UNITED STATES 
                    SECURITIES AND EXCHANGE COMMISSION 
                         WASHINGTON, D.C.  20549 
 
                                FORM 10-K 
 
             Annual Report Pursuant to Section 13 or 15(d) of 
                  the Securities and Exchange Act of 1934 
 
[X]   Annual report pursuant to section 13 or 15(d) of the Securities Exchange 
      Act of 1934 for the fiscal year ended December 30, 1995 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:     0-15627 
 
                     SEQUENT COMPUTER SYSTEMS, INC. 
        (Exact name of registrant as specified in its charter) 
 
            Oregon                                 93-0826369 
     (State or other jurisdiction of 
     incorporation or organization)   (I.R.S. Employer Identification Number) 
 
         15450 S.W. Koll Parkway, Beaverton, Oregon  97006-6063 
       (Address of principal executive offices, including zip code) 
 
Registrant's telephone number, including are code:   (503) 626-5700 
 
Securities registered pursuant to Section 12(b) of the Act:   None 
 
         Title of each class         Name of each exchange on which registered 
       ______________________                 ______________________ 
 
        Securities registered pursuant to Section 12(g) of the Act: 
                     Common Stock, $.01 par value 
                          (Title of Class) 
 
   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_____ 
 
   Indicate by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K. 
 
   Aggregate market value of Common Stock held by nonaffiliates of the 
Registrant at February 29, 1996, based on the closing price on such date on 
the NASDAQ National Market System:  $389,755,255. 
 
   Number of shares of Common Stock outstanding as of February 29, 1996:  
33,360,076. 
 
                 Documents Incorporated by Reference 
 
                                                Part of Form 10-K into 
                Document                            which incorporated 
      1995 Annual Report to Shareholders            Parts II and IV 
      Proxy Statement for 1996 Annual 
      Meeting of Shareholders                            Part III 
 
 
                          TABLE OF CONTENTS 
 
Item of Form 10-K                                                     Page 
 
PART I 
 
  Item 1.    Business                                                     3 
 
  Item 2.    Properties                                                  11 
 
  Item 3.    Legal Proceedings                                           11 
 
  Item 4.    Submission of Matters to a Vote of Security Holders         11 
 
  Item 4(a). Executive Officers of the Registrant                        11 
 
PART II 
 
  Item 5.    Market for the Registrant's Common Equity and               12 
             Related Stockholder Matters 
 
  Item 6.    Selected Financial Data                                     12 
 
  Item 7.    Management's Discussion and Analysis of Financial           12 
             Condition and Results of Operations 
 
  Item 8.    Financial Statements and Supplementary Data                 12 
 
  Item 9.    Changes in and Disagreements with Accountants               12 
             on Accounting and Financial Disclosure 
 
PART III 
 
  Item 10    Directors and Executive Officers of the Registrant          13 
 
  Item 11    Executive Compensation                                      13 
 
  Item 12    Security Ownership of Certain Beneficial Owners and         13
             Management      
 
  Item 13    Certain Relationships and Related Transactions              13 
 
PART IV 
 
  Item 14.   Exhibits, Financial Statement Schedules and Reports         14 
             on Form 8-K 
 
SIGNATURES                                                               22 
 
                                PART I 
 
Item 1.   Business. 
 
     Sequent Computer Systems, Inc. ("Sequent" or "the Company") is a provider 
of large-scale open systems and client/server solutions for large 
organizations spanning diverse industries.  Sequent develops, manufactures and 
sells symmetric multiprocessing (SMP) systems that support large-scale on-line 
transaction processing (OLTP), decision support (DSS) and both intranet and 
internet-based business communications applications.  Sequent's project-
oriented offerings include consulting and professional services to link 
companies' current and future information technology (IT) investments to their 
business strategy.  The Company partners with other vendors to deliver 
complete solutions to its customers. 
 
     The Company was incorporated in Delaware in January 1983 and was 
reincorporated in Oregon in December 1988.  Unless the context otherwise 
requires, references in this Report on Form 10-K to the "Company" or "Sequent" 
refer to the prior Delaware corporation, the current Oregon corporation and 
its subsidiaries.  The Company's principal executive offices are located at 
15450 S.W. Koll Parkway, Beaverton, Oregon 97006, and its telephone number at 
that location is (503) 626-5700. 
 
Market Overview  
 
     In the past decade, Sequent has developed the experience to guide large 
organizations through complex changes faced in moving to open systems.  These 
changes include the renovation of business processes and information systems, 
maximizing benefits of SMP architectures and open systems, widespread use of 
relational database management software (RDBMS) applications and the 
substitution of OLTP for traditional batch processing.  Since the launch of 
its SMP family of systems in 1984, Sequent has installed more than 7,500 SMP 
open systems worldwide. 
 
     Information Systems Renovation.  Global economies and intense competitive 
pressures today prompt many companies to provide employees with access to data 
to increase responsiveness to customer needs.  This need for access to data 
requires companies to reengineer or redesign their business processes to take 
advantage of innovative open client/server architectures, systems and 
products.  Sequent offers a wide range of consulting, education and 
implementation services to assess an organization's current systems and 
processes, design new systems that support business objectives, and deliver 
and implement systems, thereby providing a complete solution. 
 
     SMP Architectures. With dramatic improvement in the power and 
price/performance characteristics of processors and the proven ability of SMP 
architectures to incorporate multiple processors into a single large-scale 
system or group of systems, customers are increasingly employing SMP systems 
to meet their commercial computing needs.  Sequent has had over a decade of 
success with SMP systems.  The adoption of SMP architectures by other major 
computer systems providers ensures continued acceptance of SMP in the 
commercial marketplace.   
 
     Open Systems.  Historically, large organizations have relied upon 
computing equipment based upon a single vendor's proprietary technology that 
was generally incompatible with that of other vendors.  In recent years, 
proprietary systems have become increasingly unacceptable to companies that 
want the flexibility to purchase computing equipment and software best suited 
for a specific need without being constrained by the technology employed by a 
specific computer vendor.  Proprietary systems also make it difficult for the 
PC user to access information and applications from the central computer.  An 
open system, by contrast, incorporates industry standard technology and 
permits users to integrate computer equipment offered by different vendors.  
An open systems environment also facilitates offloading applications from the 
central computer to a less expensive department, desktop or special-purpose 
computer.  Many companies are replacing some or all of their proprietary 
central computing systems, moving to a more open, distributed system when they 
upgrade or expand their systems.   
 
     RDBMS and OLTP.  RDBMS is the primary vehicle for managing information in 
large organizations.  RDBMS systems are also used to support OLTP, which is 
increasingly replacing traditional batch processing of historical data in 
businesses with centralized information needs and distributed operations.  The 
OLTP market includes any systems that support the day-to-day operational 
processes of a corporation.  The market demand for OLTP computing systems, 
particularly those using RDBMS technology, spans a wide variety of industries 
and applications and has increased dramatically as more businesses require 
instantaneous processing of information. 
 
     Rapid Growth in Desktop and Network Computing.  The dramatic growth of 
the number of desktop PCs has been fueled by significant increases in the 
power and performance of processors, rapid reduction in computer technology 
costs, wide availability of PC applications software and growth in the 
computer literacy rate among the workforce.  Desktop PCs have become a 
pervasive component of today's business environment, and in many cases are 
used to run applications which are critical to a company's operations.  In 
recent years, companies have increasingly sought to improve the efficiency of 
their computing systems by integrating PCs with centralized computing 
resources to enable enterprise-wide communication, distributed processing and 
instantaneous access to enterprise information (database) and computing 
services (applications software).   
 
     Client/Server Computing.  As more computing power shifts to the desktop 
from large centralized computers, organizations are recognizing that the 
traditional host-terminal model of computing, in which all information is 
processed at central locations, is no longer cost effective.  These 
organizations are increasingly incorporating the client/server model, in which 
processing takes place at many sites and computing tasks are shared between 
desktop "clients" and remote "servers."  
 
Sequent's Strategy  
 
     Sequent's strategy is to provide SMP systems that support highly 
available large-scale OLTP, DSS and both intranet and internet-based business 
communications applications.  Sequent's project-oriented offerings include 
consulting and professional services to help companies link information 
technology to current and future business objectives.  Sequent designs, 
manufactures and partners to deliver large-scale SMP computing systems with 
leading-edge technologies for RDBMS, OLTP, decision support and other 
client/server applications. 
 
     Migration to Open Systems.  Sequent concentrates on understanding the 
business objectives and computing needs of the customer at all organizational 
levels.  The Company then works closely with the customer and suppliers of key 
system components to design an open, integrated solution to meet the 
customer's computing needs.  The Company seeks to add value for the customer 
by designing an integrated system that directly supports its business 
objectives and conforms to a sound architectural infrastructure including 
hardware, system software, networks, communications and applications.  The 
Company focuses on large-scale organizations that have centralized information 
systems with distributed operations and are committed to migrating from a 
proprietary system environment to open systems. 
 
     Leading-Edge Technologies.  Sequent's Symmetry and WinServer systems, 
recognized as some of the industry's leading SMP platforms, provide superior 
price/performance and scalability for RDBMS, OLTP and client/server 
applications.  The performance benefits of SMP compared to single processor 
systems are especially pronounced in transaction-intensive applications.  
Sequent's systems currently use the Intel Pentium processors and can 
incorporate up to 30 processors in a single system.  Sequent intends to 
maintain its leadership position in SMP, including upgrading to new Intel 
processors as they become available and future non-uniform memory access 
architectural advancements.  Sequent also sells clustered systems which share 
common data allowing increased computing power with high availability. 
 
     Commitment to Open Systems.  Sequent's open system architecture 
incorporates industry standards whenever possible, including the use of Intel 
processors, the UNIX and Windows NT operating systems, and standard network 
and communications interfaces. Sequent systems are designed to operate in a 
multi-vendor heterogeneous environment and support a wide variety of third-
party software, including RDBMS,OLTP, decision support and business 
commications applications.   
 
     "Partnering" with Leading Vendors.  Sequent devotes substantial resources 
to strategic marketing and product development relationships with those 
companies it believes offer the best open systems technologies.  The Company 
has relationships with major providers of RDBMS software, including Oracle 
Corporation, Informix Software Inc., Computer Associates (Ingres), and 
Progress Software Corporation.  Sequent also has strategic relationships with 
Intel for joint research and development of future computer "building blocks"; 
with suppliers of other major operating systems, such as Microsoft for  
Windows NT; with major suppliers of communications and network software, 
including Novell; with emerging suppliers of client/server application 
development products such as Forte' Software, Inc.; and with suppliers of 
third-party applications software such as Oracle, PeopleSoft, Baan and SAP.   
 
Platform Overview  
 
     Business automation and systems integration applications require 
extensive amounts of computing power, memory and disk storage throughput.  
Sequent systems are designed for customers with extensive computing 
requirements.  Sequent products are based on industry standards and are 
designed to easily combine with other computing hardware in an open systems 
environment.  Sequent systems enable customers to implement cost-effective 
computing, to automate business functions and to integrate enterprise-wide 
computing operations.   
 
     The Company's Symmetry systems, currently based on Intel Pentium 
processors, offer high levels of transaction processing and decision-support 
performance at list prices ranging from $200,000 for a dual-processor system 
to several million dollars for a 30-processor system serving thousands of 
active users in a database environment. 
 
     Sequent's processor-independent architecture allows the Company to 
incorporate technological advances in its product offerings more quickly and 
inexpensively than manufacturers of computer systems with proprietary central 
processing units.  The Company's ongoing product development efforts leverage 
advances in open systems technology, including processor enhancements, storage 
technology, communications and user-interface enhancements.  These 
enhancements directly benefit customers who can upgrade their installed 
Sequent systems without altering source programs, retraining users or 
replacing hardware and software not directly affected by the upgrade.  The 
Company plans to introduce the 167 Megahertz Pentium Processor in its 
Symmetry product line in 1996. 
 
     Sequent Symmetry systems are based on an open system architecture that 
incorporates industry standards such as those in the UNIX operating system.  
DYNIX/ptx, Sequent's version of UNIX, enhanced for SMP in the commercial 
marketplace, allows Sequent systems to provide nearly linear improvements in 
incremental performance as processors are added. DYNIX/ptx provides Sequent 
customers access to a growing array of UNIX software applications.  Sequent 
Symmetry systems used in network and client/server applications link PCs and 
department level and central computers to deliver applications and information 
to desktop PCs through network and PC interfaces, allowing users access to 
extensive processing power and information.   
 
     The Company's WinServer systems, which run Microsoft Windows NT operating 
system, are based on Intel Pentium processors. The Windows NT-based systems 
provide database and application services for workgroup, departmental and 
enterprise-level computing requirements.  The family of systems is designed to 
support from 2  to 28 Intel processors. 
 
Partnering with Leading Vendors  
 
     Relational Database Management Software.  Sequent has strategic marketing 
and development relationships with major independent providers of RDBMS 
software, including Oracle Corporation, Informix Software, Inc., Computer 
Associates (Ingres), and Progress Software Corporation. Sequent's SMP 
architecture is designed to maximize the performance and scalability 
requirements for managing extensive amounts of computing power required by 
OLTP applications in conjunction with RDBMS software. In addition, this same 
technology, coupled with the emerging capabilities provided by Sequent's RDBMS 
partners, strengthens the decision-support performance required by large-scale 
enterprises today.  Sequent has chosen to run its partners' software in 
support of its own enterprise needs. Sequent and these strategic  partners 
join forces in joint development programs, joint marketing programs, and sales 
teaming efforts. The result is an exchange of technical personnel, dedicated 
marketing expertise and a highly trained sales organization to help sell the 
Company's and its partners' combined solutions.  During the year ended 
December 30, 1995, a significant portion of Sequent's solutions were sold with 
RDBMS packages as a result of these relationships. 
 
     Operating Systems.  The Company has committed significant resources to 
supporting both the UNIX operating system and the emerging Windows NT system, 
which the Company believes will be the two major operating systems for open, 
enterprise-wide computing.  The Company's continuing leadership in the 
development of UNIX-based SMP systems has been acknowledged by the industry's  
leading developers of commercial UNIX systems software.  The Symmetry 2000 was 
selected by AT&T's UNIX System Laboratories ("USL"), now owned by Santa Cruz 
Operation, to develop its next-generation, multiprocessing version of UNIX 
System V with enhanced security (System V.4 ES/MP), which introduces SMP 
capabilities to the operating system.  
 
     The Company continues to enhance the DYNIX/ptx operating system, 
currently as DYNIX/ptx 4.1 adding features to operate in mission critical 
environments.  These features include increased scalability, improved systems 
management and support for highly available systems through clustering 
software.  Sequent's clustering technology is software based which enables the 
Company to respond quickly to improvements in hardware technology as they are 
introduced into the marketplace.  The Company has worked closely with 
Microsoft in joint development programs, including the exchange of technical 
personnel, to ensure that the Windows NT operating system is compatible with 
Sequent's SMP architecture.  The Company regularly works with Microsoft to 
enhance the scalability and performance of Windows NT. 
 
     Client/Server Application Software.  Sequent maintains strategic 
relationships with key software providers to assure the availability and 
maximum performance of pivotal software products on the Sequent platform.  
Sequent offers packaged and custom applications. 
 
     Packaged Applications:  Packaged software applications provide a standard 
pre-engineered solution for a common set of functional business problems.  
Packaged applications offer the potential to trim the total cost of a 
solution, reduce the time required for implementation, and lower overall 
project risk.  Sequent maintains a number of strategic relationships with 
software partners who provide products in this area including Oracle, 
PeopleSoft, Baan and SAP. 
 
     Customer software applications are used to build custom solutions in 
situations where packaged applications do not meet business requirements or 
where customers desire to build systems for a competitive edge.  Sequent 
maintains a number of strategic relationships with software partners who 
provide products in this area including Oracle, Informix and Forte'. 
 
     Communications Software.  The Company's systems support communications 
products which allow Symmetry systems to interconnect its own and various 
multivendor systems.  These products include hardware which connect to Wide 
and Local Area Networks of different media and software which support 
protocols for open and proprietary systems.   
  
     Sequent's communications products are differentiated by Parallel STREAMS 
Architecture which utilizes SMP architecture to produce high performance and 
scalable communications.  Parallel STREAMS are used for both low level 
communications media software to drive Ethernet, Token Ring, fiber distributed 
data interface ("FDDI") and synchronous lines as well as high level protocols. 
 
     In addition to open systems communications using protocols such as 
tcp/ip, Open Systems Interconnections ("OSI") and X.25, Sequent communicates 
directly with IBM and DEC systems via Systems Network Architecture ("SNA") or 
DECnet/LAT protocols, respectively.  The Company interfaces with many other 
vendors utilizing these same protocols.   
 
     Third-Party Applications Programs.  The rapidly expanding universe of 
applications software can be easily ported to Sequent's UNIX-based Symmetry 
multiprocessing systems.  The Company recognizes that applications software is 
a critical element in providing solutions to the enterprise and maintains 
marketing programs to promote the development and support of third-party 
applications software packages for the Company's systems.  Currently, over 650 
software application modules from approximately 300 vendors are available to 
Sequent users.  The software products offered drive core business applications 
in the OLTP, DSS, both intranet and internet-based business communications as 
well as key business applications, database technologies and development 
environments.  The software packages available address the needs of many 
different vertical markets, including manufacturing, telecommunications, 
health care, financial services and state and local governments.  To 
supplement the marketing efforts of the third-party suppliers, the Company 
actively promotes these software partners to end users through joint sales 
campaigns, demonstrations at its sales offices and trade shows, marketing 
collateral, and joint marketing programs. 
 
     In addition, Sequent's WinServer systems support the thousands of 
software applications developed by third-party companies for the Microsoft 
Windows NT operating system.   
 
Sales and Distribution  
 
     The Company sells its products and services through worldwide direct and 
indirect distribution channels.  The primary sales channel in North America 
and Europe is through the direct sales force while sales channels in Asia and 
the rest of the world are primarily distributors.  The Company has 59 sales 
offices worldwide, including 32 in North America and 14 in Europe.  Indirect 
sales channels utilized by the Company include value-added resellers, original 
equipment manufacturers ("OEMs"), and foreign distributors. 
 
     As is common in the computer industry, a significant portion of orders is 
generally received and shipped in the last month of a fiscal quarter.  As a 
result, the Company's product backlog is relatively small, is not necessarily 
indicative of sales levels for future periods and is not material to 
understanding the Company's business. 
 
     The Company had no single customer that represented greater than 10% of 
total revenues in 1995, 1994 or 1993.  International sales were approximately 
55%, 48%, and 44% of the Company's total revenues in 1995, 1994 and 1993, 
respectively. 
 
Competition  
 
     The computer industry is intensely competitive and characterized by rapid 
technological advances resulting in frequent new product introductions and 
improvements in performance.  Competitive factors include product quality and 
reliability, professional services capability, architectural fit, relative 
price/performance, ease of understanding and operation of the system, 
capability of the operating system software, availability of applications 
software, marketing capability, service and support, name recognition, and 
corporate reputation and longevity. 
 
     Sequent's architectural consulting and professional services business is 
positioned in the marketplace between traditional management consultants that 
perform business process analysis and re-engineering, such as Nola, Norton & 
Co., and McKinsey & Co., and technical system integration consultants, such as 
Electronic Data Systems Corp. and Perot Systems Corp., that develop solutions 
for narrowly defined system projects.  Both management consultants and 
technical system integration consultants compete with the Company.  Some of 
these competitors have financial, marketing and technical resources which 
significantly exceed those of the Company.  The Company believes that it can 
compete favorably based on its expertise in tying the business process 
analysis and re-engineering outcomes to solutions for specific system projects 
on an enterprise-wide basis. 
 
     Within the commercial segment of the general purpose computing market, 
Sequent competes against, among others, the major computer manufacturers, 
including Hewlett-Packard, DEC and IBM.  The size, reputation, installed base 
and distribution strength of these companies make them significant 
competitors.  Although some of these competitors have financial, marketing, 
distribution and technical resources which significantly exceed those of the 
Company, the Company believes that it can compete favorably in the open 
systems marketplace based on its technological advancements, professional 
services expertise, price/performance and value to the customer. 
 
Product Development  
 
     The Company's research and development programs are continually focused 
on advancing hardware and software technologies.  Sequent not only leverages 
the availability of processor technology from Intel, but also leverages 
systems management and backup/restore software products supplied by open 
systems vendors. Sequent adds high-end capabilities to these products to 
better satisfy customer needs.   
 
     At the end of 1996, Sequent expects to introduce systems based on its new 
Cache Coherent Non-Uniform Memory Access (NUMA-Q) architecture.  The NUMA-Q 
architecture condenses four Intel Pentium Pro processors, memory and 
input/output ports into a single building block for increased performance and 
reliability.  These four-processor "quads" will be interconnected with the 
Company's IQ-Link technology which allows a large number of quads to become a 
distributed shared memory SMP system.  As with previous designs, the 
performance will scale linearly as quads are added to a system.  Sequent NUMA-
Q systems will be both software compatible and clustered systems compatible 
with Sequent's current product line. 
 
     The Company's software development program is focused on improving the 
performance of its parallel enabled operating system, providing highly 
available clustering software, and enhancing its suite of communications, 
network and client/server and third-party applications software.  The Company 
intends to continue making substantial investments in research and development 
activities to maintain and enhance its competitive position in a market 
characterized by rapid technological advances.   
 
Professional Services and Product Support  
 
          Sequent offers a wide range of professional services to ensure that 
every phase of a customer's project, from advance planning and architecture to 
technology deployment and ongoing systems support, is successful.  
Professional services include:  Architectural and transition planning; DSS 
design and implementation; packaged and custom OLTP design and implementation; 
and enterprise management design and systems administration.   The Company's 
Professional Services group uses leading edge knowledge to deliver enterprise-
wide system solutions designed to meet customers' business requirements.  In 
addition, Sequent offers customers a comprehensive set of education and 
training programs. 
 
     The Company also offers an array of customer service and support 
programs, including hardware maintenance and service, software service and 
upgrades and documentation support.  In addition, hardware maintenance is 
offered for many third-party peripheral products connected to the Sequent 
system.  The Company maintains a 24-hour toll-free telephone line for 
technical consultation as well as remote log-in capability for diagnosing 
customer hardware and software problems.  In some cases,  in-field hardware 
service is contracted to third-party suppliers, which rely on Sequent for 
customer interface and diagnostic support.  The Company's standard warranty on 
its products generally extends 90 days from the date of customer installation.
 
     The Company believes that the quality and reliability of its computer 
systems are important to customer satisfaction.  Sequent's systems have proven 
their high quality and reliability.  High system uptime is a built-in 
advantage of Sequent's architecture.  Sequent personnel perform all 
installations and hardware fault isolation and provide complete software 
support for direct customers.  Sequent systems are equipped with diagnostic 
tools that allow the Company's service engineers to identify and disable a 
failed component from remote locations.  Replacement modules can be provided 
quickly to restore the system to full capacity.  The Company also offers 
service and support programs in system performance evaluation and disaster 
protection.  Remote Analysis, Diagnostics and Resolution ("RADAR") provides 
the advanced level of support traditionally found in proprietary mainframe 
environments.  A key element in RADAR is Sequent's software-based service 
product, ProScan, which significantly increases system availability by 
continuously monitoring Sequent Symmetry systems to detect and resolve 
potential failure points. 
 
     Revenue generated from services and support was 27%, 24% and 21% of total 
revenue during 1995, 1994 and 1993, respectively.   
 
Manufacturing  
 
     The Company's manufacturing operations consist of procurement, assembly, 
testing and quality control.  Subcontractors are often used to assemble and 
test subassemblies, such as printed circuit boards.  The modular nature of the 
Company's products, together with the standards-based open architecture, 
permit ease of manufacture and system configuration.  Once integrated, all 
systems go through a fully operational, continuous burn-in cycle while 
executing rigorous system stress and diagnostic tests.  Final assembly and 
testing occur only when a specific customer order is due for shipment (because 
of the broad range of system configurations possible from a relatively few 
basic modules and the many choices of peripherals).  If a failure occurs or a 
problem of unknown origin arises during work-in-progress testing, it is the 
policy of the Company to halt shipment of products which may be affected while 
the Company isolates and corrects the problem and determines whether the 
problem may extend to other systems in manufacturing or at customer sites.  
Such interruptions could cause fluctuations in quarterly results.   
 
     The Company generally obtains most parts and components from one vendor, 
even where multiple sources are available, to maintain quality control and 
enhance the working relationship with suppliers.  These relationships include 
joint engineering programs for new product development.  The Company attempts 
to reduce the risk of supply interruption through close supplier relationships 
and greater inventory positions in certain sole-sourced components.  The 
failure of a supplier to deliver on schedule could delay or interrupt the 
Company's delivery of products and thereby adversely affect the Company's 
revenue and profits. 
 
Patents and Licenses  
 
     Four U.S. and three United Kingdom patents have been issued to the 
Company.  The Company has filed three additional U.S. patent applications and 
two foreign applications covering technology incorporated into its products, 
which are still pending.  The Company believes that the rapid pace of 
technological change in the computer industry makes patent protection less 
significant than factors such as its continued focus and efforts in research 
and product development, its technical expertise and the management ability of 
its personnel.   
 
Employees  
 
     At December 31, 1995 the Company employed approximately 2,129 full-time 
employees, of whom approximately 1,277 were employed in sales, marketing and 
customer service, 343 in product development, 171 in manufacturing and 338 in 
administrative and support services.  The Company's continued success will 
depend in part on its ability to attract and retain highly skilled and 
motivated personnel who are in great demand throughout the industry.  None of 
the Company's employees is represented by a labor union.  All full-time 
Sequent employees are granted options to acquire Common Stock of the Company.  
Sequent believes that its employee relations are excellent and believes that 
its stock incentive plans, its challenging work environment and the 
opportunities for advancement within the Company are key factors to its 
ability to attract and retain qualified personnel.   
 
Trademarks 
 
     Sequent, Symmetry, WinServer and DYNIX/ptx are registered trademarks and 
Parallel STREAMS, NUMA-Q and IQ-Link are trademarks of Sequent Computer 
Systems, Inc.  This Report on Form 10-K also refers to trademarks held by 
other corporations. 
 
Forward Looking Statements 
 
     Information in this Report on Form 10-K that is not historical 
information, including information regarding product development schedules, 
constitutes forward-looking statements that involve a number of risks and 
uncertainties.  From time to time the Company may issue other forward-looking 
statements.  The following factors are among the factors that could cause 
actual results to differ materially from the forward-looking statements:  
business conditions and growth in the electronics industry and general 
economies, both domestic and international; lower than expected customer 
orders, delays in receipt of orders or cancellation of orders; competitive 
factors, including increased competition, new product offerings by competitors 
and price pressures; the availability of third party parts and supplies at 
reasonable prices; changes in product mix and the mix between product and 
service revenue; significant quarterly performance fluctuations due to the 
receipt of a significant portion of customer orders and product shipments in 
the last month of each quarter; and product shipment interruptions due to 
manufacturing problems.  Any forward-looking statements should be considered 
in light of these factors. 
 
Item 2.   Properties. 
 
     The Company's headquarters and its product development and manufacturing 
operations are located in facilities totaling approximately 500,000 square 
feet in Beaverton, Oregon, 10 miles west of Portland.  The Company occupies 
these facilities under leases which expire from 2000 to 2006.  On the 
expiration dates of these leases, the Company generally has the option of 
purchasing the leased facilities at fair market value or renewing the leases 
for an additional five years.  The Company also leases sales, marketing and 
customer support offices in locations throughout the United States, Europe, 
Canada, Japan, Singapore, Hong Kong, New Zealand and Australia.  The Company 
anticipates that it will need to expand its corporate and field facilities in 
the next one to two years. 
 
Item 3.     Legal Proceedings. 
 
     Not applicable. 
 
Item 4.     Submission of Matters to a Vote of Security Holders. 
 
     Not applicable. 
 
Item 4(a).   Executive Officers of the Registrant. 
 
Name                   Age                    Position 
 
Karl C. Powell, Jr.     52     Chairman and Chief Executive Officer, Director 
John McAdam             45     President and Chief Operating Officer, Director 
Robert S. Gregg         42     Sr. Vice President of Finance and Legal     
                               and Chief Financial Officer 
 
     Mr. Powell, a co-founder of the Company, is Chairman and Chief Executive 
Officer, and has been a director since 1983.  Mr. Powell has served as the 
Company's sole Chief Executive Officer or shared the Office of the Chief 
Executive with the co-founder of the Company since the Company's inception.  
From 1974 to 1983, Mr. Powell was employed by Intel Corporation, where his 
most recent position was General Manager for Microprocessor Operations.  Mr. 
Powell served on the National Board of Directors of the American Electronics 
Association from 1985 to 1986.  He holds a B.S. degree in mechanical 
engineeering from the US Merchant Marine Academy. 
 
     Mr. McAdam joined the Company in August 1989 as U.K. Sales Director.  He 
became U.K. General Manager in January 1991, Vice President and General 
Manager of European Operations in October 1992, and Senior Vice President of 
European and Asian Operations in January 1994.  He was promoted to President 
and Chief Operating Officer in Feburary 1995, and was elected to the Board of 
Directors in November 1995.  Prior to joining the Company Mr. McAdam was 
employed for 10 years by Data General U.K. Ltd., serving most recently as 
Regional Manager, Public Sector, Finance and Goverment Market.  Mr. McAdam 
holds a B.Sc. first class honors degree in Computer Sciences from Glasgow 
University. 
 
     Mr. Gregg joined the Company in 1983 as its Controller.  He became 
Director of Finance in 1984 and Vice President of Finance and Chief Financial 
Officer in March 1986.  He was promoted to Senior Vice President of Finance & 
Legal and Chief Financial Officer in February 1995.  Prior to joining the 
Company, Mr. Gregg spent eight years at the public accounting firm of Price 
Waterhouse LLP.  Mr. Gregg holds a B.S. degree in business and accounting from 
the University of Oregon. 
 
 
                               PART II 
 
Item 5.     Market for the Registrant's Common Equity and Related Stockholder 
            Matters. 
     The information required by this item is included under "Market 
     Information (unaudited)" in the Company's 1995 Annual Report to 
     Shareholders and is incorporated herein by reference. 
 
Item 6.     Selected Financial Data. 
     Information with respect to selected financial data is included under 
     "Selected Financial Data" in the Company's 1995 Annual Report to 
     Shareholders and is incorporated herein by reference. 
 
Item 7.     Management's Discussion and Analysis of Financial Conditions and 
            Results of Operations. 
     Information with respect to management's discussion and analysis of 
     financial condition and results of operations is included under 
     "Management's Discussion and Analysis of Financial Conditions and 
     Results of Operations" in the Company's 1995 Annual Report to 
     Shareholders and is incorporated herein by reference. 
 
Item 8.     Financial Statements and Supplementary Data. 
     Information with respect to selected quarterly financial data is included 
     under "Quarterly Financial Data (unaudited)" in the Company's 1995 Annual 
     Report to Shareholders and is incorporated herein by reference.  The 
     other information required by this item is included under "Consolidated 
     Financial Statements" and "Notes to Consolidated Financial Statements" 
     as listed in item 14 of this report and in the Company's 1995 Annual 
     Report to Shareholders which is incorporated herein by reference. 
 
Item 9.     Changes in and Disagreements with Accountants on Accounting and 
            Financial Disclosure. 
     Not applicable. 
 
 
                                PART III 
 
Item 10.     Directors and Executive Officers of the Registrant. 
     Information with respect to directors of the Company will be included 
     under "Election of Directors" in the Company's Proxy Statement for its 
     1996 Annual Meeting of Shareholders and is incorporated herein by 
     reference.  Information with respect to executive officers of the 
     Company is included under Item 4(a) of Part I of this Report. 
 
Item 11.     Executive Compensation. 
     Information with respect to executive compensation will be included under 
     "Summary Compensation Table", "Stock Option Grants in Last Fiscal Year", 
     "Stock Option Exercises in Last Fiscal Year and Fiscal Year End Option 
     Values", and "Certain Transactions" in the Company's Proxy Statement for 
     its 1996 Annual Meeting of Shareholders and is incorporated herein by 
     reference. 
 
Item 12.     Security Ownership of Certain Beneficial Owners and Management. 
     Information with respect to security ownership of certain beneficial 
     owners and management will be included under "Voting Securities and 
     Principal Shareholders" and "Election of Directors" in the Company's Proxy 
     Statement for its 1996 Annual Meeting of Shareholders and is 
     incorporated herein by reference. 
 
Item 13.     Certain Relationships and Related Transactions. 
 
     Information with respect to transactions with management will be included 
     under "Certain Transactions" in the Company's Proxy Statement for its 
     1996 Annual Meeting of Shareholders and is incorporated herein by 
     reference. 
 
                                   PART IV 
 
Item 14.     Exhibits, Financial Statement Schedules and Reports on Form 8-K. 
 
(a)(1)       Financial Statements. 
 
             The following financial statements are included in the Company's 
             1995 Annual Report to Shareholders: 
 
      
Sequent Computer Systems, Inc. and Subsidiaries: 
 
Consolidated Statements of Operations - Fiscal Years Ended December 30, 1995, 
December 31, 1994 and January 1, 1994      
 
Consolidated Balance Sheets - December 30, 1995 and December 31, 1994      
 
Consolidated Statements of Shareholders' Equity - Fiscal Years Ended December 
30, 1995, December 31, 1994 and January 1, 1994 
 
Consolidated Statements of Cash Flows  - Fiscal Years Ended December 30, 1995, 
December 31, 1994 and January 1, 1994      
 
Notes to Consolidated Financial Statements      
 
Report of Independent Accountants      
 
(a)(2)     Financial Statement Schedules. 
 
           The following schedules and report of independent accountants are 
           filed herewith: 
 
                                                      Page in this report 
                                                          on Form 10-K 
 
Schedule V     Property and Equipment                           F-1 
 
Schedule VI    Accumulated Depreciation and Amortization 
               of Property and Equipment                        F-2 
 
Schedule VIII  Valuation and Qualifying Accounts                F-3 
 
Schedule IX    Short-term Borrowings                            F-4 
 
Schedule X     Supplementary Income Statement Information       F-5 
 
Report of Independent Accountants on Financial 
Statement Schedules                                             F-6 
 
All other schedules are omitted as the required information is inapplicable or
is presented in the financial statements or related notes thereto. 
 
 
(a)(3)   Exhibits. 
 
 Exhibit 
 Number                      Description 
 
  3.1  Articles of Incorporation, as amended, and Articles of Merger of 
       Sequent Computer Systems, Inc. (the "Company").  (Incorporated by 
       reference to Exhibit 4A to the Company's Registration Statement on 
       Form S-8 (file no. 33-63972).) 
 
  3.2  Bylaws, as amended, of the Company.  (Incorporated by reference 
       to Exhibit 4B to the Company's Registration Statement on Form S-8 
       (file no. 33-39315).) 
 
  4.1  Note Purchase Agreement dated April 10, 1992 regarding 7.5% 
       Convertible Subordinated Notes due March 31, 2000, between the Company
       and a group of institutional investors.  (Incorporated by reference to 
       Exhibit 19 to the Company's Quarterly Report on Form 10-Q for the 
       quarter ended March 28, 1992). 
 
       Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the Company 
       agrees to furnish any other long term debt agreements to the Commission 
       upon request. 
 
 10.1A Amended and Restated Lease Agreement between KC Woodside and 
       the Company, as amended, dated May 8, 1987 ("First Building Lease"), 
       and related agreements.  (Incorporated by reference to Exhibit 19.1 to 
       the Company's Quarterly Report on Form 10-Q for the quarter ended July 4,
       1987 (file no. 0-15627).) 
 
 10.1B Second Amendment to First Building Lease, dated July 28, 1988.  
       (Incorporated by reference to Exhibit 10.3B to the Company's Annual 
       Report on Form 10-K for the fiscal year ended December 30, 1989 (file 
       no. 0-15627).) 
 
 10.1C Third Amendment to First Building Lease dated July 28, 1989.  
       (Incorporated by reference to Exhibit 10.3C to the Company's Annual 
       Report on Form 10-K for the fiscal year ended December 30, 1989 (file 
       no. 0-15627).) 
 
 10.1D Fourth Amendment to First Building Lease dated September 20, 
       1991.  (Incorporated by reference to Exhibit 10.1D to the Company's 
       Annual Report on Form 10-K for the fiscal year ended December 28, 1991 
       (file no. 0-15627).) 
 
 10.1E Fifth Amendment to First Building Lease dated December 2, 1992.  
       (Incorporated by reference to Exhibit 10.1E to the Company's Annual 
       Report on Form 10-K for fiscal year ended January 2, 1993 (file no. 
       0-15627).) 
 
 10.1F Sixth Amendment to First Building Lease dated April 5, 1993. 
       (Incorporated by reference to Exhibit 10.1F to the Company's Annual 
       Report on Form 10-K for the fiscal year ended January 1, 1994 (file no. 
       0-15627).) 
 
 10.1G Lease Agreement between KC Woodside and the Company, dated May 
       8, 1987 ("Second Building Lease").  (Incorporated by reference to 
       Exhibit 19.2 to the Company's Quarterly Report on Form 10-Q for the 
       quarter ended July 4, 1987 (file no. 0-15627).) 
 
 10.1H First Amendment to Second Building Lease, dated July 28, 1988.  
       (Incorporated by reference to Exhibit 10.3E to the Company's Annual 
       Report on Form 10-K for the fiscal year ended December 30, 1989 (file no.
       0-15627).) 
 
 10.1I Second Amendment to Second Building Lease dated September 13, 
       1991.  (Incorporated by reference to Exhibit 10.1G to the Company's 
       Annual Report on Form 10-K for the fiscal year ended December 28, 1991 
       (file  no. 0-15627).) 
 
 10.1J Third Amendment to Second Building Lease, dated December 2, 
       1992.  (Incorporated by reference to Exhibit 10.1L to the Company's 
       Annual Report on Form 10-K for fiscal year ended January 2, 1993 (file 
       no. 0-15627).) 
 
 10.1K Fourth Amendment to Second Building Lease, dated April 5, 1993. 
       (Incorporated by reference to Exhibit 10.1K to the Company's Annual 
       Report on Form 10-K for the fiscal year ended January 1, 1994 (file 
       no. 0-15627).) 
 
 10.1L Lease Agreement, dated July 28, 1988 between KC Woodside and 
       the Company ("Third Building Lease").  (Incorporated by reference to 
       Exhibit 10.3F to the Company's Annual Report on Form 10-K for the 
       fiscal year ended December 30, 1989 (file no. 0-15627).) 
 
 10.1M First Amendment to Third Building Lease, dated July 28, 1989.  
       (Incorporated by reference to Exhibit 10.3G to the Company's Annual 
       Report on Form 10-K for the fiscal year ended December 30, 1989 (file 
       no. 0-15627).) 
 
 10.1N Second Amendment to Third Building Lease dated September 13, 
       1991.  (Incorporated by reference to Exhibit 10.1J to the Company's 
       Annual Report on Form 10-K for the fiscal year ended December 28, 1991 
       (file no. 0-15627).) 
 
 10.1O Third Amendment to Third Building Lease, dated December 2, 
       1992.  (Incorporated by reference to Exhibit 10.1M to the Company's 
       Annual Report on Form 10-K for fiscal year ended January 2, 1993 (file 
       no. 0-15627).) 
 
 10.1P Fourth Amendment to Third Building Lease, dated April 5, 1993. 
       (Incorporated by reference to Exhibit 10.1P to the Company's Annual 
       Report on Form 10-K for the fiscal year ended January 1, 1994 (file no. 
       0-15627).) 
 
 10.1Q Lease Agreement, dated July 28, 1989 between KC Woodside and 
       the Company ("Fourth Building Lease").  (Incorporated by reference to 
       Exhibit 10.3H to the Company's Annual Report on Form 10-K for the 
       fiscal year ended December 30, 1989 (file no. 0-15627).) 
 
 10.1R First Amendment to Fourth Building Lease dated September 13, 
       1991.  (Incorporated by reference to Exhibit 10.1P to the Company's
       Annual Report on Form 10-K for the fiscal year ended December 28, 1991 
       (file no. 0-15627).) 
      
 10.1S Second Amendment to Fourth Building Lease dated August 13, 
       1992.  (Incorporated by reference to Exhibit 10.1P to the Company's 
       Annual Report on Form 10-K for fiscal year ended January 2, 1993 (file 
       no. 0-15627).) 
 
 10.1T Third Amendment to Fourth Building Lease dated December 2, 
       1992.  (Incorporated by reference to Exhibit 10.1Q to the Company's 
       Annual Report on Form 10-K for fiscal year ended January 2, 1993 (file 
       no. 0-15627).) 
 
 10.1U Fourth Amendment to Fourth Building Lease dated April 5, 1993. 
       (Incorporated by reference to Exhibit 10.1U to the Company's Annual 
       Report on Form 10-K for fiscal year ended January 1, 1994 (file no. 
       0-15627).) 
 
 10.1V Triple Net Lease dated July 9, 1990 between KC Woodside and the 
       Company ("Fifth Building Lease").  (Incorporated by reference to 
       Exhibit 19 to the Company's Quarterly Report on Form 10-Q for the 
       quarter ended September 29, 1990 (file no. 0-15627).) 
 
 10.1W First Amendment to Fifth Building Lease dated April 29, 1991.  
       (Incorporated by reference to Exhibit 10.1N to the Company's Annual 
       Report on Form 10-K for the fiscal year ended December 28, 1991 (file 
       no. 0-15627).) 
 
 10.1X Second Amendment to Fifth Building Lease dated April 29, 1991.  
       (Incorporated by reference to Exhibit 10.1O to the Company's Annual 
       Report on Form 10-K for the fiscal year ended December 28, 1991 (file 
       no. 0-15627).) 
 
 10.1Y Third Amendment to Fifth Building Lease dated June 10, 1991.  
       (Incorporated by reference to Exhibit 10.1P to the Company's Annual 
       Report on Form 10-K for the fiscal year ended December 28, 1991 (file 
       no. 0-15627).) 
 
 10.1Z Fourth Amendment to the Fifth Building Lease dated July 3, 
       1991.  (Incorporated by reference to Exhibit 10.1Q to the Company's 
       Annual Report on Form 10-K for the fiscal year ended December 28, 1991 
       (file no. 0-15627).) 
 
 10.1aa  Fifth Amendment to Fifth Building Lease dated September 13, 
         1991.  (Incorporated by reference to Exhibit 10.1R to the Company's 
         Annual Report on Form 10-K for the fiscal year ended December 28, 
         1991 (file no. 0-15627).) 
 
 10.1bb  Sixth Amendment to Fifth Building Lease dated December 2, 
         1992.  (Incorporated by reference to Exhibit 10.1X to the Company's 
         Annual Report on Form 10-K for fiscal year ended January 2, 1993 (file 
         no. 0-15627).) 
 
 10.1cc  Seventh Amendment to Fifth Building Lease dated April 5, 1993. 
         (Incorporated by reference to Exhibit 10.1cc to the Company's Annual 
         Report on Form 10-K for fiscal year ended January 1, 1994 (file no. 
         0-15627).) 
 
 10.1dd  Lease Agreement between KC Woodside and the Company, dated 
         June 10, 1991 (Umpqua).  (Incorporated by reference to Exhibit 10.1Y 
         to the Company's Annual Report on Form 10-K for fiscal year ended 
         January 2, 1993 (file no. 0-15627).) 
 
 10.1ee  Lease Agreement between KC Woodside and the Company, dated 
         June 10, 1991 (Charles).  (Incorporated by reference to Exhibit 
         10.1Z to the Company's Annual Report on Form 10-K for fiscal year ended
         January 2, 1993 (file no. 0-15627).) 
 
 10.1ff  First Amendment to Lease, dated October 31, 1991 (Charles).  
         (Incorporated by reference to Exhibit 10.1aa to the Company's 
         Annual Report on Form 10-K for fiscal year ended January 2, 1993 
         (file no. 0-15627).) 
 
 10.1gg  Second Amendment to Lease, dated May 6, 1992 (Charles).  
         (Incorporated by reference to Exhibit 10.1bb to the Company's Annual
         Report on Form 10-K for fiscal year ended January 2, 1993 (file no. 
         0-15627).) 
 
 10.1hh  Third Amendment to Lease, dated January 8, 1993 (Charles).  
         (Incorporated by reference to Exhibit 10.1cc to the Company's Annual
         Report on Form 10-K for fiscal year ended January 2, 1993 (file no. 
         0-15627).) 
 
 10.1jj  Lease Agreement between KC Woodside and the Company, dated 
         June 10, 1991 (S. Platte). (Incorporated by reference to Exhibit 
         10.1dd to the Company's Annual Report on Form 10-K for fiscal year 
         ended January 2, 1993 (file no. 0-15627).) 
 
 10.1kk  First Amendment to Lease, dated May 12, 1992 (Guadalupe). 
         (Incorporated by reference to Exhibit 10.1ff to the Company's Annual
         Report on Form 10-K for fiscal year ended January 2, 1993 (file no. 
         0-15627).) 
 
 10.1ll  Business park Lease between KC Woodside and the Company, dated 
         June 10, 1991 (Hillsborough). (Incorporated by reference to Exhibit 
         10.1gg to the Company's Annual Report on Form 10-K for fiscal year 
         ended January 2, 1993 (file no. 0-15627).) 
 
 10.1mm  Fourth Amendment to Lease, dated July 21, 1995 (Charles).  
         (Incorporated by reference to Exhibit 10.1dd to the Company's Annual
         Report on 10-K for fiscal year ended January 2, 1993 (file no. 
         0-15627).) 
 
 10.1nn  First Amendment to Lease, dated July 21, 1995 (South Platte).  
         (Incorporated by reference to Exhibit 10.1ee to the Company's Annual
         Report on Form 10-K for fiscal year ended Janaury 2, 1993 (file no. 
         0-15627).) 
 
 10.1oo  Second Amendment to Lease, dated July 21, 1995 (Guadalupe).  
         (Incorporated by reference to Exhibit 10.gg to the Company's Annual
         Report on Form 10-K for fiscal year ended January 2, 1993 (file no. 
         0-15627).) 
 
 10.2    Master Software License Agreement between Unix System 
         Laboratories, Inc. (formerly owned by American Telephone & Telegraph
         Company) and the Company, dated effective as of April 18, 1985. 
         (Incorporated by reference to Exhibit 10.2 to the Company's Annual 
         Report on Form 10-K for fiscal year ended January 2, 1993 (file no. 
         0-15627).) 
 
 10.2A   Sublicensing Agreement dated January 28, 1986, as amended June 
         22, 1987 and August 10, 1987. (Incorporated by reference to Exhibit 
         10.2A to the Company's Annual Report on Form 10-K for fiscal year 
         ended January 2, 1993 (file no. 0-15627).) 
 
 10.2B   Substitution Agreement between Unix System Laboratories, Inc. 
         and the Company, dated January 28, 1986. (Incorporated by reference to
         Exhibit 10.2B to the Company's Annual Report on Form 10-K for fiscal
         year ended January 2, 1993 (file no. 0-15627).) 
 
 10.2C   Amendment dated November 13, 1992 to Master Software License 
         Agreement and Sublicensing Agreement with Unix System Laboratories, 
         Inc. 
 
 10.2D   License Agreement dated July 15, 1983 between The Regents of 
         University of California and the Company, as amended July 2, 1986. 
         (Incorporated by reference to Exhibit 10.2C to the Company's Annual 
         Report on Form 10-K for fiscal year ended January 2, 1993 (file no. 
         0-15627).) 
 
+10.3    Distributorship Agreement between the Company and Oracle 
         Corporation, dated March 31, 1987, as amended on December 29, 1988, 
         August 30, 1989, May 28, 1990, May 31, 1991 and June 30, 1991.  
         (Incorporated by reference to Exhibit 10.3 to Amendment No. 1 to the 
         Company's Annual Report on Form 10-K for fiscal year ended January 
         2, 1993 (file no. 0-15627).) 
 
*10.4    Aircraft Lease Agreement between the Company and B&K 
         Transportation, Inc., dated October 1, 1993, as amended November 1,
         1993 and December 12, 1994. (Incorporated by reference to Exhibit 
         10.4 to the Company's Annual Report on Form 10-K for fiscal year 
         ended December  31, 1994 (file no. 0-15627).) 
 
* 10.5   Sequent Computer Systems, Inc. Incentive Stock Option Plan 
         and Nonstatutory Stock Option Plan adopted March 20, 1984, as 
         amended.  (Incorporated by reference to Exhibit 10.10 to the 
         Company's Registration Statement on Form S-1 (File no. 33-33444).) 
 
* 10.6   Sequent Computer Systems, Inc. 1987 Employee Stock Option 
         Plan, as amended. (Incorporated by reference to Exhibit 10.11 to the
         Company's Registration Statement on Form S-1 (file no. 33-33444).) 
 
* 10.7   Sequent Computer Systems, Inc. 1987 Nonstatutory Stock 
         Option Plan, as amended. (Incorporated by reference to Exhibit 10.12
         to the Company's Registration Statement on Form S-1 (file no. 
         33-33444).) 
 
* 10.8   Sequent Computer Systems Inc. Restated Employee Stock 
         Purchase Plan. (Incorporated by reference to Appendix A to the 
         Company's Proxy Statement dated March 18, 1993). 
 
* 10.9   Sequent Computer Systems, Inc. 1989 Stock Incentive Plan, 
         as amended.  (Incorporated by reference to Appendix A to the 
         Company's Proxy Statement for its 1994 Annual Meeting of 
         Shareholders). 
 
  11     Statement regarding computation of earnings per share. 
 
  13     1995 Annual Report to Shareholders (portions not incorporated by 
         reference are not deemed filed). 
 
  21     Subsidiaries. 
 
  23     Consent of Independent Public Accountants. 
 
  24     Powers of Attorney. 
 
  27     Financial Data Schedule. 
________________________ 
 
  +      Confidential treatment for portions of this contract has been 
         previously requested of the Commission. 
 
  *      Management contract or compensatory plan or arrangement required to 
         be filed as an exhibit pursuant to Item 14(a) (3) of this Report. 
 
 (b)     Reports on Form 8-K. 
 
         No reports on Form 8-K were filed by the Company during the 
         last quarter of fiscal 1995. 
 
 
                                SIGNATURES 
 
     Pursuant to the requirements of Section 13 or 15(d) 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. 
 
                                   Sequent Computer Systems, Inc. 
 
Date:  March 26, 1996              By:__________________________________ 
                                       Robert S. Gregg 
                                       Sr. Vice President of Finance 
                                       and Chief Financial Officer 
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
registrant and in the capacities indicated on March 27, 1996. 
 
     Signature                                    Title 
 
  KARL C. POWELL, JR.            Chairman and Chief Executive Officer 
 (Karl C. Powell, Jr.)           and Director (Principal Executive Officer) 
      
  ROBERT S. GREGG                Sr. Vice President of Finance and Legal 
 (Robert S. Gregg)               and Chief Financial Officer 
                                 (Principal Accounting and Financial Officer) 
 
  JOHN MCADAM                    Director 
 (John McAdam)           
           
 
  DAVID R. HATHAWAY *      
 (David R. Hathaway)             Director 
 
  ROBERT C. MATHIS *      
 (Robert C. Mathis)              Director 
 
  MICHAEL S. SCOTT MORTON *      
 (Michael S. Scott Morton)       Director 
 
  RICHARD C. PALERMO *      
 (Richard C. Palermo)            Director 
 
  ROBERT W. WILMOT *      
 (Robert W. Wilmot)              Director 
 
 
By:  ROBERT S. GREGG  * 
     Robert S. Gregg, Attorney-in-fact 
 
 
 
<TABLE>
                                                                  SCHEDULE V 
 
          SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES  
                      PROPERTY AND EQUIPMENT (1) 
                            (In thousands)  
 
<CAPTION>
 
 
                              Balance at                                                      Balance at 
                             Beginning of      Additions                      Other Charges     End of    
                                Period          at Cost       Retirements     Add (Deducts)     Period     
<S>                          <C>              <C>             <C>             <C>             <C>     
 
Year ended Jan. 1, 1994 
  Land                       $   5,037         $      0        $      0        $      0       $   5,037 
  Operational equipment         75,112           36,471          15,688               0          95,895 
  Furniture and equipment       43,195            4,990           1,542               0          46,643 
  Leasehold improvements         8,510            2,951             268               0          11,193 
                             $ 131,854         $ 44,412        $ 17,498        $      0       $ 158,768 
 
Year ended Dec. 31, 1994 
  Land                       $   5,037         $      0        $      0        $      0       $   5,037 
  Operational equipment         95,895           38,053          14,413               0         119,535 
  Furniture and equipment       46,643           14,875           7,646               0          53,872 
  Leasehold improvements        11,193            1,707             559               0          12,341 
                             $ 158,768         $ 54,635        $ 22,618        $      0       $ 190,785 
 
Year ended Dec. 30, 1995 
  Land                       $   5,037         $      0        $      0        $      0       $   5,037 
  Operational equipment        119,535           25,162           9,800               0         134,897 
  Furniture and equipment       53,872           14,499           1,361               0          67,010 
  Leasehold improvements        12,341            3,711              78               0          15,974 
                             $ 190,785         $ 43,372        $ 11,239        $      0       $ 222,918 
 
 
 
(1)  Depreciation and amortization is provided on a straight-line basis 
     over the estimated life as follows: 
 
     Operational equipment       3 to 5 years 
     Furniture and equipment     3 to 5 years 
     Leasehold improvements      5 to 10 years 
 
                                                                  SCHEDULE VI 
 
                SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES  
                   ACCUMULATED DEPRECIATION AND AMORTIZATION 
                           OF PROPERTY AND EQUIPMENT 
                                (In thousands)  
 
 
 
          Additions           
                              Balance at     Charged to        Retirements          Other         Balance at 
                              Beginning of     Costs and        Charged to         Charges          End of    
                                 Period         Expenses       Other Accts.     Add (Deducts)       Period           
 
Year ended Jan. 1, 1994 
  Operational equipment       $   32,319      $  18,501         $   9,499          $     0        $  41,321 
  Furniture and equipment         21,322          6,777               643                0           27,456 
  Leasehold improvements           2,725          1,100               143                0            3,682 
                              $   56,366      $  26,378         $  10,285          $     0        $  72,459 
 
Year ended Dec. 31, 1994 
  Operational equipment       $   41,321      $  19,370         $   5,060          $     0        $  55,631 
  Furniture and equipment         27,456         13,810             5,524                0           35,742 
  Leasehold improvements           3,682          1,613                97                0            5,198 
                              $   72,459      $  34,793         $  10,681          $     0        $  96,571 
 
Year ended Dec. 30, 1995 
  Operational equipment      $    55,631      $  18,183         $   2,339          $     0        $  71,475 
  Furniture and equipment         35,742         12,490             2,389                0           45,843 
  Leasehold improvements           5,198          2,291                54                0            7,435 
                             $    96,571      $  32,964         $   4,782          $     0        $ 124,753 
 
 
 
                                                                 SCHEDULE VIII 
 
             SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES  
                      VALUATION AND QUALIFYING ACCOUNTS 
                               (In thousands)  
 
 
 
                                               Additions       Additions 
                             Balance at       Charged to       Charged to        Write-offs     Balance at 
                             Beginning of      Costs and       Other Accts.        Net of         End of    
                                Period          Expenses       Describe (1)      Recoveries       Period          
 
Year ended Jan. 1, 1994 
  Allowance for doubtful      
    accounts                 $   1,836         $    468        $     (10)        $    513       $   1,781 
  Accumulated amortization      
    capitalized software     $  19,191         $ 11,714        $       0         $  1,993       $  28,912 
 
 
Year ended Dec. 31, 1994 
  Allowance for doubtful      
    accounts                 $   1,781         $    898        $       9         $    355        $  2,333 
  Accumulated amortization      
    capitalized software     $  28,912         $ 12,778        $       0         $      0        $ 41,690 
 
 
Year ended Dec. 30, 1995 
  Allowance for doubtful 
    accounts                 $   2,333         $  1,089        $     (18)        $    588        $  2,816 
  Accumulated amortization 
    capitalized software     $  41,690         $ 16,618        $       0         $      0        $ 58,308 
 
 
(1)     Foreign currency translation adjustment 
 
                                                                   SCHEDULE IX 
 
               SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES  
                              SHORT-TERM BORROWINGS 
                                (In thousands)  
 
 
 
                                                         Maximum         Average       Weighted 
                                            Weighted      Amount          Amount       Average 
                              Balance at     Average    Outstanding    Outstanding   Interest Rate 
                                End of      Interest    During the     During the     During the    
                                Period        Rate        Period         Period       Period (1)           
 
Year ended Jan. 1, 1994 
  Notes payable to bank     $   32,279        6.0%     $   32,279     $   27,247          6.8% 
 
 
Year ended Dec. 31, 1994 
  Notes payable to bank     $   59,437        5.5%     $   59,437     $   44,772          5.6% 
 
 
Year ended Dec. 30, 1995 
  Notes payable to bank     $   41,146        5.5%     $   61,529     $   47,155          6.3% 
 
 
(1)  The weighted average interest rate during the period is calculated 
     using monthly weighted averages. 
 
 
                                                                    SCHEDULE X 
 
            SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES  
               SUPPLEMENTARY INCOME STATEMENT INFORMATION 
                             (In thousands)  
 
 
                                                  Fiscal Year Ended                
                                         Dec. 30,      Dec. 31,     Jan. 1, 
                                           1995          1994         1994       
Depreciation and amortization: 
  Depreciation                         $   34,972     $   31,822     $ 27,259      
  Capitalized software amortization        16,618         12,778       11,714      
  Goodwill amortization                       504            536          517      
      Total                            $   52,094     $   45,136     $ 39,490      
 
Royalties                              $   10,141     $    6,374        4,380      
 
Advertising                            $   11,358     $   11,674     $  9,803 

</TABLE>
 
                     REPORT OF INDEPENDENT ACCOUNTANTS 
                     ON FINANCIAL STATEMENT SCHEDULES 
 
 
 
To the Board of Directors of 
Sequent Computer Systems, Inc. 
 
 
 
Our audits of the consolidated financial statements referred to in our report 
dated January 24, 1996 appearing on page 49 of the 1995 Annual Report to 
Shareholders of Sequent Computer Systems, Inc. (which report and consolidated 
financial statements are incorporated by reference in this Annual Report on 
Form 10-K) also included an audit of Financial Statement Schedules listed in 
Item 14(a)(2) of this Form 10-K.  In our opinion, these Financial Statement 
Schedules present fairly, in all material respects, the information set forth 
therein when read in conjunction with the related consolidated financial 
statements. 
 
 
 
PRICE WATERHOUSE LLP 
 
Portland, Oregon 
January 24, 1996 
 
 
 
 
              SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES 
      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND  
                           RESULTS OF OPERATIONS  
 
 
OVERVIEW  
 
     Total revenue was $540.3 million in 1995 compared to $450.8 million in 
1994 and $353.8 million in 1993.  The Company recorded net income in 1995 of 
$35.1 million, compared to $33.1 million in 1994 and a net loss in 1993 of 
$7.5 million, which included a pretax restructuring charge of $22.3 million.  
The Company's total revenue for 1995 represents a 20% increase over 1994 and 
is attributed to strong sales performance primarily in Europe and the Western 
region of North America.  Net earnings increased 6% in 1995 and were adversely 
impacted by the increase in the Company's effective tax rate to approximately 
26% from 15% in 1994. 
      
     The Company's total revenue growth rate of 27% from 1993 to 1994 was 
primarily attributable to its transition from platform vendor to provider of 
open systems, architecture and professional services and its success in 
penetrating larger customer accounts.  In addition to the increase in revenue, 
net earnings in 1994 benefitted from management controls resulting in a slight 
reduction in selling, general and administrative expenses as a percentage of 
revenue. 
      
     In 1993, the Company recognized a restructuring charge of $22.3 million 
related to a shift to open distributed client/server computing solutions, 
professional service consulting and architecture-led selling, marketing and 
engineering. 
 
RESULTS OF OPERATIONS  
 
     The following table sets forth certain operating data as a percentage of 
total revenue:  
                                         
                                             Fiscal Year Ended      
                                 December 30,   December 31,    January 1,      
                                     1995          1994           1994      
Revenue:                                                                   
  End-user products                  69.4%          70.6%          72.0%      
  OEM products                        3.9            5.1            7.3      
  Service and other                  26.7           24.3           20.7       
     Total revenue                  100.0          100.0          100.0      
Cost of products and service         54.8           53.7           51.8         
Gross profit                         45.2           46.3           48.2      
Operating expenses:                                                          
  Research and development            7.5            7.8            8.2      
  Selling, general and admin.        28.7           29.7           34.6      
  Restructuring charge                --             --             6.3       
      Total operating expenses       36.2           37.5           49.1         
Operating income (loss)               9.0            8.8           (0.9)      
Interest income (expense), net        0.2           (0.3)          (0.5)      
Other income (expense), net          (0.4)           0.1           (0.4)   
Income (loss) before provision  
  for income taxes                    8.8            8.6           (1.8)      
Provision for income taxes            2.3            1.3            0.3      
Net income (loss)                     6.5%           7.3%          (2.1)%
 
 
REVENUE  
 
     End-user product revenue increased $56.7 million, or 18% from 1994 to 
1995 and $63.5 million, or 25% from 1993 to 1994 primarily due to the North 
American and United Kingdom sales operation's success in penetrating and 
leveraging large customer accounts.  Germany and the Asia-Pacific region also 
showed significant percentage growth although at lower dollar magnitudes. 
 
     As anticipated, total OEM revenue continued to decline in 1995 compared 
to 1994 and 1993 due to decreases in revenue from Unisys Corporation.  Total 
OEM revenue in 1995 and 1994 was $20.9 million and $23.1 million, 
respectively, compared to $25.8 million in 1993. 
 
     During 1995 and 1994, the Company's service and other revenue continued 
to increase in dollar amount and as a percentage of total revenue primarily 
due to the growing installed customer base and associated customer 
service/maintenance contracts, as well as the Company's emphasis on 
professional services consulting.  
 
     The Company has continued to benefit from its significant investment in 
developing worldwide sales and distribution channels.  International revenue 
increased as a percentage of total revenue from 48% in 1994 to 55% in 1995, 
the majority of which is from Europe (particularly the United Kingdom), with 
the balance coming from Asia-Pacific and Canada.  During 1995, international 
revenue increased $79.1 million, or 36% over 1994.  European operations showed 
continued success with large customer accounts and also professional services. 
 
     During 1994, international revenue increased 40% over 1993 and increased 
as a percentage of total revenue (from 44% to 48%), primarily due to large 
customer accounts in the United Kingdom, and a positive currency impact over 
1993. 
 
COST OF SALES 
  
                                              Fiscal Year Ended      
                                         Dec. 30,  Dec. 31,  Jan. 1,
                                           1995      1994      1994      
Cost of products sold as a percentage  
  of product revenue                        48%       48%       48%      
Cost of service and other as a percentage  
  of service and other revenue              75        71        68      
Total cost of sales as a percentage  
  of total revenue                          55        54        52      
 
 
     The factors influencing gross margins in a given period include unit 
volumes (which affect economies of scale), product configuration mix, changes 
in component and manufacturing costs, product pricing and the mix between 
product and service revenue.  
 
     Total cost of sales as a percentage of total revenue increased both in 
1995 and 1994 compared to 1993 primarily due to product mix with lower margin 
service increasing as a percentage of total revenue.  
 
 
RESEARCH AND DEVELOPMENT 
 
      Research and development costs increased 17% in 1995 compared to 1994 
and 21% in 1994 compared to 1993.  The Company has continued to invest 
significantly in new product development in addition to ongoing enhancements 
to existing products.  Research and development costs as a percentage of total 
revenue were approximately 8% for 1995, 1994 and 1993.  Management intends to 
make significant investments during 1996 in order to deliver its next-
generation (NUMA-Q) products into the market by the end of 1996.  This 
investment is expected to result in increased research and development costs 
during 1996. 
 
     Capitalized software amortization was approximately $16.6 million, $12.8 
million, and $11.7 million in 1995, 1994 and 1993, respectively.  The Company 
has continued to increase its focus on software design for computing solutions 
and its next-generation products, resulting in greater investments in software 
development and products. 
 
SELLING, GENERAL AND ADMINISTRATIVE 
 
     Selling, general and administrative costs increased 16% in 1995 compared 
to 1994 and 9% in 1994 compared to 1993 primarily due to costs associated with 
increased revenue levels (including commissions and additional sales-related 
personnel) and, in 1993, targeted marketing program costs.  Selling, general 
and administrative costs as a percentage of total revenue were 29% in 1995 
compared to 30% in 1994 and 35% in 1993.  Selling, general and administrative 
costs as a percentage of total revenue have decreased due to management 
controls and the impact resulting from obtaining larger orders in large 
customer accounts.  The company is in the process of making substantial 
investments to strengthen its worldwide sales force and to strategically 
position itself for the delivery of the NUMA-Q product line beginning in late 
1996.  As a result, selling, general and administrative expenses are expected 
to increase both in dollars and as a percentage of revenue in 1996. 
 
RESTRUCTURING CHARGES 
 
     During 1993, the Company provided for restructuring charges of $22.3 
million in connection with management's decision to realign resources to 
provide open distributed client/server computing solutions, professional 
service consulting and architecture-led selling, marketing and engineering 
strategies.  These restructuring steps included a reduction in the Company's 
workforce. 
 
INTEREST AND OTHER INCOME (EXPENSE) 
 
     Interest expense includes costs related to the Convertible Debentures, 
foreign currency hedging loans and capital lease obligations.  Interest income 
is primarily generated from restricted deposits held at a foreign bank, short 
term investments and cash and cash equivalents.  Interest income of $5.3 
million exceeded interest expense of $4.2 million in 1995.  Interest expense 
of $4.7 million and $3.5 million exceeded interest income of $3.5 million and 
$1.8 million in 1994 and 1993, respectively.   
 
     Other expense in 1995 of $2.3 million and other income in 1994 of 
$500,000 includes foreign currency transaction gains and losses and other non-
operating charges.  Other expense in 1993 of $1.4 million reflects losses in 
the Company's Japanese joint venture, foreign currency transaction gains and 
losses and other non-operating charges.  
 
INCOME TAXES 
 
     The Company provided $12.3 million for income taxes in 1995 on a net 
profit before tax of $47.3 million.  The difference between the statutory rate 
and the effective tax rate is principally due to the utilization of domestic 
tax attributes carried forward from prior years.  These carryforward benefits 
were fully reserved in prior years.  The 1995 effective tax rate of 25.9% 
compares to effective rates of 14.6% in 1994 and 18.8% in 1993. 
 
 
LIQUIDITY AND CAPITAL RESOURCES 
 
     The Company's current ratio at December 30, 1995 increased to 2.5:1 from 
2.3:1 at December 31, 1994.  Cash flow from operations of $51.6 million and 
$23 million from stock issuance proceeds provided the funds for (i) 
investments in property and equipment of $38.9 million primarily related to 
equipment requirements for product development, strategic partnerships 
support, employee desktop enhancements and new employees and (ii) capitalized 
software expenditures of $23.4 million related to development of new software 
products and enhancements to existing software products. 
 
     The Company renegotiated its $50 million line of credit agreement during 
1995, increased from $30 million.  The line is unsecured and extends through 
May 30, 1996.  The line contains certain financial covenants and prohibits the 
Company from paying dividends without the lenders' consent.  No borrowings 
were outstanding under the line of credit as of December 30, 1995. 
 
     The Company maintains a short-term borrowing agreement with a foreign 
bank to cover foreign currency exposures.  Maximum borrowings allowed under 
the foreign bank agreement were $56.2 million, of which $39.6 million was 
outstanding at December 30, 1995 (based on currency exchange rates on such 
date). 
 
     The Company maintains a short-term borrowing agreement with a domestic 
bank as an additional hedging facility to cover certain foreign currency 
exposures.  At December 30, 1995, no borrowings were outstanding under this 
agreement. 
 
     In addition to the above borrowing agreements, the Company has entered 
into certain other miscellaneous borrowing arrangements with a foreign bank 
aggregating $1.5 million as of December 30, 1995. 
 
     Management expects that existing funds, funds generated from operations 
and the bank line of credit will provide adequate resources to meet the 
Company's anticipated cash requirements during 1996 resulting from its 
operations and planned investments in its sales force and NUMA-Q product 
technology. 
 
FORWARD-LOOKING STATEMENTS 
 
     The Chairman's Letter and Management's Discussion and Analysis of 
Financial Conditions and Results of operations contain information regarding 
management's revenue growth and earnings expectations, planned expenditure 
levels and comments relating to technology development and resulting release 
of future products.  These statements are forward-looking statements that 
involve a number of risks and uncertainties.  The following factors are among 
the factors that could cause actual results to differ materially from the 
forward-looking statements:  business conditions and growth in the electronics 
industry and general economies, both domestic and international; lower than 
expected customer orders, delays in receipt of orders or cancellation of 
orders; competitive factors, including increased competition, new product 
offerings by competitors and price pressures; the availability of third party 
parts and supplies at reasonable prices; changes in product mix and the mix 
between product and service revenue; significant quarterly performance 
fluctuations due to the receipt of a significant portion of customer orders 
and product shipments in the last month of each quarter; and product shipment 
interruptions due to manufacturing problems. 
 
             SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES  
                   CONSOLIDATED STATEMENTS OF OPERATIONS 
                 (In thousands, except per share amounts)  
 
 
                                              Fiscal Year Ended                
                                       Dec. 30,     Dec. 31,      Jan. 1,  
                                         1995         1994          1994 
           
Revenue: 
  Product                             $ 395,941     $ 341,504     $ 280,579
  Service and other                     144,404       109,319        73,227
    Total revenue                       540,345       450,823       353,806     
 
Costs and expenses: 
  Cost of products sold                 188,232       164,991       133,294 
  Cost of service and other revenue     107,721        77,238        49,988 
  Research and development               40,923        35,047        28,944 
  Selling, general and admin.           154,950       134,070       122,537 
  Restructuring charge                    ---           ---          22,307
    Total costs and expenses            491,826       411,346       357,070
 
Operating income (loss)                  48,519        39,477        (3,264)
Interest income                           5,340         3,515         1,819
Interest expense                         (4,207)       (4,687)       (3,474)
Other income (expense), net              (2,325)          495        (1,412)
 
Income (loss) before provision  
  for income taxes                       47,327        38,800        (6,331)
Provision for income taxes               12,254         5,666         1,193 
      
Net income (loss)                     $  35,073      $ 33,134     $  (7,524)  
Net income (loss) per share           $    1.04      $   1.03     $    (.26)  
Weighted average number of common 
  and common equivalent shares 
  outstanding                            33,665        32,028        29,335
                                    
The accompanying notes to consolidated financial statements are an integral 
part of these statements. 
 
 
            SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES  
                      CONSOLIDATED BALANCE SHEETS  
                (In thousands, except per share amounts)  
 
 
                                             Dec. 30, 1995     Dec. 31, 1994
ASSETS                                                                    
Current assets:                                                           
  Cash and cash equivalents                   $   61,939       $   46,291      
  Restricted deposits                             39,642           59,437      
  Receivables, net                               178,322          133,571      
  Inventories                                     60,853           48,698      
  Prepaid royalties and other                     13,464           12,812      
    Total current assets                         354,220          300,809      
Property and equipment, net                       98,165           94,214      
Capitalized software costs, net                   45,381           38,555      
Intangible assets and other, net                   6,157            2,399      
    Total assets                              $  503,923      $   435,977      
 
LIABILITIES AND SHAREHOLDERS' EQUITY  
Current liabilities:  
  Notes payable                               $   41,146      $    59,437      
  Accounts payable and other                      60,095           46,744      
  Accrued payroll                                 11,723           11,794      
  Unearned revenue                                21,466            9,716      
  Income taxes payable                             4,981            3,850      
  Current obligations under capital 
   leases and debt                                    60              800      
    Total current liabilities                 $  139,471      $   132,341
 
Other accrued expenses                             2,158            2,100      
Long-term obligations under 
  capital leases and debt                          9,106           10,341      
    Total liabilities                            150,735          144,782      
  
Commitments and contingencies (Note 6) 
                                                                         
Shareholders' equity:  
  Preferred stock, $.01 par value, 
   5,000 shares authorized, 
   none outstanding                                --               --      
  Common stock, $.01 par value, 100,000 
   shares authorized, 33,221 and 31,360 
   shares outstanding                               332              314      
  Paid-in capital                               302,186          278,145      
  Retained earnings                              52,945           17,872      
  Foreign currency translation adjustment        (2,275)          (5,136)       
                                                                          
    Total shareholders' equity                  353,188          291,195      
    Total liabilities and 
     shareholders' equity                    $  503,923       $  435,977      
                                                                          
                                    
The accompanying notes to consolidated financial statements are an integral 
part of these statements. 
 
<TABLE>
 
           SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES  
           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY  
                           (In thousands)  
 
 
<CAPTION>
 
                                                                                          Retained        Foreign    
                                                                                          earnings        currency 
                               Preferred Stock           Common Stock         Paid-in   (accumulated     translation 
                              Shares      Amount      Shares      Amount      capital      deficit)       adjustment       Total   
<S>                          <C>         <C>         <C>        <C>         <C>         <C>              <C>            <C>       
 
Balance, January 2, 1993      1,500       $  15       22,450     $  225     $ 186,027     $  (7,738)      $ (6,027)     $ 172,502  
 
Common shares issued,  
  net of repurchases            -            -         4,795         47        79,883           -              -           79,930 
Conversion of preferred 
  stock                      (1,500)        (15)       3,000         30           -             -              -               15 
Net loss                        -            -           -            -           -          (7,524)           -           (7,524) 
Foreign currency 
  translation adjustment        -            -           -            -           -             -           (1,435)        (1,435) 
Balance, January 1, 1994        -            -        30,245        302       265,910       (15,262)        (7,462)       243,488  
 
Common shares issued            -            -         1,115         12        12,235           -              -           12,247 
Net income                      -            -           -            -           -          33,134            -           33,134 
Foreign currency translation  
  adjustment                    -            -           -            -           -             -            2,326          2,326 
Balance, December 31, 1994      -            -        31,360        314       278,145        17,872         (5,136)       291,195 
 
 
Common shares issued            -            -         1,798         18        18,298           -              -           18,316 
Tax benefit of option exercises -            -           -            -         4,743           -              -            4,743 
Conversion of debentures        -            -            63          -         1,000           -              -            1,000 
Net income                      -            -           -            -           -          35,073            -           35,073 
Foreign currency translation 
  adjustment                    -            -           -            -           -             -            2,861          2,861 
Balance, December 30, 1995      -        $   -        33,221      $ 332     $ 302,186     $  52,945       $ (2,275)     $ 353,188 
 
                                    
The accompanying notes to consolidated financial statements are an integral 
part of these statements. 
 
 
              SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES  
                  CONSOLIDATED STATEMENTS OF CASH FLOWS  
                              (In thousands)  
<CAPTION>
                                         
                                                          Fiscal Year Ended           
                                             Dec. 30, 1995   Dec. 31, 1994   Jan. 1, 1994         
<S>                                          <C>             <C>             <C>
                                                                                                  
Cash flow from operating activities:  
  Net income (loss)                            $   35,073     $   33,134     $  (7,524)      
  Reconciliation of net income (loss)  
    to net cash and cash equivalents provided 
    by operating activities-  
      Depreciation and amortization                52,094         44,600        39,490      
      Restructuring charge not affecting cash        --             --          14,286      
  Changes in assets and liabilities-  
      Receivables, net                            (44,751)       (18,010)      (32,055)      
      Inventories                                 (12,155)        (2,833)      (18,208)      
      Prepaid royalties and other                    (652)          (403)       (3,033)      
      Accounts payable and other                   13,351        (17,072)       32,714      
      Accrued payroll                                 (71)           891           339      
      Unearned revenue                             11,750          2,593         2,025      
      Income taxes payable                          1,131          2,835          (226)      
      Other accrued expenses                       (4,204)           314           267      
    Net cash provided by       
      operating activities                         51,566         46,049        28,075      
                                                                                               
Cash flow from investing activities:  
  Restricted deposits                              19,795        (27,158)       (2,283)      
  Investments                                        --            5,000        (5,000)      
  Purchases of property and equipment, net        (38,923)       (40,256)      (40,032)      
  Capitalized software costs                      (23,444)       (19,116)      (21,012)      
  Foreign currency translation adjustment           2,861          2,326        (1,435)      
  Other, net                                         --              399           454      
    Net cash used for investing activities        (39,711)       (78,805)      (69,308)      
                                                                                               
Cash flow from financing activities:  
  Notes payable, net                              (18,291)        27,158         3,634       
  Payments under capital lease obligations           (719)        (3,293)       (2,635)       
  Long-term debt payments, net                       (256)           (51)       (1,190)      
  Stock issuance proceeds, net                     23,059          12,247       70,045      
    Net cash provided by financing activities       3,793          36,061       69,854       
 
Net increase in cash and cash equivalents          15,648           3,305       28,621      
Cash and cash equivalents at beginning  
  of period                                        46,291          42,986       14,365      
Cash and cash equivalents at end of period     $   61,939      $   46,291    $  42,986      
 
                                    
The accompanying notes to consolidated financial statements are an integral 
part of these statements. 
                                                                                               
</TABLE>
 
               SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
 
 
1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  
 
     Sequent Computer Systems, Inc. and subsidiaries ("Sequent" or the 
"Company") was incorporated in January 1983 and was in the development stage 
until product shipments began in December 1984.  Sequent is a provider of 
large open systems and client/server solutions for large organizations 
spanning diverse industries.  Sequent develops, manufactures and sells 
symmetric multiprocessing (SMP) systems that support large-scale on-line 
transaction processing (OLTP), decision support (DSS) and Internet-based 
business communications applications.  Sequent's project-oriented offerings 
include consulting and professional services to link companies' current and 
future IT investments to their business strategy. The Company partners with 
other systems vendors to deliver complete solutions to its customers. 
 
     Principles of Consolidation.   The Company's fiscal year is based on a 
52-53 week year ending the Saturday closest to December 31.  The consolidated 
financial statements of the Company include accounts of Sequent Computer 
Systems, Inc. and its wholly-owned subsidiaries.  All significant intercompany 
accounts and profits have been eliminated.   
 
     The financial statements and transactions of the Company's foreign 
subsidiaries are maintained in their functional currencies and translated into 
U.S. dollars for purposes of consolidation.  Translation adjustments are 
accumulated as a separate component of shareholders' equity.  Gains and losses 
resulting from transactions denominated in a currency other than an entity's 
functional currency are included in other income (expense) in the consolidated 
statements of operations.  During 1995 and 1993 the Company realized a net 
pretax loss of $0.8 million and $0.2 million, respectively, resulting from 
such transactions.  During 1994 the Company realized a net pretax gain of $1.1 
million as a result of positive impact of changes in exchange rates, primarily 
in the United Kingdom.   
 
     Revenue Recognition and Receivables.  Revenue from product sales is 
generally recognized upon shipment; however, depending upon contract terms, 
revenue recognition may be deferred until customer acceptance or clarification 
of funding.  Revenue is recognized as earned on the straight-line basis over 
the term of customer service/maintenance contracts, and on the percentage-of-
completion basis for professional service contracts.   
 
     Receivables are shown net of allowance for doubtful accounts of $2.8 
million at December 30, 1995 and $2.3 million at December 31, 1994.   
 
     In July 1994, the Company entered into a two year agreement with a group 
of banks to sell, without recourse, undivided ownership interests in a 
revolving pool consisting of substantially all of the Company's domestic 
accounts receivable for a maximum of $20 million.  At December 30, 1995 and 
December 31, 1994, accounts receivable in the accompanying consolidated 
balance sheets is net of $14 million and $8 million, respectively, received by 
the Company under this agreement. 
 
     The Company had no single customer that represented greater than 10% of 
total revenue in 1995, 1994 and 1993. 
 
     Inventories.  Inventories are stated at the lower of cost or market.  
Costs are determined using the first-in, first-out (FIFO) method and include 
material, labor and manufacturing overhead.   
 
     Prepaid Royalties.  The Company has entered into agreements with various 
vendors which provide for prepayment of future royalties based on sales of 
certain software.  Prepaid royalties were $3.6 million at December 30, 1995 
and $4.2 million at December 31, 1994, and are stated at the lower of cost or 
net realizable value.  Such prepaid amounts are realized by receipt of reverse 
royalties from the vendors based upon software sales by the vendor, and by 
charging cost of products sold for certain software sales by the Company. 
 
     Property and Equipment.  Property and equipment are stated at cost and 
depreciated over their estimated useful lives, ranging from three to five 
years, on the straight-line method.  Leasehold improvements and equipment held 
under capital leases are amortized on the straight-line basis over the shorter 
of the asset life or lease term.  Maintenance and repairs are expensed as 
incurred.   
 
     Research and Development.  Software development costs for certain 
projects are capitalized from the time technological feasibility is 
established to the time the resulting software product is first shipped.  
Capitalized software costs are stated at the lower of cost or net realizable 
value and are shown net of accumulated amortization of $58.3 million at 
December 30, 1995 and $41.7 million at December 31, 1994.  Amortization, 
generally based on a three-year straight-line basis, was $16.6 million in 
1995, $12.8 million in 1994 and $11.7 million in 1993.  All other research and 
development costs are expensed as incurred.   
 
     Income Taxes.  The Company accounts for income taxes in accordance with 
Statement of Financial Accounting Standards No.  109, "Accounting For Income 
Taxes". 
 
     The Company's general practice is to reinvest the earnings of its foreign 
subsidiaries in those operations, unless it would be advantageous to the 
Company to repatriate the foreign subsidiaries' retained earnings. 
 
     Per Share Information.  Primary earnings per share is computed based on 
the weighted average number of common and dilutive common equivalent shares 
outstanding.  Outstanding stock options, net of assumed buy-back, and 
preferred stock are common stock equivalents.   
 
     The computation of fully dilutive earnings per share also assumes 
conversion of the remaining 7.5% Convertible Subordinated Debentures issued 
April 1992 when it would be dilutive.  A fully diluted earnings per share 
amount is not shown as the effect of the debentures would be antidilutive.   
 
     Consolidated Statement of Cash Flows.  The Company considers short-term 
investments which are highly liquid, readily convertible into cash and having 
original maturities less than three months to be cash equivalents for purposes 
of the statement of cash flows. 
 
     Total cash expenditures for income taxes were $5.3 million, $2.3 million 
and $.8 million during 1995, 1994 and 1993, respectively.  Interest paid does 
not differ materially from interest expense.   
 
     Non-cash investing and financing activities include the following: 1995 - 
$1 million of Convertible Debentures were converted into 63,000 shares of 
common stock.  1993 - In connection with the equity offering, all outstanding 
shares of preferred stock were converted into 3 million shares of common stock 
and $9.9 million of the Convertible Debentures were converted into 626,000 
shares of common stock. 
 
     Management 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. 
 
     New Accounting Pronouncements.  In March 1995, the Financial Accounting 
Standards Board (FASB) issued Statement of Financial Accounting Standards No. 
121 (SFAS 121), "Accounting for the Impairment of Long-Lived Assets...".  SFAS 
121 requires recognition of impairment of long-lived assets in the event the 
net book value of such assets exceeds the future undiscounted cash flows 
attributable to such assets.  SFAS 121 is effective for fiscal years beginning 
after December 15, 1995.  The adoption of SFAS 121 is not expected to have a 
material impact on the Company's financial position or results of operations. 
 
     In October 1995, the FASB issued Statement of Financial Accounting 
Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123).  SFAS 
123 allows companies to choose whether to account for stock-based compensation 
on a fair value method or to continue to account for stock-based compensation 
under the current intrinsic value method as prescribed by APB Opinion No. 25,  
"Accounting for Stock Issued to Employees."  The Company plans to adopt SFAS 
123 during 1996 and to continue to follow the provisions of APB Opinion No. 
25.  Accordingly, management of the Company believes that the impact of 
adoption will not have a significant effect on the Company's financial 
position or results of operations. 
 
 
2.  INVENTORIES  
       (in thousands) 
                                    December 30,     December 31,      
                                       1995               1994           
      
     Raw materials                  $   9,385         $   5,377      
     Work-in-progress                   1,736             2,065      
     Finished goods                    49,732            41,256      
 
                                    $  60,853         $  48,698      
 
     Finished goods inventory includes evaluation systems aggregating 
$15.7 million and $10.4 million as of December 30, 1995 and December 31, 1994, 
respectively.  Such systems are located at potential customer sites for 
demonstration and garner of sales. 
                                                            
3.  PROPERTY AND EQUIPMENT  
       (in thousands) 
                                    December 30,     December 31,      
                                       1995               1994           
 
     Land                           $   5,037         $   5,037      
     Operational equipment            134,897           119,535      
     Furniture and office equipment    67,010            53,872      
     Leasehold improvements            15,974            12,341      
                                      222,918           190,785      
     Less accumulated depreciation  
        and amortization             (124,753)          (96,571)      
                                   $   98,165         $  94,214        
                                                                         
     Depreciation and amortization charged to expense totaled $35.0 million in 
1995, $31.8 million in 1994 and $27.3 million in 1993.   
 
4.       NOTES PAYABLE  
 
     The Company has an unsecured line of credit agreement with a group of 
banks which provides short-term borrowings up to $50 million (increased in the 
second quarter of 1995 from $30 million).  The line of credit agreement 
contains financial covenants, including covenants relating to net worth, ratio 
of liabilities to net worth and limitations on net operating losses, and 
prohibits the Company from paying dividends without the group of banks' 
consent.  The line of credit agreement extends through May 30, 1996.  At 
December 30, 1995 and December 31, 1994 there were no borrowings outstanding 
under this line of credit agreement.  
 
     The Company has a short-term borrowing agreement with a foreign bank as a 
hedge to cover certain foreign currency exposures.  Borrowings under the 
agreement are denominated in various foreign currencies.  Proceeds from the 
borrowings are converted into U.S. dollars and placed in a term deposit 
account with the foreign bank.  The deposits, which are classified as 
restricted deposits in the accompanying consolidated balance sheets, are 
pledged to the foreign bank so long as borrowings under the agreement are 
outstanding.  During July 1995, the Company re-negotiated the agreement and 
extended it through July 1996.  The foreign bank, without cause, can terminate 
the agreement at any time.  At December 30, 1995, maximum borrowings allowed 
under the agreement were $56.2 million.  Amounts outstanding were $39.6 
million and $49 million at December 30, 1995 and December 31, 1994, 
respectively.  The maximum borrowing limit is denominated in specified foreign 
currencies and fluctuates with the change in foreign exchange rates.  The 
average interest rate on these borrowings at December 30, 1995 was 6.4%.   
 
     In July 1994, the Company entered into an agreement with a domestic bank 
for an additional hedging facility to cover certain foreign currency 
exposures.  Borrowings under this agreement are denominated in foreign 
currencies.  Proceeds from the borrowings are converted into U.S. dollars and 
placed in a term deposit account.  The deposits are classified as restricted 
deposits in the accompanying consolidated balance sheets and are pledged to 
the bank so long as borrowings under the agreement are outstanding.  The 
agreement is for a maximum of $10 million, excluding foreign currency gain or 
loss fluctuations, and expires May 30, 1996.  At December 30, 1995, there were 
no borrowings outstanding under this agreement.  At December 31, 1994, 
borrowings of $10.4 million, after translation, were outstanding under this 
agreement.  The interest rate on these borrowings was 6% at December 31, 1994. 
 
     In addition to the above borrowing agreements, the Company has entered 
into certain other miscellaneous borrowing arrangements with a foreign bank 
aggregating $1.5 million as of December 30, 1995.  The interest rate on these 
borrowings was 1.7% at December 30, 1995. 
 
5.       OBLIGATIONS UNDER CAPITAL LEASES AND LONG-TERM DEBT  
 
     In April 1992, the Company issued $20 million of 7.5% Convertible 
Subordinated Debentures ("Convertible Debentures" or "Debentures") due March 
31, 2000.  In conjunction with the Company's equity offering in 1993 (see 
Shareholders' Equity footnote), $9.9 million of the Debentures were converted 
into 626,000 shares of common stock and are no longer classified as long-term 
debt.  The Convertible Debentures are convertible into the Company's common 
stock at the option of the holders at an initial conversion price of $15.81 
per share.  Under this provision, in August 1995, an additional $1.0 million 
of the debentures were converted into 63,000 shares of common stock, further 
reducing long-term debt.  Beginning on June 30, 1997, the Company is required 
to make quarterly principal payments of $1.7 million through 1998 to retire 
the outstanding Debentures.  The balance outstanding on the Debentures was 
$9.1 million and $10.1 million at December 30, 1995 and December 31, 1994, 
respectively.  The Convertible Debentures are callable at the option of the 
Company after five years (in certain circumstances, after three years).  The 
Debentures contain certain financial covenants, including restrictions on 
additional debt, minimum net worth levels and a prohibition on the payment of 
dividends. 
 
     Sequent leases certain equipment under five-year capital leases.  These 
lease terms require maintenance of certain financial ratios and generally 
include a fair market value purchase option at the end of the lease.  The cost 
of equipment under capital leases was $.4 million and $4.1 million at the end 
of 1995 and 1994, respectively.  Accumulated amortization was $.3 million and 
$3.8 million, respectively.  These leased assets are pledged as security for 
capital lease obligations.   
 
     Included in the above are capital leases arising from sale-leaseback 
transactions whereby the Company has sold certain equipment to leasing 
companies and then leased back the same equipment under capital leases.  Such 
transactions have resulted in gains which have been deferred.  The Company 
amortizes these gains over terms of the respective leases.  Total deferred 
gains at December 30, 1995 and December  31, 1994 were $0 and $122,000, 
respectively.  The short-term portion of these gains is reflected in the 
balance sheets as accounts payable and other, while the long-term portion is 
included in other accrued expenses.   
 
     Aggregate payments due on obligations under capital leases and debt 
subsequent to 1995 are:  1996 - $.1 million, 1997 - $5.0 million, and 1998 - 
$4.1 million. 
 
 
6.     OPERATING LEASE COMMITMENTS  
 
     Sequent is committed under operating leases for office space and 
manufacturing facilities.  Future minimum lease payments are as follows:  
 
     (In thousands)     
                1996                   $  14,565      
                1997                      12,119 
                1998                      11,113 
                1999                       9,812 
                2000                       8,515 
                2001 and thereafter     $ 15,746 
 
     Rent expense for operating leases was $14.9 million, $15.1 million and 
$14.7 million in 1995, 1994 and 1993, respectively. 
 
 
7.     INCOME TAXES  
 
     Pre-tax income (loss) from continuing operations for the last three 
fiscal years was taxed under the following jurisdictions:  
     (in thousands) 
 
                       Fiscal         Fiscal       Fiscal      
                        1995           1994          1993      
 
     Domestic       $   29,556     $   27,332      $ (3,989)      
     Foreign            17,771         11,468        (2,342)      
        Total       $   47,327     $   38,800      $ (6,331)      
                                                                          
          The provision (benefit) for income taxes was as follows:  
 
                          Fiscal         Fiscal        Fiscal      
                           1995           1994          1993      
 
     Current:                                                          
          Federal        $  5,890      $  1,420      $   611      
          Foreign           5,435         3,769          697      
          State               355            96           --       
                           11,680         5,285        1,308      
     Deferred:   
          Federal             --            --            --      
          Foreign             574           381         (115)      
          State               --            --            --       
                              574           381         (115)      
     Total provision     $ 12,254      $  5,666      $ 1,193      
 
      
      
     Deferred tax liabilities (assets) are comprised of the following 
components:  
                                         
          (in thousands)      
                                            Dec. 30,        Dec. 31,           
                                              1995            1994           
 
     Research and development             $  17,534       $  14,830            
     Depreciation                              (798)           (112)           
     Other                                    2,929           1,408           
     Gross deferred tax liabilities          19,665          16,126           
      
     Net operating loss carryforwards:  
       Domestic                             (21,677)        (26,416)           
       Foreign                               (8,733)         (9,051)           
     Credit carryforwards                   (10,720)         (5,873)           
     Expenses not currently deductible       (7,586)         (4,735)           
     Revenue currently taxable                 (945)           (746)        
     Inventory basis differences             (1,337)         (1,563)          
     Restructuring costs                       (188)           (786)        
     Gross deferred tax assets              (51,186)        (49,170)           
     Deferred tax asset valuation allowance  31,542          32,999             
     Net deferred tax liability (asset)     $    21       $     (45)    
 
The provision for income taxes differs from the amount of income taxes 
determined by applying the U.S.  statutory federal tax rate to income (loss) 
from continuing operations due to the following:  
                                  
                                             Fiscal    Fiscal     Fiscal      
                                              1995      1994       1993      
                                                                            
     Statutory federal tax rate               35.0%     35.0%      (34.0)%      
     State taxes, net of federal benefit       4.2       4.2        (4.3)      
     Tax provision (benefit) from Foreign  
          Sales Corporation                   (1.6)     (3.9)        9.6      
     Tax provision on foreign earnings        (2.1)     (0.1)        9.2      
     Tax effect of fully reserving  
          changes in net deferred tax asset     --        --        38.3      
     Realized benefit from net                
          operating losses                    (9.6)    (20.9)        --      
     Other, net                                          0.3         --     
                                              25.9%     14.6%       18.8%       
                                                                         
     The deferred tax asset valuation allowance in fiscal years 1993-1995 is 
attributed to U.S. federal and state deferred tax assets.  Management believes 
sufficient uncertainty exists with regard to the realizability of such assets 
that a valuation allowance of $31.5 million has been provided at December 30, 
1995.  When and if these reserved deferred tax assets are ultimately realized, 
$16.0 million will reduce the Company's federal and state tax provision and 
$15.5 million will be credited to paid-in capital (related to stock option 
deductions). 
 
     In accordance with FAS 109, the valuation allowance is allocated pro-rata 
to federal and state current and non-current deferred tax assets.  Net 
deferred tax liability at December 30, 1995 reflects foreign liabilities of 
$578,000 offset by $557,000 of U.S. assets.  The net deferred tax asset at 
December 31, 1994 related to foreign operations. 
 
     The Company has accumulated unused research and development credits of 
$3.9 million for income tax purposes.  These credits expire from 1998-2005.  
The Company also has Alternative Minimum Tax Credits (AMT) which may be 
carried forward indefinitely and certain state tax credits which expire from 
1996-2000.
 
     The Company may realize tax benefits as a result of the exercise of 
certain employee stock options.  For financial reporting purposes, any 
reduction in income tax obligations as a result of these tax benefits is 
credited to paid-in capital.  During 1995, $4.7 million of benefits were 
credited to paid-in capital with a related reduction in current taxes payable.  
No benefits were recognized in 1994 or 1993. 
 
     An income tax provision has not been recorded for U.S. or additional 
foreign taxes on undistributed earnings of foreign subsidiaries as the 
undistributed earnings have been and will continue to be reinvested. 
 
8.     RESTRUCTURING CHARGES  
 
     During 1993, the Company provided for restructuring charges of $22.3 
million in connection with management's decision to realign resources to 
provide open distributed client/server computing solutions, professional 
service consulting and architecture-led selling, marketing and engineering 
strategies.  These restructuring steps included a reduction in the Company's 
workforce of approximately 5%.  The realignment of resources is progressing 
according to plan.  The $.5 million remaining accrual is primarily related to 
obligations associated with closed facility leases and future extended 
employee benefit costs.  Management expects that the remaining accrual is 
adequate and will be fully utilized according to the realignment plan. 
 
9.     SHAREHOLDERS' EQUITY  
 
     Common and Preferred Stock.  In February 1993, the Company sold 3 million 
shares of common stock in an equity offering.  Net proceeds to the Company, 
after deducting the underwriting discount and offering expenses, were 
approximately $60 million.  In connection with such offering, all outstanding 
shares of preferred stock were converted into 3 million shares of common stock 
and $9.9 million of the Debentures were converted into 626,000 shares of 
common stock.  In 1995, an additional $1.0 million of the Debentures were 
converted into 63,000 shares of common stock. 
 
     Stock Option Plans.  Sequent grants options under compensatory and 
noncompensatory plans to employees and nonemployees.  Option prices generally 
have been at 85% or greater of the fair market value of the common stock on 
the date of grant.  Employee and nonemployee options vest over varying time 
periods as long as, in the case of employees, the optionee remains employed by 
Sequent.  Options generally expire ten years from the date of the grant.   
 
     The following table summarizes the stock option transactions:  
     (In thousands, except per share)      
                                    Shares Under          
                                       Option          Price Range         
 
     Balance at January 2, 1993         4,564        $1.20  -  $22.31 
          Options granted                 968       $10.31  -  $21.13 
          Options cancelled              (454)       $5.05  -  $20.63 
          Options exercised              (609)       $1.20  -  $15.41 
     Balance at January 1, 1994         4,469        $1.20  -  $22.31 
          Options granted               1,214       $10.47  -  $19.63 
          Options cancelled              (603)       $6.32  -  $20.50 
          Options exercised              (648)       $1.20  -  $17.85 
     Balance at December 31, 1994       4,432        $1.20  -  $22.31 
          Option granted                2,328       $12.22  -  $24.38 
          Options cancelled              (636)       $6.80  -  $24.38 
          Options exercised            (1,056)       $1.20  -  $19.23 
     Balance at December 30, 1995       5,068        $1.20  -  $24.38      
 
     Exercisable at December 30, 1995   1,276        $1.20  -  $22.31 
 
     Available for grant at 
      December 30, 1995                   544 
       
          Employee Stock Purchase Plan.  In September 1987, Sequent 
established an Employee Stock Purchase Plan.  Under the plan, Sequent is 
authorized to grant rights to purchase up to 4,150,000 shares of common stock 
in a series of eighteen-month offerings. At December 30, 1995, there were 
957,000 shares available for future purchase.  Substantially all employees are 
eligible to receive rights under the plan.  The purchase price is the lesser 
of 85% of the fair market value of the common stock on the date of plan 
enrollment or on the date of purchase.  During 1995, 1994 and 1993, Sequent 
issued 576,000, 467,000 and 535,000 shares under the plan, respectively.   
 
10.     GEOGRAPHIC SEGMENT INFORMATION  
 
     Information about the Company's foreign operations and export sales is 
provided in the table below.  Foreign revenue is that which is produced by 
identifiable assets located in foreign countries while export revenue is that 
which is generated by identifiable assets located in the United States.   
                                         
     (in thousands) 
 
                                     Fiscal         Fiscal        Fiscal      
                                      1995           1994          1993      
     Revenue:                                                                
          United States           $  244,029     $  233,246    $  197,724  
          Foreign:                                                           
               Europe                242,133        177,320       127,595 
               Other                  32,784         24,624        19,953   
          Export:                                                            
               Europe                   --             --            --       
               Other                  21,399         15,633         8,534
                                  $  540,345     $  450,823     $ 353,806 
     Operating income (loss):                                                  
          United States           $   27,184     $   27,773     $     304      
          Foreign:                                                          
               Europe                 18,290          9,444        (4,249)
               Other                   3,045          2,260           681      
                                  $   48,519     $   39,477     $  (3,264)     
     Identifiable assets:                                                      
          United States           $  367,196     $  321,857     $ 308,651       
          Foreign:                                                          
               Europe                123,614        105,232        61,963       
               Other                  13,113          8,888         4,810       
                                  $  503,923     $  435,977     $ 375,424 
                                                                         
     Intercompany sales between geographic areas, primarily from the United 
States to Europe, were $131.0 million during 1995, $111.1 million during 1994 
and $81.6 million during 1993.   
 
11.     FOREIGN CURRENCY EXPOSURE  
 
     A substantial portion of the Company's business is conducted overseas 
through its foreign subsidiaries, primarily in Europe.  This exposes the 
Company to risks associated with foreign currency rate fluctuations which can 
impact the Company's revenue and net income.  To mitigate this risk the 
Company enters into foreign currency transactions with foreign and domestic 
banks on a continuing basis in amounts and timing consistent with the 
underlying currency exposure so that gains and losses on these transactions 
offset gains and losses on the underlying exposure.  The Company does not 
engage in any speculative trading activity.  See related discussion in Note 4.
 
 
 
12.     FAIR VALUE OF FINANCIAL INSTRUMENTS  
 
     Statement of Financial Accounting Standards No. 107, "Disclosures About 
Fair Value of Financial Instruments," requires disclosure of the fair value of 
certain financial instruments. 
 
     Cash and cash equivalents, restricted deposits, investments, receivables, 
notes payable, accounts payable and other and current obligations under 
capital leases and debt are reflected in the consolidated financial statements 
at fair value because of the short-term maturity of these instruments. 
 
     The fair value of long-term obligations under capital leases was 
estimated by discounting the future cash flows using market interest rates and 
does not differ significantly from the amount reflected in the consolidated 
financial statements. 
 
     Due to the private nature of the Company's Convertible Debentures and the 
subjectivity of assessing the impact of the Company's future common stock 
price, the fair value of long-term debt is judged to be materially the same as 
that reflected in the financial statements. 
 
     Fair value estimates are made at a specific point in time, based on 
relevant market information about the financial instrument.  These estimates 
are subjective in nature and involve uncertainties and matters of significant 
judgment and therefore cannot be determined with precision.  Changes in 
assumptions could significantly affect the estimates. 
 
REPORT OF INDEPENDENT ACCOUNTANTS  
 
 
To the Board of Directors and Shareholders of  
Sequent Computer Systems, Inc.   
 
 
     In our opinion, the accompanying consolidated balance sheets and the 
related consolidated statements of operations, of shareholders' equity and of 
cash flows present fairly, in all material respects, the financial position of 
Sequent Computer Systems, Inc. and its subsidiaries at December 30, 1995 and 
December 31, 1994, and the results of their operations and their cash flows 
for each of the years ended December 30, 1995, December 31, 1994 and January 
1, 1994 in conformity with generally accepted accounting principles.  These 
financial statements are the responsibility of the Company's management; our 
responsibility is to express an opinion on these financial statements based on 
our audits.  We conducted our audits of these statements in accordance with 
generally accepted auditing standards which require that we plan and perform 
the audit to obtain reasonable assurance about whether the financial 
statements are free of material misstatement.  An audit includes examining, on 
a test basis, evidence supporting the amounts and disclosures in the financial 
statements, assessing the accounting principles used and significant estimates 
made by management, and evaluating the overall financial statement 
presentation.  We believe that our audits provide a reasonable basis for the 
opinion expressed above.   
 
PRICE WATERHOUSE LLP 
 
Portland, Oregon  
January 24, 1996 
 
 
                 QUARTERLY FINANCIAL DATA (unaudited)  
                (In thousands, except per share amounts)  
 
                                         
                      Total          Gross         Net       Earnings     
                      Revenue        Profit       Income     Per Share    
Fiscal 1995 
   First quarter     $ 116,099     $  52,689     $  5,953    $   .18 
   Second quarter      139,207        65,082       11,010        .33 
   Third quarter       133,215        59,565        7,441        .22 
   Fourth quarter      151,824        67,056       10,668        .31 
     Year           $  540,345     $ 244,392     $ 35,073*   $  1.04 
 
Fiscal 1994                                                                   
   First quarter    $   93,871     $  45,017     $  4,720    $   .15 
   Second quarter      108,797        48,579        7,155        .23 
   Third quarter       121,247        54,321        8,874        .28 
   Fourth quarter      126,908        60,677       12,385        .38 
     Year           $  450,823     $ 208,594     $ 33,134    $  1.03* 
 
 
     *The sum of quarterly earnings per share does not equal annual earnings 
per share as a result of the computation of quarterly versus annual average 
shares outstanding.  The sum of quarterly net income does not equal annual net 
income due to rounding. 
 
MARKET INFORMATION (unaudited)  
 
     Sequent's Common Stock has been traded on the NASDAQ National Market 
System since April 1987 under the symbol SQNT.  The following table sets 
forth, for the fiscal quarters indicated, the high and low sales prices for 
the common stock as reported on the NASDAQ National Market System.   
                                         
                                High            Low      
1995: 
     First quarter            $  20.63       $  15.56 
     Second quarter           $  18.63       $  14.44 
     Third quarter            $  25.25       $  17.88 
     Fourth quarter           $  19.50       $  14.38 
 
1994:                                                     
     First quarter            $  16.13       $  12.88 
     Second quarter           $  15.25       $  11.25 
     Third quarter            $  18.00       $  12.00 
     Fourth quarter           $  20.38       $  16.75 
 
     At December 30, 1995, there were approximately 1.1 thousand shareholders 
of record of the Company's common stock and 33.2 million shares outstanding.  
The Company has never paid cash dividends on its common stock.  The Company 
intends to retain earnings for use in its business and, therefore, does not 
anticipate paying cash dividends in the foreseeable future.  In addition, the 
Company's bank line of credit agreement and the agreements relating to the 
Company's Convertible Debentures prohibit payment of dividends without the
lenders' consent.