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.
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DELL TECHNOLOGIES INC. |
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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 |
Fiscal Year Ended |
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February 3, 2017 |
January 29, 2016 |
Change |
February 3, 2017 |
January 29, 2016 |
Change |
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Net revenue: |
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|
Products |
$ 15,196 |
$ 10,642 |
43 % |
$ 48,706 |
$ 42,742 |
14 % |
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|
Services |
4,878 |
2,037 |
139 % |
12,936 |
8,169 |
58 % |
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Total net revenue |
20,074 |
12,679 |
58 % |
61,642 |
50,911 |
21 % |
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Cost of net revenue: |
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|
Products |
13,313 |
9,208 |
45 % |
42,169 |
37,563 |
12 % |
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|
Services |
2,230 |
1,217 |
83 % |
6,514 |
4,961 |
31 % |
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Total cost of net revenue |
15,543 |
10,425 |
49 % |
48,683 |
42,524 |
14 % |
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|
Gross margin |
4,531 |
2,254 |
101 % |
12,959 |
8,387 |
55 % |
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Operating expenses: |
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|
Selling, general, and administrative |
4,928 |
2,001 |
146 % |
13,575 |
7,850 |
73 % |
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|
Research and development |
1,271 |
279 |
356 % |
2,636 |
1,051 |
151 % |
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|
Total operating expenses |
6,199 |
2,280 |
172 % |
16,211 |
8,901 |
82 % |
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|
Operating loss |
(1,668) |
(26) |
NM |
(3,252) |
(514) |
(533)% |
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|
Interest and other, net |
(742) |
(172) |
(331)% |
(2,104) |
(772) |
(173)% |
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|
Loss from continuing operations before income taxes |
(2,410) |
(198) |
NM |
(5,356) |
(1,286) |
(316)% |
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|
Income tax benefit |
(996) |
(30) |
NM |
(1,619) |
(118) |
NM |
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Net loss from continuing operations |
(1,414) |
(168) |
(742)% |
(3,737) |
(1,168) |
(220)% |
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|
Income from discontinued operations, net of income taxes |
1,144 |
13 |
NM |
2,019 |
64 |
NM |
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|
Net loss |
(270) |
(155) |
(74)% |
(1,718) |
(1,104) |
(56)% |
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|
Less: Net loss attributable to non-controlling interests |
(34) |
— |
NA |
(46) |
— |
NA |
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|
Net loss attributable to Dell Technologies Inc. |
$ (236) |
$ (155) |
(52)% |
$ (1,672) |
$ (1,104) |
(51)% |
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Earnings (loss) per share attributable to Dell Technologies Inc. - basic: |
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|
Continuing operations - Class V Common Stock - basic |
$ |
0.64 |
$ |
— |
$ |
1.44 |
$ |
— |
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|
Continuing operations - DHI Group - basic |
$ |
(2.68) |
$ |
(0.41) |
$ |
(8.52) |
$ |
(2.88) |
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Discontinued operations - DHI Group - basic |
$ |
2.02 |
$ |
0.03 |
$ |
4.30 |
$ |
0.16 |
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Earnings (loss) per share attributable to Dell Technologies Inc. - diluted: |
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|
Continuing operations - Class V Common Stock - diluted |
$ |
0.64 |
$ |
— |
$ |
1.43 |
$ |
— |
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|
Continuing operations - DHI Group - diluted |
$ |
(2.68) |
$ |
(0.41) |
$ |
(8.52) |
$ |
(2.88) |
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|
Discontinued operations - DHI Group - diluted |
$ |
2.02 |
$ |
0.03 |
$ |
4.30 |
$ |
0.16 |
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|
Weighted-average shares outstanding: |
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|
Basic - Class V Common Stock |
215 |
— |
217 |
— |
|||||||||||
|
Diluted - Class V Common Stock |
215 |
— |
217 |
— |
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|
Basic - DHI Group |
566 |
405 |
470 |
405 |
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|
Diluted - DHI Group |
566 |
405 |
470 |
405 |
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Percentage of Total Net Revenue: |
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|
Gross margin |
23 % |
18 % |
21 % |
16 % |
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|
Selling, general, and administrative |
25 % |
16 % |
22 % |
15 % |
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|
Research and development |
6 % |
2 % |
4 % |
2 % |
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|
Operating expenses |
31 % |
18 % |
26 % |
17 % |
|||||||||||
|
Operating loss |
(8)% |
(0)% |
(5)% |
(1)% |
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|
Loss from continuing operations before income taxes |
(12)% |
(2)% |
(9)% |
(3)% |
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|
Net loss from continuing operations |
(7)% |
(1)% |
(6)% |
(2)% |
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|
Income tax rate |
41 % |
15 % |
30 % |
9 % |
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