EX-99.1 2 a4887241ex991.txt EXHIBIT 99.1 Exhibit 99.1 Dell's First-Quarter Results Particularly Strong Outside U.S.; Company Forecasts Higher Revenue Growth in Second Quarter; Storage Products and Mobile Computing Driving Global Growth ROUND ROCK, Texas--(BUSINESS WIRE)--May 12, 2005--Dell (NASDAQ:DELL) continued to grow significantly faster than the rest of the industry in all global regions, customer segments and product categories during its fiscal first-quarter 2006, and did so with strong profitability. The company also said it expects revenue growth to be higher in the second quarter. Revenue growth outside of the United States and in strategic products and services highlighted the first quarter. Sales outside the U.S. increased 21 percent year-over-year and grew to 42 percent of the company's total revenue. Worldwide revenue from storage systems increased 49 percent and sales of mobility products grew 22 percent from a year ago. For the quarter ended April 29, the company achieved total revenue of $13.4 billion, a 16-percent increase year-over-year, and net earnings of 37 cents per share, up 32 percent and a company record. First Quarter (in millions, except share data) FY'06 FY'05 Change ------- -------- ------ Revenue $13,386 $ 11,540 16% Operating Income $ 1,174 $ 966 22% Net Income $ 934 $ 731 28% EPS $ 0.37 $ 0.28 32% "Our greatest strength in the quarter was precisely in the products, services and regions in which we're most focused on growing," said Kevin Rollins, Dell's chief executive officer. "Customers worldwide are increasingly relying on us for their diversified information-technology requirements." Mr. Rollins said the company expects second-quarter fiscal 2006 to produce a revenue increase of 16 to 18 percent, to $13.6 to $13.8 billion, and earnings per share of 37 to 39 cents. In the first quarter, Dell's operating margin as a percent of revenue was 8.8 percent, up from 8.4 percent a year ago. The company generated $1.2 billion in cash flow from operations. Dell repurchased more than 50 million shares of its common stock during the quarter for $2 billion, a company record, and has reduced Dell's shares outstanding by more than 80 million over the past year. Significant Growth Outside the U.S. Revenue in Europe, the Middle East and Africa (EMEA) and in Asia-Pacific and Japan (APJ) grew 20 percent and 19 percent, respectively. Overall company shipments in EMEA increased 26 percent as Dell closed the gap on the regional leader by almost two share points. Sales of Dell storage systems increased more than 60 percent year-over-year. Revenue from software and peripherals rose 37 percent, led by strong growth in imaging and printing products. Revenue from mobility products increased 20 percent, as shipments of notebook computers rose 39 percent. Regional server shipments were up 23 percent, more than twice the average of other companies. In APJ, overall shipments of Dell products increased 27 percent from a year ago, double the rest of the industry. Server volumes grew 38 percent, resulting in revenue growth of 17 percent. Shipments of notebook computers increased 41 percent, driving a 22-percent rise in revenue from mobility products. Storage revenue grew 36 percent. Sales of software and peripheral products were up 52 percent. Regional shipments in the Americas increased 17 percent year-over-year. Storage revenue grew 47 percent. Regional sales from mobility products increased 22 percent. Combined sales in Canada and Latin America were 32 percent higher than a year ago. For the fifth straight quarter, Dell ranked No. 1 in U.S. share of every industry product category and customer segment. Enhanced Services, S&P Growth Revenue from enhanced services, including professional and managed services supporting Dell's enterprise customers, rose 30 percent worldwide, even faster in EMEA and APJ. Services and storage revenue directly benefit from Dell's growing server business, shipments for which increased 25 percent worldwide. Worldwide revenue from software and peripherals -- including imaging and printing, televisions and displays -- increased 29 percent. Sales of printer ink, toner and supplies nearly doubled as customers continued to embrace the ease of buying those products online. Dell's broadening printer line spans both ink-jet and laser models and the company is introducing those products to more regions and customers. 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 past year was $51.1 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 second-quarter 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 this forward-looking statement 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 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 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 is a trademark of Dell Inc. Dell disclaims any proprietary interests 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 -------------------------- April January April % Growth Rates 29, 28, 30, ----------------- Sequential Yr. to 2005 2005 2004 Yr. -------- -------- -------- ----------------- Net revenue $13,386 $13,457 $11,540 (0.5%) 16.0% Cost of revenue 10,895 10,962 9,467 (0.6%) 15.1% -------- -------- -------- Gross margin 2,491 2,495 2,073 (0.2%) 20.2% Selling, general and administrative 1,207 1,198 991 0.7% 21.8% Research, development and engineering 110 110 116 (0.4%) (5.5%) -------- -------- -------- Operating expenses 1,317 1,308 1,107 0.6% 19.0% -------- -------- -------- Operating income 1,174 1,187 966 (1.0%) 21.5% Investment and other income, net 59 48 49 22.2% 19.3% -------- -------- -------- Income before income taxes 1,233 1,235 1,015 (0.1%) 21.4% Income tax provision (1) 299 568 284 (47.3%) 5.2% -------- -------- -------- Net income (1) $934 $667 $731 40.1% 27.8% ======== ======== ======== Earnings per common share: (1) Basic $0.38 $0.27 $0.29 ======== ======== ======== Diluted $0.37 $0.26 $0.28 ======== ======== ======== Weighted average shares outstanding: Basic 2,456 2,485 2,539 Diluted 2,515 2,553 2,593 Percentage of Total Net Revenue: ------------------------- Gross margin 18.6% 18.5% 18.0% Selling, general and administrative 9.0% 8.9% 8.6% Research, development and engineering 0.8% 0.8% 1.0% Operating expenses 9.8% 9.7% 9.6% Operating income 8.8% 8.8% 8.4% Income before income taxes 9.2% 9.2% 8.8% Net income (1) 7.0% 5.0% 6.3% Income tax rate (1) 24.2% 46.0% 28.0% Net Revenue by Geographic Region (in billions): ------------------------- Americas $8.6 $8.9 $7.5 (4%) 14% Europe 3.2 3.1 2.7 2% 20% Asia Pacific - Japan 1.7 1.5 1.4 15% 19% Percentage of Total Net Revenue: ------------------------- Americas 64% 66% 65% Europe 24% 23% 23% Asia Pacific - Japan 12% 11% 12% Net Revenue by Product Category (in billions): ------------------------ Desktop PCs $5.3 $5.6 $5.0 (5%) 6% Mobility 3.3 3.1 2.7 4% 22% Servers 1.3 1.3 1.2 (1%) 12% Storage 0.4 0.4 0.3 5% 49% Enhanced Services 1.1 1.1 0.8 1% 30% Software and peripherals 2.0 1.9 1.5 4% 29% Percentage of Total Net Revenue: ------------------------- Desktop PCs 40% 42% 44% Mobility 24% 23% 23% Servers 10% 10% 10% Storage 3% 3% 3% Enhanced Services 8% 8% 7% Software and peripherals 15% 14% 13% Note: Percentage growth rates and ratios are calculated based on underlying data in thousands. (1) Results for the period ended January 28, 2005 include the impact of a $280M ($0.11 per share) 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) April 29, January 28, April 30, 2005 2005 2004 ----------- ------------ ---------- Assets: ------- Current assets: Cash and cash equivalents $5,874 $4,747 $4,075 Short-term investments 3,967 5,060 1,180 Accounts receivable, net 4,289 4,414 3,424 Inventories 483 459 425 Other 2,439 2,217 2,073 ----------- ------------ ---------- Total current assets 17,052 16,897 11,177 Property, plant and equipment, net 1,741 1,691 1,510 Investments 3,574 4,319 6,631 Other non-current assets 320 308 391 ----------- ------------ ---------- Total assets $22,687 $23,215 $19,709 =========== ============ ========== Liabilities and Stockholders' Equity: ----------------------------- Current liabilities: Accounts payable $9,057 $8,895 $7,518 Accrued and other 5,332 5,241 3,803 ----------- ------------ ---------- Total current liabilities 14,389 14,136 11,321 Long-term debt 504 505 505 Other non-current liabilities 2,170 2,089 1,778 ----------- ------------ ---------- Total liabilities 17,063 16,730 13,604 Stockholders' equity 5,624 6,485 6,105 ----------- ------------ ---------- Total liabilities and stockholders' equity $22,687 $23,215 $19,709 =========== ============ ========== Ratios: ------- Days supply in inventory 4 4 4 Days of sales outstanding (1) 32 32 31 Days in accounts payable 75 73 71 ----------- ------------ ---------- Cash conversion cycle (39) (37) (36) Other Information: ------------------ Headcount (approximate) 57,600 55,200 47,800 Average total revenue/unit (approximate) $1,520 $1,510 $1,570 Note: Ratios are calculated based on underlying data in thousands. (1) 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 April 29, 2005, January 28, 2005 and April 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; 29 and 3 days; and 27 and 4 days, respectively. DELL INC. Condensed Consolidated Statement of Cash Flows (in millions) (unaudited) Three Months Ended ----------------- April 29, 2005 ----------------- Cash flows from operating activities: Net income $934 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 91 Tax benefits from employee stock plans 32 Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies (80) Other 18 Changes in: Operating working capital 103 Non-current assets and liabilities 92 ----------------- Net cash provided by operating activities 1,190 Cash flows from investing activities: Investments: Purchases (869) Maturities and sales 2,726 Capital expenditures (143) ----------------- Net cash provided by investing activities 1,714 Cash flows from financing activities: Purchase of common stock (2,000) Issuance of common stock under employee plans and other 161 ----------------- Net cash used in financing activities (1,839) Effect of exchange rate changes on cash and cash equivalents 62 ----------------- Net increase in cash and cash equivalents 1,127 Cash and cash equivalents at beginning of period 4,747 ----------------- Cash and cash equivalents at end of period $5,874 ================= Additional supplemental information is available on our website at http://www.dell.com/downloads/global/corporate/conferences/q1fy06_ earnings_pres.pdf (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.) CONTACT: Dell Inc., Round Rock Media Contacts: T.R. Reid, 512-728-7977 tr_reid@dell.com or Jess Blackburn, 512-725-0187 jess_blackburn@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