UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 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): February 21, 2012
____________
Dell
Inc.
(Exact
name of registrant as specified in its charter)
Delaware |
0-17017 |
74-2487834 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
One Dell Way, Round Rock, Texas 78682 |
(Address of principal executive offices) (Zip Code) |
Registrant’s telephone number, including area code: (800) 289-3355
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 February 21, 2012, Dell Inc. (“Dell”) issued a press release announcing its financial results for its fiscal quarter and fiscal year ended February 3, 2012. A copy of the press release is furnished as Exhibit 99.1 to this report.
To supplement Dell’s condensed consolidated financial statements presented on the basis of accounting principles generally accepted in the United States of America (“GAAP”) which are furnished in Exhibit 99.1 to this report, Dell has presented information about non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share (collectively, the “non-GAAP financial measures”), which are not measurements of financial performance under GAAP. A reconciliation of each historical non-GAAP financial measure to the most comparable GAAP financial measure for Dell’s fiscal quarter and fiscal year ended February 3, 2012 and certain prior fiscal periods is included in the tables set forth under the heading “Reconciliation of Non-GAAP Financial Measures” in Exhibit 99.1. In addition, a discussion of Dell management’s reasons for including the non-GAAP financial measures, the material limitations associated with the use of the non-GAAP financial measures, and the manner in which Dell management compensates for those limitations is included under “Use of Non-GAAP Financial Measures” in Exhibit 99.1. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for net income, operating income, gross margin, operating expenses, and earnings per share prepared in accordance with GAAP.
In accordance with General Instruction B.2 to Form 8-K, the information contained in this current report, including Exhibit 99.1 hereto, is being “furnished” with the Securities and Exchange Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under such section. Furthermore, such information shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless specifically identified as being incorporated therein by reference.
Item 9.01 — Financial Statements and Exhibits.
Dell herewith furnishes the following document as an exhibit to this report:
(d) Exhibits
Exhibit
Number |
Description |
|
99.1 | Press Release Issued by Dell Inc., dated February 21, 2012 |
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: February 21, 2012 | By: |
/s/ Janet B. Wright |
|
Janet B. Wright, |
|||
Vice President and Assistant Secretary |
|||
(Duly Authorized Officer) |
EXHIBIT INDEX
Exhibit Number |
Description |
|
99.1 |
Press Release Issued by Dell Inc., dated February 21, 2012 |
Exhibit 99.1
Dell Record Fiscal Year 2012 Highlighted By Enterprise Solutions and Services Strength
ROUND ROCK, Texas--(BUSINESS WIRE)--February 21, 2012--Dell’s further expansion as an enterprise solutions and services provider highlighted the company’s most successful financial year ever.
New corporate highs were achieved for a full fiscal year with revenue of $62.1 billion, earnings per share of $1.88 (GAAP) and $2.13 (Non-GAAP), and revenue from enterprise solutions and services of $18.6 billion.
“Our customers think of Dell in much broader terms now, trusting us with their comprehensive IT needs, from the datacenter to the device,” said Michael Dell, chairman and CEO. “We are more committed than ever to both developing and investing in innovative solutions that deliver greater value and better outcomes for our customers.”
“The expanding mix of revenue and earnings from enterprise solutions and services is critical to our future,” said Brian Gladden, Dell chief financial officer. “Our full-year results are a strong reflection of the significant progress we made this year on our strategic priorities.”
Results
Fiscal-Year 2012 Fourth Quarter and Full Year Highlights |
||||||||||||||||||||||||
Fourth Quarter |
Fiscal Year |
|||||||||||||||||||||||
(in millions) |
FY12 |
FY11 |
Change |
FY12 |
FY11 |
Change |
||||||||||||||||||
Revenue | $ | 16,031 | $ | 15,692 | 2 | % | $ | 62,071 | $ | 61,494 | 1 | % | ||||||||||||
Operating Income (GAAP) | $ | 931 | $ | 1,145 | (19 | )% | $ | 4,431 | $ |
3,433 |
29 |
% |
||||||||||||
Net Income (GAAP) | $ | 764 | $ | 927 | (18 | )% | $ | 3,492 | $ | 2,635 | 33 | % | ||||||||||||
EPS (GAAP) | $ | 0.43 | $ | 0.48 | (10 | )% | $ | 1.88 | $ | 1.35 | 39 | % | ||||||||||||
Operating Income (non-GAAP) | $ | 1,143 | $ | 1,286 | (11 | )% | $ | 5,135 | $ | 4,149 | 24 | % | ||||||||||||
Net Income (non-GAAP) | $ | 913 | $ | 1,018 | (10 | )% | $ | 3,952 | $ | 3,106 | 27 | % | ||||||||||||
EPS (non-GAAP) | $ | 0.51 | $ | 0.53 | (4 | )% | $ | 2.13 | $ | 1.59 | 34 | % | ||||||||||||
Information about Dell’s use of non-GAAP financial information is provided under “Non-GAAP Financial Measures” below. Non-GAAP financial information excludes costs related primarily to the amortization of purchased intangibles, severance and facility actions and acquisition-related costs, a merger termination fee and certain settlement costs. All comparisons in this press release are year over year unless otherwise noted.
Strategic Highlights:
Business Units and Regions:
Company Outlook:
The company will continue to prioritize operating income and cash flow. For fiscal 2013, the company expects non-GAAP earnings per share to exceed the record $2.13 it delivered in fiscal 2012 and expects to continue strong execution, with cash flow from operations exceeding net income. For Q1, the company expects revenue to decline approximately 7 percent sequentially, which aligns with normal seasonality adjusted for the fourteenth week.
About Dell
Dell Inc. (NASDAQ: DELL) listens to customers and delivers worldwide innovative technology, business solutions and services they trust and value. For more information, visit www.dell.com. As previously announced, the fourth-quarter analyst call with Michael Dell, chairman and CEO; Brian Gladden, CFO; and, Steve Felice, president and chief commercial officer, will be webcast live today at 4:00 CST and archived at www.dell.com/investor. To monitor highlighted facts from the analyst call, follow on the Dell Investor Relations Twitter account at: http://twitter.com/dellshares or hashtag #DellEarnings. To communicate directly with Dell, go to www.dell.com/dellshares.
Non-GAAP Financial Measures:
This press release includes information about non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share (collectively with non-GAAP gross margin and non-GAAP operating expenses, the “non-GAAP financial measures”), which are not measurements of financial performance prepared in accordance with U.S. generally accepted accounting principles. In the following tables, Dell has provided a reconciliation of each historical non-GAAP financial measure to the most directly comparable GAAP financial measure under the heading “Reconciliation of Non-GAAP Financial Measures” and has presented a detailed discussion of its reasons for including the non-GAAP financial measures and the limitations associated with those measures under the heading “Use of Non-GAAP Financial Measures.” Dell encourages investors to review the reconciliation and the non-GAAP discussion in conjunction with Dell’s presentation of these non-GAAP financial measures.
Special Note on Forward-Looking Statements:
Statements in this press release that relate to future results and events (including statements about Dell’s future financial and operating performance, trends relating to enterprise, solutions and services, anticipated customer demand, global macroeconomic uncertainty, and geographic trends, as well as the financial guidance with respect to revenue, cash flow from operations, net income and non-GAAP earnings per share) are forward-looking statements and are based on Dell's current expectations. In some cases, you can identify these statements by such forward-looking words as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “confidence,” “may,” “plan,” “potential,” “should,” “will” and “would,” or similar expressions. Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks, uncertainties and other factors, including: intense competition; Dell’s cost-cutting measures; Dell’s ability to effectively manage the growth of its distribution capabilities and add to its product and services offerings; Dell’s ability to effectively manage periodic product and services transitions; weak global economic conditions and instability in financial markets; Dell’s ability to generate substantial non-U.S. net revenue; weak economic conditions and additional regulation affecting Dell’s financial services activities; Dell’s ability to achieve favorable pricing from its vendors; Dell’s ability to deliver consistent quality products and services; Dell’s reliance on third-party suppliers for product components, including reliance on several single-sourced or limited-sourced suppliers; successful implementation of Dell’s acquisition strategy; Dell’s product, customer, and geographic sales mix, and seasonal sales trends; access to the capital markets by Dell or its customers; loss of government contracts; the risk of temporary suspension or debarment from contracting with U.S. federal, state and local governments as a result of settlements of an SEC investigation by Dell and Dell’s Chairman and CEO; customer terminations of or pricing changes in services contracts, or Dell’s failure to perform as it anticipates at the time it enters into services contracts; Dell’s ability to obtain licenses to intellectual property developed by others on commercially reasonable and competitive terms; information technology and manufacturing infrastructure disruptions or breaches of data security; Dell’s ability to hedge effectively its exposure to fluctuations in foreign currency exchange rates and interest rates; counterparty default; unfavorable results of legal proceedings; expiration of tax holidays or favorable tax rate structures, or unfavorable outcomes in tax audits and other compliance matters; Dell’s ability to attract, retain, and motivate key personnel; Dell’s ability to maintain strong internal controls; changing environmental and safety laws; the effect of armed hostilities, terrorism, natural disasters, and public health issues; and other risks and uncertainties discussed in Dell’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for its fiscal year ended Jan. 28, 2011. In particular, Dell’s expectations with regard to revenue, cash flow from operations, net income and non-GAAP earnings per share for the full fiscal year ending Feb. 1, 2013 assume, among other matters, that there is no significant decline in economic conditions generally or demand growth specifically, that macroeconomic uncertainties do not materialize into significant economic difficulties, no significant change in product mix patterns, continued geographic customer demand trends, continued successful demand planning and forecasting, no supply chain disruptions, and no significant adverse component pricing or supply movements. Dell assumes no obligation to update its forward-looking statements.
Consolidated statements of income, financial position and cash flows and
other financial data 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 and percentages) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Three Months Ended | % Growth Rates | |||||||||||||||||||||||
February 3, | October 28, | January 28, | ||||||||||||||||||||||
2012 | 2011 | 2011 | Sequential | Yr. to Yr. | ||||||||||||||||||||
Net revenue | ||||||||||||||||||||||||
Products | $ | 12,925 | $ | 12,312 | $ | 12,751 | 5 | % | 1 | % | ||||||||||||||
Services, including software related | 3,106 | 3,053 | 2,941 | 2 | % | 6 | % | |||||||||||||||||
Total net revenue |
16,031 | 15,365 | 15,692 | 4 | % | 2 | % | |||||||||||||||||
Cost of net revenue | ||||||||||||||||||||||||
Products | 10,521 | 9,797 | 10,337 | 7 | % | 2 | % | |||||||||||||||||
Services, including software related | 2,125 | 2,099 | 2,064 | 1 | % | 3 | % | |||||||||||||||||
Total cost of net revenue | 12,646 | 11,896 | 12,401 | 6 | % | 2 | % | |||||||||||||||||
Gross margin | 3,385 | 3,469 | 3,291 | (2 | %) | 3 | % | |||||||||||||||||
Operating expenses | ||||||||||||||||||||||||
Selling, general and administrative | 2,218 | 2,107 | 1,977 | 5 | % | 12 | % | |||||||||||||||||
Research, development and engineering | 236 | 220 | 169 | 7 | % | 40 | % | |||||||||||||||||
Total operating expenses | 2,454 | 2,327 | 2,146 | 5 | % | 14 | % | |||||||||||||||||
Operating income | 931 | 1,142 | 1,145 | (18 | %) | (19 | %) | |||||||||||||||||
Interest and other, net | (24 | ) | (70 | ) | (18 | ) | 66 | % | (36 | %) | ||||||||||||||
Income before income taxes | 907 | 1,072 | 1,127 | (15 | %) | (20 | %) | |||||||||||||||||
Income tax provision | 143 | 179 | 200 | (20 | %) | (28 | %) | |||||||||||||||||
Net income | $ | 764 | $ | 893 | $ | 927 | (14 | %) | (18 | %) | ||||||||||||||
Earnings per share: | ||||||||||||||||||||||||
Basic | $ | 0.43 | $ | 0.49 | $ | 0.48 | (12 | %) | (10 | %) | ||||||||||||||
Diluted | $ | 0.43 | $ | 0.49 | $ | 0.48 | (12 | %) | (10 | %) | ||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||||||
Basic | 1,778 | 1,813 | 1,924 | (2 | %) | (8 | %) | |||||||||||||||||
Diluted | 1,796 | 1,828 | 1,938 | (2 | %) | (7 | %) | |||||||||||||||||
Percentage of Total Net Revenue: |
||||||||||||||||||||||||
Gross margin | 21.1 | % | 22.6 | % | 21.0 | % | ||||||||||||||||||
Selling, general and administrative | 13.8 | % | 13.8 | % | 12.6 | % | ||||||||||||||||||
Research and development | 1.5 | % | 1.4 | % | 1.1 | % | ||||||||||||||||||
Operating expenses | 15.3 | % | 15.2 | % | 13.7 | % | ||||||||||||||||||
Operating income | 5.8 | % | 7.4 | % | 7.3 | % | ||||||||||||||||||
Income before income taxes | 5.7 | % | 7.0 | % | 7.2 | % | ||||||||||||||||||
Net income | 4.8 | % | 5.8 | % | 5.9 | % | ||||||||||||||||||
Income tax rate | 15.8 | % | 16.7 | % | 17.8 | % | ||||||||||||||||||
Net Revenue by Product Category: |
||||||||||||||||||||||||
Servers and Networking | $ | 2,220 | $ | 2,089 | $ | 2,090 | 6 | % | 6 | % | ||||||||||||||
Storage | 500 | 460 | 574 | 9 | % | (13 | %) | |||||||||||||||||
Services | 2,179 | 2,123 | 1,943 | 3 | % | 12 | % | |||||||||||||||||
Software and Peripherals | 2,558 | 2,528 | 2,651 | 1 | % | (4 | %) | |||||||||||||||||
Mobility | 4,877 | 4,750 | 4,850 | 3 | % | 1 | % | |||||||||||||||||
Desktop PCs | 3,697 | 3,415 | 3,584 | 8 | % | 3 | % | |||||||||||||||||
Consolidated net revenue | $ | 16,031 | $ | 15,365 | $ | 15,692 | 4 | % | 2 | % | ||||||||||||||
Percentage of Total Net Revenue: |
||||||||||||||||||||||||
Servers and Networking | 14 | % | 14 | % | 13 | % | ||||||||||||||||||
Storage | 3 | % | 3 | % | 4 | % | ||||||||||||||||||
Services | 14 | % | 14 | % | 12 | % | ||||||||||||||||||
Software and Peripherals | 16 | % | 16 | % | 17 | % | ||||||||||||||||||
Mobility | 30 | % | 31 | % | 31 | % | ||||||||||||||||||
Desktop PCs | 23 | % | 22 | % | 23 | % | ||||||||||||||||||
Net Revenue by Global Segment: |
||||||||||||||||||||||||
Large Enterprise | $ | 4,909 | $ | 4,487 | $ | 4,692 | 9 | % | 5 | % | ||||||||||||||
Public | 3,949 | 4,375 | 3,973 | (10 | %) | (1 | %) | |||||||||||||||||
Small and Medium Business | 3,977 | 3,712 | 3,749 | 7 | % | 6 | % | |||||||||||||||||
Consumer | 3,196 | 2,791 | 3,278 | 15 | % | (2 | %) | |||||||||||||||||
Consolidated net revenue | $ | 16,031 | $ | 15,365 | $ | 15,692 | 4 | % | 2 | % | ||||||||||||||
Percentage of Total Net Revenue: |
||||||||||||||||||||||||
Large Enterprise | 30 | % | 29 | % | 30 | % | ||||||||||||||||||
Public | 25 | % | 29 | % | 25 | % | ||||||||||||||||||
Small and Medium Business | 25 | % | 24 | % | 24 | % | ||||||||||||||||||
Consumer | 20 | % | 18 | % | 21 | % | ||||||||||||||||||
Consolidated Operating Income: |
||||||||||||||||||||||||
Large Enterprise | $ | 461 | $ | 441 | $ | 502 | ||||||||||||||||||
Public | 327 | 463 | 366 | |||||||||||||||||||||
Small and Medium Business | 412 | 386 | 450 | |||||||||||||||||||||
Consumer | 39 | 76 | 69 | |||||||||||||||||||||
Segment operating income | 1,239 | 1,366 | 1,387 | |||||||||||||||||||||
Broad based long-term incentives | (96 | ) | (78 | ) | (101 | ) | ||||||||||||||||||
Amortization of intangible assets | (104 | ) | (100 | ) | (85 | ) | ||||||||||||||||||
Severance and facility actions and acquisition-related | (108 | ) | (46 | ) | (56 | ) | ||||||||||||||||||
Consolidated operating income | $ | 931 | $ | 1,142 | $ | 1,145 | ||||||||||||||||||
Note: Percentage growth rates and ratios are calculated based on underlying data in thousands. | ||||||||||||||||||||||||
DELL INC. | ||||||||||||||
Condensed Consolidated Statement of Income and Related Financial Highlights | ||||||||||||||
(in millions, except per share data and percentages) | ||||||||||||||
(unaudited) | ||||||||||||||
Fiscal Year Ended | % Growth Rates | |||||||||||||
February 3, | January 28, | |||||||||||||
2012 | 2011 | Yr. to Yr. | ||||||||||||
Net revenue | ||||||||||||||
Products | $ | 49,906 | $ | 50,002 | 0 | % | ||||||||
Services, including software related | 12,165 | 11,492 | 6 | % | ||||||||||
Total net revenue |
62,071 | 61,494 | 1 | % | ||||||||||
Cost of net revenue | ||||||||||||||
Products | 39,689 | 42,068 | (6 | %) | ||||||||||
Services, including software related | 8,571 | 8,030 | 7 | % | ||||||||||
Total cost of net revenue | 48,260 | 50,098 | (4 | %) | ||||||||||
Gross margin | 13,811 | 11,396 | 21 | % | ||||||||||
Operating expenses | ||||||||||||||
Selling, general and administrative | 8,524 | 7,302 | 17 | % | ||||||||||
Research, development and engineering | 856 | 661 | 30 | % | ||||||||||
Total operating expenses | 9,380 | 7,963 | 18 | % | ||||||||||
Operating income | 4,431 | 3,433 | 29 | % | ||||||||||
Interest and other, net(1) |
(191 | ) | (83 | ) | (130 | %) | ||||||||
Income before income taxes | 4,240 | 3,350 | 27 | % | ||||||||||
Income tax provision | 748 | 715 | 5 | % | ||||||||||
Net income | $ | 3,492 | $ | 2,635 | 33 | % | ||||||||
Earnings per share: | ||||||||||||||
Basic | $ | 1.90 | $ | 1.36 | 40 | % | ||||||||
Diluted | $ | 1.88 | $ | 1.35 | 39 | % | ||||||||
Weighted average shares outstanding: | ||||||||||||||
Basic | 1,838 | 1,944 | (5 | %) | ||||||||||
Diluted | 1,853 | 1,955 | (5 | %) | ||||||||||
Percentage of Total Net Revenue: |
||||||||||||||
Gross margin | 22.3 | % | 18.5 | % | ||||||||||
Selling, general and administrative | 13.7 | % | 11.9 | % | ||||||||||
Research and development | 1.5 | % | 1.0 | % | ||||||||||
Operating expenses | 15.2 | % | 12.9 | % | ||||||||||
Operating income | 7.1 | % | 5.6 | % | ||||||||||
Income before income taxes | 6.8 | % | 5.4 | % | ||||||||||
Net income | 5.6 | % | 4.3 | % | ||||||||||
Income tax rate | 17.6 | % | 21.3 | % | ||||||||||
Net Revenue by Product Category: |
||||||||||||||
Servers and Networking | $ | 8,336 | $ | 7,609 | 10 | % | ||||||||
Storage | 1,943 | 2,295 | (15 | %) | ||||||||||
Services | 8,322 | 7,673 | 8 | % | ||||||||||
Software and Peripherals | 10,222 | 10,261 | 0 | % | ||||||||||
Mobility | 19,104 | 18,971 | 1 | % | ||||||||||
Desktop PCs | 14,144 | 14,685 | (4 | %) | ||||||||||
Consolidated net revenue | $ | 62,071 | $ | 61,494 | 1 | % | ||||||||
Percentage of Total Net Revenue: |
||||||||||||||
Servers and Networking | 13 | % | 12 | % | ||||||||||
Storage | 3 | % | 4 | % | ||||||||||
Services | 13 | % | 12 | % | ||||||||||
Software and Peripherals | 17 | % | 17 | % | ||||||||||
Mobility | 31 | % | 31 | % | ||||||||||
Desktop PCs | 23 | % | 24 | % | ||||||||||
Net Revenue by Global Segment: |
||||||||||||||
Large Enterprise | $ | 18,457 | $ | 17,813 | 4 | % | ||||||||
Public | 16,548 | 16,851 | (2 | %) | ||||||||||
Small and Medium Business | 15,166 | 14,473 | 5 | % | ||||||||||
Consumer | 11,900 | 12,357 | (4 | %) | ||||||||||
Consolidated net revenue | $ | 62,071 | $ | 61,494 | 1 | % | ||||||||
Percentage of Total Net Revenue: |
||||||||||||||
Large Enterprise | 30 | % | 29 | % | ||||||||||
Public | 27 | % | 27 | % | ||||||||||
Small and Medium Business | 24 | % | 24 | % | ||||||||||
Consumer | 19 | % | 20 | % | ||||||||||
Consolidated Operating Income: |
||||||||||||||
Large Enterprise | $ | 1,854 | $ | 1,473 | ||||||||||
Public | 1,644 | 1,484 | ||||||||||||
Small and Medium Business | 1,665 | 1,477 | ||||||||||||
Consumer | 324 | 65 | ||||||||||||
Segment operating income | 5,487 | 4,499 | ||||||||||||
Broad based long-term incentives | (352 | ) | (350 | ) | ||||||||||
Amortization of intangible assets | (391 | ) | (349 | ) | ||||||||||
Severance and facility actions and acquisition-related | (313 | ) | (227 | ) | ||||||||||
Other(2) | - | (140 | ) | |||||||||||
Consolidated operating income | $ | 4,431 | $ | 3,433 | ||||||||||
Note: Percentage growth rates and ratios are calculated based on underlying data in thousands. |
(1) Interest and other, net for the fiscal year ended January 28, 2011 includes Dell’s receipt of a $72 million merger termination fee.
(2) Other for the fiscal year ended January 28, 2011 includes amounts for the $100 million settlement of the SEC investigation and a $40 million settlement for a securities litigation matter.
DELL INC. | |||||||||||||||
Condensed Consolidated Statement of Financial Position and Related Financial Highlights | |||||||||||||||
(in millions, except for "Ratios") | |||||||||||||||
(unaudited) | |||||||||||||||
February 3, | October 28, | January 28, | |||||||||||||
2012 | 2011 | 2011 | |||||||||||||
Assets: |
|||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 13,852 | $ | 13,293 | $ | 13,913 | |||||||||
Short-term investments | 966 | 545 | 452 | ||||||||||||
Accounts receivable, net | 6,476 | 6,690 | 6,493 | ||||||||||||
Short-term financing receivables, net | 3,327 | 3,326 | 3,643 | ||||||||||||
Inventories, net | 1,404 | 1,397 | 1,301 | ||||||||||||
Other current assets | 3,423 | 3,005 | 3,219 | ||||||||||||
Total current assets | 29,448 | 28,256 | 29,021 | ||||||||||||
Property, plant and equipment, net | 2,124 | 2,123 | 1,953 | ||||||||||||
Long-term investments | 3,404 | 2,183 | 704 | ||||||||||||
Long-term financing receivables, net | 1,372 | 1,279 | 799 | ||||||||||||
Goodwill | 5,838 | 5,943 | 4,365 | ||||||||||||
Purchased intangible assets, net | 1,857 | 1,957 | 1,495 | ||||||||||||
Other non-current assets | 490 | 302 | 262 | ||||||||||||
Total assets | $ | 44,533 | $ | 42,043 | $ | 38,599 | |||||||||
Liabilities and Stockholders' Equity: |
|||||||||||||||
Current liabilities: | |||||||||||||||
Short-term debt | $ | 2,867 | $ | 1,831 | $ | 851 | |||||||||
Accounts payable | 11,656 | 11,107 | 11,293 | ||||||||||||
Accrued and other | 3,934 | 3,816 | 4,181 | ||||||||||||
Short-term deferred services revenue | 3,544 | 3,465 | 3,158 | ||||||||||||
Total current liabilities | 22,001 | 20,219 | 19,483 | ||||||||||||
Long-term debt | 6,387 | 6,430 | 5,146 | ||||||||||||
Long-term deferred services revenue | 3,836 | 3,744 | 3,518 | ||||||||||||
Other non-current liabilities | 3,392 | 2,987 | 2,686 | ||||||||||||
Total liabilities | 35,616 | 33,380 | 30,833 | ||||||||||||
Total stockholders' equity | 8,917 | 8,663 | 7,766 | ||||||||||||
Total liabilities and equity | $ | 44,533 | $ | 42,043 | $ | 38,599 | |||||||||
Ratios: |
|||||||||||||||
Days of sales outstanding(1) |
42 | 42 | 40 | ||||||||||||
Days supply in inventory | 11 | 11 | 9 | ||||||||||||
Days in accounts payable | (89 | ) | (84 | ) | (82 | ) | |||||||||
Cash conversion cycle | (36 | ) | (31 | ) | (33 | ) | |||||||||
Average total revenue/unit (approximate) | $ | 1,330 | $ | 1,390 | $ | 1,360 | |||||||||
Note: Ratios are calculated based on underlying data in thousands. |
(1) Days of sales outstanding (“DSO”) is based on the ending net trade receivables and most recent quarterly revenue for each period. DSO includes the effect of product costs related to customer shipments not yet recognized as revenue that are classified in the other current assets. At February 3, 2012, October 28, 2011, and January 28, 2011, DSO and days of customer shipments not yet recognized were 39 and 3 days, 39 and 3 days, 37 and 3 days, respectively.
DELL INC. | ||||||||||||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||||||||||||
(in millions, unaudited) | ||||||||||||||||||||
Three Months Ended | Fiscal Year Ended | |||||||||||||||||||
February 3, | January 28, | February 3, | January 28, | |||||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income | $ | 764 | $ | 927 | $ | 3,492 | $ | 2,635 | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||||||
Depreciation and amortization | 249 | 225 | 936 | 970 | ||||||||||||||||
Stock-based compensation | 101 | 107 | 362 | 332 | ||||||||||||||||
Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies |
14 | (27 | ) | (5 | ) | (4 | ) | |||||||||||||
Provision for doubtful accounts - including financing receivables | 67 | 83 | 234 | 382 | ||||||||||||||||
Other | 85 | 12 | 40 | (19 | ) | |||||||||||||||
Changes in assets and liabilities, net of effects from acquisitions: | ||||||||||||||||||||
Accounts receivable | 137 | (119 | ) | (53 | ) | (707 | ) | |||||||||||||
Financing receivables | (210 | ) | (250 | ) | (372 | ) | (709 | ) | ||||||||||||
Inventories | (6 | ) | (7 | ) | (52 | ) | (248 | ) | ||||||||||||
Other assets | (251 | ) | (227 | ) | (28 | ) | 516 | |||||||||||||
Accounts payable | 558 | 24 | 327 | (151 | ) | |||||||||||||||
Deferred services revenue | 180 | 149 | 720 | 551 | ||||||||||||||||
Accrued and other liabilities | 149 | 586 | (74 | ) | 421 | |||||||||||||||
Change in cash from operating activities | 1,837 | 1,483 | 5,527 | 3,969 | ||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Investments: | ||||||||||||||||||||
Purchases | (2,237 | ) | (174 | ) | (4,656 | ) | (1,360 | ) | ||||||||||||
Maturities and sales | 579 | 174 | 1,435 | 1,358 | ||||||||||||||||
Capital expenditures | (165 | ) | (160 | ) | (675 | ) | (444 | ) | ||||||||||||
Proceeds from sale of facility and land | 2 | - | 14 | 18 | ||||||||||||||||
Purchase of financing receivables | - | - | - | (430 | ) | |||||||||||||||
Collections on purchased financing receivables | 74 | 49 | 278 | 69 | ||||||||||||||||
Acquisition of business, net of cash received |
2 | (130 | ) | (2,562 | ) | (376 | ) | |||||||||||||
Change in cash from investing activities |
(1,745 | ) | (241 | ) | (6,166 | ) | (1,165 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Repurchase of common stock | (537 | ) | (200 | ) | (2,717 | ) | (800 | ) | ||||||||||||
Issuance of common stock under employee plans | 6 | 1 | 40 | 12 | ||||||||||||||||
Issuance (repayment) of commercial paper (maturity 90 days or less), net |
635 | - | 635 | (176 | ) | |||||||||||||||
Proceeds from debt | 733 | 515 | 4,050 | 3,069 | ||||||||||||||||
Repayments of debt |
(380 | ) | (515 | ) | (1,435 | ) | (1,630 | ) | ||||||||||||
Other | 1 | - | 4 | 2 | ||||||||||||||||
Change in cash from financing activities |
458 | (199 | ) | 577 | 477 | |||||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
9 | (19 | ) | 1 | (3 | ) | ||||||||||||||
Change in cash and cash equivalents |
559 | 1,024 | (61 | ) | 3,278 | |||||||||||||||
Cash and cash equivalents at beginning of period |
13,293 | 12,889 | 13,913 | 10,635 | ||||||||||||||||
Cash and cash equivalents at end of period |
$ | 13,852 | $ | 13,913 | $ | 13,852 | $ | 13,913 | ||||||||||||
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
The tables on the following pages set forth, for the periods indicated, a reconciliation of non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share (collectively, the “non-GAAP financial measures”) to the most comparable GAAP financial measures. These non-GAAP financial measures may not be directly comparable to similarly titled measures reported by other companies. See “Use of Non-GAAP Financial Measures” following the tables for additional information regarding Dell’s reasons for including the non-GAAP financial measures and for material limitations with respect to the usefulness of these measures.
DELL INC. | |||||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||||
(in millions, except per share data and percentages) | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Three Months Ended | % Growth Rates | ||||||||||||||||||||||
February 3, | October 28, | January 28, | |||||||||||||||||||||
2012 | 2011 | 2011 | Sequential | Yr. to Yr. | |||||||||||||||||||
|
|||||||||||||||||||||||
GAAP gross margin | $ | 3,385 | $ | 3,469 | $ | 3,291 | (2 | %) | 3 | % | |||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||
Amortization of intangibles | 83 | 77 | 69 | ||||||||||||||||||||
Severance and facility actions and acquisition-related | 15 | - | 8 | ||||||||||||||||||||
Non-GAAP gross margin | $ | 3,483 | $ | 3,546 | $ | 3,368 | (2 | %) | 3 | % | |||||||||||||
GAAP operating expenses | $ | 2,454 | $ | 2,327 | $ | 2,146 | 5 | % | 14 | % | |||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||
Amortization of intangibles | (21 | ) | (23 | ) | (16 | ) | |||||||||||||||||
Severance and facility actions and acquisition-related | (93 | ) | (46 | ) | (48 | ) | |||||||||||||||||
Non-GAAP operating expenses | $ | 2,340 | $ | 2,258 | $ | 2,082 | 4 | % | 12 | % | |||||||||||||
GAAP operating income | $ | 931 | $ | 1,142 | $ | 1,145 | (18 | %) | (19 | %) | |||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||
Amortization of intangibles | 104 | 100 | 85 | ||||||||||||||||||||
Severance and facility actions and acquisition-related | 108 | 46 | 56 | ||||||||||||||||||||
Non-GAAP operating income | $ | 1,143 | $ | 1,288 | $ | 1,286 | (11 | %) | (11 | %) | |||||||||||||
GAAP net income | $ | 764 | $ | 893 | $ | 927 | (14 | %) | (18 | %) | |||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||
Amortization of intangibles | 104 | 100 | 85 | ||||||||||||||||||||
Severance and facility actions and acquisition-related | 108 | 46 | 56 | ||||||||||||||||||||
Aggregate adjustment for income taxes | (63 | ) | (56 | ) | (50 | ) | |||||||||||||||||
Non-GAAP net income | $ | 913 | $ | 983 | $ | 1,018 | (7 | %) | (10 | %) | |||||||||||||
GAAP earnings per share - diluted | $ | 0.43 | $ | 0.49 | $ | 0.48 | (12 | %) | (10 | %) | |||||||||||||
Non-GAAP adjustments per share - diluted | 0.08 | 0.05 | 0.05 | ||||||||||||||||||||
Non-GAAP earnings per share - diluted | $ | 0.51 | $ | 0.54 | $ | 0.53 | (6 | %) | (4 | %) | |||||||||||||
Diluted WAS | 1,796 | 1,828 | 1,938 | ||||||||||||||||||||
Percentage of Total Net Revenue: |
|||||||||||||||||||||||
GAAP gross margin | 21.1 | % | 22.6 | % | 21.0 | % | |||||||||||||||||
Non-GAAP adjustment | 0.6 | % | 0.5 | % | 0.5 | % | |||||||||||||||||
Non-GAAP gross margin | 21.7 | % | 23.1 | % | 21.5 | % | |||||||||||||||||
GAAP operating expenses | 15.3 | % | 15.2 | % | 13.7 | % | |||||||||||||||||
Non-GAAP adjustment | (0.7 | %) | (0.5 | %) | (0.4 | %) | |||||||||||||||||
Non-GAAP operating expenses | 14.6 | % | 14.7 | % | 13.3 | % | |||||||||||||||||
GAAP operating income | 5.8 | % | 7.4 | % | 7.3 | % | |||||||||||||||||
Non-GAAP adjustment | 1.3 | % | 1.0 | % | 0.9 | % | |||||||||||||||||
Non-GAAP operating income | 7.1 | % | 8.4 | % | 8.2 | % | |||||||||||||||||
GAAP net income | 4.8 | % | 5.8 | % | 5.9 | % | |||||||||||||||||
Non-GAAP adjustment | 0.9 | % | 0.6 | % | 0.6 | % | |||||||||||||||||
Non-GAAP net income | 5.7 | % | 6.4 | % | 6.5 | % | |||||||||||||||||
Note: Percentage growth rates and ratios are calculated based on underlying data in thousands. | |||||||||||||||||||||||
DELL INC. | ||||||||||||||
Reconciliation of Non-GAAP Financial Measures | ||||||||||||||
(in millions, except per share data and percentages) | ||||||||||||||
(unaudited) | ||||||||||||||
Fiscal Year Ended | % Growth Rates | |||||||||||||
February 3, | January 28, | |||||||||||||
2012 | 2011 | Yr. to Yr. | ||||||||||||
GAAP gross margin | $ | 13,811 | $ | 11,396 | 21 | % | ||||||||
Non-GAAP adjustments: | ||||||||||||||
Amortization of intangibles | 305 | 278 | ||||||||||||
Severance and facility actions and acquisition-related | 49 | 57 | ||||||||||||
Non-GAAP gross margin | $ | 14,165 | $ | 11,731 | 21 | % | ||||||||
GAAP operating expenses | $ | 9,380 | $ | 7,963 | 18 | % | ||||||||
Non-GAAP adjustments: | ||||||||||||||
Amortization of intangibles | (86 | ) | (71 | ) | ||||||||||
Severance and facility actions and acquisition-related | (264 | ) | (170 | ) | ||||||||||
Other(1) | - | (140 | ) | |||||||||||
Non-GAAP operating expenses | $ | 9,030 | $ | 7,582 | 19 | % | ||||||||
GAAP operating income | $ | 4,431 | $ | 3,433 | 29 | % | ||||||||
Non-GAAP adjustments: | ||||||||||||||
Amortization of intangibles | 391 | 349 | ||||||||||||
Severance and facility actions and acquisition-related | 313 | 227 | ||||||||||||
Other(1) | - | 140 | ||||||||||||
Non-GAAP operating income | $ | 5,135 | $ | 4,149 | 24 | % | ||||||||
GAAP net income | $ | 3,492 | $ | 2,635 | 33 | % | ||||||||
Non-GAAP adjustments: | ||||||||||||||
Amortization of intangibles | 391 | 349 | ||||||||||||
Severance and facility actions and acquisition-related | 313 | 227 | ||||||||||||
Other(1) | - | 68 | ||||||||||||
Aggregate adjustment for income taxes | (244 | ) | (173 | ) | ||||||||||
Non-GAAP net income | $ | 3,952 | $ | 3,106 | 27 | % | ||||||||
GAAP earnings per share - diluted | $ | 1.88 | $ | 1.35 | 39 | % | ||||||||
Non-GAAP adjustments per share - diluted | 0.25 | 0.24 | ||||||||||||
Non-GAAP earnings per share - diluted | $ | 2.13 | $ | 1.59 | 34 | % | ||||||||
Diluted WAS | 1,853 | 1,955 | ||||||||||||
Percentage of Total Net Revenue: |
||||||||||||||
GAAP gross margin | 22.3 | % | 18.5 | % | ||||||||||
Non-GAAP adjustment | 0.5 | % | 0.6 | % | ||||||||||
Non-GAAP gross margin | 22.8 | % | 19.1 | % | ||||||||||
GAAP operating expenses | 15.2 | % | 12.9 | % | ||||||||||
Non-GAAP adjustment | (0.7 | %) | (0.6 | %) | ||||||||||
Non-GAAP operating expenses | 14.5 | % | 12.3 | % | ||||||||||
GAAP operating income | 7.1 | % | 5.6 | % | ||||||||||
Non-GAAP adjustment | 1.2 | % | 1.1 | % | ||||||||||
Non-GAAP operating income | 8.3 | % | 6.7 | % | ||||||||||
GAAP net income | 5.6 | % | 4.3 | % | ||||||||||
Non-GAAP adjustment | 0.8 | % | 0.8 | % | ||||||||||
Non-GAAP net income | 6.4 | % | 5.1 | % | ||||||||||
Note: Percentage growth rates and ratios are calculated based on underlying data in thousands. |
(1) Other for the fiscal year ended January 28, 2011 includes amounts for the $100 million settlement of the SEC investigation and a $40 million settlement for a securities litigation matter, which are both recorded in operating expenses, offset by Dell's receipt of a $72 million merger termination fee, which is recorded in Interest and Other, Net.
USE OF NON-GAAP FINANCIAL MEASURES
Dell uses non-GAAP financial measures to supplement the financial information presented on a GAAP basis. Dell believes that excluding certain items from Dell’s GAAP results allows Dell’s management to better understand Dell’s consolidated financial performance from period to period and in relationship to the operating results of Dell’s segments, as management does not believe that the excluded items are reflective of Dell's underlying operating performance. Dell also believes that excluding certain items from Dell’s GAAP results allows Dell’s management to better project Dell’s future consolidated financial performance because Dell’s forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, Dell believes these non-GAAP financial measures will provide investors with useful information to help them evaluate Dell's operating results by facilitating an enhanced understanding of Dell's operating performance, and enabling them to make more meaningful period to period comparisons. Non-GAAP projections for Fiscal 2013, which are forward looking non-GAAP financial measures, exclude acquisition-related charges, severance and facility action costs, and amortization of purchased intangible assets related to acquisitions, some of which Dell cannot forecast with certainty or accuracy due to their inherently indefinite and contingent nature, thereby preventing Dell from reconciling its projections to GAAP. The historical non-GAAP financial measures, as defined by Dell, represent the comparable GAAP measures adjusted to exclude these same items as well as amounts for the settlements related to the SEC investigation and a securities litigation matter, which were both incurred during the first quarter of Fiscal 2011, and a merger termination fee, which was received during the third quarter of Fiscal 2011. Dell provides more detail below regarding each of these items and our reasons for excluding them. In future fiscal periods, Dell expects that it may again exclude such items and may incur income and expenses similar to these excluded items. Accordingly, the exclusion of these items and other similar items in Dell’s non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent, or unusual.
The non-GAAP financial measures for the periods indicated in the tables above reflect adjustments related to the following items:
There are limitations to the use of non-GAAP financial measures. Dell's non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in Dell’s industry, may calculate the non-GAAP financial measures differently than Dell does, limiting the usefulness of those measures for comparative purposes. In addition, items such as amortization of purchased intangible assets represent the loss in value of intangible assets over time. The expense associated with this loss in value is not included in the non-GAAP financial measures and such measures, therefore, do not reflect the full economic effect of such loss. Further, items such as severance and facility action costs and acquisition expenses that are excluded from the non-GAAP financial measures can have a material impact on earnings. Dell’s management compensates for the foregoing limitations by relying on Dell’s GAAP results and using non-GAAP financial measures supplementally or for projections when comparable GAAP measures are not available. The non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from or as substitutes for gross margin, operating expenses, operating income, net income, and earnings per share prepared in accordance with GAAP and should be read only in conjunction with financial information presented on a GAAP basis. Dell provides detailed reconciliations of each historical non-GAAP financial measure to its most directly comparable GAAP measure within the financial information included with this press release and in other written materials that include such non-GAAP historical financial measures, and Dell encourages investors to review the reconciliations in conjunction with the presentation of any historical non-GAAP financial measures.
CONTACT:
Dell
Media: 512-728-4100
David Frink,
512-728-2678
david_frink@dell.com
or
Jess Blackburn,
512-728-8295
jess_blackburn@dell.com
or
Investor
Relations:
Robert Williams, 512-728-7570
robert_williams@dell.com
or
Michael
McMullen, 512-724-4448
michael_mcmullen@dell.com
or
David
Mehok, 512-728-4225
david_mehok@dell.com