DELL TOPS $18 BILLION IN ANNUAL REVENUE
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DELL TOPS $18 BILLION IN ANNUAL REVENUE
Internet Sales Rise to $14 Million Per Day; Company Announces 2-for-1 Stock Split
Dell Achieves Top Ten in Fortune List of America's Most Admired Companies
ROUND ROCK, Texas, Feb. 16, 1999 -- Dell Computer Corporation (Nasdaq:DELL), the world's leading direct computer systems company, today reported earnings per share rose 55 percent to $0.31 for the fourth quarter ended Jan. 29, 1999. Revenue increased 38 percent to $5.2 billion, as the company achieved customer sales via www.dell.com of $14 million per day.
For fiscal 1999, revenue increased 48 percent to $18.2 billion. Earnings per share for the year were $1.05, a 64-percent increase over last year.
Dell also announced today that its Board of Directors has declared a 2-for-1 stock split. This split, the company's seventh in the last seven years, will be paid in the form of a 100-percent stock dividend to be issued on March 5, 1999, to shareholders of record as of Feb. 26, 1999. All per-share data are presented prior to this split.
(in millions, except per-share data)
Q4 FY'99 Q4 FY'98 Yr. to Yr. Growth FY'99 FY'98 Yr. to Yr. Growth
Net Revenue $5,173 $3,737 38% $18,243 $12,327 48%
Operating Income $595 $397 50% $2,046 $1,316 56%
Net Income $425 $285 49% $1,460 $944 55%
Earnings Per Share $0.31 $0.20 55% $1.05 $0.64 64%
"Dell finished another record year with strong momentum, ranking No. 1 among key competitors in return on invested capital, revenue growth and unit growth" said Michael Dell, chairman and chief executive officer. "In the fourth quarter, we grew our business at more than three and one-half times the market rate, our Internet business leadership accelerated, and we had great success winning customer accounts. Consequently, Dell is well positioned for continued industry-leading growth in the coming year."
As a result of "its growth and shareholder returns through focused use of technology," Dell has vaulted to the No. 4 position on the top ten list of America's Most Admired Companies in the Fortune magazine annual survey, which appeared in the March 1, 1999 issue.
Dell Maintains Asset Management Leadership
Dell continued to set the standard for the computer industry in managing assets. During the quarter, the company generated a record $752 million in cash from operations. Dell increased its cash and marketable securities to $3.2 billion, while repurchasing 15 million shares in the quarter. Since its share repurchase program began three years ago, Dell has repurchased 375 million shares.
With its industry-leading high-velocity, low-inventory model, Dell achieved a record six days of inventory. That is equivalent to 61 turns of inventory on an annual basis.
Gross margin increased to 22.4 percent in the fourth quarter, compared with 22.0 percent in the year-ago quarter, while operating expenses declined to 11.0 percent from 11.4 percent a year ago. As a result, operating margin rose to a record 11.4 percent for the quarter, compared with 10.6 percent a year ago. For the year, the company achieved a gross margin of 22.5 percent and operating expenses of 11.3 percent, producing an operating margin of 11.2 percent.
Company Achieves Strong Results Worldwide
The company continued to achieve strong results in all customer and product segments around the world during the fourth quarter. Revenue rose 39 percent over the year-ago quarter in Dell's Americas region, where seasonal gains in the company's consumer business were noteworthy.
Revenue rose 39 percent over the year-ago quarter in Dell's Americas region, where seasonal gains in the company's consumer business were noteworthy.
In Europe, Dell revenue in the fourth quarter increased 40 percent year-over-year. Dell achieved revenue growth in excess of 50 percent during the quarter in eight national markets in the region; five of those markets exceeded 80-percent revenue growth.
In Asia-Pacific, including Japan, Dell continued to grow profitably, despite persistent economic uncertainty in the region. Dell achieved fourth-quarter, year-over-year revenue growth of 30 percent, while unit shipment growth was more than five times the market rate. Regional sales topped $1 billion for the year.
Sustained customer focus and a superior direct business model underscored Dell's growth beyond $18 billion in sales in fiscal 1999. Key achievements during the year included the following:
Dell continued to significantly broaden and enhance its Internet capabilities. By year end, www.dell.com was generating sales of more than $14 million per day, equivalent to a $5 billion annual run rate. In the fourth quarter alone, www.dell.com received more than 25 million visits, generating $1 billion in customer sales.
Strength of Direct Model Propels Fiscal 1999 Success
Dell enhanced its reputation for product leadership by garnering more than 350 product and service awards around the world. Among these were the following:
The prestigious "Readers' Choice" award for Personal Service and Reliability in the Fortune Technology Buyer's Guide;
Readers' Choice awards for Service and Reliability for both desktops and notebooks from PC Magazine;
PC World's Reliability and Service award for work PCs, home PCs and notebooks;
No. 1 ranking in Web-based support by ComputerWorld.
Dell continued to significantly increase its share of the global notebook PC market, rising to more than 9 percent. The high-powered Inspiron 7000 with its 15-inch screen achieved the distinction of "best portable ever" from PC Magazine.
The company strengthened its rapidly growing enterprise systems business, adding the entry-level PowerEdge 1300 to its family of server products and launching the PowerVault line of fiber-channel storage products. Dell Precision workstation products won two product of the year awards, and Dell achieved a virtual tie for the No. 1 position in the Windows NT workstation market.
The company broadened its array of services in fiscal 1999. This included expanding online customer services by providing more than 12,000 "Premier" Pages to serve a growing number of customers of all sizes. Other innovative Dell Internet offerings include paperless purchase orders, a virtual help desk, a spare parts ordering system and a natural language search capability.
Dell continued to expand its global manufacturing, sales and service facilities, adding more manufacturing capacity than at any other time in its history. To accommodate its rapidly growing enterprise systems business, Dell added to its operations in Central Texas with a state-of-the-art facility for manufacturing servers, workstations and storage products. The company added to its regional manufacturing operations in Ireland, opening a second and beginning construction of a third facility in Limerick, Ireland. Supporting the launch of its direct business model in China, Dell opened a manufacturing and sales support center in Xiamen.
Opportunity to Increase Market Share Continues in Fiscal 2000
"By focusing on delivering a superior customer experience, we delivered exceptional performance in fiscal 1999," stated Mr. Dell. "While these results enabled again us to outpace our key competitors, we see substantial opportunity in fiscal 2000 to grow significantly faster than the industry rate and once again to increase our market share.
"Last year we dramatically extended the capabilities of the Dell direct business model through opportunities with the Internet. Our online customer mix moved from a predominantly consumer-oriented base to a far broader base including business and government customers. Through our efforts in fiscal 2000, we intend to significantly expand our Internet offerings and focus on ways of making it even easier for our customers to do business with us via www.dell.com.
"Looking at the year ahead, industry demand appears solid. Major demand drivers, including processor transitions, operating system introductions and component cost declines, remain healthy and are setting the stage for a robust year ahead in our industry.
"At the same time, our industry remains highly competitive, underscoring the need for greater operational efficiencies. We believe Dell's direct business model gives distinct advantages over our competitors, enabling Dell to again deliver a superior customer experience around the world."
Ranked No. 125 among the Fortune 500 companies and No. 363 in the Fortune Global 500, Dell Computer Corporation is the world's leading direct computer systems company, based on revenues of $18.2 billion for the past four quarters. Dell 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 through its toll-free number 1-800-388-8542 or by accessing the Dell World Wide Web site at www.dell.com.
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Dell, Latitude and PowerEdge are registered trademarks; Inspiron, PowerVault and Dell Precision are trademarks; and DellWare and Premier Pages are service marks of Dell Computer Corporation.
Fortune 500 is a registered trademark of Time Inc.
Windows NT is a trademark of Microsoft Corp.
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 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 the level of demand for personal computers; the intensity of competition; currency fluctuations; the cost of certain key components; and the company's ability to effectively manage product transitions and component availability, to minimize excess and obsolete inventory and to continue to expand and improve its infrastructure (including personnel and systems). 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 and financial position follow.
DELL COMPUTER CORPORATION
Condensed Consolidated Statement of Income and Related Financial Highlights
(in millions, except per share data)
(unaudited)
Three Months Ended % Growth Rates
January 29,
1999 November 1,
1998 February 1,
1998 Sequential Yr. to Yr.
Net revenue $ 5,173 $ 4,818 $ 3,737 7.4% 38.4%
Cost of revenue 4,012 3,732 2,915 7.5% 37.7%
Gross margin 1,161 1,086 822 6.9% 41.2%
Selling, general and administrative 492 471 370 4.5% 33.2%
Research, development and engineering 74 76 55 (2.1)% 34.0%
Total operating expenses 566 547 425 3.6% 33.3%
Operating income 595 539 397 10.3% 49.8%
Financing and other 12 9 16
Income before income taxes 607 548 413 10.7% 47.0%
Provision for income taxes 182 164 128
Net income $ 425 $ 384 $ 285 10.6% 49.2%
Basic earnings per common share* $ 0.34 $ 0.30 $ 0.22 13.3% 54.5%
Diluted earnings per common share* $ 0.31 $ 0.28 $ 0.20 10.7% 55.0%
Weighted average shares outstanding*:
Basic 1,264 1,264 1,282
Diluted 1,375 1,381 1,412
Percentage of Net Revenue:
Gross margin 22.4% 22.5% 22.0%
Selling, general and administrative 9.5% 9.8% 9.9%
Research, development and engineering 1.5% 1.6% 1.5%
Total operating expenses 11.0% 11.4% 11.4%
Operating income 11.4% 11.2% 10.6%
Income before income taxes 11.7% 11.4% 11.0%
Net income 8.2% 8.0% 7.6%
Income tax rate 30.0% 30.0% 31.0%
Net revenue by geographic region:
% of total net revenue
Americas 67% 70% 67%
Europe 27% 24% 27%
Asia-Pacific and Japan 6% 6% 6%
Net revenue by product line:
% of system net revenues
Desktops 63% 64% 67%
Enterprise 14% 14% 11%
Portables 23% 22% 22%
Total system net revenues 100% 100% 100%
Non-system net revenues (peripherals, other);% of total system net revenues 7% 7% 8%
Note: Percentage growth rates and ratios are calculated based on underlying data in thousands.
*Restated to reflect the two-for-one common stock split effected on September 4, 1998.
DELL COMPUTER CORPORATION
Condensed Consolidated Statement of Income and Related Financial Highlights
(in millions, except per share data)
(unaudited)
Year to Date
January 29,
1999 February 1,
1998 Yr. to Yr.
% Growth
Rates
Net revenue $ 18,243 $ 12,327 48.0%
Cost of revenue 14,137 9,605 47.2%
Gross margin 4,106 2,722 50.9%
Selling, general and administrative 1,788 1,202 48.7%
Research, development and engineering 272 204 33.9%
Total operating expenses 2,060 1,406 46.6%
Operating income 2,046 1,316 55.5%
Financing and other 38 52
Income before income taxes 2,084 1,368 52.3%
Provision for income taxes 624 424
Net income $ 1,460 $ 944 54.6%
Basic earnings per common share*: $ 1.15 $ 0.72 59.7%
Diluted earnings per common share* $ 1.05 $ 0.64 64.1%
Weighted average shares outstanding*:
Basic 1,266 1,316
Diluted 1,386 1,476
Percentage of Net Revenue:
Gross Margin 22.5% 22.1%
Selling, general and administrative 9.8% 9.8%
Research, development and engineering 1.5% 1.6%
Total operating expenses 11.3% 11.4%
Operating income 11.2% 10.7%
Income before income taxes 11.4% 11.1%
Net income 8.0% 7.7%
Income tax rate 30.0% 31.0%
Net revenue by geographic region:
% of total net revenue
Americas 68% 69%
Europe 26% 24%
Asia-Pacific and Japan 6% 7%
Net revenue by product line:
% of system net revenues
Desktops 64% 71%
Enterprise 13% 9%
Portables 23% 20%
Total system net revenues 100% 100%
Non-system net revenues (peripherals, other); % of total system net revenues 7% 9%
Note: Percentage growth rates and ratios are calculated based on underlying data in thousands.
*Restated to reflect the two-for-one common stock split effected on September 4, 1998.
DELL COMPUTER CORPORATION
Condensed Consolidated Statement of Financial Position and Related Financial Highlights
(in millions, except for "Ratios" and "Other information")
(unaudited)
January 29,
1999 November 1,
1998 February 1,
1998
Assets:
Current assets:
Cash $ 520 $ 519 $ 320
Marketable securities 2,661 2,278 1,524
Accounts receivable, net 2,094 2,157 1,486
Inventories 273 281 233
Other 791 680 349
Total current assets 6,339 5,915 3,912
Property, plant and equipment, net 523 511 342
Other 15 16 14
Total assets $ 6,877 $ 6,442 $ 4,268
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $ 2,397 $ 2,313 $ 1,643
Accrued and other 1,298 1,345 1,054
Total current liabilities 3,695 3,658 2,697
Long-term debt 512 512 17
Other 349 325 261
Total liabilities 4,556 4,495 2,975
Stockholders' equity 2,321 1,947 1,293
Total liabilities and stockholders' equity $ 6,877 $ 6,442 $ 4,268
Ratios:
Current ratio 1.72 1.62 1.45
Quick ratio 1.43 1.35 1.23
Days supply in inventory 6 7 7
Days of sales in accounts receivable 36 40 36
Days in accounts payable 54 56 51
Other information:
Headcount (approximate) 24,400 23,300 16,200
Average total revenue/unit (approximate) $ 2,350 $ 2,400 $ 2,600
Return on invested capital* 170% 190% 217%
Note: Ratios are calculated based on underlying data in thousands
* Calculation excludes cash and marketable securities in excess of 5% of annualized revenue.
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