Exhibit 99.1
Dell's Superior Execution Produces Record Shipments, Revenue and
Operating Income in Q2; Q3 Guidance: Sales of $10.5 Billion, 26 Cents
in EPS
ROUND ROCK, Texas--(BUSINESS WIRE)--Aug. 14, 2003--Continued strong growth
in servers and storage systems and in key global markets helped Dell
(Nasdaq:DELL) achieve best-ever quarterly operating results in the period ended
Aug. 1, and widen its overall global market-share lead.
Total product shipments in the company's fiscal second-quarter
2004 were up 27 percent from one year ago, more than four times the
growth for the rest of the industry. Dell server volumes rose at the
same strong percentage rate. Company shipments increased 46 percent in
Asia-Pacific and Japan and 31 percent in Europe, the Middle East and
Africa. Without Dell, growth in those regions was 6 percent and 12
percent, respectively.
Second-quarter revenue was $9.8 billion, up 16 percent from the
same period one year ago. Per-share earnings were 24 cents, an
increase of 26 percent.
Second Quarter Year to Date
(in millions,
except share FY'04 FY'03 Change FY'04 FY'03 Change
data) ------- ------- ------ -------- -------- ------
Revenue $9,778 $8,459 16% $19,310 $16,525 17%
Operating Income $ 840 $ 677 24% $ 1,651 $ 1,267 30%
Net Income $ 621 $ 501 24% $ 1,219 $ 958 27%
Earnings Per
Share $ 0.24 $ 0.19 26% $ 0.47 $ 0.36 31%
"We've again shown Dell's unique ability to profitably earn a
larger share of business by focusing on standards-based technologies,
managing costs and creating value for customers," said Kevin B.
Rollins, Dell's president and chief operating officer. "We've done
that regardless of the pace of industry demand and the appetite of
others to generate sales, even at a loss."
Mr. Rollins said industry shipments in the third quarter would
likely grow at a rate in the high single digits from one year ago, but
that Dell expects its volumes to increase more than 25 percent. The
company believes such growth would generate record company revenue of
about $10.5 billion, a 15-percent increase from the prior year, and
generate earnings per share of 26 cents, a 24-percent rise.
Second-quarter operating expenses were a record-low 9.6 percent of
revenue, down from 9.8 percent in the first quarter and 9.9 percent a
year ago. Operating profit as a percent of revenue increased to 8.6
percent -- the company's highest in nearly three years, and up from
8.0 percent in last year's second quarter. Dell generated $740 million
in cash from operations during the period. At the end of the quarter,
cash and investments totaled $10.6 billion.
Dell Global Market Share Nears 18 Percent
Dell's second-quarter growth earned it nearly three points of
additional global market share, and the company outpaced average
industry growth in all regional markets and worldwide product
categories.
In Asia-Pacific and Japan, shipments of Dell PowerEdge servers
were up 40 percent, more than double the rate for other companies in
the region. Dell Japan, the No. 3 computer-systems supplier
nationally, increased unit volumes 35 percent, while the rest of the
industry declined 2 percent. The company gained three share points and
accounted for more than 10 percent of industry shipments in Japan for
the first time.
Respondents to a recent survey by a leading Japanese
information-technology publication ranked Dell No. 1 in customer
satisfaction for standards-based servers for the fifth consecutive
year.
Total volumes in China, another priority market for Dell,
increased 71 percent -- the third straight quarter of company growth
in excess of 65 percent. Server shipments in that market were up 79
percent and notebook-computer volumes doubled.
Dell's profitability in Europe, the Middle East and Africa (EMEA)
was up almost 90 percent. The company's quarterly performance was
highlighted by combined server growth of 30 percent -- nearly twice
that of other companies -- in the United Kingdom, France and Germany,
all strategically important markets. Overall growth of 43 percent in
the U.K. was almost four times the average for the rest of the
industry.
In the United States, Dell achieved a 23-percent increase in
shipments -- versus an average 2 percent for other companies -- and
industry-best profitability. Dell added two points to its No. 1 U.S.
server share.
Dell shipments to U.S. consumers increased 47 percent -- 70
percent for notebook computers from the company's Inspiron line.
Growth in systems sold to small and medium businesses was up 30
percent. Company volumes in the Americas region outside of the U.S.
rose 30 percent, highlighted by a 73-percent gain in Mexico.
Product Leadership Earns Continued Recognition
Dell's 27-percent increase in second-quarter server shipments was
eight points higher than the average server growth for other
companies. Revenue from external storage systems was up 46 percent to
an annual run rate of more than $1.5 billion.
Third-party opinions underscored Dell's strength with customers in
enterprise product categories. Technology Business Research Inc. (TBR)
ranked Dell No. 1 in service and support for standards-based servers
for eight consecutive quarters. InfoWorld, in its annual readers'
choice awards, named a PowerEdge model "best server" and a PowerVault
storage system "best enterprise storage product." The same report gave
a Dell/EMC entry-level storage array an overall "excellent" rating and
a perfect score for management.
In desktop computers, Dell's combined 25-percent growth in
shipments of Dimension and OptiPlex systems countered an average
1-percent increase for others. The company also extended to 23
consecutive quarters its leadership of TBR's study of satisfaction
among corporate desktop-computer buyers. Additionally, PC Magazine
gave Dell a grade of "A+" for service and reliability in desktop
computers, marking the eighth straight time the company has earned an
"A" or better.
Consistent with new accounting standards effective in the third
quarter, Dell expects to begin consolidating operations of Dell
Financial Services, the company's U.S. joint venture with CIT Group
Inc., when it announces third-quarter results in November. The
accounting change will not alter the company's risk profile, and is
expected to have no material effect on Dell's operating results or
financial position.
About Dell
Dell Inc. (Nasdaq:DELL) is a premier provider of products and
services required for customers worldwide to build their
information-technology and Internet infrastructures. Company revenue
for the past four quarters totaled $38.2 billion. Dell, through its
direct business model, designs, manufactures and customizes products
and services to customer requirements, and offers an extensive
selection of software and peripherals. Information on Dell and its
products can be obtained at www.dell.com.
Dell, Inspiron, PowerEdge, PowerVault, Dimension and OptiPlex are
trademarks of Dell Inc.
Dell disclaims any proprietary interest in the marks and names of
others.
Special note: Statements in this press release that relate to
future results and events (including statements about fiscal
third-quarter financial and operating performance) are based on the
company's current expectations. Actual results in future periods may
differ materially from those currently expected or desired because of
a number of risks and uncertainties, including general economic and
business conditions; the level of demand for the company's products
and services; the level and intensity of competition in the technology
industry and the pricing pressures that have resulted; the company's
ability to timely and effectively manage periodic product transitions,
as well as component availability and cost; the company's ability to
develop new products based on new or evolving technology and the
market's acceptance of those products; the company's ability to manage
its inventory levels to minimize excess inventory, declining inventory
values and obsolescence; the product, customer and geographic sales
mix of any particular period; the company's ability to effectively
manage its operating costs; and the effect of armed hostilities,
terrorism or public health issues on the economy generally, on the
level of demand for the company's products and services and on the
company's ability to manage its supply and delivery logistics in such
an environment. Additional discussion of these and other factors
affecting the company's business and prospects is contained in the
company's periodic filings with the Securities and Exchange
Commission.
Consolidated statements of income and financial position follow.
DELL INC.
Condensed Consolidated Statement of Operations
and Related Financial Highlights
(in millions, except per share data)
(unaudited)
Three Months Ended
------------------------
% Growth Rates
Aug. 1, May 2, Aug. 2, ---------------------
2003 2003 2002 Sequential Yr. to Yr.
-------- ------- ------- ---------- ----------
Net revenue $9,778 $9,532 $8,459 2.6% 15.6%
Cost of revenue 8,000 7,784 6,944 2.8% 15.2%
-------- ------- -------
Gross margin 1,778 1,748 1,515 1.7% 17.4%
Selling, general and
administrative 822 826 727 (0.4%) 13.2%
Research,
development and
engineering 116 111 111 3.7% 3.8%
-------- ------- -------
Total operating
expenses 938 937 838 0.1% 12.0%
-------- ------- -------
Operating income 840 811 677 3.5% 24.1%
Investment and other
income, net 47 43 49 10.2% (4.3%)
-------- ------- -------
Income before income
taxes 887 854 726 3.9% 22.2%
Income tax provision 266 256 225 3.9% 18.1%
-------- ------- -------
Net income $621 $598 $501 3.9% 24.0%
======== ======= =======
Earnings per common
share:
Basic $0.24 $0.23 $0.19
======== ======= =======
Diluted $0.24 $0.23 $0.19
======== ======= =======
Weighted average
shares outstanding:
Basic 2,567 2,572 2,586
Diluted 2,624 2,614 2,649
Percentage of Total
Net Revenue:
- -------------------
Gross margin 18.2% 18.3% 17.9%
Selling, general and
administrative 8.4% 8.6% 8.6%
Research,
development and
engineering 1.2% 1.2% 1.3%
Total operating
expenses 9.6% 9.8% 9.9%
Operating income 8.6% 8.5% 8.0%
Income before income
taxes 9.1% 9.0% 8.6%
Net income 6.3% 6.3% 5.9%
Income tax rate 30.0% 30.0% 31.0%
Net Revenue by
Geographic Region:
- -------------------
Percentage of Total
Net Revenue
- -------------------
Americas 70% 68% 73%
Europe 19% 21% 18%
Asia Pacific - Japan 11% 11% 9%
Net Revenue by
Product Line:
- --------------
Percentage of Total
Net Revenue
- -------------------
Desktops 51% 53% 52%
Notebooks 28% 27% 28%
Enterprise 21% 20% 20%
Note: Percentage growth rates and ratios are calculated based on
underlying data in thousands.
DELL INC.
Condensed Consolidated Statement of Operations
and Related Financial Highlights
(in millions, except per share data)
(unaudited)
Six Months Ended
--------------------- % Growth
Rates
Aug. 1, Aug. 2, ------------
2003 2002 Yr. to Yr.
---------- --------- ------------
Net revenue $19,310 $16,525 16.9%
Cost of revenue 15,784 13,619 15.9%
---------- ---------
Gross margin 3,526 2,906 21.3%
Selling, general and
administrative 1,648 1,418 16.3%
Research, development and
engineering 227 221 2.6%
---------- ---------
Total operating expenses 1,875 1,639 14.4%
---------- ---------
Operating income 1,651 1,267 30.3%
Investment and other income,
net 90 97 (7.7%)
---------- ---------
Income before income taxes 1,741 1,364 27.6%
Income tax provision 522 406 28.2%
---------- ---------
Net income $1,219 $958 27.3%
========== =========
Earnings per common share:
Basic $0.47 $0.37
========== =========
Diluted $0.47 $0.36
========== =========
Weighted average shares
outstanding:
Basic 2,570 2,591
Diluted 2,619 2,661
Percentage of Total Net
Revenue:
- -----------------------
Gross margin 18.3% 17.6%
Selling, general and
administrative 8.5% 8.6%
Research, development and
engineering 1.2% 1.3%
Total operating expenses 9.7% 9.9%
Operating income 8.6% 7.7%
Income before income taxes 9.0% 8.3%
Net income 6.3% 5.8%
Income tax rate 30.0% 29.9%
Net Revenue by Geographic
Region:
- -------------------------
Percentage of Total Net
Revenue
- -----------------------
Americas 69% 71%
Europe 20% 19%
Asia Pacific - Japan 11% 10%
Net Revenue by Product Line:
- ----------------------------
Percentage of Total Net
Revenue
- -----------------------
Desktops 52% 53%
Notebooks 27% 27%
Enterprise 21% 20%
Note: Percentage growth rates and ratios are calculated based on
underlying data in thousands.
DELL INC.
Condensed Consolidated Statement of Financial Position
and Related Financial Highlights
(in millions, except for "Ratios" and "Other Information")
(unaudited)
Aug. 1, May 2, Aug. 2,
2003 2003 2002
-------- -------- --------
Assets:
- -------
Current assets:
Cash and cash equivalents $4,636 $4,474 $3,725
Short term investments 484 388 319
Accounts receivable, net 2,883 2,656 2,590
Inventories, net 358 264 291
Other 1,246 1,238 1,358
-------- -------- --------
Total current assets 9,607 9,020 8,283
Property, plant and equipment, net 1,062 889 872
Investments 5,498 5,470 4,589
Other non-current assets 373 333 318
-------- -------- --------
Total assets $16,540 $15,712 $14,062
======== ======== ========
Liabilities and Stockholders' Equity:
- -------------------------------------
Current liabilities:
Accounts payable $6,418 $6,082 $5,621
Accrued and other 2,846 2,787 2,424
-------- -------- --------
Total current liabilities 9,264 8,869 8,045
Long term debt 506 506 516
Other 1,264 1,261 935
-------- -------- --------
Total liabilities 11,034 10,636 9,496
Stockholders' equity 5,506 5,076 4,566
-------- -------- --------
Total liabilities and stockholders' equity $16,540 $15,712 $14,062
======== ======== ========
Ratios:
- -------
Quick ratio 0.86 0.85 0.82
Days supply in inventory 4 3 4
Days of sales outstanding(a) 30 29 32
Days in accounts payable 72 70 73
-------- -------- --------
Cash conversion cycle (38) (38) (37)
Other Information:
- ------------------
Headcount (approximate) 41,800 40,000 36,000
Average total revenue/unit (approximate) $1,610 $1,620 $1,770
Note: Ratios are calculated based on underlying data in thousands.
(a) Days of sales outstanding include the effect of product costs
related to in-transit customer shipments (arising from the
adoption of SAB 101) that are classified in other current assets.
At Aug. 1, 2003, May 2, 2003, and Aug. 2, 2002, days of sales
outstanding included days of sales in accounts receivable and
days of in-transit customer shipments of 26 and 4 days; 25 and 4
days; and 28 and 4 days, respectively.
CONTACT: Dell Inc., Round Rock
Media Contacts:
T.R. Reid, 512-728-7977
tr_reid@dell.com
or
Mike Maher, 512-723-2575
mike_maher@dell.com
or
Investor Contacts:
Lynn A. Tyson, 512-723-1130
lynn_tyson@dell.com
or
Robert Williams, 512-728-7570
robert_williams@dell.com