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Dell announced fiscal 2013 third-quarter results today with revenue of
$13.7 billion, GAAP operating income of $589 million, and GAAP earnings
of $0.27 per share. Dell’s enterprise solution strategy continued to
show positive results with server and networking revenue increasing 11
percent year over year.
“We are consistently executing our end-to-end solutions strategy for the
benefit of our customers,” said Michael Dell, Chairman and CEO. “In the
quarter, we completed the acquisition of Quest Software which – along
with other recent acquisitions like SonicWALL and Wyse – adds leading
management, security, virtualization and cloud capabilities to our
expanding portfolio of powerful solutions.”
“In a difficult global IT spending environment we saw solid proof points
that demonstrate progress in our strategy,” said Brian Gladden, Dell
CFO. “A highlight has been the strong progress of our newly introduced
servers, with our server and networking business up 11 percent. We’re
also encouraged by early interest in our new Windows 8 touch portfolio
and the opportunities it creates for our commercial and consumer
businesses.”
Mr. Gladden added that strong cash flow from operations generated over
the past two years continued with $1.3 billion in the quarter and,
combined with a strong cash position this fiscal year, helped enable
Dell to invest in new capabilities and return almost $900 million year
to date to shareholders through the company’s recently adopted dividend
and share repurchases.
Results
Revenue in the quarter was $13.7 billion, an 11 percent
decrease from the previous year as desktop and mobility revenue
contracted.
GAAPoperating income for the quarter was $589 million,
or 4.3 percent of revenue. Non-GAAP operating income was $886
million, or 6.5 percent of revenue.
GAAP earnings per share in the quarter was 27 cents, down 45
percent from the previous year; non-GAAP EPS was 39 cents, down
28 percent.
Cash flow from operations in the quarter was $1.3 billion. Dell
ended the quarter with $14.2 billion in cash and investments.
Fiscal-Year 2013 Third Quarter and Year-to-Date Highlights
Third Quarter
Fiscal Year To Date
(in millions)
FY13
FY12
Change
FY13
FY12
Change
Revenue
$
13,721
$
15,365
(11
%)
$
42,626
$
46,040
(7
%)
Operating Income (GAAP)
$
589
$
1,142
(48
%)
$
2,314
$
3,500
(34
%)
Net Income (GAAP)
$
475
$
893
(47
%)
$
1,842
$
2,728
(32
%)
EPS (GAAP)
$
0.27
$
0.49
(45
%)
$
1.05
$
1.46
(28
%)
Operating Income (non-GAAP)
$
886
$
1,288
(31
%)
$
3,019
$
3,992
(24
%)
Net Income (non-GAAP)
$
679
$
983
(31
%)
$
2,315
$
3,039
(24
%)
EPS (non-GAAP)
$
0.39
$
0.54
(28
%)
$
1.32
$
1.62
(19
%)
Information about Dell’s use of non-GAAP financial information is
provided under “Non-GAAP Financial Measures” below. Non-GAAP financial
information excludes costs related primarily to the amortization of
purchased intangibles, severance and facility-action costs, certain
settlement costs and acquisition-related charges. All comparisons in
this press release are year over year unless otherwise noted.
Strategic Highlights:
Dell Enterprise Solutions and Services revenue grew 3 percent
year over year to $4.8 billion. The company year to date is 4 percent
ahead of last year’s ES&S revenue at $14.2 billion, accounting for
greater than 50 percent of the company’s gross margin thus far this
year. The ES&S business is on an annual run-rate approaching $20
billion.
Server and networking revenue for the quarter grew 11 percent.
Dell was the only top-3 server provider to have positive unit growth
in the quarter. Dell’s server growth was driven by its new, 12th-Generation
line, leadership in hyper-scale infrastructure solutions and an
increase in customer adoption of cloud solutions for their IT
requirements. Dell’s differentiated intellectual property and
solutions have resulted in solid growth in this business.
Dell’s
Servicesbusiness continues to execute well, with gross
margin percentages improving sequentially for the sixth consecutive
quarter, as the company focuses on the most profitable areas of the
business. Growth in support, deployment and security services
highlighted the quarter.
Business Units and Regions:
Large Enterprise revenuewas $4.2 billionin the
quarter, an 8 percent decline. Operating income was $325 million, or
7.8 percent of revenue.
Public revenue was $3.8 billion, an 11 percent decrease.
Operating income for the quarter was $352 million, or 9.2 percent of
revenue.
Small and Medium Business revenue was $3.3 billion, a 1 percent
decline. Operating income was $349 million, or 10.6 percent of revenue.
Consumer revenue was $2.5 billion, a 23 percent decline.
Operating loss was $65 million or minus 2.7 percent of revenue.
Revenue in Americas was down 9 percent; Asia-Pacific and
Japan was down 11 percent; and EMEA was down 15 percent.
Company Outlook:
Dell sees the challenging global macro-economic environment continuing
in the fourth quarter, which will continue to impact the company’s
results. The company expects sequential revenue growth of 2 to 5
percent. For the full year, Dell maintains its expectation for at least
$1.70 in earnings per share on a non-GAAP basis. Going forward, the
company is committed to its end-to-end solutions strategy and creating
value over the long term.
About Dell
Dell Inc. (NASDAQ: DELL) listens to customers and delivers worldwide
innovative technology, business solutions and services they trust and
value. For more information, visit www.dell.com.
The third-quarter analyst call with Michael Dell, chairman and CEO,
Brian Gladden, CFO, and, Steve Felice, Chief Commercial Officer, will be
webcast live today at 4 p.m. CST and archived at www.dell.com/investor.
To monitor highlighted facts from the analyst call, follow on the Dell
Investor Relations Twitter account at: http://twitter.com/dellshares
or hashtag #DellEarnings.
To communicate directly with Dell, go to www.dell.com/dellshares.
Segment Realignment:
In the first quarter of Fiscal 2013, Dell made certain segment
realignments in order to conform to the way Dell internally manages
segment performance. These realignments affected all of Dell's operating
segments, but primarily consisted of the transfer of small office
business customers from the Small and Medium Business segment to the
Consumer Segment. Dell has recast prior period amounts to provide
visibility and comparability. None of these changes impacts Dell's
previously reported consolidated net revenue, gross margin, operating
income, net income, or earnings per share.
Non-GAAP Financial Measures:
This press release includes information about non-GAAP operating
income, non-GAAP net income, and non-GAAP earnings per share
(collectively with non-GAAP gross margin and non-GAAP operating
expenses, the “non-GAAP financial measures”), which are not measurements
of financial performance prepared in accordance with U.S. generally
accepted accounting principles. In the following tables, Dell has
provided a reconciliation of each historical non-GAAP financial measure
to the most directly comparable GAAP financial measure under the heading
“Reconciliation of Non-GAAP Financial Measures.” Dell encourages
investors to review the reconciliation in conjunction with Dell’s
presentation of these non-GAAP financial measures.
Special Note on Forward Looking Statements:
Statements in this press release that relate to future results and
events (including statements about Dell’s future financial and operating
performance, trends relating to macroeconomic challenges and the IT
spending environment, effects of our acquisitions, our server business,
our dividends and share repurchases, and consumer demand relating to
Windows 8, as well as the financial guidance with respect to revenue and
earnings per share) are forward-looking statements and are based on
Dell's current expectations. In some cases, you can identify these
statements by such forward-looking words as “anticipate,” “believe,”
“could,” “estimate,” “expect,” “intend,” “confidence,” “may,” “plan,”
“potential,” “should,” “will” and “would,” or similar expressions.
Actual results and events in future periods may differ materially from
those expressed or implied by these forward-looking statements because
of a number of risks, uncertainties and other factors, including:
intense competition; Dell’s reliance on third-party suppliers for
product components, including reliance on several single-sourced or
limited-sourced suppliers; Dell’s ability to achieve favorable pricing
from its vendors; weak global economic conditions and instability in
financial markets; Dell’s ability to manage effectively the change
involved in implementing strategic initiatives; successful
implementation of Dell’s acquisition strategy; Dell’s cost-efficiency
measures; Dell’s ability to effectively manage periodic product and
services transitions; Dell’s ability to deliver consistent quality
products and services; Dell’s ability to generate substantial non-U.S.
net revenue; Dell’s product, customer, and geographic sales mix, and
seasonal sales trends; the performance of Dell’s sales channel partners;
access to the capital markets by Dell or its customers; weak economic
conditions and additional regulation affecting our financial services
activities; counterparty default; customer terminations of or pricing
changes in services contracts, or Dell’s failure to perform as it
anticipates at the time it enters into services contracts; loss of
government contracts; Dell’s ability to obtain licenses to intellectual
property developed by others on commercially reasonable and competitive
terms; infrastructure disruptions; cyber-attacks or other data security
breaches; Dell’s ability to hedge effectively its exposure to
fluctuations in foreign currency exchange rates and interest rates;
expiration of tax holidays or favorable tax rate structures, or
unfavorable outcomes in tax audits and other compliance matters;
impairment of portfolio investments; unfavorable results of legal
proceedings; Dell’s ability to attract, retain, and motivate key
personnel; Dell’s ability to maintain strong internal controls; changing
environmental and safety laws; the effect of armed hostilities,
terrorism, natural disasters, and public health issues; and other risks
and uncertainties discussed in Dell’s filings with the Securities and
Exchange Commission, including its Annual Report on Form 10-K for its
fiscal year ended February 3, 2012. In particular, Dell’s expectations
with regard to sequential revenue and earnings per share for the full
fiscal year ending Feb. 1, 2013 assume, among other matters, that there
is no significant decline in economic conditions generally or demand
growth specifically, that macroeconomic challenges do not materialize
into more significant economic difficulties, no significant change in
seasonality patterns, continued strength in server, storage and network
products and continued geographic customer demand trends. Dell assumes
no obligation to update its forward-looking statements.
Consolidated statements of income, financial position and cash flows and
other financial data 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 Income and Related Financial
Highlights
(in millions, except per share data and percentages; percentage
growth rates and ratios are calculated based on underlying data in
thousands)
(unaudited)
Three Months Ended
% Growth Rates
November 2,
August 3,
October 28,
2012 (1)
2012 (1)
2011
Sequential
Yr. to Yr.
Net revenue
Products
$
10,706
$
11,403
$
12,312
(6
)%
(13
)%
Services, including software related
3,015
3,080
3,053
(2
)%
(1
)%
Total net revenue
13,721
14,483
15,365
(5
)%
(11
)%
Cost of net revenue
Products
8,904
9,280
9,797
(4
)%
(9
)%
Services, including software related
1,945
2,065
2,099
(6
)%
(7
)%
Total cost of net revenue
10,849
11,345
11,896
(4
)%
(9
)%
Gross margin
2,872
3,138
3,469
(8
)%
(17
)%
Operating expenses
Selling, general, and administrative
2,013
1,976
2,107
2
%
(4
)%
Research, development, and engineering
270
261
220
3
%
23
%
Total operating expenses
2,283
2,237
2,327
2
%
(2
)%
Operating income
589
901
1,142
(35
)%
(48
)%
Interest and other, net
(38
)
(63
)
(70
)
41
%
46
%
Income before income taxes
551
838
1,072
(34
)%
(49
)%
Income tax provision
76
106
179
(28
)%
(57
)%
Net income
$
475
$
732
$
893
(35
)%
(47
)%
Earnings per share:
Basic
$
0.27
$
0.42
$
0.49
(36
)%
(45
)%
Diluted
$
0.27
$
0.42
$
0.49
(36
)%
(45
)%
Cash dividends declared per common share
$
0.08
$
—
$
—
Weighted average shares outstanding:
Basic
1,735
1,747
1,813
(1
)%
(4
)%
Diluted
1,742
1,753
1,828
(1
)%
(5
)%
Percentage of Total Net Revenue:
Gross margin
20.9
%
21.6
%
22.6
%
Selling, general, and administrative
14.7
%
13.6
%
13.8
%
Research, development, and engineering
1.9
%
1.8
%
1.4
%
Operating expenses
16.6
%
15.4
%
15.2
%
Operating income
4.3
%
6.2
%
7.4
%
Income before income taxes
4.0
%
5.8
%
7.0
%
Net income
3.5
%
5.1
%
5.8
%
Income tax rate
13.8
%
12.7
%
16.7
%
Net Revenue by Product Category:
Servers and Networking (1)
$
2,322
$
2,332
$
2,089
—
%
11
%
Storage
386
435
460
(11
)%
(16
)%
Services
2,107
2,106
2,123
—
%
(1
)%
Software and Peripherals
2,258
2,338
2,528
(3
)%
(11
)%
Mobility
3,523
3,870
4,750
(9
)%
(26
)%
Desktop PCs
3,125
3,402
3,415
(8
)%
(8
)%
Consolidated net revenue
$
13,721
$
14,483
$
15,365
(5
)%
(11
)%
Percent of Total Net Revenue:
Servers and Networking (1)
17
%
16
%
14
%
Storage
3
%
3
%
3
%
Services
15
%
15
%
14
%
Software and Peripherals
16
%
16
%
16
%
Mobility
26
%
27
%
31
%
Desktop PCs
23
%
23
%
22
%
Net Revenue by Global Segment:
(2)
Large Enterprise
$
4,156
$
4,536
$
4,540
(8
)%
(8
)%
Public
3,824
4,065
4,287
(6
)%
(11
)%
Small and Medium Business
3,282
3,258
3,326
1
%
(1
)%
Consumer
2,459
2,624
3,212
(6
)%
(23
)%
Consolidated net revenue
$
13,721
$
14,483
$
15,365
(5
)%
(11
)%
Percentage of Total Net Revenue:
(2)
Large Enterprise
30
%
31
%
29
%
Public
28
%
28
%
28
%
Small and Medium Business
24
%
23
%
22
%
Consumer
18
%
18
%
21
%
Consolidated Operating Income:
(2)
Large Enterprise
$
325
$
433
$
446
Public
352
379
454
Small and Medium Business
349
382
367
Consumer
(65
)
14
99
Segment operating income
961
1,208
1,366
Broad based long-term incentives
(75
)
(85
)
(78
)
Amortization of intangible assets
(165
)
(150
)
(100
)
Severance and facility actions and acquisition-related costs
(132
)
(72
)
(46
)
Consolidated operating income
$
589
$
901
$
1,142
(1) Includes the results of Dell's Fiscal 2013 acquisitions
from their respective acquisition dates. Servers and Networking includes
our Fiscal 2013 Software acquisitions (Quest Software, SonicWALL, and
AppAssure).
(2) Segment Results for Fiscal 2012 have been recast to
conform to segment realignments that were completed during the first
quarter of Fiscal 2013. See Supplemental Segment Information at the end
of these financial tables for more information.
DELL INC.
Condensed Consolidated Statement of Income and Related Financial
Highlights (continued)
(in millions, except per share data and percentages; percentage
growth rates and ratios are calculated based on underlying data in
thousands)
(unaudited)
Nine Months Ended
% Growth Rates
November 2,
October 28,
2012(1)
2011
Yr. to Yr.
Net revenue
Products
$
33,532
$
36,981
(9
)%
Services, including software related
9,094
9,059
—
%
Total net revenue
42,626
46,040
(7
)%
Cost of net revenue
Products
27,514
29,168
(6
)%
Services, including software related
6,035
6,446
(6
)%
Total cost of net revenue
33,549
35,614
(6
)%
Gross margin
9,077
10,426
(13
)%
Operating expenses
Selling, general, and administrative
5,998
6,306
(5
)%
Research, development, and engineering
765
620
23
%
Total operating expenses
6,763
6,926
(2
)%
Operating income
2,314
3,500
(34
)%
Interest and other, net
(133
)
(167
)
20
%
Income before income taxes
2,181
3,333
(35
)%
Income tax provision
339
605
(44
)%
Net income
$
1,842
$
2,728
(32
)%
Earnings per share:
Basic
$
1.05
$
1.47
(29
)%
Diluted
$
1.05
$
1.46
(28
)%
Cash dividends declared per common share
$
0.08
$
—
Weighted average shares outstanding:
Basic
1,747
1,860
(6
)%
Diluted
1,757
1,874
(6
)%
Percentage of Total Net Revenue:
Gross margin
21.3
%
22.6
%
Selling, general, and administrative
14.1
%
13.7
%
Research, development, and engineering
1.8
%
1.3
%
Operating expenses
15.9
%
15.0
%
Operating income
5.4
%
7.6
%
Income before income taxes
5.1
%
7.2
%
Net income
4.3
%
5.9
%
Income tax rate
15.5
%
18.2
%
Net Revenue by Product Category:
Servers and Networking (1)
$
6,671
$
6,116
9
%
Storage
1,265
1,443
(12
)%
Services
6,284
6,143
2
%
Software and Peripherals
6,982
7,664
(9
)%
Mobility
11,629
14,227
(18
)%
Desktop PCs
9,795
10,447
(6
)%
Consolidated net revenue
$
42,626
$
46,040
(7
)%
Percent of Total Net Revenue:
Servers and Networking (1)
16
%
13
%
Storage
3
%
3
%
Services
15
%
13
%
Software and Peripherals
16
%
17
%
Mobility
27
%
31
%
Desktop PCs
23
%
23
%
Net Revenue by Global Segment:
(2)
Large Enterprise
$
13,128
$
13,804
(5
)%
Public
11,355
12,237
(7
)%
Small and Medium Business
10,017
9,987
—
%
Consumer
8,126
10,012
(19
)%
Consolidated net revenue
$
42,626
$
46,040
(7
)%
Percentage of Total Net Revenue:(2)
Large Enterprise
31
%
30
%
Public
27
%
26
%
Small and Medium Business
23
%
22
%
Consumer
19
%
22
%
Consolidated Operating Income:(2)
Large Enterprise
$
1,160
$
1,422
Public
1,002
1,272
Small and Medium Business
1,120
1,182
Consumer
(19
)
372
Segment operating income
3,263
4,248
Broad based long-term incentives
(244
)
(256
)
Amortization of intangible assets
(425
)
(287
)
Severance and facility actions and acquisition-related costs
(280
)
(205
)
Consolidated operating income
$
2,314
$
3,500
(1) Includes the results of Dell's Fiscal 2013 acquisitions
from their respective acquisition dates. Servers and Networking includes
our Fiscal 2013 Software acquisitions (Quest Software, SonicWALL, and
AppAssure).
(2) Segment Results for Fiscal 2012 have been recast to
conform to segment realignments that were completed during the first
quarter of Fiscal 2013. See Supplemental Segment Information at the end
of these financial tables for more information.
DELL INC.
Condensed Consolidated Statement of Financial Position and Related
Financial Highlights
(in millions, except for ratios; ratios are calculated based on
underlying data in thousands)
(unaudited)
November 2,
August 3,
October 28,
2012
2012
2011
Assets:
Current assets:
Cash and cash equivalents
$
10,991
$
11,519
$
13,293
Short-term investments
281
372
545
Accounts receivable, net
6,187
6,829
6,690
Short-term financing receivables, net
3,151
3,174
3,326
Inventories, net
1,364
1,615
1,397
Other current assets
3,688
3,741
3,005
Total current assets
25,662
27,250
28,256
Property, plant, and equipment, net
2,156
2,058
2,123
Long-term investments
2,908
2,738
2,183
Long-term financing receivables, net
1,354
1,344
1,279
Goodwill
9,191
7,558
5,943
Purchased intangible assets, net
3,511
2,609
1,957
Other non-current assets
664
540
302
Total assets
$
45,446
$
44,097
$
42,043
Liabilities and Stockholders' Equity:
Current liabilities:
Short-term debt
$
3,724
$
2,609
$
1,831
Accounts payable
10,556
11,193
11,107
Accrued and other
3,504
3,227
3,816
Short-term deferred services revenue
4,027
3,683
3,465
Total current liabilities
21,811
20,712
20,219
Long-term debt
5,310
5,832
6,430
Long-term deferred services revenue
3,943
3,893
3,744
Other non-current liabilities
4,184
3,914
2,987
Total liabilities
35,248
34,351
33,380
Total Dell stockholders' equity
10,177
9,746
8,663
Noncontrolling interest
21
—
—
Total stockholders' equity
10,198
9,746
8,663
Total liabilities and equity
$
45,446
$
44,097
$
42,043
Ratios:
Days of sales outstanding (1)
45
46
42
Days supply in inventory
11
13
11
Days in accounts payable
(88
)
(89
)
(84
)
Cash conversion cycle
(32
)
(30
)
(31
)
Average total revenue/unit (approximate)
$
1,410
$
1,390
$
1,390
(1) Days of sales outstanding ("DSO") is based on the ending
net trade receivables and most recent quarterly revenue for each period.
DSO includes the effect of product costs related to customer shipments
not yet recognized as revenue that are classified as other current
assets. At November 2, 2012, August 3, 2012, and October 28, 2011, DSO
and days of customer shipments not yet recognized were 41 and 4 days, 42
and 4 days, and 39 and 3 days, respectively.
DELL INC.
Condensed Consolidated Statements of Cash Flows
(in millions, unaudited)
Three Months Ended
Nine Months Ended
November 2,
October 28,
November 2,
October 28,
2012
2011
2012
2011
Cash flows from operating activities:
Net income
$
475
$
893
$
1,842
$
2,728
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
294
241
823
687
Stock-based compensation
84
80
276
261
Effects of exchange rate changes on monetary assets and liabilities
denominated in foreign currencies
—
(10
)
15
(19
)
Deferred income taxes
(59
)
(35
)
(107
)
(91
)
Provision for doubtful accounts — including financing receivables
64
50
185
167
Other
10
46
22
46
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable
766
(95
)
294
(190
)
Financing receivables
(62
)
(83
)
(51
)
(162
)
Inventories
257
(15
)
67
(46
)
Other assets
(138
)
16
(334
)
223
Accounts payable
(664
)
(492
)
(1,104
)
(231
)
Deferred services revenue
63
137
204
540
Accrued and other liabilities
253
118
(290
)
(223
)
Change in cash from operating activities
1,343
851
1,842
3,690
Cash flows from investing activities:
Investments:
Purchases
(641
)
(1,638
)
(1,831
)
(2,419
)
Maturities and sales
716
424
3,156
856
Capital expenditures
(121
)
(214
)
(383
)
(510
)
Proceeds from sale of facilities, land, and other assets
47
—
81
12
Collections on purchased financing receivables
34
69
136
204
Acquisition of business, net of cash received
(2,297
)
(663
)
(4,708
)
(2,564
)
Change in cash from investing activities
(2,262
)
(2,022
)
(3,549
)
(4,421
)
Cash flows from financing activities:
Repurchase of common stock
—
(600
)
(724
)
(2,180
)
Cash dividends paid
(139
)
—
(139
)
—
Issuance of common stock under employee plans
5
5
49
34
Issuance (repayment) of commercial paper (maturity 90 days or less),
net
(430
)
—
(292
)
—
Proceeds from debt
1,639
884
2,790
3,317
Repayments of debt
(718
)
(362
)
(2,822
)
(1,055
)
Other
—
1
8
3
Change in cash from financing activities
357
(72
)
(1,130
)
119
Effect of exchange rate changes on cash and cash equivalents
34
(87
)
(24
)
(8
)
Change in cash and cash equivalents
(528
)
(1,330
)
(2,861
)
(620
)
Cash and cash equivalents at beginning of the period
11,519
14,623
13,852
13,913
Cash and cash equivalents at end of the period
$
10,991
$
13,293
$
10,991
$
13,293
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
The following tables include information about non-GAAP gross margin,
non-GAAP operating expenses, non-GAAP operating income, non-GAAP net
income, and non-GAAP earnings per share (collectively, the “non-GAAP
financial measures”), which are not measurements of financial
performance prepared in accordance with U.S. generally accepted
accounting principles. Dell has provided a reconciliation of the
historical non-GAAP financial measures to the most directly comparable
GAAP measures in the below tables. A detailed discussion of Dell's
reasons for including the non-GAAP financial measures and the
limitations associated with those measures is presented in "Management's
Discussion and Analysis of Financial Condition and Results of Operations
- Results of Operations - Non-GAAP Financial Measures" in Dell's annual
report on Form 10-K for the financial year ended February 3, 2012. Dell
encourages investors to review the historical reconciliation and the
non-GAAP discussion in conjunction with the presentation of non-GAAP
financial measures.
DELL INC.
Reconciliation of Non-GAAP Financial Measures
(in millions, except per share data and percentages; percentage
growth rates and ratios are calculated based on underlying data in
thousands)
(unaudited)
Three Months Ended
% Growth Rates
November 2,
August 3,
October 28,
2012 (1)
2012 (1)
2011
Sequential
Yr. to Yr.
GAAP gross margin
$
2,872
$
3,138
$
3,469
(8
)%
(17
)%
Non-GAAP adjustments:
Amortization of intangibles
120
109
77
Severance and facility actions and acquisition-related costs
21
23
—
Non-GAAP gross margin
$
3,013
$
3,270
$
3,546
(8
)%
(15
)%
GAAP operating expenses
$
2,283
$
2,237
$
2,327
2
%
(2
)%
Non-GAAP adjustments:
Amortization of intangibles
(45
)
(41
)
(23
)
Severance and facility actions and acquisition-related costs
(111
)
(49
)
(46
)
Non-GAAP operating expenses
$
2,127
$
2,147
$
2,258
(1
)%
(6
)%
GAAP operating income
$
589
$
901
$
1,142
(35
)%
(48
)%
Non-GAAP adjustments:
Amortization of intangibles
165
150
100
Severance and facility actions and acquisition-related costs
132
72
46
Non-GAAP operating income
$
886
$
1,123
$
1,288
(21
)%
(31
)%
GAAP net income
$
475
$
732
$
893
(35
)%
(47
)%
Non-GAAP adjustments:
Amortization of intangibles
165
150
100
Severance and facility actions and acquisition-related costs
132
72
46
Aggregate adjustment for income taxes
(93
)
(79
)
(56
)
Non-GAAP net income
$
679
$
875
$
983
(22
)%
(31
)%
GAAP earnings per share - diluted
$
0.27
$
0.42
$
0.49
(36
)%
(45
)%
Non-GAAP adjustments per share - diluted
0.12
0.08
0.05
Non-GAAP earnings per share - diluted
$
0.39
$
0.50
$
0.54
(22
)%
(28
)%
Diluted WAS
1,742
1,753
1,828
Percentage of Total Net Revenue:
GAAP gross margin
20.9
%
21.6
%
22.6
%
Non-GAAP adjustment
1.1
%
1.0
%
0.5
%
Non-GAAP gross margin
22.0
%
22.6
%
23.1
%
GAAP operating expenses
16.6
%
15.4
%
15.2
%
Non-GAAP adjustment
(1.1
)%
(0.6
)%
(0.5
)%
Non-GAAP operating expenses
15.5
%
14.8
%
14.7
%
GAAP operating income
4.3
%
6.2
%
7.4
%
Non-GAAP adjustment
2.2
%
1.6
%
1.0
%
Non-GAAP operating income
6.5
%
7.8
%
8.4
%
GAAP net income
3.5
%
5.1
%
5.8
%
Non-GAAP adjustment
1.4
%
0.9
%
0.6
%
Non-GAAP net income
4.9
%
6.0
%
6.4
%
(1) Includes the results of Dell's Fiscal 2013 acquisitions
from their respective acquisition dates.
DELL INC.
Reconciliation of Non-GAAP Financial Measures
(in millions, except per share data and percentages; percentage
growth rates and ratios are calculated based on underlying data in
thousands)
(unaudited)
Nine Months Ended
% Growth Rates
November 2,
October 28,
2012(1)
2011
Yr. to Yr.
GAAP gross margin
$
9,077
$
10,426
(13
)%
Non-GAAP adjustments:
Amortization of intangibles
317
222
Severance and facility actions and acquisition-related costs
56
34
Non-GAAP gross margin
$
9,450
$
10,682
(12
)%
GAAP operating expenses
$
6,763
$
6,926
(2
)%
Non-GAAP adjustments:
Amortization of intangibles
(108
)
(65
)
Severance and facility actions and acquisition-related costs
(224
)
(171
)
Non-GAAP operating expenses
$
6,431
$
6,690
(4
)%
GAAP operating income
$
2,314
$
3,500
(34
)%
Non-GAAP adjustments:
Amortization of intangibles
425
287
Severance and facility actions and acquisition-related costs
280
205
Non-GAAP operating income
$
3,019
$
3,992
(24
)%
GAAP net income
$
1,842
$
2,728
(32
)%
Non-GAAP adjustments:
Amortization of intangibles
425
287
Severance and facility actions and acquisition-related costs
280
205
Aggregate adjustment for income taxes
(232
)
(181
)
Non-GAAP net income
$
2,315
$
3,039
(24
)%
GAAP earnings per share - diluted
$
1.05
$
1.46
(28
)%
Non-GAAP adjustments per share - diluted
0.27
0.16
Non-GAAP earnings per share - diluted
$
1.32
$
1.62
(19
)%
Diluted WAS
1,757
1,874
Percentage of Total Net Revenue:
GAAP gross margin
21.3
%
22.6
%
Non-GAAP adjustment
0.9
%
0.6
%
Non-GAAP gross margin
22.2
%
23.2
%
GAAP operating expenses
15.9
%
15.0
%
Non-GAAP adjustment
(0.8
)%
(0.5
)%
Non-GAAP operating expenses
15.1
%
14.5
%
GAAP operating income
5.4
%
7.6
%
Non-GAAP adjustment
1.7
%
1.1
%
Non-GAAP operating income
7.1
%
8.7
%
GAAP net income
4.3
%
5.9
%
Non-GAAP adjustment
1.1
%
0.7
%
Non-GAAP net income
5.4
%
6.6
%
(1) Includes the results of Dell's Fiscal 2013 acquisitions
from their respective acquisition dates.
Dell Inc.
Supplemental Segment Information
Fiscal 2011
(in millions, unaudited)
Three Months Ended
Fiscal Year Ended
April 30, 2010
July 30, 2010
October 29, 2010
January 28, 2011
January 28, 2011
As Reported
Recast
Variance
As Reported
Recast
Variance
As Reported
Recast
Variance
As Reported
Recast
Variance
As Reported
Recast
Variance
Net Revenue by Global Segment:(1)
Large Enterprise
$
4,246
$
4,341
$
95
$
4,549
$
4,618
$
69
$
4,326
$
4,389
$
63
$
4,692
$
4,763
$
71
$
17,813
$
18,111
$
298
Public
3,856
3,708
(148
)
4,580
4,467
(113
)
4,442
4,340
(102
)
3,973
3,862
(111
)
16,851
16,377
(474
)
Small and Medium Business
3,524
3,096
(428
)
3,535
3,083
(452
)
3,665
3,179
(486
)
3,749
3,250
(499
)
14,473
12,608
(1,865
)
Consumer
3,248
3,729
481
2,870
3,366
496
2,961
3,486
525
3,278
3,817
539
12,357
14,398
2,041
Consolidated net revenue
$
14,874
$
14,874
$
—
$
15,534
$
15,534
$
—
$
15,394
$
15,394
$
—
$
15,692
$
15,692
$
—
$
61,494
$
61,494
$
—
Percentage of Total Net Revenue:(1)
Large Enterprise
28
%
29
%
1
%
29
%
30
%
1
%
28
%
28
%
—
30
%
30
%
—
29
%
29
%
—
Public
26
%
25
%
-1
%
30
%
29
%
-1
%
29
%
28
%
-1
%
25
%
25
%
—
27
%
27
%
—
Small and Medium Business
24
%
21
%
-3
%
23
%
20
%
-3
%
24
%
21
%
-3
%
24
%
21
%
-3
%
24
%
21
%
-3
%
Consumer
22
%
25
%
3
%
18
%
21
%
3
%
19
%
23
%
4
%
21
%
24
%
3
%
20
%
23
%
3
%
Consolidated Operating Income:(1)
Large Enterprise
$
283
$
293
$
10
$
288
$
289
$
1
$
400
$
398
$
(2
)
$
502
$
510
$
8
$
1,473
$
1,490
$
17
Public
298
280
(18
)
369
363
(6
)
451
450
(1
)
366
353
(13
)
1,484
1,446
(38
)
Small and Medium Business
313
301
(12
)
323
298
(25
)
391
365
(26
)
450
419
(31
)
1,477
1,383
(94
)
Consumer
17
37
20
(21
)
9
30
—
29
29
69
105
36
65
180
115
Segment operating income
$
911
$
911
$
—
$
959
$
959
$
—
$
1,242
$
1,242
$
—
$
1,387
$
1,387
$
—
$
4,499
$
4,499
$
—
(1) In the first quarter of Fiscal 2013, Dell made certain
segment realignments in order to conform to the way Dell now internally
manages segment performance. These realignments affected all of Dell's
operating segments, but primarily consisted of the transfer of small
office business customers from the Small and Medium Business segment to
the Consumer Segment. Dell has recast prior period amounts to provide
visibility and comparability. None of these changes impacts Dell's
previously reported consolidated net revenue, gross margin, operating
income, net income, or earnings per share.
Dell Inc.
Supplemental Segment Information
Fiscal 2012
(in millions, unaudited)
Three Months Ended
Fiscal Year Ended
April 29, 2011
July 29, 2011
October 28, 2011
February 3, 2012
February 3, 2012
As Reported
Recast
Variance
As Reported
Recast
Variance
As Reported
Recast
Variance
As Reported
Recast
Variance
As Reported
Recast
Variance
Net Revenue by Global Segment:(1)
Large Enterprise
$
4,477
$
4,587
$
110
$
4,584
$
4,677
$
93
$
4,487
$
4,540
$
53
$
4,909
$
4,982
$
73
$
18,457
$
18,786
$
329
Public
3,767
3,621
(146
)
4,457
4,329
(128
)
4,375
4,287
(88
)
3,949
3,833
(116
)
16,548
16,070
(478
)
Small and Medium Business
3,768
3,355
(413
)
3,709
3,306
(403
)
3,712
3,326
(386
)
3,977
3,560
(417
)
15,166
13,547
(1,619
)
Consumer
3,005
3,454
449
2,908
3,346
438
2,791
3,212
421
3,196
3,656
460
11,900
13,668
1,768
Consolidated net revenue
$
15,017
$
15,017
$
—
$
15,658
$
15,658
$
—
$
15,365
$
15,365
$
—
$
16,031
$
16,031
$
—
$
62,071
$
62,071
$
—
Percentage of Total Net Revenue:(1)
Large Enterprise
30
%
31
%
1
%
29
%
30
%
1
%
29
%
29
%
—
30
%
31
%
1
%
30
%
30
%
—
Public
25
%
24
%
-1
%
28
%
28
%
—
29
%
28
%
-1
%
25
%
24
%
-1
%
27
%
26
%
-1
%
Small and Medium Business
25
%
22
%
-3
%
24
%
21
%
-3
%
24
%
22
%
-2
%
25
%
22
%
-3
%
24
%
22
%
-2
%
Consumer
20
%
23
%
3
%
19
%
21
%
2
%
18
%
21
%
3
%
20
%
23
%
3
%
19
%
22
%
3
%
Consolidated Operating Income:(1)
Large Enterprise
$
504
$
516
$
12
$
448
$
460
$
12
$
441
$
446
$
5
$
461
$
467
$
6
$
1,854
$
1,889
$
35
Public
370
352
(18
)
484
466
(18
)
463
454
(9
)
327
312
(15
)
1,644
1,584
(60
)
Small and Medium Business
463
435
(28
)
404
380
(24
)
386
367
(19
)
412
399
(13
)
1,665
1,581
(84
)
Consumer
136
170
34
73
103
30
76
99
23
39
61
22
324
433
109
Segment operating income
$
1,473
$
1,473
$
—
$
1,409
$
1,409
$
—
$
1,366
$
1,366
$
—
$
1,239
$
1,239
$
—
$
5,487
$
5,487
$
—
(1) In the first quarter of Fiscal 2013, Dell made certain
segment realignments in order to conform to the way Dell now internally
manages segment performance. These realignments affected all of Dell's
operating segments, but primarily consisted of the transfer of small
office business customers from the Small and Medium Business segment to
the Consumer Segment. Dell has recast prior period amounts to provide
visibility and comparability. None of these changes impacts Dell's
previously reported consolidated net revenue, gross margin, operating
income, net income, or earnings per share.
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