____________________________________________________________
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1994
Commission File Number 1-9026
COMPAQ COMPUTER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 76-0011617
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20555 SH 249, Houston, Texas 77070
(713) 370-0670
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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 [ ]
The number of shares of the registrant's Common Stock, $.01 par value,
outstanding as of March 31, 1994, was 85,481,000.
____________________________________________________________
P A R T I. FINANCIAL INFORMATION
Item 1. Financial Statements
COMPAQ COMPUTER CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
March 31, December 31,
1994 1993
--------- ------------
(in millions)
Current assets:
Cash and cash equivalents $ 940 $ 627
Short-term investments 56
Accounts receivable, net 1,500 1,377
Inventories 1,429 1,123
Prepaid expenses and other current assets 195 164
------- -------
Total current assets 4,120 3,291
Property, plant, and equipment,
less accumulated depreciation 794 779
Other assets 22 14
------- -------
$ 4,936 $ 4,084
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 840 $ 637
Income taxes payable 106 69
Other current liabilities 592 538
------- -------
Total current liabilities 1,538 1,244
------- -------
Long-term debt 300
------- -------
Deferred income taxes 188 186
------- -------
Stockholders' equity:-
Preferred stock, $.01 par value: 10,000,000 shares
authorized; none outstanding
Common stock and capital in excess of $.01 par value:
400,000,000 shares authorized; 85,481,000 shares
and 84,348,000 shares issued and outstanding 629 586
Retained earnings 2,281 2,068
------- -------
Total stockholders' equity 2,910 2,654
------- -------
$ 4,936 $ 4,084
======= =======
See accompanying notes to consolidated financial data
COMPAQ COMPUTER CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Quarter ended March 31,
1994 1993
------- -------
(in millions, except per share amounts)
Sales $ 2,278 $ 1,611
Cost of sales 1,661 1,241
------- -------
617 370
------- -------
Research and development costs 53 38
Selling, general, and administrative expense 254 177
Other income and expense, net 22 20
------- -------
329 235
------- -------
Income before provision for income taxes 288 135
Provision for income taxes 75 33
------- -------
Net income $ 213 $ 102
======= =======
Earnings per common and common equivalent share:
Primary $ 2.40 $ 1.23
======= =======
Assuming full dilution $ 2.39 $ 1.23
======= =======
Shares used in computing earnings per common
and common equivalent share:
Primary 88.8 83.1
======= =======
Assuming full dilution 89.0 83.1
======= =======
See accompanying notes to consolidated financial data
COMPAQ COMPUTER CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Quarter ended March 31,
1994 1993
-------- --------
(in millions)
Cash flows from operating activities:
Cash received from customers $2,112 $1,444
Cash paid to suppliers and employees (1,989) (1,454)
Interest and dividends received 6 3
Interest paid (15) (15)
Income taxes paid (36) (32)
------ ------
Net cash provided by (used in) operating activities 78 (54)
------ ------
Cash flows from investing activities:
Purchases of property, plant, and equipment, net (54) (32)
Purchases of short-term investments (56)
Other, net (8) (1)
------ ------
Net cash used in investing activities (118) (33)
------ ------
Cash flows from financing activities:
Proceeds from sale of equity securities 43 26
Issuance of long-term debt 300
------ ------
Net cash provided by financing activities 343 26
------ ------
Effect of exchange rate changes on cash 10 24
------ ------
Net increase (decrease) in cash and cash equivalents 313 (37)
Cash and cash equivalents at beginning of year 627 357
------ ------
Cash and cash equivalents at end of year $ 940 $ 320
====== ======
Reconciliation of net income to net cash provided by
(used in) operating activities:
Net income $ 213 $ 102
Depreciation and amortization 37 39
Provision for bad debts 15 2
Deferred income taxes 3
Currency exchange losses 9 6
Increase in accounts receivable (143) (178)
Increase in inventories (306) (81)
Decrease (increase) in prepaid expenses and
other current assets (31) 12
Increase in accounts payable 203 14
Increase in income taxes payable 36
Increase in other current liabilities 42 30
------ ------
Net cash provided by (used in) operating activities $ 78 $ (54)
====== ======
See accompanying notes to consolidated financial data
COMPAQ COMPUTER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL DATA
Note 1 - Basis of presentation
The accompanying unaudited financial data as of March 31, 1994 and December
31, 1993 and for the three month periods ended March 31, 1994 and 1993 have
been prepared on substantially the same basis as the annual consolidated
financial statements. In the opinion of the Company, the data reflect all
adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of the results for those periods and the financial
condition at those dates.
Note 2 - Inventories
Inventories consisted of the following components:
March 31, December 31,
1994 1993
--------- ------------
(in millions)
Raw materials 677 535
Work-in-process 147 90
Finished goods 605 498
------- -------
$ 1,429 $ 1,123
======= =======
Notes 3 - Long-term debt
In March 1994 the Company issued $300 million in senior notes, including
$150 million 6 1/2% notes due March 15, 1999 and $150 million 7 1/4% notes
due March 15, 2004. Interest on the notes is payable semi-annually on
March 15 and September 15. The notes are not redeemable prior to maturity
and are not entitled to any sinking fund.
Note 4 - Other income and expense
Other income and expense consisted of the following components:
Quarter ended March 31,
1994 1993
------- -------
(in millions)
Interest and dividend income $ (6) $ (3)
Interest expense associated with hedging 4 6
Other interest expense 13 10
Currency exchange losses, net 9 6
Other, net 2 1
----- -----
$ 22 $ 20
===== =====
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the
consolidated interim financial statements.
Results of Operations
The following table presents, as a percentage of sales, certain
selected financial data for the quarters ended March 31, 1994 and 1993.
Quarter ended March 31,
1994 1993
---------- ----------
Sales 100.0% 100.0%
Cost of sales 72.9 77.0
______ ______
Gross margin 27.1 23.0
Research and development costs 2.3 2.4
Selling, general, and administrative expense 11.2 11.0
Other income and expense, net 1.0 1.2
______ ______
14.5 14.6
______ ______
Income before provision for income taxes 12.6% 8.4%
______ ______
______ ______
Sales
Sales for the first quarter of 1994 increased 41% over the
comparable period of 1993 and 3% over the fourth quarter of 1993.
European sales represented 36% of total sales in the first quarter of
1994 as compared with 42% in the comparable period of 1993 and 36% in the
fourth quarter of 1993. Other international sales, excluding Canada,
represented 11% of the total sales in the first quarter of 1994 as
compared with 9% in the comparable period of 1993 and 12% in the fourth
quarter of 1993.
The Company's significant increase in consolidated sales in the
first quarter of 1994 stemmed primarily from an increase in the number of
units sold. Total computer unit sales increased more than 40% in the
first quarter of 1994 over the comparable period of 1993, including a 94%
increase in unit sales of the Company's tower server CPU products. Unit
sales growth primarily resulted from the Company's aggressively priced
Compaq ProLinea(R) in desktop products, the Compaq Contura(R) portable
computers, and the Compaq Prosignia(TM) tower system products. The
Company expanded these lines in February 1994 with the introduction of
the Compaq Contura Aero(TM) subnotebook PC, in March 1994 with the
introduction of the new Compaq Prosignia VS server for small and mid-
sized businesses and the Compaq LTE Elite(TM) family of high performance
notebook computers, and in April 1994 with the announcement of the Compaq
Deskpro(R) XL family of desktop personal computers as well as five new
Compaq Prolinea desktop PCs.
Unit growth closely matched revenue growth for first quarter 1994
when compared to first quarter 1993. The relative stability in the
Company's average sales price per unit resulted from a more stabilized
pricing environment and a greater proportion of sales of its higher end
products. Competition continues to have a significant impact on prices
of the Company's products, especially those products aimed at the
consumer market, and additional pricing actions may occur as the Company
attempts to maintain its competitive mix of price and performance
characteristics and customer support services. The Company attempts to
mitigate the effect of any pricing actions through implementation of
effective design to cost goals, the aggressive pursuit of reduced
component costs, manufacturing efficiencies, and control of operating
expenses.
Gross Margin
Gross margin as a percentage of sales rose to 27.1% in the first
quarter of 1994, compared to 23.0% in the comparable period of 1993 and
23.7% in the fourth quarter of 1993. The rise from the fourth quarter of
1993 primarily resulted from increases in proportion of sales of the
Company's higher margin products as well as currency fluctuations,
reduced component costs, and manufacturing efficiencies. The Company
believes that industry consolidation and restructuring will continue
throughout 1994 resulting in a continued aggressive pricing environment
and continued pressure on the Company's gross margins. The Company
maintains a market share growth strategy and continues to expand its
presence in new price sensitive market segments, which could lower the
Company's average sales price per unit. This reduction, coupled with
related changes in the mix of product sales, could result in lower gross
margin levels. The Company continues to pursue aggressively the
reduction of product costs both at the supplier and manufacturing levels
and anticipates that these savings will assist its efforts to maintain
competitive pricing.
Operating Expenses
Research and development costs increased 40% in absolute dollars in
the first quarter of 1994 as compared with the same period of 1993 while
remaining stable as a percentage of sales. The Company is committed to
continuing a significant research and development program and research
and development costs are likely to increase in absolute dollars in the
remaining quarters of 1994.
Selling, general, and administrative expense increased in amount
while remaining relatively stable as a percentage of sales in the first
quarter of 1994 as compared with the same period of 1993. The increase
in expenses resulted from domestic and international selling expense
associated with higher unit volumes as well as expense incurred in
connection with the introduction of new products, the entry into new
markets (both domestically and internationally), the expansion of
distribution channels, and a greater emphasis on advertising, customer
service, and technical support. The Company anticipates that selling
expenses will be higher in the remaining quarters of 1994--at least in
absolute dollars--as a result of the Company's marketing and sales
programs and the continuing expansion of its geographic markets.
Other Items
Other income and expense in the first quarter of 1994 was an
expense of $22 million. In the first quarter of 1994 compared to the
corresponding period of 1993, the Company experienced a relatively stable
net interest expense in absolute dollars. This stability resulted from
an increase in interest earned on investable cash due to higher cash
levels and a decrease in interest expense associated with the Company's
foreign exchange hedging program, which were offset by an increase in
interest expense in connection with financing resellers' inventories.
The translation gains and losses relating to the financial
statements of the Company's international subsidiaries, net of offsetting
gains and losses associated with hedging activities related to the net
monetary assets of these subsidiaries, are included in other income and
expense and were a net loss of $9 million in the first quarter of 1994,
compared to a net loss of $6 million in the first quarter of 1993.
Provision for Income Taxes
The Company estimates the effective tax rate for 1994 will be 26%,
an increase from 25% in 1993. The increase is attributable to higher
profitability and a decline in the proportion of earnings derived from
its Singaporean subsidiaries to total Company earnings. A portion of the
undistributed earnings of the Company's Singaporean subsidiaries are
invested indefinitely in operations outside the United States.
Liquidity and Capital Resources
During the first quarter of 1994 the Company had working capital of
approximately $2.6 billion compared to its level of $2.0 billion at
December 31, 1993.
The Company's cash, cash equivalents, and short-term investments
increased to $996 million at March 31, 1994, from $627 million at
December 31, 1993, primarily because of the Company's issuance of $300
million in debt securities during the first quarter, positive cash flow
from operating activities and cash received in connection with the
exercise of employee stock options, which were partially offset by
working capital needs related to the Company's support of higher
production volumes to meet demand. Accounts receivable increased to $1.5
billion at March 31, 1994, from $1.4 billion at December 31, 1993, as a
result of higher sales levels. Inventory levels increased to $1.4
billion from $1.1 billion during that period. The Company's higher
levels of inventory, associated with higher sales levels, could adversely
affect the Company in the event of a drop in worldwide demand for PC
products.
Cash used in the first quarter of 1994 for the purchase of
property, plant and equipment totaled $54 million. The Company estimates
that capital expenditures for land, buildings, and equipment during the
remainder of 1994 will be approximately $221 million. The Company has
commitments for only a small portion of such amounts and the actual level
of spending will depend on a variety of factors, including general
economic conditions and the Company's business.
The Company currently expects to fund expenditures for capital
requirements as well as liquidity needs created by changes in working
capital from a combination of available cash balances, internally
generated funds, and financing arrangements. The Company from time to
time may borrow funds for actual or anticipated funding needs or because
it is economically beneficial to borrow funds for the Company's needs
instead of repatriating funds in the form of dividends from its foreign
subsidiaries. The Company has outstanding debt securities of $300
million. The Company also has committed lines of credit totaling $300
million, which were unused and available at March 31, 1994.
Factors that May Affect Future Results
The Company participates in a highly volatile industry that is
characterized by its rapidly changing customer demand patterns and
industry-wide competition resulting in aggressive pricing practices. In
anticipation of continued growth and expansion of its market share, the
Company is significantly expanding manufacturing and distribution
capacity as well as reengineering its internal logistics. The Company's
operating results could be adversely affected should the Company be
unable to anticipate customer demand accurately, to manage its
manufacturing process and inventory levels to respond quickly to changing
production needs, or to distribute its products efficiently in a variety
of reseller channels.
The Company's product strategy focuses in part on marketing
products with distinctive features and at prices that appeal to a variety
of purchasers. Because of the pace of technological advances in the
personal computer industry, the Company must introduce new products on a
timely basis that offer customers the latest competitive technologies.
In addition, although the Company designs many of its own components for
its products, across the Company's product range certain elements of
product strategy are dependent on technological developments by, and
manufacturing capacities, of other manufacturers. There can be no
assurance that the Company will obtain the delivery of the technology
needed to introduce new products in a timely manner, will acquire a
sufficient supply of components utilizing such technology to deliver high
volumes of its products, will manage the lead times required to obtain
components to respond to short term shifts in customer demand patterns,
or will be able to obtain any competitive advantage in access to new
technology. If the Company were unable to develop and launch new
products in a timely fashion and in significant unit volumes, this
failure could have a material adverse effect on the Company's business.
In order to maintain or increase its market share, the Company must
continue to price its products competitively and from time to time may
use various incentive programs to increase sales. Some of these
strategies lower the average sales price per unit and may cause declines
in gross margin. To compensate for the impact of reduced prices on its
sales and profitability, the Company must increase unit shipments,
aggressively reduce costs, and maintain tight control over operating
expenses. If the Company takes pricing actions and does not achieve
significant unit shipment increases and cost reductions, however, there
could be an adverse impact on sales and profitability. The Company
believes its pricing and product strategies are competitive and have
created demand for its products. While the Company anticipates that
demand will continue to be strong in coming quarters, it expects that the
gross margin levels experienced in the first quarter of 1994 will
decline, primarily as a result of anticipated fluctuations in the product
mix of its sales.
During the first quarter of 1994 the Company continued to broaden
its product distribution into new geographic locations and new sales
channels. Offering its products in an increasing number of geographic
locations and through a variety of distribution channels, including
distributors, mail order, electronics superstores and other consumer
retail outlets, requires the Company to increase its geographic presence
and to provide increased levels of sales and support interface with
customers. There can be no assurance, however, that this direction will
be effective, or that the requisite service and support to ensure the
success of the Company's operations in new locations or through new
channels can be achieved in a cost effective manner. While the Company
anticipates that its geographic expansion will continue and the number of
outlets for its products will continue to increase in the remainder of
1994, a reduction in this growth could affect sales and profitability.
Geographic expansion, particularly in developing countries, also subjects
the Company to a number of political and economic risks, such as currency
devaluation and expropriation.
The Company's primary means of distribution remains third-party
resellers. The Company continuously monitors and manages the credit it
extends to resellers and attempts to limit credit risks by broadening its
distribution channels, utilizing certain risk transfer instruments, and
obtaining security interests in property owned by its debtors. The
Company's business could be adversely affected, however, in the event
that the generally weak financial condition of third-party computer
resellers worsens. Upon the financial failure of a major reseller, the
Company could experience disruptions in its distribution as well as the
loss of the unsecured portion of any outstanding accounts receivable.
The Company believes that the continued expansion of its distribution
outlets and geographic growth will help mitigate any potential impact on
its sales.
The value of the U.S. dollar continues to affect the Company's
financial results. The functional currency for the Company's
international marketing subsidiaries is the U.S. dollar. When the U.S.
dollar strengthens against other currencies, sales made in those
currencies translate into fewer sales in U.S. dollars; and when the U.S.
dollar weakens, sales made in local currencies translate into higher
sales in U.S. dollars. Correspondingly, costs and expenses incurred in
non-U.S. dollar currencies increase when the U.S. dollar weakens and
decline when the U.S. dollar strengthens. Accordingly, changes in
exchange rates may negatively affect the Company's consolidated sales (as
expressed in U.S. dollars) and gross margins and the Company's results of
operations can be significantly affected in the short term by
fluctuations in foreign currency exchange rates. The Company engages in
several hedging programs aimed at limiting in part the impact of currency
fluctuations. Through these programs the Company hedges a portion of
anticipated sales of its international marketing subsidiaries using
purchased foreign currency options, hedges its Japanese-yen denominated
purchase commitments through the use of forward exchange contracts and
option contracts, and hedges its non-U.S. dollar net monetary assets
through the use of forward and option contracts. Although these programs
may reduce the impact of changes in currency exchange rates, when the
U.S. dollar sustains a strengthening position against currencies in which
the Company sells its products or a weakening exchange rate against
currencies in which the Company incurs costs, particularly the Japanese
yen, the Company's sales or its costs are adversely affected.
General economic conditions have an impact on the Company's
business and financial results. Many of the markets in which the Company
sells its products are currently experiencing economic recession and the
Company cannot predict when these conditions will improve or if
conditions in these and other markets will decline. Although the Company
does not consider its business to be highly seasonal, it has experienced
seasonally higher sales and earnings in the first and fourth quarters of
the year. The continued expansion of its retail business is likely to
result in the increased seasonality of the Company's business and its
results being more dependent on retail business fluctuations.
Because of the foregoing factors, as well as other variables
affecting the Company's operating results, past financial performance
should not be considered a reliable indicator of future performance, and
investors should not use historical trends to anticipate results or
trends in future periods. In addition, the Company's participation in a
highly dynamic industry often results in significant volatility of the
Company's common stock price.
P A R T II. OTHER INFORMATION
Item 1. Legal Proceedings
In May 1991 a number of class action lawsuits were filed in the
United States District Court for the Southern District of Texas, Houston
Division. These suits were consolidated into a single class action suit
in June 1991. The action is brought on behalf of all persons who
purchased Compaq common stock or options from December 4, 1990 through
May 14, 1991, and the named defendants include the Company and certain of
its current and former officers and directors. This action has been
settled on behalf of all defendants. On April 8, 1994, a stipulation of
settlement was filed with the court setting forth the terms of the
settlement reached by the parties. The Company settled the consolidated
securities class action in order to eliminate diversion of Company
resources and the expense of litigation. The settlement is subject to
approval by the court at a fairness hearing scheduled for June 23, 1994.
The Company anticipates that insurance will fund a significant portion
of the settlement and that there will be no material financial impact to
the Company.
In May 1991 Michael Ashkenazi and Herbert Kestenbaum brought a
shareholders' derivative action against the Company and certain of its
current and former officers and directors. The complaint was brought in
the District Court of Harris County, Texas, 61st Judicial District. The
complaint alleges that the individual defendants breached their fiduciary
duty to the Company under principles of common law by misleading
investors through certain public statements. The allegations of
misleading statements and/or omissions are similar to the allegations
made in the class action complaints. The complaint also alleges that
sales of Company stock made by eight of the defendants were made while
those defendants were in possession of material adverse information and
were therefore in violation of their fiduciary duties. The plaintiffs
ask that the individual defendants pay to the Company any profits that
they may have made as a result of such stock sales and all other damages
that may be incurred by the Company as a result of the individual
defendants' alleged actions.
The Company has been named as a defendant in a number of repetitive
stress injury lawsuits, primarily in New York state courts or federal
district courts for the New York City area. In each of these lawsuits
the plaintiff alleges that he or she suffers from symptoms generally
known as repetitive stress injury, which allegedly were caused by the
design of the keyboard supplied with the computer the plaintiff used.
The suits naming the Company are similar to those filed against other
major suppliers of personal computers. Ultimate resolution of the
litigation against the Company may depend on progress in resolving this
type of litigation overall. The Company is unable to determine at this
time the outcome of these suits or the likelihood of the Company's being
named in additional suits by plaintiffs' alleging similar injuries. The
Company has denied these claims and intends to defend vigorously the
suits. The Company believes that the claims will not have a material
adverse effect on the Company's financial results of operations or its
financial position.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders
during the first quarter of 1994. At the annual meeting of stockholders
of the Company on April 21, 1994, Benjamin M. Rosen, Eckhard Pfeiffer,
Robert Ted Enloe, III, George H. Heilmeier, George E.R. Kinnear II, Peter
N. Larson, Kenneth L. Lay and Kenneth Roman were elected as directors of
the Company. The following table sets forth the votes at this election:
Director Nominee For Against Abstentions Broker
or Non-
Withheld Votes
Benjamin M. Rosen 68,944,030 210,695 0 0
Eckhard Pfeiffer 68,944,002 210,723 0 0
Robert Ted Enloe, III 68,944,324 210,401 0 0
George H. Heilmeier 68,936,959 217,766 0 0
George E.R. Kinnear II 68,945,348 209,377 0 0
Peter N. Larson 68,946,093 208,632 0 0
Kenneth L. Lay 68,943,780 210,945 0 0
Kenneth Roman 68,945,649 209,076 0 0
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. Description
1.1 Underwriting Agreement dated March 10, 1994, between the
Company and Merrill, Lynch, Pierce, Fenner & Smith,
Incorporated and Morgan Stanley & Co. Incorporated acting
severally on behalf of themselves and the several
underwriters named therein
11 Statement regarding computation of per share earnings
(b) Reports on Form 8-K
1. Report on Form 8-K dated January 26, 1994, containing the Company's
news release dated January 26, 1994, with respect to its financial
results for the periods ended December 31, 1993, including an
unaudited consolidated balance sheet as of December 31, 1993, and
an unaudited consolidated statement of income for the periods ended
December 31, 1993
2. Report on Form 8-K dated March 10, 1994, containing exhibits for
each of the following: a specimen of the Company's 6 1/2% senior
notes due March 15, 1999, a specimen of the Company's 7 1/4% senior
notes due March 15, 2004, statement of ratio of earnings to fixed
charges, and a consent of Price Waterhouse, independent accountants
All other items specified by Part II of this report are inapplicable and
accordingly have been omitted.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
April 29, 1994 Compaq Computer Corporation
/s/ DARYL J. WHITE
------------------------------------------
Daryl J. White, Senior Vice President,
Finance, and Chief Financial Officer
(as authorized officer and as principal
financial officer)
UNDERWRITING AGREEMENT
March 10, 1994
Compaq Computer Corporation
20555 SH 249
Houston, Texas 77070
Dear Sirs:
We (collectively, the "Manager") are acting on behalf of the
underwriter or underwriters (including ourselves) named below (such
underwriter or underwriters being herein called the "Underwriters"), and we
understand that Compaq Computer Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell $150,000,000 aggregate principal amount
of 6.5% Senior Notes due March 15, 1999 (the "1999 Notes") and $150,000,000
aggregate principal amount of 7.25% Senior Notes due March 15, 2004 (the "2004
Notes," together with the 1999 Notes, the "Offered Securities"). (The Offered
Securities may also be referred to herein as the "Debt Securities.") The 1999
Notes and the 2004 Notes will be issued pursuant to the provisions of a Senior
Debt Indenture dated as of March 1, 1994 (the "Indenture") between the Company
and NationsBank of Texas, National Association, as Trustee (the "Trustee").
Subject to the terms and conditions set forth or incorporated by
reference herein, the Company hereby agrees to sell and the Underwriters agree
to purchase, severally and not jointly, the respective principal amounts of
the 1999 Notes and the 2004 Notes set forth below opposite their names at
purchase prices of (i) in the case of the 1999 Notes, 99.076% of the principal
amount of the 1999 Notes and (ii) in the case of the 2004 Notes, 98.803% of
the principal amount of the 2004 Notes:
Principal Amount of
Name Offered Securities
1999 Notes 2004 Notes
Merrill Lynch, Pierce, Fenner
& Smith Incorporated $75,000,000 $75,000,000
Morgan Stanley & Co. Incorporated 75,000,000 75,000,000
Total . . . . . . . . . . . . . . $150,000,000 $150,000,000
The Underwriters will pay for the Offered Securities upon delivery
thereof at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, N.Y. 10017, at 10:00 a.m. (New York time) on March 17, 1994, or at such
other time, not later than 5:00 p.m. (New York time) on March 24, 1994, as
shall be designated by the Manager. The time and date of such payment and
delivery are hereinafter referred to as the Closing Date.
The Offered Securities shall have the terms set forth in the
Prospectus dated September 1, 1993 and the final Prospectus Supplement dated
March 10, 1994, including the following:
Terms of 1999 Notes
Maturity Date: March 15, 1999
Interest Rate: 6.5%
Interest Payment Dates: September 15 and March 15 of each year,
commencing on September 15, 1994
Redemption Provisions: Non-redeemable prior to maturity
Form and Denomination: Issuable in fully registered form, in
denominations of $1,000 and any integral
multiple thereof
Terms of 2004 Notes
Maturity Date: March 15, 2004
Interest Rate: 7.25%
Interest Payment Dates: September 15 and March 15 of each year,
commencing on September 15, 1994
Redemption Provisions: Non-redeemable prior to maturity
Form and Denomination: Issuable in fully registered form, in
denominations of $1,000 and any integral
multiple thereof
All provisions contained in the document entitled Compaq Computer
Corporation Underwriting Agreement Standard Provisions (Debt Securities) dated
March 10, 1994, a copy of which is attached hereto, are herein incorporated by
reference in their entirety and shall be deemed to be a part of this Agreement
to the same extent as if such provisions had been set forth in full herein,
except that (i) if any term defined in such document is otherwise defined
herein, the definition set forth herein shall control, (ii) all references in
such document to a type of security that is not an Offered Security shall not
be deemed to be a part of this Agreement and (iii) all references in such
document to a type of agreement that has not been entered into in connection
with the transactions contemplated hereby shall not be deemed to be a part of
this Agreement.
Please confirm your agreement by having an authorized officer sign
a copy of this Agreement in the space set forth below.
Very truly yours,
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Morgan Stanley & Co. Incorporated
Acting severally on behalf of themselves
and the several Underwriters named herein
By Merrill Lynch, Pierce, Fenner
& Smith Incorporated
By: /s/ RICHARD K. GORDON
Name: Richard K. Gordon
Title: Managing Director
Accepted:
COMPAQ COMPUTER CORPORATION
By: /s/ DAVID J. SCHEMPF
Name: David J. Schempf
Title: Vice President,
Corporate Controller
and Treasurer
COMPAQ COMPUTER CORPORATION
UNDERWRITING AGREEMENT
STANDARD PROVISIONS
(DEBT SECURITIES)
March 10, 1994
From time to time, Compaq Computer Corporation, a Delaware
corporation (the "Company"), may enter into one or more underwriting
agreements that provide for the sale of designated securities to the several
underwriters named therein. The standard provisions set forth herein may be
incorporated by reference in any such underwriting agreement (an "Underwriting
Agreement"). The Underwriting Agreement, including the provisions
incorporated therein by reference, is herein sometimes referred to as this
Agreement. Terms defined in the Underwriting Agreement are used herein as
therein defined.
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, including a prospectus, relating
to the Debt Securities and has filed with, or transmitted for filing to, or
shall promptly hereafter file with or transmit for filing to, the Commission a
prospectus supplement (the "Prospectus Supplement") specifically relating to
the Offered Securities pursuant to Rule 424 under the Securities Act of 1933,
as amended (the "Securities Act"). The term "Registration Statement" means
the registration statement, including the exhibits thereto, as amended to the
date of this Agreement. The term "Basic Prospectus" means the prospectus
included in the Registration Statement in the form included therein or, if
different, in the form first filed pursuant to Rule 424(b) under the
Securities Act in respect of the Offered Securities. The term "Prospectus"
means, except where specifically provided otherwise herein, the Basic
Prospectus together with the Prospectus Supplement. The term "preliminary
prospectus" means the Basic Prospectus together with a preliminary prospectus
supplement specifically relating to the Offered Securities. As used herein,
the terms "Basic Prospectus," "Prospectus" and "preliminary prospectus" shall
include in each case the documents incorporated by reference therein. The
terms "supplement", "amendment" and "amend" as used herein shall include all
documents deemed to be incorporated by reference in the Prospectus that are
filed subsequent to the date of this Agreement by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
The term Contract Securities means the Offered Securities, if any,
to be purchased pursuant to the delayed delivery contracts substantially in
the form of Schedule I hereto, with such changes therein as the Company may
approve (the "Delayed Delivery Contracts"). The term "Underwriters'
Securities" means the Offered Securities other than Contract Securities.
1. Representations and Warranties. The Company represents and
warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
(b) (i) Each document filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or will
comply when so filed in all material respects with the Exchange Act and the
applicable rules and regulations of the Commission thereunder, (ii) the
Registration Statement and the Prospectus comply, and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act, the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the applicable rules and regulations of the Commission
thereunder, (iii) the Registration Statement did not or does not contain, as
of its effective date, as of the date of filing of any subsequent Annual
Report on Form 10-K of the Company or as of the date of this Agreement, any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading and (iv) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this Section 1(b) do not apply (A) to statements
or omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing by
or on behalf of such Underwriter expressly for use therein or (B) to that part
of the Registration Statement that constitutes the Statement of Eligibility
(Form T-1) under the Trust Indenture Act of each of the Trustees.
(c) The Company and each subsidiary has been duly incorporated,
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing
of property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole. All of the
issued and outstanding capital stock of each such subsidiary has been duly
authorized and validly issued and is fully paid and non-assessable, except
where any failure of such stock to be duly authorized, validly issued, fully
paid and non-assessable would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; and all such capital stock
(other than directors' qualifying shares) is owned by the Company, directly or
through subsidiaries, free and clear of any mortgage, pledge, lien,
encumbrance, claim or equity.
(d) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) Each of the Senior Debt Indenture (the "Senior Debt
Indenture") and the Subordinated Debt Indenture (the "Subordinated Debt
Indenture"), as applicable, has been duly qualified under the Trust Indenture
Act and has been duly authorized, executed and delivered by the Company and is
a valid and binding agreement of the Company, enforceable in accordance with
its terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally
and (ii) rights of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability.
(f) The Delayed Delivery Contracts, if any, have been duly
authorized, executed and delivered by the Company and are valid and binding
agreements of the Company, enforceable in accordance with their respective
terms except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability.
(g) The Offered Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the relevant
Indenture and delivered to and paid for by the Underwriters in accordance with
the terms of this Agreement, in the case of the Underwriters' Securities, or
by institutional investors in accordance with the terms of the Delayed
Delivery Contracts, in the case of the Contract Securities, will be entitled
to the benefits of the relevant Indenture and will be valid and binding
obligations of the Company, in each case enforceable in accordance with their
terms except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii)
rights of acceleration, if any, and the availability of equitable remedies may
be limited by equitable principles of general applicability; and the Offered
Securities and the applicable Indenture conform to the descriptions thereof in
the Prospectus.
(h) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement, the
Delayed Delivery Contracts, the Senior Debt Indenture, the Subordinated Debt
Indenture and the Offered Securities will not contravene any provision of
applicable law or the certificate of incorporation or by-laws of the Company
or any subsidiary or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, the
Delayed Delivery Contracts, the Senior Debt Indenture, the Subordinated Debt
Indenture or the Offered Securities, except such as may be required by the
securities or Blue Sky laws of the various states in connection with the offer
and sale of the Offered Securities.
(i) There has not occurred any material adverse change in the
condition, financial or otherwise, or in the earnings, business, operations or
business prospects of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus.
(j) There are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that are
required to be described in the Registration Statement or the Prospectus and
are not so described and, to the best of the Company's knowledge, no such
proceedings are threatened. There are no statutes, regulations, contracts or
other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed or incorporated by reference as
exhibits to the Registration Statement or a document incorporated or deemed
incorporated by reference therein that are not described, filed or
incorporated as required.
(k) The Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
(l) The consolidated financial statements included in the
Registration Statement and the Prospectus present fairly, in all material
respects, the consolidated financial position in the Company and its
consolidated subsidiaries as of the dates indicated and the results of their
operations for the periods specified; such financial statements have been
prepared in conformity with generally accepted accounting principles applied
on a consistent basis during the periods involved, except as indicated
therein; and the financial statement schedules incorporated by reference in
the Registration Statement present fairly, in all material respects, the
information required to be stated therein.
(m) Neither the Company nor any of its subsidiaries is in
violation of its or any of their charters or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which it or any of them is a party or by which it or any of them
or their properties may be bound, except where any such violation or default
would not have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
2. Delayed Delivery Contracts. If the Prospectus provides for
sales of Offered Securities pursuant to Delayed Delivery Contracts, the
Company hereby authorizes the Underwriters to solicit offers to purchase
Contract Securities pursuant to Delayed Delivery Contracts on the terms and
subject to the conditions set forth in the Prospectus. Delayed Delivery
Contracts may be entered into only with institutional investors approved by
the Company of the types set forth in the Prospectus. On the Closing Date,
the Company will pay to the Manager as compensation for the accounts of the
Underwriters the commission set forth in the Underwriting Agreement in respect
of the Contract Securities. The Underwriters will not have any responsibility
in respect of the validity or the performance of any Delayed Delivery
Contracts.
The Manager shall submit to the Company, at least three business
days prior to the Closing Date, the names of any institutional investors with
which it is proposed that the Company enter into Delayed Delivery Contracts
and the principal amount of Offered Securities to be purchased by each of
them, and the Company will advise the Manager, at least two business days
prior to the Closing Date, of the names of the institutions with which the
making of Delayed Delivery Contracts is approved by the Company and the
principal amount of Offered Securities to be covered by each such Delayed
Delivery Contract.
If the Company executes and delivers Delayed Delivery Contracts
with institutional investors, the aggregate amount of Offered Securities to be
purchased by the several Underwriters shall be reduced by the aggregate amount
of Contract Securities; such reduction shall be applied to the commitment of
each Underwriter pro rata in proportion to the amount of Offered Securities
set forth opposite such Underwriter's name in the Underwriting Agreement,
except to the extent that the Manager determines that such reduction shall be
applied in other proportions and so advises the Company; provided, however,
that the total amount of Offered Securities to be purchased by all
Underwriters shall be the aggregate amount set forth above, less the aggregate
amount of Contract Securities.
3. Public Offering. The Company is advised by the Manager that
the Underwriters propose to make a public offering of their respective
portions of the Underwriters' Securities as soon after this Agreement has been
entered into as in the Manager's judgment is advisable. The terms of the
public offering of the Underwriters' Securities are set forth in the
Prospectus.
4. Purchase and Delivery. Except as otherwise provided in this
Section 4, payment for the Underwriters' Securities shall be made by certified
or official bank check or checks payable to the order of the Company in New
York Clearing House funds at the time and place set forth in the Underwriting
Agreement, upon delivery to the Manager for the respective accounts of the
several Underwriters of the Underwriters' Securities, registered in such names
and in such denominations as the Manager shall request in writing not less
than two full business days prior to the date of delivery, with any transfer
taxes payable in connection with the transfer of the Underwriters' Securities
to the Underwriters duly paid. The obligations of the Underwriters to
purchase the Underwriters' Securities are several and not joint.
Delivery on the Closing Date of any Underwriters' Securities that
are Debt Securities in bearer form shall be effected by delivery of a single
temporary global Debt Security without coupons (the "Global Debt Security")
evidencing the Underwriters' Securities that are Debt Securities in bearer
form to a common depositary for Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euro-clear System ("Euro-clear"), and for
Centrale de Livraison de Valeurs Mobilieres S.A. ("CEDEL") for credit to the
respective accounts at Euro-clear or CEDEL of each Underwriter or to such
other accounts as such Underwriter may direct. Any Global Debt Security shall
be delivered to the common depositary for the account of the several
Underwriters not later than the Closing Date, against payment of funds to the
Company in the net amount due to the Company for such Global Debt Security by
the method and in the form set forth in the Underwriting Agreement. The
Company shall cause definitive Debt Securities in bearer form to be prepared
and delivered in exchange for such Global Debt Security in such manner and at
such time as may be provided in or pursuant to the relevant Indenture;
provided, however, that the Global Debt Security shall be exchangeable for
definitive Debt Securities in bearer form only on or after the date specified
for such purpose in the Prospectus.
5. Conditions to Closing. The several obligations of the
Underwriters hereunder are subject to the following conditions:
(a) Subsequent to the execution and delivery of the Underwriting
Agreement and prior to the Closing,
(i) there shall not have occurred any downgrading in the
rating accorded any of the Company's securities by any "nationally
recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act,
nor any public announcement that any such organization has under
surveillance or review its rating of any of the Company's
securities with implications of a downgrading in such rating;
(ii) there shall not have occurred any change in the
condition, financial or otherwise, or in the earnings, business,
operations or business prospects, of the Company and its
subsidiaries, taken as a whole, from that set forth in the
Prospectus (which for purposes of this Section 5(a)(ii) is
comprised of the Basic Prospectus, as amended and supplemented as
of the date of this Agreement), that, in the reasonable judgment
of the Manager, is material and adverse; and
(iii) there shall not have been issued any stop order
suspending the effectiveness of the Registration Statement or of
any part thereof and no proceedings for that purpose shall have
been instituted or pending or, to the knowledge of the Company,
shall be contemplated by the Commission.
(b) The Manager shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in clause (a) above and to the
effect that (A) the representations and warranties of the Company
contained in this Agreement are true and correct in all material
respects as of the Closing Date; provided, that for purposes of such
certificate, the term "Prospectus" in the representation and warranty
contained in Section 1(b)(i) hereof shall mean the Basic Prospectus, as
amended and supplemented as of the date of this Agreement, and (B) that
the Company has complied with all of the agreements and satisfied all of
the conditions on its part to be performed or satisfied on or before the
Closing Date. The officer signing and delivering such certificate may
rely upon the best of his knowledge as to proceedings threatened.
(c) The Manager shall have received on the Closing Date an
opinion of Wilson D. Fargo, Esq., General Counsel for the Company, dated
the Closing Date, to the effect that
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power and
authority to own its property and to conduct its business as
described in the Prospectus;
(ii) this Agreement has been duly authorized, executed and
delivered by the Company;
(iii) the Senior Debt Indenture or the Subordinated Debt
Indenture, as applicable, has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement of the
Company, enforceable in accordance with its terms except as (a)
the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally
and (b) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability;
(iv) the Delayed Delivery Contracts have been duly
authorized, executed and delivered by the Company and are valid
and binding agreements of the Company, enforceable in accordance
with their respective terms except as (a) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (b) the availability of
equitable remedies may be limited by equitable principles of
general applicability;
(v) the Offered Securities have been duly authorized and,
when executed and authenticated in accordance with the provisions
of the relevant Indenture and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, in
the case of Underwriters' Securities, or by institutional
investors in accordance with the terms of the Delayed Delivery
Contracts, in the case of the Contract Securities, will be
entitled to the benefits of the relevant Indenture and will be
valid and binding obligations of the Company, in each case
enforceable in accordance with their terms except as (a) the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (b) rights
of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this
Agreement, the Delayed Delivery Contracts, the relevant Indenture
and the Offered Securities will not contravene any provision of
applicable law or the certificate of incorporation or by-laws of
the Company or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon the Company or any of
its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or, to the best of such counsel's
knowledge, any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required
for the performance by the Company of its obligations under this
Agreement, the Delayed Delivery Contracts, the relevant Indenture
or the Offered Securities, except such as may be required by the
securities or Blue Sky laws of the various states in connection
with the offer and sale of the Offered Securities;
(vii) the statements (1) in the Prospectus under the
captions "Description of Debt Securities" and "Plan of
Distribution", (2) in "Item 3 - Legal Proceedings" of the
Company's most recent annual report on Form 10-K incorporated by
reference in the Prospectus and (3) in "Item 1 - Legal
Proceedings" of Part II of the Company's quarterly reports on Form
10-Q, if any, filed since such annual report, in each case insofar
as such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters
referred to therein;
(viii) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which
the Company or any of its subsidiaries is a party or to which any
of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or of any
statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed or incorporated by reference as exhibits
to the Registration Statement or a document incorporated or deemed
incorporated by reference therein that are not described, filed or
incorporated as required; and
(ix) (A) such counsel (1) is of the opinion that each
document, if any, filed pursuant to the Exchange Act and
incorporated by reference in the Prospectus (except for financial
statements and schedules included therein as to which such counsel
need not express any opinion) complied when so filed as to form in
all material respects with the Exchange Act and the applicable
rules and regulations of the Commission thereunder and (2) is of
the opinion that the Registration Statement and Prospectus (except
for financial statements and schedules included therein as to
which such counsel need not express any opinion), comply as to
form in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder and
(B) nothing has come to the attention of such counsel that causes
such counsel to believe that (except for financial statements and
schedules as to which such counsel need not express any belief and
except for that part of the Registration Statement that
constitutes a Form T-1) (1) the Registration Statement, as of the
date of filing of any subsequent Annual Report on Form 10-K of the
Company or as of the date of this Agreement, contained or contains
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and (2) the Prospectus as
of the date thereof and the date such opinion is delivered
contains any untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading.
(d) The Manager shall have received on the Closing Date an
opinion of Davis Polk & Wardwell, special counsel for the Company, dated
the Closing Date, covering the matters referred to in subparagraphs
(ii), (iii), (iv), (v), (vii) (but only as to the statements in the
Prospectus under "Description of Debt Securities" and "Plan of
Distribution") and (ix) (A)(2) and (B) of paragraph (c) above and to the
effect that the Registration Statement has become effective under the
Securities Act, the Prospectus was filed with the Commission pursuant to
Rule 424(b) on the date specified in such opinion, and, to the best of
the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or of any part thereof has
been issued and no proceedings for that purpose have been instituted or
pending under the Securities Act and to the effect that such counsel is
of any opinion ascribed to it in the Prospectus with respect to tax
matters; and
(e) The Manager shall have received on the Closing Date an
opinion of special counsel for the Underwriters, dated the Closing Date,
covering the matters referred to in subparagraphs (ii), (iii), (iv),
(v), (vii) (but only as to the statements in the Prospectus under
"Description of Debt Securities" and "Plan of Distribution") and (ix)
(A)(2) and (B) (but only as of the date of this Agreement) of paragraph
(c) above and to the effect that the Registration Statement has become
effective under the Securities Act, the Prospectus was filed with the
Commission pursuant to Rule 424(b) on the date specified in such
opinion, and, to the best of the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement or of
any part thereof has been issued and no proceedings for that purpose
have been instituted or pending under the Securities Act.
With respect to the subparagraph (ix) of paragraph (c) above, the
General Counsel for the Company and Davis Polk & Wardwell may state that
their opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification,
except as specified. With respect to clauses (A)(2) and (B) of
subparagraph (ix) of paragraph (c) above, special counsel for the
Underwriters may state that their opinion and belief are based upon
their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto (but not including
documents incorporated therein by reference) and review and discussion
of the contents thereof (including documents incorporated therein by
reference), but are without independent check or verification, except as
specified.
(f) The Manager shall have received on the Closing Date a letter,
dated the Closing Date, in form and substance satisfactory to the
Manager, from the Company's independent public accountants, containing
statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Prospectus.
(g) The Prospectus Supplement shall have been filed or
transmitted for filing with the Commission pursuant to Rule 424(b) under
the Securities Act within the applicable time period described therefor
by the rules and regulations under the Securities Act.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants as
follows:
(a) To furnish the Manager and counsel for the Underwriters,
without charge, a signed copy of the Registration Statement (including
exhibits thereto) and for delivery to each other Underwriter a conformed
copy of the Registration Statement (without exhibits thereto) and,
during the period mentioned in paragraph (c) below, as many copies of
the Prospectus, any documents incorporated by reference therein and any
supplements and amendments thereto or to the Registration Statement as
the Manager may reasonably request.
(b) Before amending or supplementing the Registration Statement
or the Prospectus with respect to the Offered Securities, to furnish to
the Manager a copy of each such proposed amendment or supplement, to
afford the Manager a reasonable opportunity to comment thereon and not
to file any such proposed amendment or supplement to which the Manager
reasonably objects. The Company shall give notice to the Manager of the
filing of any such amendment or supplement.
(c) To advise the Manager promptly of the institution by the
Commission of any stop order proceedings with respect to the
Registration Statement or of any part thereof and to use its best
efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued.
(d) If, during such period after the first date of the public
offering of the Offered Securities as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer any event shall occur
or condition exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with law, forthwith to prepare, file with the Commission and
furnish to the Underwriters, and to the dealers (whose names and
addresses the Manager will furnish to the Company) to which Offered
Securities may have been sold by the Manager on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus
as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law; provided, that, prior to the expiry of the 180-day
period immediately following the first date of such public offering, any
such amendments and supplements will be at the expense of the Company
and thereafter any such amendments and supplements (other than those
constituting filings under the Exchange Act) will be at the expense of
the Underwriters. Neither the Manager's consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 5.
(e) To endeavor to qualify the Offered Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Manager shall reasonably request and to maintain such qualification for
as long as the Manager shall reasonably request.
(f) To make generally available to its security holders and to
the Manager as soon as practicable an earning statement covering a
twelve month period beginning on the first day of the first full fiscal
quarter after the date of this Agreement, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities Act and the
rules and regulations of the Commission thereunder. If the date of this
Agreement is within the last fiscal quarter of the Company's fiscal
year, such earning statement shall be made available not later than 90
days after the close of the period covered thereby and in all other
cases shall be made available not later than 45 days after the close of
the period covered thereby.
(g) During the period beginning on the date of the Underwriting
Agreement and continuing to and including the date 14 days after the
Closing Date, not to offer, sell, contract to sell or otherwise dispose
of any debt securities of the Company or warrants to purchase debt
securities of the Company similar to the Offered Securities (other than
(i) the Offered Securities and (ii) commercial paper issued in the
ordinary course of business), without the prior written consent of the
Manager.
(h) Whether or not any sale of Offered Securities is
consummated, to pay all expenses incident to the performance of its
obligations under this Agreement, including: (i) the preparation and
filing of the Registration Statement and the Prospectus and all
amendments and supplements thereto, (ii) the preparation, issuance and
delivery of the Offered Securities, (iii) the reasonable fees and
disbursements of the Company's counsel and accountants and of the
Trustee and its counsel, (iv) the qualification of the Offered
Securities under securities or Blue Sky laws in accordance with the
provisions of Section 6(e), including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of any Blue Sky
Memoranda, (v) except otherwise provided in Section 6(d), the printing
and delivery to the Underwriters in quantities as hereinabove stated of
copies of the Registration Statement and all amendments thereto and of
the Prospectus and any amendments or supplements thereto, (vi) the
printing and delivery to the Underwriters of copies of any Blue Sky
Memoranda, (vii) any fees charged by rating agencies for the rating of
the Offered Securities and (viii) the fees and expenses, if any, in
connection with the listing of the Offered Securities on any securities
exchange.
7. Covenants of the Underwriters.
Each of the several Underwriters represents and agrees with the
Company that:
(a) except to the extent permitted under U.S. Treas. Reg. Section
1.163-5(c)(2)(i)(D) (the "D Rules"), (i) it has not offered or sold, and
during the restricted period will not offer or sell, Debt Securities in
bearer form (including any Debt Security in global form that is
exchangeable for Debt Securities in bearer form) to a person who is
within the United States or its possessions or to a United States person
and (ii) it has not delivered and will not deliver within the United
States or its possessions definitive Debt Securities in bearer form that
are sold during the restricted period;
(b) it has, and throughout the restricted period will have, in
effect procedures reasonably designed to ensure that its employees or
agents who are directly engaged in selling Debt Securities in bearer
form are aware that such Debt Securities may not be offered or sold
during the restricted period to a person who is within the United States
or its possessions or to a United States person, except as permitted by
the D Rules;
(c) if it is a United States person, it is acquiring the Debt
Securities in bearer form for purposes of resale in connection with
their original issuance and if it retains Debt Securities in bearer form
for its own account, it will only do so in accordance with the
requirements of U.S. Treas. Reg. Section 1.163-5(c)(2)(i)(D)(6);
(d) if it transfers to any affiliate Debt Securities in bearer
form for the purpose of offering or selling such Debt Securities during
the restricted period, it will either (i) obtain from such affiliate for
the benefit of the Company the representations and agreements contained
in clauses (a), (b) and (c) or (ii) repeat and confirm the
representations and agreements contained in clauses (a), (b) and (c) on
such affiliate's behalf and obtain from such affiliate the authority to
so obligate it;
(e) it will obtain for the benefit of the Company the
representations and agreements contained in clauses (a), (b), (c) and
(d) from any person other than its affiliate with whom it enters into a
written contract, as defined in U.S. Treas. Reg. Section
1.163-5(c)(2)(i)(D)(4) for the offer or sale during the restricted
period of Debt Securities in bearer form; and
(f) it will comply with or observe any other restrictions or
limitations set forth in the Prospectus on persons to whom, or the
jurisdictions in which, or the manner in which, the Debt Securities may
be offered, sold, resold or delivered.
Terms used in the preceding paragraph have the meaning given to them by the
U.S. Internal Revenue Code (the "Code") and regulations thereunder, including
the D Rules. The restricted period is defined at U.S. Treas. Reg. Section
1.163-5(c)(2)(i)(D)(7).
8. Indemnification and Contribution. (a) The Company agrees
to indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by any Underwriter or any such
controlling person in connection with investigating, preparing or defending
any such action or claim, which shall be reimbursed as incurred) caused by or
arising out of any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by or arising out of any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information furnished in
writing to the Company by or on behalf of such Underwriter expressly for use
therein; provided however, that the foregoing indemnity with respect to the
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages or liabilities
purchased Offered Securities, or any person controlling such Underwriter, if a
copy of the Prospectus as then amended or supplemented, if the Company shall
have furnished any amendments or supplements thereto (exclusive of material
incorporated by reference) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered, at
or prior to the written confirmation of the sale of the Offered Securities to
such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such losses, claims, damages or liabilities,
unless the Company shall not have provided copies of such Prospectus (as so
amended or supplemented) in compliance with Section 6(d).
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the
Company to such Underwriter, but only with reference to information furnished
in writing to the Company by or on behalf of such Underwriter expressly for
use in the Registration Statement, any preliminary prospectus, the Prospectus
or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) above, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by the Manager,
in the case of parties indemnified pursuant to paragraph (a) above, and by the
Company, in the case of parties indemnified pursuant to paragraph (b) above.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability or claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph
(a) or (b) of this Section 8 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Offered Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and of the Underwriters on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other hand in connection with the offering of the Offered Securities
shall be deemed to be in the same respective proportions as the net proceeds
from the offering of such Offered Securities (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus Supplement, bear to the aggregate public offering
price of the Offered Securities. The relative fault of the Company on the one
hand and of the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Underwriters' respective obligations to contribute pursuant to this
Section 8 are several in proportion to the respective principal amounts of
Offered Securities they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Offered Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in
this Section 8 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in equity.
9. Termination. This Agreement shall be subject to
termination, by notice given by the Manager to the Company, if after the
execution and delivery of the Underwriting Agreement and prior to the Closing
(a) trading generally shall have been suspended or materially limited on or by
the New York Stock Exchange, (b) trading of any securities of the Company
shall have been suspended on the principal exchange or market on which any
such securities are traded, (c) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (d) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets that, in the reasonable
judgment of the Manager, is material and adverse and makes it, in the
reasonable judgment of the Manager, impracticable to market the Offered
Securities on the terms and in the manner contemplated in the Prospectus.
10. Defaulting Underwriters. If, on the Closing Date, any one
or more of the Underwriters shall fail or refuse to purchase Underwriters'
Securities that it has or they have agreed to purchase hereunder on such date,
and the aggregate amount of Underwriters' Securities which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not
more than one-tenth of the aggregate amount of the Underwriters' Securities to
be purchased on such date, the other Underwriters shall be obligated severally
in the proportions that the amount of Underwriters' Securities set forth
opposite their respective names in the Underwriting Agreement bears to the
aggregate amount of Underwriters' Securities set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as the
Manager may specify, to purchase the Underwriters' Securities which such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase on such date; provided that in no event shall the amount of
Underwriters' Securities that any Underwriter has agreed to purchase pursuant
to this Agreement be increased pursuant to this Section 10 by an amount in
excess of one-ninth of such amount of Underwriters' Securities without the
written consent of such Underwriter. If, on the Closing Date, any Underwriter
or Underwriters shall fail or refuse to purchase Underwriters' Securities and
the aggregate amount of Underwriters' Securities with respect to which such
default occurs is more than one-tenth of the aggregate amount of Underwriters'
Securities to be purchased on such date, and arrangements satisfactory to the
Manager and the Company for the purchase of such Underwriters' Securities are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter or the
Company. In any such case either the Manager or the Company shall have the
right to postpone the Closing Date but in no event for longer than seven days,
in order that the required changes, if any, in the Registration Statement and
in the Prospectus or in any other documents or arrangements may be effected.
Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
If this Agreement shall be terminated by the Underwriters, or any
of them, pursuant to Section 9(b) or if the purchase of the Underwriters'
Securities by the Underwriters is not consummated because of any failure or
refusal on the part of the Company to comply with the terms or because any of
the conditions of this Agreement are not fulfilled, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering of the Offered Securities.
11. Representations and Indemnities to Survive. The respective
indemnity and contribution agreements and the representations, warranties and
other statements of the Company and the Underwriters set forth in this
Agreement will remain in full force and effect, regardless of any termination
of this Agreement, any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or the Company or any of the
officers, directors or controlling persons referred to in Section 8 and
delivery of and payment for the Offered Securities.
12. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers, directors and controlling persons referred to in Section 8, and no
other person will have any right or obligation hereunder. No purchaser of
Offered Securities from any Underwriter shall be deemed to be a successor by
reason merely of such purchase.
13. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
14. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
15. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
Schedule I
DELAYED DELIVERY CONTRACT
________, 199_
Dear Sirs:
The undersigned hereby agrees to purchase from Compaq Computer
Corporation, a Delaware corporation (the "Company"), and the Company agrees to
sell to the undersigned the Company's securities described in Schedule A
annexed hereto (the "Securities"), offered by the Company's Prospectus dated
__________________, 19__ and Prospectus Supplement dated ________________,
19__, receipt of copies of which are hereby acknowledged, at a purchase price
stated in Schedule A and on the further terms and conditions set forth in this
Agreement.
The undersigned will purchase from the Company Securities in the
amounts and on the delivery dates set forth in Schedule A. Each such date on
which Securities are to be purchased hereunder is hereinafter referred to as a
"Delivery Date."
Payment for the Securities which the undersigned has agreed to
purchase on each Delivery Date shall be made to the Company or its order by
certified or official bank check in New York Clearing House funds at the
office of Davis Polk & Wardwell, 450 Lexington Avenue, New York, N.Y. 10017,
at 10:00 A.M. (New York time) on the Delivery Date, upon delivery to the
undersigned of the Securities to be purchased by the undersigned on the
Delivery Date, in such denominations and registered in such names as the
undersigned may designate by written or telegraphic communication addressed to
the Company not less than five full business days prior to such Delivery Date.
The obligation of the undersigned to take delivery of and make
payment for the Securities on each Delivery Date shall be subject only to the
conditions that (1) the purchase of Securities to be made by the undersigned
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which the undersigned is subject and (2) the Company shall
have sold, and delivery shall have taken place to the underwriters (the
"Underwriters") named in the Prospectus Supplement referred to above of, such
part of the Securities as is to be sold to them. The undersigned represents
that its purchase of Securities is not, as of the date hereof, prohibited
under the laws of any jurisdiction to which the undersigned is subject.
Promptly after completion of sale and delivery to the Underwriters, the
Company will mail or deliver to the undersigned at its address set forth below
notice to such effect, accompanied by a copy of the opinions of counsel for
the Company referred to in Sections 5(c) and (d) of the Underwriting Agreement
and delivered to the Underwriters in connection therewith.
Failure to take delivery of and make payment for Securities by any
purchaser under any other Delayed Delivery Contract shall not relieve the
undersigned of its obligations under this Agreement.
This Agreement will inure to the benefit of and be binding upon
the parties hereto and their respective successors, but will not be assignable
by either party hereto without the written consent of the other.
It is understood that the acceptance of this Agreement and any
similar Delayed Delivery Contract is in the Company's sole discretion, and,
without limiting the foregoing, need not be on a first-come, first-served
basis. If this Agreement is acceptable to the Company, it is requested that
the Company sign the form of acceptance below and mail or deliver one of the
counterparts hereof to the undersigned at its address set forth below. This
will become a binding agreement, as of the date first above written, between
the Company and the undersigned when such counterpart is so mailed or
delivered.
This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York.
Yours very truly,
___________________________
(Purchaser)
By ________________________
Name:
Title:
___________________________
___________________________
(Address)
Accepted:
COMPAQ COMPUTER CORPORATION
By ________________________
Name:
Title:
PURCHASER --- PLEASE COMPLETE AT TIME OF SIGNING
The name and telephone and department of the representative of the
Purchaser with whom details of delivery on the Delivery Date may be discussed
is as follows: (Please print.)
Telephone No.
Name (Including Area Code) Department
________________ _______________ _________________
SCHEDULE A
Securities:
Principal Amounts to be Purchased:
Purchase Price:
Delivery:
Exhibit 11
COMPAQ COMPUTER CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
Quarter ended
March 31,
In millions, except per share amounts 1994 1993
- - ---------------------------------------------------------------------
Primary earnings per share:
Shares used in computing earnings per share:
Weighted average number of shares outstanding 85.1 80.4
Incremental shares attributed
to outstanding options 3.7 2.7
----- -----
88.8 83.1
===== =====
Earnings:
Net income $ 213 $ 102
===== =====
Earnings per common and common equivalent share $2.40 $1.23
===== =====
Earnings per share - assuming full dilution:-
Shares used in computing earnings per share:
Weighted average number of shares outstanding 85.1 80.4
Incremental shares attributed to
outstanding options 3.9 2.7
----- -----
89.0 83.1
===== =====
Earnings:
Net income $ 213 $ 102
===== =====
Earnings per common and common equivalent share $2.39 $1.23
===== =====
