Dell Technologies Reports Fiscal Year 2017 Fourth Quarter and Full Year Financial Results
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Dell Technologies Reports Fiscal Year 2017 Fourth Quarter and Full Year Financial Results

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Dell Technologies (NYSE: DVMT) announces its fiscal 2017 fourth quarter and full year results, which reflect the growth and impact of the EMC transaction.

For the fourth quarter, consolidated revenue from continuing operations was $20.1 billion and non-GAAP revenue from continuing operations was $20.6 billion. During the quarter, the company generated an operating loss of $1.7 billion, with a non-GAAP operating income of $1.8 billion.

For the full year, consolidated revenue from continuing operations was $61.6 billion and non-GAAP revenue from continuing operations was $62.8 billion. The company generated an operating loss of $3.3 billion, with a non-GAAP operating income of $5.1 billion.

Due to the EMC transaction as well as the Dell going-private transaction, significant non-cash bridging items will remain between GAAP and non-GAAP results for the next few years. Prior-year historical Dell Technologies financials do not include EMC historical results, thereby impacting any year-over-year comparisons.

"I'm pleased with our overall fiscal 2017 performance, with growth in our client business and positive momentum from investments we're making in our infrastructure business," said Tom Sweet, chief financial officer, Dell Technologies Inc. "In our fiscal year 2018, we'll drive that momentum forward, beginning with our new sales go-to-market capabilities, and continue to target identified revenue and cost synergies while investing in our broad portfolio of solutions."

The company ended the year with a cash and investments balance of $15.3 billion, an increase of $287 million from the third quarter.

Since closing the EMC transaction, Dell Technologies has paid down approximately $7 billion in debt and repurchased $824 million of Class V Common Stock under the previously announced Class V Common Stock repurchase programs.

Today the company also announced the board has approved an amendment to its existing Class V Group Repurchase Program for up to an additional $300 million over six months. The amount will be funded solely through a new VMware Class A Stock Purchase Agreement with VMware.

Fiscal year 2017 fourth quarter and full year results

                       
 

Three Months Ended

     

Fiscal Year Ended

   
 

February 3, 2017

 

January 29, 2016

 

Change

 

February 3, 2017

 

January 29, 2016

 

Change

 

(in millions, except percentages, unaudited)

                       

Net revenue

$                 20,074

 

$                  12,679

 

58 %

 

$                 61,642

 

$                  50,911

 

21 %

Operating loss

$                (1,668)

 

$                      (26)

 

NM

 

$                (3,252)

 

$                    (514)

 

(533)%

Net loss from continuing operations

$                (1,414)

 

$                    (168)

 

(742)%

 

$                (3,737)

 

$                 (1,168)

 

(220)%

                       

Non-GAAP net revenue

$                 20,581

 

$                  12,768

 

61 %

 

$                 62,822

 

$                  51,370

 

22 %

Non-GAAP operating income

$                   1,843

 

$                       655

 

181 %

 

$                   5,113

 

$                    2,225

 

130 %

Non-GAAP net income from continuing operations

$                   1,091

 

$                       382

 

186 %

 

$                   2,687

 

$                    1,053

 

155 %

Adjusted EBITDA

$                   2,184

 

$                       753

 

190 %

 

$                   5,941

 

$                    2,633

 

126 %

 

 

Dell Technologies' fiscal year 2017 included an additional week, which is incorporated into the company's fourth quarter results.

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.

Operating segments summary

Client Solutions Group continued to outgrow the market worldwide for units in both commercial and consumer product categories on a calendar year basis. Revenue for the fiscal fourth quarter was $9.8 billion, up 11 percent versus the fourth quarter of last year, and revenue for the full year was $36.8 billion, up 2 percent year over fiscal year 2016. Operating income was $342 million for the quarter, and $1.8 billion for the full year.

Key calendar fourth quarter highlights include: 

Infrastructure Solutions Group generated $8.4 billion of revenue in the fourth quarter, which includes $3.6 billion in servers and networking and $4.8 billion in storage, and an operating income of $1 billion.

Key calendar fourth quarter highlights:

VMware revenue for the fourth quarter was $1.9 billion, with operating income of $565 million, or 29.2 percent of revenue.

Conference call information

As previously announced, the company will hold a conference call to discuss its fourth quarter and full-year performance today at 7 a.m. CDT. 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 30 days.

A slide presentation containing additional financial and operating information may be downloaded from Dell Technologies' website at investors.delltechnologies.com.

Dell Technologies Investor Meeting

Dell Technologies will host a meeting for investors April 5, 2017, at 1:30 p.m. EDT in New York. The meeting will feature discussions from Chief Financial Officer Tom Sweet, Infrastructure Solutions Group President David Goulden, and Treasurer Tyler Johnson with a focus on the company's strategy, integration efforts and capital structure. Due to limited seating, onsite attendance is by invitation only. A live webcast and replay of the meeting will be available on the event page of Dell Technologies Investor Relations website at investors.delltechnologies.com.

Dell EMC World

Join us May 8-11, 2017 at Dell EMC World in Las Vegas, Dell Technologies' flagship event, bringing together technology and business professionals to network, share ideas and help co-create a better future. This is the first time the Dell Technologies family of brands will be all in one place, at one conference. Meet our experts and more than 12,000 IT practitioners and business leaders who are making Digital Transformation a reality. Learn more at   www.dellemcworld.com and follow #DellEMCWorld on Twitter. 

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 98 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 © 2017 Dell Inc. or its subsidiaries. All Rights Reserved. Dell, Dell EMC, Dell Inc. and the Dell logo are trademarks of Dell Technologies in the United States and/or other jurisdictions. All other marks and names mentioned herein may be trademarks of their respective companies. 

1 IDC Worldwide Quarterly Personal Computing Device (PCD) Tracker CY16Q4
2 IDC Worldwide Quarterly PC Monitor Tracker CY16Q4
3 IDC Worldwide Quarterly Server Tracker, March 2017
4 IDC Worldwide Quarterly Enterprise Storage Systems Tracker, March 2017

Non-GAAP Financial Measures
The press release presents 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 from continuing operations, 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 of the foregoing historical non-GAAP financial measures to the most directly comparable historical GAAP financial measures 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, 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; 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 becoming a newly 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; the costs, time, and effort required to be dedicated to the integration of the Dell and EMC businesses; the ability to realize the anticipated synergies from the merger with EMC; the ability to integrate EMC's technology, solutions, products, and services with those of Dell in an effective manner; 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 the Dell Technologies' business, financial condition, results of operations, and prospects, in its filings with the Securities and Exchange Commission, including Dell Technologies' annual report on Form 10-K, which we expect to file on March 31, 2017, and current reports on Form 8-K. These filings are available for review through the Securities and Exchange Commission'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.

Special Note on the Divestitures:
On March 27, 2016, Dell entered into a definitive agreement with NTT Data International L.L.C. to sell substantially all of Dell Services for cash consideration of approximately $3.0 billion. On June 19, 2016, Dell entered into a definitive agreement with Francisco Partners and Elliot Management Corporation to sell substantially all of Dell Software Group for cash consideration of approximately $2.4 billion. On Sept. 12, 2016, EMC Corporation entered into a definitive agreement with OpenText to divest the Dell EMC Enterprise Content Division, or ECD, for cash consideration of approximately $1.6 billion. Accordingly, the results of operations of Dell Services, Dell Software Group and ECD have been excluded from the results of continuing operations and from segment results. On October 31, 2016, Dell completed the sale of Dell Software Group. On November 2, 2016, Dell completed substantially all of the sale of Dell Services. The remainder of the Dell Services transaction closed subsequent to the fiscal year ended February 3, 2017. On January 23, 2017, Dell Technologies completed the sale of ECD.

 

DELL TECHNOLOGIES INC.

Consolidated Statements of Income (Loss) and Related Financial Highlights

(in millions, except per share amounts and percentages; unaudited)

                       
 

Three Months Ended

     

Fiscal Year Ended

   
 

February 3, 2017

 

January 29, 2016

 

Change

 

February 3, 2017

 

January 29, 2016

 

Change

Net revenue:

                     

Products

$                 15,196

 

$                  10,642

 

43 %

 

$                 48,706

 

$                  42,742

 

14 %

Services

4,878

 

2,037

 

139 %

 

12,936

 

8,169

 

58 %

Total net revenue

20,074

 

12,679

 

58 %

 

61,642

 

50,911

 

21 %

                       

Cost of net revenue:

                     

Products

13,313

 

9,208

 

45 %

 

42,169

 

37,563

 

12 %

Services

2,230

 

1,217

 

83 %

 

6,514

 

4,961

 

31 %

Total cost of net revenue

15,543

 

10,425

 

49 %

 

48,683

 

42,524

 

14 %

                       

Gross margin

4,531

 

2,254

 

101 %

 

12,959

 

8,387

 

55 %

                       

Operating expenses:

                     

Selling, general, and administrative

4,928

 

2,001

 

146 %

 

13,575

 

7,850

 

73 %

Research and development

1,271

 

279

 

356 %

 

2,636

 

1,051

 

151 %

Total operating expenses

6,199

 

2,280

 

172 %

 

16,211

 

8,901

 

82 %

                       

Operating loss

(1,668)

 

(26)

 

NM

 

(3,252)

 

(514)

 

(533)%

                       

Interest and other, net

(742)

 

(172)

 

(331)%

 

(2,104)

 

(772)

 

(173)%

Loss from continuing operations before income taxes

(2,410)

 

(198)

 

NM

 

(5,356)

 

(1,286)

 

(316)%

Income tax benefit

(996)

 

(30)

 

NM

 

(1,619)

 

(118)

 

NM

Net loss from continuing operations

(1,414)

 

(168)

 

(742)%

 

(3,737)

 

(1,168)

 

(220)%

Income from discontinued operations, net of income taxes

1,144

 

13

 

NM

 

2,019

 

64

 

NM

Net loss

(270)

 

(155)

 

(74)%

 

(1,718)

 

(1,104)

 

(56)%

Less: Net loss attributable to non-controlling interests

(34)

 

 

NA

 

(46)

 

 

NA

Net loss attributable to Dell Technologies Inc.

$                (236)

 

$                 (155)

 

(52)%

 

$             (1,672)

 

$              (1,104)

 

(51)%

                       

Earnings (loss) per share attributable to Dell Technologies Inc. - basic:

                     

  Continuing operations - Class V Common Stock - basic

$

0.64

 

$

     

$

1.44

 

$

   

  Continuing operations - DHI Group - basic

$

(2.68)

 

$

(0.41)

     

$

(8.52)

 

$

(2.88)

   

  Discontinued operations - DHI Group - basic

$

2.02

 

$

0.03

     

$

4.30

 

$

0.16

   
                       

Earnings (loss) per share attributable to Dell Technologies Inc. - diluted:

                     

  Continuing operations - Class V Common Stock - diluted

$

0.64

 

$

     

$

1.43

 

$

   

  Continuing operations - DHI Group - diluted

$

(2.68)

 

$

(0.41)

     

$

(8.52)

 

$

(2.88)

   

  Discontinued operations - DHI Group - diluted

$

2.02

 

$

0.03

     

$

4.30

 

$

0.16

   
                       

Weighted-average shares outstanding:

                     

  Basic - Class V Common Stock

215

 

     

217

 

   

  Diluted - Class V Common Stock

215

 

     

217

 

   

  Basic - DHI Group

566

 

405

     

470

 

405

   

  Diluted - DHI Group

566

 

405

     

470

 

405

   
                       

Percentage of Total Net Revenue:

                     

Gross margin

23 %

 

18 %

     

21 %

 

16 %

   

Selling, general, and administrative

25 %

 

16 %

     

22 %

 

15 %

   

Research and development

6 %

 

2 %

     

4 %

 

2 %

   

Operating expenses

31 %

 

18 %

     

26 %

 

17 %

   

Operating loss

(8)%

 

(0)%

     

(5)%

 

(1)%

   

Loss from continuing operations before income taxes

(12)%

 

(2)%

     

(9)%

 

(3)%

   

Net loss from continuing operations

(7)%

 

(1)%

     

(6)%

 

(2)%

   
                       

Income tax rate

41 %

 

15 %

     

30 %

 

9 %

   

 

 

 

DELL TECHNOLOGIES INC.

Consolidated Statements of Financial Position

(in millions; unaudited)

       
 

February 3, 2017

 

January 29, 2016

ASSETS

Current assets:

     

Cash and cash equivalents

$                   9,474

 

$                    6,322

Short-term investments

1,975

 

Accounts receivable, net

9,420

 

4,887

Short-term financing receivables, net

3,222

 

2,915

Inventories, net

2,538

 

1,619

Other current assets

4,144

 

3,497

Current assets held for sale

 

4,333

Total current assets

30,773

 

23,573

Property, plant, and equipment, net

5,653

 

1,649

Long-term investments

3,802

 

114

Long-term financing receivables, net

2,651

 

2,177

Goodwill

38,910

 

8,406

Intangible assets, net

35,053

 

8,577

Other non-current assets

1,364

 

626

Total assets

$               118,206

 

$                  45,122

       

LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS' EQUITY

Current liabilities:

     

Short-term debt

$                   6,329

 

$                    2,981

Accounts payable

14,422

 

12,881

Accrued and other

7,119

 

4,217

Short-term deferred revenue

10,265

 

3,632

Current liabilities held for sale

 

1,599

Total current liabilities

38,135

 

25,310

Long-term debt

43,061

 

10,650

Long-term deferred revenue

8,431

 

4,089

Other non-current liabilities

9,339

 

3,501

Total liabilities

98,966

 

43,550

       

Redeemable shares

231

 

106

Stockholders' equity:

     

Total Dell Technologies Inc. stockholders' equity

13,243

 

1,466

Non-controlling interests

5,766

 

Total stockholders' equity

19,009

 

1,466

Total liabilities, redeemable shares, and stockholders' equity

$               118,206

 

$                  45,122

       

 

 

 

DELL TECHNOLOGIES INC.

Consolidated Statements of Cash Flows

(in millions; unaudited)

               
 

Three Months Ended

 

Fiscal Year Ended

 

February 3, 2017

 

January 29, 2016

 

February 3, 2017

 

January 29, 2016

Cash flows from operating activities:

             

  Net loss

$                    (270)

 

$                     (155)

 

$                 (1,718)

 

$                  (1,104)

  Adjustments to reconcile net loss to net cash provided by operating activities

946

 

1,126

 

3,940

 

3,266

Change in cash from operating activities

676

 

971

 

2,222

 

2,162

Cash flows from investing activities:

             

  Investments:

             

  Purchases

(267)

 

(1)

 

(778)

 

(27)

  Maturities and sales

612

 

6

 

1,173

 

7

  Capital expenditures

(282)

 

(142)

 

(699)

 

(482)

  Proceeds from sale of facilities, land, and other assets

 

 

24

 

88

  Capitalized software development costs

(122)

 

 

(207)

 

  Collections on purchased financing receivables

4

 

14

 

35

 

85

  Acquisition of businesses, net of cash acquired

(15)

 

 

(37,629)

 

  Divestitures of businesses, net of cash transferred

6,873

 

 

6,873

 

8

  Other

 

 

(48)

 

Change in cash from investing activities

6,803

 

(123)

 

(31,256)

 

(321)

Cash flows from financing activities:

             

  Payment of dissenting shares obligation

 

 

(446)

 

  Proceeds from the issuance of DHI Group Common Stock

18

 

 

4,422

 

  Proceeds from the issuance of common stock of subsidiaries

63

 

 

164

 

  Repurchases of DHI Group Common Stock

 

 

(10)

 

  Repurchases of Class V Common Stock

(569)

 

 

(701)

 

  Repurchases of VMware Class A Common Stock

 

 

(611)

 

  Issuance of common stock under employee plans

 

 

 

2

  Payments for debt issuance costs

(4)

 

 

(853)

 

(10)

  Proceeds from debt

907

 

567

 

46,893

 

5,460

  Repayments of debt

(7,322)

 

(742)

 

(16,960)

 

(5,950)

  Other

5

 

 

10

 

2

Change in cash from financing activities

(6,902)

 

(175)

 

31,908

 

(496)

               

Effect of exchange rate changes on cash and cash equivalents

(7)

 

(79)

 

24

 

(167)

               

Change in cash and cash equivalents

570

 

594

 

2,898

 

1,178

               

Cash and cash equivalents at beginning of the period, including amounts held for sale

8,904

 

5,982

 

6,576

 

5,398

Cash and cash equivalents at end of the period

$                   9,474

 

$                    6,576

 

$                   9,474

 

$                    6,576

 Less: Cash included in current assets held for sale

 

254

 

 

254

Cash and cash equivalents from continuing operations

$                   9,474

 

$                    6,322

 

$                   9,474

 

$                    6,322

               

 

 

 

DELL TECHNOLOGIES INC.

Segment Information

(in millions, except percentages; unaudited)

                       
 

Three Months Ended

     

Fiscal Year Ended

   
 

February 3, 2017

 

January 29, 2016

 

Change

 

February 3, 2017

 

January 29, 2016

 

Change

Client Solutions Group (CSG):

                     

 Net Revenue:

                     

   Commercial

$                   6,663

 

$                    5,969

 

12 %

 

$                 26,006

 

$                  25,747

 

1 %

   Consumer

3,113

 

2,868

 

9 %

 

10,748

 

10,130

 

6 %

  Total CSG net revenue

$                   9,776

 

$                    8,837

 

11 %

 

$                 36,754

 

$                  35,877

 

2 %

                       

 Operating Income:

                     

   CSG operating income

$                      342

 

$                       484

 

(29)%

 

$                   1,845

 

$                    1,410

 

31 %

   % of CSG net revenue

3 %

 

5 %

     

5 %

 

4 %

   

   % of total segment operating income

18 %

 

64 %

     

34 %

 

57 %

   
                       

Infrastructure Solutions Group (ISG):

                     

 Net Revenue:

                     

   Servers and networking

$                   3,612

 

$                    3,234

 

12 %

 

$                 12,834

 

$                  12,761

 

1 %

   Storage

4,783

 

562

 

751 %

 

8,942

 

2,217

 

303 %

  Total ISG net revenue

$                   8,395

 

$                    3,796

 

121 %

 

$                 21,776

 

$                  14,978

 

45 %

                       

 Operating Income:

                     

   ISG operating income

$                   1,004

 

$                       276

 

264 %

 

$                   2,393

 

$                    1,052

 

127 %

   % of ISG net revenue

12 %

 

7 %

     

11 %

 

7 %

   

   % of total segment operating income

53 %

 

36 %

     

45 %

 

43 %

   
                       

VMware:

                     

 Net Revenue:

                     

  Total VMware net revenue

$                   1,936

 

$                         —

 

NA

 

$                   3,225

 

$                         —

 

NA

                       

 Operating Income:

                     

   VMware operating income

$                      565

 

$                         —

 

NA

 

$                   1,113

 

$                         —

 

NA

   % of VMware net revenue

29 %

 

NA

     

35 %

 

NA

   

   % of total segment operating income

30 %

 

NA

     

21 %

 

NA

   
                       

Reconciliation to consolidated net revenue:

                     

 Reportable segment net revenue

$                 20,107

 

$                  12,633

     

$                 61,755

 

$                  50,855

   

 Other businesses (a)

480

 

107

     

1,026

 

382

   

 Unallocated transactions (b)

(6)

 

28

     

41

 

133

   

 Impact of purchase accounting (c)

(507)

 

(89)

     

(1,180)

 

(459)

   

     Total net revenue

$                 20,074

 

$                  12,679

     

$                 61,642

 

$                  50,911

   
                       

Reconciliation to consolidated operating income (loss):

                     

 Reportable segment operating income

$                   1,911

 

$                       760

     

$                   5,351

 

$                    2,462

   

 Other businesses (a)

(3)

 

(16)

     

(39)

 

(78)

   

 Unallocated transactions (b)

(65)

 

(89)

     

(199)

 

(159)

   

 Impact of purchase accounting (c)

(1,240)

 

(129)

     

(2,294)

 

(604)

   

 Amortization of intangibles

(1,535)

 

(491)

     

(3,681)

 

(1,969)

   

 Transaction-related expenses (d)

(159)

 

(42)

     

(1,488)

 

(109)

   

 Other corporate expenses(e)

(577)

 

(19)

     

(902)

 

(57)

   

     Total operating loss

$                 (1,668)

 

$                       (26)

     

$                 (3,252)

 

$                     (514)

   

_________________

                     

(a) Other businesses consist of RSA Information Security, SecureWorks, Pivotal, and Boomi offerings, and do not constitute a reportable segment, either individually or collectively, as the results of the businesses are not material to the Company's overall results and the businesses do not meet the criteria for reportable segments.

(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, as well as the going-private transaction.

(d) Transaction-related expenses includes acquisition and integration-related costs.

(e) Other corporate expenses includes severance and facility action costs as well as stock-based compensation expense.

                       

 

 

 

SUPPLEMENTAL SELECTED NON-GAAP FINANCIAL MEASURES

These tables present information about the Company's non-GAAP net revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income from continuing operations, 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

     

Fiscal Year Ended

   
 

February 3, 2017

 

January 29, 2016

 

Change

 

February 3, 2017

 

January 29, 2016

 

Change

                       

Non-GAAP net revenue

$                 20,581

 

$                  12,768

 

61 %

 

$                 62,822

 

$                  51,370

 

22 %

                       

Non-GAAP gross margin

$                   6,595

 

$                    2,458

 

168 %

 

$                 16,819

 

$                    9,307

 

81 %

% of non-GAAP net revenue

32 %

 

19 %

     

27 %

 

18 %

   
                       

Non-GAAP operating expenses

$                   4,752

 

$                    1,803

 

164 %

 

$                 11,706

 

$                    7,082

 

65 %

% of non-GAAP net revenue

23 %

 

14 %

     

19 %

 

14 %

   
                       

Non-GAAP operating income

$                   1,843

 

$                       655

 

181 %

 

$                   5,113

 

$                    2,225

 

130 %

% of non-GAAP net revenue

9 %

 

5 %

     

8 %

 

4 %

   
                       

Non-GAAP net income from continuing operations

$                   1,091

 

$                       382

 

186 %

 

$                   2,687

 

$                    1,053

 

155 %

% of non-GAAP net revenue

5 %

 

3 %

     

4 %

 

2 %

   
                       

Adjusted EBITDA

$                   2,184

 

$                       753

 

190 %

 

$                   5,941

 

$                    2,633

 

126 %

% of non-GAAP net revenue

11 %

 

6 %

     

9 %

 

5 %

   

 

 

 

DELL TECHNOLOGIES INC.

Reconciliation of Selected Non-GAAP Financial Measures

(in millions, except percentages; unaudited)

                       
 

Three Months Ended

     

Fiscal Year Ended

   
 

February 3, 2017

 

January 29, 2016

 

Change

 

February 3, 2017

 

January 29, 2016

 

Change

                       

Net revenue

$                 20,074

 

$                  12,679

 

58 %

 

$                 61,642

 

$                  50,911

 

21 %

 Non-GAAP adjustments:

                     

 Impact of purchase accounting

507

 

89

     

1,180

 

459

   

Non-GAAP net revenue

$                 20,581

 

$                  12,768

 

61 %

 

$                 62,822

 

$                  51,370

 

22 %

                       

Gross margin

$                   4,531

 

$                    2,254

 

101 %

 

$                 12,959

 

$                    8,387

 

55 %

 Non-GAAP adjustments:

                     

 Impact of purchase accounting

1,110

 

104

     

2,007

 

512

   

 Amortization of intangibles

847

 

97

     

1,653

 

392

   

 Transaction-related expenses

18

 

     

43

 

6

   

 Other corporate expenses

89

 

3

     

157

 

10

   

Non-GAAP gross margin

$                   6,595

 

$                    2,458

 

168 %

 

$                 16,819

 

$                    9,307

 

81 %

                       

Operating expenses

$                   6,199

 

$                    2,280

 

172 %

 

$                 16,211

 

$                    8,901

 

82 %

 Non-GAAP adjustments:

                     

 Impact of purchase accounting

(130)

 

(25)

     

(287)

 

(92)

   

 Amortization of intangibles

(688)

 

(394)

     

(2,028)

 

(1,577)

   

 Transaction-related expenses

(141)

 

(42)

     

(1,445)

 

(103)

   

 Other corporate expenses

(488)

 

(16)

     

(745)

 

(47)

   

Non-GAAP operating expenses

$                   4,752

 

$                    1,803

 

164 %

 

$                 11,706

 

$                    7,082

 

65 %

                       

Operating loss

$                 (1,668)

 

$                       (26)

 

NM

 

$                 (3,252)

 

$                     (514)

 

(533)%

 Non-GAAP adjustments:

                     

 Impact of purchase accounting

1,240

 

129

     

2,294

 

604

   

 Amortization of intangibles

1,535

 

491

     

3,681

 

1,969

   

 Transaction-related expenses

159

 

42

     

1,488

 

109

   

 Other corporate expenses

577

 

19

     

902

 

57

   

Non-GAAP operating income

$                   1,843

 

$                       655

 

181 %

 

$                   5,113

 

$                    2,225

 

130 %

                       

Net loss from continuing operations

$                 (1,414)

 

$                     (168)

 

(742)%

 

$                 (3,737)

 

$                  (1,168)

 

(220)%

 Non-GAAP adjustments:

                     

 Impact of purchase accounting

1,240

 

129

     

2,294

 

604

   

 Amortization of intangibles

1,535

 

491

     

3,681

 

1,969

   

 Transaction-related expenses

159

 

42

     

1,485

 

83

   

 Other corporate expenses

577

 

19

     

902

 

77

   

 Aggregate adjustment for income taxes

(1,006)

 

(131)

     

(1,938)

 

(512)

   

Non-GAAP net income from continuing operations

$                   1,091

 

$                       382

 

186 %

 

$                   2,687

 

$                    1,053

 

155 %

                       

Net loss from continuing operations

$                 (1,414)

 

$                     (168)

 

(742)%

 

$                 (3,737)

 

$                  (1,168)

 

(220)%

 Adjustments:

                     

 Interest and other, net

742

 

172

     

2,104

 

772

   

 Income tax benefit

(996)

 

(30)

     

(1,619)

 

(118)

   

 Depreciation and amortization

2,041

 

623

     

4,840

 

2,494

   

EBITDA

$                      373

 

$                       597

 

(38)%

 

$                   1,588

 

$                    1,980

 

(20)%

                       

EBITDA

$                      373

 

$                       597

 

(38)%

 

$                   1,588

 

$                    1,980

 

(20)%

 Adjustments:

                     

 Stock-based compensation expense

215

 

17

     

392

 

63

   

 Impact of purchase accounting

1,075

 

95

     

1,926

 

487

   

 Transaction-related expenses

159

 

42

     

1,525

 

83

   

 Other corporate expenses

362

 

2

     

510

 

20

   

Adjusted EBITDA

$                   2,184

 

$                       753

 

190 %

 

$                   5,941

 

$                    2,633

 

126 %

                       

 

 

 

To view the original version on PR Newswire, visit: http://www.prnewswire.com/news-releases/dell-technologies-reports-fiscal-year-2017-fourth-quarter-and-full-year-financial-results-300431802.html

SOURCE Dell Technologies