SEC Filings

• Notice and Access and Interactive Year-in-Review

  Wed. Jun. 04, 2008
  by Robert L. Williams, Director - Investor Relations

  In preparation of our upcoming Annual Meeting of Stockholders on July 18^th in Austin, we filed our proxy documents this week and began mailing ‘notice’ to shareholders.  In the past, we mailed shareholders paper documents, including an annual report, proxy statement and voting instructions.  As a result of a U.S. Securities and Exchange Commission e-proxy rule, public companies are now allowed to provide their proxy materials over the Internet, which is commonly referred to as ‘notice and access.’

  So what’s different this year?  The e-proxy rule requires us to mail a ‘notice’ to shareholders.  This ‘notice’ provides instructions on how to ‘access’ proxy materials and related company information over the Internet, as well an option to continue receiving a paper copy of the proxy statement, annual report and voting instruction card.  We believe that this new process is important – it will conserve natural resources and reduce the costs of printing and distributing proxy materials.  Since we must provide this filing at least 40 days before the shareholders’ meeting, it will also provide shareholders with immediate access to the information they should review.

  Why are we blogging about it now?  It’s a big change and we wanted to make the transition as easy as possible.  We filed our proxy statement on Monday, June 2^nd and will begin mailing ‘notices’ to you this Friday, June 6^th.  Once you receive your notice in the mail, you can access the voting page online, where you will find:  the proxy statement, our annual report on form10-K, a link to our 2008 interactive year-in-review website and information on the time and location of our annual meeting of stockholders.

  In coordination with the online voting migration, we have re-designed our 2008 interactive year-in-review website that includes our chairman’s letter, a video from Michael, a synopsis of our key growth priorities, financial summary charts and easy-to-print PDF’s of all of the material on the site.  Additionally, we have included easy to access links to our shareholder meeting webpage and the proxy voting website for your convenience.  We encourage you to review the interactive review online and provide feedback on how you like the new format.  

  Proxy voting is an important means by which you as an investor can have a say in the business operations and activities of Dell.  Whether you plan to attend our annual meeting on July 18^th or not, we value your opinion and your vote.  Shareholder feedback enables us to serve you better.  We’re listening.

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• Dell Issues Private Placement Debt

  Thu. Apr. 17, 2008
  by Lynn A. Tyson, VP - Investor Relations

  Today we settled three tranches of debt (see 8k filing) that we issued earlier this week in private placement transactions: $600 million at 4.7% yield due April 15, 2013; $500 million at 5.65% yield due April 15, 2018; and $400 million at 6.5% yield due April 15, 2038. This debt is considered "investment grade" by various rating agencies - for example it is rated A2 - Stable by Moody's.

  As we discussed in our FY 2008 10K, filed on March 31, 2008, we use cash generated by operations as our primary source of liquidity and believe this cash is enough to support our business operations.  In FY 2008 we generated $3.9 billion in cash flow from operations, accessed $5.3bn in cash form a subsidiary outside of the United States, spent $4 billion on share repurchase, $2.2 billion on acquisitions and $831million on capital expenditures.  We ended the year with $9.5 billion in cash and investments.

  Like many multi-national companies, a substantial amount of our cash balances are held outside of the U.S. and so like other companies we have chosen to access the capital markets to supplement our liquidity in the United States - which means raise debt.   The last time Dell raised long term debt was in 1998. 

  We plan to use the funds we raised this week for general corporate purposes - which includes discretionary spending like share repurchase and acquisitions.  Share repurchase remains our primary use of cash.  Dell believes this is good for Dell and for our shareholders because it lowers our weighted average cost of capital enhancing our current capital structure.  

  We do plan on exchanging the debt we raised this week for public debt later this year.

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• Dell Driving Actions to Enhance Competitiveness and Optimize Operations

  Mon. Mar. 31, 2008
  by Lynn A. Tyson, VP - Investor Relations

  I know that sounds like a mouthful, so let me take a few minutes to discuss what we announced today.  In May of last year, we announced we were taking steps to improve the competiveness of our operating model, profitability and cash flow.  Restoring competitive advantage means fixing things in our business that will allow us to provide even more value to our customers - and investing in things that will allow us to deliver better and more products and services to our customers around the world.  

  Improving profitability means just that and this can be achieved by improving our cost position which is embedded in cost of goods sold (COGS) - like designing products that have the right features for our customers - things they want and value.  Operating expenses (Opex) is also a part of profitability and we believe we can do a better job of managing these expenses - things like reducing headcount (net of acquisitions) and moving more of our people to front line positions - positions that actually touch the customer.  And when you generate profits - cash flow follows.  At least this is the case for Dell.  On an annualized basis we typically generate operating free cash flow in excess of net income - so the more net income we generate - the more cash we generate.  And at the end of the day it's cash that fuels shareholder value.

  So in our press release we said we believe we have a $3 billion opportunity to reduce total costs - this includes both COGS and Opex.  Now this does not happen over night.  In fact we said we believe it will take three years to achieve an annualized savings of $3 billion.  This means that before you adjust for growth, we believe our costs at the end of our fiscal 2011 will be $3 billion lower than at the end of fiscal 2008.   A company can do several things with this benefit.  They can use it to strengthen their competitive position and invest back into their business which helps drive growth, they can use it to improve profitability, or they can do both.  We will use it for both - and the split will depend on a variety of things including marketplace dynamics and our growth initiatives.

  In our release we also announced that we will be closing our desktop manufacturing in Austin, Texas.   Over the last three years, driven by the massive shift in customer preference for notebooks - especially among consumers, industry forecasts for the rate of growth of desktops have declined from 10.8 percent to 3.6 percent.  And the desktop to notebook mix in the U.S. has declined from a 70/30 split in 2005 in favor of desktops to a 50/50 split today.  Our fiscal fourth quarter of last year reflects this change as we grew notebook units year over year by 37 percent and desktops by 10 percent.

  Lastly - in our release we announced we would undertake a strategic assessment of ownership and operating structure alternatives for our Dell Financial Services financing activities.  And that this assessment will primarily focus on the consumer and small/medium business aspect of this business.  We acquired the remaining 30 percent of DFS from our partner, CIT, in December of last year. 

  There is a lot of concern out there right now about the credit markets and we've been getting a lot of questions so let me clarify two things relative to Dell. 

  First, our assessment of our DFS business is unrelated to what is going on right now in the credit markets - we completed the acquisition and so the natural next step is to pursue our strategy, simple as that.  Many companies - GE and Target - to cite recent examples - often assess the ownership structure of their financing companies.  In our case we are primarily evaluating three key things:  (1) can DFS provide even better and most robust product offerings to our customers, (2) can we accelerate the investments we are making in DFS and, (3) are there more efficient ways to fund DFS.   Our assessment may result in no change, or a sale to or partnership with a fully dedicated financing company.

  Second, relative to our consumer financing receivables - less than 20 percent of our net customer receivables - or $1.6 billion - were to subprime customers.   This percentage is similar to what it was in our fiscal third quarter.  Based on our assessment of these customers financing receivables and the associated risks, we believe we are adequately reserved.  If you are interested in this topic I encourage you to read Note 2 Financial Instruments, and Note 6 Financial Services of our Fiscal 2008 10K that we filed today.

  To get an update on all of the initiatives we have underway at Dell - I encourage you to listen to our equity analyst meeting which will be held in Round Rock, Texas on Wednesday April 2^nd and Thursday April 3^rd.   You can reach the web cast and accompanying slides via this link: Dell Analyst Meeting.  If you can't listen right away - it will be up on our web site for a while.

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• Why SEC Filings are Important

  Tue. Nov. 06, 2007
  by Robert L. Williams, Director - Investor Relations

  Recently, we filed five 10-Qs and a 10-K for the periods between Q1FY'07 and Q2FY'08. I urge you to read these documents, which are found on our IR website here and with the SEC here, as they contain financial data and other qualitative information that's critical to making informed investment decisions. In light of these filings, I thought that in the spirit of 21^st Century IR and our efforts to provide greater transparency and democratization of information, it would be beneficial to current and perspective shareholders to have an "SEC Filings 101" discussion that talks about the requirements of such filings and why they're important to read.

  The SEC requires publicly traded companies to file annual and quarterly reports on a regular basis. The quarterly report (10-Q) must be filed within 40 days of the end of a fiscal quarter, while the annual report (10-K) must be filed within 60 days after the fiscal year end. Finally, there are "current reports" (8-Ks), which must be filed within four days of a material event such as an earnings announcement or significant acquisition or dispositions.  Another way of thinking about the SEC filings is to view them as follows:  the 10-Ks are the most detailed reports and give an annual overview of the company, the 10-Qs are quarterly updates of the 10-K, and the 8Ks provide current information about important events.

  Over the past year, Dell was unable to file its 10-Qs and 10-Ks because of our Audit Committee's internal investigation. But this is not to say the company went "radio silent" with our quarterly results, as preliminary financials were always publicly reported and corresponding 8-Ks filed, providing investors with an interim view of the company's performance. Now that the investigation is completed and the restatements made, we're able to file the delayed SEC documents and return to compliance with not just the SEC, but the NASDAQ as well.

  Admittedly, these documents read a bit dry (and can be quite lengthy), but the content within is golden for the investor community.

  So why are Qs and Ks important to investors? Well, beyond obtaining the detailed income statement, balance sheet, and cash flow statements, there are additional notes to the financial statements that investors often focus their attention on, and qualitative sections that help frame the context of the company's results. Of the documents we recently filed, the 10-K is a good place for an investor to start since it contains the most detailed information. The FY'07 10-K we filed last week, in particular, is commonly referred to as a "Super 10- K", since it contains not only FY'07 information, but all the relevant audited restated financial statements for the restatement period of Q1FY'03 to Q1FY'07 and the findings from the recently completed independent investigation.

  The 10-K sections, or "items", include discussions of our business history and current strategy, the macro-economic environment, the industry we operate in, and our competitors. There's information about seasonal trends that impact the business, and special operating costs that might arise. There's also detail on our management, executive compensation, property holdings and subsidiary information. Finally, and perhaps most importantly, is the Management Discussion & Analysis section (known as MD&A), which discusses management's view on past performance, expectations for future results, and how we intend to achieve those results.

  So I urge you to review these documents for a greater understanding of Dell's operations, environment, and future perspective. In conjunction with quarterly press releases, earnings calls, and other investor communications, SEC filings help paint a comprehensive picture of the state of the company.

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