June 27, 1998,  respectively,  as compared with the same periods in fiscal
1997.  This  increase was  completely  offset by a 2% and 3% decline in contract
maintenance  revenues in the current  quarter and nine-month  periods ended June
27, 1998,  respectively,  as compared  with the quarter and  nine-month  periods
ended June 28, 1997.
<TABLE>
<CAPTION>
Revenues by Geographic Marketplace

---------------------------------------------------------------------------------------------------------------------------
                                               Percentage of                                Percentage Change of
                                           Consolidated Revenues                               $ of Revenues
                            ----------------------------------------------------    ---------------------------------------
                                  Quarter ended           Nine months ended                  6/27/98 - 6/28/97
                            ----------------------------------------------------    ---------------------------------------
                              6/27/98      6/28/97      6/27/98       6/28/97       Quarter ended      Nine months ended
                            ----------------------------------------------------    ---------------------------------------
<S>                             <C>          <C>          <C>           <C>             <C>                   <C>
Domestic
Product                         65%          68%          61%           64%             (17%)                (10%)
Service                         60%          59%          60%           58%               1%                   3%
Total                           64%          65%          61%           63%             (13%)                 (7%)

Europe
Product                         22%          20%          24%           22%              (8%)                  1%
Service                         31%          30%          31%           32%               4%                  (2%)
Total                           24%          23%          26%           24%              (4%)                  --

Other International
Product                         13%          12%          15%           14%              (5%)                  3%
Service                          9%          11%           9%           10%             (13%)                (10%)
Total                           12%          12%          14%           13%              (7%)                  --
---------------------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>




         The decrease in domestic  product  revenues for the current quarter and
nine-month  periods  ended June 27,  1998 was  primarily  a result of  decreased
shipments of CLARiiON,  Motorola-based AViiON systems, and personal computer and
other equipment product revenues, which was partly offset by the increase in the
Company's  Intel-based  AViiON systems and product  revenues from VALiiANT.  The
decrease in European product  revenues,  including U.S. direct export sales, for
the current  quarter  was mainly  attributable  to  decreases  in  CLARiiON  and
personal computer and other equipment  product revenues,  which is partly offset
by increases in Intel-based  AViiON product  revenues.  The increase in European
product revenues,  including U.S. direct export sales, for the nine-month period
ended June 27,  1998 was mainly  attributable  to the  increase  in  Intel-based
AViiON  product  revenues,  partially offset by  decreases  in CLARiiON  product
revenues.  Other  international  product revenues,  including U.S. direct export
sales,  for the current  quarter  decreased 5% as compared  with the same fiscal
quarter in 1997. The increase in other  international  product  revenues for the
nine-month  period  ended June 27,  1998 was  primarily  due to an  increase  in
revenues from the CLARiiON product line.

           For the current  nine-month  period,  total  revenues in the European
marketplace  decreased  by  approximately  3% due to a stronger  U.S.  dollar as
compared to the nine-month period ended June 28, 1997.
<TABLE>
<CAPTION>
Cost of Revenues (in millions)

---------------------------------------------------------------------------------------------------------------------------------
                                             Quarter ended                                Nine months ended
                            ---------------------------------------------------       -------------------------------------------
                
                               6/27/98          Change          6/28/97                  6/27/98         Change         6/28/97
                            ---------------------------------------------------       -------------------------------------------
<S>                             <C>              <C>            <C>                       <C>             <C>            <C>
Product                         $244.3           23%            $199.4                    $624.2           11%           $563.2
 % of Product Revenues             96%                             68%                       80%                            67%

Service                           59.9           (2%)             61.4                     183.2           (3%)           188.0
 % of Service Revenues             61%                             63%                       62%                            64%

Total Cost of Revenues          $304.2           17%            $260.8                    $807.4            7%           $751.2
 % of Total Revenues               87%                             67%                       75%                            67%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

         During the quarter ended June 27, 1998,  the Company  recorded  certain
one-time  charges of $52.6 million related to the Company's  restructuring  plan
which are included in product cost of sales. These charges are primarily related
to the write-down of capitalized  software development costs related to products
no longer  considered to be part of the Company's core strategy.  As a result of
the  change  in  the  Company's   strategic   focus,   the   evaluation  of  the
recoverability  of the  capitalized  software  development  costs  resulted in a
write-down of its carrying value to its net realizable  value.  Also included in
the one-time charge is the write-down of certain  inventory  associated with the
Company's THiiN Line business unit and the refocused  server  strategy.  Without
these  special  one-time  charges,  the  pro-forma  product  cost of  sales as a
percentage  of product  revenues was 76% and 73% for the quarter and  nine-month
period ended June 27, 1998, respectively.  The increase in the pro-forma product
cost as a percentage of product  revenues from the comparable  year-ago  periods
was primarily  caused by  competitive  pricing  pressures and a shift in product
mix. The decrease in the service  cost as a percentage  of service  revenues for
the  current  quarter  and nine  months  ended  June 27,  1998 was the result of
continued  improvements in spare parts  inventory  management and improved gross
margins in the  professional  service  business related to cost savings from the
Company's restructuring program.



<PAGE>


<TABLE>
<CAPTION>
Operating Expenses (in millions)


-------------------------------------------------------------------------------------------------------------------------
                                                       Quarter ended                         Nine months ended
                                           -------------------------------------     ------------------------------------
                                           
                                             6/27/98       Change       6/28/97      6/27/98       Change      6/28/97
                                           -------------------------------------     ------------------------------------
<S>                                           <C>            <C>         <C>         <C>             <C>        <C>
Research & Development                        $31.7          14%         $27.8       $ 88.1          9%         $ 81.1
   % of Total Revenues                           9%                         7%           8%                         7%

Selling, general & administrative             $84.7          (1%)        $85.5       $254.2          1%         $251.6
  % of Total Revenues                           24%                        22%          24%                        22%

Restructuring charge                          $82.4                        --        $ 82.4                       --
  % of Total Revenues                           23%                        --            8%                       --
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
         The Company continued to focus its research and development  efforts on
its core business  technology:  multi-user computer systems,  servers,  and mass
storage  devices.  In the  current  nine-month  period,  gross  expenditures  on
research and development and software  development  before  capitalization  were
$116.8  million,  an  increase  of 9%  from  $107  million  for  the  comparable
prior-year  period.  The increase in research and development  expenditures  was
driven by investment in CLARiiON fibre products and in the Company's Non-Uniform
Memory Access (NUMA)  architecture for high-end  servers.  Additionally,  in the
current  quarter,  changes  in the  strategic  focus  for the  Company's  server
products  resulted  in the  expensing  of  software  development  costs that had
previously been capitalized.

         For the current  quarter ended June 27, 1998,  the decrease in selling,
general, and administrative expenses over the comparable quarter, is a result of
the impact of the Company's restructuring  program.  The  increase  in  selling,
general,  and  administrative  expenses for the nine-month period ended June 27,
1998 was the result of  increased  marketing  efforts in the server and  storage
businesses.  It is  anticipated  that  savings  as a  result  of  the  Company's
restructuring  program  in  the  server  business  will  result  in decreases in
selling, general, and administrative expenses  in  the  second  half of calendar
year 1998, offset, in part, by increases  from the  continued  investment in the
Clariion storage business.  At June 27, 1998,  the  number  of employees totaled
4,784, a net decrease of 339 and 280 employees from  September 27, 1997 and June
28, 1997, respectively.

         In  the  quarter  ended  June  27,  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.  The program included a net
reduction of the Company's  worldwide  workforce  by approximately 400 employees
which included 480 employee terminations, offset  by  additional employees hired
to support the Company's storage business initiatives.  The  plan  also included
the discontinuation of the Company's THiiN Line internet server products and of
the development and manufacturing of certain low-end AViiON server  products,  a
restructuring  of research and  development  activities and the  cancellation of
certain  development and vendor supply agreements with various third parties. As
a result of the employee terminations and other actions noted above, the Company
will also close certain offices related to sales and marketing activities.

<PAGE>

         Accordingly,  during the current quarter, the Company recorded a charge
of approximately $135 million related to the restructuring program  and  certain
asset  write-downs  resulting from the plan. The charge  included  approximately
$82.4 million related to employee  termination  benefits,  asset write-downs and
other exit costs which the  Company  has  recorded  in  operating  expenses  and
approximately $52.6 million for capitalized  software and inventory  write-downs
which are included in product cost of sales.  A  summary  of  the  restructuring
charge included in operating expense  and  the related accrued liability balance
at June 27, 1998 is as follows:

<TABLE>
--------------------------------------------------------------------------------------------------------------------------
                                                         Restructuring                Less:
                                                             Charge             Cash payments and        Jun. 27, 1998
 in millions                                             June 27, 1998          Asset write-downs           Balance
                                                                                                      
--------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                     <C>                     <C>         
Employee termination benefits                               $ 43.7                  $ 5.8                   $ 37.9
Asset write-downs                                             19.9                    7.4                     12.5
Lease abandonments                                            11.3                     .1                     11.2
Other exit costs                                               7.5                    1.3                      6.2
                                                             -----                  -----                    -----    
          Total                                             $ 82.4                 $ 14.6                   $ 67.8
                                                            ======                 ======                   ======

--------------------------------------------------------------------------------------------------------------------------
</TABLE>
         This  provision  includes  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,
approximately 270 were terminated during the quarter ended June 27, 1998 and the
remaining  terminations are expected to be substantially  complete by the end of
calendar year 1998. Asset  write-downs are comprised  primarily of fixed assets,
including  leasehold  improvements  and  demonstration  equipment  which will be
disposed of in connection with the  restructuring  plan. The provision for lease
abandonments relates to vacated lease properties, mainly in Europe and Asia, and
includes  a change in  estimate  of $1.3  million  for lease  abandonment  costs
accrued in prior years.

         In addition,  the Company recorded charges related to the write-down of
certain  capitalized  software  costs ($43 million) and inventory  ($10 million)
which have been recorded in product cost of sales for the quarter ended June 27,
1998.  Changes in the Company's focus for its server products resulting from the
restructuring  program  significantly lowered the future gross revenue estimates
for  certain   software  based   solutions,   requiring  that  these  previously
capitalized  costs be reduced to their net realizable  value.  Also, the Company
disposed of  inventory  related to its THiiN Line  business  and  certain  other
discontinued products.

         The Company  expects cost savings of  approximately  $40 to $45 million
annually from the restructuring  program. The Company does not expect to realize
the full benefit of the expense  reductions  until the first quarter of calendar
year 1999.  Based on current  forecasts,  the  Company  believes  that such cost
reductions will benefit future operations.  While the Company does not currently
foresee any significant additional restructuring charges in the near future, the
successful implementation of the action plans associated with this restructuring
is critical to achieving improved operating results in future periods. There can
be no assurance that the Company's  restructuring  activities will be successful
or sufficient  to allow the Company to generate  improved  operating  results in
future periods.

         During fiscal year 1995, the Company recorded a restructuring charge of
$43 million.  No material changes in estimates to prior provisions or additional
charges were recorded  during the first  nine-month  period of fiscal 1998.  All
charges,  excluding  asset  write-downs  and certain other charges,  are cash in
nature and are funded from operations. The remaining reserves of $4.6 million at
June 27, 1998 are for excess  vacant  rental  properties,  primarily  located in
Europe.


<PAGE>




         Interest  income  for the  current  quarter  was $3.2  million,  an 18%
increase  from $2.7 million for the  comparable  period of fiscal  1997,  due to
higher levels of invested  cash.  Interest  expense for the current  quarter was
$3.6  million,  a 20% decrease  from $4.5 million for the  comparable  period of
fiscal 1997 due to interest  expense  savings from the retirement in fiscal 1997
of the 7 3/4%  Convertible  Subordinated  Debentures due 2001. Other expense for
the  current  quarter  includes a loss of $2 million  from the  write-off  of an
equity investment in a non-affiliated  company which had been previously carried
at cost. For the nine-month  period ended June 27, 1998, the write-off is offset
by a gain on the sale of an equity security.

         The income tax  provision  for the  current  quarter  was $1.0  million
compared to $.6 million for the comparable  prior-year  period. The current year
tax  provision  relates  primarily to foreign,  state,  and federal  alternative
minimum taxes. The Company has a valuation allowance which offsets substantially
all deferred tax assets as of June 27, 1998 and June 28, 1997. 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.

         Statements concerning the Company's business outlook or future economic
performance;  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 1997
fiscal year ended September 27, 1997 and this Quarterly  Report on Form 10-Q for
the third fiscal quarter of 1998, which ended June 27, 1998.



<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's  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 CLARiiON storage products 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.

Item 5.  Other Matters

Stockholder Proposals

         August 17, 1998 is the deadline for  submitting  stockholder  proposals
for  inclusion  in the Board of  Directors'  proxy  statement  and form of proxy
relating to the January,  1999 Annual Meeting of  Stockholders  (the "1999 Proxy
Statement").  Further, proxies  received  in  connection  with  the January 1999
Annual  Meeting  of  Stockholders  will  confer  on  the  Company  discretionary
authority (i) to vote on any stockholder  proposal  which  is  received  by  the
Company after November 2, 1998, and (ii) to vote  on  any  stockholder  proposal
which is received  by  the Company on or before November 2, 1998  if  the  proxy
statement includes advice on the nature  of  the  matter  and  how  the  Company
intends to vote.


<PAGE>



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

(a) Exhibits:

    3.  (c)    By-Laws of the  Company,  as  amended,  previously  filed on Form
               10-K/A  dated  April 21,  1998,  which is incorporated  herein by
               reference.

        (d)    Certificate of Increase dated November 26, 1997, previously filed
               on March  16,  1998 as  Exhibit 4 to the  Company's  Registration
               Statement on Form 8-A, which is incorporated herein by reference.

    4.  (d)    Form  of  6% Convertible  Subordinated  Note due 2004, previously
               filed   on   March  16,  1998  as  Exhibit  2  to  the  Company's
               Registration  Statement on Form 8-A, which is incorporated herein
               by reference.

    10. (nn)   Deferred Compensation Plan Trust Agreement dated January 2, 1998,
               previously  filed  as  Exhibit 10(nn) to the Company's  Quarterly
               Report on  Form  10-Q for the quarter ended March 28, 1998, which
               is incorporated herein by reference.

    11.        Computation of basic and diluted earnings per share.

(b) No reports on Form 8-K were filed  during the current quarter ended June 27,
    1998.



<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/ Arthur W. DeMelle
                                                --------------------------------
                                                         Arthur W. DeMelle
                                                       Senior Vice President
                                                      Chief Financial Officer



    Dated:  August 6, 1998





<PAGE>



                                    EXHIBITS


Index to Exhibits.

3. (c)   By-Laws of the  Company,  as amended,  previously  filed on Form 10-K/A
         dated  April 21,  1998,  which is incorporated herein by reference.

   (d)   Certificate of Increase dated November 26, 1997, previously filed on 
         March 16, 1998 as Exhibit 4 to the Company's Registration Statement on
         Form 8-A, which is incorporated herein by reference.

4. (d)   Form of 6% Convertible Subordinated Note due 2004, previously filed on
         March 16, 1998 as Exhibit 2 to the Company's Registration Statement on
         Form 8-A, which is incorporated herein by reference.

10.(nn)  Deferred  Compensation  Plan  Trust  Agreement  dated  January 2, 1998,
         previously filed as Exhibit 10(nn) to the Company's Quarterly Report on
         Form 10-Q for the quarter ended March 28, 1998,  which is  incorporated
         herein by reference.

11.      Computation of basic and diluted earnings per share.