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): October 14, 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
HOUSTON, TEXAS 77070
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(Address of Principal Executive Offices) (Zip Code)
(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 October 14, 1998, Compaq Computer Corporation (NYSE:
CPQ) announced its financial results for the period ended September 30, 1998,
including an unaudited consolidated balance sheet as of September 30, 1998 and
an unaudited consolidated statement of income for the period ended September
30, 1998. The news release is attached as Exhibit 99.
ITEM 7. EXHIBITS.
Exhibit 99 News Release dated October 14, 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.
Dated: October 14, 1998
COMPAQ COMPUTER CORPORATION
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 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 REPORTS THIRD QUARTER RESULTS
DIGITAL INTEGRATION ACTIVITIES ON TRACK
HOUSTON, October 14, 1998 - Compaq Computer Corporation (NYSE: CPQ) today
announced worldwide sales of $8.8 billion for the third quarter ended
September 30, 1998, an increase of 36 percent compared to sales reported for
the third quarter of 1997. The Company reported a profit after tax of $115
million, or $.07 per share.
"The third quarter was the first full quarter of operating the combined
companies of Compaq and Digital," said Eckhard Pfeiffer, Compaq's President
and Chief Executive Officer. "The Compaq team took decisive implementation
steps during the quarter to begin realizing synergies from the Digital
acquisition. To date, the Digital integration activities are on track."
According to Earl Mason, Compaq's Senior Vice President and Chief
Financial Officer, "Progress in integration and operational initiatives can be
seen on both the income statement and balance sheet. Gross margins improved
sequentially to 24.9 percent, and the acquired services business had its
strongest quarter in terms of year-over-year revenue growth in over five
years. On the balance sheet, cash ended at $4.4 billion after buying back
approximately $180 million of Compaq's common stock and satisfying
approximately $100 million of restructuring obligations. Improvements in both
Days Sales Outstanding and Inventory Turns contributed to the continued strong
cash position."
OUTLOOK
"Sales out of the distribution channels grew 38 percent over the third
quarter of 1997. We estimate this growth was more than two times the market
and believe Compaq will achieve continued strong growth during the fourth
quarter," said Pfeiffer. "With a significant portion of the Digital sales
force integration work accomplished, we are now ready to more actively
communicate with our customers on the total capability of Compaq today."
"During the fourth quarter, we will continue the integration process,
taking the necessary actions to achieve additional synergies," said Mason.
"With strong execution of our integration plans, we continue to believe
earnings for the combined companies should be accretive as early as the fourth
quarter."
COMPANY BACKGROUND
Founded in 1982, Compaq Computer Corporation is a Fortune Global 200
company. Compaq is the second largest computer company in the world and the
largest global supplier of personal computers. 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 are available at
http://www.compaq.com or by calling 1-800-OK-COMPAQ. Product information and
reseller locations are available 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 acquisition of Digital Equipment Corporation;
inventory risks due to shifts in market demand; timely development, production,
continued competitive factors and pricing pressures; market responses to
pricing actions and promotional programs; acceptance of the products; and
changes in product mix. Further information on the factors that could affect
the Company's financial results are included in its SEC filings, including the
quarterly report on Form 10-Q for the quarter ended June 30, 1998, and the
Form 10-Q for the quarter ended September 30, 1998, which will be filed
shortly.
(Attached is Consolidated Balance Sheet and Statement of Income.)
# # #
Compaq, Registered U.S. Patent and Trademark Office. Digital is a registered
trademark of Digital Equipment Corporation.
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]
Shandwick International Mark Ostermann 281-514-5893
[email protected]
For investor information, contact:
Investor Relations 281-514-9549
Investor Relations Fax Service 800-433-2391
<PAGE>
<TABLE>
<CAPTION>
COMPAQ COMPUTER CORPORATION
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
SEPTEMBER 30, DECEMBER 31,
1998 1997
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(IN MILLIONS)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,408 $ 6,418
Short-term investments 22 344
Accounts receivable, net 5,727 2,891
Inventories 2,123 1,570
Deferred income taxes 1,981 595
Other current assets 509 199
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Total current assets 14,770 12,017
Property, plant and equipment, less accumulated depreciation 2,822 1,985
Deferred income taxes 862 --
Intangible and other assets 3,193 629
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$ 21,647 $ 14,631
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,779 $ 2,837
Income taxes payable 210 195
Accrued restructuring costs 1,634 --
Other current liabilities 4,733 2,170
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Total current liabilities 10,356 5,202
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Postretirement and other postemployment benefits 430 --
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Minority interest 422 --
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Stockholders' equity:
Preferred stock, $.01 par value
(authorized: 10 million shares; issued: none)
Common stock and capital in excess of $.01 par value
(authorized: 3 billion shares; issued:
1,683 million shares at September 30, 1998 and
1,519 million shares at December 31, 1997) 6,881 2,096
Retained earnings 3,766 7,333
Treasury stock (at cost) (208) --
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Total stockholders' equity 10,439 9,429
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$ 21,647 $ 14,631
============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPAQ COMPUTER CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
NINE MONTHS ENDED QUARTER ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1998 1997 1998 1997
---- ---- ---- ----
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenue:
Product sales $ 18,227 $ 16,926 $ 7,280 $ 6,353
Service revenue 2,083 335 1,511 121
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20,310 17,261 8,791 6,474
---------- ---------- ---------- ----------
Cost of sales:
Cost of product sales 14,576 12,285 5,569 4,608
Cost of service revenue 1,416 245 1,037 89
---------- ---------- ---------- ----------
15,992 12,530 6,606 4,697
---------- ---------- ---------- ----------
Selling, general, and administrative expense 3,417 2,097 1,581 788
Research and development costs 924 600 430 213
Purchased in-process technology 3,234 208 -- --
Restructuring and asset impairment charges 393 -- -- --
Merger-related costs -- 44 -- 44
Other income and expense, net (56) (23) 18 (4)
---------- ---------- ---------- ----------
7,912 2,926 2,029 1,041
---------- ---------- ---------- ----------
Income (loss) before provision for income taxes (3,594) 1,805 156 736
Provision (benefit) for income taxes (93) 617 41 219
---------- ---------- ---------- ----------
Net income (loss) $ (3,501) $ 1,188 $ 115 $ 517
========== ========== ========== ==========
Earnings (loss) per common share:
Basic $ (2.21) $ 0.79 $ 0.07 $ 0.34
========== ========== ========== ==========
Diluted $ (2.21) $ 0.76 $ 0.07 $ 0.33
========== ========== ========== ==========
Shares used in computing earnings (loss) per
common share:
Basic 1,585 1,502 1,675 1,510
========== ========== ========== ==========
Diluted 1,585 1,557 1,737 1,579
========== ========== ========== ==========
</TABLE>
