www.dell.com DDellell iiss aann EEqual-Opportunity/Affiqual-Opportunity/Affi rrmative-Actionmative-Action EEmployermployer DIRECT THE WORLD OVER DELL FISCAL 2006 IN REVIEW TThishis rreporteport wwasas mmanufacturedanufactured eentirelyntirely wwithith nnon-polluting,on-polluting, 110000 ppercentercent GGreen-ereen-e ccertifiertifi eedd wwindind eenergynergy aandnd pprintedrinted oonn 1100 ppercentercent poost-consumerst-consumer rrecycledecycled ppaper.aper. 662315de_cvr2315de_cvr bbc1-fc1c1-fc1 33/28/06/28/06 11:16:52:16:52 AAMM OPERATING RESULTS Fiscal-year ended Feb. 3, 2006((1)1) Jan. 28, 2005((2)2) % growth rates ((inin mmillions,illions, eexceptxcept pper-shareer-share ddata)ata) Net revenue $ 55,908 $ 49,205 14% Non-GAAP gross margin $ 10,288 $ 9,015 14% DDell,ell, tthehe DDellell llogo,ogo, PPowerEdge,owerEdge, PPowerVault,owerVault, PPowerConnect,owerConnect, DDellell PPrecision,recision, IInspiron,nspiron, LLatitude,atitude, OOptiPlex,ptiPlex, DDimension,imension, XXPSPS aandnd AAximxim aarere ttrademarksrademarks ooff DDellell IInc.nc. OOtherther ttrademarksrademarks aandnd ttraderade GAAP gross margin $ 9,950 $ 9,015 10% nnamesames uusedsed inin thisthis ddocumentocument referrefer eithereither toto thethe entitiesentities claimingclaiming thethe marksmarks andand names,names, oror toto Non-GAAP operating income $ 4,789 $ 4,254 13% ttheirheir pproducts.roducts. DDellell ddisclaimsisclaims pproprietaryroprietary iinterestnterest iinn tthehe mmarksarks aandnd nnamesames ooff oothers.thers. GAAP operating income $ 4,347 $ 4,254 2% SStatementstatements iinn thisthis rreporteport tthathat relaterelate toto futurefuture rresultsesults andand eeventsvents areare basedbased oonn tthehe ccompany’sompany’s Non-GAAP net income $ 3,825 $ 3,323 ccurrenturrent eexpectations.xpectations. AActualctual rresultsesults inin futurefuture periodsperiods mmayay differdiffer materiallymaterially fromfrom thosethose ccurrentlyurrently eexpectedxpected oror desireddesired becausebecause ofof a numbernumber ofof risksrisks andand uncertainties,uncertainties, includingincluding GAAP net income $ 3,572 $ 3,043 ggeneraleneral eeconomicconomic aandnd bbusinessusiness cconditions;onditions; tthehe llevelevel ooff ddemandemand fforor tthehe ccompany’sompany’s pproductsroducts aandnd sservices;ervices; tthehe llevelevel ooff iintensityntensity ooff ccompetitionompetition iinn tthehe ttechnologyechnology iindustryndustry aandnd tthehe ppricingricing Non-GAAP earnings per common share $ 1.56 $ 1.29 ppressuresressures tthathat hhaveave rresulted;esulted; tthehe ccompany’sompany’s aabilitybility ttoo ttimelyimely aandnd eeffectivelyffectively mmanageanage pperiodiceriodic GAAP earnings per common share $ 1.46 $ 1.18 pproductroduct transitions,transitions, aass wellwell asas componentcomponent availabilityavailability andand cost;cost; thethe company’scompany’s abilityability toto ddevelopevelop nnewew productsproducts bbasedased onon newnew oror evolvingevolving technologytechnology andand thethe market’smarket’s acceptanceacceptance Weighted average shares 2,449 2,568 ooff tthosehose pproducts;roducts; tthehe ccompany’sompany’s aabilitybility ttoo mmanageanage iitsts iinventorynventory llevelsevels ttoo mminimizeinimize eexcessxcess iinventory,nventory, ddecliningeclining iinventorynventory vvaluesalues andand oobsolescence;bsolescence; thethe product,product, customercustomer andand Total cash and investments $ 11,749 $ 14,101 ggeographiceographic ssalesales mmixix ooff aanyny pparticulararticular pperiod;eriod; tthehe ccompany’sompany’s aabilitybility ttoo eeffectivelyffectively mmanageanage Total assets $ 23,109 $ 23,215 iitsts ooperatingperating costs;costs; andand thethe effecteffect ofof armedarmed hostilities,hostilities, terrorism,terrorism, naturalnatural disastersdisasters oror public-public- hhealthealth iissuesssues oonn tthehe eeconomyconomy ggenerally,enerally, oonn tthehe llevelevel ooff ddemandemand fforor tthehe ccompany’sompany’s pproductsroducts Long-term debt $ 504 $ 505 aandnd sserviceservices andand onon thethe company’scompany’s abilityability toto managemanage itsits supplysupply andand deliverydelivery logisticslogistics inin suchsuch aann eenvironment.nvironment. AAdditionaldditional ddiscussioniscussion ooff tthesehese aandnd ootherther ffactorsactors aaffectingffecting tthehe ccompany’sompany’s Total stockholders’ equity $ 4,129 $ 6,485 bbusinessusiness aandnd pprospectsrospects isis containedcontained inin thethe company’scompany’s periodicperiodic fi lingslings withwith thethe U.S.U.S. SecuritiesSecurities aandnd EExchangexchange CCommission.ommission. NNote:ote: PPercentageercentage ggrowthrowth rratesates aandnd rratiosatios aarere ccalculatedalculated bbasedased oonn uunderlyingnderlying ddataata iinn tthousands.housands. ((1)1) ((2)2) RReferefer ttoo ppageage 2200 fforor ffootnoteootnote ddetails.etails. IInn aaddition,ddition, fforor a NNon-GAAPon-GAAP ttoo GGAAPAAP rreconciliationeconciliation fforor fi sscalcal 22006006 andand 22005,005, sseeee tthehe ““ItemizedItemized ReconciliationReconciliation bbetweenetween NNetet IIncomencome oonn a GGAAPAAP aandnd NNon-GAAPon-GAAP BBasis”asis” ssetet fforthorth iinn EExhibitxhibit 999.19.1 ttoo DDell’sell’s ccurrenturrent rreporteport oonn FFormorm 8-K8-K fi lleded oonn FFeb.eb. 116,6, 22006.006. TThishis ccurrenturrent ©©DellDell IInc.nc. rreport,eport, aalonglong wwithith DDell’sell’s ootherther rreportseports fi lleded wwithith tthehe SSecuritiesecurities aandnd EExchangexchange CCommission,ommission, iiss aaccessibleccessible tthroughhrough DDell’sell’s IInvestornvestor RRelationselations WWebeb ssiteite aatt 0 www.dell.com wwww.dell.com/investor,ww.dell.com/investor, oorr aatt tthehe SSEC’sEC’s WWebeb ssiteite aatt wwww.sec.gov.ww.sec.gov. DDesign:esign: PPericherich + PPartners,artners, LLtd.td. PPhotography:hotography: BBobob SStevenstevens PPhotographyhotography aandnd WWyattyatt MMcSpaddencSpadden PPrinter:rinter: SSandyAlexanderandyAlexander 662315de_cvr2315de_cvr iifc1-ibc1fc1-ibc1 33/27/06/27/06 77:51:23:51:23 PPMM To our Customers, Partners, Shareholders and Colleagues: In fi scal 2006, Dell continued to outpace the industry worldwide and in every region where we compete — achieving company records for shipments, revenue, operating income and earnings per share. Each milestone resulted from the global execution of our direct business model. It continues to give us a one-of-a-kind ability to listen to millions of customers daily, deliver what each defi nes as value and provide a superior experience. No other technology company can rival Dell’s know-how for gathering volumes of customer feedback, turning it over to accomplished, innovative teams of professionals across our business or in collaboration with strategic partners and delivering relevant technologies that meet or exceed customer expectations. More than ever, customers of all sizes, vertical markets, product segments and geographic locations chose Dell as a trusted partner. Unit shipments grew 19 percent to 37 million for the year, including more than 10 million systems in our fourth quarter alone — a milestone achievement in our industry. Overall revenue increased a healthy 14 percent, to $56 billion, with our non- U.S. operations fueling the fastest growth, increasing from 40 to 43 percent, an all-time high. Kevin B. Rollins 4 We are proud of the progress Dell has made in our fi rst 22 years as a company. PPresidentresident aandnd In fact, we view the company as just beginning to make its mark. We are CChiefhief EExecutivexecutive OOffiffi ccerer confi dent that we are best positioned to grow and gain an even larger share of our $1.4-trillion industry in the years ahead. The priorities resulting from our customer-focused approach are defi ned by Dell’s four, multi-year strategic corporate initiatives: driving Global Growth, achieving Product Leadership, enhancing the Customer Experience and developing our Winning Culture. Michael S. Dell 4 CChairmanhairman ooff tthehe BBoardoard 662315de_1-52315de_1-5 1 33/27/06/27/06 77:08:06:08:06 PPMM GLOBAL GROWTH Worldwide, Dell strengthened its position as the No. 1 provider of computer These facilities include: a more than $100-million, state-of-the-art manufacturing systems. We widened our lead by working with integrity and an intense sense of plant in Winston-Salem, N.C., our largest; 10 additional Dell Customer Contact responsibility to all of our stakeholders, including customers, investors, partners Centers in North America, Europe and Asia; a Dell Design Center in Singapore and ourselves. and a Dell Enterprise Command Center in Malaysia to increase support for our corporate customers in South Asia. Due to the tremendous drive and dedication of the Dell team, we have gained share every year since 1995 in almost every customer segment and product In China, where our products are available in more than 2,000 cities, shipments category in each of our top 15 countries. It is clear that our model is being increased 37 percent, and we doubled our manufacturing capacity in Xiamen. embraced throughout the world. Dell is poised for break-out growth in China, a country that is rapidly embracing the direct model as Internet usage continues to boom. Annual revenue in the Europe, Middle East and Africa region was up 19 percent and 21 percent in Asia-Pacifi c and Japan. Sales in the Americas were up 11 We also continued to invest in www.dell.com, one of the world’s highest- percent, with the countries outside the U.S. increasing revenue 31 percent. revenue Web sites. Handling