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: October 16, 1997
COMPAQ COMPUTER CORPORATION
(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-9026 76-0011617
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
20555 SH 249, HOUSTON, TEXAS 77070-2698
(Address of Principal Executive Offices)
(281) 370-0670
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events.
In a release dated October 16, 1997, Compaq Computer Corporation (NYSE:
CPQ) announced its financial results for the period ended September 30, 1997,
including an unaudited consolidated balance sheet as of September 30, 1997,
and an unaudited consolidated statement of income for the quarter and
nine-month period ended September 30, 1997. The news release is attached as
Exhibit 99.1. In a separate release dated October 16, 1997, Compaq announced
the initiation of a cash dividend, a two-for-one stock split, a dividend
reinvestment plan and a direct purchase plan. The record date for the stock
split is October 31, 1997, and the first dividend is payable on January 20,
1998, to shareholders of record on December 31, 1997. The news release is
attached as Exhibit 99.2.
Item 7. Exhibit - Index
Exhibit 99.1 -- News Release dated October 16, 1997.
Exhibit 99.2 -- News Release dated October 16, 1997.
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.
October 16, 1997 COMPAQ COMPUTER CORPORATION
/s/ Earl L. Mason
_______________________________
Earl L. Mason
Senior Vice President and Chief
Financial Officer
(as authorized officer and as
principal financial officer)
Compaq Computer Corporation P.O. Box 692000 NEWS RELEASE
Public Relations Department Houston, Texas 77269-2000
Tel 281-514-0484
Fax 281-514-4583
http://www.compaq.com
[Logo of Compaq Computer Corporation appears here]
FOR IMMEDIATE RELEASE
COMPAQ ANNOUNCES RECORD THIRD QUARTER
SALES, EARNINGS AND EVA
56 PERCENT UNIT GROWTH; 31 PERCENT REVENUE GROWTH;
54 PERCENT EARNINGS GROWTH
HOUSTON, October 16, 1997 - Compaq Computer Corporation (NYSE:CPQ) today
announced record worldwide sales of $6.5 billion for the third quarter ended
September 30, 1997, an increase of 31 percent compared to the third quarter of
1996 and a 56 percent unit growth for the same period. Net income increased
by 54 percent to a record $562 million or $.71 per share, excluding a $44
million or $.06 per share non-recurring charge for merger related costs. Net
income after the non-recurring charge for the merger related costs was $517
million or $.65 per share.
"These results reflect record performance for Compaq, our customers and
shareholders," said Eckhard Pfeiffer, Compaq's President and Chief Executive
Officer. "Our new distribution focus has enabled Compaq's volume to grow more
than three times the industry's rate (IDC PC Forecast, September 8, 1997)
while increasing profitability."
"Compaq continues to demonstrate solid financial progress, as shown by
earnings growth which are above revenue growth," said Earl Mason, Compaq's
Senior Vice President and Chief Financial Officer. "Our ongoing focus on
asset management increased inventory turns from 8.8 to 10.1, and decreased
Days Sales Outstanding from 60 to 40 days. These and other operational
achievements lifted our cash balance 83 percent from the previous year to $6
billion. These record results more than doubled Economic Value Added to $441
million, providing a continued increase in shareholder value."
OUTLOOK
"Our outlook continues to call for a strong fourth quarter performance,
with a healthy outlook for 1998," said Pfeiffer. "We're confident that
Compaq's new business model will continue to accelerate market share gains and
improve profitability. The progress in implementing the new model to optimize
our entire distribution process (ODM) is on target. This work is enabling the
industry's most satisfying buying and ownership experience."
COMPANY BACKGROUND
Founded in 1982, Compaq Computer Corporation, a Fortune 100 company, is a
global information technology company. Compaq is the fifth largest computer
company in the world and the largest global supplier of personal computers.
With worldwide sales of $20 billion in 1996, Compaq develops and markets
hardware, software, solutions and services, including industry-leading
enterprise computing solutions, fault-tolerant business-critical solutions,
networking products, commercial desktop and portable products and consumer
PCs. The company is an industry leader in environmentally friendly programs
and business practices.
Compaq products are sold and supported in more than 100 countries through
a network of authorized Compaq marketing partners. Customer support and
information about Compaq and its products can be found at http://www.compaq.com
or by calling 1-800-OK-COMPAQ. Product information and reseller locations can
be obtained by calling 1-800-345-1518.
Historical financial results have been restated to reflect the pooling of
Tandem.
This release 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 the operational integration associated with mergers and acquisitions;
market responses to pricing actions and promotional programs; the
implementation of operations and systems improvements; timely development,
production, and acceptance of new products; continued competitive factors and
pricing pressures; 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-Q for the quarter ended June 30, 1997, and the Form 10-Q
for the quarter ended September 30, 1997, which will be filed shortly.
(Attached is the 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 Jim Finlaw 281-514-6137
[email protected]
Miller/Shandwick Technologies Jessen Wehrwein 617-536-0470
[email protected]
For further financial information, contact:
Compaq Investor Relations 281-514-9549
For financial publications, contact: 800-433-2391 or 281-518-0435
<TABLE>
<CAPTION>
COMPAQ COMPUTER CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
September 30, December 31,
1997 1996
------------- -------------
(in millions)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,840 $ 3,008
Short-term investments 1,118 1,073
Accounts receivable, net 2,888 3,718
Inventories 2,007 1,267
Deferred income taxes 869 836
Other current assets 184 187
------------- -------------
Total current assets 11,906 10,089
Property, plant and equipment,
less accumulated depreciation 1,819 1,753
Other assets 618 489
------------- -------------
$14,343 $12,331
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,026 $ 2,098
Income taxes payable 382 322
Other current liabilities 2,032 2,016
------------- -------------
Total current liabilities 5,440 4,436
------------- -------------
Long-term debt 76 375
------------- -------------
Deferred income taxes 259 230
------------- -------------
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:
757.0 million shares at September 30,
1997 and 746.1 million shares at
December 31, 1996) 1,875 1,779
Retained earnings 6,706 5,507
Accumulated translation adjustments ( 13) 4
------------- -------------
Total stockholders' equity 8,568 7,290
------------- -------------
$14,343 $12,331
============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPAQ COMPUTER CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Nine months ended Quarter ended
September 30, September 30,
-------- ------- ------ -------
1997 1996 1997 1996
-------- ------- ------ -------
(in millions, except
per share amounts)
<S> <C> <C> <C> <C>
Sales $17,261 $14,044 $6,474 $4,947
Cost of sales 12,530 10,485 4,697 3,641
-------- ------- ------- ------
4,731 3,559 1,777 1,306
-------- ------- ------- ------
Selling, general and administrative
expense 2,097 1,788 788 608
Research and development costs 600 513 213 175
Purchased in-process technology (1) 208
Restructuring charge (2) 52
Merger-related expense (3) 44 44
Other income and expense, net ( 23) 9 ( 4) 9
-------- ------- ------- ------
2,926 2,362 1,041 792
-------- ------- ------- ------
Income before provision for income taxes 1,805 1,197 736 514
Provision for income taxes 617 366 219 149
-------- ------- ------- ------
Net income $ 1,188 $ 831 $ 517 $ 365
======== ======= ======= ======
Earnings per common and
common equivalent share:
Primary $ 1.53 $ 1.10 $ 0.66 $ 0.48
======== ======= ======= ======
Assuming full dilution $ 1.50 $ 1.09 $ 0.65 $ 0.48
======== ======= ======= ======
Shares used in computing earnings
per common and common equivalent share:
Primary 778.1 754.7 789.3 758.5
======== ======= ======= ======
Assuming full dilution 791.6 759.5 792.0 760.5
======== ======= ======= ======
<FN>
(1) Represents a $208 million ($ .26 per share) non-recurring, non-tax
deductible charge for purchased in-process technology in connection with the
Microcom acquisition during the second quarter of 1997.
(2) Represents a $52 million ($ .07 per share) charge related to restructuring
actions taken by Tandem during the second quarter of 1996.
(3) Represents a $44 million ($ .06 per share) non-recurring, non-tax
deductible charge related to costs associated with the merger of the Company
and Tandem Computers Incorporated. The merger has been accounted for on a
pooling of interest basis.
</TABLE>
Compaq Computer Corporation P.O. Box 692000 NEWS RELEASE
Public Relations Department Houston, Texas 77269-2000
Tel 281-514-0484
Fax 281-514-4583
http://www.compaq.com
[Logo of Compaq Computer Corporation appears here]
FOR IMMEDIATE RELEASE
COMPAQ ANNOUNCES INITIATION OF CASH DIVIDEND
AND TWO-FOR-ONE STOCK SPLIT
DIVIDEND REINVESTMENT PLAN AND DIRECT PURCHASE PLAN INSTITUTED
HOUSTON, October 16, 1997 - Compaq Computer Corporation (NYSE:CPQ) today
announced two measures with the goal of enhancing shareholder value. First,
the Board of Directors approved the initiation of a quarterly dividend of $.03
per common share. Second, the Board of Directors approved a two-for-one stock
split, subject to shareholder approval to increase the number of authorized
common shares. Stockholder approval will be solicited by written consent of
stockholders of record on October 31, 1997. After the stock split, the
quarterly dividend becomes $.015 per common share.
"The dividend and stock split allow us to share our success with our
shareholders," said Benjamin M. Rosen, Chairman. "These actions reflect our
confidence in Compaq's long-term growth. In addition, the cash dividend
payments and lower post-split share price will make it easier for individual
investors to purchase the stock, thus broadening the Company's ownership
base."
The dividend is payable on January 20, 1998, to shareholders of record on
December 31, 1997. The Company will institute a dividend reinvestment plan
and a direct purchase plan that will be available to stockholders prior to the
first dividend payment date.
COMPANY BACKGROUND
Founded in 1982, Compaq Computer Corporation, a Fortune 100 company, is a
global information technology company. Compaq is the fifth largest computer
company in the world and the largest global supplier of personal computers.
With worldwide sales of $20 billion in 1996, Compaq develops and markets
hardware, software, solutions and services, including industry-leading
enterprise computing solutions, fault-tolerant business-critical solutions,
networking products, commercial desktop and portable products and consumer
PCs. The company is an industry leader in environmentally friendly programs
and business practices.
Compaq products are sold and supported in more than 100 countries through a
network of authorized Compaq marketing partners. Customer support and
information about Compaq and its products can be found at http://www.compaq.com
or by calling 1-800-OK-COMPAQ. Product information and reseller locations
can be obtained by calling 1-800-345-1518.
Historical financial results have been restated to reflect the pooling of
Tandem.
# # #
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 Jim Finlaw 281-514-6137
[email protected]
Miller/Shandwick Technologies Jessen Wehrwein 617-536-0470
[email protected]
For further financial information, contact:
Compaq Investor Relations 281-514-9549
For financial publications, contact: 800-433-2391 or 281-518-0435
