-----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, Ui/m4NHc4jyE6Dt3SdndOzK9PVRYTHeYxQnUAs0aZ/G9EkAdZP63K64s36e6at23 kOdKSw3Rx17A+GPl6bOx1A== 0001157523-06-005374.txt : 20060518 0001157523-06-005374.hdr.sgml : 20060518 20060518170315 ACCESSION NUMBER: 0001157523-06-005374 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060518 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060518 DATE AS OF CHANGE: 20060518 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: 06852815 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 a5152504.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): May 18, 2006 ______ 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 May 18, 2006, Dell Inc. issued a press release announcing its financial results for its fiscal quarter ended May 5, 2006. A copy of the press release is furnished as Exhibit 99.1 to this report. Item 8.01 Other Events. Dell Inc. plans to initiate a commercial paper program under which Dell may, from time-to-time, issue short-term unsecured notes in an aggregate amount not to exceed $1.0 billion. The notes will be a private offering under the exemption provided by Section 4(2) of the Securities Act of 1933. Dell intends to use the proceeds of the notes for general corporate purposes, which will include the funding of DFS growth. The notes will not be registered under the Securities Act or state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. This announcement is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of the notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction or an exemption therefrom. 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 May 18, 2006. 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: May 18, 2006 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 May 18, 2006. 4 EX-99.1 2 a5152504ex99-1.txt EXHIBIT 99.1 EXHIBIT 99.1 Dell's International and Enterprise Business Drives First Quarter Revenue Growth; Company Outlines Long-Term Growth Strategy; Dell to End Year with Broadest and Highest Quality Product Line in History ROUND ROCK, Texas--(BUSINESS WIRE)--May 18, 2006--Dell's (NASDAQ:DELL) expansion of business outside the United States and its sales of servers, storage and enhanced services drove revenue of $14.2 billion and earnings of 33 cents per share in the fiscal first-quarter 2007. Enhanced services revenue grew 28 percent year-over-year in the first quarter. Storage revenues increased 12 percent year-over-year. Shipments of Dell products were led by a 36 percent year-over-year increase in mobility units. Revenue outside the United States grew 12 percent and was 44 percent of Dell's overall revenue. Dell had operating income of $949 million, or 6.7 percent of revenue, in the quarter, which reflected investments in customer experience as well as pricing decisions the company believes will drive future growth. Cash flow from operations was $1.0 billion for the quarter and Dell ended the quarter with $11.1 billion in cash and investments. During the quarter, Dell spent $1.7 billion to repurchase 58 million shares of common stock. First Quarter (in millions, except share data) FY'07(1) FY'06 Change Revenue $14,216 $13,386 6% Operating Income $949 $1,174 (19%) Net Income $762 $934 (18%) EPS $0.33 $0.37 (11%) (1) Results for the three months ended May 5, 2006 include stock-based compensation expense of $77 million net of tax, or $0.03 per share, due to the implementation of Statement of Financial Accounting Standard No. 123 (revised 2004) Share-Based Payments, ("SFAS 123(R)"). Dell implemented SFAS 123(R) using the modified prospective method. Accordingly, net income prior to fiscal 2007 includes only compensation expense related to restricted stock awards, but does not include stock-based compensation expense for employee stock options or the purchase discount under Dell's employee stock purchase plan. "The competitive environment has been more intense than we had planned for or understood," said Kevin Rollins, Dell's chief executive officer. "Over the last year, we tried to achieve both growth and increased levels of profitability, which allowed our competitors to improve their relatively low levels of profitability and accelerate their growth. We have now taken action to reignite our growth and reassert the unique value of our Direct Model. We are re-establishing our price position, investing in customer sales, service and support, building our product and technology leadership and improving our cost structure and productivity. All of these actions will enable Dell to optimize the significant potential we have for global growth at a time when we expect our industry to undergo significant change and consolidation." Mr. Rollins said Dell is addressing the changes by reinvigorating its direct business model to provide greater value and service for customers. Specifically, Dell is focusing on three areas: Customer Service: -- The company is investing more than $100 million to regain its leadership position in customer experience. -- More than 2,000 new sales and support personnel have been hired in the U.S.; call centers have been added or expanded in Ottawa, Oklahoma City, Manila and Nashville. -- By the end of the fiscal year, Dell will have opened 14 new manufacturing, call center and design and development facilities over a two-year period. Product Leadership: -- Dell will end the year with the broadest and highest quality product line in its history, including a new generation of servers, and new storage products, desktop and notebook computers, and printers. -- In the enterprise, we will launch new ninth generation servers featuring Intel's Woodcrest microprocessors. Dell will also introduce new AMD Opteron processors in our multi-processor servers by the end of the year offering a great new technology to our customers at the high-end of our server line. -- On the client side, our focus on the XPS brand and acquisition of Alienware signals a renewed vigor around product design and quality for desktops and notebooks. In mobility, we will enhance our line this fall with Intel's new energy-efficient Merom processor. And, we will have Intel's Conroe in our desktops and workstations later this year. Productivity and Cost Improvements: -- Dell is accelerating plans to drive $3 billion of cost improvement in the year including structural material, component and transformational costs as well as improved warranty costs. "We are confident in our ability to continue growing globally, particularly when we remember that 95 percent of the world's population lives outside the U.S. and we have less share of market outside the U.S. than some of our competitors," Mr. Rollins said. "The growth associated with these initiatives will not be accomplished in just one or two quarters. We are positioning the company for the next three to five years and beyond." Dell is making key investments in its top countries, including China, India, Germany, Brazil and the U.S., to ensure that it can design, manufacture and provide service close to its customers for the long-term. Dell ended its practice of providing specific quarterly guidance for revenue and earnings per share and said it would focus forward-looking statements on long-term specific company and industry factors influencing performance. Dell does expect financial results for the second fiscal quarter of fiscal 2007 to be similar to its first quarter results. Product Highlights Mobility revenue was up 12 percent on 36 percent unit growth year-over-year. Enhanced services revenue grew 28 percent year-over-year to $1.4 billion. Revenues for storage increased 12 percent year-over-year, while server shipments increased 8 percent. Revenue for imaging products increased 10 percent year-over-year on 54 percent growth of consumables, such as ink and toner cartridges and paper. More than half of Dell's imaging revenue now comes from purchases of consumables. During the second quarter, Dell will introduce a new generation of business color, mono and multi-function laser printers. Regional Highlights Sales outside the U.S. were 44 percent of the company's overall revenue for the first quarter, up 12 percent year-over-year. Asia Pacific and Japan (APJ) increased revenue in the quarter by 17 percent and units by 30 percent year-over-year or roughly twice the growth of the industry. In China, revenue grew 29 percent year-on-year with continued strong profitability. In other emerging businesses, revenue increased by 54 percent year-over-year in Korea and 40 percent in India. Shipments increased 18 percent year-over-year in Europe, Middle East and Africa (EMEA). Revenue for enterprise products -- which includes servers, storage, services and associated software and peripherals -- increased 9 percent in the quarter year-over-year. Americas International -- all of the Americas excluding the U.S. -- had revenue growth of 26 percent year-over-year with 74 percent growth in Brazil. The U.S. maintained its number one position with 32 percent market share. Dell was recently selected the top equipment brand in a survey of information technology executives in the United States by ACNielsen who cited Dell's value and outstanding customer service. About Dell Dell Inc. (NASDAQ:DELL) listens to customers and delivers innovative technology and services they trust and value. Uniquely enabled by its direct business model, Dell sells more systems globally than any computer company, placing it No. 25 on the Fortune 500. Company revenue for the past four quarters was $56.7 billion. For more information, visit www.dell.com. To get Dell news direct, visit www.dell.com/RSS. 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 ability 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 Income and Related Financial Highlights (in millions, except per share data or as otherwise noted) (unaudited) Three Months Ended ------------------------------- % Growth Rates May 5, February 3, April 29, --------------------- 2006 (1) 2006 2005 Sequential Yr. to Yr. -------- ----------- ---------- ---------- ---------- Net revenue $14,216 $15,183 $13,386 (6%) 6% Cost of revenue 11,744 12,474 10,895 (6%) 8% -------- ----------- ---------- Gross margin 2,472 2,709 2,491 (9%) (1%) Selling, general and administrative 1,394 1,338 1,207 4% 15% Research, development and engineering 129 125 110 3% 18% -------- ----------- ---------- Total operating expenses 1,523 1,463 1,317 4% 16% -------- ----------- ---------- Operating income 949 1,246 1,174 (24%) (19%) Investment and other income, net 50 57 59 (12%) (15%) -------- ----------- ---------- Income before income taxes 999 1,303 1,233 (23%) (19%) Income tax provision 237 291 299 (18%) (21%) -------- ----------- ---------- Net income $762 $1,012 $934 (25%) (18%) ======== =========== ========== Earnings per common share: Basic $0.33 $0.43 $0.38 (23%) (13%) ======== =========== ========== Diluted $0.33 $0.43 $0.37 (23%) (11%) ======== =========== ========== Weighted average shares outstanding: Basic 2,297 2,350 2,456 Diluted 2,318 2,375 2,515 Percentage of Total Net Revenue: - --------- Gross margin 17.4% 17.8% 18.6% Selling, general and administrative 9.8% 8.8% 9.0% Research, development and engineering 0.9% 0.8% 0.8% Operating expenses 10.7% 9.6% 9.8% Operating income 6.7% 8.2% 8.8% Income before income taxes 7.0% 8.6% 9.2% Net income 5.4% 6.7% 7.0% Income tax rate 23.8% 22.3% 24.2% Net Revenue by Geographic Region (in billions): - ----------- Americas $8.9 $9.8 $8.5 (8%) 4% Europe 3.4 3.7 3.2 (9%) 6% Asia Pacific - Japan 1.9 1.7 1.7 11% 17% Percentage of Total Net Revenue: - --------- Americas 63% 64% 64% Europe 24% 24% 24% Asia Pacific - Japan 13% 12% 12% Net Revenue by Product Category (in billions): - ----------- Desktop PCs $5.1 $5.6 $5.3 (9%) (3%) Mobility 3.7 3.8 3.3 (4%) 12% Servers and Networking 1.3 1.4 1.3 (7%) 3% Storage 0.5 0.6 0.4 (16%) 12% Enhanced Services 1.4 1.4 1.1 2% 28% Software and Peripherals 2.2 2.4 2.0 (6%) 11% Percentage of Total Net Revenue: - --------- Desktop PCs 36% 37% 40% Mobility 26% 25% 24% Servers and Networking 9% 10% 10% Storage 3% 4% 3% Enhanced Services 10% 9% 8% Software and Peripherals 16% 15% 15% Note: Percentage growth rates and ratios are calculated based on underlying data in thousands. (1) Results for the three months ended May 5, 2006 include stock-based compensation expense of $77 million, net of tax or $0.03 per share, due to the implementation of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payments, ("SFAS 123(R)"). Dell implemented SFAS 123(R) using the modified prospective method. Accordingly, net income prior to fiscal 2007 includes only compensation expense related to restricted stock awards, but does not include stock-based compensation expense for employee stock options or the purchase discount under Dell's employee stock purchase plan. DELL INC. Condensed Consolidated Statement of Financial Position and Related Financial Highlights (in millions, except for "Ratios" and "Other information") (unaudited) May 5, February 3, April 29, 2006 2006 2005 ---------- ------------ ----------- Assets: - ------- Current assets: Cash and cash equivalents $6,877 $7,042 $5,874 Short-term investments 1,579 2,016 3,967 Accounts receivable, net 4,332 4,089 3,741 Financing receivables, net (2) 1,451 1,363 710 Inventories, net 636 576 483 Other 2,522 2,620 2,277 ---------- ------------ ----------- Total current assets 17,397 17,706 17,052 Property, plant and equipment, net 2,074 2,005 1,741 Investments 2,690 2,691 3,533 Long-term financing receivables, net (2) 256 325 196 Other non-current assets 454 382 165 ---------- ------------ ----------- Total assets $22,871 $23,109 $22,687 ========== ============ =========== Liabilities and Stockholders' Equity: - -------- Current liabilities: Accounts payable $10,069 $9,840 $9,057 Accrued and other 6,251 6,087 5,332 ---------- ------------ ----------- Total current liabilities 16,320 15,927 14,389 Long-term debt 503 504 504 Other non-current liabilities 2,674 2,549 2,170 ---------- ------------ ----------- Total liabilities 19,497 18,980 17,063 Stockholders' equity 3,374 4,129 5,624 ---------- ------------ ----------- Total liabilities and stockholders' equity $22,871 $23,109 $22,687 ========== ============ =========== Ratios: - ------- Days supply in inventory 5 4 4 Days of sales outstanding (1) (2) 30 29 28 Days in accounts payable 77 77 75 ---------- ------------ ----------- Cash conversion cycle (42) (44) (43) Other Information: - ------------------ Headcount (approximate) 69,700 65,200 57,600 Average total revenue/unit (approximate) $1,430 $1,490 $1,520 Note: Ratios are calculated based on underlying data in thousands. (1) 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 May 5, 2006, February 3, 2006, and April 29, 2005, days of sales in accounts receivable and days of customer shipment not yet recognized were 27 and 3 days, 26 and 3 days, and 25 and 3 days, respectively. (2) Financing receivables, net have been separately classified on the balance sheet as of May 5, 2006 and February 3, 2006. The April 29, 2005 balance sheet has been reclassified to conform to the current presentation and days of sales outstanding have been recalculated to reflect the reclassification of certain items previously included in accounts receivable to financing receivables. DELL INC. Condensed Consolidated Statement of Cash Flows (in millions) (unaudited) Three Months Ended ------------------ May 5, 2006 ------------------ Cash flows from operating activities: Net income $762 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 106 Stock-based compensation expense 112 Tax benefits from stock-based compensation 3 Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies (64) Other 48 Changes in: Operating working capital (113) Non-current assets and liabilities 168 ------------------ Net cash provided by operating activities 1,022 Cash flows from investing activities: Investments: Purchases (3,087) Maturities and sales 3,548 Capital expenditures (184) ------------------ Net cash provided by investing activities 277 Cash flows from financing activities: Purchases of common stock (1,691) Issuance of common stock under employee plans 138 Excess tax benefits from stock-based compensation 23 Other (3) ------------------ Net cash used in financing activities (1,533) Effect of exchange rate changes on cash and cash equivalents 69 ------------------ Net decrease in cash and cash equivalents (165) Cash and cash equivalents at beginning of period 7,042 ------------------ Cash and cash equivalents at end of period $6,877 ================== Additional supplemental information is available on our website at http://www.dell.com/downloads/global/corporate/conferences/ q1fy07_earnings_pres.pdf (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.) CONTACT: Dell Inc., Round Rock Media Contacts: Bob Pearson, 512-728-3256 bob_pearson@dell.com or Jess Blackburn, 512-725-0187 jess_blackburn@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-----