Exhibit 99.1
Dell Second-Quarter Revenue Up 20 Percent, EPS 29 Percent Higher;
Growth in Servers, Markets Outside U.S. is Exceptionally Strong
ROUND ROCK, Texas--(BUSINESS WIRE)--Aug. 12, 2004--Dell
(Nasdaq:DELL) showed its unique ability to both grow rapidly in key
markets and achieve strong profitability again in the company's fiscal
second-quarter 2005, which ended July 30.
Dell revenue was $11.7 billion, a company record and 20 percent
higher than in the same quarter a year ago. Sales in Europe, the
Middle East and Africa and in Asia-Pacific and Japan rose 30 and 29
percent, respectively. Combined revenue for enterprise systems,
including servers and storage systems, accounted for 22 percent of
overall sales, matching a company high.
Earnings per share were 31 cents, 29 percent higher and also a
Dell record. Results were consistent with revised company guidance in
mid-July, which included an increase in earnings expectations.
(in millions, except share data)
Second Quarter Year to Date
FY'05 FY'04 Change FY'05 FY'04 Change
----- ----- ------ ----- ----- ------
Revenue $11,706 $9,778 20% $23,246 $19,310 20%
Operating Income $1,006 $840 20% $1,972 $1,651 19%
Net Income $799 $621 29% $1,530 $1,219 26%
Earnings Per Share $0.31 $0.24 29% $0.59 $0.47 26%
"We start with the marketplace advantage of a more efficient, more
customer-focused way of doing business," said Kevin Rollins, Dell's
chief executive officer. "And our global team is consistently
disciplined in applying that business model.
"Like our shareholders, our expectation is for volume and share
growth along with solid profitability. Those objectives aren't
mutually exclusive."
According to Mr. Rollins, Dell's third-quarter product shipments
should be 21 percent higher than in the same year-ago period. Such
growth is expected to produce quarterly revenue of about $12.5
billion, up 18 percent, and earnings per share of 33 cents, a
27-percent increase.
In the most-recent quarter, operating expenses were 9.6 percent of
revenue, equaling a company low. Operating profit as a percent of
revenue was 8.6 percent, up from 8.4 percent in the year's first
quarter. Dell generated more than $700 million in cash from operations
during the period, at the end of which company cash and investments
totaled $11.8 billion.
EMEA Leads Robust Worldwide Volume Gains
Dell's global product shipments increased 19 percent, sharply
faster than for the rest of the industry.
Second-quarter shipment growth in Europe, the Middle East and
Africa was 30 percent, 12 points higher than the average of other
companies in the region. Among Dell highlights: a 44-percent
rise -- double the rest of the industry -- in server shipments, and a
60-percent increase in total storage revenue.
Overall company volumes in the United Kingdom were up 30 percent,
twice that of the industry excluding Dell. Server growth of 34 percent
in the U.K. enabled Dell to close the gap between itself and the
national category leader by more than eight share points from a year
ago. Dell France achieved a 38-percent increase in overall shipments,
37 percent in servers.
Company shipment growth of 28 percent in Asia-Pacific and Japan
was more than double that of the rest of the industry. Dell server
volumes in the region were up 33 percent.
In Japan, Dell's 19-percent shipment increase compared with 1
percent for other suppliers. Dell gained two points of market share
from last year's second quarter, as its share exceeded 12 percent for
the first time and again ranked No. 3 nationally.
Profitable growth in China during the period included a 41-percent
jump in server shipments. Dell was recently recognized for the first
time with a "gold" user-satisfaction award for standards-based server
service by the China Center for Information Industry Development.
In the Americas, Dell revenue grew 16 percent. The company added
nearly two points to its leading United States market share, with
shipments increasing at more than twice the average of other
companies. Total demand by large-corporate and small- and
medium-business customers increased 21 percent. Americas volumes
outside the U.S. rose 25 percent, led by strong growth in Canada.
U.S. consumers purchased 29 percent more Dell notebook computers
than in the same period a year ago.
Servers, Printers Highlight Strategic Product Growth
Dell's 31-percent second-quarter increase in server shipments was
12 points higher than average server growth for other companies. The
company is introducing a new, eighth-generation of PowerEdge servers,
which feature more powerful processors and enhanced systems-management
software.
Revenue from software and peripheral products increased 31
percent, helped by sustained strong demand for Dell printers. Those
products are being introduced in more countries, including Japan
during the second quarter and China in Q3. The company expects to sell
five million Dell printers during fiscal 2005, up from an original
target of four million. Dell's overall printing and imaging business
is now at a $1 billion annual run rate.
In notebook computers, Dell's combined shipments of Inspiron and
Latitude systems rose 28 percent, significantly more than the increase
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 four quarters totaled $45.4 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, Inspiron and Latitude are trademarks of Dell Inc.
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
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, 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
July 30, April 30, Aug. 1, ---------------------
2004 2004 2003 Sequential Yr. to Yr.
--------- --------- --------- ---------- ----------
Net revenue $11,706 $11,540 $9,778 1.4% 19.7%
Cost of revenue 9,572 9,467 8,000 1.1% 19.6%
--------- --------- ---------
Gross margin 2,134 2,073 1,778 3.0% 20.0%
Selling,
general and
administrative 1,008 991 822 1.8% 22.6%
Research,
development and
engineering 120 116 116 3.8% 4.2%
--------- --------- ---------
Total operating
expenses 1,128 1,107 938 2.0% 20.3%
--------- --------- ---------
Operating income 1,006 966 840 4.1% 19.7%
Investment and
other income,
net 46 49 47 (6.5%) (2.2%)
--------- --------- ---------
Income before
income taxes 1,052 1,015 887 3.6% 18.6%
Income tax
provision 253 284 266 (11.2%) (5.1%)
--------- --------- ---------
Net income $799 $731 $621 9.3% 28.7%
========= ========= =========
Earnings per
common share:
Basic $0.32 $0.29 $0.24
========= ========= =========
Diluted $0.31 $0.28 $0.24
========= ========= =========
Weighted average
shares
outstanding:
Basic 2,518 2,539 2,567
Diluted 2,574 2,593 2,624
Percentage of
Total Net
Revenue:
- -------------
Gross margin 18.2% 18.0% 18.2%
Selling,
general and
administrative 8.6% 8.6% 8.4%
Research,
development and
engineering 1.0% 1.0% 1.2%
Total operating
expenses 9.6% 9.6% 9.6%
Operating income 8.6% 8.4% 8.6%
Income before
income taxes 9.0% 8.8% 9.1%
Net income 6.8% 6.3% 6.3%
Income tax rate 24.0% 28.0% 30.0%
Net Revenue by
Geographic
Region:
- --------------
Percentage of
Total Net
Revenue
- -------------
Americas 68% 65% 70%
Europe 21% 23% 19%
Asia Pacific --
Japan 11% 12% 11%
Net Revenue by
Product Line:
- --------------
Percentage of
Total Net
Revenue
- -------------
Desktops 49% 51% 51%
Notebooks 29% 28% 28%
Enterprise 22% 21% 21%
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
July 30, Aug. 1, ----------
2004 2003 Yr. to Yr.
--------- --------- ----------
Net revenue $23,246 $19,310 20.4%
Cost of revenue 19,039 15,784 20.6%
--------- ---------
Gross margin 4,207 3,526 19.3%
Selling, general and administrative 1,999 1,648 21.3%
Research, development and engineering 236 227 4.2%
--------- ---------
Total operating expenses 2,235 1,875 19.2%
--------- ---------
Operating income 1,972 1,651 19.4%
Investment and other income, net 95 90 6.1%
--------- ---------
Income before income taxes 2,067 1,741 18.7%
Income tax provision 537 522 2.8%
--------- ---------
Net income $1,530 $1,219 25.6%
========= =========
Earnings per common share:
Basic $0.61 $0.47
========= =========
Diluted $0.59 $0.47
========= =========
Weighted average shares outstanding:
Basic 2,529 2,570
Diluted 2,583 2,619
Percentage of Total Net Revenue:
- -------------------------------
Gross margin 18.1% 18.3%
Selling, general and administrative 8.6% 8.5%
Research, development and engineering 1.0% 1.2%
Total operating expenses 9.6% 9.7%
Operating income 8.5% 8.6%
Income before income taxes 8.9% 9.0%
Net income 6.6% 6.3%
Income tax rate 26.0% 30.0%
Net Revenue by Geographic Region:
- --------------------------------
Percentage of Total Net Revenue
- -------------------------------
Americas 66% 69%
Europe 22% 20%
Asia Pacific -- Japan 12% 11%
Net Revenue by Product Line:
- ---------------------------
Percentage of Total Net Revenue
- -------------------------------
Desktops 50% 52%
Notebooks 28% 27%
Enterprise 22% 21%
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)
July 30, April 30, Aug. 1,
2004 2004 2003
--------- --------- ---------
Assets:
- ------
Current assets:
Cash and cash equivalents $4,025 $4,075 $4,636
Short-term investments 1,509 1,180 484
Accounts receivable, net 3,625 3,424 2,883
Inventories 418 425 358
Other 2,055 2,073 1,246
--------- --------- ---------
Total current assets 11,632 11,177 9,607
Property, plant and equipment, net 1,578 1,510 1,062
Investments 6,276 6,631 5,498
Other non-current assets 446 391 373
--------- --------- ---------
Total assets $19,932 $19,709 $16,540
========= ========= =========
Liabilities and Stockholders' Equity:
- ------------------------------------
Current liabilities:
Accounts payable $7,444 $7,518 $6,418
Accrued and other 3,877 3,803 2,846
--------- --------- ---------
Total current liabilities 11,321 11,321 9,264
Long-term debt 505 505 506
Other non-current liabilities 1,899 1,778 1,264
--------- --------- ---------
Total liabilities 13,725 13,604 11,034
Stockholders' equity 6,207 6,105 5,506
--------- --------- ---------
Total liabilities and stockholders'
equity $19,932 $19,709 $16,540
========= ========= =========
Ratios:
- ------
Quick ratio 0.81 0.77 0.86
Days supply in inventory 4 4 4
Days of sales outstanding(a) 31 31 30
Days in accounts payable 70 71 72
--------- --------- ---------
Cash conversion cycle (35) (36) (38)
Other Information:
- -----------------
Headcount (approximate) 50,000 47,800 41,800
Average total revenue/unit (approximate) $1,610 $1,570 $1,610
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 July 30, 2004, April 30, 2004, and
August 1, 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 26 and 4 days, respectively.
DELL INC.
Condensed Consolidated Statement of Cash Flows
(in millions)
(unaudited)
Three Months Six Months
Ended Ended
------------ ------------
July 30, 2004
--------------------------
Cash flows from operating activities:
Net income $799 $1,530
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 79 161
Tax benefits from employee stock plans 45 70
Other, primarily effects of exchange rate
changes on monetary assets and
liabilities denominated in foreign
currencies (51) (163)
Changes in:
Operating working capital (270) (189)
Non-current assets and liabilities 101 296
------------ ------------
Net cash provided by operating
activities 703 1,705
Cash flows from investing activities:
Investments:
Purchases (3,214) (6,719)
Maturities and sales 3,221 6,485
Capital expenditures (134) (216)
------------ ------------
Net cash used in investing activities (127) (450)
Cash flows from financing activities:
Purchase of common stock (891) (2,022)
Issuance of common stock
under employee plans 196 310
------------ ------------
Net cash used in financing activities (695) (1,712)
Effect of exchange rate changes
on cash and cash equivalents 69 165
------------ ------------
Net decrease in cash and cash equivalents (50) (292)
Cash and cash equivalents
at beginning of period 4,075 4,317
------------ ------------
Cash and cash equivalents at end of period $4,025 $4,025
============ ============
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