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: July 10, 1997
COMPAQ COMPUTER CORPORATION
(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-9026 76-0011617
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
20555 SH 249, HOUSTON, TEXAS 77070-2698
(Address of Principal Executive Offices)
(281) 370-0670
(Registrant's telephone number, including area code)
Item 5. Other Events.
In a release dated July 10, 1997, Compaq Computer Corporation (NYSE:CPQ)
announced its financial results for the period ended June 30, 1997, including
an unaudited consolidated balance sheet as of June 30, 1997, and an unaudited
consolidated statement of income for the period ended June 30, 1997. The news
release is attached as Exhibit 99.
Item 7. Exhibit
Exhibit 99 -- News Release dated July 10, 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.
July 10, 1997 COMPAQ COMPUTER CORPORATION
/s/ Linda S. Auwers
_______________________________
Linda S. Auwers
Vice President and Assistant
General Counsel
COMPAQ COMPUTER CORPORATION P.O. BOX 692000
PUBLIC RELATIONS DEPARTMENT HOUSTON, TEXAS 77269-2000
TEL 281-514-0484
FAX 281-514-4583
HTTP://WWW.COMPAQ.COM
[COMPAQ LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
- -----------------------
COMPAQ'S SECOND QUARTER UNIT SALES GROW 42 PERCENT;
EVA MORE THAN DOUBLES
HOUSTON, July 10, 1997 - Compaq Computer Corporation (NYSE:CPQ) today
announced worldwide sales of $5.0 billion for the second quarter ended June
30, 1997, an increase of 25 percent compared to the second quarter of 1996 and
a 42 percent unit growth for the same period. Net income increased by 58
percent to $422 million or $1.48 per share, excluding a $208 million or $.73
per share non-recurring charge for purchased in-process technology in
connection with the Microcom acquisition. Net income after the non-recurring
charge for purchased in-process technology was $214 million or $.75 per share.
"These results reflect an excellent second quarter for Compaq, our
customers and shareholders," said Eckhard Pfeiffer, President and Chief
Executive Officer, Compaq Computer Corporation. "We continue to accelerate
our market growth across all geographies and all product groups while
increasing profitability."
"We're very pleased with the consistency of our financial progress,
especially with the improvements in earnings and the growth of gross margins
to 25.3 percent in the second quarter," said Earl Mason, Compaq Senior Vice
President and Chief Financial Officer. "Our ongoing focus on asset management
increased inventory turns from 7.1 to 10.4, and decreased Days Sales
Outstanding from 60 to 39 days. Taken together, these operational
improvements lifted our cash balance 165 percent from the previous year to
$5.1 billion. These excellent results more than doubled Economic Value Added
(EVA) to $345 million at the end of the second quarter, providing a continued
increase in shareholder value."
OUTLOOK
"Our outlook continues to call for a strong second half," said Pfeiffer.
"We're confident that Compaq's new business model will accelerate market share
gains and improve profitability. We are now implementing the first phase of
optimizing our entire distribution model from design to manufacturing and
delivery. This first phase, known as Build-to-Order, will result in
substantial customer benefits. These include a shortened manufacturing cycle
time, greater product availability and predictability, lower channel inventory
and reduced product costs. Customers will continue to receive Compaq quality
and innovation at the most compelling prices and lowest total cost of
ownership. In fact, we expect our new distribution model to enable the
industry's most satisfying buying and ownership experience as well as the most
efficient, cost effective and comprehensive fulfillment process."
COMPANY BACKGROUND
Compaq Computer Corporation, a Fortune 100 company, is the fifth largest
computer company in the world and the largest global supplier of personal
computers, delivering useful innovation through products that connect people
with people and people with information. The company is an industry leader in
environmentally friendly programs and business practices. Compaq is
strategically organized to meet the current and future needs of its customers,
offering Internet and enterprise computing solutions, networking products,
commercial PC products and consumer PCs. As the leader in distributed
enterprise solutions, Compaq has shipped over a million servers. In 1996, the
company reported worldwide sales of $18.1 billion. 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.
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 March 31, 1997, and the Form
10-Q for the quarter ended June 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.
<TABLE>
<CAPTION>
COMPAQ COMPUTER CORPORATION
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
JUNE 30, DECEMBER 31,
1997 1996
---- ----
(in millions)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,215 $ 2,920
Short-term investments 898 1,073
Accounts receivable, net 2,172 3,168
Inventories 1,598 1,152
Deferred income taxes 791 761
Other current assets 121 95
------- -------
Total current assets 9,795 9,169
Property, plant and equipment, less accumulated depreciation 1,223 1,172
Other assets 262 185
------- -------
$11,280 $10,526
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,421 $ 1,962
Income taxes payable 192 322
Other current liabilities 1,591 1,568
------- -------
Total current liabilities 4,204 3,852
------- -------
Long-term debt 300
------- -------
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:
276.5 million shares at June 30, 1997 and
273.6 million shares at December 31, 1996) 1,179 1,107
Retained earnings 5,638 5,037
------- -------
Total stockholders' equity 6,817 6,144
------- -------
$11,280 $10,526
======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPAQ COMPUTER CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
SIX MONTHS QUARTER ENDED
ENDED JUNE 30, JUNE 30,
-------------------------------
1997 1996 1997 1996
---- ---- ---- ----
(in millions, except per share amounts)
<S> <C> <C> <C> <C>
Sales $9,817 $8,206 $5,012 $4,001
Cost of sales 7,370 6,400 3,743 3,080
------- ------- ------- ------
2,447 1,806 1,269 921
------- ------ ------- ------
Selling, general and administrative expense 1,021 871 522 440
Research and development costs 250 197 128 94
Purchased in-process technology (1) 208 208
Other income and expense, net ( 14) 22 ( 2) 5
------- ------ ------- ------
1,465 1,090 856 539
------- ------ ------- ------
Income before provision for income taxes 982 716 413 382
Provision for income taxes 381 215 199 115
------- ------ ------- ------
Net income $ 601 $ 501 $ 214 $ 267
======= ====== ======= ======
Earnings per common and common equivalent share:
Primary $ 2.12 $ 1.81 $ 0.75 $ 0.97
======= ====== ====== ======
Assuming full dilution $ 2.11 $ 1.81 $ 0.75 $ 0.96
======= ====== ======= ======
Shares used in computing earnings per common
and common equivalent share:
Primary 283.8 276.4 284.6 276.7
======= ====== ======= ======
Assuming full dilution 284.8 277.0 285.0 277.1
======= ====== ======= ======
<FN>
(1) Represents a $208 million ($ .73 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.
</TABLE>
