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 21,1998
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 January 21, 1998, Compaq Computer Corporation (NYSE:
CPQ) announced its financial results for the period ended December 31, 1997,
including an unaudited consolidated balance sheet as of December 31, 1997, and
an unaudited consolidated statement of income for the period ended December
31, 1997. The news release is attached as Exhibit 99.
Item 7. Exhibit - Index
Exhibit 99 -- News Release dated January 21, 1998.
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.
January 21, 1998 COMPAQ COMPUTER CORPORATION
/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 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's 1997 Revenue and Earnings Set New Record
Units Grow 43%; Net Income Grows 60%; Eva Grows 151%
HOUSTON, January 21, 1998 - Compaq Computer Corporation (NYSE: CPQ) today
announced record worldwide sales of $7.3 billion for the fourth quarter ended
December 31, 1997, an increase of 23 percent compared to the fourth quarter of
1996. Net income increased by 37 percent to $667 million or $.84 per share
before the January 20, 1998, two-for-one stock split ($.42 per share on a
post-split basis), compared to the fourth quarter of 1996.
Compaq's worldwide sales for 1997 grew to $24.6 billion, compared with $20.0
billion in 1996. Net income for 1997 increased by 60 percent to $2.1 billion
or $2.69 per share ($1.35 post-split), excluding $252 million or $.32 per
share ($.16 post-split) in non-recurring, non-tax deductible charges for
purchased research and development and merger-related costs in connection with
acquisitions. Net income after these non-recurring charges was $1.9 billion
or $2.37 per share ($1.19 post-split).
"These results reflect an excellent fourth quarter and an outstanding year for
Compaq," said Eckhard Pfeiffer, Compaq's President and Chief Executive Officer.
"We continued to execute well across all areas of our business. Compaq's
volume grew more than 2 1/2 times the industry's rate(1) while increasing
profitability. This is remarkable growth for a $24.6 billion company."
"Compaq continues to demonstrate solid financial progress, as shown by
improvements in earnings and the growth of gross margins to 27.6 percent in
the fourth quarter," said Earl Mason, Compaq's Senior Vice President and Chief
Financial Officer. "Our focus on asset management lifted our cash balance 66
percent from the previous year to $6.8 billion and increased our Return on
Invested Capital from 49 percent to 90 percent for the fourth quarter."
OUTLOOK
Our outlook, despite weakness in Asia, calls for a strong 1998," said
Pfeiffer. "We're confident that Compaq will be well-positioned to continue to
accelerate market share gains and improve profitability. Customers are
increasingly relying on Compaq to provide the most innovative, cost-effective
and flexible products to meet their computing needs. Compaq's enterprise
computing business, including servers, workstations, clustering technology,
primary and secondary storage products, and massive parallel fault-tolerant
solutions, accounted for 37 percent of our business in the fourth quarter.
With the success of the Tandem merger, we can continue to attract world-class
partners and drive Compaq's enterprise business momentum."
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 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 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; operational integration associated with mergers and
acquisitions; 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 September 30, 1997, and the Form
10-K for the year ended December 31, 1997, which will be filed in March.
(1) IDC Revised PC Forecast, December 15, 1997
(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 financial information, contact:
Investor Relations 281-514-9549
Investor Relations Fax Service 800-433-2391 or 281-518-0435
<TABLE>
<CAPTION>
COMPAQ COMPUTER CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
December 31, December 31,
1997 1996
----------- -----------
(in millions)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,418 $ 3,008
Short-term investments 344 1,073
Accounts receivable, net 2,891 3,718
Inventories 1,570 1,267
Deferred income taxes 595 836
Other current assets 199 187
----------- -----------
Total current assets 12,017 10,089
Property, plant and equipment,
less accumulated depreciation 1,985 1,753
Other assets 629 489
----------- -----------
$ 14,631 $ 12,331
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ 2,837 $ 2,098
Income taxes payable 195 533
Other current liabilities 2,170 2,110
----------- -----------
Total current liabilities 5,202 4,741
----------- -----------
Long-term debt 300
----------- -----------
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:
759.3 million shares at December 31, 1997 and
746.0 million shares at December 31, 1996) 2,096 1,779
Retained earnings 7,333 5,511
----------- -----------
Total stockholders' equity 9,429 7,290
----------- -----------
$ 14,631 $ 12,331
=========== ===========
<FN>
* Issued and outstanding share amounts have not been adjusted to reflect a
2-for-1 stock split that was effective January 20, 1998.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COMPAQ COMPUTER CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Year ended Quarter ended
December 31, December 31,
--------------------- ---------------------
1997 1996 1997 1996
--------- --------- --------- ---------
(in millions, except per share amounts)
<S> <C> <C> <C> <C>
Sales $ 24,584 $ 20,009 $ 7,323 $ 5,965
Cost of sales 17,833 14,855 5,303 4,370
--------- --------- --------- ---------
6,751 5,154 2,020 1,595
--------- --------- --------- ---------
Selling, general and administrative expense 2,947 2,507 850 719
Research and development costs 817 695 217 182
Purchased in-process technology (1) 208
Restructuring charge (2) 52
Merger-related costs (3) 44
Other income and expense, net (23) 17 8
--------- --------- --------- ---------
3,993 3,271 1,067 909
--------- --------- --------- ---------
Income before provision for income taxes 2,758 1,883 953 686
Provision for income taxes 903 565 286 199
--------- --------- --------- ---------
Net income $ 1,855 $ 1,318 $ 667 $ 487
========= ========= ========= =========
Earnings per common and common equivalent
share: (4)
Basic $ 2.46 $ 1.79 $ 0.88 $ 0.66
========= ========= ========= =========
Diluted $ 2.37 $ 1.74 $ 0.84 $ 0.63
========= ========= ========= =========
Shares used in computing earnings per common
and common equivalent share: (4)
Basic 752.7 735.9 758.3 742.8
========= ========= ========= =========
Diluted 782.1 758.1 792.6 767.7
========= ========= ========= =========
<FN>
(1) Represents a $208 million ($.27 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 $52 million ($.04 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. The merger has been accounted for on a pooling of
interest basis.
(4) Share and per share amounts have not been adjusted to reflect a 2-for-1
stock split that was effective January 20, 1998.
</FN>
</TABLE>
