UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM 10-Q
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[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended December 31, 1997
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from __________ to ___________
-------------------------------
Commission file number 1-7725
I.R.S. Employer Identification Number 36-2687938
COMDISCO, INC.
(a Delaware Corporation)
6111 North River Road
Rosemont, Illinois 60018
Telephone: (847) 698-3000
Name of each Number of shares
Title of exchange on outstanding as of
each class which registered December 31, 1997
---------- ---------------- -----------------
Common stock, New York Stock Exchange 74,385,000
$.10 par value Chicago Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes XX No .
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<PAGE>
Comdisco, Inc. and Subsidiaries
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Earnings and Retained Earnings --
Three Months Ended December 31, 1997 and 1996....................3
Consolidated Balance Sheets --
December 31, 1997 and September 30, 1997.........................4
Consolidated Statements of Cash Flows --
Three Months Ended December 31, 1997 and 1996....................5
Notes to Consolidated Financial Statements........................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................9
PART II. OTHER INFORMATION
Item 3. Quantitative and Qualitative Disclosures about Market Risk.........12
Item 4. Submission of Matters to a Vote of Security Holders................12
Item 6. Exhibits and Reports on Form 8-K...................................13
SIGNATURES....................................................................15
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<PAGE>
PART I. FINANCIAL INFORMATION
Comdisco, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (UNAUDITED)
(in millions except per share data)
For the Three Months Ended December 31, 1997 and 1996
<TABLE>
Three Months Ended
December 31
1997 1996
---- ----
<S> <C> <C>
Revenue
Leasing
Operating ....................................... $448 $390
Direct financing ................................ 40 36
Sales-type ...................................... 90 64
---- ----
Total leasing ................................ 578 490
Sales ............................................. 51 46
Continuity and network services ................... 104 84
Other ............................................. 11 13
---- ----
Total revenue ................................... 744 633
---- ----
Costs and expenses
Leasing
Operating ....................................... 359 305
Sales-type ...................................... 60 46
---- ----
Total leasing ................................ 419 351
Sales ............................................. 40 30
Continuity and network services ................... 86 71
Selling, general and administrative ............... 62 59
Interest .......................................... 81 73
---- ----
Total costs and expenses ........................ 688 584
Earnings before income taxes ......................... 56 49
Income taxes ......................................... 20 19
---- ----
Net earnings before preferred dividends .............. 36 30
Preferred dividends .................................. (2) (2)
---- ----
Net earnings available to common stockholders ........ $ 34 $ 28
==== ====
Retained earnings at beginning of period ............. $965 $856
Net earnings available to common stockholders ........ 34 28
Cash dividends paid on common stock .................. (4) (3)
---- ----
Retained earnings at end of period ................... $995 $881
==== ====
Net earnings per common share:
Earnings per common share--basic ................... $.46 $.39
==== ====
Earnings per common share--diluted ................... $.43 $.37
==== ====
Cash dividends paid per common share ................. $.05 $.05
==== ====
Common shares outstanding:
Average common shares outstanding-basic .............. 74 73
Average common shares outstanding--diluted ........... 80 78
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
Comdisco, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in millions except number of shares)
<TABLE>
<CAPTION>
December 31 September 30
1997 1997
(unaudited) (audited)
------ ------
<S> <C> <C>
ASSETS
Cash and cash equivalents .............................. $ 26 $ 37
Cash - legally restricted .............................. 54 45
Receivables, net ....................................... 269 262
Inventory of equipment ................................. 188 157
Leased assets:
Direct financing and sales-type ...................... 1,771 1,717
Operating (net of accumulated depreciation) .......... 3,621 3,571
------ ------
Net leased assets .................................. 5,392 5,288
Buildings, furniture and other, net .................... 136 140
Other assets ........................................... 417 421
------ ------
$6,482 $6,350
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable ..................................... $1,304 $1,024
Term notes payable ................................ 495 497
Senior and subordinated debt ...................... 2,368 2,421
Accounts payable .................................. 111 170
Income taxes ...................................... 319 306
Other liabilities ................................. 318 325
Discounted lease rentals .......................... 740 742
------ ------
5,655 5,485
Stockholders' equity:
Preferred stock $.10 par value.
Authorized 100,000,000 shares:
8.75% Cumulative Preferred Stock, Series A and B
$25 stated value and liquidation preference,
824,400 shares issued (3,562,600 at
September 30, 1997) ........................... 21 89
Common stock $.10 par value
Authorized 200,000,000 shares issued 110,202,028 shares
(110,132,686 at September 30, 1997) ........... 11 11
Additional paid-in capital ...................... 181 178
Deferred compensation (ESOP) .................... (1) (3)
Deferred translation adjustment ................. (27) (20)
Retained earnings ............................... 995 965
------ ------
1,180 1,220
Common stock held in treasury, at cost .......... (353) (355)
------ ------
Total stockholders' equity ................. 827 865
------ ------
$6,482 $6,350
====== ======
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
Comdisco, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
Three Months Ended December 31, 1997 and 1996
Increase (decrease) in cash and cash equivalents:
<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Cash flows from operating activities:
Operating lease and other leasing receipts ................ $ 468 $ 380
Direct financing and sales-type leasing receipts .......... 222 202
Leasing costs, primarily rentals paid ..................... (5) (7)
Sales ..................................................... 75 57
Sales costs ............................................... (23) (21)
Continuity and network services receipts .................. 90 81
Continuity and network services costs ..................... (67) (49)
Other revenue ............................................. 11 14
Selling, general and administrative expenses .............. (80) (65)
Interest .................................................. (78) (64)
Income taxes .............................................. (2) (5)
----- -----
Net cash provided by operating activities ............... 611 523
----- -----
Cash flows from investing activities:
Equipment purchased for leasing ............................ (756) (680)
Investment in continuity and network services facilities ... (14) (15)
Other ...................................................... 6 (13)
----- -----
Net cash used in investing activities ................... (764) (708)
----- -----
Cash flows from financing activities:
Discounted lease proceeds .................................. 129 139
Net increase (decrease) in notes payable .................. 280 (114)
Issuance of term notes and senior notes .................... 42 344
Maturities and repurchases of term notes and senior notes .. (95) (1)
Principal payments on secured debt ......................... (131) (124)
Decrease (increase) in legally restricted cash ............. (9) 3
Preferred stock repurchased ................................ (68) --
Common stock repurchased and placed in treasury ............ -- (25)
Dividends paid on common stock ............................. (4) (3)
Dividends paid on preferred stock .......................... (2) (2)
Other ...................................................... -- 1
----- -----
Net cash provided by financing activities ............... 142 218
----- -----
Net increase (decrease) in cash and cash equivalents ......... (11) 33
Cash and cash equivalents at beginning of period ............. 37 29
----- -----
Cash and cash equivalents at end of period ................... $ 26 $ 62
===== =====
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
Comdisco, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) -- CONTINUED
(in millions)
Three Months Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
Reconciliation of net earnings to net cash provided by operating activities:
<S> <C> <C>
Net earnings .............................................. $ 36 $ 30
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Leasing costs, primarily
depreciation and amortization ....................... 414 344
Leasing revenue, primarily principal portion of
direct financing and sales-type lease rentals ....... 113 92
Cost of sales ......................................... 17 9
Continuity and network services costs,
primarily depreciation and amortization ........... 19 22
Income taxes .......................................... 18 14
Interest .............................................. 3 9
Other - net ........................................... (9) 3
---- ----
Net cash provided by operating activities ............. $611 $523
==== ====
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
Comdisco, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
December 31, 1997 and 1996
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial statements and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and disclosures required by generally accepted accounting
principles for annual financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. For further
information, refer to the consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year
ended September 30, 1997.
The balance sheet at September 30, 1997 has been derived from the audited
financial statements included in the Company's Annual Report on Form 10-K
for the year ended September 30, 1997.
Legally restricted cash represents cash and cash equivalents that are
restricted solely for use as collateral in secured borrowings and are not
available to other creditors.
2. Interest-Bearing Liabilities
At December 31, 1997, the Company had $1.6 billion of available domestic
and international borrowing capacity under various lines of credit from
commercial banks and commercial paper facilities.
The average daily borrowings outstanding during the three months ended
December 31, 1997 were approximately $4.9 billion, with a related weighted
average interest rate of 6.63%. This compares to average daily borrowings
during the first three months of fiscal 1997 of approximately $4.3 billion,
with a related weighted average interest rate of 6.85%.
3. Senior Notes
On June 23, 1997 the Company filed a registration statement on Form S-3
with the Securities and Exchange Commission for a shelf offering of up to
$1.2 billion of senior debt securities on terms to be set at the time of
each sale (the "1997 Shelf"). On November 6, 1997, the Company filed a
Prospectus Supplement designating $600 million of senior debt securities as
"Medium-Term Notes, Series G," all of which medium-term notes remained
available for issuance at December 31, 1997. Pursuant to the 1997 Shelf,
the Company, on January 8, 1998, issued $250 million of 6.125% Notes Due
January 15, 2003. The Company plans to continue to be active in issuing
senior debt during fiscal 1998, primarily to support the anticipated growth
of the leased assets and, where appropriate, to refinance maturities of
interest-bearing liabilities.
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<PAGE>
4. Preferred and Common Stock
On September 19, 1997, the Company announced the redemption, effective
October 20, 1997, of all shares of the Series A Preferred Stock (2,738,200
shares) at the redemption price of $25, plus accrued and unpaid dividends.
On January 20, 1998, the Board of Directors declared a quarterly cash
dividend of $.05 per share to be paid on March 9, 1998 to stockholders of
record as of February 6, 1998.
On February 2, 1998, the Company announced that 106 senior managers of the
Company purchased over three million shares of the Company's common stock
for approximately $109 million (the "Proceeds"). Under the voluntary
program, the senior managers took out full recourse, personal loans to
purchase the shares. The Company has guaranteed repayment of the loans in
the event of default. The purchased shares represented over 4% of the
current total shares outstanding. It is currently anticipated that most of
the Proceeds will be used by the Company to purchase its common stock under
the Company's existing repurchase program.
-8-
<PAGE>
Comdisco, Inc. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Net Earnings
- ------------
Net earnings available to common stockholders (hereinafter referred to as "net
earnings") for the three months ended December 31, 1997 were $34 million, or
$.43 per share, as compared to $28 million, or $.37 per share, for the three
months ended December 31, 1996. The increase in net earnings in the current
quarter compared to the year earlier period is due to an increase in earnings
contributions from remarketing and continuity services activities. Earnings per
share in the current quarter benefited from a lower effective tax rate of 36.0%
compared to 38.0% in fiscal 1997.
The Company's operating results are subject to quarterly fluctuations resulting
from a variety of factors, including the volume of new leases written, product
announcements by manufacturers, economic conditions, interest rate fluctuations
and variations in the financial mix of leases written. The financial mix of
leases written in a quarter is a result of a combination of factors, including,
but not limited to, changes in customer demands and/or requirements, new product
announcements, price changes, changes in delivery dates, changes in maintenance
policies and the pricing policies of equipment manufacturers, and price
competition from other lessors and finance companies. Additionally, the growth
in leasing volume during the last six fiscal quarters has the effect of
increasing the proportion of leases for new equipment ("New Leases") to total
leases. New Leases traditionally have lower earnings contributions than leases
with remarketed equipment. Therefore, increasing lease volume activities
initially has the impact of putting pressure on leasing margins.
Business
- --------
Leasing volume, as measured by the cost of equipment placed on lease, increased
in the first quarter of fiscal 1997 as compared to the year earlier quarter.
Lease volume in the current quarter was the fifth highest quarterly volume level
in the Company's history. The growth in leasing volume is expected to have a
positive impact on leasing revenue in future periods and will provide equipment
for remarketing.
Cost of equipment placed on lease was $722 million during the quarter ended
December 31, 1997. This compares to cost of equipment placed on lease of $686
million and $838 million during the quarters ended December 31, 1996 and
September 30, 1997, respectively. In the current quarter, information technology
services had cost of equipment placed on lease of $541 million, compared to $598
million in the year earlier quarter. Internationally, cost of equipment of all
types placed on lease declined in the current year quarter compared to the year
earlier quarter. Diversified technology services had cost of equipment placed on
lease of $181 million, compared to $88 million in the year earlier period.
Remarketing activity, an important contributor to quarterly earnings, increased
compared to the first quarter of fiscal 1997 and was at approximately the level
of activity attained in the fourth quarter of fiscal 1997. To meet its quarterly
earnings goals, remarketing contributions have to be at approximately the level
achieved in the current fiscal quarter. While the Company is devoting resources
to its remarketing activities, there can be no assurance that the Company will
achieve the appropriate level of activity necessary to meet the Company's
desired operating results.
Continuity and network services had its ninth consecutive record quarter with
pretax earnings of $18 million. This compares to pretax earnings of $16 million
in the fourth quarter of fiscal 1997 and $13 million in the same quarter of the
prior fiscal year. Revenue increased 24% compared to the year earlier quarter.
Revenue from continuity contracts, which is recognized monthly during the
noncancelable continuity contract and is therefore recurring and predictable,
was approximately $74 million and $69 million during the three months ended
December 31, 1997 and 1996, respectively, representing approximately 71% and 82%
of continuity and network services revenue. Revenue from consulting services was
negatively impacted by the reduced work days in December 1997. The Company has
been successful in containing costs to maintain and improve margins in its
services operations. However, to attain its services earnings contribution goals
for fiscal 1998, the Company will have to expand its contract subscription base
(through new contract signings and contract renewals) and increase its revenues
from consulting services.
Three Months Ended December 31, 1997
- ------------------------------------
Total revenue for the three months ended December 31, 1997 was $744 million
compared to $633 million in the prior year quarter and $784 million in the
quarter ended September 30, 1997, respectively. The increase in the current
quarter compared to the prior year quarter was due to higher total leasing
revenue. Total leasing revenue of $578 million for the quarter ended December
31, 1997 represented an increase of 18% compared to the year earlier period. The
decrease in total revenue in the current quarter compared to the fourth quarter
of fiscal 1997 was due to reduced revenue from sales. Total leasing revenue was
$580 million in the fourth quarter of fiscal 1997.
The increase in lease volume, particularly during the last nine quarters,
coupled with lower margins on large systems transactions, has resulted in lower
margins on leasing, particularly for operating leases. Operating lease revenue
minus operating lease cost was $89 million, or 19.9% of operating lease revenue
(collectively, the "Operating Lease Margin"), and $85 million, or 21.8% of
operating lease revenue, in the three months ended December 31, 1997 and 1996,
respectively. The Operating Lease Margin was $84 million, or 19.6% in the
quarter ended September 30, 1997. The Company expects the Operating Lease Margin
to decline from current levels throughout fiscal 1998 because of the continued
pressure from New Leases and the lower margins on large systems.
Revenue from sales, which includes remarketing and buy/sell activities, totaled
$51 million in the first quarter of fiscal 1998 compared to $46 million in the
year earlier quarter. Sales from distributed systems equipment as well as sales
from the Company's electronics group, both of which generally have higher
margins as compared to large system sales, decreased in the current year period
compared to the year earlier period. Margins on sales were 22% and 35% in the
quarters ended December 31, 1997 and 1996, respectively.
Revenue from continuity and network services activities for the three months
ended December 31, 1997 and 1996 was $104 million and $84 million, respectively,
a 24% increase. Cost of continuity and network services activities for the three
months ended December 31, 1997 and 1996 was $86 million and $71 million,
respectively, a 21% increase.
Other revenue for the quarter ended December 31, 1997 and 1996 was $11 and $13
million, respectively. Revenue from the sale of equity positions held as a
result of the Company's lease financing transactions with early-stage high
technology companies for each of the quarters ended December 31, 1997 and 1996
was $7 million.
Total costs and expenses for the quarter ended December 31, 1997 was $688
million compared to $584 million in the prior year period. The increase in total
costs and expenses is primarily due to increased leasing costs related to
increasing operating lease revenue.
Selling, general and administrative expenses totaled $62 million in the quarter
ended December 31, 1997 compared to $59 million in the quarter ended December
31, 1996 and $63 million in the quarter ended September 30, 1997. The primary
reason of the increase in the current year quarter compared to the year earlier
period is increased advertising costs resulting from the Company's current
advertising campaign designed to increase awareness of the Comdisco name and its
services.
Interest expense for the three months ended December 31, 1997 totaled $81
million in comparison to $73 million and $78 million in the quarters ended
December 31, 1996 and September 30, 1997, respectively. The increase in the
current quarter is due to higher average daily borrowings resulting from
increased leased assets at September 30, 1997 and an increase in equipment
purchased for lease during the current quarter compared to the year earlier
period.
Financial Condition
- -------------------
The Company's current financial resources and estimated cash flows from
operations are considered adequate to fund anticipated future growth and
operating requirements. The Company utilizes a variety of financial instruments
to fund its short and long-term needs.
Capital expenditures for equipment are financed by cash flows from operations,
recourse debt, or by assigning the noncancelable lease rentals to various
financial institutions at fixed interest rates on a nonrecourse basis. Cash
provided by operating activities for the three months ended December 31, 1997
was $611 million, compared to $523 million for the year earlier period. Cash
provided by operations has been used to finance equipment purchases and,
accordingly, had a positive impact on the level of borrowing required to support
the Company's investment in its lease portfolio.
Note on Forward-Looking Information
- -----------------------------------
Certain statements herein and in the future filings by the Company with the
Securities and Exchange Commission and in the Company's written and oral
statements made by or with the approval of an authorized executive officer
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
and the Company intends that such forward-looking statements be subject to the
safe harbors created thereby. The words and phrases "looking ahead," "we are
confident," "should be," "will be," "predicted," "believe," "expect" and
"anticipate" and similar expressions identify forward-looking statements. These
forward-looking statements reflect the Company's current views with respect to
future events and financial performance, but are subject to many uncertainties
and factors relating to the Company's operations and business environment which
may cause the actual results of the company to be materially different from any
future results expressed or implied by such forward-looking statements. Examples
of such uncertainties include, but are not limited to, the volume of New Leases,
fair market value volatility in large systems, changes in customer demand and
requirements, attaining the expected level of remarketing (which will require
equipment for remarketing, appropriate sales force education and incentive and a
knowledge of the customer and customer requirements), financial mix of leases
written, new product announcements, continued growth of the semiconductor
industry, trend of movement to client/server environment, interest rate
fluctuations, changes in federal income tax laws and regulations, competition,
including competition from other technology service providers, reductions in
technology budgets and related spending plans and price competition from other
technology service providers. The growth in leasing volume during the last two
fiscal years has increased the proportion of leases for new equipment to total
leases. New Leases traditionally have lower earnings contributions than leases
for remarketed equipment. Accordingly, the increase in lease volume has put
pressure on leasing margins. With respect to economic conditions, a recession
can cause customers to put off new investments and increase the Company's bad
debt experience. In addition, the recent economic turmoil in Asia may have an
impact on the regions semiconductor manufacturing industry, which in turn would
have an impact on the Company's diversified technology business. Continued
pressures on credit in Asia and the Asian economy in general, could also impact
the domestic economy and/or the Company's multinational customer base. The
financial mix of leases written in a quarter is a result of a combination of
factors, including, but not limited to, changes in customer demands and/or
requirements, new product announcements, price changes, changes in delivery
dates, changes in maintenance policies and the pricing policies of equipment
manufacturers, and price competition from other lessors. The Company undertakes
no obligation to publicly update or revise any forward-looking statements
whether as a result of new information, further events or otherwise.
-11-
<PAGE>
Part II Other Information
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
a) The Annual Meeting of Shareholders was held on January 20, 1998.
b) The five nominees, Alan J. Andreini, Robert A. Bardagy, Philip A. Hewes,
Thomas H. Patrick and Nicholas K. Pontikes listed in the Company's Notice of
Annual Meeting of Stockholders and Proxy Statement dated and mailed December 22,
1997 were elected to the Board of Directors of the Company for a term of three
years.
Nominee Votes Cast For Percent of Votes Cast
Alan J. Andreini ... 54,692,630 84%
Robert A. Bardagy .. 54,675,700 84%
Philip A. Hewes .... 55,126,383 85%
Thomas H. Patrick .. 55,118,987 85%
Nicholas K. Pontikes 55,122,501 85%
c)(i) As set forth in the Company's Notice of Annual Meeting of Stockholders and
Proxy Statement dated and mailed December 22, 1997 as Item 2, approval of the
1998 Employee Stock Purchase Plan to be a successor to the Comdisco 1982
Employee Stock Purchase Plan which terminated December 31, 1997. There were
56,767,239 (76%) common shares voted for this proposal, 1,159,853 (2%) common
shares voted against, 406,820 (less than 1%), common shares abstained and
15,984,818, (22%) were not voted. The affirmative vote of the holders of a
majority of all votes entitled to be cast at the Annual Meeting was required for
approval of this proposal.
c)(ii) As set forth in the Company's Notice of Annual Meeting of Stockholders
and Proxy Statement dated and mailed December 22, 1997, as Item 3, approval of
an amendment to Comdisco's Restated Certificate of Incorporation to increase the
number of authorized shares of Comdisco Common Stock from 200,000,000 to
750,000,000. There were 40,712,147 (85%) common shares voted for this proposal,
23,897,805 (32%) common shares voted against, 437,108 (less than 1%) common
shares abstained and 9,271,670 (12%) were not voted. The affirmative vote of the
holders of a majority of all votes entitled to be cast at the Annual Meeting was
required for approval of this proposal.
c)(iii) As set forth in the Company's Notice of Annual Meeting of Stockholders
and Proxy Statement dated and mailed December 22, 1997, as Item 4, approval of
KPMG Peat Marwick LLP, independent certified public accountants, as auditors, to
audit the financial statements for fiscal 1998 and to perform other accounting
services, as appropriate. There were 64,851,045 (87%) common shares voted for
this proposal, 119,506 (less than 1%)common shares voted against, 76,509 (less
than 1%) common shares abstained and 9,271,670 (12%) were not voted.
-12-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits:
Exhibit No. Description of Exhibit
- ----------- ---------------------------------------------------------------
3.01 Restated Certificate of Incorporation of Registrant dated
February 12, 1988
Incorporated by reference to Exhibit 4.1 filed with the
Company's Registration Statement on Forms S-8 and S-3, File
No. 33-20715, filed March 8, 1988.
3.02 Certificate of amendment of Restated Certificate of
Incorporation
3.03 By-Laws of Registrant dated November 4, 1997
Incorporated by reference to Exhibit 4.1 filed with the
Company's Current Report on Form 8-K dated November 12,
1997, as filed with the Commission November 14, 1997, File
No. 1-7725.
3.04 Certificate of Designations with respect to the Company's 8
3/4% Cumulative Preferred Stock, Series B, as filed with the
Secretary of the State of Delaware on July 2, 1994.
Incorporated by reference to Exhibit 4.1 filed with the
Company's Current Report on Form 8-K dated June 30, 1994, as
filed with the Commission July 21, 1994, File No. 1-7725.
3.05 Certificate of Designation, Preferences and Right of Series C
Junior Participating Preferred Stock
Incorporated by reference to Exhibit 4.1 filed with the
Company's Current Report on Form 8-K dated November 5, 1997,
as filed with the Commission November 6, 1997, File No.
1-7725)
4.04 Rights Agreement, dated as of November 17, 1997, between the
Registrant and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent, which includes as Exhibit A thereto the
Certificate of Designation, Preferences and Right of Series C
Junior Participating Preferred Stock and as Exhibit B thereto
the Form of Rights Certificate.
Incorporated by reference to Exhibit 4.1 filed with the
Company's Current Report on Form 8-K dated November 5, 1997,
as filed with the Commission November 6, 1997 File No.
1-7725.
4.02 Indenture Agreement between Registrant and Yasuda Bank and
Trust Company (USA), as Trustee dated as of December 1, 1995
Incorporated by reference to Exhibit 4.1 filed with the
Company's Current Report on Form 8-K dated January 12, 1996,
as filed with the Commission on January 17, 1996, File No.
1-7725, the copy of the Indenture dated as of December 1,
1995 between the Registrant and Yasuda Bank and Trust
Company (USA), as Trustee.
-13-
<PAGE>
Exhibit No. Description of Exhibit
- ----------- ---------------------------------------------------------------
11 Computation of Earnings Per Common Share
12 Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
b) Reports on Form 8-K:
On January 8, 1998, the Company filed a current report on
Form 8-K, dated January 7, 1998, reporting Item 7. Financial
Statements and Exhibits. The filing contained exhibits
relating to the Company's 6.125% Notes Due January 15, 2003.
-14-
<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 thereunto duly authorized.
COMDISCO, INC.
Registrant
Date: February 13, 1998 /s/David J. Keenan
David J. Keenan
Senior Vice President and
Controller
-15-
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
Comdisco, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting
duly held, adopted a resolution setting forth a proposed amendment to the
Restated Certificate of Incorporation of said corporation, declaring said
amendment to be advisable and calling a meeting of the stockholders of said
corporation for consideration thereof. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, that the Restated Certificate of Incorporation of Comdisco,
Inc. be amended by changing the Fourth Article thereof so that, as
amended, said Article shall be and read as follows:
The aggregate number of shares which Comdisco shall have authority to
issue is 850,000,000 of which 750,000,000 shares shall be designated
as "Common Stock" of the par value of $0.10 per share and 100,000,000
shares shall be designated as "Preferred Stock" of the par value of
$0.10 per share.
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the stockholders of said corporation was duly
called and held, upon written waiver of notice signed by all stockholders at
which meeting the necessary number of shares as required by statute were voted
in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said Comdisco, Inc. has caused this certificate to
be signed by Philip A. Hewes, its Senior Vice President and Secretary, this
Third day of February, 1998.
Comdisco, Inc.
By:/s/Philip A. Hewes
Senior Vice President and Secretary
Comdisco, Inc. and Subsidiaries Exhibit 11
COMPUTATION OF EARNINGS PER COMMON SHARE
(in millions except per share data)
Average shares used in computing net earnings per common and common equivalent
share were as follows:
Three months
ended
December 31
1997 1996
---- ----
Average shares outstanding ......................... 74 73
Effect of dilutive options ......................... 6 5
---- ----
Total ........................................... 80 78
==== ====
Net earnings available
to common stockholders ......................... $ 34 $ 28
==== ====
Net earnings per common share
Basic ..................................... $.46 $.39
==== ====
Diluted ................................... $.43 $.37
==== ====
Comdisco, Inc. and Subsidiaries Exhibit 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(dollars in millions)
<TABLE>
<CAPTION>
Three months ended
December 31, For the years ended September 30,
1997 1996 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed charges
Interest expense <F1> ...................................... $ 82 $ 73 $301 $267 $278 $266 $295
Approximate portion of
rental expense representative
of an interest factor .................................... 1 1 4 7 11 13 22
---- ---- ---- ---- ---- ---- ----
Fixed charges .............................................. 83 74 305 274 289 279 317
Earnings from continuing operations
before income taxes and
extraordinary item, and cumulative
effect of change in accounting principle,
net of preferred stock dividends .......................... 54 47 203 176 160 80 137
---- ---- ---- ---- ---- ---- ----
Earnings from continuing operations
before income taxes, extraordinary item,
cumulative effect of change
in accounting principle, net of
preferred stock dividend ................................... $137 $121 $508 $450 $449 $359 $454
==== ==== ==== ==== ==== ==== ====
Ratio of earnings to fixed charges ........................... 1.65 1.64 1.67 1.64 1.55 1.29 1.43
==== ==== ==== ==== ==== ==== ====
Rental expense:
Equipment subleases ........................................ $ 2 $ 2 $ 6 $ 14 $ 22 $ 30 $ 57
Office space, furniture, etc ............................... 2 2 7 8 10 8 8
---- ---- ---- ---- ---- ---- ----
Total ................................................... $ 4 $ 4 $ 13 $ 22 $ 32 $ 38 $ 65
==== ==== ==== ==== ==== ==== ====
1/3 of rental expense ................................... $ 1 $ 1 $ 4 $ 7 $ 11 $ 13 $ 22
==== ==== ==== ==== ==== ==== ====
<FN>
<F1> Includes interest expense incurred by continuity and network services and included in continuity and network services
expenses on the statements of earnings.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information
extracted from the Quarterly Report on Form 10-Q
for the quarter ended December 31, 1997 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000722487
<NAME> Comdisco, Inc.
<MULTIPLIER> 1,000,000
<CURRENCY> dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> Oct-01-1997
<PERIOD-END> Dec-31-1997
<EXCHANGE-RATE> 1
<CASH> 26
<SECURITIES> 0
<RECEIVABLES> 287
<ALLOWANCES> 18
<INVENTORY> 188
<CURRENT-ASSETS> 2,993
<PP&E> 7,699
<DEPRECIATION> 2,307
<TOTAL-ASSETS> 6,482
<CURRENT-LIABILITIES> 1,799
<BONDS> 2,368
0
21
<COMMON> 11
<OTHER-SE> 795
<TOTAL-LIABILITY-AND-EQUITY> 6,482
<SALES> 578
<TOTAL-REVENUES> 744
<CGS> 419
<TOTAL-COSTS> 607
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81
<INCOME-PRETAX> 56
<INCOME-TAX> 20
<INCOME-CONTINUING> 36
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34
<EPS-PRIMARY> 0.460
<EPS-DILUTED> 0.430
</TABLE>
