-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UhxQfJndilEfeCOTCiPMVS7Hy3tp/dAHMcCN6GTOvicGta8jc19KZm8HgiIfJU29 JJ9reSIDrRDLNaT83G3BAQ== 0000950134-97-006524.txt : 19970912 0000950134-97-006524.hdr.sgml : 19970912 ACCESSION NUMBER: 0000950134-97-006524 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970803 FILED AS OF DATE: 19970903 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELL COMPUTER CORP CENTRAL INDEX KEY: 0000826083 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 742487834 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-17017 FILM NUMBER: 97674942 BUSINESS ADDRESS: STREET 1: 2214 W BRAKER LN STREET 2: STED CITY: AUSTIN STATE: TX ZIP: 78758 BUSINESS PHONE: 5123384400 MAIL ADDRESS: STREET 1: 2112 KRAMER LN - BLDG 1 CITY: AUSTIN STATE: TX ZIP: 78758 10-Q 1 FORM 10-Q FOR QUARTER ENDED AUGUST 3, 1997 1 ================================================================================ 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 AUGUST 3, 1997 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 August 29, 1997, 330,800,822 shares of the registrant's common stock, par value $.01 per share, were outstanding. ================================================================================ 2 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DELL COMPUTER CORPORATION CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IN MILLIONS) (UNAUDITED) ASSETS
AUGUST 3, FEBRUARY 2, 1997 1997 --------- ----------- Current assets: Cash...................................................... $ 194 $ 115 Marketable securities..................................... 1,321 1,237 Accounts receivable, net.................................. 1,133 903 Inventories............................................... 273 251 Other..................................................... 331 241 ------ ------ Total current assets.............................. 3,252 2,747 Property, plant and equipment, net.......................... 288 235 Other....................................................... 12 11 ------ ------ $3,552 $2,993 ====== ====== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $1,285 $1,040 Accrued and other......................................... 778 618 ------ ------ Total current liabilities......................... 2,063 1,658 Deferred revenue............................................ 231 219 Other....................................................... 46 31 ------ ------ Total liabilities................................. 2,340 1,908 ------ ------ Put options................................................. 85 279 ------ ------ 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 issued and outstanding: 333 and 346, respectively........................................... 515 195 Retained earnings......................................... 654 647 Other..................................................... (42) (36) ------ ------ Total stockholders' equity........................ 1,127 806 ------ ------ $3,552 $2,993 ====== ======
The accompanying notes are an integral part of these condensed consolidated financial statements. 1 3 DELL COMPUTER CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME (IN MILLIONS, EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED --------------------- --------------------- AUGUST 3, JULY 28, AUGUST 3, JULY 28, 1997 1996 1997 1996 --------- -------- --------- -------- Net sales........................................... $2,814 $1,690 $5,402 $3,328 Cost of sales....................................... 2,190 1,317 4,220 2,636 ------ ------ ------ ------ Gross margin...................................... 624 373 1,182 692 ------ ------ ------ ------ Operating expenses: Selling, general and administrative............... 280 195 520 377 Research, development and engineering............. 48 28 89 53 ------ ------ ------ ------ Total operating expenses.................. 328 223 609 430 ------ ------ ------ ------ Operating income.......................... 296 150 573 262 Financing and other, net............................ 14 7 24 11 ------ ------ ------ ------ Income before income taxes and extraordinary loss........................................... 310 157 597 273 Provision for income taxes.......................... 96 45 185 79 ------ ------ ------ ------ Income before extraordinary loss.................. 214 112 412 194 Extraordinary loss, net of taxes.................... -- (9) -- (9) ------ ------ ------ ------ Net income................................ $ 214 $ 103 $ 412 $ 185 ====== ====== ====== ====== Earnings per common share: Income before extraordinary loss.................. $ 0.59 $ 0.28 $ 1.13 $ 0.49 Extraordinary loss, net of taxes.................. -- (.02) -- (.02) ------ ------ ------ ------ Earnings per common share......................... $ 0.59 $ 0.26 $ 1.13 $ 0.47 ====== ====== ====== ====== Weighted average shares outstanding................. 364 389 366 391 ====== ====== ====== ======
The accompanying notes are an integral part of these condensed consolidated financial statements. 2 4 DELL COMPUTER CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (IN MILLIONS) (UNAUDITED)
SIX MONTHS ENDED --------------------- AUGUST 3, JULY 28, 1997 1996 --------- -------- Cash flows from operating activities: Net income................................................ $ 412 $ 185 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization.......................... 30 21 Other.................................................. 8 12 Changes in: Operating working capital.............................. 129 335 Non-current assets and liabilities..................... 28 64 ------- ------- Net cash provided by operating activities......... 607 617 ------- ------- Cash flows from investing activities: Marketable securities: Purchases.............................................. (5,317) (4,305) Maturities and sales................................... 5,231 3,986 Capital expenditures...................................... (86) (57) ------- ------- Net cash used in investing activities............. (172) (376) ------- ------- Cash flows from financing activities: Purchase of common stock.................................. (417) (199) Repurchase of 11% Senior Notes............................ -- (68) Issuance of common stock under employee plans............. 36 19 Cash received from sale of equity options................. 28 -- ------- ------- Net cash used in financing activities............. (353) (248) ------- ------- Effect of exchange rate changes on cash..................... (3) (2) ------- ------- Net increase (decrease) in cash............................. 79 (9) Cash at beginning of period................................. 115 55 ------- ------- Cash at end of period....................................... $ 194 $ 46 ======= =======
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 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 2, 1997. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals) considered necessary to present fairly the financial position of the Company and its consolidated subsidiaries at August 3, 1997 and February 2, 1997 and the results of their operations for the three-month and six-month periods ended August 3, 1997 and July 28, 1996. NOTE 2 -- COMMON STOCK On July 18, 1997, the Company's stockholders approved an increase in the number of authorized shares of common stock to one billion. On July 25, 1997, the Company effected a two-for-one common stock split by paying a 100% stock dividend to stockholders of record as of July 18, 1997. All share and per share information included in the accompanying condensed consolidated financial statements and related notes have been restated to reflect the stock split. NOTE 3 -- COMMITMENTS AND CONTINGENCIES 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 or results of operations. NOTE 4 -- EARNINGS PER COMMON SHARE Earnings per common share are computed by dividing net income by the weighted average number of common shares and common stock equivalents (if dilutive) outstanding during each period. Common stock equivalents include stock options and equity option instruments. The number of common stock equivalents outstanding is computed using the treasury stock method. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share." This statement is effective for financial statements issued for periods ending after December 15, 1997 and will require restatement of all prior period comparative amounts. Under this statement, primary and fully diluted earnings per share calculations will be replaced by basic and diluted earnings per share calculations. Diluted earnings per share does not differ from earnings per common share as currently reported. Basic earnings per share for the three month periods ended August 3, 1997 and July 28, 1996 will be $0.64 and $0.29, respectively. For the six month periods then ended, basic earnings per share will be $1.23 and $0.51, respectively. NOTE 5 -- SUPPLEMENTAL FINANCIAL INFORMATION (IN MILLIONS) Supplemental Condensed Consolidated Statement of Financial Position Information:
AUGUST 3, FEBRUARY 2, 1997 1997 --------- ----------- Inventories: Production materials...................................... $234 $223 Work-in-process and finished goods........................ 39 28 ---- ---- $273 $251 ==== ====
4 6 Supplemental Condensed Consolidated Statement of Cash Flows Information:
SIX MONTHS ENDED --------------------- AUGUST 3, JULY 28, 1997 1996 --------- -------- Changes in operating working capital accounts: Accounts receivable, net.................................. $(263) $(105) Inventories............................................... (23) 225 Accounts payable.......................................... 252 244 Accrued and other liabilities............................. 232 (53) Other, net................................................ (69) 24 ----- ----- $ 129 $ 335 ===== =====
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 and six-month periods ended August 3, 1997 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 sales represented by certain items in the Company's condensed consolidated statement of income.
PERCENTAGE OF CONSOLIDATED NET SALES ------------------------------------------- THREE MONTHS ENDED SIX MONTHS ENDED -------------------- -------------------- AUGUST 3, JULY 28, AUGUST 3, JULY 28, 1997 1996 1997 1996 --------- -------- --------- -------- Net sales: Americas....................................... 70.5% 67.5% 69.1% 66.3% Europe......................................... 22.1 25.9 23.4 27.2 Asia Pacific and Japan......................... 7.4 6.6 7.5 6.5 ----- ----- ----- ----- Consolidated net sales...................... 100.0 100.0 100.0 100.0 Cost of sales.................................... 77.8 77.9 78.1 79.2 ----- ----- ----- ----- Gross margin................................ 22.2 22.1 21.9 20.8 Operating expenses: Selling, general and administrative............ 9.9 11.5 9.6 11.3 Research, development and engineering.......... 1.7 1.7 1.6 1.6 ----- ----- ----- ----- Total operating expenses............... 11.6 13.2 11.2 12.9 ----- ----- ----- ----- Operating income....................... 10.6 8.9 10.7 7.9 Financing and other income (expense), net........ 0.4 0.4 0.3 0.3 ----- ----- ----- ----- Income before income taxes and extraordinary loss........................................ 11.0 9.3 11.0 8.2 Provision for income taxes....................... 3.4 2.7 3.4 2.4 ----- ----- ----- ----- Income before extraordinary loss............... 7.6 6.6 7.6 5.8 Extraordinary loss, net of taxes................. -- (0.5) -- (0.3) ----- ----- ----- ----- Net income............................. 7.6% 6.1% 7.6% 5.5% ===== ===== ===== =====
5 7 Net Sales The second quarter of fiscal 1998 marked the Company's fourteenth consecutive quarter of sequential growth in consolidated net sales. Consolidated net sales increased 67% and 62% in the second quarter and first six months, respectively, of fiscal 1998 over the comparable periods of fiscal 1997, and increased 9% over the first quarter of fiscal 1998. The increase in consolidated net sales was primarily attributable to increased units sold but was also positively affected by product mix shift and slightly higher average revenue per unit. Unit volumes increased 61% and 62% in the second quarter and first six months, respectively, of fiscal 1998 compared to the same periods of fiscal 1997. Unit volumes increased 9% in the second quarter of fiscal 1998 compared to the first quarter of fiscal 1998. This unit volume growth reflects strong demand for the Company's products across all product lines. While desktop products continue to remain the primary driver of unit volumes (comprising 85% of total units shipped during the second quarter and first six months of fiscal 1998), the growth rate in the server product line continues to exceed the growth rate of desktop products. During the second quarter and first six months of fiscal 1998, server product units increased 269% and 300%, respectively, over the comparable periods of the prior fiscal year. On a sequential basis, server units increased 29% in the second quarter of fiscal 1998. Notebook products also exhibited strong unit growth increasing 79% and 75% in the second quarter and first six months of fiscal 1998, respectively, compared to the same periods of fiscal 1997. Net sales grew in all geographic regions in the second quarter and first six months of fiscal 1998 as compared with the same periods of fiscal 1997. Growth in net sales was led by the Americas, where net sales increased 74% and 69% in the second quarter and first six months of fiscal 1998, respectively, from the related periods in fiscal 1997. Europe also exhibited strong growth, where net sales increased 42% and 40% in the second quarter and first six months of fiscal 1998, respectively. Additionally, the Asia-Pacific and Japan region continued strong momentum as net sales increased 89% in both the second quarter and first six months of fiscal 1998. The sequential increase in net sales of 9% from the first quarter to the second quarter of fiscal 1998, was attributable primarily to the strong growth in the Americas region of 14%. Net sales in the Asia-Pacific and Japan region increased 5% in the second quarter of fiscal 1998 while Europe experienced a seasonal decline in net sales of 4%. Gross Margin The Company's gross margin as a percentage of consolidated net sales remained relatively flat in the second quarter of fiscal 1998 compared to the second quarter of fiscal 1997. The increase from 20.8% in the first six months of fiscal 1997 to 21.9% in the first six months of fiscal 1998 was driven by the first quarter of each respective period. During the first quarter of fiscal 1998, gross margin was positively affected by component cost declines, partially offset by price reductions, and a shift in product mix to server and higher-end desktop products. On a sequential basis, gross margins increased to 22.2% in the second quarter from 21.6% in the first quarter of fiscal 1998. The increase is the result of several factors, including continued product mix shift to servers and higher-end desktop products and manufacturing efficiencies. Operating Expenses Selling, general and administrative expenses decreased as a percentage of consolidated net sales to 9.9% and 9.6% for the second quarter and first six months of fiscal 1998, respectively, from 11.5% and 11.3% in the comparable periods of the prior fiscal year due to scaling benefits as a result of significant sales growth. However, selling, general and administrative expenses increased as a percentage of consolidated net sales to 9.9% in the second quarter from 9.3% in the first quarter of fiscal 1998. The increase is attributable to increased staffing worldwide and increased spending related to other infrastructure needs to meet the demands of the Company's growth. Research, development and engineering expenses have increased in absolute dollar amounts due to increased staffing levels and product development costs in order to meet the demand of product transition cycles. 6 8 Although spending may continue to increase in absolute dollar terms, the Company's goal is to manage operating expenses, over time, relative to net sales and gross margin. Income Taxes The Company's effective tax rate was 31.0% for the second quarter and first six months of fiscal 1998 compared with 29.0% for the second quarter and first six months of fiscal 1997. The increase in the Company's effective tax rate resulted from changes in the geographical distribution of income and losses. LIQUIDITY AND CAPITAL RESOURCES The following table presents selected financial statistics and information:
AUGUST 3, FEBRUARY 2, 1997 1997 --------- ----------- (DOLLARS IN MILLIONS) Cash and marketable securities.............................. $1,515 $1,352 Working capital............................................. $1,189 $1,089 Days of sales in accounts receivable........................ 37 37 Days of supply in inventory................................. 11 13 Days in accounts payable.................................... 53 54
Cash flows generated from operating activities for the first six months of fiscal 1998 were $607 million and represented the Company's primary source of cash during the quarter. Operating cash flows benefited from the Company's strong net income performance and continued focus on asset management. During the second quarter of fiscal 1998, the Company repurchased 5.7 million shares of common stock for $218 million. The Company is currently authorized to repurchase up to 40.7 million additional shares of its common stock and anticipates that such repurchases will constitute a significant use of future cash resources. At August 3, 1997, the Company held equity instrument arrangements that entitle the Company to purchase 27.0 million additional shares of common stock for an average cost of $50 per share at various times through the third quarter of fiscal 1999. The Company's potential repurchase obligations under put options has decreased from $279 million at February 2, 1997 to $85 million at August 3, 1997, because a significant number of the options that contained net cash or physical settlement terms have expired or have been exercised. The above share and per share information has been restated to reflect the Company's two-for-one stock split effected on July 25, 1997. The Company utilized $86 million in cash during the first six months of fiscal 1998 to construct and equip facilities. Capital expenditures for fiscal 1998 are expected to be approximately $190 million. During the second quarter of fiscal 1998, the Company entered into a $250 million five-year revolving credit facility. This facility replaced a $100 million 364-day revolving credit facility that expired on June 9, 1997 and a $150 million three-year revolving credit facility that was scheduled to expire on June 9, 1999. At August 3, 1997, this new facility was unused. During the first half of fiscal 1998, the Company entered into a $225 million master lease facility, which provides for the ability to lease certain real property, buildings and equipment to be constructed or acquired. 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. 7 9 FACTORS AFFECTING THE COMPANY'S BUSINESS AND PROSPECTS Statements in this Report that relate to future results or events are based on the Company's current expectations. There are many factors that affect the Company's business and the results of its operations and may cause the actual results of operations in future periods to differ materially from those currently expected or desired. 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; foreign currency fluctuations; 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. 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 2, 1997. 8 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 or results of operations. ITEM 2. CHANGES IN SECURITIES On July 18, 1997, the Company's stockholders approved an amendment to the Company's Certificate of Incorporation to increase the number of shares of common stock, par value $.01 per share, that the Company is authorized to issue from 300 million to one billion. The amendment was filed with the Delaware Secretary of State, and became effective, on July 18, 1997. On July 25, 1997, approximately 165 million authorized shares of common stock were issued to complete a two-for-one stock split that had been declared by the Company's Board of Directors on May 20, 1997. The record date for the stock split was July 18, 1997. The remaining authorized but unissued and unreserved shares are available for issuance from time to time for any proper purpose approved by the Company's Board of Directors (including issuances in connection with future stock splits or dividends and issuances to raise capital or effect acquisitions). There are currently no arrangements, agreements or understandings for the issuance or use of the additional shares of authorized common stock (other than issuances permitted or required under the Company's stock-based employee benefit plans or awards made pursuant to those plans). The Board of Directors does not presently intend to seek further stockholder approval of any particular issuance of shares unless such approval is required by law or the rules of The Nasdaq Stock Market. Stockholders do not have any preemptive or similar rights to subscribe for or purchase any additional shares of common stock that may be issued in the future, and therefore, future issuances of common stock may, depending on the circumstances, have a dilutive effect on the earnings per share, voting power and other interests of the existing stockholders. The increase in the number of authorized shares of common stock could have an anti-takeover effect, although that was not its purpose. For example, if the Company were the subject of a hostile takeover attempt, it could try to impede the takeover by issuing shares of common stock, thereby diluting the voting power of the other outstanding shares and increasing the potential cost of the takeover. The availability of this defensive strategy to the Company could discourage unsolicited takeover attempts, thereby limiting the opportunity for the Company's stockholders to realize a higher price for their shares than is generally available in the public markets. The Board of Directors is not aware of any attempt, or contemplated attempt, to acquire control of the Company, and the increase in the number of authorized shares of common stock was not proposed with the intent that it be utilized as a type of anti-takeover device. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meeting of the Company's stockholders was held on July 18, 1997. At that meeting, three proposals were submitted to a vote of the Company's stockholders. Proposal 1 was a proposal to elect two Class III directors (with Claudine B. Malone and Michael A. Miles being the nominees). Proposal 2 was a proposal to approve an amendment to the Company's Certificate of Incorporation to increase the number of authorized shares of common stock from 300 million to one billion. Proposal 3 was a proposal to approve an amendment to the Company's Incentive Plan to (a) provide for automatic periodic increases in the number of shares of common stock that may be awarded thereunder and (b) reduce the number of authorized shares that may be awarded in the form of "Stock Awards" (as defined in the Incentive Plan) from 25% to 20%. At the close of business on the record date for the meeting (which was May 30, 1997), there were 168,177,835 shares of common stock outstanding and entitled to be voted at the meeting. Holders of 145,580,986 shares of common stock (representing a like number of votes) were present at the meeting, either in person or by proxy. 9 11 The following table sets forth the results of the voting on each of the proposals (including, in the case of Proposal 1, the results of the voting with respect to each nominee):
NUMBER OF VOTES ----------------------------------------------- BROKER PROPOSAL FOR AGAINST ABSTAIN NON-VOTE -------- ----------- ---------- ------- ---------- Proposal 1 -- Election of directors: Claudine B. Malone.................. 145,488,486 298,749 -- -- Michael A. Miles.................... 145,559,215 228,020 -- -- Proposal 2 -- Approval of amendment to Certificate of Incorporation........ 125,729,775 19,792,819 264,621 -- Proposal 3 -- Approval of amendment to Incentive Plan...................... 84,197,161 39,330,335 445,451 21,814,288
Consequently, all proposals were passed by the stockholders. For additional discussion concerning Proposal 2 (Amendment to Certificate of Incorporation), see "Item 2 -- Changes in Securities" above. 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 ----------- ---------------------- 3 -- Certificate of Amendment to Certificate of Incorporation, dated and filed on July 18, 1997 10 -- Third Amendment to Dell Computer Corporation Incentive Plan, dated as of July 18, 1997 11 -- Statement Re Computation of Per Share Earnings 27 -- Financial Data Schedule
(b) Reports on Form 8-K. None. 10 12 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 /s/ JAMES M. SCHNEIDER ------------------------------------ James M. Schneider Vice President, Finance (On behalf of the registrant and as chief accounting officer) September 3, 1997 11 13 INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT 3 Certificate of Amendment to Certificate of Incorporation, dated and filed on July 18, 1997 10 Third Amendment to Dell Computer Corporation Incentive Plan, dated as of July 18, 1997 11 Statement Re Computation of Per Share Earnings 27 Financial Data Schedule
12 EX-3 2 CERTIFICATE OF AMENDMENT 1 EXHIBIT 3 DELL COMPUTER CORPORATION CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION Dell Computer Corporation (the "Company"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "DGCL"), hereby certifies as follows: FIRST: The Board of Directors of the Company (the "Board"), acting by unanimous written consent, dated May 20, 1997, in accordance with the applicable provisions of the DGCL and the Company's Bylaws, did duly adopt resolutions (a) approving the amendment to the Company's Certificate of Incorporation described herein, (b) directing that such amendment be submitted to the stockholders of the Company for consideration at the Company's Annual Meeting of Stockholders held on July 18, 1997 and (c) directing that, upon approval and adoption of such amendment by the stockholders of the Company, this Certificate of Amendment be executed and filed with the Secretary of State of the State of Delaware. SECOND: The stockholders of the Company, acting at the Company's Annual Meeting of Stockholders duly called and held on July 18, 1997 in accordance with the applicable provisions of the DGCL and the Company's Bylaws, did duly consent to, approve and adopt such amendment to the Company's Certificate of Incorporation. THIRD: The first paragraph of Article Fourth of the Company's Certificate of Incorporation is hereby amended to read in its entirety as follows: "FOURTH: The total number of shares of capital stock of the Corporation shall be one billion and five million (1,005,000,000), which shall consist of five million (5,000,000) shares of Preferred Stock, of the par value of $.01 per share, and one billion (1,000,000,000) shares of Common Stock, of the par value of $.01 per share." Such amendment having been duly adopted in accordance with the provisions of Section 242 of the DGCL and the applicable provisions of the Company's Certificate of Incorporation and Bylaws, the Company has caused this Certificate of Amendment to be executed and attested by its duly authorized officers on July 18, 1997. DELL COMPUTER CORPORATION By: /s/ MICHAEL S. DELL ---------------------------------- Michael S. Dell, Chairman of the Board and Chief Executive Officer Attest: /s/ THOMAS H. WELCH, JR. - ------------------------------------ Thomas H. Welch, Jr., Assistant Secretary 13 EX-10 3 THIRD AMENDMENT 1 EXHIBIT 10 THIRD AMENDMENT TO DELL COMPUTER CORPORATION INCENTIVE PLAN Dell Computer Corporation, a Delaware corporation (the "Company"), hereby adopts an amendment to the Dell Computer Corporation Incentive Plan, dated June 22, 1994, as amended (the "Incentive Plan"), as specified below. RECITALS A. The Incentive Plan was submitted to, and approved by, the stockholders of the Company at the Company's annual meeting of stockholders held on June 22, 1994. Following such approval, the Incentive Plan was adopted by the Company effective June 22, 1994. The Incentive Plan was subsequently amended effective July 21, 1995 and November 30, 1995. B. The Board of Directors of the Company (the "Board"), acting by unanimous written consent in accordance with the applicable provisions of the General Corporation Law of the State of Delaware (the "DGCL") and the Company's Bylaws, did duly adopt resolutions (1) approving the amendment to the Incentive Plan described herein (subject to the approval of such amendment by the stockholders of the Company), (2) directing that such amendment be submitted to the stockholders of the Company for consideration at the Company's annual meeting of stockholders held on July 18, 1997 and (3) directing that, upon approval and adoption of such amendment by the stockholders of the Company, the Incentive Plan be amended as described herein. C. The stockholders of the Company, acting at the Company's annual meeting of stockholders duly called and held on July 18, 1997 in accordance with the applicable provisions of the DGCL and the Company's Bylaws, did duly consent to, approve and adopt the amendment to the Incentive Plan described. Now, therefore, the Company hereby adopts the following amendment to the Incentive Plan. 1. CALCULATION OF AUTHORIZED AND AVAILABLE SHARES. Sections 2.1, 2.2 and 2.3 of the Incentive Plan are hereby deleted and replaced in their entirety with the following: 2.1 Maximum Amount of Shares. Subject to the provisions of Paragraph 2.6 and Paragraph 11.1 of the Plan, the aggregate number of shares of Stock that may be issued or transferred pursuant to Awards under the Plan (the "Authorized Shares") shall be calculated as follows (with all references to "fiscal years" referring to fiscal years of the Corporation): (a) At any time from (and including) July 18, 1997 until (and including)the end of fiscal 1998, the number of Authorized Shares shall be 31,761,880. (b) At any time during any fiscal year (commencing with fiscal 1999 and ending with fiscal 2003), the number of Authorized Shares shall be equal to the sum of (1) the number of Authorized Shares as of the end of the immediately preceding fiscal year, plus (2) 4% of the total number of issued and outstanding shares of Stock as of the end of the immediately preceding fiscal year, plus (3) 4% of the total number of shares of Stock repurchased by the Corporation during the immediately preceding fiscal year, plus (4) the Performance Amount (as defined in subparagraph (d) of this Paragraph) for the immediately preceding fiscal year. (c) The number of Authorized Shares shall not be increased after fiscal 2003 unless such increase is approved by the Corporation's stockholders. (d) The "Performance Amount" for any fiscal year shall be calculated as follows: (1) If the Total Shareholder Return (as defined below) achieved by the Corporation during such fiscal year exceeds the average Total Shareholder Return achieved by the 14 2 companies included in the S&P Computer Systems Index during such fiscal year, the Performance Amount for such fiscal year shall be equal to the sum of (A) 1% of the total number of issued and outstanding shares of Stock as of the end of such fiscal year, plus (B) 1% of the total number of shares of Stock repurchased by the Corporation during such fiscal year. (2) If the Total Shareholder Return achieved by the Corporation during such fiscal year does not exceed the average Total Shareholder Return achieved by the companies included in the S&P Computer Systems Index during such fiscal year, the Performance Amount for such fiscal year shall be equal to zero. The term "Total Shareholder Return" for any period and for any company shall mean the number (expressed as a percentage) obtained by dividing (X) the sum of the amount of dividends for such period, assuming dividend reinvestment, and the difference between the price per share of such company's common stock at the end of the period and the price per share of such company's common stock at the beginning of the period, by (Y) the price per share of such company's common stock at the beginning of such period. 2.2 Calculation of Available Shares. At any time, the number of shares that may then be issued or transferred pursuant to Awards under the Plan (the "Available Shares") shall be equal to the difference between (a) the number of Authorized Shares at such time and (b) the sum of (1) the number of shares of Stock subject to issuance upon exercise or settlement of then outstanding Awards, (2) the number of shares of Stock that equal the value of then outstanding Performance Units determined in each case as of the Date of Grant of each Award (other than Awards designated to be paid only in cash) and (3) the number of shares of Stock that have been issued upon exercise or settlement of outstanding Awards (except as otherwise provided in Paragraph 2.3). 2.3 Restoration of Unused Shares. If Stock subject to any Award is not issued or transferred, or ceases to be issuable or transferable for any reason, including (but not exclusively) because an Award is forfeited, terminated, expires unexercised, is settled in cash in lieu of Stock or is exchanged for other Awards, the shares of Stock that were subject to that Award shall no longer be charged against the number of Authorized Shares in calculating the number of Available Shares under Paragraph 2.2 and shall again be included in Available Shares. 2. REDUCTION IN AVAILABILITY OF STOCK AWARDS. Section 2.7 of the Incentive Plan is hereby amended by replacing the words "twenty-five percent" in such provision with the words "twenty percent." 3. NO EFFECT ON OTHER PROVISIONS. Except as described in Paragraphs 1 and 2 above, the terms, conditions and provisions of the Incentive Plan shall remain in full force and effect and shall be unaffected by this amendment. 4. EFFECTIVE DATE OF AMENDMENT. This amendment, and the changes to the provisions of the Incentive Plan effected hereby, shall be effective as of July 18, 1997. In witness whereof, the Company, acting by and through its duly authorized officer, has executed this instrument to be effective as of the date specified in Paragraph 4 above. DELL COMPUTER CORPORATION By: /s/ MICHAEL S. DELL ---------------------------------- Michael S. Dell Chairman and Chief Executive Officer 15 EX-11 4 COMPUTATION OF EARNINGS PER SHARE 1 DELL COMPUTER CORPORATION STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (IN MILLIONS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED ---------------------------------- ---------------------------------- AUGUST 3, 1997 JULY 28, 1996 AUGUST 3, 1997 JULY 28, 1996 ---------------- ----------------- ----------------- ---------------- Primary earnings per common share: Calculation of weighted average shares (a): Weighted average shares of common stock outstanding 334 360 337 364 Weighted average shares of common stock equivalents, utilizing the treasury stock method 30 29 29 27 ---------------- ----------------- ----------------- ---------------- Weighted average shares outstanding 364 389 366 391 ================ ================= ================= ================ Earnings: Net Income available to stockholders $214 $103 $412 $185 ================ ================= ================= ================ Earnings per common share (a)(b) $0.59 $0.26 $1.13 $0.47 ================ ================= ================= ================ Fully diluted earnings per common share: Calculation of weighted average shares (a): Weighted average shares of common stock outstanding 334 360 337 364 Weighted average shares of common stock equivalents, utilizing the treasury stock method 32 30 32 30 Assumed conversion of Convertible Preferred Stock (c) -- 2 -- 2 ---------------- ----------------- ----------------- ---------------- Weighted average shares outstanding 366 392 369 396 ================ ================= ================= ================ Earnings: Net Income available to common stockholders $214 $103 $412 $185 ================ ================= ================= ================ Earnings per common share (a)(b) $0.58 $0.26 $1.12 $0.47 ================ ================= ================= ================
(a) All share and per share information for fiscal 1997 reflects both two-for-one common stock splits effected on December 6, 1996 and July 25, 1997. (b) Earnings per common share was calculated using the underlying data in thousands. (c) Assumes conversion of the 60,000 shares of outstanding convertible preferred stock from the beginning of fiscal 1997 to the actual conversion date. 16 EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DELL COMPUTER CORPORATION FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTH PERIOD ENDED AUGUST 3, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 6-MOS FEB-01-1998 AUG-03-1997 194 1,321 1,160 27 273 3,252 439 151 3,552 2,063 17 0 0 515 612 3,552 5,402 5,402 4,220 4,220 89 0 1 597 185 412 0 0 0 412 1.13 1.12
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