______________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: January 24, 1996
COMPAQ COMPUTER CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 1-9026 76-0011617
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation or organization) File Number)
20555 SH 249, Houston, Texas 77070
(Address, including zip code,
of Registrant's principal executive offices)
Registrant's telephone number, including area code: (713) 370-0670
______________________________________________________
<PAGE>
Item 5. Other Events.
The Registrant's news release dated January 24, 1996, with
respect to its financial results for the periods ended December 31,
1995, including an unaudited consolidated balance sheet as of December
31, 1995, and an unaudited consolidated statement of income for the
periods ended December 31, 1995, is attached.
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 hereunto duly authorized.
Compaq Computer Corporation
January 25, 1996 /s/ Daryl J. White
--------------------------------------
Daryl J. White, Senior Vice President,
Finance, and Chief Financial Officer
(as authorized officer and as
principal financial officer)
<PAGE>
News Release
Compaq Computer Corporation P.O. Box 692000
Public Relations Department Houston, Texas 77269-2000
Tel 713-514-0484 Fax 713-514-4583
FOR IMMEDIATE RELEASE
Compaq Announces Record Sales and Operating Profits
1995 Sales of $14.8 Billion Lift Compaq
to No. 5 Computer Company in the World*
HOUSTON, January 24, 1996 -- Compaq Computer Corporation
(NYSE:CPQ) today announced record 1995 sales of $14.8 billion, an
increase of 36 percent over the $10.9 billion reported in 1994.
Net income for 1995 was a record $1.0 billion or $3.74 per share
excluding a one time charge of $241 million or $.87 per share
associated with Compaq's acquisition of NetWorth, Inc. and
Thomas-Conrad Corporation.
Fourth quarter 1995 sales were a record $4.7 billion, an
increase of 45 percent over the $3.25 billion reported in 1994.
Net income for the fourth quarter increased to $323 million or
$1.17 per share before the one-time NetWorth/Thomas-Conrad charge
of $241 million or $.87 per share.
"1995 was an outstanding year for Compaq as we reinforced
our number one position in the PC industry," said Eckhard
Pfeiffer, president and chief executive officer, Compaq Computer
Corporation. "Record sales of $14.8 billion propelled Compaq
past Digital Equipment Corporation and Hitachi in computer sales
to become the fifth largest computer company in the world.
"Compaq also made important financial, market and strategic
progress in expanding the company's participation in the ever-
widening market for personal computer technology," said Pfeiffer.
"It was a year of great change for the computer industry and one
in which Compaq brought greater definition to its vision of
computing for business and home," he said.
*based on Compaq and McKinsey estimates of 1995 computer sales
<PAGE>
Fourth Quarter 1995 Results 2-2-2
Fourth Quarter Worldwide Performance
During the fourth quarter, Compaq increased sales in all of
its worldwide geographies including increases of 54 percent in
North America, 38 percent in Europe,
32 percent in Asia-Pacific, 28 percent in Japan and 27 percent in
Latin America.
"Compaq's sales growth continued to be strong in all our
geographical divisions, including Japan where fierce price
competition impacted our profitability in the fourth quarter,"
said Pfeiffer. "In addition, strong seasonal sales of lower-
margin consumer products and Compaq's decision to take advantage
of high demand to phase-out end-of-life products lowered the
company's gross margins. Strong sales and good operating expense
controls overcame fourth-quarter gross margin pressures to
deliver record operating profits."
1996 Market and Business Outlook
Based upon current expectations and available information,
Compaq noted several key considerations that will play a role in
its 1996 performance:
o Current information from research organizations forecast
PC unit growth in 1996 to be in the range of 17 percent
to 20 percent.
o The company will continue to focus on profitable market
share growth while working to increase its lead over
competitors.
o In line with normal trends, Compaq expects first quarter
sales to be down from the seasonally high fourth quarter.
o Compaq expects first quarter 1996 margins to improve over
fourth quarter levels due to a better mix of higher-
margin products. However, continued pricing pressures in
Japan will likely cause first quarter margins to fall
below Compaq's operating model margin of 23 to 24
percent. For the full year, the company will continue to
target gross margins in the 23 to 24 percent range and an
operating profit of 10 percent.
o The company's tax rate for 1996 will increase to 30
percent and capital expenditures for the year are
projected at $450 million.
<PAGE>
Fourth Quarter 1995 Results 3-3-3
This outlook contains forward-looking statements based on
current expectations that involve a number of risks and
uncertainties. The factors that could cause actual results
to differ materially include the following: general economic
conditions and growth in the personal computer industry;
competitive factors and pricing pressures; changes in product
mix; the timely development and acceptance of new products;
inventory risks due to shifts
in market demand; continued success in manufacturing ramp; and
the risks described from time to time in the company's SEC
reports, which include the report on Form 10-Q for the quarter
ended September 30, 1995.
1996 Product Outlook
Compaq entered 1996 with the broadest range of feature-rich
products in the industry and plans an aggressive schedule of
announcements in all product categories throughout the year. The
company will continue to leverage its strong strategic
partnerships in bringing unique and usefully innovative products
to its customers.
Servers
Compaq's Systems Division will reinforce its leadership
position and deliver complete solutions for the distributed
enterprise. In the first quarter, Compaq will introduce a number
of Internet server platform products and strengthen its current
server lineup with more powerful and higher performance models
and features. In the first half of 1996, Compaq will formally
introduce the first router products from the newly formed
Internetworking Products Group and introduce its first Pentium
Pro server. Throughout the year, Compaq plans to deliver
leadership platforms; enhance the integration, maintenance and
management of servers; and build upon strategic partnerships with
joint development partners, software vendors, reseller channels,
systems integrators and service providers.
Commercial Desktops
Compaq plans to continue its desktop leadership in 1996 with
the introduction of the Pentium Pro-based products that, for the
first time, address the needs of engineering workstation
customers. The company also plans to continue its leadership in
Intelligent
<PAGE>
Fourth Quarter 1995 Results 4-4-4
Manageability by introducing desktop enhancements that help
companies further reduce their overall cost of ownership.
Portables
1996 will serve as the launch pad for Compaq's reemergence
in its business heritage -- portable PCs. The company has
initiated an aggressive announcement strategy with expanded new
product introductions, exciting communications options and a new
branding strategy across the entire range.
The company will flex its product engineering muscle during
the first half of the year with the introduction of an innovative
new product family and a new brand that offers technologies not
seen before in portable products. This new product family will
again demonstrate the strength of Compaq's engineering by
bringing to market significant advances in sound quality,
telephone and communications capabilities. Customers can also
expect to see exciting extensions to the innovative LTE 5000
product family, with new options, larger screens, faster
processors and extended communications devices.
Already a significant technology feature in its desktop product
family, Compaq will feature new advances in Intelligent
Manageability for its portable family of products.
Consumer
In the first quarter, Compaq plans to announce its spring
line-up of Presario home PC products that will include innovative
technologies available only from Compaq. These products will
lead the industry in providing more value-packed features for the
dollar.
In the second half of the year, Compaq plans to announce the
strongest fall line-up of home PCs in industry history. This
product line will represent the first "grounds-up" redesign of
home PCs resulting from the formation of the Compaq Consumer
Division in May 1995. This product lineup will target distinct
customer segments and introduce entirely new product categories
for the home PC buyer. In addition, Compaq is currently
researching new innovations such as videophone communications,
arcade-level graphics, easier to use software interfaces,
colorful new PC designs and much more.
<PAGE>
Fourth Quarter 1995 Results 5-5-5
In the summer of 1996, Compaq and Fisher-Price plan to begin
distribution of the Wonder Tools product line through leading toy
and computer retailers. The products,
which were unveiled earlier this month, are designed for children
ages 3-7 and their
families. The line includes the Wonder Tools Cruiser driving
console, the Wonder Tools Keyboard for children and stand-alone
software for children and families.
Internet
Compaq intends to be the Internet platform leader, both on
the network side and the client side. On the network side, the
company will leverage its strong partnerships along with its
existing strength in servers and internetworking devices to
deliver optimized, cost-effective Internet servers. On the
client side, Compaq will leverage existing strengths in home and
commercial PCs to assure the highest level of Internet readiness,
and will develop new lower-cost devices that can open new markets
for Internet access.
Compaq Background
Compaq Computer Corporation is the world's largest supplier
of personal computers, offering desktop PCs, portable PCs,
servers and options. Compaq products are sold and supported in
more than 100 countries throughout the world. Compaq also sells
products directly to customers through Compaq Direct Plus at 1-
800-888-5858. Compaq provides 24-hour customer support and can
be reached through the Compaq forums on America Online,
CompuServe, Internet (http://www.compaq.com), and Prodigy, or by
calling 1-800-345-1518.
# # #
(Attached are Consolidated Balance Sheet and Statement of
Income)
Compaq, Registered U.S. Patent and Trademark Office. Product
names mentioned herein may be trademarks and/or registered
trademarks of their respective companies.
For further editorial information, contact:
Compaq Computer Corporation Bob Beach 713-514-1560
Miller/Shandwick Technologies Tony Sapienza, Donna Ruane 617-536-0470
<PAGE>
COMPAQ COMPUTER CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
December 31,
1995 1994
-------- --------
(in millions)
Current assets:
Cash and cash equivalents $ 745 $ 471
Accounts receivable, net 3,141 2,287
Inventories 2,156 2,005
Deferred income taxes 365 303
Prepaid expenses and other current assets 120 92
-------- --------
Total current assets 6,527 5,158
Property, plant, and equipment, less
accumulated depreciation 1,110 944
Other assets 181 64
-------- --------
$ 7,818 $ 6,166
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,379 $ 888
Income taxes payable 190 246
Other current liabilities 1,111 879
-------- --------
Total current liabilities 2,680 2,013
-------- --------
Long-term debt 300 300
-------- --------
Deferred income taxes 224 179
-------- --------
Stockholders' equity:-
Preferred stock, $.01 par value
(authorized: 10 million shares; issued: none)
Common stock and capital in excess of $.01 par value
(authorized: 1 billion shares; issued and outstanding:
267.1 million shares at December 31, 1995 and
261.0 million shares at December 31, 1994) 890 739
Retained earnings 3,724 2,935
-------- --------
Total stockholders' equity 4,614 3,674
-------- --------
$ 7,818 $ 6,166
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<PAGE>
COMPAQ COMPUTER CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Year ended Quarter ended
December 31, December 31,
1995 1994 1995 1994
-------- -------- ------- --------
(in millions, except per share
amounts)
Sales $ 14,755 $ 10,866 $ 4,701 $ 3,251
Cost of sales 11,367 8,139 3,682 2,457
-------- -------- ------- --------
3,388 2,727 1,019 794
-------- -------- ------- --------
Selling, general, and
administrative expense 1,594 1,235 469 368
Research and development costs 270 226 81 61
Purchased in-process technology(1) 241 241
Other income and expense, net 95 94 21 36
-------- -------- ------- --------
2,200 1,555 812 465
-------- -------- ------- --------
Income before provision for income
taxes 1,188 1,172 207 329
Provision for income taxes 399 305 125 86
-------- -------- ------- --------
Net income $ 789 $ 867 $ 82 $ 243
======== ======== ======= ========
Earnings per common and common
equivalent share:
Primary $ 2.88 $ 3.23 $ 0.30 $ 0.90
======== ======== ======= ========
Assuming full dilution $ 2.87 $ 3.21 $ 0.30 $ 0.90
======== ======== ======= ========
Shares used in computing earnings
per common and common equivalent share:
Primary 273.6 268.6 276.0 270.6
======== ======== ======= ========
Assuming full dilution 275.0 270.1 276.0 270.8
======== ======== ======= ========
(1) Represents a $241 million ($.87 per share) non-recurring,
non-tax deductible charge for purchased in-process
technology in connection with the NetWorth and Thomas-Conrad
acquisitions during the fourth quarter of 1995.
