Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549  
______________________
FORM 8-K
______________________
 CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 7, 2017
 ______________________
Dell Technologies Inc.
(Exact name of registrant as specified in its charter)
 ______________________

Delaware
 
001-37867
 
80-0890963
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
One Dell Way
Round Rock, Texas
 
78682
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (800) 289-3355
Not Applicable
(Former name or former address, if changed since last report)
______________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
 






Item 2.02    Results of Operations and Financial Condition.

On December 7, 2017, Dell Technologies Inc. (the “Company”) issued a press release announcing its financial results for its fiscal quarter ended November 3, 2017, which is the Company’s third quarter of fiscal 2018. A copy of the press release is furnished as Exhibit 99.1 to this current report.

In accordance with General Instruction B.2 to Form 8-K, the information contained in this current report, including Exhibit 99.1 hereto, is being “furnished” with the Securities and Exchange Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under such section. Further, such information shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless specifically identified as being incorporated therein by reference.

Item 9.01    Financial Statements and Exhibits.

(d)  Exhibits.

The following document is herewith furnished as an exhibit to this report:
Exhibit
No.
  
Exhibit Description
99.1
  



2



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: December 7, 2017
 
Dell Technologies Inc.
 
By:
/s/ Janet Bawcom
 
 
Janet Bawcom
Senior Vice President and Assistant Secretary
 
 
 (Duly Authorized Officer)
 


3
Exhibit


Exhibit 99.1
 http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=11928268&doc=3


Dell Technologies Reports Fiscal Year 2018 Third Quarter
Financial Results


ROUND ROCK, Texas - Dec. 7, 2017
    
News summary

Third quarter revenue of $19.6 billion, non-GAAP revenue of $19.9 billion
Cash flow from operations of $1.6 billion
Company unveils new capabilities and offerings, including new midrange storage solutions and Future-Proof Storage Loyalty Program

Full story
Dell Technologies (NYSE: DVMT) announces its fiscal 2018 third quarter results. For the third quarter, consolidated revenue was $19.6 billion and non-GAAP revenue was $19.9 billion. During the quarter, the company generated an operating loss of $533 million1, with non-GAAP operating income of $2.0 billion. The company generated cash flow from operations of $1.6 billion.

“In the third fiscal quarter, we delivered solid performance across the business,” said Tom Sweet, chief financial officer, Dell Technologies. “Moving forward, we’ll maintain our focus on profitable growth, generating strong cash flow and delivering a comprehensive and seamless solutions portfolio, incorporating the capabilities of all of the companies under Dell Technologies.”
 
Fiscal third quarter 2018 results
 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
November 3, 2017
 
October 28, 2016
 
Change
 
November 3, 2017
 
October 28, 2016
 
Change
 
(in millions, except percentages; unaudited)
Net revenue
$
19,610

 
$
16,247

 
21%
 
$
56,725

 
$
41,568

 
36%
Operating loss
$
(533
)
 
$
(1,512
)
 
65%
 
$
(3,012
)
 
$
(1,584
)
 
(90)%
Net loss from continuing operations
$
(941
)
 
$
(1,637
)
 
43%
 
$
(3,302
)
 
$
(2,323
)
 
(42)%
Non-GAAP net revenue
$
19,905

 
$
16,777

 
19%
 
$
57,710

 
$
42,241

 
37%
Non-GAAP operating income
$
1,986

 
$
1,975

 
1%
 
$
4,735

 
$
3,270

 
45%
Non-GAAP net income from continuing operations
$
1,109

 
$
970

 
14%
 
$
2,563

 
$
1,596

 
61%
Adjusted EBITDA
$
2,318

 
$
2,230

 
4%
 
$
5,751

 
$
3,757

 
53%

Information about Dell Technologies' use of non-GAAP financial information is provided under "Non-GAAP Financial Measures" below. All comparisons in this press release are year over year unless otherwise noted.

“Our strategy to be the essential infrastructure provider is resonating with our customers, who turn to Dell Technologies to transform and digitize their environments,” said Jeff Clarke, vice-chairman, Products & Operations, Dell Technologies. “We deliver a more holistic view and set of solutions, offering a higher level of innovation and integration across the edge, core and cloud that is unmatched in the industry.”






Operating segments summary

Client Solutions Group (Dell) continued to outperform the market worldwide as the overall PC market moved back to positive year-over-year growth during the calendar quarter. Revenue for the third fiscal quarter was $10.0 billion, up 8 percent from the same quarter of fiscal 2017. Operating income was $672 million, a 6 percent increase.

Key highlights:
Double-digit revenue growth in notebooks for both commercial and consumer
Delivered 19th consecutive quarter of year-over-year PC unit share growth2
No. 1 workstation vendor worldwide, outperforming the industry and positive growth in every major region3
No. 1 displays provider worldwide for the 17th consecutive quarter4 

Infrastructure Solutions Group (Dell EMC) experienced growth of 2 percent quarter over quarter, with third quarter revenue of $7.5 billion and operating income of $678 million. Servers and networking revenue was $3.9 billion, which was an increase of 32 percent year over year and 3 percent quarter over quarter. Storage revenue remained flat at $3.7 billion quarter over quarter.

Key highlights:
Record revenue and double-digit growth for servers for 2nd consecutive quarter
Worldwide leader in servers, outgrowing the market in units and revenue for both mainstream and hyperscale5 
Triple-digit growth in hyperconverged portfolio, led by VxRail
Double-digit demand growth for Isilon scale-out NAS and all-flash arrays

VMware segment revenue for the third quarter was $2.0 billion, with operating income of $639 million, or 32.7 percent of revenue.

Additional highlights

During the third quarter, Dell Technologies paid down $1.7 billion in debt, and since the close of the EMC transaction, it has paid down $9.7 billion of gross debt, excluding DFS-related debt. Also since closing the EMC transaction, the company has repurchased a total of 23.4 million shares of Class V common stock under the previously announced repurchase programs. The company ended the quarter with a cash and investments balance of $18.0 billion.

During the quarter, Dell Technologies launched a dedicated Internet of Things (IoT) division aimed at coordinating development of IoT products and services across all of our businesses. This comprehensive approach includes IoT-specific products, labs, partner program and consumption models to help customers speed the implementation of their IoT solutions.

Subsequent to the end of the quarter, Dell EMC announced the expansion of its industry-leading midrange storage portfolio with two new SC All-Flash data storage arrays, along with key software updates to Dell EMC Unity designed to boost efficiency and cost savings for mixed block and file workloads. Additionally, Dell EMC launched its new Future-Proof Storage Loyalty Program to help customers protect their investment.

Conference call information

As previously announced, the company will hold a conference call to discuss its third quarter performance this morning at 7 a.m. CST. The conference call will be broadcast live over the internet and can be accessed at investors.delltechnologies.com. For those unable to listen to the live broadcast, an archived version will be available at the same location for one year.

A slide presentation containing additional financial and operating information may be downloaded from Dell Technologies' website at investors.delltechnologies.com.

Additional resources
Find out more about how Dell Technologies is collaboratively solving customers’ biggest challenges by visiting our Annual Report to Customers
Follow the latest news on Twitter from @DellTech






About Dell Technologies
Dell Technologies is a unique family of businesses that provides the essential infrastructure for organizations to build their digital future, transform IT and protect their most important asset, information. The company services customers of all sizes across 180 countries - ranging from 98 percent of the Fortune 500 to individual consumers - with the industry's most comprehensive and innovative portfolio from the edge to the core to the cloud.
MEDIA CONTACTS:
Dave Farmer
(508) 293-7206
dave.farmer@dell.com

Lauren Lee
(512) 728-4374
lauren.lee@dell.com

INVESTOR RELATIONS CONTACTS:

Karen Litzler-Hollier
(512) 728-0388
karen.litzler-hollie@dell.com

Hall Butler
(512) 723-4963
hall.butler@dell.com

# # #

Copyright © 2017 Dell Inc. or its subsidiaries. All Rights Reserved. Dell, Dell Inc. and the Dell logo are trademarks of Dell Technologies in the United States and/or other jurisdictions. All other marks and names mentioned herein may be trademarks of their respective companies. 

1 Due to the EMC transaction and to a lesser extent the Dell going-private transaction, significant non-cash bridging items will remain between GAAP and non-GAAP results for the next few years. As a result of the EMC merger transaction completed on September 7, 2016 and its impact on the third quarter and first nine months of Fiscal 2018, our results for the fiscal periods discussed herein are not directly comparable.
2 IDC WW Quarterly Personal Computing Device (PCD) Tracker CY17Q3
3 IDC WW Quarterly Workstation Tracker CY17Q3
4 DisplaySearch Desktop Monitor Market Tracker CY17Q2
5 IDC WW Quarterly Server Tracker CY17Q3


Non-GAAP Financial Measures:

This press release presents information about the Company's non-GAAP net revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income from continuing operations, EBITDA and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with generally accepted accounting principles in the United States of America ("GAAP"). A reconciliation of each of the foregoing historical non-GAAP financial measures to the most directly comparable historical GAAP financial measures is provided in the attached tables for each of the fiscal periods indicated.

Special Note on Forward-Looking Statements:

Statements in this press release that relate to future results and events are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933 and are based on Dell Technologies' current expectations. In some cases, you can identify these statements by such forward-looking words as "anticipate," "believe," "confidence," "could," "estimate," "expect," "guidance," "intend," "may," "objective," "outlook,"





"plan," "project," "possible," "potential," "should," "will" and "would," or similar words or expressions that refer to future events or outcomes.

Dell Technologies' results or events in future periods could differ materially from those expressed or implied by these forward-looking statements because of risks, uncertainties, and other factors that include, but are not limited to, the following: competitive pressures; Dell Technologies' reliance on third-party suppliers for products and components, including reliance on single-source or limited-source suppliers; Dell Technologies' ability to achieve favorable pricing from its vendors; adverse global economic conditions and instability in financial markets; Dell Technologies' execution of its growth, business and acquisition strategies; the success of Dell Technologies' cost efficiency measures; Dell Technologies' ability to manage solutions and products and services transitions in an effective manner; Dell Technologies' ability to deliver high-quality products and services; Dell Technologies' foreign operations and ability to generate substantial non-U.S.net revenue; Dell Technologies' product, customer, and geographic sales mix, and seasonal sales trends; the performance of Dell Technologies' sales channel partners; access to the capital markets by Dell Technologies or its customers; weak economic conditions and additional regulation; counterparty default risks; the loss by Dell Technologies of any services contracts with its customers, including government contracts, and its ability to perform such contracts at its estimated costs; Dell Technologies' ability to develop and protect its proprietary intellectual property or obtain licenses to intellectual property developed by others on commercially reasonable and competitive terms; infrastructure disruptions, cyberattacks, or other data security breaches; Dell Technologies' ability to hedge effectively its exposure to fluctuations in foreign currency exchange rates and interest rates; expiration of tax holidays or favorable tax rate structures, or unfavorable outcomes in tax audits and other tax compliance matters; impairment of portfolio investments; unfavorable results of legal proceedings; increased costs and additional regulations and requirements as a result of Dell Technologies operation as a public company; Dell Technologies' ability to develop and maintain effective internal control over financial reporting; compliance requirements of changing environmental and safety laws; the effect of armed hostilities, terrorism, natural disasters, and public health issues; the costs, time, and effort required to be dedicated to the integration of the Dell and EMC businesses; the ability to realize the anticipated synergies from the merger with EMC; the ability to integrate EMC's technology, solutions, products, and services with those of Dell in an effective manner; the impact of the financial performance of VMware; and the market volatility of Dell Technologies' pension plan assets.

This list of risks, uncertainties, and other factors is not complete. Dell Technologies discusses some of these matters more fully, as well as certain risk factors that could affect the Dell Technologies' business, financial condition, results of operations, and prospects, in its reports filed with the Securities and Exchange Commission, including Dell Technologies' Annual Report on Form 10-K for the fiscal year ended February 3, 2017, quarterly reports on Form 10-Q, and current reports on Form 8-K. These filings are available for review through the Securities and Exchange Commission's website at www.sec.gov. Any or all forward-looking statements Dell Technologies makes may turn out to be wrong and can be affected by inaccurate assumptions Dell Technologies might make or by known or unknown risks, uncertainties and other factors, including those identified in this press release. Accordingly, you should not place undue reliance on the forward-looking statements made in this press release, which speak only as of its date. Dell Technologies does not undertake to update, and expressly disclaims any duty to update, its forward-looking statements, whether as a result of circumstances or events that arise after the date they are made, new information, or otherwise.






DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Income (Loss) and Related Financial Highlights
(in millions, except per share amounts and percentages; unaudited; continued on next page)

 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
November 3, 2017
 
October 28, 2016
 
Change
 
November 3, 2017
 
October 28, 2016
 
Change
Net revenue:
 
 
 
 
 
 
 
 
 
 
 
Products
$
14,680

 
$
12,366

 
19%
 
$
42,003

 
$
33,510

 
25%
Services
4,930

 
3,881

 
27%
 
14,722

 
8,058

 
83%
Total net revenue
19,610

 
16,247

 
21%
 
56,725

 
41,568

 
36%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of net revenue:
 
 
 
 
 
 
 
 
 
 
 
Products
12,369

 
10,562

 
17%
 
36,206

 
28,856

 
25%
Services
2,078

 
1,786

 
16%
 
6,245

 
4,284

 
46%
Total cost of net revenue
14,447

 
12,348

 
17%
 
42,451

 
33,140

 
28%
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
5,163

 
3,899

 
32%
 
14,274

 
8,428

 
69%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Selling, general, and administrative
4,625

 
4,556

 
2%
 
13,989

 
8,647

 
62%
Research and development
1,071

 
855

 
25%
 
3,297

 
1,365

 
142%
Total operating expenses
5,696

 
5,411

 
5%
 
17,286

 
10,012

 
73%
 
 
 
 
 
 
 
 
 
 
 
 
Operating loss
(533
)
 
(1,512
)
 
65%
 
(3,012
)
 
(1,584
)
 
(90)%
 
 
 
 
 
 
 
 
 
 
 
 
Interest and other, net
(682
)
 
(794
)
 
14%
 
(1,800
)
 
(1,362
)
 
(32)%
Loss from continuing operations before income taxes
(1,215
)
 
(2,306
)
 
47%
 
(4,812
)
 
(2,946
)
 
(63)%
Income tax benefit
(274
)
 
(669
)
 
59%
 
(1,510
)
 
(623
)
 
(142)%
Net loss from continuing operations
(941
)
 
(1,637
)
 
43%
 
(3,302
)
 
(2,323
)
 
(42)%
Income (loss) from discontinued operations, net of income taxes

 
(438
)
 
100%
 

 
875

 
(100)%
Net loss
(941
)
 
(2,075
)
 
55%
 
(3,302
)
 
(1,448
)
 
(128)%
Less: Net loss attributable to non-controlling interests
(4
)
 
(11
)
 
64%
 
(85
)
 
(12
)
 
(608)%
Net loss attributable to Dell Technologies Inc.
$
(937
)
 
$
(2,064
)
 
55%
 
$
(3,217
)
 
$
(1,436
)
 
(124)%







DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Income (Loss) and Related Financial Highlights
(in millions, except per share amounts and percentages; unaudited; continued)

 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
November 3, 2017
 
October 28, 2016
 
 
 
November 3, 2017
 
October 28, 2016
 
 
Earnings (loss) per share attributable to Dell Technologies Inc. - basic:
 
 
 
 
 
 
 
 
 
 
 
Continuing operations - Class V Common Stock - basic
$
1.10

 
$
0.79

 
 
 
$
2.50

 
$
0.79

 
 
Continuing operations - DHI Group - basic
$
(2.05
)
 
$
(3.62
)
 
 
 
$
(6.57
)
 
$
(5.70
)
 
 
Discontinued operations - DHI Group - basic
$

 
$
(0.88
)
 
 
 
$

 
$
2.01

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per share attributable to Dell Technologies Inc. - diluted:
 
 
 
 
 
 
 
 
 
 
 
Continuing operations - Class V Common Stock - diluted
$
1.09

 
$
0.78

 
 
 
$
2.46

 
$
0.78

 
 
Continuing operations - DHI Group - diluted
$
(2.05
)
 
$
(3.63
)
 
 
 
$
(6.58
)
 
$
(5.70
)
 
 
Discontinued operations - DHI Group - diluted
$

 
$
(0.88
)
 
 
 
$

 
$
2.01

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic - Class V Common Stock
202

 
222

 
 
 
204

 
222

 
 
Diluted - Class V Common Stock
202

 
222

 
 
 
204

 
222

 
 
Basic - DHI Group
567

 
497

 
 
 
567

 
436

 
 
Diluted - DHI Group
567

 
497

 
 
 
567

 
436

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of Total Net Revenue:
 
 
 
 
 
 
 
 
 
 
 
Gross margin
26
 %
 
24
 %
 
 
 
25
 %
 
20
 %
 
 
Selling, general, and administrative
24
 %
 
28
 %
 
 
 
25
 %
 
21
 %
 
 
Research and development
5
 %
 
5
 %
 
 
 
6
 %
 
3
 %
 
 
Operating expenses
29
 %
 
33
 %
 
 
 
30
 %
 
24
 %
 
 
Operating loss
(3
)%
 
(9
)%
 
 
 
(5
)%
 
(4
)%
 
 
Loss from continuing operations before income taxes
(6
)%
 
(14
)%
 
 
 
(8
)%
 
(7
)%
 
 
Net loss from continuing operations
(5
)%
 
(10
)%
 
 
 
(6
)%
 
(6
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax rate
23
 %
 
29
 %
 
 
 
31
 %
 
21
 %
 
 






DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Financial Position
(in millions; unaudited)

 
November 3, 2017
 
February 3, 2017
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
11,706

 
$
9,474

Short-term investments
2,008

 
1,975

Accounts receivable, net
9,189

 
9,420

Short-term financing receivables, net
3,643

 
3,222

Inventories, net
2,582

 
2,538

Other current assets
5,397

 
4,144

Total current assets
34,525

 
30,773

Property, plant, and equipment, net
5,378

 
5,653

Long-term investments
4,273

 
3,802

Long-term financing receivables, net
3,317

 
2,651

Goodwill
39,330

 
38,910

Intangible assets, net
29,846

 
35,053

Other non-current assets
1,725

 
1,364

Total assets
$
118,394

 
$
118,206

LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
Short-term debt
$
6,235

 
$
6,329

Accounts payable
16,711

 
14,422

Accrued and other
6,901

 
7,119

Short-term deferred revenue
10,895

 
10,265

Total current liabilities
40,742

 
38,135

Long-term debt
45,416

 
43,061

Long-term deferred revenue
9,161

 
8,431

Other non-current liabilities
7,487

 
9,339

Total liabilities
102,806

 
98,966

Redeemable shares
362

 
231

Stockholders' equity:
 
 
 
Total Dell Technologies Inc. stockholders’ equity
9,519

 
13,243

Non-controlling interests
5,707

 
5,766

Total stockholders' equity
15,226

 
19,009

Total liabilities, redeemable shares, and stockholders' equity
$
118,394

 
$
118,206







DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Cash Flows
(in millions; unaudited)
 
Three Months Ended
 
Nine Months Ended
 
November 3, 2017
 
October 28, 2016
 
November 3, 2017
 
October 28, 2016
Cash flows from operating activities:
 
 
 
 
 
 
 
Net loss
$
(941
)
 
$
(2,075
)
 
$
(3,302
)
 
$
(1,448
)
Adjustments to reconcile net loss to net cash provided by operating activities
2,564

 
1,829

 
6,981

 
3,017

Change in cash from operating activities
1,623

 
(246
)
 
3,679

 
1,569

Cash flows from investing activities:
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
 
Purchases
(1,194
)
 
(503
)
 
(3,454
)
 
(511
)
Maturities and sales
935

 
543

 
2,993

 
561

Capital expenditures
(341
)
 
(182
)
 
(902
)
 
(417
)
Proceeds from sale of facilities, land, and other assets

 
5

 

 
24

Capitalized software development costs
(94
)
 
(85
)
 
(281
)
 
(85
)
Collections on purchased financing receivables
15

 
6

 
25

 
31

Acquisition of businesses, net

 
(37,614
)
 
(223
)
 
(37,614
)
Divestitures of businesses, net

 

 

 

Asset acquisitions, net
(9
)
 

 
(95
)
 

Asset dispositions, net
(12
)
 

 
(53
)
 

Other

 
(8
)
 

 
(48
)
Change in cash from investing activities
(700
)
 
(37,838
)
 
(1,990
)
 
(38,059
)
Cash flows from financing activities:
 
 
 
 
 
 
 
Payment of dissenting shares obligation

 

 

 
(446
)
Proceeds from the issuance of DHI Group Common Stock

 
4,404

 
 
 
4,404

Proceeds from the issuance of common stock of subsidiaries
30

 
1

 
110

 
101

Repurchases of DHI Group Common Stock
(4
)
 
(8
)
 
(6
)
 
(10
)
Repurchases of Class V Common Stock
(300
)
 
(132
)
 
(722
)
 
(132
)
Repurchases of common stock of subsidiaries
(555
)
 
(611
)
 
 
 
(611
)
Issuance of common stock under employee plans

 

 
1

 

Payments for debt issuance costs
(39
)
 
(834
)
 
(44
)
 
(849
)
Proceeds from debt
8,416

 
43,838

 
13,192

 
45,986

Repayments of debt
(5,872
)
 
(7,000
)
 
(11,181
)
 
(9,638
)
Share repurchases for tax withholdings on vesting of equity awards
(105
)
 
(26
)
 
(299
)
 
(28
)
Other

 
4

 

 
10

Change in cash from financing activities
1,571

 
39,636

 
496

 
38,787

Effect of exchange rate changes on cash and cash equivalents
(1
)
 
(21
)
 
47

 
31

Change in cash and cash equivalents
2,493

 
1,531

 
2,232

 
2,328

Cash and cash equivalents at beginning of period, including amounts held for sale
9,213

 
7,373

 
9,474

 
6,576

Cash and cash equivalents at end of the period
$
11,706

 
$
8,904

 
$
11,706

 
$
8,904

Less: Cash included in current assets held for sale

 
82

 

 
82

Cash and cash equivalents from continuing operations
$
11,706

 
$
8,822

 
$
11,706

 
$
8,822







DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued on next page)

 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
November 3, 2017
 
October 28, 2016
 
Change
 
November 3, 2017
 
October 28, 2016
 
Change
Client Solutions Group (CSG):
 
 
 
 
 
 
 
 
 
 
 
Net Revenue:
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
6,907

 
$
6,400

 
8%
 
$
20,453

 
$
19,343

 
6%
Consumer
3,052

 
2,787

 
10%
 
8,413

 
7,635

 
10%
Total CSG net revenue
$
9,959

 
$
9,187

 
8%
 
$
28,866

 
$
26,978

 
7%
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income:
 
 
 
 
 
 
 
 
 
 
 
CSG operating income
$
672

 
$
634

 
6%
 
$
1,612

 
$
1,503

 
7%
% of CSG net revenue
7
%
 
7
%
 
 
 
6
%
 
6
%
 
 
% of total segment operating income
34
%
 
30
%
 
 
 
34
%
 
44
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Infrastructure Solutions Group (ISG):
 
 
 
 
 
 
 
 
 
 
 
Net Revenue:
 
 
 
 
 
 
 
 
 
 
 
Servers and networking
$
3,851

 
$
2,910

 
32%
 
$
10,822

 
$
9,222

 
17%
Storage
3,667

 
3,079

 
19%
 
11,018

 
4,159

 
165%
Total ISG net revenue
$
7,518

 
$
5,989

 
26%
 
$
21,840

 
$
13,381

 
63%
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income:
 
 
 
 
 
 
 
 
 
 
 
ISG operating income
$
678

 
$
897

 
(24)%
 
$
1,431

 
$
1,389

 
3%
% of ISG net revenue
9
%
 
15
%
 
 
 
7
%
 
10
%
 
 
% of total segment operating income
34
%
 
43
%
 
 
 
30
%
 
40
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VMware:
 
 
 
 
 
 
 
 
 
 
 
Net Revenue:
 
 
 
 
 
 
 
 
 
 
 
Total VMware net revenue
$
1,953

 
$
1,289

 
52%
 
$
5,596

 
$
1,289

 
334%
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income:
 
 
 
 
 
 
 
 
 
 
 
VMware operating income
$
639

 
$
548

 
17%
 
$
1,686

 
$
548

 
208%
% of VMware net revenue
33
%
 
43
%
 
 
 
30
%
 
43
%
 
 
% of total segment operating income
32
%
 
26
%
 
 
 
36
%
 
16
%
 
 


















DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued)

 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
November 3, 2017
 
October 28, 2016
 
 
 
November 3, 2017
 
October 28, 2016
 
 
Reconciliation to consolidated net revenue:
 
 
 
 
 
 
 
 
 
 
Reportable segment net revenue
$
19,430

 
$
16,465

 
 
 
$
56,302

 
$
41,648

 
 
Other businesses (a)
475

 
312

 
 
 
1,409

 
530

 
 
Unallocated transactions (b)

 

 
 
 
(1
)
 
63

 
 
Impact of purchase accounting (c)
(295
)
 
(530
)
 
 
 
(985
)
 
(673
)
 
 
Total net revenue
$
19,610

 
$
16,247

 
 
 
$
56,725

 
$
41,568

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to consolidated operating income (loss):
 
 
 
 
 
 
 
 
Reportable segment operating income
$
1,989

 
$
2,079

 
 
 
$
4,729

 
$
3,440

 
 
Other businesses (a)
6

 
(13
)
 
 
 
10

 
(48
)
 
 
Unallocated transactions (b)
(9
)
 
(91
)
 
 
 
(4
)
 
(122
)
 
 
Impact of purchase accounting (c)
(366
)
 
(850
)
 
 
 
(1,195
)
 
(1,054
)
 
 
Amortization of intangibles
(1,734
)
 
(1,164
)
 
 
 
(5,250
)
 
(2,146
)
 
 
Transaction-related expenses (d)
(86
)
 
(1,200
)
 
 
 
(415
)
 
(1,329
)
 
 
Other corporate expenses (e)
(333
)
 
(273
)
 
 
 
(887
)
 
(325
)
 
 
Total operating loss
$
(533
)
 
$
(1,512
)
 
 
 
$
(3,012
)
 
$
(1,584
)
 
 
_________________
(a)
Other businesses consist of RSA Information Security, SecureWorks, Pivotal, and Boomi, and do not constitute a reportable segment, either individually or collectively, as the results of the businesses are not material to the Company's overall results and the businesses do not meet the criteria for reportable segments.
(b)
Unallocated transactions includes long-term incentives, certain short-term incentive compensation expenses, and other corporate items that are not allocated to Dell Technologies' reportable segments.
(c)
Impact of purchase accounting includes non-cash purchase accounting adjustments that are primarily related to the EMC merger transaction.
(d)
Transaction-related expenses includes acquisition, integration, and divestiture related costs.
(e)
Other corporate expenses includes severance and facility action costs as well as stock-based compensation expense.






SUPPLEMENTAL SELECTED NON-GAAP FINANCIAL MEASURES

These tables present information about the Company’s non-GAAP net revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income from continuing operations, EBITDA, and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with generally accepted accounting principles in the United States of America (“GAAP”). A detailed discussion of Dell Technologies’ reasons for including these non-GAAP financial measures, the limitations associated with these measures, the items excluded from these measures, and our reason for excluding those items are presented in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures” in our periodic reports filed with the SEC. Dell Technologies encourages investors to review the non-GAAP discussion in conjunction with the presentation of non-GAAP financial measures.






DELL TECHNOLOGIES INC.
Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited)

 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
November 3, 2017
 
October 28, 2016
 
Change
 
November 3, 2017
 
October 28, 2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP net revenue
$
19,905

 
$
16,777

 
19%
 
$
57,710

 
$
42,241

 
37%
Non-GAAP gross margin
$
6,417

 
$
5,324

 
21%
 
$
18,163

 
$
10,224

 
78%
% of non-GAAP net revenue
32
%
 
32
%
 
 
 
31
%
 
24
%
 
 
Non-GAAP operating expenses
$
4,431

 
$
3,349

 
32%
 
$
13,428

 
$
6,954

 
93%
% of non-GAAP net revenue
22
%
 
20
%
 
 
 
23
%
 
16
%
 
 
Non-GAAP operating income
$
1,986

 
$
1,975

 
1%
 
$
4,735

 
$
3,270

 
45%
% of non-GAAP net revenue
10
%
 
12
%
 
 
 
8
%
 
8
%
 
 
Non-GAAP net income from continuing operations
$
1,109

 
$
970

 
14%
 
$
2,563

 
$
1,596

 
61%
% of non-GAAP net revenue
6
%
 
6
%
 
 
 
4
%
 
4
%
 
 
Adjusted EBITDA
$
2,318

 
$
2,230

 
4%
 
$
5,751

 
$
3,757

 
53%
% of non-GAAP net revenue
12
%
 
13
%
 
 
 
10
%
 
9
%
 
 






DELL TECHNOLOGIES INC.
Reconciliation of Non-GAAP Financial Measures
(in millions, except percentages; unaudited; continued on next page)

 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
November 3, 2017
 
October 28, 2016
 
Change
 
November 3, 2017
 
October 28, 2016
 
Change
Net revenue
$
19,610

 
$
16,247

 
21%
 
$
56,725

 
$
41,568

 
36%
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Impact of purchase accounting
295

 
530

 
 
 
985

 
673

 
 
Non-GAAP net revenue
$
19,905

 
$
16,777

 
19%
 
$
57,710

 
$
42,241

 
37%
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
$
5,163

 
$
3,899

 
32%
 
$
14,274

 
$
8,428

 
69%
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Impact of purchase accounting
307

 
729

 
 
 
1,020

 
897

 
 
Amortization of intangibles
914

 
604

 
 
 
2,784

 
806

 
 
Transaction-related expenses
5

 
30

 
 
 
22

 
25

 
 
Other corporate expenses
28

 
62

 
 
 
63

 
68

 
 
Non-GAAP gross margin
$
6,417

 
$
5,324

 
21%
 
$
18,163

 
$
10,224

 
78%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
$
5,696

 
$
5,411

 
5%
 
$
17,286

 
$
10,012

 
73%
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Impact of purchase accounting
(59
)
 
(121
)
 
 
 
(175
)
 
(157
)
 
 
Amortization of intangibles
(820
)
 
(560
)
 
 
 
(2,466
)
 
(1,340
)
 
 
Transaction-related expenses
(81
)
 
(1,170
)
 
 
 
(393
)
 
(1,304
)
 
 
Other corporate expenses
(305
)
 
(211
)
 
 
 
(824
)
 
(257
)
 
 
Non-GAAP operating expenses
$
4,431

 
$
3,349

 
32%
 
$
13,428

 
$
6,954

 
93%
 
 
 
 
 
 
 
 
 
 
 
 
Operating loss
$
(533
)
 
$
(1,512
)
 
65%
 
$
(3,012
)
 
$
(1,584
)
 
(90)%
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Impact of purchase accounting
366

 
850

 
 
 
1,195

 
1,054

 
 
Amortization of intangibles
1,734

 
1,164

 
 
 
5,250

 
2,146

 
 
Transaction-related expenses
86

 
1,200

 
 
 
415

 
1,329

 
 
Other corporate expenses
333

 
273

 
 
 
887

 
325

 
 
Non-GAAP operating income
$
1,986

 
$
1,975

 
1%
 
$
4,735

 
$
3,270

 
45%
 
 
 
 
 
 
 
 
 
 
 
 
Net loss from continuing operations
$
(941
)
 
$
(1,637
)
 
43%
 
$
(3,302
)
 
$
(2,323
)
 
(42)%
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Impact of purchase accounting
366

 
850

 
 
 
1,195

 
1,054

 
 
Amortization of intangibles
1,734

 
1,164

 
 
 
5,250

 
2,146

 
 
Transaction-related expenses
86

 
1,200

 
 
 
415

 
1,326

 
 
Other corporate expenses
333

 
273

 
 
 
887

 
325

 
 
Aggregate adjustment for income taxes
(469
)
 
(880
)
 
 
 
(1,882
)
 
(932
)
 
 
Non-GAAP net income from continuing operations
$
1,109

 
$
970

 
14%
 
$
2,563

 
$
1,596

 
61%








DELL TECHNOLOGIES INC.
Reconciliation of Non-GAAP Financial Measures
(in millions, except percentages; unaudited; continued)

 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
November 3, 2017
 
October 28, 2016
 
Change
 
November 3, 2017
 
October 28, 2016
 
Change
Net loss from continuing operations
$
(941
)
 
$
(1,637
)
 
43%
 
$
(3,302
)
 
$
(2,323
)
 
(42)%
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Interest and other, net
682

 
794

 
 
 
1,800

 
1,362

 
 
Income tax benefit
(274
)
 
(669
)
 
 
 
(1,510
)
 
(623
)
 
 
Depreciation and amortization
2,137

 
1,576

 
 
 
6,491

 
2,799

 
 
EBITDA
$
1,604

 
$
64

 
NM
 
$
3,479

 
$
1,215

 
186%
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA
$
1,604

 
$
64

 
NM
 
$
3,479

 
$
1,215

 
186%
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
221

 
144

 
 
 
630

 
177

 
 
Impact of purchase accounting
298

 
693

 
 
 
990

 
851

 
 
Transaction-related expenses
86

 
1,200

 
 
 
415

 
1,366

 
 
Other corporate expenses
109

 
129

 
 
 
237

 
148

 
 
Adjusted EBITDA
$
2,318

 
$
2,230

 
4%
 
$
5,751

 
$
3,757

 
53%