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): November 29, 2018
 ______________________
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:
x
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 November 29, 2018, Dell Technologies Inc. (the “Company”) issued a press release announcing its financial results for its fiscal quarter ended November 2, 2018, which is the Company’s third quarter of fiscal 2019. 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
  

No Offer or Solicitation
This communication does not constitute an offer to sell or a solicitation of an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended (the “Securities Act”), and otherwise in accordance with applicable law.

Additional Information and Where to Find It
This communication is being made in respect of the proposed merger of a wholly-owned subsidiary of the Company with and into the Company, with the Company as the surviving entity, pursuant to which each share of Class V common stock of the Company will, at the election of the holder, convert into the right to receive shares of Class C common stock of the Company or cash, without interest, and each existing share of Class A common stock, Class B common stock and Class C common stock of the Company will be unaffected by the merger and remain outstanding. The proposed transaction requires the approval of a majority of the aggregate voting power of the outstanding shares of Class A common stock, Class B common stock and Class V common stock other than those held by affiliates of the Company, in each case, voting as a separate class, and all outstanding shares of common stock of the Company, voting together as a single class, and will be submitted to stockholders for their consideration. The Company has filed a registration statement on Form S-4 (File No. 333-226618). The registration statement was declared effective by the SEC on October 19, 2018, and a definitive proxy statement/prospectus was mailed on or about October 23, 2018 to each holder of Class A common stock, Class B common stock, Class C common stock and Class V common stock entitled to vote at the special meeting in connection with the proposed transaction. The Company also filed a supplement to the definitive proxy statement/prospectus on November 26, 2018, which was mailed on or about November 26, 2018 to each holder of Class A common stock, Class B common stock, Class C common stock and Class V common stock entitled to vote at the special meeting in connection with the proposed transaction. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS, THE SUPPLEMENT AND ANY OTHER DOCUMENTS RELATING TO THE TRANSACTION FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You may get these documents, when available, for free by visiting EDGAR on the SEC website at www.sec.gov or by visiting the Company’s website at http://investors.delltechnologies.com.



2



Participants in the Solicitation
The Company and its consolidated subsidiaries and their directors, executive officers and other members of their management and employees, and Silver Lake Technology Management, L.L.C. and its managing partners and employees, may be deemed to be participants in the solicitation of proxies from the stockholders of the Company in favor of the proposed merger and the other transactions contemplated by the amended merger agreement, including the exchange of shares of Class V common stock of the Company for shares of Class C common stock of the Company or cash. Information concerning persons who may be considered participants in such solicitation under the rules of the SEC, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in the aforementioned proxy statement/prospectus and the supplement that have been filed with the SEC.

Dell Technologies Inc. Disclosure Regarding Forward-Looking Statements
This communication contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “may,” “will,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “aim,” “seek,” and similar expressions as they relate to the Company or its management are intended to identify these forward-looking statements. All statements by the Company regarding its expected financial position, revenues, cash flows and other operating results, business strategy, legal proceedings, and similar matters are forward-looking statements. The expectations expressed or implied in these forward-looking statements may not turn out to be correct. The Company’s results could be materially different from its expectations because of various risks, including but not limited to: (i) the failure to consummate or delay in consummating the proposed transaction, including the failure to obtain the requisite stockholder approvals or the failure of VMware to pay the special dividend or any inability of the Company to pay the cash consideration to Class V holders; (ii) the risk as to the trading price of Class C common stock to be issued by the Company in the proposed transaction relative to the trading price of shares of Class V common stock and VMware, Inc. common stock; and (iii) the risks discussed in the “Risk Factors” section of the registration statement on Form S-4 (File No. 333-226618) that has been filed with the SEC and declared effective, the risks discussed in the “Update to Risk Factors” section of the supplement to the definitive proxy statement/prospectus that has been filed with the SEC, as well as the Company’s periodic and current reports filed with the SEC. Any forward-looking statement speaks only as of the date as of which such statement is made, and, except as required by law, the Company undertakes no obligation to update any forward-looking statement after the date as of which such statement was made, whether to reflect changes in circumstances or expectations, the occurrence of unanticipated events, or otherwise.




3



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: November 29, 2018
 
Dell Technologies Inc.
 
By:
/s/ Janet Bawcom
 
 
Janet Bawcom
Senior Vice President and Assistant Secretary
 
 
 (Duly Authorized Officer)
 


4
Exhibit


Exhibit 99.1

News Release

 https://cdn.kscope.io/5442027f68d83b573ae02ef34d4ad8f1-dtilogoa06.jpg

Dell Technologies Reports Fiscal Year 2019 Third Quarter
Financial Results


ROUND ROCK, Texas - Nov. 29, 2018
    
News summary

GAAP revenue up 15 percent to $22.5 billion
Third consecutive quarter of double-digit growth across all reportable segments
Continued cross-sell synergies across the family of businesses

Full story

Dell Technologies (NYSE: DVMT) announces its fiscal 2019 third quarter results. For the third quarter, revenue was $22.5 billion, up 15 percent, and non-GAAP revenue was $22.7 billion, up 14 percent from the prior period. During the quarter, the company generated a GAAP operating loss of $356 million1, with a non-GAAP operating income of $2.1 billion, down 2 percent. Cash flow from operations was approximately $833 million.

“The digital transformation of our world is underway, and we are in the early stages of a massive, technology-led investment cycle," said Michael Dell, chairman and CEO, Dell Technologies. "Dell Technologies was created to meet this opportunity head on for our customers and our investors. You can see the proof in our strong growth, in our powerful innovation and in the depth of our customer relationships.”

The company ended the third quarter with a cash and investments balance of $20.4 billion. During the quarter, Dell Technologies paid down approximately $1.3 billion of core debt2. Within the past two years, the company has paid down approximately $14.4 billion in gross debt, excluding Dell Financial Services related and subsidiary debt.

“Dell Technologies has assembled a broad set of capabilities and unique position that drive an attractive financial model,” said Tom Sweet, chief financial officer, Dell Technologies. “Our third quarter of double-digit growth in all three of our reportable segments shows that our customers increasingly see us as a key partner with a deep portfolio to meet their needs, from the edge to the core to the cloud.”






Fiscal year 2019 third quarter results
 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
November 2, 2018
 
November 3, 2017
 
Change
 
November 2, 2018
 
November 3, 2017
 
Change
 
(in millions, except percentages; unaudited)
Total net revenue
$
22,482

 
$
19,556

 
15%
 
$
66,780

 
$
57,077

 
17%
Operating loss
$
(356
)
 
$
(410
)
 
13%
 
$
(522
)
 
$
(2,347
)
 
78%
Net loss
$
(895
)
 
$
(851
)
 
(5)%
 
$
(1,894
)
 
$
(2,793
)
 
32%
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP net revenue
$
22,651

 
$
19,851

 
14%
 
$
67,316

 
$
58,062

 
16%
Non-GAAP operating income
$
2,064

 
$
2,109

 
(2)%
 
$
6,198

 
$
5,400

 
15%
Non-GAAP net income
$
1,200

 
$
1,199

 
—%
 
$
3,723

 
$
3,072

 
21%
Adjusted EBITDA
$
2,426

 
$
2,441

 
(1)%
 
$
7,268

 
$
6,416

 
13%

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.

“Data is becoming the most valuable and differentiating asset for many organizations as it opens up new revenue streams and unearths opportunities for improvement in almost every part of an organization,” said Jeff Clarke, vice chairman, Products & Operations, Dell Technologies. “This presents a tremendous opportunity for Dell Technologies given all of this data needs to be stored, protected, managed and analyzed, and we believe this is evidenced through the strong momentum we’ve seen in our business.”

Operating segments summary

Infrastructure Solutions Group revenue for the third quarter was $8.9 billion, a 19 percent increase. This was driven by revenue of $3.9 billion in storage, a 6 percent increase, and $5.1 billion in servers and networking, a 30 percent increase. Operating income for the third quarter was $935 million, a 7 percent increase driven primarily by server and storage mix dynamics.

Key third quarter highlights:
Servers and Networking delivered its sixth consecutive quarter of double-digit revenue growth
Triple-digit growth for VxRail on a demand basis, and now well above a $1 billion run rate
Demand was strong for file-based arrays where Dell Technologies is highly differentiated with unmatched scalability, performance and flexibility

Client Solutions Group revenue for the third quarter was $10.9 billion, up 11 percent, with growth across both Commercial and Consumer. Commercial revenue grew 12 percent to $7.6 billion, and Consumer revenue was up 8 percent to $3.3 billion. Operating income for the third quarter was $447 million, or 4.1 percent of revenue. CSG operating income was down 29 percent against a strong prior period, and foreign exchange and supply chain headwinds.

Key third quarter highlights:
Outperformed the PC industry for total worldwide units, delivering above-market growth in desktops and notebooks and in total commercial units3 
No. 1 share position worldwide for displays, gaining unit share year-over-year for the 22nd consecutive quarter4 
Maintained position as No. 1 provider of workstations worldwide5, with growth in every region and double-digit growth in both fixed and mobile form factors






VMware revenue for the third quarter was $2.2 billion, up 15 percent, with operating income of $768 million and 34.5 percent of revenue. The company continues to see revenue synergies through the collaboration across the Dell Technologies family of businesses. Earlier this month at VMworld Europe, Dell Technologies announced the VxBlock System 1000 as part of the Dell EMC Cloud Marketplace with new automation software and integration with VMware vRealize Suite, revolutionizing Converged Infrastructure operations by enabling administrators to expand resources in minutes versus hours. For the industry-leading hyper-converged infrastructure solution VxRail, the company announced an integrated cloud platform with support for VMware Cloud Foundation and fully automated network configuration with Dell EMC Networking SmartFabric Services.

Third quarter revenue from other businesses, including Pivotal, Secureworks, RSA Security, Virtustream and Boomi, was $583 million, up 5 percent.

Conference call information

As previously announced, the company will hold a conference call to discuss its third quarter results today at 5:00 p.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.

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 99 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.
 
CONTACTS:
Investor Relations: Investor_Relations@Dell.com
Media Relations: Media.Relations@Dell.com


# # #

Copyright © 2018 Dell Inc. or its subsidiaries. All Rights Reserved. Dell Technologies, Dell, EMC and Dell EMC are trademarks of Dell Inc. or its subsidiaries. Other trademarks may be trademarks of their respective owners. 

1
Due to the EMC transaction, significant non-cash bridging items will remain between GAAP and non-GAAP results for the next few years.
2
Core debt represents the total principal amount of the company’s debt, less unrestricted subsidiary debt, DFS related debt, and other debt. See slide presentation on the FY19Q3 Earnings Event page for full reconciliation of the core debt amount.
3
IDC WW Quarterly Personal Computing Device (PCD) Tracker CY18Q3
4
DisplaySearch Desktop Monitor Market Tracker CY18Q3
5
IDC WW Workstation Tracker CY18Q3







Non-GAAP Financial Measures:
This press release presents information about Dell Technologies’ non-GAAP net revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, 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 historical non-GAAP financial measure to the most directly comparable historical GAAP financial measure 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 risks relating to the proposed exchange of shares of Dell Technologies Class V common stock for shares of Class C common stock or, at the holder’s election, cash, including but not limited to: (i) the failure to consummate or delay in consummating the proposed transaction, including the failure to obtain the requisite stockholder approvals or the failure of VMware, Inc. (“VMware”) to pay the special dividend or any inability of Dell Technologies to pay the cash consideration to Class V holders; (ii) the risk as to the trading price of Class C common stock to be issued by Dell Technologies in the proposed transaction relative to the trading price of shares of Class V common stock and VMware common stock; and (iii) the risks discussed in the “Risk Factors” section of the registration statement on Form S-4 (File No. 333-226618) that has been filed with the Securities and Exchange Commission (the “SEC”) and declared effective, and the risks discussed in the “Update to Risk Factors” section of the supplement to the definitive proxy statement/prospectus that has been filed with the SEC. Other risks, uncertainties and factors include 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; Dell Technologies’ substantial level of indebtedness; 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 Dell Technologies’ business, financial condition, results of operations, and prospects, in its reports filed with the SEC, including Dell Technologies’ Annual Report on Form 10-K for the fiscal year ended February 2, 2018, quarterly reports on Form 10-Q, and current reports on Form 8-K. These filings are available for review through the SEC’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.

No Offer or Solicitation:
This communication does not constitute an offer to sell or a solicitation of an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933 and otherwise in accordance with applicable law.






Additional Information and Where to Find It:
This communication is being made in respect of the proposed merger of a wholly-owned subsidiary of Dell Technologies Inc. (the “Company”) with and into the Company, with the Company as the surviving entity, pursuant to which each share of Class V common stock of the Company will, at the election of the holder, convert into the right to receive shares of Class C common stock of the Company or cash, without interest, and each existing share of Class A common stock, Class B common stock and Class C common stock of the Company will be unaffected by the merger and remain outstanding. The proposed transaction requires the approval of a majority of the aggregate voting power of the outstanding shares of Class A common stock, Class B common stock and Class V common stock other than those held by affiliates of the Company, in each case, voting as a separate class, and all outstanding shares of common stock of the Company, voting together as a single class, and will be submitted to stockholders for their consideration. The Company has filed a registration statement on Form S-4 (File No. 333-226618). The registration statement was declared effective by the SEC on October 19, 2018, and a definitive proxy statement/prospectus was mailed on or about October 23, 2018 to each holder of Class A common stock, Class B common stock, Class C common stock and Class V common stock entitled to vote at the special meeting in connection with the proposed transaction. The Company also filed a supplement to the definitive proxy statement/prospectus on November 26, 2018, which was mailed on or about November 26, 2018 to each holder of Class A common stock, Class B common stock, Class C common stock and Class V common stock entitled to vote at the special meeting in connection with the proposed transaction. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS, THE SUPPLEMENT AND ANY OTHER DOCUMENTS RELATING TO THE TRANSACTION FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You may get these documents, when available, for free by visiting EDGAR on the SEC website at www.sec.gov or by visiting the Company’s website at http://investors.delltechnologies.com.

Participants in the Solicitation:
The Company and its consolidated subsidiaries and their directors, executive officers and other members of their management and employees, and Silver Lake Technology Management, L.L.C. and its managing partners and employees, may be deemed to be participants in the solicitation of proxies from the stockholders of the Company in favor of the proposed merger and the other transactions contemplated by the amended merger agreement, including the exchange of shares of Class V common stock of the Company for shares of Class C common stock of the Company or cash. Information concerning persons who may be considered participants in such solicitation under the rules of the SEC, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in the aforementioned proxy statement/prospectus and the supplement that have been filed with the SEC.






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

 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
November 2, 2018
 
November 3, 2017
 
Change
 
November 2, 2018
 
November 3, 2017
 
Change
Net revenue:
 
 
 
 
 
 
 
 
 
 
 
Products
$
17,625

 
$
15,120

 
17%
 
$
52,445

 
$
43,856

 
20%
Services
4,857

 
4,436

 
9%
 
14,335

 
13,221

 
8%
Total net revenue
22,482

 
19,556

 
15%
 
66,780

 
57,077

 
17%
Cost of net revenue:
 
 
 
 
 
 
 
 
 
 
 
Products
14,565

 
12,573

 
16%
 
43,114

 
37,171

 
16%
Services
1,974

 
1,763

 
12%
 
5,722

 
5,261

 
9%
Total cost of net revenue
16,539

 
14,336

 
15%
 
48,836

 
42,432

 
15%
Gross margin
5,943

 
5,220

 
14%
 
17,944

 
14,645

 
23%
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Selling, general, and administrative
5,159

 
4,559

 
13%
 
15,064

 
13,695

 
10%
Research and development
1,140

 
1,071

 
6%
 
3,402

 
3,297

 
3%
Total operating expenses
6,299

 
5,630

 
12%
 
18,466

 
16,992

 
9%
Operating loss
(356
)
 
(410
)
 
13%
 
(522
)
 
(2,347
)
 
78%
Interest and other, net
(639
)
 
(682
)
 
6%
 
(1,564
)
 
(1,799
)
 
13%
Loss before income taxes
(995
)
 
(1,092
)
 
9%
 
(2,086
)
 
(4,146
)
 
50%
Income tax benefit
(100
)
 
(241
)
 
59%
 
(192
)
 
(1,353
)
 
86%
Net loss
(895
)
 
(851
)
 
(5)%
 
(1,894
)
 
(2,793
)
 
32%
Less: Net income (loss) attributable to non-controlling interests
(19
)
 
(5
)
 
280%
 
117

 
(44
)
 
(366)%
Net loss attributable to Dell Technologies Inc.
$
(876
)
 
$
(846
)
 
(4)%
 
$
(2,011
)
 
$
(2,749
)
 
27%
Earnings (loss) per share attributable to Dell Technologies Inc. - basic:
 
 
 
 
 
 
 
 
 
 

Class V Common Stock - basic
$
0.83

 
$

 
 
 
$
4.80

 
$

 

DHI Group - basic
$
(1.84
)
 
$

 
 
 
$
(5.23
)
 
$

 

Earnings (loss) per share attributable to Dell Technologies Inc. - diluted:
 
 
 
 
 
 
 
 
 
 
 
Class V Common Stock - diluted
$
0.81

 
$

 
 
 
$
4.72

 
$

 
 
DHI Group - diluted
$
(1.84
)
 
$

 
 
 
$
(5.25
)
 
$

 
 
Weighted-average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic - Class V Common Stock
199

 
202

 
 
 
199

 
204

 
 
Diluted - Class V Common Stock
199

 
202

 
 
 
199

 
204

 
 
Basic - DHI Group
567

 
567

 
 
 
567

 
567

 
 
Diluted - DHI Group
567

 
567

 
 
 
567

 
567

 
 
Percentage of Total Net Revenue:
 
 
 
 
 
 
 
 
 
 
 
Gross margin
26
 %
 
27
 %
 
 
 
27
 %
 
26
 %
 
 
Selling, general, and administrative
23
 %
 
23
 %
 
 
 
23
 %
 
24
 %
 
 
Research and development
5
 %
 
5
 %
 
 
 
5
 %
 
6
 %
 
 
Operating expenses
28
 %
 
29
 %
 
 
 
28
 %
 
30
 %
 
 
Operating loss
(2
)%
 
(2
)%
 
 
 
(1
)%
 
(4
)%
 
 
Loss before income taxes
(4
)%
 
(6
)%
 
 
 
(3
)%
 
(7
)%
 
 
Net loss
(4
)%
 
(4
)%
 
 
 
(3
)%
 
(5
)%
 
 
Income tax rate
10.1
 %
 
22.1
 %
 
 
 
9.2
 %
 
32.6
 %
 
 





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

 
November 2, 2018
 
February 2, 2018
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
15,152

 
$
13,942

Short-term investments
2,322

 
2,187

Accounts receivable, net
11,113

 
11,721

Short-term financing receivables, net
4,134

 
3,919

Inventories, net
3,793

 
2,678

Other current assets
6,445

 
5,881

Total current assets
42,959

 
40,328

Property, plant, and equipment, net
5,228

 
5,390

Long-term investments
2,972

 
4,163

Long-term financing receivables, net
3,946

 
3,724

Goodwill
39,651

 
39,920

Intangible assets, net
23,787

 
28,265

Other non-current assets
2,698

 
2,403

Total assets
$
121,241

 
$
124,193

LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
Short-term debt
$
8,150

 
$
7,873

Accounts payable
19,748

 
18,334

Accrued and other
7,606

 
8,026

Short-term deferred revenue
12,079

 
11,606

Total current liabilities
47,583

 
45,839

Long-term debt
40,507

 
43,998

Long-term deferred revenue
10,064

 
9,210

Other non-current liabilities
6,567

 
7,277

Total liabilities
104,721

 
106,324

Redeemable shares
2,095

 
384

Stockholders' equity:
 
 
 
Total Dell Technologies Inc. stockholders’ equity
7,592

 
11,719

Non-controlling interests
6,833

 
5,766

Total stockholders' equity
14,425

 
17,485

Total liabilities, redeemable shares, and stockholders' equity
$
121,241

 
$
124,193







DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Cash Flows
(in millions; unaudited)
 
Three Months Ended
 
Nine Months Ended
 
November 2, 2018
 
November 3, 2017
 
November 2, 2018
 
November 3, 2017
Cash flows from operating activities:
 
 
 
 
 
 
 
Net loss
$
(895
)
 
$
(851
)
 
$
(1,894
)
 
$
(2,793
)
Adjustments to reconcile net loss to net cash provided by operating activities
1,728

 
2,490

 
6,519

 
6,537

Change in cash from operating activities
833

 
1,639

 
4,625

 
3,744

Cash flows from investing activities:
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
 
Purchases
(24
)
 
(1,194
)
 
(912
)
 
(3,454
)
Maturities and sales
863

 
935

 
2,185

 
2,993

Capital expenditures
(300
)
 
(341
)
 
(861
)
 
(902
)
Proceeds from sale of facilities, land, and other assets

 

 
10

 

Capitalized software development costs
(86
)
 
(94
)
 
(246
)
 
(281
)
Collections on purchased financing receivables
8

 
15

 
25

 
25

Acquisition of businesses, net
(493
)
 

 
(493
)
 
(223
)
Divestitures of businesses, net

 

 
142

 

Asset acquisitions, net
(21
)
 
(9
)
 
(59
)
 
(95
)
Asset dispositions, net
(6
)
 
(12
)
 
(12
)
 
(53
)
Change in cash from investing activities
(59
)
 
(700
)
 
(221
)
 
(1,990
)
Cash flows from financing activities:
 
 
 
 
 
 
 
Payment of dissenting shares obligation

 

 
(76
)
 

Share repurchases for tax withholdings of equity awards
(52
)
 
(105
)
 
(251
)
 
(299
)
Proceeds from the issuance of common stock of subsidiaries
114

 
30

 
767

 
110

Repurchases of DHI Group Common Stock

 
(4
)
 
(47
)
 
(6
)
Repurchases of Class V Common Stock

 
(300
)
 

 
(722
)
Repurchases of common stock of subsidiaries
(1
)
 
(555
)
 
(1
)
 
(555
)
Payments for debt issuance costs
(3
)
 
(39
)
 
(11
)
 
(44
)
Proceeds from debt
1,806

 
8,412

 
6,443

 
13,168

Repayments of debt
(2,721
)
 
(5,837
)
 
(9,669
)
 
(11,128
)
Other

 

 
1

 
1

Change in cash from financing activities
(857
)
 
1,602

 
(2,844
)
 
525

Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(46
)
 
(1
)
 
(262
)
 
47

Change in cash, cash equivalents, and restricted cash
(129
)
 
2,540

 
1,298

 
2,326

Cash, cash equivalents, and restricted cash at beginning of the period
15,805

 
9,618

 
14,378

 
9,832

Cash, cash equivalents, and restricted cash at end of the period
$
15,676

 
$
12,158

 
$
15,676

 
$
12,158







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

 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
November 2, 2018
 
November 3, 2017
 
Change
 
November 2, 2018
 
November 3, 2017
 
Change
Infrastructure Solutions Group (ISG):
 
 
 
 
 
 
 
 
 
 
 
Net Revenue:
 
 
 
 
 
 
 
 
 
 
 
Servers and networking
$
5,054

 
$
3,875

 
30%
 
$
14,700

 
$
10,908

 
35%
Storage
3,883

 
3,660

 
6%
 
12,131

 
11,055

 
10%
Total ISG net revenue
$
8,937

 
$
7,535

 
19%
 
$
26,831

 
$
21,963

 
22%
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income:
 
 
 
 
 
 
 
 
 
 
 
ISG operating income
$
935

 
$
870

 
7%
 
$
2,886

 
$
2,023

 
43%
% of ISG net revenue
10
%
 
12
%
 
 
 
11
%
 
9
%
 
 
% of total segment operating income
43
%
 
41
%
 
 
 
45
%
 
37
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Client Solutions Group (CSG):
 
 
 
 
 
 
 
 
 
 
 
Net Revenue:
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
7,613

 
$
6,778

 
12%
 
$
23,085

 
$
20,327

 
14%
Consumer
3,292

 
3,051

 
8%
 
9,219

 
8,416

 
10%
Total CSG net revenue
$
10,905

 
$
9,829

 
11%
 
$
32,304

 
$
28,743

 
12%
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income:
 
 
 
 
 
 
 
 
 
 
 
CSG operating income
$
447

 
$
630

 
(29)%
 
$
1,405

 
$
1,483

 
(5)%
% of CSG net revenue
4
%
 
6
%
 
 
 
4
%
 
5
%
 
 
% of total segment operating income
21
%
 
29
%
 
 
 
22
%
 
27
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VMware:
 
 
 
 
 
 
 
 
 
 
 
Net Revenue:
 
 
 
 
 
 
 
 
 
 
 
Total VMware net revenue
$
2,229

 
$
1,933

 
15%
 
$
4,222

 
$
3,802

 
11%
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income:
 
 
 
 
 
 
 
 
 
 
 
VMware operating income
$
768

 
$
634

 
21%
 
$
2,117

 
$
1,973

 
7%
% of VMware net revenue
34
%
 
33
%
 
 
 
33
%
 
34
%
 
 
% of total segment operating income
36
%
 
30
%
 
 
 
33
%
 
36
%
 
 
















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

 
Three Months Ended
 
Nine Months Ended
 
November 2, 2018
 
November 3, 2017
 
November 2, 2018
 
November 3, 2017
Reconciliation to consolidated net revenue:
 
 
 
 
 
 
Reportable segment net revenue
$
22,071

 
$
19,297

 
$
65,586

 
$
56,441

Other businesses (a)
583

 
557

 
1,736

 
1,629

Unallocated transactions (b)
(3
)
 
(3
)
 
(6
)
 
(8
)
Impact of purchase accounting (c)
(169
)
 
(295
)
 
(536
)
 
(985
)
Total net revenue
$
22,482

 
$
19,556

 
$
66,780

 
$
57,077

 
 
 
 
 
 
 
 
Reconciliation to consolidated operating income (loss):
 
 
 
 
Reportable segment operating income
$
2,150

 
$
2,134

 
$
6,408

 
$
5,479

Other businesses (a)
(40
)
 
(19
)
 
(139
)
 
(71
)
Unallocated transactions (b)
(46
)
 
(6
)
 
(71
)
 
(8
)
Impact of purchase accounting (c)
(193
)
 
(366
)
 
(630
)
 
(1,195
)
Amortization of intangibles
(1,546
)
 
(1,734
)
 
(4,594
)
 
(5,250
)
Transaction-related expenses (d)
(167
)
 
(86
)
 
(437
)
 
(415
)
Other corporate expenses (e)
(514
)
 
(333
)
 
(1,059
)
 
(887
)
Total operating loss
$
(356
)
 
$
(410
)
 
$
(522
)
 
$
(2,347
)
_________________
(a)
Pivotal, SecureWorks, RSA Security, Virtustream, and Boomi constitute "Other businesses" and do not meet the requirements for a reportable segment, either individually or collectively. The results of Other businesses are not material to the Company's overall results.
(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, 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 2, 2018
 
November 3, 2017
 
Change
 
November 2, 2018
 
November 3, 2017
 
Change
Non-GAAP net revenue
$
22,651

 
$
19,851

 
14%
 
$
67,316

 
$
58,062

 
16%
Non-GAAP gross margin
$
7,000

 
$
6,474

 
8%
 
$
20,985

 
$
18,534

 
13%
% of non-GAAP net revenue
31
%
 
33
%
 
 
 
31
%
 
32
%
 
 
Non-GAAP operating expenses
$
4,936

 
$
4,365

 
13%
 
$
14,787

 
$
13,134

 
13%
% of non-GAAP net revenue
22
%
 
22
%
 
 
 
22
%
 
23
%
 
 
Non-GAAP operating income
$
2,064

 
$
2,109

 
(2)%
 
$
6,198

 
$
5,400

 
15%
% of non-GAAP net revenue
9
%
 
11
%
 
 
 
9
%
 
9
%
 
 
Non-GAAP net income
$
1,200

 
$
1,199

 
—%
 
$
3,723

 
$
3,072

 
21%
% of non-GAAP net revenue
5
%
 
6
%
 
 
 
6
%
 
5
%
 
 
Adjusted EBITDA
$
2,426

 
$
2,441

 
(1)%
 
$
7,268

 
$
6,416

 
13%
% of non-GAAP net revenue
11
%
 
12
%
 
 
 
11
%
 
11
%
 
 






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

 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
November 2, 2018
 
November 3, 2017
 
Change
 
November 2, 2018
 
November 3, 2017
 
Change
Net revenue
$
22,482

 
$
19,556

 
15%
 
$
66,780

 
$
57,077

 
17%
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Impact of purchase accounting
169

 
295

 
 
 
536

 
985

 
 
Non-GAAP net revenue
$
22,651

 
$
19,851

 
14%
 
$
67,316

 
$
58,062

 
16%
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
$
5,943

 
$
5,220

 
14%
 
$
17,944

 
$
14,645

 
23%
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangibles
726

 
914

 
 
 
2,154

 
2,784

 
 
Impact of purchase accounting
171

 
307

 
 
 
549

 
1,020

 
 
Transaction-related expenses
102

 
5

 
 
 
239

 
22

 
 
Other corporate expenses
58

 
28

 
 
 
99

 
63

 
 
Non-GAAP gross margin
$
7,000

 
$
6,474

 
8%
 
$
20,985

 
$
18,534

 
13%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
$
6,299

 
$
5,630

 
12%
 
$
18,466

 
$
16,992

 
9%
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangibles
(820
)
 
(820
)
 
 
 
(2,440
)
 
(2,466
)
 
 
Impact of purchase accounting
(22
)
 
(59
)
 
 
 
(81
)
 
(175
)
 
 
Transaction-related expenses
(65
)
 
(81
)
 
 
 
(198
)
 
(393
)
 
 
Other corporate expenses
(456
)
 
(305
)
 
 
 
(960
)
 
(824
)
 
 
Non-GAAP operating expenses
$
4,936

 
$
4,365

 
13%
 
$
14,787

 
$
13,134

 
13%
 
 
 
 
 
 
 
 
 
 
 
 
Operating loss
$
(356
)
 
$
(410
)
 
13%
 
$
(522
)
 
$
(2,347
)
 
78%
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangibles
1,546

 
1,734

 
 
 
4,594

 
5,250

 
 
Impact of purchase accounting
193

 
366

 
 
 
630

 
1,195

 
 
Transaction-related expenses
167

 
86

 
 
 
437

 
415

 
 
Other corporate expenses
514

 
333

 
 
 
1,059

 
887

 
 
Non-GAAP operating income
$
2,064

 
$
2,109

 
(2)%
 
$
6,198

 
$
5,400

 
15%
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
$
(895
)
 
$
(851
)
 
(5)%
 
$
(1,894
)
 
$
(2,793
)
 
32%
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangibles
1,546

 
1,734

 
 
 
4,594

 
5,250

 
 
Impact of purchase accounting
193

 
366

 
 
 
630

 
1,195

 
 
Transaction-related expenses
167

 
86

 
 
 
437

 
415

 
 
Other corporate expenses
514

 
333

 
 
 
1,059

 
887

 
 
Aggregate adjustment for income taxes
(325
)
 
(469
)
 
 
 
(1,103
)
 
(1,882
)
 
 
Non-GAAP net income
$
1,200

 
$
1,199

 
—%
 
$
3,723

 
$
3,072

 
21%









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

 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
November 2, 2018
 
November 3, 2017
 
Change
 
November 2, 2018
 
November 3, 2017
 
Change
Net loss
$
(895
)
 
$
(851
)
 
(5)%
 
$
(1,894
)
 
$
(2,793
)
 
32%
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Interest and other, net
639

 
682

 
 
 
1,564

 
1,799

 
 
Income tax benefit
(100
)
 
(241
)
 
 
 
(192
)
 
(1,353
)
 
 
Depreciation and amortization
1,961

 
2,137

 
 
 
5,806

 
6,491

 
 
EBITDA
$
1,605

 
$
1,727

 
(7)%
 
$
5,284

 
$
4,144

 
28%
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA
$
1,605

 
$
1,727

 
(7)%
 
$
5,284

 
$
4,144

 
28%
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
256

 
221

 
 
 
671

 
630

 
 
Impact of purchase accounting
169

 
298

 
 
 
536

 
990

 
 
Transaction-related expenses
158

 
86

 
 
 
409

 
415

 
 
Other corporate expenses
238

 
109

 
 
 
368

 
237

 
 
Adjusted EBITDA
$
2,426

 
$
2,441

 
(1)%
 
$
7,268

 
$
6,416

 
13%