Exhibit 99.1
Strong Growth in Servers, Storage Systems Leads Dell to Record Operating
Results in Fiscal Third Quarter; Company Anticipates $11.5 Billion in Revenue,
EPS of 28 Cents in Q4
ROUND ROCK, Texas--(BUSINESS WIRE)--Nov. 13, 2003--Dell
(Nasdaq:DELL) again demonstrated its unique ability to simultaneously
deliver high customer value, solid worldwide share gains and leading
profitability, achieving record company operating results in the
fiscal third quarter.
Dell's global server shipments increased 30 percent, almost twice
the combined rate of other companies. Sales of external storage
systems jumped 68 percent in the quarter. The company's total revenue
from enterprise computing systems was up 32 percent.
For the three months ended Oct. 31, Dell's net revenue was $10.6
billion, 16 percent higher than in the year-ago quarter. Company
revenue was more than 40-percent higher than two years ago; sales by
the rest of the industry are essentially flat over the same period.
Third-quarter Dell earnings were 26 cents per share, a 24-percent
increase.
Third Quarter Year to Date
(in millions, except FY'04 FY'03 Change FY '04 FY'03 Change
share data)
Revenue $10,622 $ 9,144 16% $29,932 $25,669 17%
Operating Income $ 912 $ 758 20% $ 2,563 $ 2,025 27%
Net Income $ 677 $ 561 21% $ 1,896 $ 1,519 25%
Earnings Per Share $ 0.26 $ 0.21 24% $ 0.72 $ 0.57 26%
"Customers and investors get best value over time from companies
like Dell that are growing and financially very healthy," said Michael
Dell, chairman of the board and chief executive officer. "The market
should insist on both, and it's a credit to our teams and a better way
of doing business that we're consistently meeting those expectations."
Mr. Dell said the company anticipates its fourth-quarter shipments
will be up more than 25 percent year-over-year, and again outpace the
rest of the industry. Dell expects revenue of $11.5 billion, an
increase of 18 percent, and earnings per share of 28 cents, up 22
percent.
Third-quarter operating expenses were 9.6 percent of revenue,
equaling a company record. Despite sharp industry price competition
and slower than expected declines in component costs, Dell's operating
profit was 8.6 percent of revenue for the second straight quarter. In
dollar terms, operating income was $912 million, up 20 percent from a
year ago.
Dell generated $1.1 billion in cash from operations in the
quarter. Total cash and investments at the end of the period was $11.0
billion, another company record.
Company Gains Additional Share in Critical Markets
Dell's overall volume growth of 22 percent enabled it to gain 1.5
points of additional global market share. Product shipments in five
strategic markets -- China, France, Germany, Japan and the United
Kingdom -- rose a combined 32 percent in the third quarter.
Asia-Pacific and Japan led the company's regional growth with a
35-percent increase, nearly three times the combined rate of other
companies. Dell's strength in the region was most profound in servers
and notebook computers, which were up 37 and 36 percent, respectively.
Company performance in China was exceptional, including a
67-percent increase in volumes of servers and a 70-percent gain in
notebook computers. The company's 25-percent growth in Japan moved it
to the No. 3 share position in the market, up from No. 4 a year ago.
Total Dell shipments in Europe, the Middle East and Africa
increased 26 percent, seven points ahead of the average for the rest
of the industry. Volumes were up 24 percent or more in every regional
product category. Technology Business Research (TBR) for the first
time ranked Dell No. 1 in U.K. customer satisfaction in servers,
notebook computers and desktop computers at the same time. Based on
TBR's most recent surveys, the company also holds the same distinction
in all three product categories in France and Germany.
Dell's 30-percent shipment growth in the U.K. was more than twice
the rest of the industry, as the company gained nearly three points of
share from a year ago and reclaimed market leadership. Server
shipments in France increased 37 percent, more than double the
industry without Dell.
Company product shipments in the Americas and the United States
rose 20 percent, strongly ahead of the average of other companies.
Dell systems sold to U.S. consumers were up 28 percent, while those to
small and medium businesses and federal, state and local governments
both increased 22 percent.
Performance in Servers, Storage, Services Remains Strong
Dell's PowerEdge servers continued to earn customer demand and
favorable recognition from reviewers in the third quarter. PC Magazine
gave the PowerEdge 1750 a perfect overall rating for performance,
manageability and serviceability and an "Editors' Choice" award.
Dell's increasing leadership in servers -- the company ranks No. 1
in shipments of such products in the U.S., No. 2 worldwide -- is
driving growth in storage systems. Through the first two years of
Dell's partnership with EMC Corp., more than 7,000 customers have
purchased Dell/EMC storage systems.
Demand for Dell services grew strongly in the third quarter.
Services revenue was up 31 percent to an annual run rate of $2.6
billion.
Quarterly shipments of Inspiron and Latitude notebook computers
increased 31 percent, and those of Dimension and OptiPlex desktop
computers were up 20 percent. In its most recent report on U.S.
corporate buying behavior and customer satisfaction for desktop
computers, TBR said Dell demonstrated strength in 10 of 13 categories
and had no weaknesses. The next-best computer supplier showed strength
in only two areas.
Revenue from software and peripheral products rose 26 percent in
the third quarter. The company has sold more than one million Dell
printers since their launch in March. Shipments of Dell printers were
up nearly 70 percent from the second quarter, and the company expects
sequential growth of more than 80 percent in Q4. During the third
quarter, Dell introduced its own digital music players and LCD
television/computer monitors, and new versions of the company's Axim
handheld computers and digital projectors.
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 $39.7 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, PowerEdge, Inspiron, Latitude, 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
fourth-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, financial position and cash
flows follow.
DELL INC.
Condensed Consolidated Statement of Operations and Related Financial
Highlights
(in millions, except per share data)
(unaudited)
Three Months Ended
--------------------------
Oct. 31, Aug. 1, Nov. 1, % Growth Rates
---------------------
2003 2003 2002 Sequential Yr. to Yr.
--------- -------- ------- ---------------------
Net revenue $10,622 $9,778 $9,144 8.6% 16.2%
Cost of revenue 8,687 8,000 7,482 8.6% 16.1%
--------- -------- -------
Gross margin 1,935 1,778 1,662 8.8% 16.4%
Selling, general and
administrative 905 822 787 10.1% 15.0%
Research,
development and
engineering 118 116 117 2.4% 1.1%
--------- -------- -------
Total operating
expenses 1,023 938 904 9.1% 13.2%
--------- -------- -------
Operating income 912 840 758 8.5% 20.3%
Investment and other
income, net 41 47 44 (12.1%) (6.8%)
--------- -------- -------
Income before income
taxes 953 887 802 7.4% 18.8%
Income tax provision 276 266 241 3.7% 14.7%
--------- -------- -------
Net income $677 $621 $561 9.0% 20.6%
========= ======== =======
Earnings per common
share:
Basic $0.26 $0.24 $0.22
========= ======== =======
Diluted $0.26 $0.24 $0.21
========= ======== =======
Weighted average
shares outstanding:
Basic 2,563 2,567 2,582
Diluted 2,623 2,624 2,634
Percentage of Total
Net Revenue:
Gross margin 18.2% 18.2% 18.2%
Selling, general and
administrative 8.5% 8.4% 8.6%
Research,
development and
engineering 1.1% 1.2% 1.3%
Total operating
expenses 9.6% 9.6% 9.9%
Operating income 8.6% 8.6% 8.3%
Income before income
taxes 9.0% 9.1% 8.8%
Net income 6.4% 6.3% 6.1%
Income tax rate 29.0% 30.0% 30.0%
Net Revenue by
Geographic Region:
Percentage of Total
Net Revenue
Americas 71% 70% 72%
Europe 19% 19% 19%
Asia Pacific - Japan 10% 11% 9%
Net Revenue by
Product Line:
Percentage of Total
Net Revenue
Desktops 50% 51% 52%
Notebooks 28% 28% 28%
Enterprise 22% 21% 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)
Nine Months Ended % Growth
---------------------
Oct. 31, Nov. 1, Rates
----------
2003 2002 Yr. to Yr.
--------- --------- ----------
Net revenue $29,932 $25,669 16.6%
Cost of revenue 24,471 21,101 16.0%
--------- ---------
Gross margin 5,461 4,568 19.6%
Selling, general and
administrative 2,553 2,205 15.8%
Research, development and
engineering 345 338 2.1%
--------- ---------
Total operating expenses 2,898 2,543 14.0%
--------- ---------
Operating income 2,563 2,025 26.5%
Investment and other income, net 131 141 (7.4%)
--------- ---------
Income before income taxes 2,694 2,166 24.3%
Income tax provision 798 647 23.2%
--------- ---------
Net income $1,896 $1,519 24.8%
========= =========
Earnings per common share:
Basic $0.74 $0.59
========= =========
Diluted $0.72 $0.57
========= =========
Weighted average shares
outstanding:
Basic 2,568 2,587
Diluted 2,620 2,651
Percentage of Total Net Revenue:
Gross margin 18.2% 17.8%
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% 7.9%
Income before income taxes 9.0% 8.4%
Net income 6.3% 5.9%
Income tax rate 29.6% 30.0%
Net Revenue by Geographic Region:
Percentage of Total Net Revenue
Americas 70% 71%
Europe 20% 19%
Asia Pacific - Japan 10% 10%
Net Revenue by Product Line:
Percentage of Total Net Revenue
Desktops 51% 53%
Notebooks 27% 27%
Enterprise 22% 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)
Oct. 31, Aug. 1, Nov. 1,
2003 (a) 2003 2002
---------- --------- --------
Assets:
Current assets:
Cash and cash equivalents $4,356 $4,636 $4,034
Short-term investments 626 484 270
Accounts receivable, net 3,142 2,883 2,661
Inventories 358 358 307
Other 1,599 1,246 1,483
---------- --------- --------
Total current assets 10,081 9,607 8,755
Property, plant and equipment, net 1,498 1,062 882
Investments 6,050 5,498 4,755
Other non-current assets 496 373 320
---------- --------- --------
Total assets $18,125 $16,540 $14,712
========== ========= ========
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $6,851 $6,418 $5,936
Accrued and other 3,350 2,846 2,562
---------- --------- --------
Total current liabilities 10,201 9,264 8,498
Long-term debt 506 506 514
Other non-current liabilities 1,540 1,264 1,052
---------- --------- --------
Total liabilities 12,247 11,034 10,064
Stockholders' equity 5,878 5,506 4,648
---------- --------- --------
Total liabilities and stockholders'
equity $18,125 $16,540 $14,712
========== ========= ========
Ratios:
Quick ratio 0.80 0.86 0.82
Days supply in inventory 4 4 4
Days of sales outstanding (b) 31 30 30
Days in accounts payable 71 72 71
---------- --------- --------
Cash conversion cycle (36) (38) (37)
Other Information:
Headcount (approximate) 44,300 41,800 38,200
Average total revenue/unit
(approximate) $1,620 $1,610 $1,710
Note: Ratios are calculated based on underlying data in thousands.
(a) Due to the adoption of FASB Interpretation No. 46, Consolidation
of Variable Interest Entities, Dell began consolidating the
financial results of Dell Financial Services ("DFS") at the
beginning of the current quarter. The consolidation of DFS
resulted in an increase of assets and liabilities in Dell's
consolidated statement of financial position by $588 million as of
Oct. 31, 2003, net of intercompany eliminations.
(b) Days of sales outstanding include the effect of product costs
related to in-transit customer shipments that are classified in
other current assets. At Oct. 31, 2003, Aug. 1, 2003, and Nov. 1,
2002, days of sales outstanding included days of sales in accounts
receivable and days of in-transit customer shipments of 27 and 4
days; 26 and 4 days; and 26 and 4 days, respectively.
DELL INC.
Condensed Consolidated Statement of Cash Flows
(in millions)
(unaudited)
Three Months Nine Months
Ended Ended
------------------------
Oct. 31, 2003
------------------------
Cash flows from operating activities:
Net income $677 $1,896
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 71 187
Tax benefits from employee stock plans 40 107
Other, primarily effects of exchange rate
changes on monetary assets and
liabilities denominated in foreign
currencies (82) (352)
Changes in:
Operating working capital 309 566
Non-current assets and liabilities 45 208
------------ -----------
Net cash provided by operating
activities 1,060 2,612
Cash flows from investing activities:
Investments:
Purchases (4,204) (8,492)
Maturities and sales 3,462 7,383
Cash assumed in consolidation of DFS 172 172
Capital expenditures (129) (267)
Purchase of assets held in master lease
facilities (446) (636)
------------ -----------
Net cash used in investing activities (1,145) (1,840)
Cash flows from financing activities:
Purchase of common stock (500) (1,500)
Issuance of common stock under employee
plans 174 508
Other - (11)
------------ -----------
Net cash used in financing activities (326) (1,003)
Effect of exchange rate changes on cash and
cash equivalents 131 355
------------ -----------
Net (decrease)/increase in cash and cash
equivalents (280) 124
Cash and cash equivalents at beginning of
period 4,636 4,232
------------ -----------
Cash and cash equivalents at end of period $4,356 $4,356
============ ===========
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