-----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, Nn7a/Zq249jCa7wZZYfnfIBymxYoTKQApg5wqFGyZc7MI4S2XE54VEYvAM2faf5h N2Lwcnxzs8UgoBiKmRM7KA== 0001157523-03-006640.txt : 20031113 0001157523-03-006640.hdr.sgml : 20031113 20031113160830 ACCESSION NUMBER: 0001157523-03-006640 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031113 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELL INC CENTRAL INDEX KEY: 0000826083 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 742487834 STATE OF INCORPORATION: DE FISCAL YEAR END: 0129 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17017 FILM NUMBER: 03998254 BUSINESS ADDRESS: STREET 1: ONE DELL WAY STREET 2: STED CITY: ROUND ROCK STATE: TX ZIP: 78682-2244 BUSINESS PHONE: 5127284737 MAIL ADDRESS: STREET 1: ONE DELL WAY CITY: ROUND ROCK STATE: TX ZIP: 78682 FORMER COMPANY: FORMER CONFORMED NAME: DELL COMPUTER CORP DATE OF NAME CHANGE: 19920703 8-K 1 a4515782.txt DELL 8-K - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported): November 13, 2003 Dell Inc. (Exact name of registrant as specified in its charter) Delaware 0-17017 74-2487834 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) One Dell Way, Round Rock, Texas 78682 (Address of principal executive offices, including zip code) 512-338-4400 (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- The information in this Report, including the exhibit, is provided under Item 12 of Form 8-K and, pursuant to General Instruction B.6. thereunder, shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. Furthermore, the information in this Report, including the exhibit, shall not be deemed to be incorporated by reference into the filings of the registrant under the Securities Act of 1933. Item 7 -- Financial Statements and Exhibits. (c) Exhibits -- The following exhibit is furnished as part of this Report: Exhibit 99.1 -- Text of Press Release issued by Dell Inc., dated November 13, 2003. Item 12 -- Results of Operations and Financial Condition On November 13, 2003, Dell Inc. issued a press release announcing its financial results for the fiscal quarter ended October 31, 2003. A copy of the press release is furnished as Exhibit 99.1 to this Report. 2 SIGNATURES 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 INC. Dated: November 13, 2003 By: /s/Robert W. Davis ----------------------------------- Robert W. Davis Vice President, Corporate Finance (On behalf of the registrant and as principal accounting officer) 3 EXHIBIT INDEX Exhibit No. Description of Exhibit ------- ---------------------- 99.1 -- Text of Press Release issued by Dell Inc., dated November 13, 2003 4 EX-99 3 a4515782ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Strong Growth in Servers, Storage Systems Leads Dell to Record Operating Results in Fiscal Third Quarter; Company Anticipates $11.5 Billion in Revenue, EPS of 28 Cents in Q4 ROUND ROCK, Texas--(BUSINESS WIRE)--Nov. 13, 2003--Dell (Nasdaq:DELL) again demonstrated its unique ability to simultaneously deliver high customer value, solid worldwide share gains and leading profitability, achieving record company operating results in the fiscal third quarter. Dell's global server shipments increased 30 percent, almost twice the combined rate of other companies. Sales of external storage systems jumped 68 percent in the quarter. The company's total revenue from enterprise computing systems was up 32 percent. For the three months ended Oct. 31, Dell's net revenue was $10.6 billion, 16 percent higher than in the year-ago quarter. Company revenue was more than 40-percent higher than two years ago; sales by the rest of the industry are essentially flat over the same period. Third-quarter Dell earnings were 26 cents per share, a 24-percent increase. Third Quarter Year to Date (in millions, except FY'04 FY'03 Change FY '04 FY'03 Change share data) Revenue $10,622 $ 9,144 16% $29,932 $25,669 17% Operating Income $ 912 $ 758 20% $ 2,563 $ 2,025 27% Net Income $ 677 $ 561 21% $ 1,896 $ 1,519 25% Earnings Per Share $ 0.26 $ 0.21 24% $ 0.72 $ 0.57 26% "Customers and investors get best value over time from companies like Dell that are growing and financially very healthy," said Michael Dell, chairman of the board and chief executive officer. "The market should insist on both, and it's a credit to our teams and a better way of doing business that we're consistently meeting those expectations." Mr. Dell said the company anticipates its fourth-quarter shipments will be up more than 25 percent year-over-year, and again outpace the rest of the industry. Dell expects revenue of $11.5 billion, an increase of 18 percent, and earnings per share of 28 cents, up 22 percent. Third-quarter operating expenses were 9.6 percent of revenue, equaling a company record. Despite sharp industry price competition and slower than expected declines in component costs, Dell's operating profit was 8.6 percent of revenue for the second straight quarter. In dollar terms, operating income was $912 million, up 20 percent from a year ago. Dell generated $1.1 billion in cash from operations in the quarter. Total cash and investments at the end of the period was $11.0 billion, another company record. Company Gains Additional Share in Critical Markets Dell's overall volume growth of 22 percent enabled it to gain 1.5 points of additional global market share. Product shipments in five strategic markets -- China, France, Germany, Japan and the United Kingdom -- rose a combined 32 percent in the third quarter. Asia-Pacific and Japan led the company's regional growth with a 35-percent increase, nearly three times the combined rate of other companies. Dell's strength in the region was most profound in servers and notebook computers, which were up 37 and 36 percent, respectively. Company performance in China was exceptional, including a 67-percent increase in volumes of servers and a 70-percent gain in notebook computers. The company's 25-percent growth in Japan moved it to the No. 3 share position in the market, up from No. 4 a year ago. Total Dell shipments in Europe, the Middle East and Africa increased 26 percent, seven points ahead of the average for the rest of the industry. Volumes were up 24 percent or more in every regional product category. Technology Business Research (TBR) for the first time ranked Dell No. 1 in U.K. customer satisfaction in servers, notebook computers and desktop computers at the same time. Based on TBR's most recent surveys, the company also holds the same distinction in all three product categories in France and Germany. Dell's 30-percent shipment growth in the U.K. was more than twice the rest of the industry, as the company gained nearly three points of share from a year ago and reclaimed market leadership. Server shipments in France increased 37 percent, more than double the industry without Dell. Company product shipments in the Americas and the United States rose 20 percent, strongly ahead of the average of other companies. Dell systems sold to U.S. consumers were up 28 percent, while those to small and medium businesses and federal, state and local governments both increased 22 percent. Performance in Servers, Storage, Services Remains Strong Dell's PowerEdge servers continued to earn customer demand and favorable recognition from reviewers in the third quarter. PC Magazine gave the PowerEdge 1750 a perfect overall rating for performance, manageability and serviceability and an "Editors' Choice" award. Dell's increasing leadership in servers -- the company ranks No. 1 in shipments of such products in the U.S., No. 2 worldwide -- is driving growth in storage systems. Through the first two years of Dell's partnership with EMC Corp., more than 7,000 customers have purchased Dell/EMC storage systems. Demand for Dell services grew strongly in the third quarter. Services revenue was up 31 percent to an annual run rate of $2.6 billion. Quarterly shipments of Inspiron and Latitude notebook computers increased 31 percent, and those of Dimension and OptiPlex desktop computers were up 20 percent. In its most recent report on U.S. corporate buying behavior and customer satisfaction for desktop computers, TBR said Dell demonstrated strength in 10 of 13 categories and had no weaknesses. The next-best computer supplier showed strength in only two areas. Revenue from software and peripheral products rose 26 percent in the third quarter. The company has sold more than one million Dell printers since their launch in March. Shipments of Dell printers were up nearly 70 percent from the second quarter, and the company expects sequential growth of more than 80 percent in Q4. During the third quarter, Dell introduced its own digital music players and LCD television/computer monitors, and new versions of the company's Axim handheld computers and digital projectors. 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 $39.7 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, PowerEdge, Inspiron, Latitude, Dimension and OptiPlex are trademarks of Dell Inc. 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 -------------------------- Oct. 31, Aug. 1, Nov. 1, % Growth Rates --------------------- 2003 2003 2002 Sequential Yr. to Yr. --------- -------- ------- --------------------- Net revenue $10,622 $9,778 $9,144 8.6% 16.2% Cost of revenue 8,687 8,000 7,482 8.6% 16.1% --------- -------- ------- Gross margin 1,935 1,778 1,662 8.8% 16.4% Selling, general and administrative 905 822 787 10.1% 15.0% Research, development and engineering 118 116 117 2.4% 1.1% --------- -------- ------- Total operating expenses 1,023 938 904 9.1% 13.2% --------- -------- ------- Operating income 912 840 758 8.5% 20.3% Investment and other income, net 41 47 44 (12.1%) (6.8%) --------- -------- ------- Income before income taxes 953 887 802 7.4% 18.8% Income tax provision 276 266 241 3.7% 14.7% --------- -------- ------- Net income $677 $621 $561 9.0% 20.6% ========= ======== ======= Earnings per common share: Basic $0.26 $0.24 $0.22 ========= ======== ======= Diluted $0.26 $0.24 $0.21 ========= ======== ======= Weighted average shares outstanding: Basic 2,563 2,567 2,582 Diluted 2,623 2,624 2,634 Percentage of Total Net Revenue: Gross margin 18.2% 18.2% 18.2% Selling, general and administrative 8.5% 8.4% 8.6% Research, development and engineering 1.1% 1.2% 1.3% Total operating expenses 9.6% 9.6% 9.9% Operating income 8.6% 8.6% 8.3% Income before income taxes 9.0% 9.1% 8.8% Net income 6.4% 6.3% 6.1% Income tax rate 29.0% 30.0% 30.0% Net Revenue by Geographic Region: Percentage of Total Net Revenue Americas 71% 70% 72% Europe 19% 19% 19% Asia Pacific - Japan 10% 11% 9% Net Revenue by Product Line: Percentage of Total Net Revenue Desktops 50% 51% 52% Notebooks 28% 28% 28% Enterprise 22% 21% 20% 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 --------------------- Oct. 31, Nov. 1, Rates ---------- 2003 2002 Yr. to Yr. --------- --------- ---------- Net revenue $29,932 $25,669 16.6% Cost of revenue 24,471 21,101 16.0% --------- --------- Gross margin 5,461 4,568 19.6% Selling, general and administrative 2,553 2,205 15.8% Research, development and engineering 345 338 2.1% --------- --------- Total operating expenses 2,898 2,543 14.0% --------- --------- Operating income 2,563 2,025 26.5% Investment and other income, net 131 141 (7.4%) --------- --------- Income before income taxes 2,694 2,166 24.3% Income tax provision 798 647 23.2% --------- --------- Net income $1,896 $1,519 24.8% ========= ========= Earnings per common share: Basic $0.74 $0.59 ========= ========= Diluted $0.72 $0.57 ========= ========= Weighted average shares outstanding: Basic 2,568 2,587 Diluted 2,620 2,651 Percentage of Total Net Revenue: Gross margin 18.2% 17.8% Selling, general and administrative 8.5% 8.6% Research, development and engineering 1.2% 1.3% Total operating expenses 9.7% 9.9% Operating income 8.6% 7.9% Income before income taxes 9.0% 8.4% Net income 6.3% 5.9% Income tax rate 29.6% 30.0% Net Revenue by Geographic Region: Percentage of Total Net Revenue Americas 70% 71% Europe 20% 19% Asia Pacific - Japan 10% 10% Net Revenue by Product Line: Percentage of Total Net Revenue Desktops 51% 53% Notebooks 27% 27% Enterprise 22% 20% 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) Oct. 31, Aug. 1, Nov. 1, 2003 (a) 2003 2002 ---------- --------- -------- Assets: Current assets: Cash and cash equivalents $4,356 $4,636 $4,034 Short-term investments 626 484 270 Accounts receivable, net 3,142 2,883 2,661 Inventories 358 358 307 Other 1,599 1,246 1,483 ---------- --------- -------- Total current assets 10,081 9,607 8,755 Property, plant and equipment, net 1,498 1,062 882 Investments 6,050 5,498 4,755 Other non-current assets 496 373 320 ---------- --------- -------- Total assets $18,125 $16,540 $14,712 ========== ========= ======== Liabilities and Stockholders' Equity: Current liabilities: Accounts payable $6,851 $6,418 $5,936 Accrued and other 3,350 2,846 2,562 ---------- --------- -------- Total current liabilities 10,201 9,264 8,498 Long-term debt 506 506 514 Other non-current liabilities 1,540 1,264 1,052 ---------- --------- -------- Total liabilities 12,247 11,034 10,064 Stockholders' equity 5,878 5,506 4,648 ---------- --------- -------- Total liabilities and stockholders' equity $18,125 $16,540 $14,712 ========== ========= ======== Ratios: Quick ratio 0.80 0.86 0.82 Days supply in inventory 4 4 4 Days of sales outstanding (b) 31 30 30 Days in accounts payable 71 72 71 ---------- --------- -------- Cash conversion cycle (36) (38) (37) Other Information: Headcount (approximate) 44,300 41,800 38,200 Average total revenue/unit (approximate) $1,620 $1,610 $1,710 Note: Ratios are calculated based on underlying data in thousands. (a) Due to the adoption of FASB Interpretation No. 46, Consolidation of Variable Interest Entities, Dell began consolidating the financial results of Dell Financial Services ("DFS") at the beginning of the current quarter. The consolidation of DFS resulted in an increase of assets and liabilities in Dell's consolidated statement of financial position by $588 million as of Oct. 31, 2003, net of intercompany eliminations. (b) Days of sales outstanding include the effect of product costs related to in-transit customer shipments that are classified in other current assets. At Oct. 31, 2003, Aug. 1, 2003, and Nov. 1, 2002, days of sales outstanding included days of sales in accounts receivable and days of in-transit customer shipments of 27 and 4 days; 26 and 4 days; and 26 and 4 days, respectively. DELL INC. Condensed Consolidated Statement of Cash Flows (in millions) (unaudited) Three Months Nine Months Ended Ended ------------------------ Oct. 31, 2003 ------------------------ Cash flows from operating activities: Net income $677 $1,896 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 71 187 Tax benefits from employee stock plans 40 107 Other, primarily effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies (82) (352) Changes in: Operating working capital 309 566 Non-current assets and liabilities 45 208 ------------ ----------- Net cash provided by operating activities 1,060 2,612 Cash flows from investing activities: Investments: Purchases (4,204) (8,492) Maturities and sales 3,462 7,383 Cash assumed in consolidation of DFS 172 172 Capital expenditures (129) (267) Purchase of assets held in master lease facilities (446) (636) ------------ ----------- Net cash used in investing activities (1,145) (1,840) Cash flows from financing activities: Purchase of common stock (500) (1,500) Issuance of common stock under employee plans 174 508 Other - (11) ------------ ----------- Net cash used in financing activities (326) (1,003) Effect of exchange rate changes on cash and cash equivalents 131 355 ------------ ----------- Net (decrease)/increase in cash and cash equivalents (280) 124 Cash and cash equivalents at beginning of period 4,636 4,232 ------------ ----------- Cash and cash equivalents at end of period $4,356 $4,356 ============ =========== CONTACT: Dell Inc., Round Rock Media Contacts: T.R. Reid, 512-728-7977 tr_reid@dell.com or Mike Maher, 512-723-2575 mike_maher@dell.com or Investor Contacts: Lynn A. Tyson, 512-723-1130 lynn_tyson@dell.com or Robert Williams, 512-728-7570 robert_williams@dell.com -----END PRIVACY-ENHANCED MESSAGE-----