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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1995

COMMISSION FILE NUMBER:0-17017

DELL COMPUTER CORPORATION
(Exact name of registrant as specified in its charter)

2112 KRAMER LANE, BUILDING 1
AUSTIN, TEXAS 78758-4012
(512) 338-4400
(Address, zip code and telephone number of registrant's principal executive
offices)

A DELAWARE CORPORATION IRS EMPLOYER ID NO. 74-2487834

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING TWELVE MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
--- ---

AS OF JUNE 12, 1995, 45,286,029 SHARES OF THE REGISTRANT'S COMMON STOCK,
PAR VALUE $.01 PER SHARE, WERE OUTSTANDING.

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PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DELL COMPUTER CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)

ASSETS

APRIL 30, JANUARY 29,
1995 1995
-------------- -------------

Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . $ 94,632 $ 42,953
Short-term investments . . . . . . . . . . . . . . . . . . 423,404 484,294
Accounts receivable, net . . . . . . . . . . . . . . . . . 588,288 537,974
Inventories . . . . . . . . . . . . . . . . . . . . . . . 337,803 292,925
Other current assets . . . . . . . . . . . . . . . . . . . 108,998 112,215
---------------- --------------
Total current assets . . . . . . . . . . . . . . . . 1,553,125 1,470,361
Property, plant and equipment, net . . . . . . . . . . . . . 123,301 116,981
Other assets . . . . . . . . . . . . . . . . . . . . . . . . 6,197 6,658
---------------- --------------
$ 1,682,623 $ 1,594,000
================ ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . $ 417,716 $ 447,071
Accrued liabilities . . . . . . . . . . . . . . . . . . . 309,781 279,402
Income taxes . . . . . . . . . . . . . . . . . . . . . . . 44,516 24,937
---------------- --------------
Total current liabilities . . . . . . . . . . . . . . 772,013 751,410
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . 113,472 113,429
Other liabilities . . . . . . . . . . . . . . . . . . . . . 83,642 77,425
Commitments and contingencies
Stockholders' equity:
Preferred stock: $.01 par value; shares authorized:
5,000,000; shares issued and outstanding: 60,000 and
1,250,000, respectively . . . . . . . . . . . . . . . . . . 1 13
Common stock: $.01 par value; shares authorized:
100,000,000; shares issued and outstanding:
45,070,499 and 39,679,638, respectively . . . . . . . . . . 451 397
Additional paid-in capital . . . . . . . . . . . . . . . . . 363,833 356,768
Unrealized loss on short-term investments . . . . . . . . . (1,497) (2,628)
Retained earnings . . . . . . . . . . . . . . . . . . . . . 360,381 311,217
Cumulative translation adjustment . . . . . . . . . . . . . (9,673) (14,031)
---------------- --------------
Total stockholders' equity . . . . . . . . . . . . . 713,496 651,736
---------------- --------------
$ 1,682,623 $ 1,594,000
================ ==============

The accompanying notes are an integral part of these condensed consolidated financial statements.

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DELL COMPUTER CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

THREE MONTHS ENDED
----------------------------------
APRIL 30, MAY 1,
1995 1994
-------------- ---------------

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,135,933 $ 766,632
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . 899,780 596,800
------------- --------------
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . 236,153 169,832
Operating expenses:
Selling, general and administrative . . . . . . . . . . . . . . 127,611 94,877
Research, development and engineering . . . . . . . . . . . . . 20,879 14,970
------------- --------------
Total operating expenses . . . . . . . . . . . . . . . . . . 148,490 109,847
------------- --------------
Operating income . . . . . . . . . . . . . . . . . . . . . . 87,663 59,985
Financing and other income (expense), net . . . . . . . . . . . . (769) (32,531)
------------- --------------
Income before income taxes . . . . . . . . . . . . . . . . . . 86,894 27,454
Provision for income taxes . . . . . . . . . . . . . . . . . . . . 25,196 8,481
------------- --------------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,698 18,973
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . 11,638 2,187
------------- --------------
Net income applicable to common stockholders . . . . . . . . . . . $ 50,060 $ 16,786
============= ==============
Earnings per common share:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.11 $ .42
============= ==============
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.05 $ --
============= ==============

The accompanying notes are an integral part of these condensed consolidated financial statements.

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DELL COMPUTER CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

THREE MONTHS ENDED
--------------------------------
APRIL 30, MAY 1,
1995 1994
------------- ------------

Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 61,698 $ 18,973
Charges to income not requiring cash outlays:
Depreciation and amortization . . . . . . . . . . . . . . . . 9,012 7,571
Net loss on investment derivatives . . . . . . . . . . . . . . -- 9,283
Net (gain) loss on short-term investments . . . . . . . . . . (250) 15,500
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 628 586
Changes in:
Operating working capital . . . . . . . . . . . . . . . . . . (63,027) (41,351)
Non-current assets and liabilities . . . . . . . . . . . . . 2,259 7,228
----------- -----------
Net cash provided by operating activities . . . . . . . . . 10,320 17,790
Cash flows from investing activities:
Short-term investments:
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . (1,191,021) (884,170)
Maturities and other redemptions . . . . . . . . . . . . . . 1,252,939 818,322
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 83,000
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . (14,408) (15,537)
----------- -----------
Net cash provided by investing activities . . . . . . . . . 49,510 1,615
Cash flows from financing activities:
Preferred stock dividends paid . . . . . . . . . . . . . . . . . (12,533) (2,187)
Issuance of common stock under employee plans . . . . . . . . . 6,695 4,898
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (82) (145)
----------- -----------
Net cash provided by (used in) financing activities . . . . (5,920) 2,566
Effect of exchange rate changes on cash . . . . . . . . . . . . . (2,231) 926
----------- -----------
Net increase in cash . . . . . . . . . . . . . . . . . . . . . . . 51,679 22,897
Cash at beginning of period . . . . . . . . . . . . . . . . . . . 42,953 3,355
----------- -----------
Cash at end of period . . . . . . . . . . . . . . . . . . . . . . $ 94,632 $ 26,252
=========== ===========

See Note 6 for Supplemental Condensed Consolidated Statement of Cash Flows information.
The accompanying notes are an integral part of these condensed consolidated financial statements.

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DELL COMPUTER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1 -- BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto filed with the Securities and Exchange Commission (the
"Commission") in the Company's fiscal 1995 Annual Report on Form 10-K, as
amended. In the opinion of management, the accompanying condensed consolidated
financial statements reflect all adjustments (consisting only of normal
recurring accruals) considered necessary to present fairly the financial
position of Dell Computer Corporation and its consolidated subsidiaries at
April 30, 1995 and January 29, 1995, and the results of their operations for
the three-month periods ended April 30, 1995 and May 1, 1994. Operating
results for the three-month period ended April 30, 1995 are not necessarily
indicative of the results that may be expected for the fiscal year ending
January 28, 1996.

NOTE 2 -- PREFERRED STOCK CONVERSION

On February 21, 1995, the Company offered to pay a cash premium of $8.25
for each outstanding share of its Series A Convertible Preferred Stock (the
"Preferred Stock") that was converted to common stock. The offer of premium
upon conversion was available to holders of the Preferred Stock through the
closing of the special conversion period on March 22, 1995. The Company also
offered to register the resale of the shares of common stock issued upon
conversion of the Preferred Stock with the Commission for a 50-day period which
ends June 15, 1995. Holders of 1,190,000 shares of Preferred Stock elected to
convert and, as a result, received an aggregate of approximately 5.0 million
shares of common stock and $9.8 million in cash during the first quarter of
1996. The $9.8 million conversion premium and $0.5 million expenses of the
conversion offer were treated as an additional dividend on the Preferred Stock
for financial reporting purposes. Accordingly, $11.6 million, comprised of the
conversion premium, conversion offer expenses and dividends, was deducted from
net income for the first quarter of 1996 to determine the net income applicable
to common stockholders. In addition, the weighted average shares outstanding
used to compute primary earnings per common share for the first quarter of 1996
includes the shares of common stock issued upon conversion from the closing of
the conversion period until the end of the quarter. The conversion of
Preferred Stock had the effect of reducing primary earnings per common share by
$0.27 and fully diluted earnings per common share by $0.21 for the first
quarter of 1996.

NOTE 3 -- SHORT-TERM INVESTMENTS AND INVESTMENT DERIVATIVES

The Company realized losses on short-term investments of $10.9 million
(net) in the first quarter of 1995, primarily due to a $15.5 million write-down
of certain of the Company's short-term investments as a result of interest rate
increases in the United States, Canadian, Japanese and European interest rate
markets. Additionally, $22.6 million of realized and unrealized losses on
interest rate derivatives were recognized in the first quarter of 1995,
primarily as a result of these same interest rate increases. The Company
discontinued its investment derivative program in the second quarter of 1995.

NOTE 4 -- COMMITMENTS AND CONTINGENCIES

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has denied or is in the process of denying the claims and intends to vigorously
defend the suits. The suits naming the Company are just a few of many lawsuits
of this type that have been filed, often naming Apple, Atex, Compaq, IBM,
Keytronic and other major suppliers of keyboard products. The Company
currently is not able to predict the outcome of these suits. It is possible
that the Company may be named in additional suits. Ultimate resolution of the
litigation against the Company may depend on progress in resolving this type of
litigation overall. However, the Company does not believe that the outcome of
these matters will have a material adverse effect on the Company's financial
condition or results of operations.

In March 1995, the Company was named along with twelve other personal
computer and/or computer monitor manufacturers in a complaint filed by the
District Attorney for Merced County, California. The complaint alleges that
each of the defendants has engaged in false and/or misleading advertising with
regard to the size of computer monitor screens and seeks unspecified damages
and injunctive relief. In May 1995, several other district attorneys in other
California counties joined this lawsuit as co-plaintiffs. The Company is
vigorously contesting the allegations of the complaint and does not believe
that the litigation of the complaint or its outcome will have a material
adverse effect on the Company's financial condition or results of operations.

In May 1995, the Company was named, along with two other personal computer
manufacturers and one computer monitor vendor, in a class action complaint
filed in the California Superior Court for Marin County. The complaint alleges
that each of the defendants has engaged in false and/or misleading advertising
with regard to the size of computer monitor screens. The plaintiffs seek
restitution in the form of refunds or product exchange, damages, punitive
damages and attorneys' fees. The Company plans to vigorously contest the
allegations of the complaint. This litigation is currently at a preliminary
stage and no discovery has occurred to date. As such, it is too early for the
Company to adequately evaluate the likelihood of the plaintiffs prevailing in
their claims. There can be no assurance that an adverse determination in this
litigation would not have a material adverse effect on the Company's financial
condition or results of operations.

On June 9, 1995, the Company was served with a class action complaint filed
in State District Court in Travis County, Texas. The complaint alleges that
the Company has included "used parts" in its "new" computer systems and has
failed to adequately inform its customers and prospective customers of that
practice. According to the complaint, these facts constitute fraud, negligent
misrepresentation, breach of contract and breach of warranty. The plaintiffs
seek refund of the purchase price for computer systems purchased from the
Company, damages in an unspecified amount, injunctive relief, interest and
attorneys' fees. The Company plans to vigorously contest the allegations of
the complaint. This litigation is at a very preliminary stage and no discovery
has occurred to date. As such, it is too early for the Company to adequately
evaluate the likelihood of the plaintiffs prevailing in their claims. There
can be no assurance that an adverse determination in this litigation would not
have a material adverse effect on the Company's financial condition or results
of operations.

NOTE 5 -- EARNINGS PER COMMON SHARE

Primary earnings per common share are computed by dividing net income
applicable to common stockholders by the weighted average number of common
shares and common stock equivalents (if dilutive) outstanding during each
period. Common stock equivalents include stock options. The Preferred Stock
is not a common stock equivalent for purposes of computing earnings per common
share. The number of common stock equivalents outstanding is computed using
the treasury stock method. The weighted average shares outstanding used to
compute primary earnings per common share for the first quarter of 1996
includes the shares of common stock issued upon conversion of the Preferred
Stock from the closing of the conversion period until the end of the quarter.
Shares used in the calculation of fully diluted earnings per common share have
been adjusted for the assumed conversion of the Company's outstanding Preferred
Stock.

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NOTE 6 -- SUPPLEMENTAL FINANCIAL INFORMATION (IN THOUSANDS)

Supplemental Condensed Consolidated Statement of Financial Position
Information:

APRIL 30, JANUARY 29,
1995 1995
------------- --------------

Inventories:
Production materials . . . . . . . . . . . . . . . . . . . $ 291,365 $ 262,150
Work-in-process and finished goods . . . . . . . . . . . . 46,438 30,775
------------- --------------
$ 337,803 $ 292,925
============= ==============

Supplemental Condensed Consolidated Statement of Operations Information:

THREE MONTHS ENDED
-------------------------------
APRIL 30, MAY 1,
1995 1994
------------ -------------

Financing and other income (expense), net:
Investment income (loss), net:
Short-term investments . . . . . . . . . . . . . . . . $ 5,612 $ (10,889)
Investment derivatives . . . . . . . . . . . . . . . . -- (22,607)
Interest expense . . . . . . . . . . . . . . . . . . . . . (4,019) (2,170)
Foreign currency transactions . . . . . . . . . . . . . . (1,331) 2,540
Other . . . . . . . . . . . . . . . . . . . . . . . . . . (1,031) 595
=========== =============
$ (769) $ (32,531)
=========== =============
Weighted average shares used to compute earnings
per common share:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . 45,254 40,315
=========== =============
Fully diluted . . . . . . . . . . . . . . . . . . . . . . 48,772 --
=========== =============

Supplemental Condensed Consolidated Statement of Cash Flows Information:

THREE MONTHS ENDED
-----------------------------------
APRIL 30, MAY 1,
1995 1994
------------- ---------------

Changes in operating working capital accounts:
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . $ (25,025) $ (37,113)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . (42,261) 9,964
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . (34,914) 17,322
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . 15,619 (3,764)
Other current assets . . . . . . . . . . . . . . . . . . . . . . 2,720 (31,659)
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . 19,519 3,742
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,315 157
---------------- ---------------
$ (63,027) $ (41,351)
================ ===============

Changes in non-current assets and liabilities:
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,186 $ 40
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . 1,073 7,188
---------------- ---------------
$ 2,259 $ 7,228
================ ===============

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Unless otherwise indicated, all references to years in connection with
financial information refer to the Company's fiscal years and all references to
quarters in connection with financial information refer to the Company's fiscal
quarters. All percentage amounts used in describing operating results are
based on the related dollar amounts rounded to the nearest thousand which are
set forth in the Condensed Consolidated Financial Statements and related notes
thereto.

RESULTS OF OPERATIONS

The Company reported net income for the first quarter of 1996 of $61.7
million or $1.11 primary earnings per common share compared with net income of
$19.0 million or $.42 primary earnings per common share for the comparable
period in 1995. The conversion of Preferred Stock in the first quarter of 1996
had the effect of reducing primary earnings per common share by $0.27. Net
income for the first quarter of 1995 was reduced by $26.3 million, or $0.65
primary earnings per common share, due to after-tax losses on certain
investment derivatives and short-term investments.

The following table sets forth for the periods indicated the percentage
of consolidated net sales represented by certain items in the Company's
condensed consolidated statements of operations.

PERCENTAGE OF CONSOLIDATED NET SALES
------------------------------------
THREE MONTHS ENDED
------------------------------------
APRIL 30, MAY 1,
1995 1994
--------------- -------------

Net sales:
Americas . . . . . . . . . . . . . . . . . . . . . . 62.2% 67.1%
Europe . . . . . . . . . . . . . . . . . . . . . . . 30.7 30.4
Other international . . . . . . . . . . . . . . . . . 7.1 2.5
------ ------
Consolidated net sales . . . . . . . . . . . . . . 100.0 100.0
Cost of sales . . . . . . . . . . . . . . . . . . . . 79.2 77.8
------ ------
Gross profit . . . . . . . . . . . . . . . . . . . 20.8 22.2
Operating expenses:
Selling, general and administrative . . . . . . . . . 11.3 12.4
Research, development and engineering . . . . . . . . 1.8 1.9
------ ------
Total operating expenses . . . . . . . . . . . . . 13.1 14.3
------ ------
Operating income . . . . . . . . . . . . . . . 7.7 7.9
Financing and other income (expense), net . . . . . . (0.1) (4.3)
------ ------
Income before income taxes . . . . . . . . . . . . . 7.6 3.6
Provision for income taxes . . . . . . . . . . . . . . 2.2 1.1
------ ------
Net income . . . . . . . . . . . . . . . . . . . . . 5.4 2.5
Preferred stock dividends . . . . . . . . . . . . . . . 1.0 0.3
------ ------
Net income applicable to common
stockholders . . . . . . . . . . . . . . . . . . 4.4% 2.2%
====== ======

Net Sales

Consolidated net sales increased 48% to $1.14 billion for the first quarter
of 1996 compared with $766.6 million for the first quarter of 1995. Unit
volumes increased 37% and average revenue per unit increased 8% primarily due
to strong demand for the Company's higher priced Pentium(TM) processor-based
products and notebook computers. The Company's consolidated net sales
(expressed in United States dollars) benefited by approximately 2.6% in the
first quarter of 1996 as a result of fluctuations in the average value of the
United States dollar relative to its average value in the comparable period of
the prior year, net of foreign currency hedging results.

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Consolidated net sales consisted primarily of sales of computer systems,
including hardware, certain software and accessories, which amounted to 87% of
consolidated net sales in the first quarters of both 1996 and 1995. The
remainder of consolidated net sales was comprised of revenue from sales of
computer peripherals as well as other hardware, software and accessories sold
separately from computer systems and from sales of extended service contracts.
Sales of the Company's Pentium processor-based products increased to 55% of
system revenue in the first quarter of 1996 from 10% of system revenue in the
first quarter of 1995, an increase in revenue of $475.5 million or 749%. Sales
of Pentium processor-based products in the first quarter of 1996 increased by
$138.4 million or 35% from the fourth quarter of 1995, in which quarter such
sales represented 44% of system revenue. The Company's rapid introduction of
Pentium processor-based systems relative to its competitors and increased
customer acceptance of these systems resulted in the substantial increase in
sales of such systems. This shift in demand toward Pentium processor-based
products was evident in the Company's sales of 486-based products, which
decreased to 45% of system revenue in the first quarter of 1996 from 90% of
system revenue in the comparable period of the prior year and 56% of system
revenue in the fourth quarter of 1995.

Revenue from the Company's Latitude(TM) family of notebook computers, which
began with the introduction of the Latitude notebook computer line on February
21, 1994, represented 17% of system revenue in the first quarter of 1996, up
from 2% in the first quarter of 1995 and 14% in the fourth quarter of 1995.
This increase in first quarter notebook computer revenue was due primarily to
strong customer acceptance of the Company's Latitude XP notebook computer line
introduced in August 1994. The Company further expanded its Latitude family of
notebook computers in May 1995 with the introduction of nine new notebook
models, including the Company's first Pentium processor-based notebook
computers. Revenue from the Company's desktop product lines represented 80% of
system revenue (or $789.4 million) in the first quarter of 1996 versus 94% of
system revenue (or $619.4 million) in the comparable period of the prior year
and 80% of system revenue (or $723.3 million) in the fourth quarter of 1995.
Sales from the server product line represented 3% of system revenue (or $25.6
million) in the first quarter of 1996, 4% of system revenue (or $28.7 million)
in the first quarter of 1995 and 6% of system revenue (or $49.2 million) in the
fourth quarter of 1995. The 6% for the fourth quarter of 1995 included certain
high-end desktop products that were generally used as low-end servers;
excluding sales of those products, server sales for the fourth quarter of 1995
were approximately 4% of system revenue.

The Company believes that its success is largely dependent upon continued
growth of its notebook product line, its ability to expand its presence in the
network server market and its ability to continue to efficiently manage the
transition to Pentium processor-based computers and other technological
advancements as they become commercially available. There can be no assurance
that the Company's development activities will be successful, that product
technologies will be available to the Company, that the Company will be able to
deliver commercial quantities of computer products in a timely manner or that
such products will achieve market acceptance. Some new products introduced by
the Company are intended to replace existing products. Although the Company
monitors the products that are intended to be replaced and attempts to phase
out the manufacture of those products in a timely manner, there can be no
assurance that such transitions will be executed without adversely affecting
the Company's results of operations or financial condition.

Consolidated net sales from the Americas (United States, Canada, Mexico and
Latin America) increased 37% to $706.2 million for the first quarter of 1996
from $514.3 million in the first quarter of 1995 and increased 2% from $691.3
million in the fourth quarter of 1995. Net revenue from the Company's European
operations increased 50% to $348.4 million from $232.8 million in the first
quarters of 1996 and 1995, respectively, and increased 17% from $298.0 million
in the fourth quarter of 1995. Other international sales increased 317% to
$81.3 million for the first quarter of 1996 from $19.5 million in the
comparable period in 1995 primarily due to sales growth in Japan where revenue
has more than tripled compared to the first quarter of 1995. Other
international sales increased 87% in the first quarter of 1996 from $43.4
million in the fourth quarter of 1995, again primarily due to sales growth in
Japan. The Company believes that a significant opportunity exists for
continued growth in international operations, and during the first quarter of
1996, the Company began construction of a 238,000 square foot combination
office and manufacturing facility on a nine-acre site in Penang, Malaysia, to
meet the needs of its expanding Asia-Pacific business. Dell intends to
continue to expand its

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international activities by increasing its market presence in existing markets
through ongoing revisions and improvement of its marketing and sales
compensation programs to more effectively reach its customers, by improving its
support systems, by pursuing additional distribution opportunities and by
entering new markets. There can be no assurance that the Company will
successfully manage the construction of its Malaysian facility, that the
facility will meet the needs of its expanding Asia-Pacific business or that the
Company will be successful in its efforts to expand its international
activities.

Consolidated net sales to national accounts, consisting of sales to major
corporate, government and education accounts and value-added resellers,
increased 47% to $720.4 million for the first quarter of 1996 from $490.9
million in the first quarter of 1995. Sales to medium- to small-sized
businesses and individuals increased 51% to $415.5 million from $275.7 million
in the first quarters of 1996 and 1995, respectively, despite the decline in
sales to mass merchant and other consumer retailers as a result of the
discontinuation of traditional consumer retailer sales in the United States and
Canada in July 1994. Revenue from consumer retailers in the United States and
Canada represented 7% of consolidated net sales in the first quarter of 1995.

The Company does not believe that backlog is a meaningful indicator of
sales that can be expected for any period. The Company attempts to reduce
manufacturing costs by more efficiently managing its flow of customer orders
into production, which resulted in an increase in backlog to $135.6 million at
April 30, 1995, compared with $95.0 million at January 29, 1995. Consistent
with the Company's unconditional 30-day return policy, customers may cancel or
reschedule orders without penalty prior to commencement of manufacturing.

Gross Profit Margin

Gross profit increased $66.3 million in the first quarter of 1996 from the
comparable period in the prior year primarily as a result of the increase in
unit volumes and in average revenue per unit previously discussed. However,
the Company's gross profit as a percentage of consolidated net sales decreased
to 20.8% for the first quarter of 1996 from 22.2% for the first quarter of 1995
and was relatively flat with 21.0% in the fourth quarter of 1995. The decrease
in gross profit margin in the first quarter of 1996 from the comparable period
in 1995 resulted from pricing actions taken by the Company in the United States
to enhance its competitive position, as well as from growth in sales of certain
of the Company's lower margin desktop products. This decrease was partially
offset by a shift in the Company's overall sales mix towards higher margin
notebook computers, which grew as a percentage of system revenue from 2% in the
first quarter of 1995 to 17% in the first quarter of 1996, and by favorable
foreign currency fluctuations, net of hedging results.

The Company may take pricing actions as it attempts to maintain a
competitive mix of price, performance and customer services while managing its
liquidity, profitability and growth. The Company attempts to mitigate the
effects of price reductions by improving product mix, further reducing
component costs and lowering operating costs. There can be no assurance that
pricing actions will be effective in stimulating higher levels of sales or that
cost reduction efforts will offset the effects of pricing actions on the
Company's gross margins.

The Company's manufacturing process requires a high volume of quality
components that are procured from third party suppliers. Reliance on
suppliers, as well as industry supply conditions, generally involves several
risks, including the possibility of defective parts, a shortage of components,
increases in component costs and reduced control over delivery schedules, any
or all of which could adversely affect the Company's financial results. The
Company has several single supplier relationships and the lack of availability
of timely and reliable supply of components from these sources could adversely
affect the Company's business. Even when multiple suppliers are available, the
Company may establish a working relationship with a single source when the
Company believes it is advantageous due to performance, quality, support,
delivery, capacity and price considerations. While the Company has supply
agreements with certain suppliers, such agreements typically only specify
general terms and conditions, subject to release of purchase orders by the
Company and acceptance thereof by the component supplier. In addition,
alternative sources of supply are not available for some of the Company's
single sourced components. Where alternative sources are available,
qualification of the alternative suppliers and establishment of reliable
supplies of components from such sources may result in delays and could
adversely affect the Company's

9
11

manufacturing processes and results of operations. The Company occasionally
experiences delays in receiving certain components, which can cause delays in
the shipment of some products to customers. Additionally, the Company has
occasionally experienced certain defective components, which can affect the
reliability and reputation of its products. There can be no assurance that the
Company will be able to continue to obtain additional supplies of reliable
components in a timely or cost-effective manner. In particular, the Company
obtains its supply of microprocessors from Intel Corporation, although certain
comparable microprocessors are available from other sources. The Company is
continuing to increase its shipments of products incorporating Intel's Pentium
microprocessor.

In November 1994, an inaccuracy in Intel's Pentium microprocessor was
publicized that, in some cases, may cause errors in division. Based on
information from Intel Corporation, the Company believes only a limited number
of its Pentium microprocessor customers perform calculations affected by the
inaccuracy. Nonetheless, Intel has offered replacement microprocessors to
end-users for any Pentium microprocessor exhibiting this inaccuracy. By early
February 1995, all of the Company's new shipments of Pentium processor-based
products contained the corrected Pentium microprocessors. Although the Company
previously shipped products which included Pentium microprocessors which
exhibited the inaccuracy, the Company believes that the costs associated with
the replacement of such microprocessors will not have a material adverse effect
on the Company's results of operations or financial condition.

Operating Expenses

Operating expenses increased 35% to $148.5 million in the first quarter of
1996 from $109.8 million in the comparable period of the prior year. However,
operating expenses as a percentage of consolidated net sales decreased to 13.1%
for the first quarter of 1996 from 14.3% for the first quarter of 1995.
Selling, general and administrative expenses increased 35% to $127.6 million in
the first quarter of 1996 from $94.9 million in the first quarter of the prior
year. The increase in selling, general and administrative expenses resulted
from increased compensation-related expenses as the Company strengthened its
management team and increased staffing to meet the demands of its growth and
increased costs relating to the Company's investment in global information
systems. Research, development and engineering expenses increased 39% to $20.9
million in the first quarter of 1996 from $14.9 million in the first quarter of
1995. The increase in research, development and engineering expenses resulted
primarily from higher compensation expense relating to an increase in headcount
and higher development costs related to notebook computers.

The Company believes that its ability to manage operating costs is an
important factor in its ability to remain price competitive. However, the
Company will invest in key global information systems through 1998 to manage
and support its growth. No assurance can be given that the Company's efforts
to manage future operating expenses will be successful.

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Financing and Other Income (Expense), net

Financing and other income (expense), net was ($.8) million for the first
quarter of 1996 compared with ($32.5) million for the first quarter of 1995.
The table below sets forth for the periods indicated the components of
financing and other income (expense), net:

THREE MONTHS ENDED
---------------------------------
APRIL 30, MAY 1,
1995 1994
------------- -------------

Financing and other income (expense), net:
Investment income (loss), net:
Short-term investments . . . . . . . . . . . . . . . . . . $ 5,612 $ (10,889)
Investment derivatives . . . . . . . . . . . . . . . . . . -- (22,607)
Interest expense . . . . . . . . . . . . . . . . . . . . . . . (4,019) (2,170)
Foreign currency transactions . . . . . . . . . . . . . . . . (1,331) 2,540
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,031) 595
=========== =============
$ (769) $ (32,531)
=========== =============

Short-term investment income (loss) was $5.6 million in the first quarter
of 1996 compared with ($10.9) million in the first quarter of 1995. The
investment loss for the first quarter of 1995 was primarily due to a $15.5
million write-down of certain of the Company's short-term investments as a
result of interest rate increases in the United States, Canadian, Japanese and
European interest rate markets. The Company accounts for highly liquid
investments with maturities of three months or less at date of acquisition as
short-term investments and reflects the related cash flows as investing cash
flows. As a result, a significant portion of its gross investment maturities
and purchases disclosed as investing cash flows is related to highly liquid
investments.

Realized and unrealized net losses on interest rate derivatives recognized
in income were ($22.6) million in the first quarter of 1995. The losses were
primarily a result of interest rate increases in the United States, Canadian,
Japanese and European interest rate markets. The Company closed all remaining
investment derivatives during the second quarter of 1995. The Company intends
to use derivative financial instruments only to manage its exposure to
fluctuations in foreign currency exchange rates and to manage market risk on
components of its debt and equity.

All of the Company's foreign exchange and interest rate derivative
instruments involve elements of market and credit risk in excess of the amounts
recognized in the financial statements. The counterparties to financial
instruments consist of a number of major financial institutions. In addition
to limiting the amount of agreements and contracts it enters into with any one
party, the Company regularly monitors the credit quality of the financial
institutions which are counterparties to these financial instruments. The
Company does not anticipate nonperformance by the counterparties.

Interest expense increased in the first quarter of 1996 to $4.0 million
from $2.2 million in the first quarter of 1995. The increase in interest
expense in 1996 was primarily due to higher borrowings and higher interest
rates in the first quarter of 1996. Concurrently with the issuance of the 11%
Senior Notes (the "Notes") in the third quarter of 1994, the Company entered
into interest rate swap agreements to manage the interest costs associated with
the Notes. The swap agreements effectively changed the Company's interest rate
exposure from a fixed-rate to a floating-rate basis. However, in response to
increasing interest rates, in August 1994, the Company entered into offsetting
swap agreements to effectively change its interest rate exposure from a
floating-rate basis to a fixed-rate basis. The interest rate swap agreements
mature on August 15, 1998, the first available redemption date of the Notes.
At the end of the first quarter of 1996, the Company had outstanding receive
fixed/pay floating interest rate swaps with an aggregate notional amount of
$100 million offset by receive floating/pay fixed interest rate swaps with an
aggregate notional amount of $100 million. The weighted average interest rate
on the Notes, adjusted by the swaps, was 13.8% for the first quarter of 1996
and 10.3% for the first quarter of 1995.

11
13

Net foreign currency transaction gains (losses) were ($1.4) million for the
first quarter of 1996 compared to $2.6 million for the first quarter of 1995
primarily due to the weakening of the United States dollar relative to other
major foreign currencies.

Financing fees and other income (expense) were ($1.0) million in the first
quarter of 1996 compared with $.6 million in the first quarter of 1995. The
increase in financing fees and other income (expense) was primarily due to
higher financing-related expenses incurred in 1996 in connection with the
refinancing of debt and credit facilities.

Income Tax

The Company's effective tax rate was 29.0% for the first quarter of 1996
compared with 30.9% for the first quarter of 1995. The change in the effective
tax rate resulted from changes in the geographical distribution of income and
losses.

Fluctuations in Operating Results

The Company's operating results may fluctuate from period to period and
will depend on numerous factors, including, but not limited to, customer demand
and market acceptance of the Company's products, new product introductions,
product obsolescence, component price fluctuations, varying product mix,
foreign currency exchange rates, foreign currency and interest rate hedging and
other factors. In addition, the Company has operated without a material
backlog so that net sales in a given quarter are dependent on customer orders
received in that quarter and operating expenditures are primarily based on
forecasts of customer demand. As a result, if demand does not meet the
Company's expectations in any given period, the sales shortfall may result in
an increased impact on operating results due to the Company's inability to
adjust operating expenditures quickly enough to compensate for such shortfall.
The Company's business is sensitive to the spending patterns of its customers,
which in turn are subject to prevailing economic conditions and other factors
beyond the Company's control. The Company's results of operations could be
materially adversely affected by changes in economic conditions or customer
spending patterns for personal computer products.

HEDGING ACTIVITIES

The results of the Company's international operations are affected by
changes in exchange rates between certain foreign currencies and the United
States dollar. The financial statements of the Company's international sales
subsidiaries have generally been measured using the local currency as the
functional currency. An increase in the value of the United States dollar
increases costs incurred by the Company's international operations because many
of its component purchases are denominated in the United States dollar.
Changes in exchange rates may negatively affect the Company's consolidated net
sales (as expressed in United States dollars) and gross profit margins from
international operations. Effective January 30, 1995, most of the Company's
European sales are made from a U.S. dollar functional currency entity.

The purpose of the Company's hedging program is to reduce the Company's
exposure to the risk that the dollar-value equivalent of anticipated cash flows
will be adversely affected by changes in foreign currency exchange rates. The
Company attempts to reduce its exposure to currency fluctuations involving
anticipated, but not firmly committed, transactions and involving transactions
with firm foreign currency commitments through the use of purchased foreign
currency option contracts and forward contracts.

Realized and unrealized gains or losses and premiums on foreign currency
purchased option contracts that are designated and effective as hedges of
probable anticipated, but not firmly committed, foreign currency transactions
are deferred and recognized in income in the same period as the hedged
transaction. The risk of loss associated with purchased options is limited to
premium amounts paid for the option contracts, which could be significant.
Forward contracts designated as hedges of anticipated transactions are
accounted for on a mark-to-market basis and included in income as a component
of net sales or cost of sales, depending upon which

12
14

transaction is hedged. Transaction exposures representing firm foreign
currency commitments are generally hedged using foreign exchange forward
contracts. Forward contracts related to transaction exposures are accounted
for on a mark-to-market basis with realized and unrealized gains or losses
included in financing and other income (expense) as an offset to the underlying
hedged transaction. The risk of loss associated with forward contracts is
limited to the exchange rate differential from the time the contract is made
until the time it is settled.

The Company enters into foreign currency purchased options and, to a lesser
extent, forward contracts to hedge a portion of its anticipated, but not firmly
committed, transactions including sales by international subsidiaries, which
includes international sales by a U.S. dollar functional currency entity and
intercompany shipments to certain international subsidiaries, and foreign
currency denominated purchases of certain components. Foreign currency
purchased options generally expire in twelve months or less and forward
contracts generally mature in three months or less. The principal hedge
currencies are the German mark, the British pound and the Japanese yen. At
April 30, 1995, the Company held purchased option contracts that were
designated and effective as hedges of anticipated sales by international
subsidiaries with a total notional amount of $787.9 million and a combined net
realized and unrealized loss of $3.8 million. At April 30, 1995, the Company
held purchased options that were designated and effective as hedges of foreign
currency denominated purchases with a total notional amount of $62.0 million
and a combined net realized and unrealized gain of $6.6 million. Forward
contracts with maturity dates of less than three months designated to hedge
foreign currency transaction exposures of $42.7 million were outstanding at
April 30, 1995.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash flow from operating activities for the first three
months of 1996 was $10.3 million. The Company's primary source of cash during
the quarter resulted from short-term investment activity, where maturities,
redemptions and sales exceeded purchases by $63.9 million. Working capital
totaled $781.1 million at April 30, 1995 compared with $719.0 million at
January 29, 1995. Days in accounts receivable at the end of the first quarter
of 1996 remained unchanged from 47 days at the end of 1995. Days in accounts
payable decreased to 42 days at the end of the first quarter of 1996 from 49
days at the end of 1995. Inventory levels increased slightly to 34 days of
supply at the end of the first quarter of 1996 from 32 days at the end of 1995.
Maintaining the Company's current inventory level is dependent upon the
Company's ability to achieve targeted revenue and product mix, to further
minimize complexities in its product line and to maximize commonality of parts.
There can be no assurance that the Company will be able to maintain these low
inventory levels in future periods.

The Company utilized $14.4 million of cash during the first three
months of 1996 to construct facilities and to acquire information systems and
personal computer office equipment. Total capital expenditures for 1996 are
expected to be approximately $100 million, primarily related to the
construction of manufacturing and administrative facilities, the acquisition
and development of an integrated management information system and the
acquisition of computer equipment for internal use. The Company believes that
its cash and short-term investments and its cash flow from operating activities
will be adequate to fund its planned 1996 capital expenditures.

The Company had a line of credit facility which expired June 8, 1995,
and bore interest at a defined Base Rate or Eurocurrency Rate with covenants
based on quarterly income, maintenance of net worth, a maximum ratio of total
liabilities to tangible net worth and a maximum inventory level. The line of
credit also contained certain restrictions on the payment of cash dividends on
the Company's common stock. Maximum amounts available under the credit
facility were limited to $90 million less the aggregate of outstanding letters
of credit. During the commitment period, the Company was obligated to pay a
fee on the unused portion of the credit facility. No borrowings were
outstanding under this credit facility as of April 30, 1995, and the maximum
available totaled $81.7 million as of April 30, 1995.

Effective June 8, 1995, the Company entered into a series of line of
credit facilities, each of which bears interest at a defined Base Rate or
Eurocurrency Rate with a covenant based on quarterly maintenance of net worth.

13
15

Maximum aggregate amounts available under the new credit facilities are limited
to $100 million less the aggregate of outstanding letters of credit under these
facilities. During the commitment period, the Company is obligated to pay a
fee on the unused portion of the credit facilities. No borrowings or letters
of credit were outstanding under these credit facilities as of June 12, 1995,
and the maximum available totaled $100 million.

The Company's subsidiary, Dell Receivables Corporation, has a
Receivables Purchase Agreement which expires June 22, 1996, pursuant to which
the Company may raise up to $100 million through the sale of interests in
certain of its accounts receivable. The Company is obligated to pay a
commitment fee on the unused portion of the amount available under the
Receivables Purchase Agreement. As of April 30, 1995, this facility was unused.

Repayment of the Company's $100 million in 11% Senior Notes due August
15, 2000, a $14 million loan secured by its facilities in Round Rock, Texas and
its operating lease commitments constitute the Company's long-term commitments
to use cash.

Management believes that sufficient resources will be available to meet
the Company's cash requirements through at least the next twelve months. Cash
requirements for periods beyond the next twelve months depend on the Company's
profitability, its ability to manage working capital requirements and its rate
of growth.

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16

PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of May 15, 1995, the Company has been named as a defendant in 27
repetitive stress injury lawsuits, most of which are in New York state courts
or United States District Courts for the New York City area. Several are in
state courts in New Jersey. One is in the Federal District Court for the
Eastern District of Pennsylvania, and one is in Federal District Court in
Kansas. The allegations in all of these lawsuits are similar. Each plaintiff
alleges that he or she suffers from symptoms generally known as "repetitive
stress injury," which allegedly were caused by the design or manufacture of the
keyboard supplied with the computer the plaintiff used. The Company has denied
or is in the process of denying the claims and intends to vigorously defend the
suits. The suits naming the Company are just a few of many lawsuits of this
type that have been filed, often naming Apple, Atex, Compaq, IBM, Keytronic and
other major suppliers of keyboard products. The Company currently is not able
to predict the outcome of these suits. It is possible that the Company may be
named in additional suits. Ultimate resolution of the litigation against the
Company may depend on progress in resolving this type of litigation overall.
However, the Company does not believe that the outcome of these matters will
have a material adverse effect on the Company's financial condition or results
of operations.

For additional information about a Federal Trade Commission inquiry and a
State of California Attorney General investigation into the Company's
advertising and marketing claims regarding monitor screen sizes, see Item 3 of
the Company's Annual Report on Form 10-K for the fiscal year ended January 29,
1995.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------

10 Severance Agreement, dated April 28, 1995, between the Company and L. Scott Flaig
11 Statement Re Computation of Per Share Earnings
27 Financial Data Schedule

(b) Reports on Form 8-K

The registrant filed no Current Reports on Form 8-K during the
first quarter of 1996. On June 2, 1995, the registrant filed a Current Report
on Form 8-K dated May 2, 1995, which reported under Item 5 recent developments
in certain legal proceedings that are described under Item 1 of Part II of this
Report.

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18

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

DELL COMPUTER CORPORATION

June 14, 1995 /s/ Thomas J. Meredith
Thomas J. Meredith
Chief Financial Officer
(On behalf of the registrant and as
principal financial officer)

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INDEX TO EXHIBITS

EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------

10 Severance Agreement, dated April 28, 1995, between the Company and L. Scott Flaig
11 Statement Re Computation of Per Share Earnings
27 Financial Data Schedule