-----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, MSrUONa87mSigOFuwNnsR81WbensXVVGFGJrqN9UR9oHyfeu23kX9WUMpzPPHp3r PGsrHgnl7smvt2kj2dmtUw== 0001157523-05-007361.txt : 20050811 0001157523-05-007361.hdr.sgml : 20050811 20050811161704 ACCESSION NUMBER: 0001157523-05-007361 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050811 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050811 DATE AS OF CHANGE: 20050811 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: 051017355 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 a4951195.txt DELL INC. 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): August 11, 2005 -------- Dell Inc. (Exact name of registrant as specified in its charter) Delaware 0-17017 74-2487834 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) One Dell Way, Round Rock, Texas 78682 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (512) 338-4400 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ Item 2.02 Results of Operations and Financial Condition. On August 11, 2005, Dell Inc. issued a press release announcing its financial results for its fiscal quarter ended July 29, 2005. A copy of the press release is furnished as Exhibit 99.1 to this report. Item 9.01 Financial Statements and Exhibits. (c) Exhibits. The following exhibit is furnished as part of this report: Exhibit 99.1 -- Press Release issued by Dell Inc., dated August 11, 2005. 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 hereunto duly authorized. DELL INC. Date: August 11, 2005 By: /s/ JOAN S. HOOPER -------------------------- Joan S. Hooper Vice President, Corporate Finance and Chief Accounting Officer 3 EXHIBIT INDEX Exhibit No. Description of Exhibit --- ---------------------- 99.1 -- Press Release issued by Dell Inc., dated August 11, 2005. 4 EX-99.1 2 a4951195ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Dell Generates Record EPS, Outpaces Industry Growth; Strong Growth in Services, Storage and International Markets ROUND ROCK, Texas--(BUSINESS WIRE)--Aug. 11, 2005--Dell (NASDAQ:DELL) achieved record earnings in its fiscal 2006 second-quarter, as it exceeded industry shipment growth in a competitive pricing environment. Sales of storage systems, mobility products, enhanced services and software and peripherals were up strongly around the world. Dell's second quarter, which ended July 29, was highlighted by industry-record shipments of 9.1 million computer systems -- including 2.7 million mobility products -- and company-record revenue of more than $2 billion from software and peripheral products, including printers and displays. The company's second-quarter earnings were $1.02 billion, or 41 cents per share, up 32 percent from a year ago. Second-quarter EPS includes a three-cent revision to the previously recorded tax estimate for the repatriation of funds under the American Jobs Creation Act of 2004. Absent that benefit, EPS was a record 38 cents, up 23 percent. Dell revenue for the quarter was $13.4 billion, 15 percent higher than the same quarter last year. (in millions, Second Quarter Year to Date except share data) FY'06 FY'05 Change FY'06 FY'05 Change ----------------------- ----------------------- Revenue $13,428 $11,706 15% $26,814 $23,246 15% Operating Income $1,173 $1,006 17% $2,347 $1,972 19% Reported GAAP Net Income $1,020 $799 28% $1,954 $1,530 28% Pro forma Net Income(a) $935 $799 17% $1,869 $1,530 22% Reported GAAP EPS $0.41 $0.31 32% $0.78 $0.59 32% Pro forma EPS(a) $0.38 $0.31 23% $0.75 $0.59 27% - -------------------- (a) Pro forma results for the period ended July 29, 2005 exclude the impact of an $85 million ($0.03 per share) tax benefit related to a revised estimate of taxes on the repatriation of earnings under the American Jobs Creation Act of 2004. "Our teams performed well in a dynamic market. Our growth in Q2 was characterized by share increases in every region," said Kevin Rollins, Dell's chief executive officer. "While average selling prices were down more than we would have liked, we focused on balanced profitability and, in the process, delivered to our guidance for EPS." Dell's operating margin as a percent of revenue was 8.7 percent, up from 8.6 percent a year ago. The company generated more than $900 million in cash flow from operations. Dell spent $1.8 billion during the quarter to repurchase almost 47 million shares, and has now repurchased almost 280 million shares over the past 10 quarters. Mr. Rollins said continued steady purchase rates by corporate customers, the seasonal impact of back-to-school buying in the consumer segment, and continued growth in markets outside of the United States will drive Dell's third-quarter business. The company expects Q3 revenue of $14.1 to $14.5 billion, and earnings per share of 39 to 41 cents. Dell plans to repurchase at least $1.2 billion in stock during the current fiscal quarter. Growth Continues Globally Revenue from outside the United States accounted for 39 percent of Dell's total for the quarter and grew 24 percent year-over-year. Asia-Pacific and Japan (APJ) revenue grew 24 percent year-over-year. Software and peripherals revenue in APJ increased 90 percent year-over-year. Printer shipments more than tripled over last year, and Dell took the No. 1 position for Intel-based servers in Japan. Revenue from enhanced services increased 67 percent year-over-year. In Europe, the Middle East and Africa, revenue was up 21 percent over last year. Storage revenue increased 47 percent and enhanced services revenue increased 66 percent. The region shipped 52 percent more mobility products year-over-year. Excluding the U.S., the Americas region revenue grew 34 percent year-over-year. Shipments of mobility products increased, driven by notebook growth of 67 percent year-over-year. Printer shipments increased 117 percent from a year ago. In the United States, Dell expanded its leadership as the No. 1 systems vendor in all of its segments with more than 1 point year-over-year share increase. Dell's U.S. server leadership increased by more than 5 points year-over-year. Products and Services Achieve Record Demand Worldwide revenue from storage products grew 26 percent year-over-year. Dell's Storage Area Network (SAN) business grew more than 50 percent faster than the rest of the industry. Customers are shifting to denser, more powerful industry-standard servers, and Dell increased its shipments by 25 percent year-over-year. In this product category, Dell grew twice the rate of the industry in every region, gaining almost 3 points of share year-to-year and closing the gap with the leader by more than 4 percentage points. Mobility revenue in the quarter was a record $3.4 billion, a 20 percent year-over-year increase. Mobility product shipments increased 47 percent, a result of more customers shifting from desktops to mobility products. Dell increased desktop computer shipments by 17 percent and added another half-share point to its worldwide leadership. Software and peripherals revenue increased 35 percent year-over-year with further expansion of Dell's imaging products. Laser printer units increased 168 percent year-over-year and overall printer shipments grew 77 percent year-over-year. Enhanced services revenue for the quarter was $1.2 billion, an increase of 41 percent year-over-year, as more customers look to Dell for professional and managed services for their enterprises. Dell's quality of support was cited as often as its product reliability as the reason enterprise customers choose Dell in the current server customer satisfaction survey conducted by Technology Business Research. 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, recognized by Fortune magazine as America's most admired company and No. 3 globally, designs, builds and delivers innovative, tailored systems that provide customers with exceptional value. Company revenue for the last four quarters was $52.8 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 Dell's anticipated financial and operating performance) are forward-looking statements based on Dell's current expectations. Actual results in future periods could differ materially from those projected in these forward-looking statements because of a number of risks and uncertainties including: general economic, business and industry conditions; the level and intensity of competition in the technology industry and the pricing pressures that have resulted; local economic and labor conditions, political instability, unexpected regulatory changes, trade protection measures, tax laws and fluctuations in foreign currency exchange rates; the ability to accurately predict product, customer and geographic sales mix; the ability to timely and effectively manage periodic product transitions; reliance on third-party suppliers for product components, including dependence on several single-source supplier relationships; the ability to effectively manage operating costs; the failure to attract and retain qualified personnel; the level of demand for the products and services Dell offers; the ability to manage inventory levels to minimize excess inventory, declining inventory values and obsolescence; and the effect of armed hostilities, terrorism, natural disasters and public health issues on the economy generally, on the level of demand for Dell's products and services and on Dell's ability to manage its supply and delivery logistics in such an environment. Additional discussion of these and other factors affecting Dell's business and prospects is contained in Dell's periodic filings with the Securities and Exchange Commission. Consolidated statements of income, financial position and cash flows follow. Dell is a trademark of Dell Inc. Dell disclaims any proprietary interest in the marks and names of others. DELL INC. Condensed Consolidated Statement of Operations and Related Financial Highlights (in millions, except per share data) (unaudited) Three Months Ended ----------------------------- % Growth Rates --------------- Yr. July 29, April 29, July 30, to 2005 2005 2004 Sequential Yr. --------- --------- --------- --------------- Net revenue $13,428 $13,386 $11,706 0% 15% Cost of revenue 10,929 10,895 9,572 0% 14% --------- --------- --------- Gross margin 2,499 2,491 2,134 0% 17% Selling, general and administrative 1,204 1,207 1,008 0% 19% Research, development and engineering 122 110 120 12% 2% --------- --------- --------- Operating expenses 1,326 1,317 1,128 1% 18% --------- --------- --------- Operating income 1,173 1,174 1,006 0% 17% Investment and other income, net 61 59 46 4% 33% --------- --------- --------- Income before income taxes 1,234 1,233 1,052 0% 17% Income tax provision(a) 214 299 253 (28%)(15%) --------- --------- --------- Net income(a) $1,020 $934 $799 9% 28% ========= ========= ========= Earnings per common share:(a) Basic $0.42 $0.38 $0.32 ========= ========= ========= Diluted $0.41 $0.37 $0.31 ========= ========= ========= Weighted average shares outstanding: Basic 2,418 2,456 2,518 Diluted 2,478 2,515 2,574 Percentage of Total Net Revenue: - ----------------------- Gross margin 18.6% 18.6% 18.2% Selling, general and administrative 9.0% 9.0% 8.6% Research, development and engineering 0.9% 0.8% 1.0% Operating expenses 9.9% 9.8% 9.6% Operating income 8.7% 8.8% 8.6% Income before income taxes 9.2% 9.2% 9.0% Net income(a) 7.6% 7.0% 6.8% Income tax rate(a) 17.4% 24.2% 24.0% Net Revenue by Geographic Region (in billions): - ------------------ Americas $8.9 $8.6 $8.0 4% 11% Europe 2.9 3.2 2.4 (8%) 21% Asia Pacific - Japan 1.6 1.7 1.3 (1%) 24% Percentage of Total Net Revenue: - ----------------------- Americas 66% 64% 68% Europe 22% 24% 21% Asia Pacific - Japan 12% 12% 11% Net Revenue by Product Category (in billions): - ------------------------ Desktop PCs $5.1 $5.3 $5.0 (5%) 2% Mobility 3.4 3.3 2.9 5% 20% Servers 1.3 1.3 1.2 2% 9% Storage 0.4 0.4 0.3 (8%) 26% Enhanced Services 1.2 1.1 0.8 8% 41% Software and peripherals 2.0 2.0 1.5 3% 35% Percentage of Total Net Revenue: - ----------------------- Desktop PCs 37% 40% 42% Mobility 26% 24% 25% Servers 10% 10% 10% Storage 3% 3% 3% Enhanced Services 9% 8% 7% Software and peripherals 15% 15% 13% Note: Percentage growth rates and ratios are calculated based on underlying data in thousands. (a) Results for the period ended July 29, 2005 include the impact of an $85 million ($0.03 per share) tax benefit related to a revised estimate of taxes on the repatriation of earnings under 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) Six Months Ended --------------------- % Growth Rates July 29, July 30, ----------- 2005 2004 Yr. to Yr. ---------- ---------- ----------- Net revenue $26,814 $23,246 15% Cost of revenue 21,824 19,039 15% ---------- ---------- Gross margin 4,990 4,207 19% Selling, general and administrative 2,411 1,999 21% Research, development and engineering 232 236 (2%) ---------- ---------- Total operating expenses 2,643 2,235 18% ---------- ---------- Operating income 2,347 1,972 19% Investment and other income, net 120 95 26% ---------- ---------- Income before income taxes 2,467 2,067 19% Income tax provision(a) 513 537 (4%) ---------- ---------- Net income(a) $1,954 $1,530 28% ========== ========== Earnings per common share:(a) Basic $0.80 $0.61 ========== ========== Diluted $0.78 $0.59 ========== ========== Weighted average shares outstanding: Basic 2,437 2,529 Diluted 2,497 2,583 Percentage of Total Net Revenue: - ----------------------- Gross margin 18.6% 18.1% Selling, general and administrative 9.0% 8.6% Research, development and engineering 0.9% 1.0% Operating expenses 9.9% 9.6% Operating income 8.8% 8.5% Income before income taxes 9.2% 8.9% Net income (a) 7.3% 6.6% Income tax rate(a) 20.8% 26.0% Net Revenue by Geographic Region (in billions): - ------------------------- Americas $17.4 $15.4 13% Europe 6.1 5.1 20% Asia Pacific - Japan 3.3 2.7 21% Percentage of Total Net Revenue: - ----------------------- Americas 65% 66% Europe 23% 22% Asia Pacific - Japan 12% 12% Net Revenue by Product Category (in billions): - ------------------------ Desktop PCs $10.4 $10.0 4% Mobility 6.7 5.6 21% Servers 2.6 2.4 10% Storage 0.8 0.6 37% Enhanced Services 2.3 1.6 36% Software and peripherals 4.0 3.0 32% Percentage of Total Net Revenue: - ----------------------- Desktop PCs 39% 43% Mobility 25% 24% Servers 10% 10% Storage 3% 3% Enhanced Services 8% 7% Software and peripherals 15% 13% Note: Percentage growth rates and ratios are calculated based on underlying data in thousands. (a) Results for the period ended July 29, 2005 include the impact of an $85 million ($0.03 per share) tax benefit related to a revised estimate of taxes on the repatriation of earnings under 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) July 29, April 29, July 30, 2005 2005 2004 --------- ---------- ---------- Assets: - ---------------------------- Current assets: Cash and cash equivalents $6,337 $5,874 $4,025 Short-term investments 2,709 3,967 1,509 Accounts receivable, net 4,443 4,289 3,625 Inventories 570 483 418 Other 2,739 2,439 2,055 --------- ---------- ---------- Total current assets 16,798 17,052 11,632 Property, plant and equipment, net 1,843 1,741 1,578 Investments 3,625 3,574 6,276 Other non-current assets 345 320 446 --------- ---------- ---------- Total assets $22,611 $22,687 $19,932 ========= ========== ========== Liabilities and Stockholders' Equity: - ----------------------------- Current liabilities: Accounts payable $9,196 $9,057 $7,444 Accrued and other 5,172 5,332 3,877 --------- ---------- ---------- Total current liabilities 14,368 14,389 11,321 Long-term debt 504 504 505 Other non-current liabilities 2,230 2,170 1,899 --------- ---------- ---------- Total liabilities 17,102 17,063 13,725 Stockholders' equity 5,509 5,624 6,207 --------- ---------- ---------- Total liabilities and stockholders' equity $22,611 $22,687 $19,932 ========= ========== ========== Ratios: - ------- Days supply in inventory 5 4 4 Days of sales outstanding(a) 33 32 31 Days in accounts payable 76 75 70 --------- ---------- ---------- Cash conversion cycle (38) (39) (35) Other Information: - ------------------ Headcount (approximate) 61,400 57,600 50,000 Average total revenue/unit (approximate) $1,480 $1,520 $1,610 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 July 29, 2005, April 29, 2005 and July 30, 2004, days of sales outstanding included days of sales in accounts receivable and days of in-transit customer shipments of 30 and 3 days; 29 and 3 days; and 28 and 3 days, respectively. DELL INC. Condensed Consolidated Statement of Cash Flows (in millions) (unaudited) Three Months Six Months Ended Ended -------------------------------------- July 29, 2005 -------------------------------------- Cash flows from operating activities: Net income $1,020 $1,954 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 97 188 Tax benefits from employee stock plans 91 123 Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies 95 15 Other 42 60 Changes in: Operating working capital (550) (447) Non-current assets and liabilities 124 216 ------------ ------------- Net cash provided by operating activities 919 2,109 Cash flows from investing activities: Investments: Purchases (2,144) (3,013) Maturities and sales 3,344 6,070 Capital expenditures (204) (347) ------------ ------------- Net cash provided by investing activities 996 2,710 Cash flows from financing activities: Purchase of common stock (1,800) (3,800) Issuance of common stock under employee plans and other 466 627 ------------ ------------- Net cash used in financing activities (1,334) (3,173) Effect of exchange rate changes on cash and cash equivalents (118) (56) ------------ ------------- Net increase in cash and cash equivalents 463 1,590 Cash and cash equivalents at beginning of period 5,874 4,747 ------------ ------------- Cash and cash equivalents at end of period $6,337 $6,337 ============ ============= Additional supplemental information is available on our website at http://www.dell.com/downloads/global/corporate/conferences/ q2fy06_earnings_pres.pdf CONTACT: Dell, Round Rock Media Contacts: Jess Blackburn, 512-725-0187 jess_blackburn@dell.com or David Frink, 512-728-2678 david_frink@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-----