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 (Date of earliest event reported): April 15, 1998
COMPAQ COMPUTER CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1-9026 76-0011617
(State or other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
20555 SH 249 77070
HOUSTON, TEXAS
(Address of Principal (Zip Code)
Executive Offices)
(281) 370-0670
(Registrant's telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 5. OTHER EVENTS.
1. In a release dated April 15, 1998, Compaq Computer Corporation (NYSE:
CPQ) announced its financial results for the period ended March 31, 1998,
including an unaudited consolidated balance sheet as of March 31, 1998 and an
unaudited consolidated statement of income for the period ended March 31,
1998. The news release is attached as Exhibit 99.
ITEM 7. EXHIBITS.
Exhibit 99 News Release dated April 15, 1998.
<PAGE>
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
Dated: April 15, 1998 By: /s/ Linda S. Auwers
-------------------------
Linda S. Auwers
Vice President and
Associate General Counsel
Exhibit 99
Compaq Computer Corporation P.O. Box 692000 News Release
Public Relations 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 Reports First Quarter Earnings
HOUSTON, April 15, 1998 - Compaq Computer Corporation (NYSE: CPQ) today
announced worldwide sales of $5.7 billion for the first quarter ended March
31, 1998, an increase of eight percent compared to the first quarter of 1997.
Net income for the quarter was $16 million or $.01 per share.
"As we indicated in early March, sales from our North American commercial
channels were not meeting our expectations. At that time, we said we would
immediately reduce prices and aggressively promote commercial products in
North America in order to reduce channel inventories and accelerate the
implementation of our Optimized Distribution Model (ODM), and that is exactly
what we are doing. As a result, we are seeing an acceleration of sales out of
the channel," said Eckhard Pfeiffer, Compaq's President and Chief Executive
Officer.
"It will take another quarter of adjustment to put the Company's core
business on a track of improved profitability," said Earl Mason, Senior Vice
President and Chief Financial Officer. "Our asset management progress
continues. For example, End of Period Inventory Turns was 15 which is an
improvement of 4 turns from the first quarter of 1997. In fact, inventory
decreased $314 million from the fourth quarter of 1997. This coupled with
improvements in receivables and payables increased our cash balance to
$7.1 billion, an increase of 43 percent over the $5.0 billion reported a year
ago."
BUSINESS OUTLOOK
"The second quarter, while a period of adjustment, will also be the time
the Company repositions itself with almost a complete new product line. From
handheld devices to high-end servers, Compaq will be introducing some of the
most competitive products in the industry. We continue to work with the
Federal Trade Commission and the Securities and Exchange Commission to obtain
approval for the pending acquisition of Digital Equipment Corporation. This
closing is expected to take place in the second quarter," said Pfeiffer.
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 $24.6 billion in 1997, Compaq develops and markets
hardware, software, solutions and services, including industry-leading
enterprise computing solutions, fault-tolerant business-critical solutions,
networking and communication 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.
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 implementation of operations and systems improvements,
particularly those associated with the Optimized Distribution Model; the
operational integration associated with the pending acquisition of Digital
Equipment Corporation; market responses to pricing actions and promotional
programs; continued competitive factors and pricing pressures; inventory risks
due to shifts in market demand; timely development, production, and acceptance
of the products; and changes in product mix. Further information on the
factors that could affect the Compaq's financial results are included in its
SEC filings, including the annual report on Form 10-K for the year ended
December 31, 1997, and the quarterly report on Form 10-Q for the quarter ended
March 31, 1998, to be filed shortly.
(Attached is 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 Angela Goodwin 281-514-0688
[email protected]
For financial information, contact:
Investor Relations 281-514-9549
Investor Relations Fax Service 800-433-2391 or 281-518-0435
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<TABLE>
<CAPTION>
COMPAQ COMPUTER CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
Quarter Ended
March 31,
------------------------
1998 1997 *
----------- ----------
(in millions, except
per share amounts)
<S>
<C> <C> <C>
Sales $ 5,687 $ 5,272
Cost of sales 4,664 3,855
----------- -----------
1,023 1,417
----------- -----------
Selling, general and administrative expense 785 639
Research and development costs 245 189
Other income and expense, net ( 30) ( 15)
------------ -----------
1,000 813
------------ -----------
Income before provision for income taxes 23 604
Provision for income taxes 7 190
------------ -----------
Net income $ 16 $ 414
============ ===========
Earnings per common share:
Basic $ 0.01 $ 0.28
============ ===========
Diluted $ 0.01 $ 0.27
============ ===========
Shares used in computing earnings per common share:
Basic 1,523 1,494
============ ===========
Diluted 1,584 1,541
============ ===========
<FN>
* Historical financial results have been restated to reflect the merger of Tandem into Compaq
in a pooling of interest transaction.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPAQ COMPUTER CORPORATION
CONSOLIDATED BALANCE SHEET
(unaudited)
ASSETS
March 31, December 31,
1998 1997
------------- ------------
(in millions)
<S>
<C> <C> <C>
Current assets:
Cash and cash equivalents $ 7,107 $ 6,418
Short-term investments - 344
Accounts receivable, net 2,743 2,891
Inventories 1,256 1,570
Deferred income taxes 594 595
Other current assets 207 199
------------- ------------
Total current assets 11,907 12,017
Property, plant and equipment, less accumulated depreciation 2,028 1,985
Other assets 645 629
------------- ------------
$ 14,580 $ 14,631
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,812 $ 2,837
Income taxes payable 257 195
Other current liabilities 2,037 2,170
------------- -----------
Total current liabilities 5,106 5,202
------------- -----------
Stockholders' equity:
Preferred stock, $.01 par value
(authorized: 10 million shares; issued: none)
Common stock and capital in excess of $.01 par value
(authorized: 3 billion shares; issued and outstanding:
1,526 million shares at March 31, 1998 and
1,519 million shares at December 31, 1997) 2,153 2,096
Retained earnings 7,321 7,333
------------- -----------
Total stockholders' equity 9,474 9,429
------------- -----------
$ 14,580 $ 14,631
============= ===========
</TABLE>
