Exhibit 99.1
Dell Generates Record EPS, Outpaces Industry Growth;
Strong Growth in Services, Storage and International Markets
ROUND ROCK, Texas--(BUSINESS WIRE)--Aug. 11, 2005--Dell
(NASDAQ:DELL) achieved record earnings in its fiscal 2006
second-quarter, as it exceeded industry shipment growth in a
competitive pricing environment. Sales of storage systems, mobility
products, enhanced services and software and peripherals were up
strongly around the world.
Dell's second quarter, which ended July 29, was highlighted by
industry-record shipments of 9.1 million computer systems -- including
2.7 million mobility products -- and company-record revenue of more
than $2 billion from software and peripheral products, including
printers and displays.
The company's second-quarter earnings were $1.02 billion, or 41
cents per share, up 32 percent from a year ago. Second-quarter EPS
includes a three-cent revision to the previously recorded tax estimate
for the repatriation of funds under the American Jobs Creation Act of
2004. Absent that benefit, EPS was a record 38 cents, up 23 percent.
Dell revenue for the quarter was $13.4 billion, 15 percent higher than
the same quarter last year.
(in millions, Second Quarter Year to Date
except share data) FY'06 FY'05 Change FY'06 FY'05 Change
----------------------- -----------------------
Revenue $13,428 $11,706 15% $26,814 $23,246 15%
Operating Income $1,173 $1,006 17% $2,347 $1,972 19%
Reported GAAP Net
Income $1,020 $799 28% $1,954 $1,530 28%
Pro forma Net
Income(a) $935 $799 17% $1,869 $1,530 22%
Reported GAAP EPS $0.41 $0.31 32% $0.78 $0.59 32%
Pro forma EPS(a) $0.38 $0.31 23% $0.75 $0.59 27%
- --------------------
(a) Pro forma results for the period ended July 29, 2005 exclude the
impact of an $85 million ($0.03 per share) tax benefit related to
a revised estimate of taxes on the repatriation of earnings under
the American Jobs Creation Act of 2004.
"Our teams performed well in a dynamic market. Our growth in Q2
was characterized by share increases in every region," said Kevin
Rollins, Dell's chief executive officer.
"While average selling prices were down more than we would have
liked, we focused on balanced profitability and, in the process,
delivered to our guidance for EPS."
Dell's operating margin as a percent of revenue was 8.7 percent,
up from 8.6 percent a year ago. The company generated more than $900
million in cash flow from operations. Dell spent $1.8 billion during
the quarter to repurchase almost 47 million shares, and has now
repurchased almost 280 million shares over the past 10 quarters.
Mr. Rollins said continued steady purchase rates by corporate
customers, the seasonal impact of back-to-school buying in the
consumer segment, and continued growth in markets outside of the
United States will drive Dell's third-quarter business. The company
expects Q3 revenue of $14.1 to $14.5 billion, and earnings per share
of 39 to 41 cents. Dell plans to repurchase at least $1.2 billion in
stock during the current fiscal quarter.
Growth Continues Globally
Revenue from outside the United States accounted for 39 percent of
Dell's total for the quarter and grew 24 percent year-over-year.
Asia-Pacific and Japan (APJ) revenue grew 24 percent
year-over-year. Software and peripherals revenue in APJ increased 90
percent year-over-year. Printer shipments more than tripled over last
year, and Dell took the No. 1 position for Intel-based servers in
Japan. Revenue from enhanced services increased 67 percent
year-over-year.
In Europe, the Middle East and Africa, revenue was up 21 percent
over last year. Storage revenue increased 47 percent and enhanced
services revenue increased 66 percent. The region shipped 52 percent
more mobility products year-over-year.
Excluding the U.S., the Americas region revenue grew 34 percent
year-over-year. Shipments of mobility products increased, driven by
notebook growth of 67 percent year-over-year. Printer shipments
increased 117 percent from a year ago.
In the United States, Dell expanded its leadership as the No. 1
systems vendor in all of its segments with more than 1 point
year-over-year share increase. Dell's U.S. server leadership increased
by more than 5 points year-over-year.
Products and Services Achieve Record Demand
Worldwide revenue from storage products grew 26 percent
year-over-year. Dell's Storage Area Network (SAN) business grew more
than 50 percent faster than the rest of the industry.
Customers are shifting to denser, more powerful industry-standard
servers, and Dell increased its shipments by 25 percent
year-over-year. In this product category, Dell grew twice the rate of
the industry in every region, gaining almost 3 points of share
year-to-year and closing the gap with the leader by more than 4
percentage points.
Mobility revenue in the quarter was a record $3.4 billion, a 20
percent year-over-year increase. Mobility product shipments increased
47 percent, a result of more customers shifting from desktops to
mobility products. Dell increased desktop computer shipments by 17
percent and added another half-share point to its worldwide
leadership.
Software and peripherals revenue increased 35 percent
year-over-year with further expansion of Dell's imaging products.
Laser printer units increased 168 percent year-over-year and overall
printer shipments grew 77 percent year-over-year.
Enhanced services revenue for the quarter was $1.2 billion, an
increase of 41 percent year-over-year, as more customers look to Dell
for professional and managed services for their enterprises. Dell's
quality of support was cited as often as its product reliability as
the reason enterprise customers choose Dell in the current server
customer satisfaction survey conducted by Technology Business
Research.
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, recognized by Fortune magazine as America's most admired company
and No. 3 globally, designs, builds and delivers innovative, tailored
systems that provide customers with exceptional value. Company revenue
for the last four quarters was $52.8 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 Dell's
anticipated financial and operating performance) are forward-looking
statements based on Dell's current expectations. Actual results in
future periods could differ materially from those projected in these
forward-looking statements because of a number of risks and
uncertainties including: general economic, business and industry
conditions; the level and intensity of competition in the technology
industry and the pricing pressures that have resulted; local economic
and labor conditions, political instability, unexpected regulatory
changes, trade protection measures, tax laws and fluctuations in
foreign currency exchange rates; the ability to accurately predict
product, customer and geographic sales mix; the ability to timely and
effectively manage periodic product transitions; reliance on
third-party suppliers for product components, including dependence on
several single-source supplier relationships; the ability to
effectively manage operating costs; the failure to attract and retain
qualified personnel; the level of demand for the products and services
Dell offers; the ability to manage inventory levels to minimize excess
inventory, declining inventory values and obsolescence; and the effect
of armed hostilities, terrorism, natural disasters and public health
issues on the economy generally, on the level of demand for Dell's
products and services and on Dell's ability to manage its supply and
delivery logistics in such an environment. Additional discussion of
these and other factors affecting Dell's business and prospects is
contained in Dell's periodic filings with the Securities and Exchange
Commission.
Consolidated statements of income, financial position and cash
flows follow.
Dell is a trademark of Dell Inc.
Dell disclaims any proprietary interest in the marks and names of
others.
DELL INC.
Condensed Consolidated Statement of Operations and Related Financial
Highlights
(in millions, except per share data)
(unaudited)
Three Months Ended
-----------------------------
% Growth Rates
---------------
Yr.
July 29, April 29, July 30, to
2005 2005 2004 Sequential Yr.
--------- --------- --------- ---------------
Net revenue $13,428 $13,386 $11,706 0% 15%
Cost of revenue 10,929 10,895 9,572 0% 14%
--------- --------- ---------
Gross margin 2,499 2,491 2,134 0% 17%
Selling, general and
administrative 1,204 1,207 1,008 0% 19%
Research, development
and engineering 122 110 120 12% 2%
--------- --------- ---------
Operating expenses 1,326 1,317 1,128 1% 18%
--------- --------- ---------
Operating income 1,173 1,174 1,006 0% 17%
Investment and other
income, net 61 59 46 4% 33%
--------- --------- ---------
Income before income
taxes 1,234 1,233 1,052 0% 17%
Income tax provision(a) 214 299 253 (28%)(15%)
--------- --------- ---------
Net income(a) $1,020 $934 $799 9% 28%
========= ========= =========
Earnings per common
share:(a)
Basic $0.42 $0.38 $0.32
========= ========= =========
Diluted $0.41 $0.37 $0.31
========= ========= =========
Weighted average shares
outstanding:
Basic 2,418 2,456 2,518
Diluted 2,478 2,515 2,574
Percentage of Total Net
Revenue:
- -----------------------
Gross margin 18.6% 18.6% 18.2%
Selling, general and
administrative 9.0% 9.0% 8.6%
Research, development
and engineering 0.9% 0.8% 1.0%
Operating expenses 9.9% 9.8% 9.6%
Operating income 8.7% 8.8% 8.6%
Income before income
taxes 9.2% 9.2% 9.0%
Net income(a) 7.6% 7.0% 6.8%
Income tax rate(a) 17.4% 24.2% 24.0%
Net Revenue by
Geographic Region
(in billions):
- ------------------
Americas $8.9 $8.6 $8.0 4% 11%
Europe 2.9 3.2 2.4 (8%) 21%
Asia Pacific - Japan 1.6 1.7 1.3 (1%) 24%
Percentage of Total Net
Revenue:
- -----------------------
Americas 66% 64% 68%
Europe 22% 24% 21%
Asia Pacific - Japan 12% 12% 11%
Net Revenue by Product
Category (in billions):
- ------------------------
Desktop PCs $5.1 $5.3 $5.0 (5%) 2%
Mobility 3.4 3.3 2.9 5% 20%
Servers 1.3 1.3 1.2 2% 9%
Storage 0.4 0.4 0.3 (8%) 26%
Enhanced Services 1.2 1.1 0.8 8% 41%
Software and
peripherals 2.0 2.0 1.5 3% 35%
Percentage of Total Net
Revenue:
- -----------------------
Desktop PCs 37% 40% 42%
Mobility 26% 24% 25%
Servers 10% 10% 10%
Storage 3% 3% 3%
Enhanced Services 9% 8% 7%
Software and
peripherals 15% 15% 13%
Note: Percentage growth rates and ratios are calculated based on
underlying data in thousands.
(a) Results for the period ended July 29, 2005 include the impact of
an $85 million ($0.03 per share) tax benefit related to a revised
estimate of taxes on the repatriation of earnings under 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)
Six Months Ended
--------------------- % Growth
Rates
July 29, July 30, -----------
2005 2004 Yr. to Yr.
---------- ---------- -----------
Net revenue $26,814 $23,246 15%
Cost of revenue 21,824 19,039 15%
---------- ----------
Gross margin 4,990 4,207 19%
Selling, general and
administrative 2,411 1,999 21%
Research, development and
engineering 232 236 (2%)
---------- ----------
Total operating
expenses 2,643 2,235 18%
---------- ----------
Operating income 2,347 1,972 19%
Investment and other income,
net 120 95 26%
---------- ----------
Income before income
taxes 2,467 2,067 19%
Income tax provision(a) 513 537 (4%)
---------- ----------
Net income(a) $1,954 $1,530 28%
========== ==========
Earnings per common
share:(a)
Basic $0.80 $0.61
========== ==========
Diluted $0.78 $0.59
========== ==========
Weighted average shares
outstanding:
Basic 2,437 2,529
Diluted 2,497 2,583
Percentage of Total Net
Revenue:
- -----------------------
Gross margin 18.6% 18.1%
Selling, general and
administrative 9.0% 8.6%
Research, development and
engineering 0.9% 1.0%
Operating expenses 9.9% 9.6%
Operating income 8.8% 8.5%
Income before income
taxes 9.2% 8.9%
Net income (a) 7.3% 6.6%
Income tax rate(a) 20.8% 26.0%
Net Revenue by Geographic
Region (in billions):
- -------------------------
Americas $17.4 $15.4 13%
Europe 6.1 5.1 20%
Asia Pacific - Japan 3.3 2.7 21%
Percentage of Total Net
Revenue:
- -----------------------
Americas 65% 66%
Europe 23% 22%
Asia Pacific - Japan 12% 12%
Net Revenue by Product
Category (in billions):
- ------------------------
Desktop PCs $10.4 $10.0 4%
Mobility 6.7 5.6 21%
Servers 2.6 2.4 10%
Storage 0.8 0.6 37%
Enhanced Services 2.3 1.6 36%
Software and peripherals 4.0 3.0 32%
Percentage of Total Net
Revenue:
- -----------------------
Desktop PCs 39% 43%
Mobility 25% 24%
Servers 10% 10%
Storage 3% 3%
Enhanced Services 8% 7%
Software and peripherals 15% 13%
Note: Percentage growth rates and ratios are calculated based on
underlying data in thousands.
(a) Results for the period ended July 29, 2005 include the impact
of an $85 million ($0.03 per share) tax benefit related to a
revised estimate of taxes on the repatriation of earnings
under 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)
July 29, April 29, July 30,
2005 2005 2004
--------- ---------- ----------
Assets:
- ----------------------------
Current assets:
Cash and cash equivalents $6,337 $5,874 $4,025
Short-term investments 2,709 3,967 1,509
Accounts receivable, net 4,443 4,289 3,625
Inventories 570 483 418
Other 2,739 2,439 2,055
--------- ---------- ----------
Total current assets 16,798 17,052 11,632
Property, plant and equipment,
net 1,843 1,741 1,578
Investments 3,625 3,574 6,276
Other non-current assets 345 320 446
--------- ---------- ----------
Total assets $22,611 $22,687 $19,932
========= ========== ==========
Liabilities and Stockholders'
Equity:
- -----------------------------
Current liabilities:
Accounts payable $9,196 $9,057 $7,444
Accrued and other 5,172 5,332 3,877
--------- ---------- ----------
Total current liabilities 14,368 14,389 11,321
Long-term debt 504 504 505
Other non-current liabilities 2,230 2,170 1,899
--------- ---------- ----------
Total liabilities 17,102 17,063 13,725
Stockholders' equity 5,509 5,624 6,207
--------- ---------- ----------
Total liabilities and
stockholders' equity $22,611 $22,687 $19,932
========= ========== ==========
Ratios:
- -------
Days supply in inventory 5 4 4
Days of sales outstanding(a) 33 32 31
Days in accounts payable 76 75 70
--------- ---------- ----------
Cash conversion cycle (38) (39) (35)
Other Information:
- ------------------
Headcount (approximate) 61,400 57,600 50,000
Average total revenue/unit
(approximate) $1,480 $1,520 $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 customer shipments not yet recognized as revenue that
are classified in other current assets. At July 29, 2005, April
29, 2005 and July 30, 2004, days of sales outstanding included
days of sales in accounts receivable and days of in-transit
customer shipments of 30 and 3 days; 29 and 3 days; and 28 and 3
days, respectively.
DELL INC.
Condensed Consolidated Statement of Cash Flows
(in millions)
(unaudited)
Three Months Six Months
Ended Ended
--------------------------------------
July 29, 2005
--------------------------------------
Cash flows from operating
activities:
Net income $1,020 $1,954
Adjustments to
reconcile net income
to net cash provided
by operating activities:
Depreciation and
amortization 97 188
Tax benefits from
employee stock plans 91 123
Effects of exchange
rate changes on
monetary assets and
liabilities denominated
in foreign currencies 95 15
Other 42 60
Changes in:
Operating working
capital (550) (447)
Non-current assets
and liabilities 124 216
------------ -------------
Net cash provided
by operating
activities 919 2,109
Cash flows from investing
activities:
Investments:
Purchases (2,144) (3,013)
Maturities and sales 3,344 6,070
Capital expenditures (204) (347)
------------ -------------
Net cash provided
by investing
activities 996 2,710
Cash flows from financing
activities:
Purchase of common
stock (1,800) (3,800)
Issuance of common
stock under employee
plans and other 466 627
------------ -------------
Net cash used
in financing
activities (1,334) (3,173)
Effect of exchange rate
changes on cash and cash
equivalents (118) (56)
------------ -------------
Net increase in cash and
cash equivalents 463 1,590
Cash and cash equivalents
at beginning of period 5,874 4,747
------------ -------------
Cash and cash equivalents
at end of period $6,337 $6,337
============ =============
Additional supplemental information is available on our website at
http://www.dell.com/downloads/global/corporate/conferences/
q2fy06_earnings_pres.pdf
CONTACT: Dell, Round Rock
Media Contacts:
Jess Blackburn, 512-725-0187
jess_blackburn@dell.com
or
David Frink, 512-728-2678
david_frink@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