ROUND ROCK, Texas, Nov. 29, 2018 /PRNewswire/
--
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
$14.4 billion in gross debt,
excluding Dell Financial Services related and subsidiary debt.
"Dell Technologies has assembled a broad set of capabilities and
unique position that drive an attractive financial model," said
Tom Sweet, chief financial officer,
Dell Technologies. "Our third quarter of double-digit growth in all
three of our reportable segments shows that our customers
increasingly see us as a key partner with a deep portfolio to meet
their needs, from the edge to the core to the cloud."
DELL TECHNOLOGIES
INC.
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Fiscal year 2019
third quarter results:
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Three Months
Ended
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Nine Months
Ended
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November 2,
2018
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November 3,
2017
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Change
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November 2,
2018
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November 3,
2017
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Change
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(in millions, except
percentages; unaudited)
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Total net
revenue
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$
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22,482
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$
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19,556
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15 %
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$
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66,780
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$
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57,077
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17 %
|
Operating
loss
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$
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(356)
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$
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(410)
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13 %
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$
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(522)
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$
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(2,347)
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78 %
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Net loss
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$
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(895)
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$
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(851)
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(5)%
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$
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(1,894)
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$
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(2,793)
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32 %
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Non-GAAP net
revenue
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$
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22,651
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$
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19,851
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14 %
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$
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67,316
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$
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58,062
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16 %
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Non-GAAP operating
income
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$
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2,064
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$
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2,109
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(2)%
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$
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6,198
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$
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5,400
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15 %
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Non-GAAP net
income
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$
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1,200
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$
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1,199
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—%
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$
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3,723
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$
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3,072
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21 %
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Adjusted
EBITDA
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$
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2,426
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$
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2,441
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(1)%
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$
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7,268
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$
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6,416
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13 %
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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.
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
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Due to the EMC
transaction, significant non-cash bridging items will remain
between GAAP and non-GAAP results for the next few
years.
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2
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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.
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3
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IDC WW Quarterly
Personal Computing Device (PCD) Tracker CY18Q3
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4
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DisplaySearch Desktop
Monitor Market Tracker CY18Q3
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5
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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
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(in millions,
except per share amounts and percentages; unaudited)
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Three Months
Ended
|
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Nine Months
Ended
|
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|
|
November 2,
2018
|
|
November 3,
2017
|
|
Change
|
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November 2,
2018
|
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November 3,
2017
|
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Change
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Net
revenue:
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|
|
|
|
|
|
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|
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Products
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$
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17,625
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$
|
15,120
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17 %
|
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$
|
52,445
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$
|
43,856
|
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20 %
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Services
|
4,857
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|
4,436
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|
9 %
|
|
14,335
|
|
13,221
|
|
8 %
|
Total net
revenue
|
22,482
|
|
19,556
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15 %
|
|
66,780
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|
57,077
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17 %
|
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Cost of net
revenue:
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Products
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14,565
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12,573
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16 %
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43,114
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37,171
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16 %
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Services
|
1,974
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|
1,763
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12 %
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|
5,722
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|
5,261
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9 %
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Total cost of net
revenue
|
16,539
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|
14,336
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15 %
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|
48,836
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|
42,432
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15 %
|
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Gross
margin
|
5,943
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|
5,220
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14 %
|
|
17,944
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|
14,645
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|
23 %
|
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|
|
|
|
|
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Operating
expenses:
|
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|
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Selling, general, and
administrative
|
5,159
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|
4,559
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13 %
|
|
15,064
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|
13,695
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|
10 %
|
Research and
development
|
1,140
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|
1,071
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6 %
|
|
3,402
|
|
3,297
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|
3 %
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Total operating
expenses
|
6,299
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|
5,630
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|
12 %
|
|
18,466
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|
16,992
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9 %
|
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|
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Operating
loss
|
(356)
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(410)
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13 %
|
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(522)
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(2,347)
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78 %
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Interest and other,
net
|
(639)
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|
(682)
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6 %
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(1,564)
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|
(1,799)
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13 %
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Loss before income
taxes
|
(995)
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|
(1,092)
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|
9 %
|
|
(2,086)
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|
(4,146)
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|
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)
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|
(4)%
|
|
$
|
(2,011)
|
|
$
|
(2,749)
|
|
27 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share attributable to Dell Technologies Inc. - basic:
|
|
|
|
|
|
|
|
|
|
|
|
Class V
Common Stock - basic
|
$
|
0.83
|
|
$
|
0.98
|
|
|
|
$
|
4.80
|
|
$
|
2.58
|
|
|
DHI
Group - basic
|
$
|
(1.84)
|
|
$
|
(1.84)
|
|
|
|
$
|
(5.23)
|
|
$
|
(5.78)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share attributable to Dell Technologies Inc. - diluted:
|
|
|
|
|
|
|
|
|
|
|
|
Class V
Common Stock - diluted
|
$
|
0.81
|
|
$
|
0.96
|
|
|
|
$
|
4.72
|
|
$
|
2.54
|
|
|
DHI
Group - diluted
|
$
|
(1.84)
|
|
$
|
(1.84)
|
|
|
|
$
|
(5.25)
|
|
$
|
(5.79)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
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)
|
Other
|
—
|
|
—
|
|
—
|
|
—
|
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 DHI Group Common Stock
|
—
|
|
—
|
|
—
|
|
—
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 %
|
|
$
|
6,451
|
|
$
|
5,735
|
|
12 %
|
|
|
|
|
|
|
|
|
|
|
|
|
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
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, facility action costs, goodwill
impairment charges, and 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
0 %
|
|
$
3,723
|
|
$
3,072
|
|
21 %
|
|
|
|
|
|
|
|
|
|
|
|
|
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 %
|
View original
content:http://www.prnewswire.com/news-releases/dell-technologies-reports-fiscal-year-2019-third-quarter-financial-results-300757954.html
SOURCE Dell Technologies