EXHIBIT 99.1
Record Revenue, Shipments, Operating Income and Cash Flow Highlight
Dell's Fiscal Fourth Quarter; Revenue Up 17 Percent, Earnings Exceed
Company Guidance
ROUND ROCK, Texas--(BUSINESS WIRE)--Feb. 10, 2005--Dell
(NASDAQ:DELL)
Strong growth throughout Dell's diversified range of products and
services in the fiscal fourth-quarter 2005 led to the company's best
ever operating period. The company achieved quarterly records for
revenue, unit shipments, operating income and cash flow from
operations.
Sales increased 22 percent in Europe, the Middle East and Africa,
and 21 percent in Asia-Pacific and Japan. Worldwide revenue growth
from servers and storage systems accelerated from the last quarter,
increasing 20 percent year-over-year. In the United States, sales to
business customers grew 19 percent year-over-year.
Revenue for the quarter ended Jan. 28 was $13.5 billion, up 17
percent from a year ago. Pro-forma fourth-quarter net earnings were 37
cents per share, 28 percent higher than last year. That exceeded
Dell's guidance by one cent, as continued strong profit growth in
markets outside the United States reduced the company's operating tax
rate.
Dell's fourth-quarter reported earnings were $667 million, or 26
cents per share, which included a tax charge of 11 cents per share.
The charge was taken in anticipation of repatriating foreign earnings
at a one-time favorable tax rate under the U.S. American Jobs Creation
Act (AJCA).
Fourth Quarter Full Year
(in millions, except -------------- ---------
share data) FY'05 FY'04 Change FY'05 FY'04 Change
Revenue $13,457 $11,512 17% $49,205 $41,444 19%
Operating Income $1,187 $981 21% $4,254 $3,544 20%
Pro-Forma Net
Income(a) $947 $749 26% $3,323 $2,645 26%
Reported-GAAP $667 $749 (11%) $3,043 $2,645 15%
Pro-Forma EPS(a) $0.37 $0.29 28% $1.29 $1.01 28%
Reported-GAAP $0.26 $0.29 (10%) $1.18 $1.01 17%
(a) Fourth-quarter and full-year fiscal-2005 pro-forma net income
and earnings per share exclude a tax charge of $280 million and 11
cents per share, respectively -- in anticipation of repatriating
earnings under the U.S. American Jobs Creation Act.
Full-year pro-forma earnings were $1.29 per share, up 28 percent;
fiscal-2005 reported earnings, including the AJCA-related charge, were
$1.18 per share. Full-year revenue was $49.2 billion, up 19 percent.
"The quarter represents continued record performance by our team
around the world," said Kevin Rollins, Dell's chief executive officer.
"No one has higher expectations for Dell over time than we do, and
we're constantly driving for excellence on behalf of customers and
shareholders."
Mr. Rollins said the company expects Dell first-quarter
fiscal-2006 product shipments to increase 21 percent. The resulting
company volumes should produce quarterly revenue of about $13.4
billion, up 16 percent from the prior year, and earnings per share of
about 37 cents, up 32 percent.
In the fourth quarter, Dell's operating margins improved to 8.8
percent, up from 8.5 percent a year ago. The company generated $1.8
billion in cash flow from operations, and total cash and investments
at quarter-end was $14.1 billion, a company record.
Strong Growth Continues Across Global Regions
Total volume increases for all products worldwide were 19 percent,
nearly seven points faster than the industry excluding Dell.
Fourth quarter unit shipments in Europe, the Middle East and
Africa (EMEA) increased 29 percent. Shipments of enterprise systems,
including servers, were up 30 percent and notebook computer volumes
rose 34 percent. Dell finished the quarter with more than a 10-percent
share in EMEA, closing the gap on the current industry leader by
nearly two percentage points. Unit shipments and revenue for the full
year increased 31 percent and 27 percent, respectively.
In Asia-Pacific and Japan, total Dell shipments increased 27
percent -- nearly three times the growth rate excluding
Dell -- highlighted by a 29-percent gain in notebook computer volumes.
Unit shipments for the full year increased 29 percent, while revenue
was up 26 percent.
Solid volume growth across product lines in the Americas was
highlighted by 25-percent growth in servers and a 28-percent increase
in notebook computers. Dell increased its share in the U.S. by nearly
three points to 33 percent during the quarter. Revenue growth in the
Americas outside the U.S. increased 27 percent year-over-year, and
shipments of notebook computers and servers rose 52 percent and 44
percent, respectively.
Servers, Storage Highlight Product Strengths
Dell's overall volume growth for the quarter was highlighted by
increases of 30 percent in notebook computers and 25 percent in
servers.
Revenue from external storage systems grew 27 percent compared to
a year ago, driven by strong demand for Dell storage-area-network
products. Sales of Dell / EMC storage systems increased 46 percent.
Enhanced services revenue rose 32 percent worldwide, led by
Asia-Pacific, where sales of services grew about 50 percent
year-over-year.
Quarterly worldwide revenue from software and peripheral products
increased 36 percent. Dell's full-year printer shipments were 5.2
million units, exceeding the company's volume targets and contributing
to more than $1 billion in printing and imaging revenue. Dell printers
are finding great customer receptivity around the world. In
Asia-Pacific, for example, fourth-quarter unit growth was up 62
percent from the third quarter.
About Dell
Dell Inc. (NASDAQ:DELL) is a trusted and diversified
information-technology supplier and partner, and sells a comprehensive
portfolio of products and services directly to customers worldwide.
Dell designs, builds and delivers innovative, tailored systems that
provide customers with exceptional value. Company revenue for the past
year was $49.2 billion. For more information about Dell and its
products and services, visit www.dell.com.
Special note: Statements in this press release that relate to
future results and events (including statements about fiscal 2006
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
January October January ------------------
28, 29, 30, Sequential Yr. to
2005 2004 2004 Yr.
-------- -------- -------- ------------------
Net revenue $13,457 $12,502 $11,512 7.6% 16.9%
Cost of revenue 10,962 10,189 9,421 7.6% 16.4%
-------- -------- --------
Gross margin 2,495 2,313 2,091 7.9% 19.3%
Selling, general and
administrative 1,198 1,101 991 8.8% 20.9%
Research, development
and engineering 110 117 119 (6.0%) (7.9%)
-------- -------- --------
Operating expenses 1,308 1,218 1,110 7.4% 17.8%
-------- -------- --------
Operating income 1,187 1,095 981 8.4% 21.0%
Investment and other
income, net 48 48 49 0.1% (2.8%)
-------- -------- --------
Income before income
taxes 1,235 1,143 1,030 8.0% 19.9%
Income tax provision (a) 568 297 281 90.9% 102.3%
-------- -------- --------
Net income (a) $667 $846 $749 (21.1%)(11.0%)
======== ======== ========
Earnings per common
share: (a)
Basic $0.27 $0.34 $0.29
======== ======== ========
Diluted $0.26 $0.33 $0.29
======== ======== ========
Weighted average shares
outstanding:
Basic 2,485 2,493 2,557
Diluted 2,553 2,546 2,616
Percentage of Total Net
Revenue:
- ------------------------
Gross margin 18.5% 18.5% 18.2%
Selling, general and
administrative 8.9% 8.8% 8.6%
Research, development
and engineering 0.8% 0.9% 1.0%
Operating expenses 9.7% 9.7% 9.6%
Operating income 8.8% 8.8% 8.5%
Income before income
taxes 9.2% 9.1% 8.9%
Net income (a) 5.0% 6.8% 6.5%
Income tax rate (a) 46.0% 26.0% 27.3%
Net Revenue by
Geographic Region:
- -------------------------
Percentage of Total Net
Revenue
- -------------------------
Americas 66% 68% 67%
Europe 23% 21% 22%
Asia Pacific - Japan 11% 11% 11%
Net Revenue by Product
Line:
- -------------------------
Percentage of Total Net
Revenue
- -------------------------
Desktops 51% 49% 52%
Notebooks 28% 30% 27%
Enterprise 21% 21% 21%
Note: Percentage growth rates and ratios are calculated based on
underlying data in thousands.
(a) Results for the period ended January 28, 2005 include the impact
of a $280M tax charge for the anticipated repatriation of earnings
at a one-time favorable rate pursuant to the American Jobs
Creation Act of 2004.
DELL INC.
Condensed Consolidated Statement of Operations and Related Financial
Highlights
(in millions, except per share data)
(unaudited)
Year Ended % Growth
------------------------- Rates
January 28, January 30, ----------
2005 2004 Yr. to Yr.
----------- ------------- ----------
Net revenue $49,205 $41,444 18.7%
Cost of revenue 40,190 33,892 18.6%
----------- -------------
Gross margin 9,015 7,552 19.4%
Selling, general and
administrative 4,298 3,544 21.3%
Research, development and
engineering 463 464 (0.2%)
----------- -------------
Operating expenses 4,761 4,008 18.8%
----------- -------------
Operating income 4,254 3,544 20.0%
Investment and other
income, net 191 180 6.0%
----------- -------------
Income before income
taxes 4,445 3,724 19.4%
Income tax provision (a) 1,402 1,079 30.0%
----------- -------------
Net income (a) $3,043 $2,645 15.0%
=========== =============
Earnings per common
share: (a)
Basic $1.21 $1.03
=========== =============
Diluted $1.18 $1.01
=========== =============
Weighted average shares
outstanding:
Basic 2,509 2,565
Diluted 2,568 2,619
Percentage of Total Net
Revenue:
- -------------------------
Gross margin 18.3% 18.2%
Selling, general and
administrative 8.7% 8.6%
Research, development
and engineering 0.9% 1.1%
Operating expenses 9.7% 9.7%
Operating income 8.6% 8.6%
Income before income
taxes 9.0% 9.0%
Net income (a) 6.2% 6.4%
Income tax rate (a) 31.5% 29.0%
Net Revenue by Geographic
Region:
- -------------------------
Percentage of Total Net
Revenue
- -------------------------
Americas 67% 69%
Europe 22% 21%
Asia Pacific - Japan 11% 10%
Net Revenue by Product
Line:
- -------------------------
Percentage of Total Net
Revenue
- -------------------------
Desktops 50% 51%
Notebooks 29% 27%
Enterprise 21% 22%
Note: Percentage growth rates and ratios are calculated based on
underlying data in thousands.
(a) Results for the period ended January 28, 2005 include the impact
of a $280M tax charge for the anticipated repatriation of earnings
at a one-time favorable rate pursuant to the American Jobs
Creation Act of 2004.
DELL INC.
Condensed Consolidated Statement of Financial Position and Related
Financial Highlights
(in millions, except for "Ratios" and "Other information")
(unaudited)
January 28, October 29, January 30,
2005 2004 2004
---------- ---------- ------------
Assets:
- ---------
Current assets:
Cash and cash equivalents $4,747 $4,525 $4,317
Short-term investments 5,060 2,969 835
Accounts receivable,
net 4,414 4,167 3,635
Inventories 459 415 327
Other 2,217 2,124 1,519
---------- --------- -----------
Total current assets 16,897 14,200 10,633
Property, plant and equipment,
net 1,691 1,627 1,517
Investments 4,319 4,942 6,770
Other non-current assets 308 285 391
---------- --------- ------------
Total assets $23,215 $21,054 $19,311
========== ========= ============
Liabilities and Stockholders'
Equity:
- -----------------------------
Current liabilities:
Accounts payable $8,895 $8,067 $7,316
Accrued and other 5,241 4,707 3,580
---------- ---------- ------------
Total current
liabilities 14,136 12,774 10,896
Long-term debt 505 505 505
Other non-current
liabilities 2,089 1,895 1,630
---------- --------- ------------
Total liabilities 16,730 15,174 13,031
Stockholders' equity 6,485 5,880 6,280
---------- ---------- ------------
Total liabilities and
stockholders' equity $23,215 $21,054 $19,311
========== ========== ============
Ratios:
- -------
Quick ratio 1.01 0.91 0.81
Days supply in inventory 4 4 3
Days of sales outstanding (a) 32 33 31
Days in accounts payable 73 71 70
---------- --------- ------------
Cash conversion cycle (37) (34) (36)
Other Information:
- ------------------
Headcount (approximate) 55,200 53,000 46,000
Average total revenue/unit
(approximate) $1,510 $1,570 $1,540
Note: Ratios are calculated based on underlying data in thousands.
(a) Days of sales outstanding include the effect of product costs
related to customer shipments not yet recognized as revenue that
are classified in other current assets. At January 28, 2005,
October 29, 2004, and January 30, 2004, days of sales outstanding
included days of sales in accounts receivable and days of
in-transit customer shipments of 29 and 3 days; 30 and 3 days; and
28 and 3 days, respectively.
DELL INC.
Condensed Consolidated Statement of Cash Flows
(in millions)
(unaudited)
Three Twelve
Months Months
Ended Ended
------------ ----------
January 28, 2005
-----------------------
Cash flows from operating activities:
Net income $667 $3,043
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 91 334
Tax benefits from employee stock plans 139 249
Gain on sale of investments -- (6)
Effects of exchange rate changes on
monetary assets and liabilities
denominated in foreign currencies (298) (602)
Other 22 84
Changes in:
Operating working capital 1,029 1,755
Non-current assets and liabilities 168 453
---------- --------
Net cash provided by operating
activities 1,818 5,310
Cash flows from investing activities:
Investments:
Purchases (2,777) (12,261)
Maturities and sales 1,292 10,469
Capital expenditures (170) (525)
---------- --------
Net cash used in investing
activities (1,655) (2,317)
Cash flows from financing activities:
Purchase of common stock (870) (4,219)
Issuance of common stock under employee
plans and other 644 1,091
---------- --------
Net cash used in financing
activities (226) (3,128)
Effect of exchange rate changes on cash and
cash equivalents 285 565
---------- --------
Net increase in cash and cash equivalents 222 430
Cash and cash equivalents at beginning of
period 4,525 4,317
---------- --------
Cash and cash equivalents at end of period $4,747 $4,747
========== ========
CONTACT: Dell, 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