______________________________________________________
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: April 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
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<PAGE>
Item 5. Other Events.
The Registrant's news release dated April 24, 1996, with respect to its
financial results for the period ended March 31, 1996, including an
unaudited consolidated balance sheet as of March 31, 1996, and an unaudited
consolidated statement of income for the period ended March 31, 1996, 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
April 24, 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>
Compaq Computer Corporation P.O. Box 692000 News Release
Public Relations Department Houston, Texas 77269-2000
Tel 713-514-0484 Fax 713-514-4583
FOR IMMEDIATE RELEASE
Compaq First Quarter Sales Up 42% to $4.2 Billion
HOUSTON, April 24, 1996 -- Compaq Computer Corporation (NYSE:CPQ) today
announced that sales increased 42 percent to $4.2 billion for the first
quarter ended March 31, 1996, compared with $3.0 billion in the first
quarter of 1995. Net income and earnings per share for the quarter were
$234 million and $.85 versus $216 million and $.80 per share for the same
period last year.
"We are extremely pleased with the growth of our business in the first
quarter," said Eckhard Pfeiffer, president and chief executive officer,
Compaq Computer Corporation. "As a result of the decisive steps we took to
competitively position our desktop and server products, we expect Compaq to
show market share gains for the first quarter and to outperform every major
competitor. Since December of 1995, Compaq has gained five share points in
the critical North American dealer channel, gaining more than any other
supplier and enhancing its dominant position to a 34 percent share,
according to Audits and Surveys. Compaq's first quarter sales were strong
in all regions, with North America increasing 56 percent, Europe 27
percent, Asia-Pacific 31 percent, Latin America 84 percent, and Japan 17
percent. Solid year-over-year sales growth and tight management of
operating expenses delivered earnings growth despite pressure on gross
margins."
A special focus on inventory management and the initial impact of Compaq's
reengineering programs resulted in the lowest inventory level in the last
two years. Quarterly sales nearly doubled during this two-year period.
Outlook
"The market dynamics for 1996 appear to be strong worldwide, and we are
confident about our opportunities to gain market share and achieve improved
profitability for the balance of the year," said Pfeiffer. "For the second
quarter we are targeting sales at approximately first quarter levels. This
level of sales is dependent on continued strong customer demand and the
availability of new products late in the quarter. We expect the
combination of changes in product mix, reductions in the cost of materials,
higher margins on new products, and ongoing expense controls to enable us
to achieve second quarter earnings that meet or exceed the same period last
year. "Beginning in June, and continuing through the summer, Compaq will
extend its leadership position by launching breakthrough products across
all categories that set new standards for performance, price, cost of
ownership and networking solutions. Early customer feedback on this broad
range of new products gives us a high level of confidence in Compaq's plans
for strong growth in the second half of the year. A sustained worldwide
advertising campaign will launch this exciting array of new products. PC
technology has emerged as the key driver in the computer industry and an
increasingly important factor in the communications and consumer
electronics industries. Compaq's growing worldwide leadership in PC
technology gives us a strong position from which to pursue these
opportunities."
This outlook contains forward-looking statements based on current
expectations that involve a number of risks and uncertainties. The
potential risks and uncertainties that could cause actual results to differ
materially include responses to pricing actions and promotional programs;
continued competitive factors and pricing pressures; the timely
development, production, and acceptance of new products; changes in product
mix; and inventory risks due to shifts in market demand. Further
information on the factors that could affect the company's financial
results are included in the company's SEC filings, including the Form 10-K
for the year ended December 31, 1995, and the Form 10-Q for the quarter
ended March 31, 1996, which will be filed shortly.
First Quarter Highlights
Distributed Enterprise Computing Solutions
In the first quarter, Compaq took important strategic steps toward becoming
a complete end- to-end provider of distributed enterprise computing
solutions -- from leading-edge platforms like the ProLiant 4500 to
internetworking products and an impressive array of industry partnerships
assuring seamless integration of hardware, operating systems, and
distributed enterprise applications. Early in February, Compaq introduced
an entirely refreshed server line including the ProLiant 4500 5/166, which
provides the industry's best price/performance for an enterprise-class
server. In addition, the company unveiled options including a 15/30 GB DLT
Tape Drive, DLT Tape Array, and SMART-2 Array Controller. These options
make reliable backup of critical data on high capacity servers easier and
faster, and enhance data availability in high-end applications. Compaq
also announced support for Oracle 7 version 7.3, delivering the best TPC-C
price/performance benchmark in the industry and the best absolute
performance benchmark for systems under $1 million.
Marking its official entry in the internetworking arena, Compaq launched a
new brand of high-performance networking products for use in distributed,
heterogeneous network environments. The Netelligent product line
represents the successful integration of technology and expertise obtained
from Thomas-Conrad and NetWorth when Compaq acquired these two companies in
1995. The Netelligent line consists of more than 100 individual networking
products -- such as network interface controllers, repeaters and switches
- -- that are designed for industry-leading price/performance and ease-of-use
in heterogeneous networking environments. This extensive line of
client/server products and tools offers customers a single source for
purchasing, support, and service of complete, end-to-end client/server
solutions based on industry standards.
Desktop PCs
Early in the first quarter, the company launched its new family of home
multimedia Presarios, combining industry-leading value with new and useful
technologies, such as the industry's first combination Scanner Keyboard,
rewriteable PD-CD drive, 6X-speed CD-ROM drives, and the most powerful
Pentium processors.
Compaq also strengthened its value leadership position in the commercial
desktop arena with the introduction of 35 new feature-packed Deskpro and
ProLinea desktop PCs, novel storage technology -- like the industry's first
standard high-capacity 120MB diskette -- and new Intelligent Manageability
features.
To further increase its market share in the burgeoning education market,
Compaq introduced its first feature-rich multimedia desktop PC designed
specifically for networked educational environments. The new Presario ES,
which addresses the growing demand of parents and educators to use the same
Windows-based computing solutions most prevalent in the workplace and home,
combines multimedia and networking capabilities with leading educational
software titles.
Useful Innovation
Compaq significantly strengthened its position as the leading provider of
usefully innovative technologies by introducing an array of unique products
that enable businesses and consumers to store and manage data effectively.
These offerings include the Scanner Keyboard, which offers consumers and
business users an easy-to-use, space-saving device to scan important images
and paper documents; the PD-CD drive, the industry's first standard,
rewriteable optical drive that serves as a standard 4X CD-ROM drive and a
rewriteable optical drive that stores 650 MB of data; and the new 120MB
diskette drive, a new standard in diskette drive technology offering an
affordable and easy-to-use solution to users who want to transfer large
files and applications without a network or expensive back-up or archiving
options.
Further illustrating its emergence as a broad-based, innovative computer
company, Compaq and its strategic partner Fisher-Price Inc. unveiled
Wonder Tools, a broad line of educational and entertainment multimedia
products that create a new dimension in play and learning for preschoolers
(ages 3-7) and their families. Compaq and Fisher-Price joined forces in
1995 to design and manufacture products that provide an engaging way for
young children to harness the power of multimedia PCs to learn and play.
The Wonder Tools family will ship this summer and consists of three product
categories: interactive computer toys, preschool-appropriate peripherals,
and stand- alone software titles for children and families.
The Internet
The Internet clearly represents one of the most important and exciting
developments of the `90s -- providing businesses and consumers with an
inexpensive communication vehicle and access to an unlimited source of
global information. With personal computers and servers at the center of
this burgeoning phenomenon, Compaq and its customers are uniquely
positioned to benefit from, as well as support, the explosive growth of
this new medium. Compaq believes that more of its products are linked to
the Internet than any other company's computers in the world.
During the first quarter, Compaq underscored its commitment to the
Internet, and Intranets, with the announcement that every Compaq server
ships with Internet server capabilities. The only supplier to deliver
Internet server functionality as a standard feature on every server
platform, Compaq includes CD-based copies of Microsoft Internet Information
Server, Netscape Commerce Server, and Novell NetWare Web Server in every
server shipment. As a result, customers can choose the best solution to
meet their needs.
Earlier this month, the company announced a partnership and investment in
Raptor, the leader in firewall security management software, that responds
to Compaq customers' need for a highly sophisticated network security
solution. Compaq will be incorporating Raptor's EagleNT network security
firewall on its line of high performance servers. Compaq believes this
partnership with Raptor will make it much easier for its customers to set
up their Internet and Intranet servers.
Looking ahead, Compaq will continue to provide proven Internet technology
solutions to its corporate and consumer customers, and continue to partner
with best-of-breed companies to bring a new era of Internet-based
capabilities to the marketplace.
Company Background
Compaq Computer Corporation is the world's largest supplier of personal
computers, offering desktop PCs, portable PCs, servers and options. The
company reported 1995 worldwide sales of $14.8 billion. Compaq products
are sold and supported in more than 100 countries through Compaq marketing
partners and sold 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-OK-COMPAQ.
Product information and reseller locations can be obtained by calling
1-800-345-1518.
# # #
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
Alice McGuire, Lysa Bryant 713-514-9549
<PAGE>
COMPAQ COMPUTER CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
March 31, December 31,
1996 1995
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(in millions)
Current assets:
Cash and cash equivalents $ 1,036 $ 745
Accounts receivable, net 3,042 3,141
Inventories 1,934 2,156
Deferred income taxes 365 365
Prepaid expenses and other current assets 126 120
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Total current assets 6,503 6,527
Property, plant, and equipment,
less accumulated depreciation 1,144 1,110
Other assets 182 181
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$ 7,829 $ 7,818
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,177 $ 1,379
Income taxes payable 191 190
Other current liabilities 1,070 1,111
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Total current liabilities 2,438 2,680
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Long-term debt 300 300
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Deferred income taxes 225 224
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Stockholders' equity:-
Preferred stock, $.01 par value
(authorized: 10 million shares; issued: none)
Common stock and capital in excess of $.01 par value
(authorized: 1 billion shares; issued and outstanding:
268.2 million shares at March 31, 1996 and
267.1 million shares at December 31, 1995) 908 890
Retained earnings 3,958 3,724
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Total stockholders' equity 4,866 4,614
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$ 7,829 $ 7,818
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COMPAQ COMPUTER CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Quarter ended March 31,
1996 1995
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(in millions, except
per share amounts)
Sales $ 4,205 $ 2,959
Cost of sales 3,320 2,235
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885 724
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Selling, general, and administrative expense 431 328
Research and development costs 103 60
Other income and expense, net 17 36
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551 424
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Income before provision for income taxes 334 300
Provision for income taxes 100 84
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Net income $ 234 $ 216
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Earnings per common and common equivalent share:
Primary $ 0.85 $ 0.80
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Assuming full dilution $ 0.85 $ 0.80
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Shares used in computing earnings per common
and common equivalent share:
Primary 276.1 270.9
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Assuming full dilution 276.1 270.9
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