<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MAY 3, 1998
COMMISSION FILE NUMBER: 0-17017
DELL COMPUTER CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 74-2487834
(State of incorporation) (I.R.S. Employer ID No.)
ONE DELL WAY
ROUND ROCK, TEXAS 78682
(Address of principal executive offices)
(512) 338-4400
(Telephone number)
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 TWELVE MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ]
AS OF THE CLOSE OF BUSINESS ON JUNE 9, 1998, 632,956,288 SHARES OF THE
REGISTRANT'S COMMON STOCK, PAR VALUE $.01 PER SHARE, WERE OUTSTANDING.
================================================================================
<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DELL COMPUTER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(IN MILLIONS AND UNAUDITED)
<TABLE>
<CAPTION>
MAY 3, FEBRUARY 1,
1998 1998
----------- -----------
ASSETS
<S> <C> <C>
Current assets:
Cash ........................................................................... $ 444 $ 320
Marketable securities .......................................................... 1,965 1,524
Accounts receivable, net ....................................................... 1,536 1,486
Inventories .................................................................... 254 233
Other .......................................................................... 349 349
------- -------
Total current assets .................................................... 4,548 3,912
Property, plant and equipment, net ................................................ 391 342
Other ............................................................................. 15 14
------- -------
Total assets ............................................................ $ 4,954 $ 4,268
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................................... $ 1,727 $ 1,643
Accrued and other .............................................................. 996 1,054
------- -------
Total current liabilities ............................................... 2,723 2,697
Long-term debt .................................................................... 512 17
Deferred revenue on warranty contracts ............................................ 238 225
Other ............................................................................. 57 36
------- -------
Total liabilities ....................................................... 3,530 2,975
------- -------
Stockholders' equity:
Preferred stock and capital in excess of $.01 par value; shares authorized: 5;
shares issued and outstanding: none ........................................ -- --
Common stock and capital in excess of $.01 par value; shares authorized: 1,000;
shares issued and outstanding : 639 and 644, respectively .................. 890 747
Retained earnings .............................................................. 590 607
Other .......................................................................... (56) (61)
------- -------
Total stockholders' equity .............................................. 1,424 1,293
------- -------
Total liabilities and stockholders' equity .............................. $ 4,954 $ 4,268
======= =======
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
1
<PAGE> 3
DELL COMPUTER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(IN MILLIONS AND UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
MAY 3, MAY 4,
1998 1997
-------- -------
<S> <C> <C>
Net revenue ........................................... $3,920 $2,588
Cost of revenue ....................................... 3,047 2,030
------ ------
Gross margin ........................................ 873 558
------ ------
Operating expenses:
Selling, general and administrative ................. 388 240
Research, development and engineering ............... 56 41
------ ------
Total operating expenses .......................... 444 281
------ ------
Operating income .................................. 429 277
Financing and other ................................... 7 10
------ ------
Income before income taxes .......................... 436 287
Provision for income taxes ............................ 131 89
------ ------
Net income .......................................... $ 305 $ 198
====== ======
Basic earnings per common share (in whole dollars)..... $ 0.48 $ 0.29
====== ======
Diluted earnings per common share (in whole dollars)... $ 0.44 $ 0.27
====== ======
Weighted average shares outstanding:
Basic ............................................... 637 675
====== ======
Diluted ............................................. 700 734
====== ======
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
2
<PAGE> 4
DELL COMPUTER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN MILLIONS AND UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MAY 3, MAY 4,
1998 1997
--------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income ....................................................... $ 305 $ 198
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ................................ 22 14
Other ........................................................ 4 6
Changes in:
Operating working capital ...................................... 92 82
Non-current assets and liabilities ............................. 34 18
------- -------
Net cash provided by operating activities .................... 457 318
------- -------
Cash flows from investing activities:
Marketable securities:
Purchases ...................................................... (3,127) (2,490)
Maturities and sales ........................................... 2,686 2,422
Capital expenditures ............................................. (71) (32)
------- -------
Net cash used in investing activities ........................ (512) (100)
------- -------
Cash flows from financing activities:
Proceeds from issuance of long-term debt, net of issuance costs ... 494 --
Purchase of common stock .......................................... (334) (199)
Issuance of common stock under employee plans ..................... 20 8
Cash received from sale of equity options ......................... -- 4
------- -------
Net cash provided by (used in) financing activities ........... 180 (187)
------- -------
Effect of exchange rate changes on cash ............................. (1) (6)
------- -------
Net increase in cash ............................................... 124 25
Cash at beginning of period ........................................ 320 115
------- -------
Cash at end of period .............................................. $ 444 $ 140
======= =======
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3
<PAGE> 5
DELL COMPUTER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Dell
Computer Corporation (the "Company") should be read in conjunction with the
consolidated financial statements and notes thereto filed with the Securities
and Exchange Commission in the Company's Annual Report on Form 10-K for the
fiscal year ended February 1, 1998. In the opinion of management, the
accompanying condensed consolidated financial statements reflect all adjustments
of a normal recurring nature considered necessary to present fairly the
financial position of the Company and its consolidated subsidiaries at May 3,
1998 and February 1, 1998, and the results of their operations and their cash
flows for the three-month periods ended May 3, 1998 and May 4, 1997.
NOTE 2 -- INVENTORIES (IN MILLIONS)
<TABLE>
<CAPTION>
MAY 3, FEBRUARY 1,
1998 1998
-------- ----------
Inventories:
<S> <C> <C>
Production materials ........................... $ 208 $ 189
Work-in-process and finished goods ............. 46 44
------- -------
$ 254 $ 233
======= =======
</TABLE>
NOTE 3 -- DEBT ISSUANCE
In April 1998, the Company issued $200 million 6.55% fixed rate senior notes due
April 15, 2008 (the "Senior Notes") and $300 million 7.10% fixed rate senior
debentures due April 15, 2028 (the "Senior Debentures"). Interest on the Senior
Notes and Senior Debentures is paid semi-annually. The Senior Notes and Senior
Debentures are redeemable, in whole or in part, at the election of the Company
for principal, any accrued interest and a redemption premium based on the
present value of interest to be paid over the term of the debt agreements. The
Senior Notes and Senior Debentures generally contain no restrictive covenants,
other than a limitation on liens on the Company's assets and a limitation on
sale-leaseback transactions.
Concurrent with the issuance of the Senior Notes and Senior Debentures, the
Company entered into interest rate swap agreements converting the Company's
interest rate exposure from a fixed rate to a floating rate basis to better
align the associated interest rate characteristics to its cash and marketable
securities portfolio. The interest rate swap agreements have an aggregate
notional amount of $200 million maturing April 15, 2008 and $300 million
maturing April 15, 2028. The floating rates are based on three-month London
interbank offered rates ("LIBOR") plus .40% and .79% for the Senior Notes and
Senior Debentures, respectively. As a result of the interest rate swap
agreements, the Company's effective interest rates for the Senior Notes and
Senior Debentures were 6.09% and 6.48%, respectively, for the first quarter of
fiscal 1999.
The Company has designated the issuance of the Senior Notes and Senior
Debentures and the related interest rate swap agreements as an integrated
transaction. Accordingly, the differential to be paid or received on the
interest rate swap agreements is accrued and recognized as an adjustment to
interest expense as interest rates change.
4
<PAGE> 6
NOTE 4 -- COMPREHENSIVE INCOME
The Company adopted Statement of Financial Accounting Standards No. 130 ("SFAS
130"), "Reporting Comprehensive Income" during the quarter ended May 3, 1998.
SFAS 130 establishes new rules for the reporting and presentation of
comprehensive income and its components. The Company's comprehensive income is
comprised of net income, foreign currency translation adjustments and unrealized
gains and losses on marketable securities held as available-for-sale
investments. Comprehensive income of $306 million and $193 million for the
three-month periods ended May 3, 1998 and May 4, 1997, respectively, was not
materially different from reported net income.
NOTE 5 -- EARNINGS PER COMMON SHARE
Basic earnings per share is based on the weighted effect of all common shares
issued and outstanding, and is calculated by dividing net income available to
common stockholders by the weighted average shares outstanding during the
period. Diluted earnings per share is calculated by dividing net income
available to common stockholders by the weighted average number of common shares
used in the basic earnings per share calculation plus the number of common
shares that would be issued assuming conversion of all potentially dilutive
common shares outstanding. The following table sets forth the computation of
basic and diluted earnings per share (in millions, except per share amounts):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------
MAY 3, MAY 4,
1998 1997
----------- -----------
<S> <C> <C>
Net income............................................... $ 305 $ 198
========== =========
Weighted average shares outstanding - Basic ............. 637 675
Employee stock options and other ........................ 63 59
---------- ---------
Weighted average shares outstanding - Diluted ........... 700 734
========== =========
Earnings per common share:
Basic ................................................ $ 0.48 $ 0.29
Diluted .............................................. $ 0.44 $ 0.27
</TABLE>
NOTE 6 -- LEGAL MATTERS
The Company is subject to various legal proceedings and claims arising in the
ordinary course of business. The Company's management does not expect that the
outcome in any of these legal proceedings, individually or collectively, will
have a material adverse effect on the Company's financial condition, results of
operations or cash flows.
5
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
All percentage amounts and ratios were calculated using the underlying data in
thousands. Operating results for the three-month period ended May 3, 1998, are
not necessarily indicative of the results that may be expected for the full
fiscal year.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage of
consolidated net revenue represented by certain items in the Company's condensed
consolidated statement of income.
<TABLE>
<CAPTION>
PERCENTAGE OF CONSOLIDATED NET REVENUE
--------------------------------------
THREE MONTHS ENDED
--------------------------------------
MAY 3, MAY 4, FEBRUARY 1,
1998 1997 1998
---------- --------- ---------------
<S> <C> <C> <C>
Net revenue:
Americas .................................. 66.6% 67.4% 67.0%
Europe .................................... 26.5 24.9 26.5
Asia Pacific and Japan .................... 6.9 7.7 6.5
----- ----- -----
Consolidated net revenue ............... 100.0 100.0 100.0
Cost of revenue ............................. 77.7 78.4 78.0
----- ----- -----
Gross margin ........................... 22.3 21.6 22.0
Operating expenses:
Selling, general and administrative ....... 9.9 9.3 9.9
Research, development and engineering ..... 1.5 1.6 1.5
----- ----- -----
Total operating expenses ............... 11.4 10.9 11.4
----- ----- -----
Operating income ....................... 10.9 10.7 10.6
Financing and other ......................... 0.2 0.4 0.4
----- ----- -----
Income before income taxes ................ 11.1 11.1 11.0
Provision for income taxes .................. 3.3 3.4 3.4
----- ----- -----
Net income ............................. 7.8% 7.7% 7.6%
===== ===== =====
</TABLE>
Net Revenue
Consolidated net revenue increased 52% in the first quarter of fiscal 1999
compared to the first quarter of fiscal 1998, and increased 5% over the fourth
quarter of fiscal 1998.
The increase in consolidated net revenue was primarily attributable to increased
units sold. Unit volumes increased 66% and 11% in the first quarter of fiscal
1999 compared to the first and fourth quarters, respectively, of fiscal 1998.
Unit shipments increased across all product lines for the first quarter of
fiscal 1999 compared to the first and fourth quarters of fiscal 1998. Desktop
products continue to remain the primary driver of unit volumes, comprising 80%
of total units shipped during the first quarter of fiscal 1999. However, the
growth rate in enterprise systems (which include both servers and workstations)
and notebooks exceeded the growth rate of desktop products. During the first
quarter of fiscal 1999, enterprise units increased 226% compared to the first
quarter of fiscal 1998, and on a sequential basis increased 17%. Notebook
products increased 100% in the first quarter of fiscal 1999 compared to the same
period of the prior fiscal year, and increased 18% sequentially.
The effect of the increased unit volumes on consolidated net revenue for the
first quarter of fiscal 1999 compared to the first and fourth quarters of fiscal
1998 was partially offset by a decline in average revenue per unit of 9% and 6%,
respectively. The decrease in average revenue per unit was attributable to price
reductions as a result of component cost declines.
6
<PAGE> 8
Net revenue increased in all geographic regions in the first quarter of fiscal
1999 as compared to the same period of fiscal 1998. Net revenue for the first
quarter of 1999 compared to the first quarter of 1998 increased 50% in the
Americas region, 62% in Europe and 35% in Asia-Pacific and Japan.
The sequential increase in net revenue of 5% from the fourth quarter of fiscal
1998 to the first quarter of fiscal 1999 was attributable to revenue growth
across all regions where the Asia-Pacific and Japan region grew 11%, Europe grew
5% and the Americas region grew 4%.
Gross Margin
The Company's gross margin as a percentage of consolidated net revenue increased
to 22.3% in the first quarter of fiscal 1999, from 21.6% for the first quarter
of fiscal 1998. This increase resulted primarily from component cost declines,
which were partially offset by price reductions, and a product mix shift to
enterprise systems and notebook products which typically have higher gross
margins. The Company's gross margin as a percentage of consolidated net revenue
increased slightly from the fourth quarter of fiscal 1998.
Operating Expenses
Selling, general and administrative expenses increased as a percentage of
consolidated net revenue to 9.9% for the first quarter of fiscal 1999, from 9.3%
in the comparable period of the prior fiscal year, and remained sequentially
flat. The increase from the first quarter of fiscal 1998 was due primarily to
the Company's increased staffing worldwide and increased infrastructure
expenses, including those for information systems, to support the Company's
continued growth.
Research, development and engineering expenses increased in absolute dollar
amounts due to increased staffing levels and product development costs required
to meet the demand of product transition cycles.
Although total operating expenses may continue to increase in absolute dollar
terms, the Company's goal is to manage these expenses, over time, relative to
its net revenue and gross margin.
Income Taxes
The Company's effective tax rate was 30.0% for the first quarter of fiscal 1999,
compared with 31.0% for the first and fourth quarters of fiscal 1998. The
decrease in the Company's effective tax rate resulted from changes in the
geographical distribution of its income and losses.
LIQUIDITY AND CAPITAL RESOURCES
The following table presents selected financial statistics and information:
<TABLE>
<CAPTION>
MAY 3, FEBRUARY 1,
1998 1998
------------ --------------
( DOLLARS IN MILLIONS)
<S> <C> <C>
Cash and marketable securities....................................... $ 2,409 $ 1,844
Working capital...................................................... $ 1,825 $ 1,215
Days of sales in accounts receivable................................. 35 36
Days of supply in inventory.......................................... 8 7
Days in accounts payable............................................. 51 51
</TABLE>
Operating cash flows were $457 million for the first quarter of fiscal 1999,
which benefited from the Company's net income performance and continued focus on
asset management.
7
<PAGE> 9
During the first quarter of fiscal 1999, the Company repurchased 10 million
shares of common stock for an average cost of $32 per share. The Company is
currently authorized to repurchase up to 50 million additional shares of its
common stock and anticipates that such repurchases will constitute a significant
use of future cash resources. At May 3, 1998, the Company held equity option
arrangements that entitle the Company to purchase 40 million additional shares
of common stock for an average cost of $48 per share at various times through
the third quarter of fiscal 2000.
The Company utilized $71 million in cash during the first three months of fiscal
1999 to improve and equip facilities. Capital expenditures for fiscal 1999 are
expected to be approximately $360 million.
In April 1998, the Company issued $200 million in Senior Notes and $300 million
in Senior Debentures. See Note 3 of Notes to Condensed Consolidated Financial
Statements.
During fiscal 1998, the Company entered into a master lease facility
("Facility"), which provides for the ability to lease certain real property,
buildings and equipment to be constructed or acquired. The lessor has agreed to
fund up to $227 million under the Facility. At May 3, 1998, $73 million of the
Facility had been utilized.
Management believes that the Company will have sufficient resources available to
meet its cash requirements for the foreseeable future, including working capital
requirements, planned capital expenditures and stock repurchases.
FACTORS AFFECTING THE COMPANY'S BUSINESS AND PROSPECTS
There are numerous factors that affect the Company's business and the results of
its operations. These factors include general economic and business conditions;
the level of demand for personal computers; the level and intensity of
competition in the personal computer industry and the pricing pressures that may
result; the ability of the Company to timely and effectively manage periodic
product transitions and component availability; the ability of the Company to
develop new products based on new or evolving technology and the market's
acceptance of those products; the ability of the Company to manage its inventory
levels to minimize excess inventory, declining inventory values and
obsolescence; the product, customer and geographic sales mix of any particular
period; and the Company's ability to continue to improve its infrastructure
(including personnel and systems) to keep pace with the growth in its overall
business activities; and the Company's ability to ensure its products and
information systems and those of its third party providers will be Year 2000
compliant. For a discussion of these and other factors affecting the Company's
business and prospects, see "Item 1 -- Business --Factors Affecting the
Company's Business and Prospects" in the Company's Annual Report on Form 10-K
for the fiscal year ended February 1, 1998.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Concurrent with the issuance of the Senior Notes and Senior Debentures,
described above, the Company entered into interest rate swap agreements
converting the Company's interest rate exposure from a fixed rate to a floating
rate basis to better align the associated interest rate characteristics to its
cash and marketable securities portfolio. The interest rate swap agreements have
an aggregate notional amount of $200 million maturing April 15, 2008 and $300
million maturing April 15, 2028. The floating rates are based on three-month
LIBOR rates plus .40% and .79% for the Senior Notes and Senior Debentures,
respectively. As a result of the interest rate swap agreements, the Company's
effective interest rates for the Senior Notes and Senior Debentures were 6.09%
and 6.48%, respectively, for the first quarter of fiscal 1999. Any basis point
increase or decrease in interest rates would result in an equivalent increase or
decrease in the Company's effective interest rates for the Senior Notes and
Senior Debentures. However, the effects of such changes would be mitigated by
offsetting trends in the Company's cash and marketable securities portfolio.
For a description of the Company's other market risks, see disclosures in "Item
II - Management's Discussion and Analysis of Financial Condition and Results of
Operations - Market Risk" in the Company's Annual Report on Form 10-K for the
fiscal year ended February 1, 1998.
8
<PAGE> 10
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to various legal proceedings and claims arising in the
ordinary course of business. The Company's management does not expect that the
results in any of these legal proceedings will have a material adverse effect on
the Company's financial condition, results of operations or cash flows.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
The following exhibits are filed as part of this Report:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- -----------------------
4.1 Indenture, dated as of April 27, 1998, between Dell Computer
Corporation and Chase Bank of Texas, National Association
(incorporated by reference to Exhibit 99.2 of the Company's
Current Report on Form 8-K filed April 28, 1998)
4.2 Officers' Certificate pursuant to Section 301 of the
Indenture establishing the terms of the Company's 6.55%
Senior Notes Due 2008 (incorporated by reference to Exhibit
99.3 of the Company's Current Report on Form 8-K filed April
28, 1998)
4.3 Officers' Certificate pursuant to Section 301 of the
Indenture establishing the terms of the Company's 7.10%
Senior Debentures Due 2028 (incorporated by reference to
Exhibit 99.3 of the Company's Current Report on Form 8-K
filed April 28, 1998)
4.4 Form of the Company's 6.55% Senior Notes Due 2008
(incorporated by reference to Exhibit 99.5 of the Company's
Current Report on Form 8-K filed April 28, 1998)
4.5 Form of the Company's 7.10% Senior Debentures Due 2028
(incorporated by reference to Exhibit 99.6 of the Company's
Current Report on Form 8-K filed April 28, 1998)
27 Financial Data Schedule
(b) Reports on Form 8-K.
On April 28, 1998, the Company filed a Current Report on Form 8-K
reporting under "Item 5 - Other Events" the completion of the issuance and sale
of $200 million of 10-year 6.55% Senior Notes and $300 million of 30-year 7.10%
Senior Debentures. No financial statements were included in such filing.
9
<PAGE> 11
SIGNATURE
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.
DELL COMPUTER CORPORATION
June 11, 1998 /s/ James M. Schneider
------------------------------------
James M. Schneider
Vice President, Finance
(On behalf of the registrant and as
chief accounting officer)
10
<PAGE> 12
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
4.1 Indenture, dated as of April 27, 1998, between Dell Computer
Corporation and Chase Bank of Texas, National Association
(incorporated by reference to Exhibit 99.2 of the Company's
Current Report on Form 8-K filed April 28, 1998)
4.2 Officers' Certificate pursuant to Section 301 of the
Indenture establishing the terms of the Company's 6.55%
Senior Notes Due 2008 (incorporated by reference to Exhibit
99.3 of the Company's Current Report on Form 8-K filed April
28, 1998)
4.3 Officers' Certificate pursuant to Section 301 of the
Indenture establishing the terms of the Company's 7.10%
Senior Debentures Due 2028 (incorporated by reference to
Exhibit 99.3 of the Company's Current Report on Form 8-K
filed April 28, 1998)
4.4 Form of the Company's 6.55% Senior Notes Due 2008
(incorporated by reference to Exhibit 99.5 of the Company's
Current Report on Form 8-K filed April 28, 1998)
4.5 Form of the Company's 7.10% Senior Debentures Due 2028
(incorporated by reference to Exhibit 99.6 of the Company's
Current Report on Form 8-K filed April 28, 1998)
27 Financial Data Schedule
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DELL
COMPUTER CORPORATION FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTH PERIOD
ENDED MAY 3, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-01-1999
<PERIOD-END> MAY-03-1998
<CASH> 444
<SECURITIES> 1,965
<RECEIVABLES> 1,563
<ALLOWANCES> 27
<INVENTORY> 254
<CURRENT-ASSETS> 4,548
<PP&E> 577
<DEPRECIATION> 186
<TOTAL-ASSETS> 4,954
<CURRENT-LIABILITIES> 2,723
<BONDS> 512
0
0
<COMMON> 890
<OTHER-SE> 534
<TOTAL-LIABILITY-AND-EQUITY> 4,954
<SALES> 3,920
<TOTAL-REVENUES> 3,920
<CGS> 3,047
<TOTAL-COSTS> 3,047
<OTHER-EXPENSES> 56<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1
<INCOME-PRETAX> 436
<INCOME-TAX> 131
<INCOME-CONTINUING> 305
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 305
<EPS-PRIMARY> .48
<EPS-DILUTED> .44
<FN>
<F1>ITEM CONSISTS OF RESEARCH, DEVELOPMENT AND ENGINEERING.
</FN>
</TABLE>
