SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 22, 1997
TANDEM COMPUTERS INCORPORATED
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(Exact name of registrant as specified in its charter)
Delaware 0-9134 94-2266618
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
19333 Vallco Parkway, Cupertino, CA 95014
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(Address of principal executive offices) (Zip Code)
(408) 285-6000
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(Registrant's telephone number,
including area code)
<PAGE>
Item 5. Other Events.
------------
The Registrant's news release dated July 22, 1997, with respect to its
financial results for the quarter ended June 30, 1997, including its comparative
unaudited consolidated balance sheets as of June 30, 1997, and its comparative
unaudited consolidated statements of operations for the three- and nine- month
periods then ended, is attached and incorporated herein by reference.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: July 23, 1997.
TANDEM COMPUTERS INCORPORATED
By /s/ Enrico L. Pesatori
---------------------------------------
Enrico L. Pesatori
President, Chief Operating Officer and
Acting Chief Financial Officer
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<PAGE>
R-134
Contact: Roberta DeTata (Financial) FOR RELEASE ON JULY 22, 1997
+1 (408) 285 4364
[email protected]
Eileen Quinn Smith (Press)
+1 (408) 285 6722
[email protected]
World Wide Web: http://www.tandem.com
TANDEM DELIVERS Q3 REVENUE GROWTH AND STRONG PROFITABILITY
INCOME IMPROVES BY 85 PERCENT TO $43 MILLION;
NEW-GENERATION NONSTOP HIMALAYA SERVERS START VOLUME SHIPMENT;
CLUSTER-READY NONSTOP SOFTWARE PRODUCTS INTRODUCED
CUPERTINO, Calif.-Tandem Computers Incorporated (NYSE:TDM) today announced
results for the third fiscal quarter ended June 30, 1997. Quarterly revenues
from continuing operations rose 8 percent to $503 million, compared with $466
million in the third quarter of fiscal year 1996. Quarterly income from
continuing operations rose to $43 million (8.6 percent of revenue), or $0.36 per
share, versus $23 million, or $0.20 per share, in the third quarter of fiscal
year 1996.
Revenues from continuing operations for the nine months ended June 30, 1997,
were $1.4 billion, up 4 percent from the same period last year. Income from
continuing operations for the nine months ended June 30, 1997, was $80 million,
compared with a loss of $46 million for the same period last year. A
restructuring charge of $52 million was posted in the second quarter of fiscal
year 1996.
Commenting on the quarter, Tandem Chief Executive Officer Roel Pieper said,
"Tandem has made significant progress toward realizing the vision and strategy
we put in place 18 months ago, and the company has clearly met its goal of
delivering significant growth and strong profitability. Our NonStop(R)
Himalaya(R) S-series servers, now shipping in volume, deliver a whole new level
of price/performance for enterprise computing. Our powerful NonStop Software
middleware will enable customers to deploy business-critical applications with
maximum flexibility. With the shipment of our first highly reliable clustered
Windows NT(R) Server system, we have fulfilled our promise to bring Tandem's
fundamentals of reliability
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<PAGE>
and scalability to the broader market. These are all proof points of
the success of our turnaround."
President and Chief Operating Officer Enrico Pesatori said, "Tandem has
continued to sharpen its focus, delivering solid revenue growth and good cost
control in the third quarter. The achievement of high single-digit revenue
growth and strong profit--due largely to the continued strength of our NonStop
Himalaya line of servers, Tandem's growing success in the wireless
communications sector, outstanding discount discipline in the field, and
excellent manufacturing inventory and purchasing management--clearly
demonstrates that the company is on track toward meeting its aggressive revenue
and profit goals for the remainder of this year and 1998. The remarkable
improvement in our gross margins testifies to the precise execution of our
strategy."
MARGINS RISE, BALANCE SHEET CONTINUES TO STRENGTHEN
Tandem continued to exercise good cost control in the third quarter. Gross
margins rose to 53.2 percent, an increase of 1.9 points over the previous
quarter and the same period last year. Inventory days improved to 38 days versus
the 40 days reported in the second quarter. The company's already strong cash
position rose $11 million from Q2 to $228 million.
NONSTOP HIMALAYA K-SERIES AND NEW S-SERIES SERVERS BOOST REVENUE
Adding to the continuing brisk sales of the Tandem(R) NonStop Himalaya K-series
servers, the company rolled out its new S-series servers in the third quarter as
planned. The new product line is based on Tandem's high-performance
ServerNet(TM) system area network and delivers greatly enhanced levels of
price/performance. The full binary application compatibility of S-series and
K-series servers ensures seamless coexistence and deployment for Tandem's
customers.
Volume shipment of the S-series platforms started in mid-June and contributed
$22 million to the company's quarterly revenues. Customer acceptance of these
new products--especially the high-end S70000 server--has been excellent. Overall
system revenue for the quarter rose 10 percent as compared with the same period
last year.
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<PAGE>
NONSTOP SOFTWARE LAUNCH DEMONSTRATES CLUSTER SCALABILITY
During the third quarter, Tandem introduced its NonStop Software suite of
cluster-ready middleware. This software delivers Tandem's fundamentals of
availability and scalability to clustered Windows NT Server systems and brings
new capabilities to NonStop Himalaya servers.
The power of the NonStop SQL/MX database management system was convincingly
demonstrated during the quarter in a complex decision support system: a
2-terabyte, 30-billion-row database deployed across a ServerNet
technology-interconnected, 64-processor Windows NT Server cluster with a single,
easily managed application image.
AMERICAS AND JAPAN LEAD SALES, KEY VERTICAL MARKETS STAY STRONG
The Americas and Japan continued to show solid performance in the third quarter
with growth in key vertical markets.
Finance and telecommunications accounted for 75 percent of Tandem's
third-quarter system revenues. Continuing success in intelligent networking and
wireless applications drove communications-related system revenues to $116
million for Q3, representing a 20 percent improvement over the same period last
year.
In addition to historical information, this press release contains
forward-looking statements that involve risks and uncertainties, including but
not limited to, product delivery and acceptance, currency fluctuation, and other
risks detailed from time to time in the company's Securities and Exchange
Commission filings, including the company's Form 10-Q for the quarter ended
March 31, 1997, and the Form 10-Q for the quarter ended June 30, 1997, which
will be filed shortly. Actual results may differ materially from management
expectations.
On June 23, 1997, Compaq Computer Corporation and Tandem Computers Incorporated
announced the execution of a definitive merger agreement in a stock-for-stock
transaction. Under the terms of the agreement, Tandem will become a wholly owned
subsidiary of Compaq Computer Corporation. The merger is subject to regulatory
review and approval by Tandem shareholders.
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<PAGE>
Founded in 1974, Tandem Computers Incorporated designs and delivers technology
solutions that companies rely on to compete in a business world that runs 24
hours a day. A US$1.9 billion company headquartered in Cupertino, Calif., Tandem
has offices, strategic partners, and providers in more than 50 countries around
the world.
Tandem, Himalaya, NonStop, ServerNet, and the Tandem logo are trademarks or
registered trademarks of Tandem Computers Incorporated in the United States
and/or other countries. Windows NT is either a registered trademark or a
trademark of Microsoft Corporation in the United States and/or other countries.
All other brand and product names are trademarks or registered trademarks of
their respective companies.
-- FINANCIAL SUMMARY APPENDED --
<PAGE>
TANDEM COMPUTERS INCORPORATED AND SUBSIDIARIES
<TABLE>
Consolidated Statements of Operations (Unaudited)
<CAPTION>
- --------------------------------------------------------------------------------
For the three months ended
--------------------------
June 30, June 30,
(In thousands, except per share amounts) 1997 1996
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<S> <C> <C>
REVENUES
Product revenues $ 392,692 $ 372,208
Service and other revenues 109,882 93,570
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Total revenues 502,574 465,778
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COSTS AND EXPENSES
Cost of product revenues 154,375 160,152
Cost of service and other revenues 80,979 66,859
Research and development 69,433 69,348
Marketing, general, and administrative 147,600 139,184
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Total costs and expenses 452,387 435,543
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OPERATING INCOME 50,187 30,235
Net interest income 2,049 22
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INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 52,236 30,257
Provision for income taxes 9,000 6,919
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INCOME FROM CONTINUING OPERATIONS 43,236 23,338
LOSS FROM DISCONTINUED OPERATIONS, NET OF
INCOME TAXES -- (15,440)
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NET INCOME $ 43,236 $ 7,898
===============================================================================
PRIMARY EARNINGS (LOSS) PER SHARE
CONTINUING OPERATIONS $ .36 $ .20
DISCONTINUED OPERATIONS -- (.13)
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EARNINGS PER SHARE $ .36 $ .07
===============================================================================
Primary weighted average shares outstanding 119,524 118,978
===============================================================================
FULLY DILUTED EARNINGS (LOSS) PER SHARE
CONTINUING OPERATIONS $ .35 $ .20
DISCONTINUED OPERATIONS -- (.13)
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EARNINGS PER SHARE $ .35 $ .07
===============================================================================
Fully diluted weighted average shares
outstanding 124,238 119,512
===============================================================================
</TABLE>
<PAGE>
TANDEM COMPUTERS INCORPORATED AND SUBSIDIARIES
<TABLE>
Consolidated Statements of Operations (Unaudited)
<CAPTION>
- --------------------------------------------------------------------------------
For the nine months ended
June 30, June 30,
(In thousands, except per share amounts) 1997 1996
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<S> <C> <C>
REVENUES
Product revenues $ 1,099,028 $ 1,069,841
Service and other revenues 306,601 286,857
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Total revenues 1,405,629 1,356,698
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COSTS AND EXPENSES
Cost of product revenues 452,345 463,038
Cost of service and other revenues 219,627 207,699
Research and development 202,798 210,751
Marketing, general, and administrative 434,961 447,770
Restructuring charge -- 52,000
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Total costs and expenses 1,309,731 1,381,258
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OPERATING INCOME (LOSS) 95,898 (24,560)
Gain on sale of real estate 5,463 --
Net interest income 4,143 730
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INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 105,504 (23,830)
Provision for income taxes 25,500 21,757
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INCOME (LOSS) FROM CONTINUING OPERATIONS 80,004 (45,587)
INCOME FROM DISCONTINUED OPERATIONS, NET OF
INCOME TAXES -- 5,894
GAIN ON DISPOSAL OF DISCONTINUED OPERATIONS, NET
OF INCOME TAXES 989 --
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NET INCOME (LOSS) $ 80,993 $ (39,693)
================================================================================
PRIMARY EARNINGS (LOSS) PER SHARE
CONTINUING OPERATIONS $ .66 $ (.39)
DISCONTINUED OPERATIONS -- .05
GAIN ON DISPOSAL OF DISCONTINUED OPERATIONS .01 --
- --------------------------------------------------------------------------------
EARNINGS (LOSS) PER SHARE $ .67 $ (.34)
================================================================================
Primary weighted average shares outstanding 120,201 117,346
================================================================================
FULLY DILUTED EARNINGS (LOSS) PER SHARE
CONTINUING OPERATIONS $ .64 $ (.39)
DISCONTINUED OPERATIONS -- .05
GAIN ON DISPOSAL OF DISCONTINUED OPERATIONS .01 --
- --------------------------------------------------------------------------------
EARNINGS (LOSS) PER SHARE $ .65 $ (.34)
================================================================================
Fully diluted weighted average shares outstanding 125,497 117,346
================================================================================
Note: Income from discontinued operations for the nine months ended
June 30, 1996 includes a gain on the sale of investments of $30.6 million.
</TABLE>
<PAGE>
TANDEM COMPUTERS INCORPORATED AND SUBSIDIARIES
<TABLE>
Consolidated Balance Sheets (Unaudited)
<CAPTION>
- --------------------------------------------------------------------------------------------
June 30, September 30,
(In thousands, except per share amount) 1997 1996
- --------------------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $ 227,822 $ 87,813
Accounts receivable, net 430,712 475,464
Current portion of lease receivables 85,702 74,624
Inventories 97,304 115,320
Prepaid expenses and other 76,904 43,749
Net current assets of discontinued operations -- 62,593
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Total current assets 918,444 859,563
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PROPERTY, PLANT, AND EQUIPMENT, at cost 1,267,894 1,246,950
Accumulated depreciation and amortization (744,821) (696,140)
Net property, plant, and equipment of discontinued
operations -- 30,402
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Net property, plant, and equipment 523,073 581,212
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LEASE RECEIVABLES 92,286 86,618
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OTHER ASSETS 256,552 217,580
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TOTAL ASSETS $ 1,790,355 $ 1,744,973
=========================================================================================
LIABILITIES AND STOCKHOLDERS' INVESTMENT
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CURRENT LIABILITIES
Accounts payable $ 140,632 $ 135,821
Accrued liabilities 344,436 353,765
Current maturities of long-term obligations 82,888 93,740
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Total current liabilities 567,956 583,326
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LONG-TERM OBLIGATIONS 87,078 75,225
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STOCKHOLDERS' INVESTMENT
Common stock, $.025 par value, authorized 400,000
shares, outstanding 123,531 shares at June 30
and 121,318 shares at September 30 3,088 3,033
Additional paid-in capital 736,015 710,264
Retained earnings 499,697 420,363
Accumulated translation adjustments (6,816) 3,629
Treasury stock, at cost (96,663) (50,867)
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Total stockholders' investment 1,135,321 1,086,422
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TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 1,790,355 $ 1,744,973
=========================================================================================
</TABLE>
