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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