Dell today announced fiscal 2014 first quarter results, with
revenue of $14.1 billion, as the company grew revenue from
Enterprise Solutions, Services and Software 12 percent year over
year to $5.5 billion, or 8 percent growth, excluding the
acquisition of Quest Software. Pricing adjustments that affected
gross margins and continued acquisition-related costs in the
quarter resulted in GAAP earnings of $0.07 per share and non-GAAP
earnings of $0.21 per share.
“We made progress in building our enterprise solutions
capabilities in the first quarter and are confident in our strategy
to be the leading provider of end-to-end scalable solutions,” said
Brian Gladden, Dell chief financial officer. “In addition, we have
taken actions to improve our competitive position in key areas of
the business, especially in end-user computing, and it has affected
profitability. We’ll also continue to make important investments to
support our strategy and drive long-term profitability.”
Results
- Revenue in the quarter was $14.1
billion, a 2 percent decrease from the previous year.
- GAAP operating income for
the quarter was $226 million, or 1.6 percent of revenue.
Non-GAAP operating income was $590 million, or 4.2 percent
of revenue.
- GAAP earnings per share in the
quarter was 7 cents, down 81 percent from the previous year;
non-GAAP EPS was 21 cents, down 51 percent.
- Cash used in operations in the
quarter was $39 million. On a trailing, 12-month basis, Dell has
generated $3.4 billion in cash flow. Dell ended the quarter with
$13.2 billion in cash and investments.
Fiscal-Year 2014 First Quarter Results
First Quarter
(in millions)
FY14
FY13
Change
Revenue $ 14,074 $ 14,422 (2 )% Operating
Income (GAAP) $ 226 $ 824 (73 )% Net Income (GAAP) $ 130 $ 635 (79
)% EPS (GAAP) $ 0.07 $ 0.36 (81 )% Operating Income
(non-GAAP) $ 590 $ 1,010 (42 )% Net Income (non-GAAP) $ 372 $ 761
(51 )% EPS (non-GAAP) $ 0.21 $ 0.43 (51 )%
Information about Dell’s use of non-GAAP financial information
is provided under “Non-GAAP Financial Measures” below. Non-GAAP
financial information excludes amortization of purchased
intangibles, severance and facility-actions, acquisition-related
charges, costs incurred in Fiscal 2014 related to Dell’s proposed
merger, and other items. All comparisons in this press release are
year over year unless otherwise noted.
Operating Segments Summary:
As previously announced, Dell has realigned its global operating
segments to its end-to-end solutions portfolio in the Enterprise
Solutions Group, Dell Services, Dell Software Group, and End User
Computing Group.
- Enterprise Solutions
Group revenue was $3.1 billion, a 10 percent increase.
Operating income for the quarter was $136 million, a 71 percent
increase. Dell server and networking revenue increased 16 percent
as the company gained share in the calendar first quarter. Dell
networking continued to deliver strong growth, with a 24 percent
revenue increase, including a 46 percent growth in the company’s
Force10 business. Dell storage revenue declined 10 percent.
- Dell Services revenue grew 2
percent to $2.1 billion driven by an 11 percent increase in revenue
for infrastructure, cloud and security services. Support and
deployment revenue increased 2 percent and applications and
business process services declined 15 percent. Operating income was
$370 million, a 10 percent increase.
- Dell Software revenue was $295
million, resulting in an operating loss. Dell enhanced its software
capabilities during the quarter, investing in additional sales
capability and research and development. Consistent with the
company’s business strategy when it acquired Quest Software, this
business is on track to be accretive to earnings in the first
quarter of fiscal year 2015.
- End User Computing revenue was
$8.9 billion in the quarter, a 9 percent decrease. Operating income
for the quarter was $224 million, a 65 percent decrease. Dell
desktop and thin-client revenue declined 2 percent, mobility
revenue declined 16 percent, and software from third parties and
peripherals revenue declined 6 percent.
Company Outlook:
Given the company’s announcement on Feb. 5 of a definitive
merger agreement to take Dell private, the company is not providing
an outlook for the fiscal 2014 second quarter.
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 analyst call with Brian Gladden, CFO,
and Tom Sweet, corporate controller, will be webcast live today at
3:45 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 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 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: effects of our proposed
merger; 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 1, 2013. Factors or
risks that could cause our actual results to differ materially from
the results we anticipate also include: (1) the occurrence of
any event, change or other circumstances that could give rise to
the termination of the merger agreement; (2) the inability to
complete the proposed merger due to the failure to obtain
stockholder approval for the proposed merger or the failure to
satisfy other conditions to completion of the proposed merger,
including that a governmental entity may prohibit, delay or refuse
to grant approval for the consummation of the transaction;
(3) the failure to obtain the necessary financing arrangements
set forth in the debt and equity commitment letters delivered
pursuant to the merger agreement; (4) risks related to
disruption of management’s attention from the Company’s ongoing
business operations due to the transaction; and (5) the effect
of the announcement of the proposed merger on the Company’s
relationships with its customers, operating results and business
generally. Dell assumes no obligation to update its forward-looking
statements.
Additional Information and Where to
Find It
In connection with the proposed merger transaction, the Company
filed with the SEC an amended preliminary proxy statement and other
documents relating to the proposed merger on May 13, 2013. When
completed, a definitive proxy statement and a form of proxy will be
filed with the SEC and mailed to the Company’s stockholders.
Stockholders are urged to read the definitive proxy statement when
it becomes available and any other documents to be filed with the
SEC in connection with the proposed merger or incorporated by
reference in the proxy statement because they will contain
important information about the proposed merger.
Investors will be able to obtain a free copy of documents filed
with the SEC at the SEC’s website at http://www.sec.gov. In
addition, investors may obtain a free copy of the Company’s filings
with the SEC from the Company’s website at
http://content.dell.com/us/en/corp/investor-financial-reporting.aspx
or by directing a request to: Dell Inc. One Dell Way, Round Rock,
Texas 78682, Attn: Investor Relations, (512) 728-7800,
investor_relations@dell.com.
The Company and its directors, executive officers and certain
other members of management and employees of the Company may be
deemed “participants” in the solicitation of proxies from
stockholders of the Company in favor of the proposed merger.
Information regarding the persons who may, under the rules of the
SEC, be considered participants in the solicitation of the
stockholders of the Company in connection with the proposed merger
and their direct or indirect interests, by security holdings or
otherwise, which may be different from those of the Company’s
stockholders generally, will be set forth in the proxy statement
and the other relevant documents to be filed with the SEC. You can
find information about the Company’s executive officers and
directors in its Annual Report on Form 10-K for the fiscal year
ended February 1, 2013 and in its definitive proxy statement filed
with the SEC on Schedule 14A on May 24, 2012.
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)
(unaudited)
Three Months Ended % Growth Rates May
3, May 4, 2013 2012 Yr. to Yr.
Net revenue Products $ 10,902 $ 11,423 (5 %) Services,
including software related 3,172 2,999
6 %
Total net revenue
14,074 14,422 (2 %) Cost of net
revenue Products 9,244 9,330 (1 %) Services, including software
related 2,083 2,025 3 % Total cost of
net revenue 11,327 11,355 0 %
Gross margin 2,747 3,067 (10 %) Operating expenses Selling,
general and administrative 2,208 2,009 10 % Research, development,
and engineering 313 234 34 % Total
operating expenses 2,521 2,243 12 %
Operating income 226 824 (73 %) Interest and other,
net (68 ) (32 ) (114 %) Income before income taxes
158 792 (80 %) Income tax provision 28 157
(82 %) Net income $ 130 $ 635 (79 %)
Earnings per share: Basic $ 0.07 $ 0.36 (81 %)
Diluted $ 0.07 $ 0.36 (81 %)
Cash dividends declared per common
share
$
0.08
$ - Weighted average shares outstanding: Basic 1,748 1,759
(1 %) Diluted 1,761 1,774 (1 %)
Percentage of
Total Net Revenue:
Gross margin 19.5 % 21.3 % Selling, general and administrative 15.7
% 13.9 % Research, development, and engineering 2.2 % 1.7 %
Operating expenses 17.9 % 15.6 % Operating income 1.6 % 5.7 %
Income before income taxes 1.1 % 5.5 % Net income 0.9 % 4.4 %
Income tax rate 17.6 % 19.8 %
Average total revenue/unit
(approximate)
$
1,460
$ 1,360 Note: Percentage growth rates and ratios are
calculated based on underlying data in thousands.
DELL INC. Segment Information (in millions,
except percentages) (unaudited)
Three Months Ended
% Growth Rates May 3, May 4,
2013(a)
2012 Yr. to Yr.
End User
Computing ("EUC"):
Net Revenue: Desktops and Thin Client $ 3,273 $ 3,335 (2 %)
Mobility 3,618 4,328 (16 %) Third-Party software and peripherals
2,029 2,169 (6 %) Total EUC Revenue
8,920 9,832 (9 %) External EUC revenue
8,714 9,632 Internal EUC revenue 206 200 Operating income:
EUC operating income 224 639
(65 %) % of segment revenue 2.5 % 6.5 % % of total segment
operating income 35 % 61 %
Enterprise
Solutions Group ("ESG"):
Net Revenue: Servers, peripherals, and networking 2,669 2,343 14 %
Storage 424 473 (10 %) Total ESG
revenue 3,093 2,816 10 % External ESG
revenue 2,959 2,681 Internal ESG revenue 134 135 Operating income:
ESG operating income 136
79 71 % % of segment revenue 4.4 % 2.8 % % of total segment
operating income 21 % 8 %
Dell Software
Group:
Net Revenue: Total Dell Software Group revenue
295 38 NM Operating income:
Dell Software Group operating income
(85 ) (6 ) NM % of segment revenue -28.7 % -16.0 % %
of total segment operating income -13 % -1 %
Dell
Services:
Net Revenue: Support and deployment 1,202 1,176 2 % Infrastructure,
cloud, and security services 612 550 11 % Applications and business
process services 295 347 (15 %) Total
Dell Services revenue 2,109 2,073 2 %
External Dell Services revenue 2,106 2,071 Internal Dell Services
revenue 3 2 Operating income: Dell Services
operating income $ 370 $ 338 10 % % of segment
revenue 17.6 % 16.3 % % of total segment operating income 57 % 32 %
Reconciliation to
consolidated net revenue:
Total segment revenue $ 14,417 $ 14,759 Less internal revenue
(343 ) (337 ) Total consolidated net revenue $ 14,074
$ 14,422
Reconciliation to
consolidated operating income:
Total segment operating income $ 645 $ 1,050 Unallocated corporate
expenses(b) (55 ) (40 ) Amortization of intangible assets (196 )
(110 ) Severance and facility actions and acquisition-related costs
(80 ) (76 ) Other (c) (88 ) - Total
consolidated operating income $ 226 $ 824 (a)
Includes the results of Dell's Fiscal 2013 acquisitions. (b)
Unallocated corporate expenses include broad based long-term
incentives, certain short-term incentive compensation expenses, and
other corporate items that are not allocated to Dell's reporting
segments. (c) Other includes expenses associated with Dell's
proposed merger and retention cash bonus awards granted to certain
key employees in the first quarter of Fiscal 2014. Note:
Percentage growth rates and ratios are calculated based on
underlying data in thousands.
DELL INC. Condensed
Consolidated Statement of Financial Position (in millions,
unaudited)
May 3, February 1,
2013 2013
Assets:
Current assets: Cash and cash equivalents $ 10,419 $ 12,569
Short-term investments 486 208 Accounts receivable, net 6,440 6,629
Short-term financing receivables, net 2,991 3,213 Inventories, net
1,387 1,382 Other current assets 3,936 3,967 Total
current assets 25,659 27,968 Property, plant and equipment, net
2,136 2,126 Long-term investments 2,303 2,565 Long-term financing
receivables, net 1,383 1,349 Goodwill 9,289 9,304 Purchased
intangible assets, net 3,176 3,374 Other non-current assets
845 854 Total assets 44,791 47,540
Liabilities and
Stockholders' Equity:
Current liabilities: Short-term debt 3,133 3,843 Accounts payable
10,990 11,579 Accrued and other 3,402 3,644 Short-term deferred
revenue 4,265 4,373 Total current liabilities 21,790
23,439 Long-term debt 4,115 5,242 Long-term deferred revenue 3,963
3,971 Other non-current liabilities 4,163 4,187 Total
liabilities 34,031 36,839 Total Dell stockholders' equity
10,739 10,680 Noncontrolling interest 21 21 Total
stockholder's equity 10,760 10,701 Total liabilities
and equity $ 44,791 $ 47,540
DELL INC.
Condensed Consolidated Statements of Cash Flows and Related
Financial Highlights (in millions, except ratios) (unaudited)
Three Months Ended May 3, May 4,
2013 2012 Cash flows from operating activities: Net
income $ 130 $ 635 Adjustments to reconcile net income to net cash
provided by operating activities: (169 ) (773 )
Change in cash from operating activities (39 ) (138 )
Cash flows from investing activities: Investments: Purchases
(329 ) (673 ) Maturities and sales 317 640 Capital expenditures
(158 ) (142 ) Proceeds from the sale of facility, land, and other
assets 4 - Collections on purchased financing receivables 29 55
Acquisition of business, net of cash
received
- (245 )
Change in cash from investing
activities
(137 ) (365 ) Cash flows from financing
activities: Repurchase of common stock - (324 ) Cash dividends paid
(142 ) - Issuance of common stock under employee plans 24 38
Issuance (repayment) of commercial paper
(maturity 90 days or less), net
- 13 Proceeds from debt 547 596
Repayments of debt
(2,384 ) (863 ) Other (2 ) 8
Change in cash from financing
activities
(1,957 ) (532 )
Effect of exchange rate changes on cash
and cash equivalents
(17 ) (3 )
Change in cash and cash equivalents
(2,150 ) (1,038 )
Cash and cash equivalents at beginning of
period
12,569 13,852
Cash and cash equivalents at end of
period
$ 10,419 $ 12,814
Ratios:
Days of sales outstanding (a) 45 43 Days supply in inventory 11 12
Days in accounts payable (87 ) (87 ) Cash conversion
cycle (31 ) (32 ) (a) 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 May 3, 2013, and May 4, 2012, DSO and days of customer shipments
not yet recognized were 41 and 4 days, and 39 and 4 days,
respectively. Note: Ratios are calculated based on
underlying data in thousands.
USE OF NON-GAAP FINANCIAL MEASURES
Dell uses non-GAAP financial measures to supplement the
financial information presented on a GAAP basis. Dell believes that
excluding certain items from Dell’s GAAP results allows management
to better understand Dell’s consolidated financial performance from
period to period and in relationship to the operating results of
our segments, as management does not believe that the excluded
items are reflective of Dell’s underlying operating performance.
Dell also believes that excluding certain items from Dell’s GAAP
results allows management to better project Dell’s future
consolidated financial performance because forecasts are developed
at a level of detail different from that used to prepare GAAP-based
financial measures. Moreover, Dell believes these non-GAAP
financial measures will provide investors with useful information
to help them evaluate Dell’s operating results by facilitating an
enhanced understanding of Dell’s operating performance, and
enabling them to make more meaningful period to period
comparisons.
The non-GAAP financial measures presented in this report include
non-GAAP gross margin, non-GAAP operating expenses, non-GAAP
operating income, non-GAAP net income, and non-GAAP earnings per
share. These non-GAAP financial measures, as defined by Dell,
represent the comparable GAAP measures adjusted to exclude
severance and facility action costs and acquisition-related
charges, amortization of purchased intangible assets related to
acquisitions, costs incurred in Fiscal 2014 related to Dell’s
proposed merger, and special retention cash bonus awards granted to
certain key employees in the first quarter of Fiscal 2014 that will
be payable in March 2014. Non-GAAP net income and non-GAAP earnings
per share also includes the aggregate adjustment for income taxes
related to the exclusion of the above items. For more information
on each of these items and Dell’s reasons for excluding them, see
the detail below. In future fiscal periods, Dell may exclude such
items and may incur income and expenses similar to these excluded
items. Accordingly, the exclusion of these items and other similar
items in our non-GAAP presentation should not be interpreted as
implying that these items are non-recurring, infrequent, or
unusual.
There are limitations to the use of the non-GAAP financial
measures presented in this report. Dell’s non-GAAP financial
measures may not be comparable to similarly titled measures of
other companies. Other companies, including companies in Dell’s
industry, may calculate the non-GAAP financial measures differently
than Dell, limiting the usefulness of those measures for
comparative purposes. In addition, items such as amortization of
purchased intangible assets represent the loss in value of
intangible assets over time. The expense associated with this loss
in value is not included in the non-GAAP financial measures and
such measures, therefore, do not reflect the full economic effect
of such loss. Further, items such as severance and facility
actions, acquisition-related costs, and other charges that are
excluded from the non-GAAP financial measures can have a material
impact on earnings. Dell’s management compensates for the foregoing
limitations by relying primarily on GAAP results and using non-GAAP
financial measures supplementally or for projections when
comparable GAAP financial measures are not available. The non-GAAP
financial measures are not meant to be considered as indicators of
performance in isolation from or as a substitute for gross margin,
operating expenses, operating income, net income, and earnings per
share prepared in accordance with GAAP, and should be read only in
conjunction with financial information presented on a GAAP basis.
See below for reconciliations of each non-GAAP financial measure to
its most directly comparable GAAP financial measure. We encourage
you to review the reconciliations in conjunction with the
presentation of the non-GAAP financial measures for each of the
periods presented.
The following is a summary of the costs and other items excluded
from the most comparable GAAP financial measures to calculate
non-GAAP financial measures:
- Severance and Facility Actions and
Acquisition-related Costs - Severance and facility action costs are
primarily related to facilities charges, including accelerated
depreciation and severance and benefits for employees terminated
pursuant to cost synergies related to strategic acquisitions and
actions taken as part of a comprehensive review of costs.
Acquisition-related charges are expensed as incurred and consist
primarily of retention payments, integration costs, and other
costs. Retention payments include stock-based compensation and cash
incentives awarded to employees, which are recognized over the
vesting period. Integration costs primarily include IT costs
related to the integration of IT systems and processes, costs
related to the integration of employees, consulting expenses, and
for acquisitions made prior to Fiscal 2013, costs related to
full-time employees who were working on the integration. Severance
and facility actions and acquisition-related charges are
inconsistent in amount and are significantly impacted by the timing
and nature of these events. Therefore, although Dell may incur
these types of expenses in the future, it believes that eliminating
these charges for purposes of calculating the non-GAAP financial
measures presented below facilitates a more meaningful evaluation
of Dell’s current operating performance and comparisons to Dell’s
past operating performance.
- Amortization of Intangible Assets -
Amortization of purchased intangible assets consists primarily of
amortization of customer relationships, acquired technology,
non-compete covenants, and trade names purchased in connection with
business acquisitions. Dell incurs charges related to the
amortization of these intangibles, and those charges are included
in Dell’s Condensed Consolidated Financial Statements. Amortization
charges for purchased intangible assets are significantly impacted
by the timing and magnitude of Dell’s acquisitions. Accordingly,
these charges may vary in amount from period to period. Dell
excludes these charges for purposes of calculating the non-GAAP
financial measures presented below to facilitate a more meaningful
evaluation of Dell’s current operating performance and comparisons
to Dell’s past operating performance.
- Other Items - Dell also adjusts GAAP
financial results for expenses associated with Dell's proposed
merger. These expenses consist of professional fees incurred by
Dell in connection with Dell's proposed merger as well as the
reimbursement of transaction-related expenses incurred by certain
participants approved by a special committee of the Board of
Directors. In addition, Dell adjusts GAAP financial results for
special retention cash bonus awards granted to certain key
employees in the first quarter of Fiscal 2014 that will be payable
in March 2014. Dell is excluding these expenses for the purpose of
calculating the non-GAAP financial measures presented below because
Dell believes these items are outside our ordinary course of
business and do not contribute to a meaningful evaluation of Dell's
current operating performance or comparisons to Dell's past
operating performance.
- The aggregate adjustment for income
taxes is the estimated combined income tax effect for the
adjustments mentioned above. The tax effects are determined based
on the tax jurisdictions where the above items were incurred.
DELL INC. Reconciliation of Non-GAAP Financial
Measures (in millions, except per share data and percentages)
(unaudited)
Three Months Ended %
Growth Rates May 3, May 4, 2013
2012 Yr. to Yr. GAAP gross margin $
2,747 $ 3,067 (10 %) Non-GAAP adjustments: Amortization of
intangibles 140 88 Severance and facility actions and
acquisition-related 10 12 Other (a) 2 -
Non-GAAP gross margin $ 2,899 $ 3,167 (8 %)
GAAP operating expenses $ 2,521 $ 2,243 12 % Non-GAAP
adjustments: Amortization of intangibles (56 ) (22 ) Severance and
facility actions and acquisition-related (70 ) (64 ) Other (a)
(86 ) - Non-GAAP operating expenses $ 2,309
$ 2,157 7 % GAAP operating income $ 226 $ 824
(73 %) Non-GAAP adjustments: Amortization of intangibles 196
110 Severance and facility actions and acquisition-related 80 76
Other (a) 88 - Non-GAAP operating
income $ 590 $ 1,010 (42 %) GAAP net income $
130 $ 635 (79 %) Non-GAAP adjustments: Amortization of
intangibles 196 110 Severance and facility actions and
acquisition-related 80 76 Other (a) 88 - Aggregate adjustment for
income taxes (122 ) (60 ) Non-GAAP net income $ 372
$ 761 (51 %) GAAP earnings per share - diluted
$ 0.07 $ 0.36 (81 %) Non-GAAP adjustments per share - diluted
0.14 0.07 Non-GAAP earnings per share -
diluted $ 0.21 $ 0.43 (51 %) Diluted
WAS 1,761 1,774
Percentage of
Total Net Revenue:
GAAP gross margin 19.5 % 21.3 % Non-GAAP adjustment
1.1 % 0.7 % Non-GAAP gross margin 20.6 % 22.0
% GAAP operating expenses 17.9 % 15.6 % Non-GAAP adjustment
(1.5 %) (0.6 %) Non-GAAP operating expenses
16.4 % 15.0 % GAAP operating income 1.6 % 5.7 %
Non-GAAP adjustment 2.6 % 1.3 % Non-GAAP operating
income 4.2 % 7.0 % GAAP net income 0.9 % 4.4 %
Non-GAAP adjustment 1.7 % 0.9 % Non-GAAP net income
2.6 % 5.3 % (a) Other includes expenses
associated with Dell's proposed merger and retention cash bonus
awards granted to certain key employees in the first quarter of
Fiscal 2014. Note: Percentage growth rates and ratios are
calculated based on underlying data in thousands.
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