Fiscal Year 2012 First Quarter Financial Statements in PDF format

  • Record earnings per share of 49 cents
  • Revenue of $15 billion and operating income of $1.2 billion
  • Enterprise solutions and services revenue up 5 percent to $4.4 billion led by server revenue increase of 11 percent

Dell’s strategy to deliver efficient and flexible information technology solutions that are open, capable and affordable continues to yield solid financial results. In the company’s fiscal first quarter revenue improved and profit increased substantially on the strength of its commercial enterprise business.

In the past two years, Dell has made strategic acquisitions to address customers’ needs for next-generation computing solutions, intelligent data management, services, security and cloud offerings. Additionally, the company has announced plans to invest $1 billion this fiscal year to deliver new solutions, build cloud capabilities and add significant numbers of new engineering, development and solutions-based sales resources in the U.S. and globally to support its enterprise solutions and services focus. Key investments include the launch of vStart for faster provisioning of virtual machines, the build out of data centers to provide customers access to public and private cloud technologies, and new solution centers where customers can test their applications.

The strong first quarter results also reflect Dell’s improved profitability in end-user-computing, particularly Dell’s client desktop and laptop offerings. This improved performance is the result of a higher-value product portfolio, good cost management, better sales execution and a significantly improved supply chain.

Results

  • Revenue in the quarter increased 1 percent to $15 billion, with enterprise solutions and services accounting for 30 percent of the total.
  • GAAP earnings per share was 49 cents; non-GAAP EPS was 55 cents.
  • GAAP operating income was $1.2 billion, or 8.1 percent of revenue. Non-GAAP operating income was $1.4 billion, or 9.2 percent of revenue.
  • Cash flow from operations was $465 million for the quarter and $4.2 billion over the last four quarters. Dell ended the quarter with $15.2 billion in cash and investments.


Fiscal-Year 2012 First Quarter Highlights

(in millions) FY12FY11Change
Revenue$15,017$14,8741%
    
Operating Income (GAAP)$1,212$519134%
Net Income (GAAP)$945$341177%
EPS (GAAP)$0.49$0.17188%
    
Operating Income (non-GAAP)$1,376$82467%
Net Income (non-GAAP)$1,050$58480%
EPS (non-GAAP$0.55$0.3083%
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:

  • Revenue for Dell's commercial business improved 3 percent to $12 billion, with record profitability. Commercial services revenue increased 6 percent.
  • Enterprise solutions and services revenue grew 5 percent to $4.4 billion in the quarter and represents 30 percent of Dell’s consolidated revenue.
  • Servers and networking revenue increased 11 percent.
  • Dell-owned storage technology, which includes Compellent, EqualLogic, PowerVault and DX Object Storage, grew 11 percent in the quarter, offset by declines in EMC storage. The company’s overall storage business revenue declined 13 percent. Dell closed the acquisition of Compellent during the quarter, has already developed a strong pipeline of business and is on track with integration plans for the period.
  • Dell Services revenue grew 5 percent to $2 billion. Transactional support and outsourcing revenue were up 5 percent and 3 percent, respectively, while the project services business grew 13 percent. Dell also added enterprise-class security capability in Q1 with the closing of its acquisition of SecureWorks.
  • The company expanded its global financing capability during the quarter with the announcement of its intent to acquire from CIT Dell Financial Services (DFS) Canada Ltd., as well as CIT Vendor Finance ’s Dell-related assets and sales and servicing functions in Europe.

Business Units and Regions:

  • Large Enterprise had record operating income of $504 million, or 11.3 percent of revenue on $4.5 billion of revenue, up 5 percent from a year ago. Enterprise solutions and services revenue was $1.8 billion, a 2 percent increase. Revenue from desktop and laptop computers grew 7 percent as the client refresh among large corporate accounts continued.
  • Public revenue was $3.8 billion, a 2 percent decline resulting from weaker spending on desktop and laptop products. Enterprise solutions and services revenue was up 3 percent Server revenues increased 9 percent. Operating income for the quarter was $370 million, or 9.8 percent of revenue.
  • Small and Medium Business had record profit in the quarter with revenue up 7 percent to $3.8 billion, a two-year high driven by strong demand across all products and services. Operating income was $463 million, or 12.3 percent of revenue. Enterprise solutions and services revenue was up 16 percent, driven by a gain in servers of 19 percent; services of 16 percent, and storage of 7 percent.
  • Consumer revenue was $3 billion, down 7 percent, as demand was softer than expected. However, profit significantly improved with operating income of $136 million, or 4.5 percent of revenue, benefiting from a simplified brand structure that now includes an improved line of Inspiron, re-launched XPS, and Alienware products, a shift to higher value products, and structural and component cost improvements in the supply chain.
  • Revenue from growth markets (which excludes the U.S., Canada, Western Europe and Japan) grew 17 percent and represents 27 percent of total company revenue. Revenue from BRIC countries grew 18 percent, with India up 28 percent and China up 22 percent.

Quotes:
Michael Dell, chairman and chief executive officer: “We’re off to a solid start in our fiscal year 2012. Our substantial profit increase demonstrates that our strategy is working and our execution is improving.”

Brian Gladden, chief financial officer: “We continue to build momentum with our strategy to expand our enterprise solutions and services business, and it’s contributing to our strong financial results. We have built an $18 billion enterprise solutions and services business with exciting growth potential and our execution in the core client business continues to be very good. We are positioned to continue delivering value to our customers and investors.”

Company Outlook:
Dell expects mid-single digit revenue growth in its second quarter, which is slightly above its normal, sequential seasonal growth of 2-3 percent. The Public business is expected to benefit from stronger spending among state and local governments and education customers as they close out their fiscal year. The company also expects its Small and Medium Business and Consumer businesses will experience above average seasonality due to the timing of demand for Dell’s Sandy Bridge based offerings, a solid consumer back-to-school spending season and a refreshed portfolio of XPS products. Dell’s updated outlook for fiscal 2012 includes revenue growth of 5-9 percent and an increase in non-GAAP operating income growth to 12-18 percent.

About Dell
Dell Inc. (NASDAQ: DELL) listens to customers and delivers innovative technology and services that give them the power to do more. For more information, visit www.dell.com. As previously announced, the first quarter a nalyst call with Michael Dell, chairman and CEO; Brian Gladden, CFO; and Paul Bell, president, Large Enterprise and Public, will be webcast live today at 4 p.m. CDT 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.


Non-GAAP Financial Measures:
This press release includes 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 with 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” and has presented a detailed discussion of its reasons for including the non-GAAP financial measures and the limitations associated with those measures under the heading “Use of Non-GAAP Financial Measures.” Dell encourages investors to review the reconciliation and the non-GAAP discussion 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, planned capital expenditures, storage growth opportunities, anticipated customer demand, including seasonal trends and commercial momentum, enterprise solutions strategies, component costs, cost controls, supply chain improvements, and new products, as well as the financial guidance with respect to revenue and non-GAAP operating income) 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 cost-cutting measures; Dell’s ability to effectively manage the growth of its distribution capabilities and add to its product and services offerings; Dell’s ability to effectively manage periodic product and services transitions; weak global economic conditions and instability in financial markets; Dell’s ability to generate substantial non-U.S. net revenue; weak economic conditions and additional regulation affecting Dell’s financial services activities; Dell’s ability to achieve favorable pricing from its vendors; Dell’s ability to deliver consistent quality products and services; Dell’s reliance on third-party suppliers for product components, including reliance on several single-sourced or limited-sourced suppliers; successful implementation of Dell’s acquisition strategy; Dell’s product, customer, and geographic sales mix, and seasonal sales trends; access to the capital markets by Dell or its customers; loss of government contracts; the risk of temporary suspension or debarment from contracting with U.S. federal, state and local governments as a result of settlements of an SEC investigation by Dell and Dell’s Chairman and CEO; 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; Dell’s ability to obtain licenses to intellectual property developed by others on commercially reasonable and competitive terms; information technology and manufacturing infrastructure disruptions or breaches of data security; Dell’s ability to hedge effectively its exposure to fluctuations in foreign currency exchange rates and interest rates; counterparty default; unfavorable results of legal proceedings; expiration of tax holidays or favorable tax rate structures, or unfavorable outcomes in tax audits and other compliance matters; 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 Jan. 28, 2011. In particular, Dell’s expectations with regard to revenue and non-GAAP operating income for the full fiscal year ending Feb. 3, 2012 assume, among other matters, that there is no significant decline in economic conditions generally or demand growth specifically, no significant change in product mix patterns, Dell’s ability to realize its pipeline opportunities, no supply chain disruptions, and no significant adverse component pricing or supply movements. Dell assumes no obligation to update its forward-looking statements.

Consolidated statements of income, financial position and cash flows and other financial data follow.
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