EX-99.1 2 d20146exv99w1.htm PRESS RELEASE exv99w1
 

EXHIBIT 99.1

(DELL LOGO) NEWS

MEDIA CONTACTS:
T.R. Reid, Mike Maher
(512) 728-7977, (512) 723-2575
tr_reid@dell.com
mike_maher@dell.com

INVESTOR CONTACTS:
Lynn A. Tyson, Robert Williams
(512) 723-1130, (512) 728-7570
lynn_tyson@dell.com
robert_williams@dell.com



RECORD REVENUE, EARNINGS AND CASH FLOW IN THE THIRD QUARTER
DISTINGUISH DELL’S BEST-EVER OPERATING PERIOD
Company Anticipates $13.5 Billion in Revenue, EPS of 36 Cents in Q4

ROUND ROCK, Texas, Nov. 11, 2004 — Record global product shipments, revenue, operating and net income, earnings per share and cash from operations made Dell’s fiscal third-quarter 2005 the best reporting period in its history.

     Dell revenue increased 18 percent from the same quarter a year ago to $12.5 billion, led by continued strong growth of 27 percent in Europe, Middle East and Africa and 25 percent in Asia-Pacific and Japan. Growth in the United States was led by a 20-percent increase in spending by business customers.

     Earnings per share were 33 cents, up 27 percent, for the quarter ended Oct. 29.

                                                 
    Third Quarter
   Year to Date
(in millions, except share data)
   FY'05
   FY'04
   Change
   FY '05
   FY'04
   Change
                                                 
Revenue
   $ 12,502     $ 10,622       18 %   $ 35,748     $ 29,932       19 %
Operating Income
   $ 1,095     $ 912       20 %   $ 3,067     $ 2,563       20 %
Net Income
   $ 846     $ 677       25 %   $ 2,376     $ 1,896       25 %
Earnings Per Share
   $ 0.33     $ 0.26       27 %   $ 0.92     $ 0.72       28 %

     “The record quarter is testament to the company’s superb team executing a better business model,” said Kevin Rollins, Dell chief executive officer. “An improving component cost environment further favors Dell, with customers and shareholders the primary beneficiaries.

     “Dell’s disciplined focus on profitable growth around the world and across businesses continues to differentiate us in the market. We’ve been doing that for years.”

- more -

 

 

     According to Mr. Rollins, Dell’s fourth-quarter product shipments should be about 20 percent higher than in the same year-ago period. Such growth is expected to produce quarterly revenue of about $13.5 billion, up 17 percent, and earnings per share of 36 cents, a 24-percent increase.

     In the third quarter, Dell’s operating profit improved to 8.8 percent of revenue, the company’s highest rate in four years. The company generated a record $1.8 billion in cash from operations, and total cash and investments rose to $12.4 billion. Dell spent $1.3 billion to repurchase 38 million shares of its common stock, bringing total shares repurchased year to date to 97 million—reducing weighted average shares outstanding by almost 3 percent for the year.

Dell Posts Strong Growth in All Global Regions

     Dell established an industry record for worldwide shipments, selling a combined eight million standards-based servers, notebook computers and desktop computers in the quarter. The company’s shipment growth of 22 percent—highlighted by a 35-percent increase in notebook computer volumes—was double the rate of the industry excluding Dell.

     Third-quarter shipments in Europe, Middle East and Africa (EMEA) were up 31 percent, a 15-point premium to the rest of the market. Server shipments in the region increased 24 percent, earning Dell nearly two points of server market share for the quarter.

     In Asia-Pacific and Japan (APJ), company-shipment growth of 25 percent was nearly three times the rate of the market excluding Dell. Revenue from enterprise systems, including servers and storage, increased 27 percent.

- more -

 

 

     Dell also established an industry record for unit shipments in the U.S., surpassing five million systems in the quarter, and increased its market share by nearly two points to 33 percent. Among highlights in the Americas: revenue from small- and medium-sized businesses increased more than 23 percent, and revenue outside the U.S. was particularly strong, up 30 percent from the same year-ago period.

Servers, Printers, Services Highlight Product Leadership

     Dell’s 19-percent year-over-year increase in worldwide server shipments enabled the company to close the gap with the category leader by more than two share points. In the U.S., the company expanded its No. 1 server position by nearly two points, to nearly 33 percent. A new Technology Business Review survey again firmly ranked Dell No. 1 in customer satisfaction for standards-based servers.

     Worldwide revenue from software and peripheral products increased 37 percent year-over-year. Strong customer demand has the company on track to exceed selling five million printers and generating more than $1 billion in imaging and printing revenue this year. During the third quarter, the company introduced its first generation of color laser printers for business and institutional customers, as well as two new printers with advanced digital photography features for consumers.

     Dell’s enhanced-services business continued to grow strongly, with a year-over-year revenue increase of 32 percent. Combined enhanced-services revenue for EMEA and APJ grew almost 60 percent.

- more -

 

 

About Dell

     Dell Inc. (NASDAQ: DELL) is a premier provider of products and services required for customers worldwide to build their information-technology and Internet infrastructures. Company revenue for the past four quarters totaled $47.3 billion. Dell, through its direct business model, designs, manufactures and customizes products and services to customer requirements, and offers an extensive selection of software and peripherals. Information on Dell and its products can be obtained at www.dell.com.

# # #

Dell is a trademark of Dell Inc.
Market comparisons based on IDC data.
Dell disclaims any proprietary interest in the marks and names of others.

Special note: Statements in this press release that relate to future results and events (including statements about fiscal fourth-quarter financial and operating performance) are based on the company’s current expectations. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, including general economic and business conditions; the level of demand for the company’s products and services; the level and intensity of competition in the technology industry and the pricing pressures that have resulted; the company’s ability to timely and effectively manage periodic product transitions, as well as component availability and cost; the company’s ability to develop new products based on new or evolving technology and the market’s acceptance of those products; the company’s ability 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; the company’s ability to effectively manage its operating costs; and the effect of armed hostilities, terrorism or public health issues on the economy generally, on the level of demand for the company’s products and services and on the company’s ability to manage its supply and delivery logistics in such an environment. Additional discussion of these and other factors affecting the company’s business and prospects is contained in the company’s periodic filings with the Securities and Exchange Commission.

Consolidated statements of income, financial position and cash flows follow.

 

 

DELL INC.
Condensed Consolidated Statement of Operations and Related Financial Highlights
(in millions, except per share data)
(unaudited)

                                         
    Three Months Ended
   % Growth Rates
    October 29,   July 30,   October 31,  
    2004
   2004
   2003
   Sequential
   Yr. to Yr.
Net revenue
   $ 12,502     $ 11,706     $ 10,622       6.8 %     17.7 %
Cost of revenue
     10,189       9,572       8,687       6.4 %     17.3 %
 
    
 		      
 		      
 		                  
Gross margin
     2,313       2,134       1,935       8.4 %     19.6 %
Selling, general and administrative
     1,101       1,008       905       9.2 %     21.6 %
Research, development and engineering
     117       120       118       (2.7 %)     (1.0 %)
 
    
 		      
 		      
 		                  
Total operating expenses
     1,218       1,128       1,023       8.0 %     19.0 %
 
    
 		      
 		      
 		                  
Operating income
     1,095       1,006       912       8.9 %     20.1 %
Investment and other income, net
     48       46       41       4.3 %     16.1 %
 
    
 		      
 		      
 		                  
Income before income taxes
     1,143       1,052       953       8.7 %     20.0 %
Income tax provision
     297       253       276       17.8 %     7.8 %
 
    
 		      
 		      
 		                  
Net income
   $ 846     $ 799     $ 677       5.8 %     24.9 %
 
    
 		      
 		      
 		                  
Earnings per common share:
                                        
Basic
   $ 0.34     $ 0.32     $ 0.26                  
 
    
 		      
 		      
 		                  
Diluted
   $ 0.33     $ 0.31     $ 0.26                  
 
    
 		      
 		      
 		                  
Weighted average shares outstanding:
                                        
Basic
     2,493       2,518       2,563                  
Diluted
     2,546       2,574       2,623                  
Percentage of Total Net Revenue:
                                        
Gross margin
     18.5 %     18.2 %     18.2 %                
Selling, general and administrative
     8.8 %     8.6 %     8.5 %                
Research, development and engineering
     0.9 %     1.0 %     1.1 %                
Total operating expenses
     9.7 %     9.6 %     9.6 %                
Operating income
     8.8 %     8.6 %     8.6 %                
Income before income taxes
     9.1 %     9.0 %     9.0 %                
Net income
     6.8 %     6.8 %     6.4 %                
Income tax rate
     26.0 %     24.0 %     29.0 %                
Net Revenue by Geographic Region:
                                        
Percentage of Total Net Revenue
                                        
Americas
     68 %     68 %     71 %                
Europe
     21 %     21 %     19 %                
Asia Pacific — Japan
     11 %     11 %     10 %                
Net Revenue by Product Line:
                                        
Percentage of Total Net Revenue
                                        
Desktops
     49 %     49 %     50 %                
Notebooks
     30 %     29 %     28 %                
Enterprise
     21 %     22 %     22 %                

Note: Percentage growth rates and ratios are calculated based on underlying data in thousands.

 

 

DELL INC.
Condensed Consolidated Statement of Operations and Related Financial Highlights
(in millions, except per share data)
(unaudited)

                         
    Nine Months Ended
   % Growth
Rates
    October 29,   October 31,  
    2004
   2003
   Yr. to Yr.
Net revenue
   $ 35,748     $ 29,932       19.4 %
Cost of revenue
     29,228       24,471       19.4 %
 
    
 		      
 		          
Gross margin
     6,520       5,461       19.4 %
Selling, general and administrative
     3,100       2,553       21.4 %
Research, development and engineering
     353       345       2.4 %
 
    
 		      
 		          
Total operating expenses
     3,453       2,898       19.2 %
 
    
 		      
 		          
Operating income
     3,067       2,563       19.7 %
Investment and other income, net
     143       131       9.3 %
 
    
 		      
 		          
Income before income taxes
     3,210       2,694       19.2 %
Income tax provision
     834       798       4.5 %
 
    
 		      
 		          
Net income
   $ 2,376     $ 1,896       25.3 %
 
    
 		      
 		          
Earnings per common share:
                        
Basic
   $ 0.94     $ 0.74          
 
    
 		      
 		          
Diluted
   $ 0.92     $ 0.72          
 
    
 		      
 		          
Weighted average shares outstanding:
                        
Basic
     2,517       2,568          
Diluted
     2,572       2,620          
Percentage of Total Net Revenue:
                        
Gross margin
     18.2 %     18.2 %        
Selling, general and administrative
     8.7 %     8.5 %        
Research, development and engineering
     1.0 %     1.2 %        
Total operating expenses
     9.7 %     9.7 %        
Operating income
     8.6 %     8.6 %        
Income before income taxes
     9.0 %     9.0 %        
Net income
     6.6 %     6.3 %        
Income tax rate
     26.0 %     29.6 %        
Net Revenue by Geographic Region:
                        
Percentage of Total Net Revenue
                        
Americas
     67 %     70 %        
Europe
     22 %     20 %        
Asia Pacific — Japan
     11 %     10 %        
Net Revenue by Product Line:
                        
Percentage of Total Net Revenue
                        
Desktops
     50 %     51 %        
Notebooks
     29 %     27 %        
Enterprise
     21 %     22 %        

Note: Percentage growth rates and ratios are calculated based on underlying data in thousands.

 

 

DELL INC.
Condensed Consolidated Statement of Financial Position and Related Financial Highlights
(in millions, except for “Ratios” and “Other information”)
(unaudited)

                         
    October 29,   July 30,   October 31,
    2004
   2004
   2003
Assets:
                        
Current assets:
                        
Cash and cash equivalents
   $ 4,525     $ 4,025     $ 4,356  
Short-term investments
     2,969       1,509       626  
Accounts receivable, net
     4,167       3,625       3,142  
Inventories
     415       418       358  
Other
     2,124       2,055       1,599  
 
    
 		      
 		      
 		  
Total current assets
     14,200       11,632       10,081  
Property, plant and equipment, net
     1,627       1,578       1,498  
Investments
     4,942       6,276       6,050  
Other non-current assets
     285       446       496  
 
    
 		      
 		      
 		  
Total assets
   $ 21,054     $ 19,932     $ 18,125  
 
    
 		      
 		      
 		  
Liabilities and Stockholders’ Equity:
                        
Current liabilities:
                        
Accounts payable
   $ 8,067     $ 7,444     $ 6,851  
Accrued and other
     4,707       3,877       3,350  
 
    
 		      
 		      
 		  
Total current liabilities
     12,774       11,321       10,201  
Long-term debt
     505       505       506  
Other non-current liabilities
     1,895       1,899       1,540  
 
    
 		      
 		      
 		  
Total liabilities
     15,174       13,725       12,247  
Stockholders’ equity
     5,880       6,207       5,878  
 
    
 		      
 		      
 		  
Total liabilities and stockholders’ equity
   $ 21,054     $ 19,932     $ 18,125  
 
    
 		      
 		      
 		  
Ratios:
                        
Quick ratio
     0.91       0.81       0.80  
Days supply in inventory
     4       4       4  
Days of sales outstanding (a)
     33       31       31  
Days in accounts payable
     71       70       71  
 
    
 		      
 		      
 		  
Cash conversion cycle
     (34 )     (35 )     (36 )
Other Information:
                        
Headcount (approximate)
     53,000       50,000       44,300  
Average total revenue/unit (approximate)
   $ 1,570     $ 1,610     $ 1,620  

Note: Ratios are calculated based on underlying data in thousands.

(a)   Days of sales outstanding include the effect of product costs related to in-transit customer shipments that are classified in other current assets. At October 29, 2004, July 30, 2004, and October 31, 2003, days of sales outstanding included days of sales in accounts receivable and days of in-transit customer shipments of 30 and 3 days; 28 and 3 days; and 27 and 4 days, respectively.

 

 

DELL INC.
Condensed Consolidated Statement of Cash Flows
(in millions)
(unaudited)

                 
    Three Months   Nine Months
    Ended
   Ended
    October 29, 2004
Cash flows from operating activities:
                
Net income
   $ 846     $ 2,376  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     82       243  
Tax benefits from employee stock plans
     40       110  
Other, primarily effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies
     (85 )     (248 )
Changes in:
                
Operating working capital
     915       726  
Non-current assets and liabilities
     (11 )     285  
 
    
 		      
 		  
Net cash provided by operating activities
     1,787       3,492  
Cash flows from investing activities:
                
Investments:
                
Purchases
     (2,765 )     (9,484 )
Maturities and sales
     2,692       9,177  
Capital expenditures
     (139 )     (355 )
 
    
 		      
 		  
Net cash used in investing activities
     (212 )     (662 )
Cash flows from financing activities:
                
Purchase of common stock
     (1,327 )     (3,349 )
Issuance of common stock under employee plans
     154       464  
Other
     (17 )     (17 )
 
    
 		      
 		  
Net cash used in financing activities
     (1,190 )     (2,902 )
Effect of exchange rate changes on cash and cash equivalents
     115       280  
 
    
 		      
 		  
Net increase in cash and cash equivalents
     500       208  
Cash and cash equivalents at beginning of period
     4,025       4,317  
 
    
 		      
 		  
Cash and cash equivalents at end of period
   $ 4,525     $ 4,525