Dell Reports Strong Second Quarter Financial Results Driven by

Dell Reports Strong Second Quarter Financial Results Driven by Enterprise Solutions and Services

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
	July 29,			April 29,			July 30,
		2011			2011			2010		Sequential		Yr. to Yr.


GAAP gross margin	$	3,525		$	3,432		$	2,586		3	%	36	%

Non-GAAP adjustments:
Amortization of intangibles		74			71			70
Severance and facility actions		-			5			14
Acquisition-related		26			3			1
Non-GAAP gross margin	$	3,625		$	3,511		$	2,671		3	%	36	%


GAAP operating expenses	$	2,379		$	2,220		$	1,841		7	%	29	%

Non-GAAP adjustments:
Amortization of intangibles		(21	)		(21	)		(17	)
Severance and facility actions		-			(14	)		(10	)
Acquisition-related		(61	)		(50	)		(15	)
Non-GAAP operating expenses	$	2,297		$	2,135		$	1,799		8	%	28	%


GAAP operating income	$	1,146		$	1,212		$	745		(5	%)	54	%

Non-GAAP adjustments:
Amortization of intangibles		95			92			87
Severance and facility actions		-			19			24
Acquisition-related		87			53			16
Non-GAAP operating income	$	1,328		$	1,376		$	872		(3	%)	52	%


GAAP net income	$	890		$	945		$	545		(6	%)	63	%

Non-GAAP adjustments:
Amortization of intangibles		95			92			87
Severance and facility actions		-			19			24
Acquisition-related		87			53			16
Aggregate adjustment for income taxes		(66	)		(59	)		(43	)
Non-GAAP net Income	$	1,006		$	1,050		$	629		(4	%)	60	%


GAAP earnings per share - diluted	$	0.48		$	0.49		$	0.28		(2	%)	71	%
Non-GAAP adjustments per share - diluted		0.06			0.06			0.04
Non-GAAP earnings per share - diluted	$	0.54		$	0.55		$	0.32		(2	%)	69	%


GAAP Diluted WAS		1,871			1,923			1,960


Percentage of Total Net Revenue:

GAAP gross margin		22.5	%		22.9	%		16.6	%
Non-GAAP adjustment		0.7	%		0.5	%		0.6	%
Non-GAAP gross margin		23.2	%		23.4	%		17.2	%

GAAP operating expenses		15.2	%		14.8	%		11.8	%
Non-GAAP adjustment		(0.5	%)		(0.6	%)		(0.2	%)
Non-GAAP operating expenses		14.7	%		14.2	%		11.6	%

GAAP operating income		7.3	%		8.1	%		4.8	%
Non-GAAP adjustment		1.2	%		1.1	%		0.8	%
Non-GAAP operating income		8.5	%		9.2	%		5.6	%

GAAP net income		5.7	%		6.3	%		3.5	%
Non-GAAP adjustment		0.7	%		0.7	%		0.5	%
Non-GAAP net income		6.4	%		7.0	%		4.0	%

Note: Percentage growth rates and ratios are calculated based on underlying data in thousands.

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