SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
The tables on the following pages set forth, for the periods indicated, a reconciliation of non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share (collectively, the “non-GAAP financial measures”) to the most comparable GAAP financial measures. These non-GAAP financial measures may not be directly comparable to similarly titled measures reported by other companies. See “Use of Non-GAAP Financial Measures” following the tables for additional information regarding Dell’s reasons for including the non-GAAP financial measures and for material limitations with respect to the usefulness of these measures.
DELL INC. | |||||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||||
(in millions, except per share data and percentages) | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Three Months Ended | % Growth Rates | ||||||||||||||||||||||
January 28, | October 29, | January 29, | |||||||||||||||||||||
2011 | 2010 | 2010 | Sequential | Yr. to Yr. | |||||||||||||||||||
GAAP gross margin | $ | 3,291 | $ | 3,003 | $ | 2,469 | 10 | % | 33 | % | |||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||
Amortization of intangibles | 69 | 71 | 71 | ||||||||||||||||||||
Severance and facility actions | 6 | 4 | 55 | ||||||||||||||||||||
Acquisition-related | 2 | - | 1 | ||||||||||||||||||||
Non-GAAP gross margin | $ | 3,368 | $ | 3,078 | $ | 2,596 | 9 | % | 30 | % | |||||||||||||
GAAP operating expenses | $ | 2,146 | $ | 1,979 | $ | 1,959 | 8 | % | 10 | % | |||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||
Amortization of intangibles | (16 | ) | (18 | ) | (15 | ) | |||||||||||||||||
Severance and facility actions | (11 | ) | (27 | ) | (31 | ) | |||||||||||||||||
Acquisition-related | (37 | ) | (23 | ) | (115 | ) | |||||||||||||||||
Non-GAAP operating expenses | $ | 2,082 | $ | 1,911 | $ | 1,798 | 9 | % | 16 | % | |||||||||||||
GAAP operating income | $ | 1,145 | $ | 1,024 | $ | 510 | 12 | % | 124 | % | |||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||
Amortization of intangibles | 85 | 89 | 86 | ||||||||||||||||||||
Severance and facility actions | 17 | 31 | 86 | ||||||||||||||||||||
Acquisition-related | 39 | 23 | 116 | ||||||||||||||||||||
Non-GAAP operating income | $ | 1,286 | $ | 1,167 | $ | 798 | 10 | % | 61 | % | |||||||||||||
GAAP net income | $ | 927 | $ | 822 | $ | 334 | 13 | % | 177 | % | |||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||
Amortization of intangibles | 85 | 89 | 86 | ||||||||||||||||||||
Severance and facility actions | 17 | 31 | 86 | ||||||||||||||||||||
Acquisition-related | 39 | 23 | 116 | ||||||||||||||||||||
Other (1) | - | (72 | ) | - | |||||||||||||||||||
Aggregate adjustment for income taxes | (50 | ) | (18 | ) | (78 | ) | |||||||||||||||||
Non-GAAP net Income | $ | 1,018 | $ | 875 | $ | 544 | 16 | % | 87 | % | |||||||||||||
GAAP earnings per share - diluted | $ | 0.48 | $ | 0.42 | $ | 0.17 | 14 | % | 182 | % | |||||||||||||
Non-GAAP adjustments per share - diluted | 0.05 | 0.03 | 0.11 | ||||||||||||||||||||
Non-GAAP earnings per share - diluted | $ | 0.53 | $ | 0.45 | $ | 0.28 | 18 | % | 89 | % | |||||||||||||
GAAP Diluted WAS | 1,938 | 1,949 | 1,971 | ||||||||||||||||||||
Percentage of Total Net Revenue: |
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GAAP gross margin | 21.0 | % | 19.5 | % | 16.6 | % | |||||||||||||||||
Non-GAAP adjustment | 0.5 | % | 0.5 | % | 0.8 | % | |||||||||||||||||
Non-GAAP gross margin | 21.5 | % | 20.0 | % | 17.4 | % | |||||||||||||||||
GAAP operating expenses | 13.7 | % | 12.8 | % | 13.2 | % | |||||||||||||||||
Non-GAAP adjustment | (0.4 | %) | (0.4 | %) | (1.1 | %) | |||||||||||||||||
Non-GAAP operating expenses | 13.3 | % | 12.4 | % | 12.1 | % | |||||||||||||||||
GAAP operating income | 7.3 | % | 6.7 | % | 3.4 | % | |||||||||||||||||
Non-GAAP adjustment | 0.9 | % | 0.9 | % | 2.0 | % | |||||||||||||||||
Non-GAAP operating income | 8.2 | % | 7.6 | % | 5.4 | % | |||||||||||||||||
Note: Percentage growth rates and ratios are calculated based on underlying data in thousands. | |||||||||||||||||||||||
(1) Other for the three months ended October 29, 2010 consists of Dell's receipt of a $72 million merger termination fee which on a GAAP basis is recorded in Interest and Other, Net. |
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