EXHIBIT 99.1
Dell Posts Record Operating Results in Fiscal Fourth Quarter;
Servers, Storage Systems Drive 18-Percent Revenue
Growth, 26-Percent Increase in EPS
ROUND ROCK, Texas--(BUSINESS WIRE)--Feb. 12, 2004--Dell's fiscal
fourth-quarter 2004 was its best operating period ever. The company
achieved record product shipments, revenue, operating and net income,
and earnings per share.
Dell (NASDAQ:DELL) continued its leading growth in enterprise
computing. Shipments of PowerEdge servers jumped 40 percent from the
year-ago quarter, more than double the rate for the rest of the
industry. Storage revenue was 47 percent higher. And company strength
was global: product shipments were up more than 30 percent in Europe,
the Middle East and Africa and in Asia-Pacific and Japan, and exceeded
20 percent in the Americas.
Company revenue for the quarter ended Jan. 30 was $11.5 billion,
18 percent higher than a year ago. Net earnings were 29 cents per
share, up 26 percent. Full-year sales were $41.4 billion, operating
income was $3.5 billion and per-share earnings were $1.01, all Dell
records.
Fourth Quarter Full Year
----------------------- ------------------------
(in millions,
except share data) FY '04 FY '03 Change FY '04 FY '03 Change
Revenue $11,512 $9,735 18% $41,444 $35,404 17%
Operating Income $ 981 $ 819 20% $ 3,544 $ 2,844 25%
Net Income $ 749 $ 603 24% $ 2,645 $ 2,122 25%
Earnings Per Share $ 0.29 $ 0.23 26% $ 1.01 $ 0.80 26%
"Dell is alone in simultaneously providing customers great value,
growing faster than the industry and earning a compelling profit for
investors," said Kevin Rollins, the company's president and chief
operating officer. "Doing that requires a high-quality, low-cost
business model and great discipline. We have both.
"Much of the industry's quarterly growth was at the low ends of
the desktop and notebook categories, which offer little if any
profitability. Dell met its operating targets by pursuing profitable
growth."
Dell's profitability was up strongly from a year ago, both in
absolute terms and as a percent of revenue. Fourth-quarter operating
income was $981 million, or 8.5 percent of revenue. Operating expenses
were 9.6 percent of revenue, matching a company low and down from 9.9
percent in the year-ago quarter. Below operating income, strong sales
and earnings growth in markets outside the United States resulted in a
lower effective tax rate.
Industry-leading profits and efficient asset management helped
Dell generate $1.1 billion in cash from operations. Total cash and
investments at the end of the quarter were $11.9 billion, the highest
in company history.
Mr. Rollins said Dell expects first-quarter fiscal-2005 product
shipments to rise more than 20 percent, ahead of anticipated industry
growth. The resulting company volume should produce quarterly revenue
of $11.2 billion, up about 17 percent from the prior year, and
earnings per share of 28 cents, up 22 percent.
Servers, Storage Systems Push Regional Strength
With record sales in the fourth quarter, the company reached $8.5
billion in full-year revenue in Europe, the Middle East and Africa
(EMEA), 23 percent more than in fiscal 2003. Quarterly company product
shipments in the region rose 33 percent, highlighted by increases in
the three largest national markets: the United Kingdom, France and
Germany. Without Dell, industry volumes were up 20 percent.
Total product shipments in Asia-Pacific and Japan increased 34
percent, those for servers 36 percent. Absent Dell, the regional
industry was up just 9 percent overall, 10 percent in servers. In
China, already the region's second-largest national market, combined
company volumes of servers and notebook computers were 47 percent
higher.
Dell product shipments in the Americas rose 22 percent, thanks to
solid increases in all customer segments. Total volumes in Canada,
Mexico and Brazil were up 25 percent. Growth in systems sold to U.S.
consumers was 26 percent, more than twice the average of other
companies.
Enterprise Categories Strong, Printers Exceed Expectations
Dell's 40-percent increase in server shipments earned the company
nearly two additional points of market share versus a year ago. In the
United States, where Dell is the category leader, server volumes were
up 49 percent, two-and-a-half times the rate of the rest of the
industry. Sales from PowerVault and Dell/EMC external storage systems
are now at a $1.8 billion annual run rate.
Revenue from software and peripheral (S&P) products rose 36
percent in the fourth quarter. Dell's own products -- including
printers and accessories, LCD television/computer monitors, handheld
devices and digital projectors -- accounted for nearly half of S&P
sales.
Since their introduction in March, Dell has sold more than 2
million of its printers. Fourth-quarter volumes were nearly double
those for Q3. Customer feedback shows exceptional satisfaction with
Dell's unique ink-management process, which alerts users on their
computer screens when ink is low, provides a link to purchase
replacement cartridges online and ships 99.8 percent of orders the
same day.
In January, Dell announced it would expand its imaging line
through new technology partnerships with Fuji Xerox Co. Ltd., Eastman
Kodak Co. and Samsung Electronics Co. Ltd., and its successful
existing relationship with Lexmark International Inc.
Shipments of Inspiron and Latitude notebook computers were up 40
percent, ahead of the rest of the industry. Volumes of Dimension and
OptiPlex desktop computers rose 21 percent, compared with an average 8
percent for other companies.
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 year totaled $41.4 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, PowerVault, Inspiron, Latitude, Dimension and
OptiPlex are trademarks of Dell Inc.
EMC is a registered trademark of EMC Corp.
Market comparisons based on IDC data.
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
first-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
-------------------------- % Growth Rates
Jan. 30, Oct. 31, Jan. 31, -----------------------
2004 2003 2003 Sequential Yr. to Yr.
-------- -------- -------- ---------- -----------
Net revenue $11,512 $10,622 $9,735 8.4% 18.2%
Cost of revenue 9,421 8,687 7,954 8.5% 18.4%
-------- -------- --------
Gross margin 2,091 1,935 1,781 8.1% 17.4%
Selling, general
and
administrative 991 905 845 9.5% 17.3%
Research,
development and
engineering 119 118 117 1.0% 1.7%
-------- -------- --------
Total operating
expenses 1,110 1,023 962 8.4% 15.4%
-------- -------- --------
Operating income 981 912 819 7.6% 19.7%
Investment and
other income, net 49 41 42 19.4% 17.4%
-------- -------- --------
Income before
income taxes 1,030 953 861 8.1% 19.6%
Income tax
provision 281 276 258 1.8% 9.0%
-------- -------- --------
Net income $749 $677 $603 10.7% 24.2%
======== ======== ========
Earnings per
common share:
Basic $0.29 $0.26 $0.23
======== ======== ========
Diluted $0.29 $0.26 $0.23
======== ======== ========
Weighted average
shares
outstanding:
Basic 2,557 2,563 2,576
Diluted 2,616 2,623 2,621
Percentage of
Total Net
Revenue:
- -------------
Gross margin 18.2% 18.2% 18.3%
Selling, general
and
administrative 8.6% 8.5% 8.7%
Research,
development and
engineering 1.0% 1.1% 1.2%
Total operating
expenses 9.6% 9.6% 9.9%
Operating income 8.5% 8.6% 8.4%
Income before
income taxes 8.9% 9.0% 8.8%
Net income 6.5% 6.4% 6.2%
Income tax rate 27.3% 29.0% 30.0%
Net Revenue by
Geographic
Region:
- --------------
Percentage of
Total Net Revenue
- ------------------
Americas 67% 71% 69%
Europe 22% 19% 21%
Asia Pacific --
Japan 11% 10% 10%
Net Revenue by
Product Line:
- --------------
Percentage of
Total Net Revenue
- ------------------
Desktops 52% 50% 55%
Notebooks 27% 28% 26%
Enterprise 21% 22% 19%
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)
Year Ended % Growth
---------------------- Rates
Jan. 30, Jan. 31, ----------
2004 2003 Yr. to Yr.
---------- ---------- ----------
Net revenue $41,444 $35,404 17.1%
Cost of revenue 33,892 29,055 16.6%
---------- ----------
Gross margin 7,552 6,349 18.9%
Selling, general and
administrative 3,544 3,050 16.2%
Research, development and
engineering 464 455 2.0%
---------- ----------
Total operating expenses 4,008 3,505 14.4%
---------- ----------
Operating income 3,544 2,844 24.6%
Investment and other income, net 180 183 (1.7%)
---------- ----------
Income before income taxes 3,724 3,027 23.0%
Income tax provision 1,079 905 19.1%
---------- ----------
Net income $2,645 $2,122 24.6%
========== ==========
Earnings per common share:
Basic $1.03 $0.82
========== ==========
Diluted $1.01 $0.80
========== ==========
Weighted average shares
outstanding:
Basic 2,565 2,584
Diluted 2,619 2,644
Percentage of Total Net Revenue:
- --------------------------------
Gross margin 18.2% 17.9%
Selling, general and
administrative 8.6% 8.6%
Research, development and
engineering 1.1% 1.3%
Total operating expenses 9.7% 9.9%
Operating income 8.6% 8.0%
Income before income taxes 9.0% 8.6%
Net income 6.4% 6.0%
Income tax rate 29.0% 29.9%
Net Revenue by Geographic Region:
- ---------------------------------
Percentage of Total Net Revenue
- -------------------------------
Americas 69% 71%
Europe 21% 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)
Jan. 30, Oct. 31, Jan. 31,
2004 2003 2003
-------- -------- --------
Assets:
- -------
Current assets:
Cash and cash equivalents $4,317 $4,356 $4,232
Short-term investments 835 626 406
Accounts receivable, net 3,635 3,142 2,586
Inventories 327 358 306
Other 1,519 1,599 1,394
-------- -------- --------
Total current assets 10,633 10,081 8,924
Property, plant and equipment, net 1,517 1,498 913
Investments 6,770 6,050 5,267
Other non-current assets 391 496 366
-------- -------- --------
Total assets $19,311 $18,125 $15,470
======== ======== ========
Liabilities and Stockholders' Equity:
- -------------------------------------
Current liabilities:
Accounts payable $7,316 $6,851 $5,989
Accrued and other 3,580 3,350 2,944
-------- -------- --------
Total current liabilities 10,896 10,201 8,933
Long-term debt 505 506 506
Other non-current liabilities 1,630 1,540 1,158
-------- -------- --------
Total liabilities 13,031 12,247 10,597
Stockholders' equity 6,280 5,878 4,873
-------- -------- --------
Total liabilities and stockholders' equity $19,311 $18,125 $15,470
======== ======== ========
Ratios:
- -------
Quick ratio 0.81 0.80 0.81
Days supply in inventory 3 4 3
Days of sales outstanding(a) 31 31 28
Days in accounts payable 70 71 68
-------- -------- --------
Cash conversion cycle (36) (36) (37)
Other Information:
- ------------------
Headcount (approximate) 46,000 44,300 39,100
Average total revenue/unit (approximate) $1,540 $1,620 $1,640
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 that are classified in
other current assets. At Jan. 30, 2004, Oct. 31, 2003, and Jan.
31, 2003, days of sales outstanding included days of sales in
accounts receivable and days of in-transit customer shipments of
28 and 3 days; 27 and 4 days; and 24 and 4 days, respectively.
DELL INC.
Condensed Consolidated Statement of Cash Flows
(in millions)
(unaudited)
Three Months Twelve Months
Ended Ended
-----------------------------
Jan. 30, 2004
-----------------------------
Cash flows from operating activities:
Net income $749 $2,645
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 76 263
Tax benefits from employee stock plans 74 181
Other, primarily effects of exchange
rate changes on monetary assets and
liabilities denominated in foreign
currencies (212) (564)
Changes in:
Operating working capital 306 872
Non-current assets and liabilities 65 273
------------- -------------
Net cash provided by operating
activities 1,058 3,670
Cash flows from investing activities:
Investments:
Purchases (3,607) (12,099)
Maturities and sales 2,695 10,078
Cash assumed in consolidation of Dell
Financial Services L.P. -- 172
Capital expenditures (62) (329)
Purchase of assets held in master lease
facilities -- (636)
------------- -------------
Net cash used in investing activities (974) (2,814)
Cash flows from financing activities:
Purchase of common stock (500) (2,000)
Issuance of common stock under employee
plans 120 628
Other -- (11)
------------- -------------
Net cash used in financing activities (380) (1,383)
Effect of exchange rate changes on cash
and cash equivalents 257 612
------------- -------------
Net (decrease)/increase in cash and cash
equivalents (39) 85
Cash and cash equivalents at beginning of
period 4,356 4,232
------------- -------------
Cash and cash equivalents at end of
period $4,317 $4,317
============= =============
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