Highlights from Compaq's 10K.
Keith and thread : here are some highlights from CPQ's 10K
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February 19, 1998
COMPAQ COMPUTER CORP (CPQ)
Annual Report (SEC form 10-K)
We expect to consummate the merger in the second quarter of 1998.
SALES
Sales for 1997 increased approximately $4.6 billion or 23% over the prior year as compared with an increase of $3.3 billion or 20% during 1996. North American sales, which include Canada, increased 26% during 1997, compared with an increase of 29% during 1996. International sales, excluding Canada, represented 45% of total sales in 1997 as compared with 47% in 1996. European sales increased 21% during 1997 compared to an increase of 10% during 1996. Other international sales increased 15% during 1997, compared with an increase of 14% during 1996. Other international markets experienced adverse market conditions in 1997. In particular, the weakness in the Asian and Japanese markets resulted in an aggressive pricing environment throughout 1997.
In 1997, Compaq's worldwide unit sales increased 43% while they increased 23% in 1996.... According to third-party estimates, worldwide unit sales of personal computers increased approximately 15% to 16% in 1997, in contrast to a 16% to 18% increase in 1996.
In addition, in May 1997, Compaq completed a cash tender offer for substantially all of its outstanding $150 million 6-1/2% Senior Notes Due March 15, 1999 and $150 million 7-1/4% Senior Notes Due March 15, 2004. Compaq paid approximately $298 million (excluding accrued interest) for the tendered notes. Also in May 1997, Compaq completed its cash tender offer for Microcom for $288 million.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Risks of Newly Acquired Businesses. Compaq plans to use strategic acquisitions and mergers to assist in the growth of its business.
Subject to certain regulatory approvals and approval by Digital shareholders, Compaq will expand its service offerings and enterprise solutions through the merger with Digital. At that time, Compaq will confront a number of risks associated with Digital's business. Compaq believes that the Digital merger will enhance its operating results, but as with any significant acquisition or merger, Compaq confronts challenges in retaining key employees, synchronizing product roadmaps and business processes, and integrating logistics, marketing, product development, and manufacturing operations to achieve greater efficiencies.
Compaq benefits from a tax holiday in Singapore which expires in 2001, with a potential extension to August 2004 if certain cumulative investment levels and other conditions are met.
Equity incentive plans - At December 31, 1997, there were 230,765,000 shares of common stock reserved by the Board of Directors for issuance under Compaq's employee stock option plans. .
From time to time, Compaq hedges a portion of its anticipated but not firmly committed sales of its international marketing subsidiaries using purchased foreign currency options.
Compaq may, from time to time, hedge commitments for inventory purchases and capital expenditures and other items constituting firm commitments.
NOTE 11. SUBSEQUENT EVENT
On January 26, 1998, Compaq announced the execution of an agreement to acquire Digital Equipment Corporation. Under the terms of the transaction, shareholders of Digital will receive $30 in cash and 0.945 shares of Compaq common stock for each share of Digital stock. Compaq will issue approximately 150 million shares of Compaq common stock and $4.8 billion in cash. This transaction will be accounted for as a purchase. The transaction is subject to the approval of Digital's shareholders as well as clearance under antitrust laws and other customary closing conditions, and is expected to be completed in the second quarter of 1998. |
