Document
false0001571996 0001571996 2020-02-24 2020-02-24


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): February 24, 2020
 ______________________
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: (800289-3355
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class C Common Stock, par value $0.01 per share
DELL
New York Stock Exchange
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 February 27, 2020, Dell Technologies Inc. (the “Company”) issued a press release announcing its financial results for its fiscal quarter and fiscal year ended January 31, 2020. 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 8.01    Other Events.

Common Stock Repurchase Program

On February 24, 2020, the Board of Directors of the Company approved a stock repurchase program under which the Company is authorized to use assets of the Company to repurchase up to $1 billion of shares of the Company’s Class C Common Stock, exclusive of any fees, commissions or other expenses related to such repurchases, from time to time over a 24-month period expiring on February 28, 2022. Shares may be repurchased under the program through open market purchases, block trades, or accelerated or other structured share repurchase programs. To the extent not retired, shares repurchased under the repurchase program will be placed in the Company’s treasury. The repurchase of shares is expected to be funded from cash on hand.

The extent to which the Company repurchases shares of Class C Common Stock, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by the Company’s management. The repurchase program may be suspended or discontinued at any time.

Item 9.01    Financial Statements and Exhibits.

(d)  Exhibits.

The following documents are herewith filed or furnished as exhibits to this report:
Exhibit
Number
  
Description
  
104
 
Cover Page Interactive Data File — the cover page XBRL tags are embedded within the Inline XBRL document.



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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: February 27, 2020
Dell Technologies Inc.
 
By:
/s/ Robert Potts
 
 
Robert Potts
Senior Vice President and Assistant Secretary
 
 
 (Duly Authorized Officer)
 


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Exhibit


Exhibit 99.1

News Release

 https://cdn.kscope.io/3765d7842e67d65ad2d14b408cc2f3f5-dtilogoa10.jpg


Dell Technologies Reports Fiscal Year 2020 Fourth Quarter
and Full Year Financial Results


ROUND ROCK, Texas February 27, 2020
    
News summary
Record full year revenue of $92.2 billion
Full year net income of $5.5 billion; adjusted EBITDA of $11.8 billion
Record Client Solutions Group full year revenue of $45.8 billion
Share repurchase program of up to $1 billion over the next 24 months


Full story
Dell Technologies (NYSE: DELL) announces financial results for its fiscal 2020 fourth quarter and full year.

Fourth quarter revenue was $24.0 billion, up 1 percent, and non-GAAP revenue was $24.1 billion, up 1 percent, over the same period last year. During the quarter, the company generated operating income of $717 million, a 117 percent increase over the same period in the prior year, and non-GAAP operating income of $2.8 billion, up 4 percent over the prior year. Net income was $416 million or approximately 2 percent of revenue. Non-GAAP net income was $1.7 billion or 7 percent of non-GAAP revenue. Diluted earnings per share was $0.54 and non-GAAP diluted earnings per share was $2.00.

For the full year, revenue was $92.2 billion, up 2 percent, and non-GAAP revenue was $92.5 billion, up 1 percent, over the prior year. The company increased its operating income to $2.6 billion from a $0.2 billion loss in the prior year and generated non-GAAP operating income of $10.1 billion, up 15 percent over the prior year. Cash flow from operations was $9.3 billion, up 33 percent from fiscal year 2019. For the full year, net income was $5.5 billion and non-GAAP net income was $6.1 billion. Diluted earnings per share was $6.03 and non-GAAP diluted earnings per share was $7.35.

“In fiscal 2020, we focused on integration and simplicity across our businesses and product portfolio to accelerate winning go-to-market solutions for our customers,” said Jeff Clarke, chief operating officer, Dell Technologies. “With more than $180 billion in revenue over the past two years and significant investments in research, innovation and breadth of capability, we have a uniquely advantaged position heading into the next digital decade.”

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Fourth Quarter and Full Year Fiscal 2020 Financial Results
 
Three Months Ended
 
 
 
Fiscal Year Ended
 
 
 
January 31, 2020
 
February 1, 2019
 
Change
 
January 31, 2020
 
February 1, 2019
 
Change
 
(in millions, except percentages; unaudited)
Total net revenue
$
24,032

 
$
23,841

 
1%
 
$
92,154

 
$
90,621

 
2%
Operating income (loss)
$
717

 
$
331

 
117%
 
$
2,622

 
$
(191
)
 
NM
Net income (loss)
$
416

 
$
(287
)
 
245%
 
$
5,529

 
$
(2,181
)
 
354%
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP net revenue
$
24,129

 
$
24,008

 
1%
 
$
92,501

 
$
91,324

 
1%
Non-GAAP operating income
$
2,767

 
$
2,656

 
4%
 
$
10,148

 
$
8,854

 
15%
Non-GAAP net income
$
1,684

 
$
1,592

 
6%
 
$
6,089

 
$
5,227

 
16%
Adjusted EBITDA
$
3,201

 
$
3,028

 
6%
 
$
11,787

 
$
10,296

 
14%
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.

Dell Technologies ended the quarter with a cash and investments balance of $10.2 billion. The company repaid approximately $1.5 billion of gross debt in the quarter and $5 billion for the year, achieving its fiscal 2020 target. The company has paid down $19.5 billion in gross debt since closing the EMC transaction in September 2016.

“This year’s results were driven by operational focus and expanding synergies across Dell Technologies and our ability to adjust to win in any environment,” said Tom Sweet, chief financial officer, Dell Technologies. “We delivered full year net income of $5.5 billion and adjusted EBITDA of $11.8 billion in fiscal 2020. I’m pleased with our profitability and remain committed to maximizing Dell Technologies’ equity value for all aligned shareholders.”
The company also announced today a new share repurchase program of up to $1 billion over the next 24 months, effective immediately. While de-levering remains the primary capital allocation goal, the company sees an opportunity to take advantage of what it believes is a significant discount in the current stock price. This share repurchase plan is another lever the company will use as it continues to focus on creating value for shareholders.
Operating segments summary

Client Solutions Group revenue for the fourth quarter was $11.8 billion, up 8 percent year over year. This was driven by $8.6 billion in commercial revenue, a 10 percent increase, and $3.2 billion in consumer revenue, a 4 percent increase. Operating income was $624 million or approximately 5 percent of Client Solutions Group revenue. For the full year, the Client Solutions Group delivered record revenue of $45.8 billion, up 6 percent versus the prior year, with commercial up 11 percent. Client Solutions Group full year operating income was $3.1 billion.


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Key highlights:
Shipped a record 46.5 million units during the 2019 calendar year1 
Gained PC unit share for the last seven years in a row1 
Achieved double-digit unit and revenue growth in commercial desktops and workstations, completing a full fiscal year of quarterly double-digit growth in the segment

Infrastructure Solutions Group revenue for the fourth quarter was $8.8 billion, down 11 percent. Storage revenue was $4.5 billion, down 3 percent, while servers and networking revenue was $4.3 billion, down 19 percent. Operating income for the group was $1.1 billion or approximately 13 percent of revenue. Revenue for full fiscal 2020 was $34.0 billion, with operating income of $4.0 billion.

Key highlights:
Gained 590 basis points of mainstream server revenue share over the last 3 years, and have been the #1 worldwide provider for 7 quarters2 
Strong customer traction with our co-engineered “first and best” solutions, including Dell Technologies Cloud, Unified Workspace, VxRail and smart fabric director
Announced the latest advancements to Dell Technologies Cloud, including a new subscription-based model that makes it easier for customers to accelerate hybrid cloud deployments and simplify IT operations

VMware revenue for the fourth quarter was $3.1 billion, with operating income of $1.0 billion. The segment delivered $10.9 billion in revenue and $3.1 billion in operating income for the full fiscal year. During the fourth quarter, VMware, Inc. acquired Pivotal Software, Inc. (“Pivotal”), and VMware’s segment results are inclusive of Pivotal. Prior periods have been recast to conform with current period presentation.

Dell Technologies World
Join us May 4 - May 7 in Las Vegas at Dell Technologies World, the company’s flagship event that brings together latest emerging trends, technology and gurus. During the event, experts from all of Dell Technologies businesses will demonstrate to customers and partners the connected ecosystem of IT infrastructure, applications, devices and security that can enable real transformation across their organizations. Register here.

Conference call information
As previously announced, the company will hold a conference call to discuss its fourth quarter and full year performance and financial guidance today, February 27, 2020, at 4:30 p.m. CST. The conference call will be broadcast live over the internet and can be accessed at https://investors.delltechnologies.com/events-and-presentations/upcoming-events

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 https://investors.delltechnologies.com/financial-information/quarterly-results.



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About Dell Technologies
Dell Technologies (NYSE:DELL) helps organizations and individuals build their digital future and transform how they work, live and play. The company provides customers with the industry’s broadest and most innovative technology and services portfolio for the data era.
 
CONTACTS:
Investor Relations: Investor_Relations@Dell.com
Media Relations: Media.Relations@Dell.com

# # #

Copyright © 2020 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
IDC WW Quarterly Personal Computing Device (PDC) Tracker CY19Q4.
2
IDC WW Quarterly Server Tracker CY19Q3; share gains calculated on a trailing-twelve-months basis.


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, non-GAAP net income attributable to non-controlling interests, non-GAAP net income attributable to Dell Technologies Inc. - basic, non-GAAP net income attributable to Dell Technologies Inc. - diluted, non-GAAP earnings per share attributable to Dell Technologies Inc. - basic, non-GAAP earnings per share attributable to Dell Technologies Inc. - diluted, 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 non-GAAP financial measure to the most directly comparable 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, including its current expectations for fiscal 2021 GAAP and non-GAAP revenue, GAAP and non-GAAP operating income, and GAAP and non-GAAP earnings per share. In some cases, you can identify these statements by such forward-looking words as “anticipate,” “believe,” “confidence,” “could,” “estimate,” “expect,” “guidance,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “will” and “would,” or similar words or expressions that refer to future events or outcomes.
Dell Technologies’ results or events in future periods could differ materially from those expressed or implied by these forward-looking statements because of risks, uncertainties, and other factors that include, but are not limited to, the following: competitive pressures; Dell Technologies’ reliance on third-party suppliers for products and components, including reliance on single-source or limited-source suppliers; Dell Technologies’ ability to achieve favorable pricing from its vendors; adverse global economic conditions and instability in financial markets; Dell Technologies’ execution of its growth, business and acquisition strategies; the success of Dell Technologies’ cost efficiency measures; Dell Technologies’ ability to manage solutions and products and services transitions in an effective manner; Dell Technologies’ ability to deliver high-quality products and services; Dell Technologies’ foreign operations and ability to generate substantial non-U.S. net revenue; Dell Technologies’ product, customer, and geographic sales mix, and seasonal sales trends; the performance of Dell Technologies’ sales channel partners; access to the capital markets by Dell Technologies or its customers; weak economic conditions and additional regulation including tariffs and other effects of trade 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, Inc.; 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 1, 2019, quarterly reports on

4



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.

5



DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Income (Loss) and Related Financial Highlights
(in millions, except percentages; unaudited)
 
Three Months Ended
 
 
 
Fiscal Year Ended
 
 
 
January 31, 2020
 
February 1, 2019
 
Change
 
January 31, 2020
 
February 1, 2019
 
Change
Net revenue (a):
 
 
 
 
 
 
 
 
 
 
 
Products
$
18,153

 
$
18,676

 
(3)%
 
$
69,918

 
$
70,751

 
(1)%
Services
5,879

 
5,165

 
14%
 
22,236

 
19,870

 
12%
Total net revenue
24,032

 
23,841

 
1%
 
92,154

 
90,621

 
2%
Cost of net revenue:
 
 
 
 
 
 
 
 
 
 
 
Products
13,999

 
14,775

 
(5)%
 
54,525

 
57,889

 
(6)%
Services
2,349

 
1,957

 
20%
 
8,696

 
7,679

 
13%
Total cost of net revenue
16,348

 
16,732

 
(2)%
 
63,221

 
65,568

 
(4)%
Gross margin
7,684

 
7,109

 
8%
 
28,933

 
25,053

 
15%
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Selling, general, and administrative
5,642

 
5,576

 
1%
 
21,319

 
20,640

 
3%
Research and development
1,325

 
1,202

 
10%
 
4,992

 
4,604

 
8%
Total operating expenses
6,967

 
6,778

 
3%
 
26,311

 
25,244

 
4%
Operating income (loss)
717

 
331

 
117%
 
2,622

 
(191
)
 
NM
Interest and other, net
(626
)
 
(606
)
 
(3)%
 
(2,626
)
 
(2,170
)
 
(21)%
Income (loss) before income taxes
91

 
(275
)
 
133%
 
(4
)
 
(2,361
)
 
100%
Income tax provision (benefit)
(325
)
 
12

 
NM
 
(5,533
)
 
(180
)
 
NM
Net income (loss)
416

 
(287
)
 
245%
 
5,529

 
(2,181
)
 
354%
Less: Net income attributable to non-controlling interests
8

 
12

 
(33)%
 
913

 
129

 
608%
Net income (loss) attributable to Dell Technologies Inc.
$
408

 
$
(299
)
 
236%
 
$
4,616

 
$
(2,310
)
 
300%
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of Total Net Revenue:
 
 
 
 
 
 
 
 
 
 
Gross margin
32
 %
 
30
 %
 
 
 
31
 %
 
28
 %
 
 
Selling, general, and administrative
23
 %
 
23
 %
 
 
 
23
 %
 
23
 %
 
 
Research and development
6
 %
 
5
 %
 
 
 
5
 %
 
5
 %
 
 
Operating expenses
29
 %
 
28
 %
 
 
 
29
 %
 
28
 %
 
 
Operating income (loss)
3
 %
 
1
 %
 
 
 
3
 %
 
 %
 
 
Income (loss) before income taxes
 %
 
(1
)%
 
 
 
 %
 
(3
)%
 
 
Net income (loss)
2
 %
 
(1
)%
 
 
 
6
 %
 
(2
)%
 
 
Income tax rate
(357.1
)%
 
(4.4
)%
 
 
 
138325.0
 %
 
7.6
 %
 
 
____________________
(a)
During the fourth quarter of Fiscal 2020, the Company reclassified revenue associated with certain service and software-as-a-service offerings from product revenue to services revenue. There was no change to total revenue as a result of the reclassifications. Prior period results have been recast to conform with current period presentation.

6



DELL TECHNOLOGIES INC.
Consolidated Statements of Financial Position
(in millions; unaudited)
 
January 31, 2020
 
February 1, 2019
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
9,302

 
$
9,676

Accounts receivable, net
12,484

 
12,371

Short-term financing receivables, net
4,895

 
4,398

Inventories, net
3,281

 
3,649

Other current assets
6,934

 
6,044

Total current assets
36,896

 
36,138

Property, plant, and equipment, net
6,027

 
5,259

Long-term investments
864

 
1,005

Long-term financing receivables, net
4,848

 
4,224

Goodwill
41,691

 
40,089

Intangible assets, net
18,107

 
22,270

Other non-current assets
10,428

 
2,835

Total assets
$
118,861

 
$
111,820

LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
 
 
 
Short-term debt
$
7,737

 
$
4,320

Accounts payable
20,065

 
19,213

Accrued and other
9,359

 
8,495

Short-term deferred revenue
14,881

 
12,944

Total current liabilities
52,042

 
44,972

Long-term debt
44,319

 
49,201

Long-term deferred revenue
12,919

 
11,066

Other non-current liabilities
5,797

 
6,327

Total liabilities
115,077

 
111,566

Redeemable shares
629

 
1,196

Stockholders’ equity (deficit):
 
 
 
Total Dell Technologies Inc. stockholders’ deficit
(1,574
)
 
(5,765
)
Non-controlling interests
4,729

 
4,823

Total stockholders’ equity (deficit)
3,155

 
(942
)
Total liabilities, redeemable shares, and stockholders’ equity (deficit)
$
118,861

 
$
111,820



7



DELL TECHNOLOGIES INC.
Condensed Consolidated Statements of Cash Flows
(in millions; unaudited)
 
Three Months Ended
 
Fiscal Year Ended
 
January 31, 2020
 
February 1, 2019
 
January 31, 2020
 
February 1, 2019
Cash flows from operating activities:
 
 
 
 
 
 
 
Net income (loss)
$
416

 
$
(287
)
 
$
5,529

 
$
(2,181
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
3,092

 
2,653

 
3,762

 
9,172

Change in cash from operating activities
3,508

 
2,366

 
9,291

 
6,991

Cash flows from investing activities:
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
 
Purchases
(39
)
 
(13
)
 
(181
)
 
(925
)
Maturities and sales
48

 
4,427

 
497

 
6,612

Capital expenditures
(629
)
 
(297
)
 
(2,241
)
 
(1,158
)
Capitalized software development costs
(71
)
 
(93
)
 
(335
)
 
(339
)
Acquisition of businesses, net
(26
)
 
(419
)
 
(2,455
)
 
(912
)
Divestitures of businesses, net

 

 

 
142

Asset acquisitions, net

 

 
(8
)
 
(59
)
Asset dispositions, net

 

 
(3
)
 
(12
)
Other
13

 
5

 
40

 
40

Change in cash from investing activities
(704
)
 
3,610

 
(4,686
)
 
3,389

Cash flows from financing activities:
 
 
 
 
 
 
 
Share repurchases for tax withholdings of equity awards
(140
)
 
(136
)
 
(547
)
 
(387
)
Dividends paid to VMware, Inc.s public stockholders

 
(2,134
)
 

 
(2,134
)
Proceeds from the issuance of common stock
207

 
37

 
658

 
805

Repurchases of Class V Common Stock

 
(14,000
)
 

 
(14,000
)
Repurchases of common stock of subsidiaries
(1,721
)
 
(55
)
 
(3,006
)
 
(56
)
Proceeds from debt
2,982

 
6,602

 
20,638

 
13,045

Repayments of debt
(3,326
)
 
(1,782
)
 
(22,274
)
 
(11,451
)
Other
(6
)
 
(17
)
 
(73
)
 
(151
)
Change in cash from financing activities
(2,004
)
 
(11,485
)
 
(4,604
)
 
(14,329
)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
10

 
73

 
(90
)
 
(189
)
Change in cash, cash equivalents, and restricted cash
810

 
(5,436
)
 
(89
)
 
(4,138
)
Cash, cash equivalents, and restricted cash at beginning of the period
9,341

 
15,676

 
10,240

 
14,378

Cash, cash equivalents, and restricted cash at end of the period
$
10,151

 
$
10,240

 
$
10,151

 
$
10,240



8



DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued on next page)
 
Three Months Ended
 
 
 
Fiscal Year Ended
 
 
 
January 31, 2020
 
February 1, 2019
 
Change
 
January 31, 2020
 
February 1, 2019
 
Change
Infrastructure Solutions Group (ISG):
Net Revenue:
 
 
 
 
 
 
 
 
 
 
 
Servers and networking
$
4,269

 
$
5,253

 
(19)%
 
$
17,127

 
$
19,953

 
(14)%
Storage
4,487

 
4,636

 
(3)%
 
16,842

 
16,767

 
—%
Total ISG net revenue
$
8,756

 
$
9,889

 
(11)%
 
$
33,969

 
$
36,720

 
(7)%
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income:
 
 
 
 
 
 
 
 
 
 
 
ISG operating income
$
1,112

 
$
1,265

 
(12)%
 
$
4,001

 
$
4,151

 
(4)%
% of ISG net revenue
13
%
 
13
%
 
 
 
12
%
 
11
%
 
 
% of total reportable segment operating income
40
%
 
47
%
 
 
 
39
%
 
46
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Client Solutions Group (CSG):
Net Revenue:
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
8,563

 
$
7,808

 
10%
 
$
34,277

 
$
30,893

 
11%
Consumer
3,207

 
3,084

 
4%
 
11,561

 
12,303

 
(6)%
Total CSG net revenue
$
11,770

 
$
10,892

 
8%
 
$
45,838

 
$
43,196

 
6%
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income:
 
 
 
 
 
 
 
 
 
 
 
CSG operating income
$
624

 
$
555

 
12%
 
$
3,138

 
$
1,960

 
60%
% of CSG net revenue
5
%
 
5
%
 
 
 
7
%
 
5
%
 
 
% of total reportable segment operating income
23
%
 
21
%
 
 
 
31
%
 
22
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VMware (a):
Net Revenue:
 
 
 
 
 
 
 
 
 
 
 
Total VMware net revenue
$
3,126

 
$
2,798

 
12%
 
$
10,905

 
$
9,741

 
12%
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income:
 
 
 
 
 
 
 
 
 
 
 
VMware operating income
$
1,026

 
$
850

 
21%
 
$
3,081

 
$
2,926

 
5%
% of VMware net revenue
33
%
 
30
%
 
 
 
28
%
 
30
%
 
 
% of total reportable segment operating income
37
%
 
32
%
 
 
 
30
%
 
32
%
 
 
____________________
(a)
During the fourth quarter of Fiscal 2020, the Company reclassified Pivotal operating results from Other businesses to the VMware reportable segment. There was no change to consolidated results as a result of the reclassification. Prior period results have been recast to conform with current period presentation.




9



DELL TECHNOLOGIES INC.
Segment Information
(in millions, except percentages; unaudited; continued)
 
Three Months Ended
 
Fiscal Year Ended
 
January 31, 2020
 
February 1, 2019
 
January 31, 2020
 
February 1, 2019
Reconciliation to consolidated net revenue:
 
 
 
 
 
 
Reportable segment net revenue (a)
$
23,652

 
$
23,579

 
$
90,712

 
$
89,657

Other businesses (a) (b)
477

 
432

 
1,788

 
1,676

Unallocated transactions (c)

 
(3
)
 
1

 
(9
)
Impact of purchase accounting (d)
(97
)
 
(167
)
 
(347
)
 
(703
)
Total consolidated net revenue
$
24,032

 
$
23,841

 
$
92,154

 
$
90,621

 
 
 
 
 
 
 
 
Reconciliation to consolidated operating income (loss):
 
 
 
 
Reportable segment operating income (a)
$
2,762

 
$
2,670

 
$
10,220

 
$
9,037

Other businesses (a) (b)
5

 
(13
)
 
(43
)
 
(111
)
Unallocated transactions (c)

 
(1
)
 
(29
)
 
(72
)
Impact of purchase accounting (d)
(112
)
 
(190
)
 
(411
)
 
(820
)
Amortization of intangibles
(1,074
)
 
(1,544
)
 
(4,408
)
 
(6,138
)
Transaction-related expenses (e)
(120
)
 
(313
)
 
(285
)
 
(750
)
Stock-based compensation expense (f)
(376
)
 
(247
)
 
(1,262
)
 
(918
)
Other corporate expenses (g)
(368
)
 
(31
)
 
(1,160
)
 
(419
)
Total consolidated operating income (loss)
$
717

 
$
331

 
$
2,622

 
$
(191
)
_________________
(a)
During the fourth quarter of Fiscal 2020, the Company reclassified Pivotal operating results from Other businesses to the VMware reportable segment. Prior period results have been recast to conform with current period presentation.
(b)
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.
(c)
Unallocated transactions includes other corporate items that are not allocated to Dell Technologies’ reportable segments.
(d)
Impact of purchase accounting includes non-cash purchase accounting adjustments that are primarily related to the EMC merger transaction.
(e)
Transaction-related expenses includes acquisition, integration, and divestiture related costs, as well as the costs incurred in the Class V transaction.
(f)
Stock-based compensation expense consists of equity awards granted based on the estimated fair value of those awards at grant date.
(g)
Other corporate expenses includes impairment charges and severance, facility action, and other costs.


10



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, non-GAAP net income attributable to non-controlling interests, non-GAAP net income attributable to Dell Technologies Inc. - basic, non-GAAP net income attributable to Dell Technologies Inc. - diluted, non-GAAP earnings per share attributable to Dell Technologies Inc. - basic, non-GAAP earnings per share attributable to Dell Technologies Inc. - diluted, 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 these reports in conjunction with the presentation of non-GAAP financial measures.


11



DELL TECHNOLOGIES INC.
Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited)
 
Three Months Ended
 
 
 
Fiscal Year Ended
 
 
 
January 31, 2020
 
February 1, 2019
 
Change
 
January 31, 2020
 
February 1, 2019
 
Change
Non-GAAP net revenue
$
24,129

 
$
24,008

 
1%
 
$
92,501

 
$
91,324

 
1%
Non-GAAP gross margin
$
8,375

 
$
8,037

 
4%
 
$
31,563

 
$
29,022

 
9%
% of non-GAAP net revenue
35
%
 
33
%
 
 
 
34
%
 
32
%
 
 
Non-GAAP operating expenses
$
5,608

 
$
5,381

 
4%
 
$
21,415

 
$
20,168

 
6%
% of non-GAAP net revenue
23
%
 
22
%
 
 
 
23
%
 
22
%
 
 
Non-GAAP operating income
$
2,767

 
$
2,656

 
4%
 
$
10,148

 
$
8,854

 
15%
% of non-GAAP net revenue
11
%
 
11
%
 
 
 
11
%
 
10
%
 
 
Non-GAAP net income
$
1,684

 
$
1,592

 
6%
 
$
6,089

 
$
5,227

 
16%
% of non-GAAP net revenue
7
%
 
7
%
 
 
 
7
%
 
6
%
 
 
Adjusted EBITDA
$
3,201

 
$
3,028

 
6%
 
$
11,787

 
$
10,296

 
14%
% of non-GAAP net revenue
13
%
 
13
%
 
 
 
13
%
 
11
%
 
 


12



DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited; continued on next page)
 
Three Months Ended
 
 
 
Fiscal Year Ended
 
 
 
January 31, 2020
 
February 1, 2019
 
Change
 
January 31, 2020
 
February 1, 2019
 
Change
Net revenue
$
24,032

 
$
23,841

 
1%
 
$
92,154

 
$
90,621

 
2%
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Impact of purchase accounting
97

 
167

 
 
 
347

 
703

 
 
Non-GAAP net revenue
$
24,129

 
$
24,008

 
1%
 
$
92,501

 
$
91,324

 
1%
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
$
7,684

 
$
7,109

 
8%
 
$
28,933

 
$
25,053

 
15%
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangibles
526

 
729

 
 
 
2,081

 
2,883

 
 
Impact of purchase accounting
98

 
171

 
 
 
353

 
720

 
 
Transaction-related expenses

 
(26
)
 
 
 
(5
)
 
213

 
 
Stock-based compensation expense
38

 
37

 
 
 
129

 
91

 
 
Other corporate expenses
29

 
17

 
 
 
72

 
62

 
 
Non-GAAP gross margin
$
8,375

 
$
8,037

 
4%
 
$
31,563

 
$
29,022

 
9%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
$
6,967

 
$
6,778

 
3%
 
$
26,311

 
$
25,244

 
4%
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangibles
(548
)
 
(815
)
 
 
 
(2,327
)
 
(3,255
)
 
 
Impact of purchase accounting
(14
)
 
(19
)
 
 
 
(58
)
 
(100
)
 
 
Transaction-related expenses
(120
)
 
(339
)
 
 
 
(290
)
 
(537
)
 
 
Stock-based compensation expense
(338
)
 
(210
)
 
 
 
(1,133
)
 
(827
)
 
 
Other corporate expenses
(339
)
 
(14
)
 
 
 
(1,088
)
 
(357
)
 
 
Non-GAAP operating expenses
$
5,608

 
$
5,381

 
4%
 
$
21,415

 
$
20,168

 
6%
 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss)
$
717

 
$
331

 
117%
 
$
2,622

 
$
(191
)
 
NM
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangibles
1,074

 
1,544

 
 
 
4,408

 
6,138

 
 
Impact of purchase accounting
112

 
190

 
 
 
411

 
820

 
 
Transaction-related expenses
120

 
313

 
 
 
285

 
750

 
 
Stock-based compensation expense
376

 
247

 
 
 
1,262

 
918

 
 
Other corporate expenses
368

 
31

 
 
 
1,160

 
419

 
 
Non-GAAP operating income
$
2,767

 
$
2,656

 
4%
 
$
10,148

 
$
8,854

 
15%



13



DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
(in millions, except percentages; unaudited; continued)
 
Three Months Ended
 
 
 
Fiscal Year Ended
 
 
 
January 31, 2020
 
February 1, 2019
 
Change
 
January 31, 2020
 
February 1, 2019
 
Change
Net income (loss)
$
416

 
$
(287
)
 
245%
 
$
5,529

 
$
(2,181
)
 
354%
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangibles
1,074

 
1,544

 
 
 
4,408

 
6,138

 
 
Impact of purchase accounting
112

 
190

 
 
 
411

 
820

 
 
Transaction-related expenses
120

 
387

 
 
 
285

 
824

 
 
Stock-based compensation expense
376

 
247

 
 
 
1,262

 
918

 
 
Other corporate expenses
368

 
31

 
 
 
1,160

 
419

 
 
Fair value adjustments on equity investments
(34
)
 
(113
)
 
 
 
(194
)
 
(342
)
 
 
Aggregate adjustment for income taxes
(748
)
 
(407
)
 
 
 
(6,772
)
 
(1,369
)
 
 
Non-GAAP net income (a)
$
1,684

 
$
1,592

 
6%
 
$
6,089

 
$
5,227

 
16%
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$
416

 
$
(287
)
 
245%
 
$
5,529

 
$
(2,181
)
 
354%
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Interest and other, net
626

 
606

 
 
 
2,626

 
2,170

 
 
Income tax provision (benefit)
(325
)
 
12

 
 
 
(5,533
)
 
(180
)
 
 
Depreciation and amortization
1,535

 
1,940

 
 
 
6,143

 
7,746

 
 
EBITDA
$
2,252

 
$
2,271

 
(1)%
 
$
8,765

 
$
7,555

 
16%
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA
$
2,252

 
$
2,271

 
(1)%
 
$
8,765

 
$
7,555

 
16%
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
376

 
247

 
 
 
1,262

 
918

 
 
Impact of purchase accounting
96

 
168

 
 
 
347

 
704

 
 
Transaction-related expenses
120

 
313

 
 
 
285

 
722

 
 
Other corporate expenses
357

 
29

 
 
 
1,128

 
397

 
 
Adjusted EBITDA
$
3,201

 
$
3,028

 
6%
 
$
11,787

 
$
10,296

 
14%




14



DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
For the Three Months Ended January 31, 2020
(in millions, except per share amounts; unaudited)
 
GAAP
 
Amortization of intangibles
 
Impact of purchase accounting
 
Transaction-related expenses
 
Stock-based compensation expense
 
Other corporate expenses
 
Fair value adjustments on equity investments
 
Aggregate adjustment for income taxes
 
Non-GAAP
Net income
$
416

 
1,074

 
112

 
120

 
376

 
368

 
(34
)
 
(748
)
 
$
1,684

Less: Net income attributable to non-controlling interests (a)
8

 
76

 
6

 
32

 
65

 
45

 

 
(61
)
 
171

Net income attributable to Dell Technologies Inc. - basic
408

 
998

 
106

 
88

 
311

 
323

 
(34
)
 
(687
)
 
1,513

Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. (b)
(3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(8
)
Net income attributable to Dell Technologies Inc. - diluted
$
405

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,505

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share - basic
$
0.56

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2.06

Earnings per share - diluted
$
0.54

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2.00

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
734

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
734

Weighted-average shares outstanding - diluted
754

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
754

_________________
(a)
Net income attributable to non-controlling interests is calculated by multiplying the minority interest percentage of VMware, Inc., Pivotal Software, Inc., and SecureWorks Corp. by their non-GAAP net income adjustments for the period presented.
(b)
Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. represents the impact of VMware, Inc.’s dilutive securities on the diluted earnings per share of Dell Technologies Inc. and is calculated by multiplying the difference between VMware, Inc.’s basic and diluted earnings per share by the number of shares of VMware, Inc. common stock held by Dell Technologies Inc.

15



DELL TECHNOLOGIES INC.
Reconciliation of Selected Non-GAAP Financial Measures
For the Fiscal Year Ended January 31, 2020
(in millions, except per share amounts; unaudited)
 
GAAP
 
Amortization of intangibles
 
Impact of purchase accounting
 
Transaction-related expenses
 
Stock-based compensation expense
 
Other corporate expenses
 
Fair value adjustments on equity investments
 
Aggregate adjustment for income taxes
 
Non-GAAP
Net income
$
5,529

 
4,408

 
411

 
285

 
1,262

 
1,160

 
(194
)
 
(6,772
)
 
$
6,089

Less: Net income attributable to non-controlling interests (a)
913

 
295

 
23

 
50

 
217

 
45

 
24

 
(1,032
)
 
535

Net income attributable to Dell Technologies Inc. - basic
4,616

 
4,113

 
388

 
235

 
1,045

 
1,115

 
(218
)
 
(5,740
)
 
5,554

Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. (b)
(84
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(35
)
Net income attributable to Dell Technologies Inc. - diluted
$
4,532

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
5,519

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share - basic
$
6.38

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
7.67

Earnings per share - diluted
$
6.03

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
7.35

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
724

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
724

Weighted-average shares outstanding - diluted
751

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
751

_________________
(a)
Net income attributable to non-controlling interests is calculated by multiplying the minority interest percentage of VMware, Inc., Pivotal Software, Inc., and SecureWorks Corp. by their non-GAAP net income adjustments for the period presented.
(b)
Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc. represents the impact of VMware, Inc.’s dilutive securities on the diluted earnings per share of Dell Technologies Inc. and is calculated by multiplying the difference between VMware, Inc.’s basic and diluted earnings per share by the number of shares of VMware, Inc. common stock held by Dell Technologies Inc.


16