Dell's Continued Strong Growth Outside U.S. Drives Company to Record Q1 Revenue; Dell Anticipates Second-Quarter Sales of $11.7 Billion, EPS 21 Percent Higher.Business Editors/High-Tech Writers ROUND ROCK, Texas--(BUSINESS WIRE)--May 13, 2004 Dell (Nasdaq:DELL) exceeded its own robust worldwide growth expectations while achieving record revenue during fiscal first-quarter 2005. Product shipments for the period ended April 30 were up 25 percent from the same quarter a year ago; volumes for the rest of the industry increased 14 percent. Dell growth was 38 percent in Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). and Japan, where the company's share ranked No. 2 for the first time. Shipments in Europe, the Middle East and Africa Europe, the Middle East and Africa, usually abbreviated to EMEA, is a regional designation used for government, marketing and business purposes. It is particularly common amongst North American based companies, who often divide their international operations into the increased 37 percent. First-quarter company revenue was up 21 percent to $11.5 billion, higher than Dell's previous guidance. The company has now met or exceeded guidance to investors for 13 straight quarters. Net earnings were $731 million, or 28 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , 22 percent higher than a year ago. Dell's growth in both product shipments and net income has surpassed 20 percent for seven consecutive quarters.
(in millions, except per-share data) Q1 FY'05 Q1 FY'04 Change
-------- -------- ------
Revenue $11,540 $9,532 21%
Operating Income $966 $811 19%
Net Income $731 $598 22%
Earnings Per Share $0.28 $0.23 22%
"In our industry, only Dell simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics creates great customer value, rapid growth and solid profitability," said Kevin KEVIN Keepers of the Eternal Vigilance of the Islamic Nation (fictional, from White Teeth by Zadie Smith) Rollins Rol·lins , Theodore Walter Known as "Sonny." Born 1930. American jazz saxophonist and composer who originated the now standard practice of playing bop in three-quarter time. , the company's president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "Others sometimes do one or two of those things. Our global team and our shareholders insist on all three." First-quarter operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $966 million, up 19 percent from a year ago despite higher-than-expected costs for random-access memory (storage) random-access memory - (RAM) (Previously "direct-access memory"). A data storage device for which the order of access to different locations does not affect the speed of access. late in the quarter. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. as a percent of revenue were 9.6 percent, matching a company low and better than 9.8 percent last year. Dell generated $1.0 billion in cash from operations during the quarter. Cash and investments at the end of the period totaled $11.9 billion, as the company spent $1.1 billion to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. its common stock -- up from a planned $600 million at the start of the quarter. For the fiscal second quarter, Dell anticipates year-over-year growth in product shipments of 24 percent. Such volumes are expected to produce revenue of about $11.7 billion, up 20 percent, and per-share earnings of 29 cents, a 21-percent increase. EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. , Asia-Pacific and Japan Highlight Regional Growth In Europe, the Middle East and Africa, Dell's growth was broadly based, and nearly double the combined rate of other companies. Dell product shipments were up at least 33 percent in 14 countries, faster in the top three national markets: the United Kingdom, France and Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). . Shipments of PowerEdge servers in the U.K. jumped 39 percent. Dell gained more than three points of server share in the market, to 32 percent, while the industry leader lost five share points. The company's total growth in Asia-Pacific and Japan was more than three times the 11-percent average of the rest of the industry. Dell China product shipments were up 48 percent. In Japan, the company rate was 24 percent, nearly four times that of the industry excluding Dell. Dell server volumes in Asia-Pacific and Japan increased 33 percent, almost twice the average of other companies. Dell Japan ranked No. 1 in shipments of standards-based servers for the first time. Already No. 1 in servers in China, Dell now is the top supplier in that product category in the region's two largest markets. Dell again scored highly in a major Japanese Japanese (jăp'ənēz`), language of uncertain origin that is spoken by more than 125 million people, most of whom live in Japan. There are also many speakers of Japanese in the Ryukyu Islands, Korea, Taiwan, parts of the United States, and customer-satisfaction survey, ranking first in after-sale service among personal-computer companies for the fourth straight year in research conducted by a leading business publication. Shipments of Dell products in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. rose 18 percent as Dell added two full points to its leading market-share position. Demand from small and medium businesses and consumers was particularly strong, and information-technology spending by large corporate customers continued to improve. The company's Americas A·mer·i·cas , the See America. business outside the U.S. was up 24 percent, including a 26-percent volume increase in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . Server Shipments Exceed Industry Rate; Notebook See notebook computer. 1. (computer) notebook - laptop computer. 2. (tool) notebook - Labtech Notebook. Shipments Up 39 Percent Dell's 24-percent growth in server volumes was markedly ahead of the average of other companies. Revenue from Dell/EMC The Dell/EMC brand is reserved for products that result from Dell's partnership with EMC Corporation. In some cases these are products that are jointly designed by Dell and EMC, while in other cases these are EMC products for which Dell will provide support. storage systems rose 25 percent, as the company focuses its sales efforts around midrange midrange Epidemiology The halfway point or midpoint in a set of observations; for most data, MR is calculated as the sum of the smallest observation and the largest observation, divided by 2; for age data, one is added to the numerator; a midrange is usually storage-area networks. During the quarter, the company introduced a new generation of storage systems, along with services and online tools to further simplify storage-area networks. Dell also announced expansions of its relationships with Oracle Corp. and SAP sap, fluid in plants consisting of water and dissolved substances. Cell sap refers to this fluid present in the large vacuole, or cell cavity, that occupies most of the central portion of mature plant cells. A.G. to make it easier for customers to acquire and use business-critical computing computing - computer applications from those companies on Dell servers. First-quarter revenue from software and peripheral Any input, output or storage device connected externally or internally to the computer's CPU, such as a monitor, keyboard, printer, disk, tape, graphics tablet, scanner, joy stick, paddle or mouse. products was up 39 percent, helped by strong demand for Dell printers. The company's initial U.S. market-share growth in printers is more rapid than in any new product category in Dell history: in just one year, the company has share of more than 10 percent in inkjet printers A printer that propels droplets of ink directly onto the medium. Today, almost all inkjet printers produce color. Low-end inkjets use three ink colors (cyan, magenta and yellow), but produce a composite black that is often muddy. , and in the upper teens in all-in-one (1) A combination computer printer, scanner, copy machine and fax machine. Some all-in-ones exclude the fax capability or make it an option. (2) A desktop computer that houses every component except the keyboard and mouse inside the same case as the monitor. printers. Dell already sells printers in selected European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. and Asian markets, and will introduce its first such products in Japan during the second quarter. The company plans to launch several new printers in the U.S. in the next few weeks. First-quarter shipments of Inspiron and Latitude latitude, angular distance of any point on the surface of the earth north or south of the equator. The equator is latitude 0°, and the North Pole and South Pole are latitudes 90°N and 90°S, respectively. notebook computers A laptop computer that weighs in a range from five to seven pounds. The term originated when laptops were routinely more than 10 pounds, and those that became lighter were placed in a special "notebook" category. In practice, notebook computer and laptop computer are synonymous. soared 39 percent, 12 points faster than category shipments for the rest of the industry. Volumes of the company's Dimension and OptiPlex desktop computers were up 21 percent, more than double the rate of the industry excluding Dell. 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 Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the infrastructures. Company revenue for the past year totaled $43.5 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 (1) (EMC Corporation, Hopkinton, MA, www.emc.com) The leading supplier of storage products for midrange computers and mainframes. Founded in 1979 by Richard J. Egan and Roger Marino, EMC has developed advanced storage and retrieval technologies for the world's largest companies. 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 second-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 In a graphical environment, to hide an application that is currently displayed on screen. For example, in Windows and Mac, the application's window is removed from the screen and represented by an icon on the Windows Taskbar. In the Mac, the icon is placed in the Dock. See Win Minimize windows. excess inventory, declining inventory values and obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. ; the product, customer and geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. sales mix sales mix See product mix. of any particular period; the company's ability to effectively manage its operating costs operating costs npl → gastos mpl operacionales ; and the effect of armed hostilities hos·til·i·ty n. pl. hos·til·i·ties 1. The state of being hostile; antagonism or enmity. See Synonyms at enmity. 2. a. A hostile act. b. hostilities Acts of war; overt warfare. , terrorism terrorism, the threat or use of violence, often against the civilian population, to achieve political or social ends, to intimidate opponents, or to publicize grievances. 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 logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. 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 con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: 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
----------------
Yr.
April 30, Jan. 30, May 2, to
2004 2004 2003 Sequential Yr.
--------- -------- -------- ---------- -----
Net revenue $11,540 $11,512 $9,532 0.2% 21.1%
Cost of revenue 9,467 9,421 7,784 0.5% 21.6%
--------- -------- --------
Gross margin 2,073 2,091 1,748 (0.9%) 18.6%
Selling, general and
administrative 991 991 826 (0.0%) 20.0%
Research, development
and engineering 116 119 111 (2.9%) 4.2%
--------- -------- --------
Total operating
expenses 1,107 1,110 937 (0.3%) 18.1%
--------- -------- --------
Operating income 966 981 811 (1.4%) 19.1%
Investment and other
income, net 49 49 43 (0.4%) 15.3%
--------- -------- --------
Income before income
taxes 1,015 1,030 854 (1.4%) 18.9%
Income tax provision 284 281 256 1.3% 11.0%
--------- -------- --------
Net income $731 $749 $598 (2.4%) 22.3%
========= ======== ========
Earnings per common
share:
Basic $0.29 $0.29 $0.23
========= ======== ========
Diluted $0.28 $0.29 $0.23
========= ======== ========
Weighted average shares
outstanding:
Basic 2,539 2,557 2,572
Diluted 2,593 2,616 2,614
Percentage
of Total Net Revenue:
-------------------------
Gross margin 18.0% 18.2% 18.3%
Selling, general and
administrative 8.6% 8.6% 8.6%
Research, development
and engineering 1.0% 1.0% 1.2%
Total operating
expenses 9.6% 9.6% 9.8%
Operating income 8.4% 8.5% 8.5%
Income before income
taxes 8.8% 8.9% 9.0%
Net income 6.3% 6.5% 6.3%
Income tax rate 28.0% 27.3% 30.0%
Net Revenue
by Geographic Region:
-------------------------
Percentage
of Total Net Revenue
------------------------
Americas 65% 67% 68%
Europe 23% 22% 21%
Asia Pacific -- Japan 12% 11% 11%
Net Revenue
by Product Line:
------------------------
Percentage
of Total Net Revenue
------------------------
Desktops 51% 52% 53%
Notebooks 28% 27% 27%
Enterprise 21% 21% 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)
April 30, Jan. 30, May 2,
2004 2004 2003
--------- -------- --------
Assets:
-------
Current assets:
Cash and cash equivalents $4,075 $4,317 $4,474
Short-term investments 1,180 835 388
Accounts receivable, net 3,424 3,635 2,656
Inventories 425 327 264
Other 2,073 1,519 1,238
--------- -------- --------
Total current assets 11,177 10,633 9,020
Property, plant and equipment, net 1,510 1,517 889
Investments 6,631 6,770 5,470
Other non-current assets 391 391 333
--------- -------- --------
Total assets $19,709 $19,311 $15,712
========= ======== ========
Liabilities and Stockholders' Equity:
-------------------------------------
Current liabilities:
Accounts payable $7,518 $7,316 $6,082
Accrued and other 3,803 3,580 2,787
--------- -------- --------
Total current liabilities 11,321 10,896 8,869
Long-term debt 505 505 506
Other non-current liabilities 1,778 1,630 1,261
--------- -------- --------
Total liabilities 13,604 13,031 10,636
Stockholders' equity 6,105 6,280 5,076
--------- -------- --------
Total liabilities and stockholders'
equity $19,709 $19,311 $15,712
========= ======== ========
Ratios:
-------
Quick ratio 0.77 0.81 0.85
Days supply in inventory 4 3 3
Days of sales outstanding(a) 31 31 29
Days in accounts payable 71 70 70
--------- -------- --------
Cash conversion cycle (36) (36) (38)
Other Information:
------------------
Headcount (approximate) 47,800 46,000 40,000
Average total revenue/unit (approximate) $1,570 $1,540 $1,620
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 April 30, 2004, January 30, 2004, and
May 2, 2003, days of sales outstanding included days of sales in
accounts receivable and days of in-transit customer shipments of
27 and 4 days; 28 and 3 days; and 25 and 4 days, respectively.
DELL INC.
Condensed Consolidated Statement of Cash Flows
(in millions)
(unaudited)
Three Months Ended
------------------
April 30, 2004
------------------
Cash flows from operating activities:
Net income $731
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 82
Tax benefits from employee stock plans 25
Other, primarily effects of exchange rate changes
on monetary assets and liabilities denominated in
foreign currencies (112)
Changes in:
Operating working capital 81
Non-current assets and liabilities 195
------------------
Net cash provided by operating activities 1,002
Cash flows from investing activities:
Investments:
Purchases (3,505)
Maturities and sales 3,264
Capital expenditures (82)
------------------
Net cash used in investing activities (323)
Cash flows from financing activities:
Purchase of common stock (1,131)
Issuance of common stock under employee plans 114
------------------
Net cash used in financing activities (1,017)
Effect of exchange rate changes on cash
and cash equivalents 96
------------------
Net decrease in cash and cash equivalents (242)
Cash and cash equivalents at beginning of period 4,317
------------------
Cash and cash equivalents at end of period $4,075
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