2023 Q2 Form 10-Q Financial Statement

#000157199623000019 Filed on June 12, 2023

View on sec.gov

Income Statement

Concept 2023 Q2 2023 Q1 2022 Q2
Revenue $20.92B $25.04B $26.12B
YoY Change -19.89% -10.55% 15.61%
Cost Of Revenue $15.90B $19.28B $20.33B
YoY Change -21.78% -19.67% 17.35%
Gross Profit $5.018B $5.756B $5.784B
YoY Change -13.24% 2.46% 9.88%
Gross Profit Margin 23.98% 22.99% 22.15%
Selling, General & Admin $3.261B $3.772B $3.553B
YoY Change -8.22% -2.87%
% of Gross Profit 64.99% 65.53% 61.43%
Research & Development $688.0M $795.0M $681.0M
YoY Change 1.03% 10.02%
% of Gross Profit 13.71% 13.81% 11.77%
Depreciation & Amortization $809.0M $854.0M $726.0M
YoY Change 11.43% 2.89% -41.4%
% of Gross Profit 16.12% 14.84% 12.55%
Operating Expenses $3.949B $4.567B $4.234B
YoY Change -6.73% -291.65% -1.01%
Operating Profit $1.069B $1.189B $1.550B
YoY Change -31.03% -85.14% 57.04%
Interest Expense -$364.0M -$266.0M $265.0M
YoY Change -237.36% -412.94% -38.8%
% of Operating Profit -34.05% -22.37% 17.1%
Other Income/Expense, Net -$364.0M $14.00M -$337.0M
YoY Change 8.01% -100.93% 17.01%
Pretax Income $705.0M $923.0M $1.213B
YoY Change -41.88% -207.08% 73.53%
Income Tax $127.0M $317.0M $144.0M
% Of Pretax Income 18.01% 34.34% 11.87%
Net Earnings $583.0M $614.0M $1.072B
YoY Change -45.62% 30600.0% 20.86%
Net Earnings / Revenue 2.79% 2.45% 4.1%
Basic Earnings Per Share $0.81 $1.42
Diluted Earnings Per Share $0.79 $0.84 $1.374M
COMMON SHARES
Basic Shares Outstanding 724.0M shares 754.0M shares
Diluted Shares Outstanding 737.0M shares 780.0M shares

Balance Sheet

Concept 2023 Q2 2023 Q1 2022 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $7.631B $8.607B $6.654B
YoY Change 14.68% -9.18% -53.29%
Cash & Equivalents $7.631B $8.607B $6.654B
Short-Term Investments
Other Short-Term Assets $11.33B $11.21B $11.68B
YoY Change -2.98% -2.79% 39.42%
Inventory $4.016B $4.776B $6.277B
Prepaid Expenses $641.0M
Receivables $9.399B $12.48B $11.84B
Other Receivables $5.013B $5.281B $4.796B
Total Short-Term Assets $37.39B $42.35B $41.38B
YoY Change -9.63% -5.96% -2.27%
LONG-TERM ASSETS
Property, Plant & Equipment $6.261B $6.209B $5.516B
YoY Change 13.51% 14.66% -15.88%
Goodwill $19.66B $19.68B $19.60B
YoY Change 0.32% -0.48% -52.01%
Intangibles $6.269B $6.468B $7.217B
YoY Change -13.14% -13.31% -47.43%
Long-Term Investments $1.399B $1.518B $1.868B
YoY Change -25.11% -17.46% 11.86%
Other Assets $7.588B $7.751B $6.720B
YoY Change 12.92% 10.97% -40.83%
Total Long-Term Assets $46.70B $47.26B $47.03B
YoY Change -0.7% -0.93% -40.78%
TOTAL ASSETS
Total Short-Term Assets $37.39B $42.35B $41.38B
Total Long-Term Assets $46.70B $47.26B $47.03B
Total Assets $84.09B $89.61B $88.41B
YoY Change -4.88% -3.37% -27.39%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $17.80B $18.60B $25.59B
YoY Change -30.44% -31.48% 18.75%
Accrued Expenses $7.438B $8.874B $6.598B
YoY Change 12.73% 17.1% -14.62%
Deferred Revenue $15.53B $15.54B $14.33B
YoY Change 8.36% 8.98% 5.04%
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due $5.470B $6.573B $5.925B
YoY Change -7.68% 12.88% -32.27%
Total Short-Term Liabilities $46.83B $51.65B $53.06B
YoY Change -11.75% -8.12% -3.28%
LONG-TERM LIABILITIES
Long-Term Debt $22.96B $23.02B $21.20B
YoY Change 8.33% 8.92% -44.12%
Other Long-Term Liabilities $17.23B $17.97B $3.431B
YoY Change 402.22% 391.84% -34.97%
Total Long-Term Liabilities $40.19B $40.98B $24.63B
YoY Change 63.2% 65.36% -43.01%
TOTAL LIABILITIES
Total Short-Term Liabilities $46.83B $51.65B $53.06B
Total Long-Term Liabilities $40.19B $40.98B $24.63B
Total Liabilities $87.12B $92.73B $90.76B
YoY Change -4.01% -1.68% -19.4%
SHAREHOLDERS EQUITY
Retained Earnings -$6.430B -$6.732B -$7.369B
YoY Change -12.74% -17.78% -42.72%
Common Stock
YoY Change
Preferred Stock
YoY Change
Treasury Stock (at cost) $2.446B
YoY Change 701.97%
Treasury Stock Shares
Shareholders Equity -$3.023B -$3.122B -$2.462B
YoY Change
Total Liabilities & Shareholders Equity $84.09B $89.61B $88.41B
YoY Change -4.88% -3.37% -27.39%

Cashflow Statement

Concept 2023 Q2 2023 Q1 2022 Q2
OPERATING ACTIVITIES
Net Income $583.0M $614.0M $1.072B
YoY Change -45.62% 30600.0% 20.86%
Depreciation, Depletion And Amortization $809.0M $854.0M $726.0M
YoY Change 11.43% 2.89% -41.4%
Cash From Operating Activities $1.777B $2.714B -$269.0M
YoY Change -760.59% -12.25% -112.02%
INVESTING ACTIVITIES
Capital Expenditures $701.0M $759.0M $690.0M
YoY Change 1.59% -202.57% 10.4%
Acquisitions
YoY Change
Other Investing Activities $17.00M -$37.00M -$4.000M
YoY Change -525.0% 428.57% -33.33%
Cash From Investing Activities -$684.0M -$796.0M -$720.0M
YoY Change -5.0% 6.56% 38.73%
FINANCING ACTIVITIES
Cash Dividend Paid $248.0M
YoY Change
Common Stock Issuance & Retirement, Net -$544.0M -$183.0M $1.779B
YoY Change -130.58% 19666.67%
Debt Paid & Issued, Net $3.698B $2.703B
YoY Change 36.81% -33.59%
Cash From Financing Activities -2.002B 1.513B -$1.706B
YoY Change 17.35% -109.71% 4.15%
NET CHANGE
Cash From Operating Activities 1.777B 2.714B -$269.0M
Cash From Investing Activities -684.0M -796.0M -$720.0M
Cash From Financing Activities -2.002B 1.513B -$1.706B
Net Change In Cash -909.0M 3.431B -$2.806B
YoY Change -67.61% -125.92% -3792.11%
FREE CASH FLOW
Cash From Operating Activities $1.777B $2.714B -$269.0M
Capital Expenditures $701.0M $759.0M $690.0M
Free Cash Flow $1.076B $1.955B -$959.0M
YoY Change -212.2% -49.0% -159.45%

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OVERVIEW AND BASIS OF PRESENTATION<div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Dell Technologies is a leading global end-to-end technology provider that designs, develops, manufactures, markets, sells, and supports a wide range of comprehensive and integrated solutions, products, and services. Dell Technologies offerings include servers and networking, storage, cloud solutions, desktops, notebooks, services, software, and third-party software and peripherals. References in these Notes to the Condensed Consolidated Financial Statements to the “Company” or “Dell Technologies” mean Dell Technologies Inc. individually and together with its consolidated subsidiaries. </span></div><div><span><br/></span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Basis of Presentation — </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and accompanying Notes filed with the U.S. Securities and Exchange Commission (“SEC”) in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2023. These Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the accompanying Condensed Consolidated Financial Statements reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of the Company as of May 5, 2023 and February 3, 2023 and the results of its operations, corresponding comprehensive income, changes in stockholders’ equity, and cash flows for the three months ended May 5, 2023 and April 29, 2022.</span></div><div><span><br/></span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and the accompanying Notes. Actual results could differ materially from those estimates. The results of its operations, corresponding comprehensive income, changes in stockholders’ equity, and cash flows for the three months ended May 5, 2023 and April 29, 2022 are not necessarily indicative of the results to be expected for the full fiscal year or for any other fiscal period.</span></div><div><span><br/></span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Company’s fiscal year is the 52- or 53-week period ending on the Friday nearest January 31. The fiscal year ended February 3, 2023 (“Fiscal 2023”) was a 53-week period while the fiscal year ending February 2, 2024 (“Fiscal 2024”) will be a 52-week period.</span></div><div><span><br/></span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%;text-decoration:underline">Principles of Consolidation</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> — These Condensed Consolidated Financial Statements include the accounts of Dell Technologies Inc., its wholly-owned subsidiaries, and the accounts of SecureWorks Corp. (“Secureworks”), which is majority-owned by Dell Technologies. All intercompany transactions have been eliminated.</span></div><div><span><br/></span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Secureworks</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> — As of May 5, 2023 and February 3, 2023, the Company held approximately 81.4% and 82.6%, respectively, of the outstanding equity interest in Secureworks, both including and excluding restricted stock awards (“RSAs”). The portion of the results of operations of Secureworks allocable to its other owners is shown as net income (loss) attributable to the non-controlling interests in the Condensed Consolidated Statements of Income, as an adjustment to net income attributable to Dell Technologies stockholders. The non-controlling interests’ share of equity in Secureworks is reflected as a component of the non-controlling interests in the Condensed Consolidated Statements of Financial Position and was $99 million and $97 million as of May 5, 2023 and February 3, 2023, respectively.</span></div><div><span><br/></span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Variable Interest Entities</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> — The Company consolidates Variable Interest Entities ("VIEs") where it has been determined that the Company is the primary beneficiary of the applicable entities’ operations. For each VIE, the primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to such VIE. In evaluating whether the Company is the primary beneficiary of each entity, the Company evaluates its power to direct the most significant activities of the VIE by considering the purpose and design of each entity and the risks each entity was designed to create and pass through to its respective variable interest holders. The Company also evaluates its economic interests in each of the VIEs. See Note 4 of the Notes to the Condensed Consolidated Financial Statements for more information regarding consolidated VIEs.</span></div>
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<span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Derivative Instruments</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> — The Company’s derivative financial instruments consist primarily of foreign currency forward and purchased option contracts and interest rate swaps. The fair value of the portfolio is determined using valuation models based on market observable inputs, including interest rate curves, forward and spot prices for currencies, and implied volatilities. Credit risk is also factored into the fair value calculation of the Company’s derivative financial instrument portfolio. See Note 7 of the Notes to the Condensed Consolidated Financial Statements for a description of the Company’s derivative financial instrument activities.</span><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">As part of its risk management strategy, the Company uses derivative instruments, primarily foreign currency forward and option contracts and interest rate swaps, to hedge certain foreign currency and interest rate exposures, respectively.</span></div><div><span><br/></span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Company’s objective is to offset gains and losses resulting from these exposures with gains and losses on the derivative contracts used to hedge the exposures, thereby reducing volatility of earnings and protecting the fair values of assets and liabilities. The earnings effects of the derivative instruments are presented in the same income statement line items as the earnings effects of the hedged items. For derivatives designated as cash flow hedges, the Company assesses hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the instruments. For derivatives designated as fair value hedges, the Company assesses hedge effectiveness on qualifying instruments using the shortcut method whereby the hedges are considered perfectly effective at the onset of the hedge and over the life of the hedging relationship.</span></div>
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