Hewlett-Packard Company <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %>

3000 Hanover Street

Palo Alto, CA 94304-1185

(415) 857-1501

http://www1.hp.com/ahp/home.html

UNION CITY, Ca., August 16, 1996/FOOLWIRE/ --- Hewlett-Packard reported Q3 1996 results and held their quarterly conference call for analysts after the market close yesterday. The company reported net earnings of $425 million or $0.40 per share.

HP described the quarter just ended as one of the most challenging they have had in quite a while, and the task of explaining it is equally challenging. What sets this quarter apart is that the factors impacting HP's results were greater in number and complexity than usual. This makes it difficult to characterize the results simply and concisely. The company feels that the forces affecting their results are a combination of things -- some are peculiar to the quarter and some are ongoing trends and the company stated that it is not always clear which category a particular factor is in.

The stronger dollar reduced order and revenue growth for HP by about 3% in the quarter. In terms of recent yen/dollar relationships, this quarter is a tough comparison because the yen was in the low 80s a year ago. The dollar has weakened a bit compared to the average rate in Q3 and, while they don't know what the future holds, it is likely that they will have a decreasing currency impact going forward.

ORDERS

Total orders grew 8% in dollars and 11% in local currency, finishing at $8.7 billion, which they admit is not up to the growth levels in prior quarters, but feel is still reasonable against a tough comparison both in terms of growth rate and currency effect. One element of change in HP's order growth rates is clear from their geographic results. Last quarter they talked specifically about slowing in Europe. This quarter they saw real slowing in the US and Asia/Pacific as well. In the US they went from 33% growth last quarter and 34% in the year ago quarter to 4% growth this quarter. The degree of this slowdown was surprising to HP. In addition, Asia/Pacific orders slowed a great deal. They grew 24% last quarter, 43% a year ago, and just 9% this quarter. US orders totalled $3.9 billion and international orders rose 11% to $4.8 billion or 55% of the total.

Orders from Europe rose 12% in local currency, and 9% in dollars. The four top performers in terms of order growth were Italy, Belgium, the UK and the Netherlands. There was slowing in the Middle East, Africa, the Nordic region, and Eastern Europe. They also saw a significant slowdown in Germany, France, and Switzerland partially impacted by a 4% currency impact. Asia Pacific orders grew 21% in dollars without Japan. Growth was paced by Austral-Asia and Korea. Orders were down in Japan by 4% in dollars, but grew 14% in local currency. In Canada, orders were flat tracking the US's slower growth. Latin America bounced back strongly with 54% growth when compared to last year's weak performance due to Mexico.

While HP has said in the past that they did not expect to maintain the 20%+ growth rates they have seen over the last two years, the swiftness and scope of this change in order growth is striking. There are some HP-specific factors in this slowdown. Beyond that, it does appear that significant segments of their customer base have undergone changes in their buying and capital spending behavior.

There are several other forces worth discussing when looking at the order slowdown. First is the base period effect. HP is comparing to one of the strongest growth quarters in HP's history (Q3 1995), with especially strong product introduction effects. In their view, about 3 points of their reduced order growth rate this quarter is due to the comparison to an exceptionally strong base period.

Second is currency, which as they noted, reduced their dollar-based order growth by about 3 percentage points.

The decision to exit the disk mechanism business is impacting business by about 2 percentage points. This is due to the fact that HP cancelled some $60 million (in Q3) disk mechanism orders this year compared to a period last year when they were taking new orders.

Next, orders from some segments of the electronics industry have slowed dramatically. Here they are referring to components, which are down 39% compared to a very strong year-ago quarter as well as semiconductor test equipment. Both of these effects are somewhat comparable to what is being seen from other semiconductor and semiconductor equipment companies. These effects are worth approximately 2 percentage points on HP's overall orders.

Finally, the impact of slower orders from the reseller channel is noteworthy. As they said in the press release, this is particularly evident in PCs and inkjet printers. Both these businesses achieved solid growth and their competitive position remains strong. In fact, the sell-through data continues to indicate good demand and increased market share compared with a year ago.

With regard to inkjets, they feel there has been too much inventory in the channel over the past several months. Some of this inventory is theirs, but most of it was from some of their competitors. There has been excess capacity in supply in inkjets which has hurt not only the ordering patterns this quarter, but has also negatively effected the pricing environment they operate in.

In the case of PCs as well, they concluded several months ago that their profitability was being impacted by too much channel inventory which translated into excessive price-protection costs, inventory writedowns, etc. So, during the past quarter, HP has been actively trying to manage channel orders and inventory more effectively. They have been working with a number of their channel partners to reduce their incoming orders with HP and, in some cases, to cancel outstanding orders. They believe this effect is also worth approximately 2 percentage points in growth.

HP was negatively impacted by order cancellations due to channel balancing and their exit from the disk mechanism business. They had a head-wind from currency versus last year and a tough compare against last year. They think many of these issues are behind them and in most markets their competitive position is solid.

In summary, some of these forces appear to be particular to the quarter, others could well be more fundamental. Their view is that this quarter's 8% order growth understates the basic strength of their businesses. However, the forces they described and their effects are very real and they are making adjustments to the changing environment these effects are creating. Another point to consider is that, in those businesses that sell through resellers, it may be the case that revenue is a better indicator of real demand. They consider their 18% revenue growth a strong, but not spectacular outcome.

REVIEW OF ORDER GROWTH BY PRODUCT AREA

Hardcopy Products -- The LaserJet business slowed to single-digit growth from the prior year, although they saw increased strength as they went through the quarter. Their marketshare data indicates that they have held or increased their position. Regionally, orders were slow in the US, Canada, and Japan, but strong in Europe, Asia/Pacific, and Latin America. The LaserJet 5 was introduced in Q2 1996. They saw slowing into the channel early in the quarter as the channel digested the new product, but then saw momentum growing by the end of this quarter. Additionally, when compared to a year ago, unit volumes were flat and average selling prices declined when compared to last year's LaserJet 4 family. They continue to show strength in personal LaserJets and high-end new products. The Color LaserJet 5, introduced in March of this year, continues to be a winner in the marketplace, helping to establish that market. LaserJet supplies continued with strong growth in all geographies. This business is still growing at historical levels.

Scanners, due to two new product introductions -- the high-resolution SJ4C and the low-cost SJ4P color scanners -- have done very well in year-over-year growth.

Inkjet products slowed to growth in the high teens while maintaining market share. In North America, the slowing was primarily in the Personal InkJet area. Channel inventories were heavy as HP neared the end of the major product roll-over and worked to sell through the older models in anticipation of the Fall buying season. This quarter also represents a return to their more normal seasonal pattern in which demand slackens until the Back-to-School and Christmas season. Additionally, it is a difficult comparison to Q3 1995's unusually outstanding performance because at that time they introduced the eagerly awaited low-end DeskJet 600 and completed worldwide rollout of the DeskJet 660 and 850. This quarter they did see two new product offerings aimed at the business market that favorably impacted performance -- the DeskJet 870 and the DeskJet 820, the small-office/home-office printer. This last printer was released in other markets earlier, but newly released in Europe this quarter. Again, they find supplies for the inkjets growing at high historical levels. They have the DeskJet 400 at a street price of $199. If you take a look at where the 600 and 650 were back then, they were much higher. On the other hand, they have been able from a margin standpoint to work on the margins associated with the DeskJet 400, so they have been able to see improved margins because of the way it is engineered and designed and they are going to have to leverage off of that. That is why it was important for them to want to move those 600s and 650s out of the channel as early as possible before the Back-to-School and Christmas season, to reposition themselves.

PCs -- Good growth continues in HP's PC business this quarter over last year, but is sequentially down from last quarter due to channel clearing and seasonality issues mentioned above in the discussion of hardcopy products. They didn't experience the phenomenal rates they've seen in past quarters. When compared to a blistering Q3 1995, this quarter's growth was more in line with industry-forecasted growth rates, with the US particularly strong. In the US and Europe, they saw modest desktop growth as a result of the VL4 Pentium family coming off allocation. With the availability of the VL4, the channel cancelled orders for the older models. HP believes that the channel-clearing exercise is mostly behind them as they enter Q4. Orders for Intel-based PC servers maintained excellent growth through continued acceptance of their Netserver family. Orders for high-end servers have more than doubled this year and were close to doubling in Q3. Low-end servers have also grown close to those levels. Orders and revenue for the Pavilion line are meeting HP's expectations and they have transitioned the product line for the Back-to-School and Christmas seasons. Photodrive models continue to do well for the emerging home photography and home image cut-and-paste market. From a regional perspective European growth was about equal to the US for the full quarter. They have seen recent slowing in Europe, but the US momentum remains strong. European growth came from the net servers and mobile. Asia Pacific and Latin America were strong across the product range.

Information storage -- HP closed the disk memory division and most people have that information but not perhaps the amount of orders cancelled. HP cancelled $60 million in disk mechanism orders as part of their plan to exit the business. They are in the process of redeploying the people from the disk drive business, they are not being laid off, so you are not going to see a change in overall headcount. Other parts of HP that would be hiring will take on these people. The majority of the expenses relative to the DMD closure have been taken already in Q3. They estimated when they preannounced last month that they expected $25 million or so in Q4 and that estimate is still okay. Digital audio tapes are seeing good growth, with the strongest growth in Asia Pacific. The CD writer business was down sharply due to aggressive competitive pricing pressures, but they saw an uptick in July in response to their promotional and pricing programs.

UNIX -- HP's overall UNIX business slowed from the very strong pace of recent history. Servers are strong but the rate of growth slowed due to weaker telecom orders in the US, unfavorable currency impacts, and a tough comparison to the extremely strong growth rates last year. In Q4 they begin delivery of their PA8000 K-class servers to an eager customer base. Their workstation business remains soft and below last year's results. The real problem was getting a product out on time and getting it accepted. They believe they have a fast processor and they need to make sure they have all the ISVs signed up from an applications standpoint and that is what they are focused on. Despite the PA8000's excellent chip performance, customers are waiting for application performance to improve before they buy. HP is working closely with their software partners to tune their applications to take full advantage of the workstation's improved performance. They are about on plan with their board upgrade program for their installed base with particular success in their larger accounts. They continue to see strength in OpenView, disk arrays, and their PSO business.

Test and Measurement -- Overall orders were up 10% from last year with the pace led by US broad-based order strength. European growth was slow and was impacted by their overcapacity in the RF Communications manufacturing sector. Asia Pacific growth has slowed to 7% due to the yen currency impact versus last year and slow semiconductor test business. Local currency growth in Japan was strong at 24% which translates into 7% dollar growth. Both Canada and Latin America experienced good growth for the quarter. On the product side, the weakness in the semiconductor equipment business has slowed overall growth. Non-semiconductor test business outperformed the overall Test and Measurement growth of 10%.

Components -- Total orders are down significantly in this business, both year over year and sequentially. Continued reduction in component lead times, customer inventory adjustments, and a restructuring in the telecom industry are the primary reasons. This is a real change in the business from just a year ago when orders were up by 44%. Infrared products and their point-and-shoot technology continues their upward growth.

Chemical Analysis -- 2% was the total year-over-year growth in this business. Regional imbalance is the story here. Tremendous growth in Asia Pacific without Japan at well over 45% was offset by weak performance in Japan where dampened spending in the semiconductor and petroleum related businesses was exacerbated by yen depreciation. The US showed negative growth compared to a year ago and was flat when compared sequentially.

Liquid Chromatography -- The liquid chromatography product line continued to post excellent order growth, up 23% from last year. Worldwide acceptance of this line of new products has contributed to its ongoing success.

Medical -- Orders in the Medical Product Group grew 9% over last year. Both the Americas and Asia Pacific showed double-digit growth while growth in orders in Europe declined. The European market's weak performance reflects healthcare reform in Germany and increased competitive pressures. The patient monitoring division, due primarily to a large US-based medical center order led the way with an exceptional performance.

COST OF SALES

This quarter cost of sales as a percent of revenue was up significantly. It was at 68.0% of revenue compared to 63.4% in Q3 1995 and 65.8% in Q2. Excluding the special charges and the cost of this quarter's ongoing operations in the disk mechanism business, the cost of sales ratio was 66% versus the 68% reported. All along they expected to see pressure on gross margin, it's just a question of how much. After adjusting for non-recurring items, the issue this quarter was their inability to offset the gross margin decline with a lower operating expense ratio. The increase from Q2 to Q3 was heavily impacted by the disk mechanism business -- both the special charges as well as the very high cost of sales in ongoing operations.

Beyond that, HP feels there are two factors that deserve particular attention. The first is the pricing environment in printers, especially inkjets (mentioned earlier). There has been a substantial excess of inkjet printers in the channel, more from their competitors than from HP, but nonetheless this excess has created an unforgiving pricing environment. Some of their competitors have cut prices dramatically over the past 6 months or so. Some resellers are promoting PC sales by giving away color inkjet printers. As a result, HP has responded with price cuts of 35-40% on some of their personal inkjet printers. This has increased gross margin pressure in this business significantly.

The second noteworthy factor affecting cost of sales this quarter is the slowdown in businesses such as components and semiconductor test where lower levels of business mean a higher cost of sales as fixed costs are spread over lower volumes than expected.

Beyond that, HP has the usual array of pricing and competitive factors that are ever present in virtually all of their businesses. So, as with orders, the story on cost of sales is more complex than it might first appear. However, HP's basic view on cost of sales is unchanged -- they expect the trend in these costs to be upward and that there will be variability around this trend.

OPERATING EXPENSES

As a percentage of revenue, operating expenses decreased 0.7% from 26% in Q3 1995 to 25.3% this quarter -- not enough to offset the increase in the cost of sales ratio even after the DMD adjustments. Sequentially, this ratio increased 1.6% from 23.7% last quarter. A sequential increase is expected since they typically see lower absolute revenues in Q3 versus Q2 due to seasonal factors. Overall, operating expenses grew 15% over Q3 1995 and actually declined 2% from Q2 -- real good result if not for slower revenue growth. Currency had a 3% positive effect this time, however it was offset by a 3% drag from the Convex acquisition and the DP Tech asset acquisition which were not in last year's numbers. So, the underlying expense growth was still 15%. This means that they achieved a 3% differential between revenue growth and expense growth -- well below their goals and recent results. Given the changing business environment, HP has taken a number of steps to reduce their spending including a cutback on discretionary travel and meetings as well as efforts to adjust their hiring. Overall, they are fairly pleased with the reduction in expense growth but feel they need to do more.

People costs are the main driver of HP's operating expenses and there is a time lag between hiring decisions and their employee count, since they honor outstanding commitments. Additionally, Q3 is the quarter when most college hires come on board. In total HP added about 2500 people during the quarter, some 500 fewer than they added last quarter. About 1700 of this quarter's hires were in cost of sales and 800 were in operating expense categories. The total of new hires in the operating expense category is well below the 1600 people that they added in that category last quarter. They are being very selective where they add people. They do not believe that their hiring is out of line. For years they grew revenues at 20% with people growth in the 3% range. They did that over a 5 year period and there is only so long you can do that. On the other hand, they feel they have a lot of flexibility in how they manage their workforce, both temporary and full time.

SG&A expense was up 12% as reported and 15% adjusted for currency and acquisition effects. Many of the operating expense people were from their college recruiting program which they feel is essential to the vitality of the company and which they didn't want to cut back.

Another important aspect of their expense structure is that, in addition to their regular HP workforce, they attempt to maintain a fair degree of flexibility in their workforce through the use of temporary workers. In this regard, HP is like many other companies. They currently utilize the equivalent of about 13% of their workforce in various temporary assignments, so they do have some flexibility to adjust here if necessary going forward.

R&D spending was up 21% but almost 8% of this was related to acquisitions. R&D expense is also affected by heavy new product introductions which typically occur in Q3. So this result is quite reasonable. One event that affected operating expenses this quarter was the acquisition of the assets of DP Tech. This is a company that has developed some very exciting print resolution enhancements technology. The accounting impact of the acquisition, about $30 million, is mostly reflected in HP's R&D line.

Overall, HP achieved 15% expense growth this quarter, which compares to 23% in Q2. This is real progress, but not yet where they feel they need to be. They feel there is room for further improvement on operating expenses and their goal is to achieve further slowing in future quarters and produce operating margins in the 10-12% range. They have met these goals in the past couple of years and plan to achieve them in the future.

Despite the order slowing, most of HP's businesses achieved strong profit performance in the quarter.

INCOME STATEMENT AND BALANCE SHEET

Revenue for the quarter was $9.1 billion, an increase of 18% over Q3 1995. Sequentially, revenues were down 8%. Typically revenues decline from Q2 to Q3 but this time the magnitude of the decrease was greater than usual. They did report sequential growth in Q3 1995 when revenues slipped from Q2 to Q3 due to product transition issues. However, this quarter's result is more indicative of their historical seasonality. Considering the tough comparison to an unusually strong Q3 last year and a strong dollar compared to last year, 18% revenue growth is pretty good.

From a geographical perspective, US revenue grew by 23% while international grew 14% over Q3 1995. Revenue breakdown this quarter was 46% US and 54% international.

Looking at revenues by major business grouping, computer products and related services grew 20% versus Q3 1995 and declined 8% sequentially. The printer business did reasonably well considering the tough year-over-year comparison and slowing of shipments in the channel given heightened focus on inventory levels in the channel. HP believes that they have either maintained or gained market share in both of their printer businesses. LaserJet revenue growth was in the high single-digits. The noteworthy performers were the Color LaserJet, the ScanJet 4C and 4P, the LaserJet 5L, 4P, and 5SI printers, and the LaserJet supplies business. On the inkjet side, revenue growth moderated from the hot growth rates experienced over the past year but was still very good, again against a very strong Q3 last year. Their fax machines and multi-function products shipped well this quarter as did the DeskJet 800 series. The supplies business did very well as the installed base continues to grow.

PC revenue growth moderated from the tremendous growth rates they have seen in recent quarters but still posted strong revenue growth. PC servers had excellent growth, the Omnibook 5500 performed well, while desktop showed moderate growth. Home PCs were up versus Q3 1995, when they had just entered the business, but down compared to last quarter which is consistent with seasonal patterns. UNIX servers and mass storage had excellent revenue growth while workstation revenues declined versus Q3 1995 and last quarter. They are still in the process of regaining momentum in the workstation marketplace. The PA-8000 chip is performing fine, no production problems but they still are working with their ISVs on tuning their applications to maximize performance on their new machines. They are behind in this process and it may take another quarter for them to get where they need to be. The consulting and professional services business showed moderate revenue growth. Information storage revenues were down significantly both year over year and sequentially due to the performance of the disk memory division where they are exiting the disk mechanism manufacturing business.

Test and measurement revenues were up 12% over Q3 1995 but were down 12% from a very strong Q2. Shipments were very good in all of T&M's businesses including digital IC test which shipped out of a backlog built back in Q4 1995 and Q1 of this year. It is also worth pointing out that T&M built backlog this quarter.

Revenue from the medical products business grew by 10% over Q3 1995 and decreased 8% sequentially. Chemical analysis revenue grew 8% over Q3 last year and decreased 2% sequentially. Components revenue was flat compared to last year and decreased 3% from last quarter.

The interest income and other category was down $7 million versus Q3 1995. Interest expense was up by $31 million over Q3 1995 and up $11 million sequentially due to higher debt levels. The provision for taxes as a percentage of earnings before taxes was 31%, unchanged from the first half. They don't anticipate a change in this rate for the balance of the year.

Operating profits were down 26% from Q3 1995 and operating profit margin was 6.7% compared to 10.6% in Q3 last year. Obviously these numbers were affected heavily by the disk memory situation. Adjusted for DMD special charges and operating losses, operating profit was down only 1% over Q3 1995. Adjusted operating margin was a more respectable 8.8%.

The company reported net earnings of $425 million or $0.40 per share, down 26% over Q3 1995 and down 41% compared to last quarter. The $0.40 comes with some qualifiers -- special charges in disk mechanisms along with the operating losses reduced earnings by about $0.13 per share. DP Tech was worth about $0.02 more in earnings per share. So, while they can't set these effects aside, they were not in last year's $0.55 number. Without the effects, they would have had earnings about equal to last year's strong Q3 -- down only 4% over Q3 1995. Net margin was 4.7% compared to 7.4% last year and 7.3% last quarter. Adjusted net margin would have been 6.1%

Overall, on a sequential basis, they made good progress in accounts receivable. They had a decent outcome on inventory. And, net property, plant, and equipment held reasonably steady as a percent of revenue.

Return on assets was 9.6% and return on equity was 21.2% -- not as good as last quarter, but still very healthy.

Capital spending for the quarter was about $530 million, which brings total spending for the year so far to about $1.5 billion. Like many of their customers and peer companies, they are looking at their spending plans in light of the changing environment. There is a fair chance that HP will end the year a bit below the $2.175 billion that was in their capital spending plan at the start of the year.

The overall outcome on operating cash in the quarter was decent. It was clearly better than the year-ago quarter when they were building inventory rapidly. However, their net cash balance is still negative. Net cash decreased by $155 million during the quarter, ending at -$628 million. They define net cash as cash, marketable securities, and long-term cash included in the Other Assets category, less total debt. The amount of cash in Puerto Rico, which is reported as other assets was unchanged from last quarter at $932 million. The net cash decreased during the quarter as cash used for inventory PPA, share repurchases, and dividends exceeded the amount of cash generated from earnings, accounts receivable, depreciation and amortization, and stock issuances. The main sources of cash during the quarter were net earnings of $425 million, depreciation and amortization of $335 million, and stock issuance of $84 million.

The major uses of cash were a net increase in PP&E of $467 million, an increase in inventory of $158 million, a net increase in other balance sheet items of $353 million, and $123 million in dividends.. They used a significant amount of cash, $337 million, to buy back stock this quarter. This translates to about 8.3 million shares purchased. They are comfortable with this level of purchase given their overall results and other uses of cash. They issued 2.7 million shares, so their shares outstanding declined by 5.6 million shares.

Accounts receivable grew by 15% from Q3 last year on revenue growth of 18%. Sequentially, a decrease in accounts receivable during the quarter also contributed an additional $479 million in cash. Accounts receivable to sales ratio was 17.5% compared to 19.5% last quarter.

Inventories increased by 2% from Q2 while revenues were down 8%. Over Q3 1995, inventories were up 26% on 18% revenue growth. Inventory to sales ratio was 18.5% down slightly from 18.7% last quarter and 18.6% last year. Month's supply of inventory was 3.5 in Q3 this year versus 3.55 in Q3 1995 and 3.26 last quarter. Although month's supply and inventory to sales ratio have at least stabilized, they still haven't made the progress they need to make. While they continue to work on the inventory management process, the buildup in Q3 was related to gearing up for the heavy demand of Back-to-School and holiday seasons and was expected.

As a percentage of revenues net PP&E fell from 15.3% last Q3, to 14% this year. This ratio was flat sequentially. While they have seen the relationship of PP&E to revenue decline for many quarters prior to FY 1996, it has been fairly steady for the past 3 quarters. This reflects the fact that they had to add facilities and people to accommodate the growth they have seen over the past few years. If growth moderates on a sustained basis, they will adjust their capital spending plans accordingly.

Depreciation and amortization amounted to $335 million for the quarter and capital expenditures were $531 million for the quarter.

THOUGHTS ON THE FUTURE

In terms of effects, HP views their exit from the disk mechanism manufacturing and its significant impact on orders, cost of sales, and earnings as transitory. This will be a much smaller effect in Q4. What also may be transitory is the scope of this quarter's currency impact on growth rates. This obviously less certain than they disk mechanism effect, but the current trend is encouraging. They believe that the slower orders from the reseller channel that affected Q3 orders in PCs and printers will improve in Q4. They are pleased with the sell-through data they see and are coming into what is traditionally a heavy selling season. But, this is a highly competitive, very price sensitive arena under any scenario. On the inkjet side in particular, they face very aggressive competitors.

Whether the decline they saw in components and semiconductor test will continue is a difficult call. If history is a reliable guide, the company thinks that softness could continue for awhile longer. It is also not at all clear whether the slowdown in order growth in the US and Asia/Pacific is in the "transitory" or "trend" category. Their sense is that future order growth should be better than this quarter, but not up to the levels they saw earlier this year. In other words, they don't anticipate that near-term growth will match the levels they achieved consistently for the last three years. Their revenue base has grown significantly, the competitive environment is very challenging, and macroeconomic conditions may not support the growth rates of recent quarters. But, HP cautioned not to misread these comments. They believe, as firmly as ever, that they are very well positioned in the markets they serve and that these are attractive markets in which they can earn very good returns.

The company is determined to execute product transitions and new product development programs successfully. They are focused on operating expense management and on continuing to bring inventory into better balance. They remain confident in their ability to capitalize on opportunities in many markets -- PCs, printers, servers, test and measurement, and others. In short, they feel they have the technology, product programs and channel presence to build on their strong presence in many markets. They are sure that the difficult quarter they just finished has increased their determination to turn their strengths into outstanding performance.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.

(c) Copyright 1996, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool.

Transmitted: 8/17/96

Copyright 1996, The Motley Fool
All Rights Reserved. This material is for personal use only.
Republication and redissemination, including posting to news groups,
is expressly prohibited without the prior written consent of The Motley Fool.