EX-99.1 2 a4819903ex99.txt EXHIBIT 99.1 PRESS RELEASE EXHIBIT 99.1 Record Revenue, Shipments, Operating Income and Cash Flow Highlight Dell's Fiscal Fourth Quarter; Revenue Up 17 Percent, Earnings Exceed Company Guidance ROUND ROCK, Texas--(BUSINESS WIRE)--Feb. 10, 2005--Dell (NASDAQ:DELL) Strong growth throughout Dell's diversified range of products and services in the fiscal fourth-quarter 2005 led to the company's best ever operating period. The company achieved quarterly records for revenue, unit shipments, operating income and cash flow from operations. Sales increased 22 percent in Europe, the Middle East and Africa, and 21 percent in Asia-Pacific and Japan. Worldwide revenue growth from servers and storage systems accelerated from the last quarter, increasing 20 percent year-over-year. In the United States, sales to business customers grew 19 percent year-over-year. Revenue for the quarter ended Jan. 28 was $13.5 billion, up 17 percent from a year ago. Pro-forma fourth-quarter net earnings were 37 cents per share, 28 percent higher than last year. That exceeded Dell's guidance by one cent, as continued strong profit growth in markets outside the United States reduced the company's operating tax rate. Dell's fourth-quarter reported earnings were $667 million, or 26 cents per share, which included a tax charge of 11 cents per share. The charge was taken in anticipation of repatriating foreign earnings at a one-time favorable tax rate under the U.S. American Jobs Creation Act (AJCA). Fourth Quarter Full Year (in millions, except -------------- --------- share data) FY'05 FY'04 Change FY'05 FY'04 Change Revenue $13,457 $11,512 17% $49,205 $41,444 19% Operating Income $1,187 $981 21% $4,254 $3,544 20% Pro-Forma Net Income(a) $947 $749 26% $3,323 $2,645 26% Reported-GAAP $667 $749 (11%) $3,043 $2,645 15% Pro-Forma EPS(a) $0.37 $0.29 28% $1.29 $1.01 28% Reported-GAAP $0.26 $0.29 (10%) $1.18 $1.01 17% (a) Fourth-quarter and full-year fiscal-2005 pro-forma net income and earnings per share exclude a tax charge of $280 million and 11 cents per share, respectively -- in anticipation of repatriating earnings under the U.S. American Jobs Creation Act. Full-year pro-forma earnings were $1.29 per share, up 28 percent; fiscal-2005 reported earnings, including the AJCA-related charge, were $1.18 per share. Full-year revenue was $49.2 billion, up 19 percent. "The quarter represents continued record performance by our team around the world," said Kevin Rollins, Dell's chief executive officer. "No one has higher expectations for Dell over time than we do, and we're constantly driving for excellence on behalf of customers and shareholders." Mr. Rollins said the company expects Dell first-quarter fiscal-2006 product shipments to increase 21 percent. The resulting company volumes should produce quarterly revenue of about $13.4 billion, up 16 percent from the prior year, and earnings per share of about 37 cents, up 32 percent. In the fourth quarter, Dell's operating margins improved to 8.8 percent, up from 8.5 percent a year ago. The company generated $1.8 billion in cash flow from operations, and total cash and investments at quarter-end was $14.1 billion, a company record. Strong Growth Continues Across Global Regions Total volume increases for all products worldwide were 19 percent, nearly seven points faster than the industry excluding Dell. Fourth quarter unit shipments in Europe, the Middle East and Africa (EMEA) increased 29 percent. Shipments of enterprise systems, including servers, were up 30 percent and notebook computer volumes rose 34 percent. Dell finished the quarter with more than a 10-percent share in EMEA, closing the gap on the current industry leader by nearly two percentage points. Unit shipments and revenue for the full year increased 31 percent and 27 percent, respectively. In Asia-Pacific and Japan, total Dell shipments increased 27 percent -- nearly three times the growth rate excluding Dell -- highlighted by a 29-percent gain in notebook computer volumes. Unit shipments for the full year increased 29 percent, while revenue was up 26 percent. Solid volume growth across product lines in the Americas was highlighted by 25-percent growth in servers and a 28-percent increase in notebook computers. Dell increased its share in the U.S. by nearly three points to 33 percent during the quarter. Revenue growth in the Americas outside the U.S. increased 27 percent year-over-year, and shipments of notebook computers and servers rose 52 percent and 44 percent, respectively. Servers, Storage Highlight Product Strengths Dell's overall volume growth for the quarter was highlighted by increases of 30 percent in notebook computers and 25 percent in servers. Revenue from external storage systems grew 27 percent compared to a year ago, driven by strong demand for Dell storage-area-network products. Sales of Dell / EMC storage systems increased 46 percent. Enhanced services revenue rose 32 percent worldwide, led by Asia-Pacific, where sales of services grew about 50 percent year-over-year. Quarterly worldwide revenue from software and peripheral products increased 36 percent. Dell's full-year printer shipments were 5.2 million units, exceeding the company's volume targets and contributing to more than $1 billion in printing and imaging revenue. Dell printers are finding great customer receptivity around the world. In Asia-Pacific, for example, fourth-quarter unit growth was up 62 percent from the third quarter. About Dell Dell Inc. (NASDAQ:DELL) is a trusted and diversified information-technology supplier and partner, and sells a comprehensive portfolio of products and services directly to customers worldwide. Dell designs, builds and delivers innovative, tailored systems that provide customers with exceptional value. Company revenue for the past year was $49.2 billion. For more information about Dell and its products and services, visit www.dell.com. Special note: Statements in this press release that relate to future results and events (including statements about fiscal 2006 first-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 January October January ------------------ 28, 29, 30, Sequential Yr. to 2005 2004 2004 Yr. -------- -------- -------- ------------------ Net revenue $13,457 $12,502 $11,512 7.6% 16.9% Cost of revenue 10,962 10,189 9,421 7.6% 16.4% -------- -------- -------- Gross margin 2,495 2,313 2,091 7.9% 19.3% Selling, general and administrative 1,198 1,101 991 8.8% 20.9% Research, development and engineering 110 117 119 (6.0%) (7.9%) -------- -------- -------- Operating expenses 1,308 1,218 1,110 7.4% 17.8% -------- -------- -------- Operating income 1,187 1,095 981 8.4% 21.0% Investment and other income, net 48 48 49 0.1% (2.8%) -------- -------- -------- Income before income taxes 1,235 1,143 1,030 8.0% 19.9% Income tax provision (a) 568 297 281 90.9% 102.3% -------- -------- -------- Net income (a) $667 $846 $749 (21.1%)(11.0%) ======== ======== ======== Earnings per common share: (a) Basic $0.27 $0.34 $0.29 ======== ======== ======== Diluted $0.26 $0.33 $0.29 ======== ======== ======== Weighted average shares outstanding: Basic 2,485 2,493 2,557 Diluted 2,553 2,546 2,616 Percentage of Total Net Revenue: ------------------------ Gross margin 18.5% 18.5% 18.2% Selling, general and administrative 8.9% 8.8% 8.6% Research, development and engineering 0.8% 0.9% 1.0% Operating expenses 9.7% 9.7% 9.6% Operating income 8.8% 8.8% 8.5% Income before income taxes 9.2% 9.1% 8.9% Net income (a) 5.0% 6.8% 6.5% Income tax rate (a) 46.0% 26.0% 27.3% Net Revenue by Geographic Region: ------------------------- Percentage of Total Net Revenue ------------------------- Americas 66% 68% 67% Europe 23% 21% 22% Asia Pacific - Japan 11% 11% 11% Net Revenue by Product Line: ------------------------- Percentage of Total Net Revenue ------------------------- Desktops 51% 49% 52% Notebooks 28% 30% 27% Enterprise 21% 21% 21% Note: Percentage growth rates and ratios are calculated based on underlying data in thousands. (a) Results for the period ended January 28, 2005 include the impact of a $280M tax charge for the anticipated repatriation of earnings at a one-time favorable rate pursuant to the American Jobs Creation Act of 2004. DELL INC. Condensed Consolidated Statement of Operations and Related Financial Highlights (in millions, except per share data) (unaudited) Year Ended % Growth ------------------------- Rates January 28, January 30, ---------- 2005 2004 Yr. to Yr. ----------- ------------- ---------- Net revenue $49,205 $41,444 18.7% Cost of revenue 40,190 33,892 18.6% ----------- ------------- Gross margin 9,015 7,552 19.4% Selling, general and administrative 4,298 3,544 21.3% Research, development and engineering 463 464 (0.2%) ----------- ------------- Operating expenses 4,761 4,008 18.8% ----------- ------------- Operating income 4,254 3,544 20.0% Investment and other income, net 191 180 6.0% ----------- ------------- Income before income taxes 4,445 3,724 19.4% Income tax provision (a) 1,402 1,079 30.0% ----------- ------------- Net income (a) $3,043 $2,645 15.0% =========== ============= Earnings per common share: (a) Basic $1.21 $1.03 =========== ============= Diluted $1.18 $1.01 =========== ============= Weighted average shares outstanding: Basic 2,509 2,565 Diluted 2,568 2,619 Percentage of Total Net Revenue: ------------------------- Gross margin 18.3% 18.2% Selling, general and administrative 8.7% 8.6% Research, development and engineering 0.9% 1.1% Operating expenses 9.7% 9.7% Operating income 8.6% 8.6% Income before income taxes 9.0% 9.0% Net income (a) 6.2% 6.4% Income tax rate (a) 31.5% 29.0% Net Revenue by Geographic Region: ------------------------- Percentage of Total Net Revenue ------------------------- Americas 67% 69% Europe 22% 21% 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. (a) Results for the period ended January 28, 2005 include the impact of a $280M tax charge for the anticipated repatriation of earnings at a one-time favorable rate pursuant to the American Jobs Creation Act of 2004. DELL INC. Condensed Consolidated Statement of Financial Position and Related Financial Highlights (in millions, except for "Ratios" and "Other information") (unaudited) January 28, October 29, January 30, 2005 2004 2004 ---------- ---------- ------------ Assets: --------- Current assets: Cash and cash equivalents $4,747 $4,525 $4,317 Short-term investments 5,060 2,969 835 Accounts receivable, net 4,414 4,167 3,635 Inventories 459 415 327 Other 2,217 2,124 1,519 ---------- --------- ----------- Total current assets 16,897 14,200 10,633 Property, plant and equipment, net 1,691 1,627 1,517 Investments 4,319 4,942 6,770 Other non-current assets 308 285 391 ---------- --------- ------------ Total assets $23,215 $21,054 $19,311 ========== ========= ============ Liabilities and Stockholders' Equity: ----------------------------- Current liabilities: Accounts payable $8,895 $8,067 $7,316 Accrued and other 5,241 4,707 3,580 ---------- ---------- ------------ Total current liabilities 14,136 12,774 10,896 Long-term debt 505 505 505 Other non-current liabilities 2,089 1,895 1,630 ---------- --------- ------------ Total liabilities 16,730 15,174 13,031 Stockholders' equity 6,485 5,880 6,280 ---------- ---------- ------------ Total liabilities and stockholders' equity $23,215 $21,054 $19,311 ========== ========== ============ Ratios: ------- Quick ratio 1.01 0.91 0.81 Days supply in inventory 4 4 3 Days of sales outstanding (a) 32 33 31 Days in accounts payable 73 71 70 ---------- --------- ------------ Cash conversion cycle (37) (34) (36) Other Information: ------------------ Headcount (approximate) 55,200 53,000 46,000 Average total revenue/unit (approximate) $1,510 $1,570 $1,540 Note: Ratios are calculated based on underlying data in thousands. (a) Days of sales outstanding include the effect of product costs related to customer shipments not yet recognized as revenue that are classified in other current assets. At January 28, 2005, October 29, 2004, and January 30, 2004, days of sales outstanding included days of sales in accounts receivable and days of in-transit customer shipments of 29 and 3 days; 30 and 3 days; and 28 and 3 days, respectively. DELL INC. Condensed Consolidated Statement of Cash Flows (in millions) (unaudited) Three Twelve Months Months Ended Ended ------------ ---------- January 28, 2005 ----------------------- Cash flows from operating activities: Net income $667 $3,043 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 91 334 Tax benefits from employee stock plans 139 249 Gain on sale of investments -- (6) Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies (298) (602) Other 22 84 Changes in: Operating working capital 1,029 1,755 Non-current assets and liabilities 168 453 ---------- -------- Net cash provided by operating activities 1,818 5,310 Cash flows from investing activities: Investments: Purchases (2,777) (12,261) Maturities and sales 1,292 10,469 Capital expenditures (170) (525) ---------- -------- Net cash used in investing activities (1,655) (2,317) Cash flows from financing activities: Purchase of common stock (870) (4,219) Issuance of common stock under employee plans and other 644 1,091 ---------- -------- Net cash used in financing activities (226) (3,128) Effect of exchange rate changes on cash and cash equivalents 285 565 ---------- -------- Net increase in cash and cash equivalents 222 430 Cash and cash equivalents at beginning of period 4,525 4,317 ---------- -------- Cash and cash equivalents at end of period $4,747 $4,747 ========== ======== CONTACT: Dell, 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