Dell Reports Fiscal Year 2014 First Quarter Financial Results

  Dell Reports Fiscal Year 2014 First Quarter Financial Results

  *Revenue of $14.1 billion
  *Enterprise Solutions, Services and Software revenue up 12 percent
  *GAAP earnings of $0.07 per share; non-GAAP earnings of $0.21 per share

Business Wire

ROUND ROCK, Texas -- May 16, 2013

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            3,172          2,999        6         %
software related
Total net revenue              14,074         14,422       (2        %)
                                                               
Cost of net revenue
Products                        9,244            9,330         (1        %)
Services, including            2,083          2,025        3         %
software related
Total cost of net revenue      11,327         11,355       0         %
                                                               
Gross margin                    2,747            3,067         (10       %)
                                                               
Operating expenses
Selling, general and            2,208            2,009         10        %
administrative
Research, development,         313            234          34        %
and engineering
Total operating expenses       2,521          2,243        12        %
                                                               
Operating income                226              824           (73       %)
                                                               
Interest and other, net        (68     )       (32     )     (114      %)
Income before income            158              792           (80       %)
taxes
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      $  0.08          $  -
per common share
                                                               
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            15.7    %        13.9    %
administrative
Research, development,          2.2     %        1.7     %
and engineering
Operating expenses              17.9    %        15.6    %
Operating income                1.6     %        5.7     %
Income before income            1.1     %        5.5     %
taxes
Net income                      0.9     %        4.4     %
Income tax rate                 17.6    %        19.8    %
                                                               
Average total
revenue/unit                 $  1,460         $  1,360
(approximate)
                                                               
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               2,029      2,169     (6      %)
peripherals
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               2,669        2,343      14      %
networking
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          (85    )    (6     )   NM      
income
% 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     612          550        11      %
services
Applications and business process      295        347       (15     %)
services
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      (80    )     (76    )
acquisition-related costs
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      4            -
assets
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       -            13
90 days or less), net
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        (17    )    (3     )
equivalents
                                                                    
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      10           12
acquisition-related
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      (70   )      (64   )
acquisition-related
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      80           76
acquisition-related
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      80           76
acquisition-related
Other ^(a)                              88           -
Aggregate adjustment for income        (122  )     (60   )
taxes
Non-GAAP net income                   $ 372       $ 761       (51     %)
                                                                
GAAP earnings per share - diluted     $ 0.07       $ 0.36       (81     %)
Non-GAAP adjustments per share -       0.14       0.07  
diluted
Non-GAAP earnings per share -         $ 0.21      $ 0.43      (51     %)
diluted
                                                                
                                                                
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.

Contact:

Dell
Media Contacts: 512-728-4100
David Frink, 512-728-2678
david_frink@dell.com
or
Jess Blackburn, 512-728-8295
jess_blackburn@dell.com
or
Investor Relations Contacts:
Robert Williams, 512-728-7570
robert_williams@dell.com
or
David Mehok, 512-728-4225
david_mehok@dell.com
 
Press spacebar to pause and continue. Press esc to stop.