Dell 1999 Annual Report Download

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DELL INC (4331)
10-K
Annual report pursuant to section 13 and 15(d)
Filed on 04/14/2000
Filed Period 01/28/2000

Table of contents

  • Page 1
    DELL INC (4331) 10-K Annual report pursuant to section 13 and 15(d) Filed on 04/14/2000 Filed Period 01/28/2000

  • Page 2
    ...Way, Round Rock, Texas 78682-2244 (Address, including Zip Code, of registrant's principal executive offices) (512) 338-4400 (Registrant's telephone number, including area code) Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, par value $.01 per share Preferred Stock Purchase...

  • Page 3
    ... and accelerate procurement and support processes. Through these custom sites, the Company offers the customer paperless purchase orders, approved product configurations, global pricing, real-time order tracking, purchasing history and account team information. The Company currently provides more...

  • Page 4
    ... The Company's corporate headquarters are located in Round Rock, Texas, and its manufacturing facilities are located in Austin, Texas; Nashville, Tennessee; Eldorado do Sul, Brazil; Limerick, Ireland; Penang, Malaysia; and Xiamen, China. See "Item 2 - Properties." For financial information about the...

  • Page 5
    ... a number of specialized services, including custom hardware and software integration, leasing and asset management, network installation and support and onsite service. The Company's direct relationships with customers and its extensive online capabilities via www.dell.com enhance service delivery...

  • Page 6
    ..., configure and purchase systems online and access volumes of support and technical information. The Company receives in excess of 2.6 million visits per week to www.dell.com, where it maintains more than 80 country-specific sites. The Company currently maintains more than 40,000 customized Premier...

  • Page 7
    ... all technical support programs maintain close contact with the Company's manufacturing and product design groups and have online access to each customer's original system configuration and service history. All of the Company's systems include a basic limited warranty ranging from one to three years...

  • Page 8
    ... contact, through the manufacturing process to post-sale service and support. The systems assist the Company in tracking key information about its customers. Using its database to assess purchasing trends, advertising effectiveness and customer and product groupings, the Company targets marketing...

  • Page 9
    ... operations in future periods to differ materially from those currently expected or desired. General economic and industry conditions Any general economic, business or industry conditions that cause customers or potential customers to reduce or delay their investments in computer systems could have...

  • Page 10
    ...interest rates. In addition, the Company utilizes equity instrument contracts to execute repurchases of its common stock under its Board-authorized stock repurchase program. Some of these instruments and contracts may involve elements of market and 11 credit risk in excess of the amounts recognized...

  • Page 11
    ... General Manager, U.S. Relationship Group Senior Vice President and Chief Information Officer Vice President and Co-General Manager, Worldwide Home and Small Business Group Senior Vice President and General Manager, U.S. Public Sector Vice President and General Manager, Americas International Group...

  • Page 12
    ... Group. He shares responsibility for all product development, manufacturing, sales, marketing and customer service activities within the Home and Small Business Group. Mr. Muehleman previously served as Vice President and General Manager of the Company's Small Business Division of the Americas...

  • Page 13
    ...owned office buildings and 1.3 million square feet of leased office space. These buildings, comprising the Company's Round Rock campus, house the Company's sales, marketing and support staff for the Americas region, as well as the Company's executive headquarters and administrative support functions...

  • Page 14
    ...during the fourth quarter of fiscal year 2000. 17 PART II ITEM 5 -MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Market Information The Company's common stock is traded on The Nasdaq National Market under the symbol DELL. Information regarding the market prices of the Company...

  • Page 15
    ... number two worldwide, as compared to the number two and number three positions for the previous year, respectively. Unit sales increased across all product lines during fiscal year 2000. The Company's enterprise systems, which include servers, workstations and storage products, continued to build...

  • Page 16
    ... call center in Eldorado do Sul, Brazil. During fiscal year 2000, the Company increased its focus on the Internet infrastructure market. This includes initiatives such as the formation of the Internet Partner Division, which will provide customers the servers, storage and services to build, expand...

  • Page 17
    ..., general and administrative expenses as a percentage of net revenue for fiscal year 2000 resulted from significant net revenue growth. The Company continues to invest in research, development and engineering activities to support its continued goal of improving and developing efficient procurement...

  • Page 18
    ... $1.5 billion at year-end in fiscal 1999. During fiscal year 2000, the Company continued to improve upon its efficient asset management. Days of sales in accounts receivable decreased two days from fiscal year 1999 to 34 days, while days of supply in inventory remained flat in fiscal year 2000. This...

  • Page 19
    ... experience any material failures as a result of the date change. Through the Product Group Y2K Project, the Company analyzed the Year 2000 readiness status of the computer hardware manufactured by the Company and implemented an ongoing Year 2000 testing and monitoring program for all new hardware

  • Page 20
    ... of operation. All costs were charged to expense as incurred, and did not include potential costs related to any customer issues or other claims or the cost of internal software and hardware replaced in the normal course of business. Risks/ Contingency Plans Prior to the Year 2000 date change, the...

  • Page 21
    ..., Texas February 10, 2000 28 DELL COMPUTER CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION (in millions) January 28, 2000 ASSETS Current assets: Cash and cash equivalents Short term investments Accounts receivable, net Inventories Other Total current assets Property, plant and equipment...

  • Page 22
    ... Research, development and engineering Purchased in-process research and development Total operating expenses Operating income Financing and other Income before income taxes Provision for income taxes Net income Earnings per common share: Basic Diluted Weighted average shares outstanding: Basic...

  • Page 23
    ...and support programs. The Company is managed on a geographic basis with those geographic segments being the Americas, Europe and Asia-Pacific and Japan regions. The Company markets and sells its computer products and services under the Dell® brand name directly to its various customer groups. These...

  • Page 24
    ... The Company conducts operations worldwide through wholly owned subsidiaries; such operations are primarily concentrated in the North America, Europe and Asia-Pacific and Japan regions. Fiscal Year - During fiscal year 1999, the Company changed its fiscal year from the 52 or 53 week period ending on...

  • Page 25
    ... expense has been recognized for options granted with an exercise price equal to market value at the date of grant or in connection with the employee stock purchase plan. Capitalized Software - During fiscal year 2000, the Company adopted the American Institute of Certified Public Accountants...

  • Page 26
    ... estimated fair value of foreign currency purchased option contracts is based on market quoted rates at the applicable balance sheet date and the Black-Scholes options pricing model. Considerable judgment is necessary in interpreting market data to develop estimates of fair value. Accordingly, the...

  • Page 27
    ... is equal to the exchange rate differential from the time the contract is entered into until the time it is settled. Transactions with firm foreign currency commitments are generally hedged using foreign currency forward contracts for periods not exceeding three months. At January 28, 2000, the...

  • Page 28
    ... Fiscal Year Ended January 29, 1999 (in millions) $ 118 45 25 - - 188 (2) (49) (51) 137 January 28, 2000 Deferred tax assets: Deferred service contract revenue Inventory and warranty provisions Provisions for product returns and doubtful accounts Loss carryforwards Credit carryforwards Deferred tax...

  • Page 29
    ... on diluted earnings per common share for fiscal years 2000 and 1999. NOTE 8 - Benefit Plans Incentive and Employee Stock Purchase Plans - The Dell Computer Corporation Incentive Plan (the "Incentive Plan"), which is administered by the Compensation Committee of the Board of Directors, provides for...

  • Page 30
    ... rate Volatility Dividends 5 years 6 months 5.81% 51.03% 0% Fiscal Year Ended January 29, 1999 5 years 6 months 5.42% 52.12% 0% February 1, 1998 5 years 6 months 6.28% 54.92% 0% Had the Company accounted for its Incentive Plan and employee stock purchase plan by recording compensation expense based...

  • Page 31
    ... leasing and asset management services to the Company's customers. Newcourt's ultimate parent is The CIT Group, Inc. The Company has a 70% equity interest in DFS; however, as the Company does not exercise control over DFS, it accounts for the investment under the equity method. During fiscal year...

  • Page 32
    ...'s reportable segments: Fiscal Year 2000 Eliminations and Purchased Asia Pacific Research & and Japan Development (in millions) $ 1,796 $ - 2 (55) $ 1,798 $ (55) $ 97 $ (194) Americas Sales to unaffiliated customers Transfers between geographic areas Total sales Operating income Corporate expenses...

  • Page 33
    ...,327 $ $ Net revenue by product group includes worldwide service revenue. No single customer accounted for more than 10% of the Company's consolidated net revenues during fiscal years 2000, 1999 and 1998. NOTE 13 - Supplemental Consolidated Financial Information January 28, January 29, 2000 1999...

  • Page 34
    ... expenses Purchased research and development Engineering expenses Financing and other: Interest expense Investment and other income, net Supplemental Consolidated Statement of Cash Flows Information Changes in operating working capital accounts: Accounts receivable, net Inventories Accounts payable...

  • Page 35
    ... under "Item 1 - Business - Executive Officers of the Company," is incorporated by reference from the Company's definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates. PART IV ITEM 14...

  • Page 36
    ... restated (incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1993, Commission File No. 0-17017) 10.5* - Dell Computer Corporation 1993 Stock Option Plan (incorporated by reference to Exhibit 10.36 to the Company's Registration...

  • Page 37
    ... Executive Incentive Bonus Plan, adopted July 17, 1998 (incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10K for the fiscal year ended January 29, 1999, Commission File No. 0-17017) 10.15* - Amended and Restated Dell Computer Corporation 1998 Broad Based Stock Option...

  • Page 38
    ...14, 2000 Director April 14, 2000 56 EXHIBIT INDEX Exhibit No. Description of Exhibit 3.1 - Certificate of Incorporation, dated October 21, 1987 and filed October 22, 1987 (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 30...

  • Page 39
    ... Executive Incentive Bonus Plan, adopted July 17, 1998 (incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10K for the fiscal year ended January 29, 1999, Commission File No. 0-17017) 10.15* - Amended and Restated Dell Computer Corporation 1998 Broad Based Stock Option...

  • Page 40
    ... from PricewaterhouseCoopers LLP regarding change in accounting principle - Subsidiaries of the Company - Consent of PricewaterhouseCoopers LLP - Financial Data Schedule * Identifies Exhibit that consists of or includes a management contract or compensatory plan or arrangement. †Filed herewith.

  • Page 41
    ... be equal to the product of the closing sales price of Dell's common stock on such day multiplied by the number of shares of Dell common stock outstanding on such day) by (2) the number of trading days in such period. For purposes of this employment agreement, Dell shall have "cause" to terminate my...

  • Page 42
    ... but not limited to: marketing strategies; new product research; pending projects and proposals; proprietary production processes; research and development strategies; and similar items. Other valuable, confidential information and trade secrets of Dell, its affiliates, its customers or other third...

  • Page 43
    ...abroad of personal knowledge or technical experience acquired in the United States. If I have any doubts regarding whether particular information is Controlled Technology or Software, I will promptly consult my manager, Dell's Legal Department, or Dell's Global Compliance Organization. 8. I will not...

  • Page 44
    12/10/99 Date NOTE: Schedule A and disclosure statements are not a part of this Agreement or accepted by Dell if the Schedule has not been initialed by a member of Dell's

  • Page 45
    1 EXHIBIT 18 February 10, 2000 Board of Directors Dell Computer Corporation One Dell Way Round Rock, Texas 78682 Dear Directors: We are providing this letter to you for inclusion as an exhibit to your Form 10-K filing pursuant to Item 601 of Regulation S-K. We have audited the consolidated ...

  • Page 46
    ...P. Corp Dell Receivables L.P. Dell Services Corporation Dell Services L.P. Dell USA Corporation Dell USA L.P. Dell World Trade L.P. California Delaware Texas Delaware Texas Brazil Delaware Ontario, Canada Delaware Delaware Chile Delaware Mexico Delaware Texas Delaware Mexico Delaware Texas Delaware...

  • Page 47
    .... Dell Computer Corporation Dell Computer Corporation K.K. Dell Computer Limited Dell Computer PTY. Limited Dell Products (Asia) B.V., Taiwan Branch Finland Madeira Madeira Malaysia India China China China China China Thailand Hong Kong Singapore Korea Japan New Zealand Australia Taiwan

  • Page 48
    ... by reference in the Registration Statement on Form S-8 (Nos. 33-24621, 33-54577, 33-31812, 33-63273, 33-4583, 333-66415 and 333-58039) of Dell Computer Corporation of our report dated February 10, 2000 appearing on page 28 of this Form 10-K. PRICEWATERHOUSECOOPERS LLP Austin, Texas April 10, 2000

  • Page 49
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