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 AUSTIN, Texas, Aug. 17 /PRNewswire/ -- Dell Computer Corporation (NASDAQ: DELL) today announced a loss of $2.03 per share on record revenues of $701 million for its second fiscal quarter ended Aug. 1, 1993. It was the first quarterly loss since Dell became a public company in 1988.
 Dell said the primary reason for the loss was $71 million in unusual charges related to restructuring provisions, inventory writedowns due to systems and process issues, and costs associated with delayed and canceled notebook projects. Excluding these charges, Dell would have reported a $.61 loss.
 Also contributing to the second-quarter loss were:
 -- a significant sell-off of excess inventory at substandard margins
 which severely depressed the company's overall gross profit
 margins; and
 -- a product backlog at the end of the quarter that was
 approximately $25 million higher than expected.
 (In millions except share data)
 Q2 FY94 Q2 FY93
 Net Sales $700.6 $457.5
 Net Income (loss) ($75.7) $21.9
 EPS (loss) ($2.03) $ .57
 Shares Outstanding 37,229,000 38,460,000
 The company had previously announced that if a loss were posted for the quarter, Dell could be in default of specific financial covenants in its revolving credit facility. Those financial covenants have now been restructured and no default will occur as a result of the second quarter performance.
 "We are obviously disappointed in this quarter's results, but we believe the decisive actions we took will make Dell a stronger company and improve our ability to capitalize on the ongoing strength of our business," said Michael S. Dell, chairman and chief executive officer. "We expect to return to profitability in the third quarter," he continued, "and we are focused on returning to higher year-over-year earnings as soon as possible. We hope to achieve higher comparative earnings in the fourth quarter of this fiscal year based on reporting approximately $3 billion in sales, but these may be aggressive targets in the current market environment."
 Worldwide sales were a record $701 million, up 53 percent over the second quarter of the prior year and 4 percent higher than in the first quarter of the current fiscal year. The second-quarter sales gain marked the 15th consecutive rise in sequential quarterly revenues.
 Domestic sales of $451 million represented a 49-percent increase over the second quarter of fiscal 1993 and a 9-percent increase over the first quarter of the current fiscal year. International sales increased 60 percent to $249 million over the comparable quarter a year ago and declined 3 percent sequentially, reflecting a weak European economy.
 Operating expenses increased to approximately 21 percent of sales in the second quarter, compared with approximately 16 percent of sales during the same quarter a year ago. The increase was primarily a result of the restructuring provisions and revenue shortfall. Dell expects operating expenses as a percentage of sales to decline in the quarters ahead.
 Inventories at the end of the quarter represented 6.0 weeks of sales.
 "Our business is in a state of transition as we refocus our attention on profitable growth," noted Mr. Dell. "I believe the corrective actions we have undertaken will position Dell well for future growth and prosperity."
 A Fortune 500 company, Dell Computer Corporation designs, develops, manufactures, markets, services and supports a complete line of personal computers compatible with industry standards. Dell pioneered the direct marketing of PCs in 1984 and was the first company in the PC industry to offer manufacturer-direct technical support. Dell is one of the fastest growing PC companies in the world, with fiscal 1993 revenues of $2 billion. Information on the company and its products can be obtained through its toll-free number: 1-800-BUY DELL (1-800-289-3355).
 /NOTE TO EDITORS: Dell is a registered trademark of Dell Computer Corporation. Dell Computer Corporation disclaims any proprietary interest in the marks and names of others.
 Dell Computer Corporation
 Condensed Consolidated Statement of Income
 (In thousands except per share data)
 Three Months Ended Six Months Ended
 8/1/93 8/2/92 8/1/93 8/2/92
 Net sales $700,569 $457,477 $1,372,933 $823,599
 Cost of sales 654,795 353,445 1,214,035 623,534
 Gross profit 45,774 104,032 158,898 200,065
 Operating expenses:
 Marketing and sales 109,148 52,359 182,576 101,221
 General and
 administrative 22,818 11,289 36,924 21,463
 Research, development
 and engineering 11,926 11,151 23,367 21,564
 Total operating
 expenses 143,892 74,799 242,867 144,248
 Operating income (98,118) 29,233 (83,969) 55,817
 Net financing and
 other income (2,830) 1,580 (2,002) 3,074
 Income before
 taxes (100,948) 30,813 (85,971) 58,891
 Provision for income
 taxes (25,240) 8,877 (20,448) 17,160
 Net income (loss) $(75,708) $21,936 $(65,523) $41,731
 Earnings (loss) per
 share $(2.03) $0.57 (1.76) 1.09
 Weighted average
 shares outstanding 37,229 38,460 37,136 38,268
 Condensed Consolidated Statement of Financial Position
 (In thousands)
 Aug. 1, 1993 Jan. 31, 1993
 Current assets:
 Cash and cash equivalents $29,566 $14,948
 Short term investments 76,189 80,367
 Accounts receivable, net 341,330 374,013
 Inventories, net 297,316 303,220
 Other current assets 101,524 80,239
 Total current assets 845,925 852,787
 Property and equipment, net 86,390 70,462
 Other assets 3,041 3,756
 Total $935,356 $927,005
 Liabilities and Stockholders' Equity
 Current liabilities:
 Notes payable $80,000 $8,500
 Accounts payable 311,916 295,133
 Accrued liabilities 206,613 162,973
 Income taxes --- 27,233
 Total current liabilities 598,529 493,839
 Long-term debt --- 48,373
 Other liabilities 24,398 15,593
 Stockholders' equity 312,429 369,200
 Total $935,356 $927,005
 -0- 8/17/93
 /CONTACT: (Media) Roger Rydell or Michele Moore, 512-728-4100; or (investor) Don Collis or Ken Smith, 512-728-8671 or 512-728-4034, all of Dell Computer Corporation/

CO: Dell Computer Corporation ST: Texas IN: CPR SU: ERN

DD -- NE004 -- 3356 08/17/93 07:30 EDT
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Publication:PR Newswire
Date:Aug 17, 1993

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