Dell 1998 Annual Report Download - page 11

success in recent periods has been due in part to its asset management
practices, including its ability to achieve rapid inventory turns. The Company's
ability to aggressively manage its inventory has been enhanced by favorable
supply conditions in the industry. Less favorable supply conditions, as well as
other factors both within and beyond the Company's control, may require or
result in increased inventory levels in the future.
The Company's manufacturing process requires a high volume of quality components
that are procured from third party suppliers. Reliance on suppliers, as well as
industry supply conditions, generally involves several risks, including the
possibility of defective parts (which can adversely affect the reliability and
reputation of the Company's products), a shortage of components and reduced
control over delivery schedules (which can adversely affect the Company's
manufacturing efficiencies) and increases in component costs (which can
adversely affect the Company's profitability).
The Company has several single-sourced supplier relationships, either because
alternative sources are not available or the relationship is advantageous due to
performance, quality, support, delivery, capacity or price considerations. If
these sources are unable to provide timely and reliable supply, the Company
could experience manufacturing delays or inefficiencies, adversely affecting its
results of operations.
Risk on financial instruments
The Company regularly utilizes derivative instruments to hedge its exposure to
fluctuations in foreign currency exchange rates and 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 credit risk in
excess of the amounts recognized in the financial statements.
11
<PAGE> 13
Strength of infrastructure
The Company has grown at a rapid pace, requiring enhancement and expansion of
its management team, information systems, manufacturing operations and other
aspects of its infrastructure. The Company's continued success and profitability
partly depends on its ability to continue to improve its infrastructure
(particularly management and information systems) to keep pace with the growth
in its overall business activities.
Patent rights
The Company's continued business success may be largely dependent on its ability
to obtain licenses to intellectual property developed by others on commercially
reasonable and competitive terms. If the Company or its suppliers are unable to
obtain desirable technology licenses, the Company could be prohibited from
marketing products, could be forced to market products without desirable
features or could incur substantial costs to redesign its products, defend legal
actions or pay damages.
Year 2000
The Company's Year 2000 program is discussed in "Item 7 -- Management's
Discussion and Analysis of Financial Condition and Results of Operations
-- Year 2000."
TRADEMARKS AND SERVICE MARKS
Several U.S. trademarks and service marks appear in this Report. Dell, the Dell
logo, Dimension, Latitude, OptiPlex and PowerEdge are registered trademarks of
the Company, and DellWare, Gigabuys, ReadyWare and SelectCare are registered
service marks. Dell Precision, Inspiron, OptiFrame and PowerVault are trademarks
of the Company, and BusinessCare, BusinessCare Plus, Dell Plus, DirectLine,
Premier Access and Premier Pages are service marks. This Report may also contain
trademarks and tradenames of other entities; the Company disclaims proprietary
interest in the marks and names of others.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name, age and position of each of the persons
who were serving as executive officers of the Company as of March 31, 1999.
NAME AGE POSITION
---- --- --------
Michael S. Dell..... 34 Chairman of the Board, Chief Executive Officer and Director
Morton L. Topfer.... 62 Vice Chairman
Kevin B. Rollins.... 46 Vice Chairman
Paul D. Bell........ 38 Senior Vice President, Americas Home and Small Business
Group
G. Carl Everett, 48 Senior Vice President, Personal Systems Group
Jr. ..............
Jan Gesmar-Larsen... 38 Senior Vice President, and President -- Dell Europe, Middle