Dell Technologies Reports Fiscal Year 2017 Third Quarter

Dell Technologies Reports Fiscal Year 2017 Third Quarter Financial Results



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						% Growth		Nine Months Ended						% Growth
	October 28,			October 30,			Rates		October 28,			October 30,			Rates
	2016			2015			Yr. to Yr.		2016			2015			Yr. to Yr.
Net revenue:
Products	$	12,366		$	10,638		16	%	$	33,510		$	32,100		4	%
Services		3,881			2,036		91	%		8,058			6,132		31	%
Total net revenue		16,247			12,674		28	%		41,568			38,232		9	%

Cost of net revenue:
Products		10,562			9,328		13	%		28,856			28,355		2	%
Services		1,786			1,214		47	%		4,284			3,744		14	%
Total cost of net revenue		12,348			10,542		17	%		33,140			32,099		3	%

Gross margin		3,899			2,132		83	%		8,428			6,133		37	%

Operating expenses:
Selling, general, and administrative		4,556			1,943		134	%		8,647			5,849		48	%
Research and development		855			267		220	%		1,365			772		77	%
Total operating expenses		5,411			2,210		145	%		10,012			6,621		51	%

Operating loss		(1,512	)		(78	)				(1,584	)		(488	)

Interest and other, net		(794	)		(203	)				(1,362	)		(600	)
Loss from continuing operations before income taxes		(2,306	)		(281	)				(2,946	)		(1,088	)
Income tax benefit		(669	)		(17	)				(623	)		(88	)
Net loss from continuing operations		(1,637	)		(264	)				(2,323	)		(1,000	)
Income (loss) from discontinued operations, net of income taxes		(438	)		84					875			51
Net loss		(2,075	)		(180	)				(1,448	)		(949	)
Less: Net loss attributable to non-controlling interests		(11	)		-					(12	)		-
Net loss attributable to Dell Technologies Inc.	$	(2,064	)	$	(180	)			$	(1,436	)	$	(949	)

Earnings (loss) per share attributable to Dell Technologies Inc. - basic:
Continuing operations - Class V Common Stock - basic	$	0.79		$	-				$	0.79		$	-
Continuing operations - DHI Group - basic	$	(3.62	)	$	(0.65	)			$	(5.70	)	$	(2.47	)
Discontinued operations - DHI Group - basic	$	(0.88	)	$	0.21				$	2.01		$	0.13

Earnings (loss) per share attributable to Dell Technologies Inc. - diluted:
Continuing operations - Class V Common Stock - diluted	$	0.78		$	-				$	0.78		$	-
Continuing operations - DHI Group - diluted	$	(3.63	)	$	(0.65	)			$	(5.70	)	$	(2.47	)
Discontinued operations - DHI Group - diluted	$	(0.88	)	$	0.21				$	2.01		$	0.13

Weighted-average shares outstanding:
Basic - Class V Common Stock		222			-					222			-
Diluted - Class V Common Stock		222			-					222			-
Basic - DHI Group		497			405					436			405
Diluted - DHI Group		497			405					436			405

Percentage of Total Net Revenue:
Gross margin		24.0	%		16.8	%				20.3	%		16.0	%
Selling, general, and administrative		28.0	%		15.3	%				20.8	%		15.3	%
Research, development, and engineering		5.3	%		2.1	%				3.3	%		2.0	%
Operating expenses		33.3	%		17.4	%				24.1	%		17.3	%
Operating loss		(9.3	%)		(0.6	%)				(3.8	%)		(1.3	%)
Loss from continuing operations before income taxes		(14.2	%)		(2.2	%)				(7.1	%)		(2.8	%)
Net loss from continuing operations		(10.1	%)		(2.1	%)				(5.6	%)		(2.6	%)

Income tax rate		29.0	%		6.0	%				21.1	%		8.1	%



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

	October 28, 2016		January 29, 2016
Assets:
Current assets:
Cash and cash equivalents	$	8,822	$	6,322
Short-term investments		1,857		-
Accounts receivable, net		8,830		4,887
Short-term financing receivables, net		3,049		2,915
Inventories, net		3,504		1,619
Other current assets		4,441		3,497
Current assets held for sale		5,904		4,333
Total current assets		36,407		23,573
Property, plant, and equipment, net		5,805		1,649
Long-term investments		4,285		114
Long-term financing receivables, net		2,390		2,177
Goodwill		38,840		8,406
Intangible assets, net		36,571		8,577
Other non-current assets		1,334		626
Total assets	$	125,632	$	45,122

Liabilities, Redeemable Shares, and Stockholders' Equity:
Current liabilities:
Short-term debt	$	8,388	$	2,981
Accounts payable		14,644		12,881
Accrued and other		7,445		4,217
Short-term deferred revenue		9,215		3,632
Current liabilities held for sale		1,677		1,599
Total current liabilities		41,369		25,310
Long-term debt		47,284		10,650
Long-term deferred revenue		7,907		4,089
Other non-current liabilities		9,066		3,501
Total liabilities		105,626		43,550

Redeemable shares		187		106

Total Dell Technologies Inc. stockholders’ equity		13,880		1,466
Non-controlling interests		5,939		-
Total stockholders' equity		19,819		1,466
Total liabilities, redeemable shares, and stockholders' equity	$	125,632	$	45,122



DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Cash Flows
(in millions; unaudited)

	Three Months Ended						Nine Months Ended
	October 28, 2016			October 30, 2015			October 28, 2016			October 30, 2015
Cash flows from operating activities:
Net loss	$	(2,075	)	$	(180	)	$	(1,448	)	$	(949	)
Adjustments to reconcile net loss to net cash provided by operating activities:		1,806			639			2,994			2,140
Change in cash from operating activities		(269	)		459			1,546			1,191
Cash flows from investing activities:
Investments:
Purchases		(503	)		-			(511	)		(26	)
Maturities and sales		543			-			561			1
Capital expenditures		(182	)		(110	)		(417	)		(340	)
Proceeds from sale of facilities, land, and other assets		5			3			24			88
Capitalized software development costs		(85	)		-			(85	)		-
Collections on purchased financing receivables		6			22			31			71
Acquisition of businesses, net of cash acquired		(37,614	)		-			(37,614	)		-
Divestitures of businesses, net of cash transferred		-			-			-			8
Other		(8	)		-			(48	)		-
Change in cash from investing activities		(37,838	)		(85	)		(38,059	)		(198	)
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		1			-			1			-
Repurchases of DHI Group common stock		(8	)		-			(10	)
Repurchases of Class V Group common stock		(132	)		-			(132	)		-
Repurchases of common stock of subsidiaries		(611	)		-			(611	)		-
Contributions from non-controlling interests, net		-			-			100			-
Issuance of common stock under employee plans		-			-			-			2
Payments for debt issuance costs		(834	)		(3	)		(849	)		(10	)
Proceeds from debt		43,838			1,815			45,986			4,893
Repayments of debt		(7,000	)		(2,459	)		(9,638	)		(5,208	)
Other		1			(1	)		5			2
Change in cash from financing activities		39,659			(648	)		38,810			(321	)

Effect of exchange rate changes on cash and cash equivalents		(21	)		(38	)		31			(88	)

Change in cash and cash equivalents		1,531			(312	)		2,328			584

Cash and cash equivalents at beginning of the period		7,373			6,294			6,576			5,398
Cash and cash equivalents at end of the period	$	8,904		$	5,982		$	8,904		$	5,982
Less: Cash included in assets held for sale		82			328			82			328
Cash and cash equivalents from continuing operations	$	8,822		$	5,654		$	8,822		$	5,654

SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES

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