UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended

~~October~~April 29, ~~2021~~2022

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37867

Dell Technologies Inc.

(Exact name of registrant as specified in its charter)


Delaware						80-0890963
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

One Dell Way, Round Rock, Texas 78682

(Address of principal executive offices) (Zip Code)

1-800-289-3355

(Registrant’s telephone number, including area code)

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 of $0.01 per share	DELL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

þ☑

Accelerated filer

¨☐

Non-accelerated filer

¨☐

Smaller reporting company

☐

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. ¨

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ~~Exchang~~e Act). Yes ☐ No þ

As of ~~November 30, 2021,~~May 31, 2022, there were ~~763,884,923~~739,517,600 shares of the registrant’s common stock outstanding, consisting of ~~289,981,446~~ 265,686,850outstanding shares of Class C Common Stock, ~~378,553,250~~378,480,523 outstanding shares of Class A Common Stock, and 95,350,227 outstanding shares of Class B Common Stock.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “may,” “will,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “aim,” “seek,” and similar expressions as they relate to us or our management are intended to identify these forward-looking statements. All statements by us regarding our expected financial position, revenues, cash flows and other operating results, business strategy, legal proceedings, future responses to and effects of the coronavirus disease 2019 (“COVID-19”), and similar matters are forward-looking statements. Our expectations expressed or implied in these forward-looking statements may not turn out to be correct. Our results could be materially different from our expectations because of various risks, including the risks discussed in “Part I — Item 1A — Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January ~~29, 2021,~~28, 2022, in this report and in our other periodic and current reports filed with the Securities and Exchange Commission (“SEC”). Any forward-looking statement speaks only as of the date as of which such statement is made, and, except as required by law, we undertake no obligation to update any forward-looking statement after the date as of which such statement was made, whether to reflect changes in circumstances or our expectations, the occurrence of unanticipated events, or otherwise.

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DELL TECHNOLOGIES INC.

TABLE OF CONTENTS

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS (UNAUDITED)

Index


			Page
Condensed Consolidated Statements of Financial Position as of ~~October~~ April 29,~~, 2021~~ 2022 and January ~~29, 2021~~28, 2022			5
Condensed Consolidated Statements of Income for the three ~~and~~ ~~nine~~ months ended ~~October~~April 29,~~, 2021~~ 2022 and ~~October~~ 3 0 ~~, 2020~~April 30, 2021			6
Condensed Consolidated Statements of Comprehensive Income for the three ~~and~~ ~~nine~~months ended ~~October~~ April 29,~~, 2021~~ 2022 and ~~October~~April 30,~~, 2020~~ 2021			7
Condensed Consolidated Statements of Cash Flows for the ~~nine~~ three months ended ~~October~~April 29, ~~2021~~ 2022 and ~~October 3~~0 ~~, 2020~~April 30, 2021			8
Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three ~~and~~ ~~nine~~months ended ~~October~~April 29,, 2022 and April 30, 2021 ~~and~~ ~~October~~ 3 0 ~~, 2020~~			910
Notes to the Condensed Consolidated Financial Statements			1112
Note 1 — ~~Overview and~~ Basis of Presentation			1112

Note 2 — ~~Fair Value Measurements and Investments~~Discontinued Operations			14
Note 3 — ~~Financial Services~~Fair Value Measuremen ts			1716
Note 4 — ~~Leases~~Investments			2618
Note 5 — Financial Services			20
Note 6 — Leases			27
Note 7 — Debt			2829
Note 6 8 — Derivative Instruments and Hedging Activities			3431
Note 7 9 — Goodwill and Intangible Assets			3935
Note 8 10 — Deferred Revenue			37
Note 1 1 — Commitments and Contingencies			38
Note 1 2 — Income and Other Taxes			40
Note 1 3 — Accumulated Other Comprehensive Income (Loss)			41
Note 91 4 — ~~Commitments and Contingencies~~Capitalization			42
Note 101 5 — ~~Income and Other Taxes~~Earnings Per Share			44
Note 11 1 6 — ~~Accumulated Other Comprehensive Income (Loss)~~Related Party Transactions			45
Note 121 7 — ~~Non-Controlling Interests~~			47
~~Note 13 — Capitalization~~Segment Information			48
Note ~~14 — Earnings Per Share~~			50
~~Note 15 — Redeemable Shares~~			51
~~Note 16 — Segment Information~~			52
~~Note 17~~18 — Supplemental Consolidated Financial Information			5551

Note 18 1 9 — Subsequent Events			5853

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DELL TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in millions; unaudited)

October 29, 2021 January 29, 2021
ASSETS
Current assets:
Cash and cash equivalents $ 22,406 $ 14,201
Accounts receivable, net of allowance of $100 and $104 (Note 17) 14,177 12,788
Short-term financing receivables, net of allowance of $164 and $228 (Note 3) 4,970 5,155
Inventories 5,442 3,402
Other current assets 10,184 8,021
Total current assets 57,179 43,567
Property, plant, and equipment, net 6,925 6,431
Long-term investments 1,827 1,624
Long-term financing receivables, net of allowance of $61 and $93 (Note 3) 5,270 5,339
Goodwill 40,701 40,829
Intangible assets, net 12,319 14,429
Other non-current assets 11,456 11,196
Total assets $ 135,677 $ 123,415
LIABILITIES, REDEEMABLE SHARES, AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt $ 16,280 $ 6,362
Accounts payable 26,772 21,696
Accrued and other 10,081 9,549
Short-term deferred revenue 16,569 16,525
Total current liabilities 69,702 54,132
Long-term debt 31,699 41,622
Long-term deferred revenue 14,885 14,276
Other non-current liabilities 5,197 5,360
Total liabilities 121,483 115,390
Commitments and contingencies (Note 9) 0 0
Redeemable shares (Note 15) — 472
Stockholders’ equity (deficit):
Common stock and capital in excess of $0.01 par value (Note 13) 17,843 16,849
Treasury stock at cost (305) (305)
Accumulated deficit (8,190) (13,751)
Accumulated other comprehensive loss (394) (314)
Total Dell Technologies Inc. stockholders’ equity 8,954 2,479
Non-controlling interests 5,240 5,074
Total stockholders’ equity 14,194 7,553
Total liabilities, redeemable shares, and stockholders’ equity $ 135,677 $ 123,415


	April 29, 2022		January 28, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	6,654	$	9,477

Accounts receivable, net of allowance of $72 and $90	11,837		12,912
Due from related party, net	131		131
Short-term financing receivables, net of allowance of $133 and $142 (Note 5)	4,796		5,089
Inventories	6,277		5,898
Other current assets	11,681		11,526
Total current assets	41,376		45,033
Property, plant, and equipment, net	5,516		5,415
Long-term investments	1,868		1,839
Long-term financing receivables, net of allowance of $48 and $47 (Note 5)	5,398		5,522
Goodwill	19,598		19,770
Intangible assets, net	7,217		7,461
Due from related party, net	713		710
Other non-current assets	6,720		6,985
Total assets	$	88,406	$	92,735
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	5,925	$	5,823
Accounts payable	25,585		27,143
Due to related party	622		1,414
Accrued and other	6,598		7,578
Short-term deferred revenue	14,329		14,261
Total current liabilities	53,059		56,219
Long-term debt	21,197		21,131
Long-term deferred revenue	13,074		13,312
Other non-current liabilities	3,431		3,653
Total liabilities	90,761		94,315
Commitments and contingencies (Note 11)	0		0
Stockholders’ equity (deficit):
Common stock and capital in excess of $0.01 par value (Note 14)	7,777		7,898
Treasury stock at cost	(2,446)		(964)
Accumulated deficit	(7,369)		(8,188)
Accumulated other comprehensive loss	(424)		(431)
Total Dell Technologies Inc. stockholders’ equity (deficit)	(2,462)		(1,685)
Non-controlling interests	107		105
Total stockholders’ equity (deficit)	(2,355)		(1,580)
Total liabilities and stockholders’ equity	$	88,406	$	92,735

The accompanying notes are an integral part of these Condensed Consolidated Financial ~~Statements.~~Statements.

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DELL TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share ~~amounts~~amounts; unaudited~~; unaudited)~~)


		Three Months Ended				Nine Months Ended					Three Months Ended
		October 29, 2021		October 30, 2020		October 29, 2021		October 30, 2020			April 29, 2022		April 30, 2021
Net revenue:	Net revenue:									Net revenue:
Products	Products	$	21,540	$	17,352	$	58,968	$	50,127	Products	$	20,464	$	17,487
Services	Services	6,854		6,130		20,035		17,985		Services	5,652		5,103
Total net revenue	Total net revenue	28,394		23,482		79,003		68,112		Total net revenue	26,116		22,590
Cost of net revenue:
Cost of net revenue (a):										Cost of net revenue (a):
Products	Products	17,552		13,789		47,137		39,923		Products	17,009		14,434
Services	Services	2,783		2,432		8,164		6,919		Services	3,323		2,892
Total cost of net revenue	Total cost of net revenue	20,335		16,221		55,301		46,842		Total cost of net revenue	20,332		17,326
Gross margin	Gross margin	8,059		7,261		23,702		21,270		Gross margin	5,784		5,264
Operating expenses:	Operating expenses:									Operating expenses:
Selling, general, and administrative	Selling, general, and administrative	5,293		4,772		15,398		14,419		Selling, general, and administrative	3,553		3,658
Research and development	Research and development	1,417		1,360		4,208		3,884		Research and development	681		619
Total operating expenses	Total operating expenses	6,710		6,132		19,606		18,303		Total operating expenses	4,234		4,277
Operating income	Operating income	1,349		1,129		4,096		2,967		Operating income	1,550		987
Interest and other, net	Interest and other, net	3,436		273		2,689		(929)		Interest and other, net	(337)		(288)
Income before income taxes	Income before income taxes	4,785		1,402		6,785		2,038		Income before income taxes	1,213		699
Income tax expense (benefit)		897		521		1,079		(124)
Income tax expense										Income tax expense	144		40
Net income from continuing operations										Net income from continuing operations	1,069		659
Income from discontinued operations, net of income taxes (Note 2)										Income from discontinued operations, net of income taxes (Note 2)	—		279
Net income	Net income	3,888		881		5,706		2,162		Net income	1,069		938
Less: Net income attributable to non-controlling interests		45		49		145		139
Less: Net loss attributable to non-controlling interests										Less: Net loss attributable to non-controlling interests	(3)		(1)
Less: Net income attributable to non-controlling interests of discontinued operations										Less: Net income attributable to non-controlling interests of discontinued operations	—		52
Net income attributable to Dell Technologies Inc.	Net income attributable to Dell Technologies Inc.	$	3,843	$	832	$	5,561	$	2,023	Net income attributable to Dell Technologies Inc.	$	1,072	$	887

Earnings per share attributable to Dell Technologies Inc.
Dell Technologies Common Stock — Basic		$	5.02	$	1.11	$	7.30	$	2.73
Dell Technologies Common Stock — Diluted		$	4.87	$	1.08	$	7.08	$	2.64
Earnings per share attributable to Dell Technologies Inc. — basic:										Earnings per share attributable to Dell Technologies Inc. — basic:
Continuing operations										Continuing operations	$	1.42	$	0.87
Discontinued operations										Discontinued operations	$	—	$	0.30

Earnings per share attributable to Dell Technologies Inc. — diluted:										Earnings per share attributable to Dell Technologies Inc. — diluted:
Continuing operations										Continuing operations	$	1.37	$	0.84
Discontinued operations										Discontinued operations	$	—	$	0.29

(a) Includes related party cost of net revenue as follows (Note 16):										(a) Includes related party cost of net revenue as follows (Note 16):
Products										Products	$	255	$	319
Services										Services	$	709	$	578

The accompanying notes are an integral part of these Condensed Consolidated Financial ~~Statements.~~Statements.

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DELL TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in ~~millions; unaudited~~)millions; unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		October 29, 2021		October 30, 2020		October 29, 2021		October 30, 2020			April 29, 2022		April 30, 2021
Net income	Net income	$	3,888	$	881	$	5,706	$	2,162	Net income	$	1,069	$	938

Other comprehensive income (loss), net of tax
Other comprehensive income, net of tax										Other comprehensive income, net of tax
Foreign currency translation adjustments	Foreign currency translation adjustments	(61)		(21)		(201)		243		Foreign currency translation adjustments	(286)		(7)

Cash flow hedges:	Cash flow hedges:									Cash flow hedges:
Change in unrealized gains (losses)	Change in unrealized gains (losses)	86		45		150		(45)		Change in unrealized gains (losses)	372		(1)
Reclassification adjustment for net (gains) losses included in net income	Reclassification adjustment for net (gains) losses included in net income	(74)		84		(34)		(24)		Reclassification adjustment for net (gains) losses included in net income	(96)		27
Net change in cash flow hedges	Net change in cash flow hedges	12		129		116		(69)		Net change in cash flow hedges	276		26
Pension and other postretirement plans:	Pension and other postretirement plans:									Pension and other postretirement plans:
Recognition of actuarial net gains (losses) from pension and other postretirement plans		1		1		2		(21)
Reclassification adjustments for net (gains) losses from pension and other postretirement plans		1		(1)		3		3
Net change in actuarial net gains (losses) from pension and other postretirement plans		2		—		5		(18)
Recognition of actuarial net gains from pension and other postretirement plans										Recognition of actuarial net gains from pension and other postretirement plans	17		1
Reclassification adjustments for net losses from pension and other postretirement plans										Reclassification adjustments for net losses from pension and other postretirement plans	—		—
Net change in actuarial net gains from pension and other postretirement plans										Net change in actuarial net gains from pension and other postretirement plans	17		1

Total other comprehensive income (loss), net of tax expense (benefit) of $1 and $9, respectively, and $6 and $(3), respectively		(47)		108		(80)		156
Total other comprehensive income, net of tax expense (benefit) of $16 and $(2), respectively										Total other comprehensive income, net of tax expense (benefit) of $16 and $(2), respectively	7		20
Comprehensive income, net of tax	Comprehensive income, net of tax	3,841		989		5,626		2,318		Comprehensive income, net of tax	1,076		958
Less: Net income attributable to non-controlling interests		45		49		145		139
Less: Other comprehensive income attributable to non-controlling interests		—		1		—		—
Less: Net income (loss) attributable to non-controlling interests										Less: Net income (loss) attributable to non-controlling interests	(3)		51

Comprehensive income attributable to Dell Technologies Inc.	Comprehensive income attributable to Dell Technologies Inc.	$	3,796	$	939	$	5,481	$	2,179	Comprehensive income attributable to Dell Technologies Inc.	$	1,079	$	907

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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DELL TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions; ~~unaudited~~)continued on next page; unaudited)

Nine Months Ended
October 29, 2021 October 30, 2020
Cash flows from operating activities:
Net income $ 5,706 $ 2,162
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 3,721 4,017
Stock-based compensation expense 1,406 1,219
Deferred income taxes (450) (219)
Other, net (a) (4,312) (322)
Changes in assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable (1,587) 885
Financing receivables 234 (624)
Inventories (2,063) (198)
Other assets and liabilities (1,624) (2,175)
Accounts payable 5,149 (216)
Deferred revenue 1,034 1,001
Change in cash from operating activities 7,214 5,530
Cash flows from investing activities:
Purchases of investments (320) (296)
Maturities and sales of investments 454 98
Capital expenditures and capitalized software development costs (2,056) (1,584)
Acquisition of businesses and assets, net (16) (405)
Divestitures of businesses and assets, net 3,957 2,187
Other 34 26
Change in cash from investing activities 2,053 26
Cash flows from financing activities:
Proceeds from the issuance of common stock 326 389
Repurchases of parent common stock (35) (240)
Repurchases of subsidiary common stock (1,174) (890)
Proceeds from debt 13,037 14,772
Repayments of debt (13,069) (17,244)
Other (113) (270)
Change in cash from financing activities (1,028) (3,483)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (54) (67)
Change in cash, cash equivalents, and restricted cash 8,185 2,006
Cash, cash equivalents, and restricted cash at beginning of the period 15,184 10,151
Cash, cash equivalents, and restricted cash at end of the period $ 23,369 $ 12,157

~~____________________~~

~~(a)During the nine months ended October 29, 2021, other, net, includes $4.0 billion pre-tax gain on the sale of Boomi.~~


	Three Months Ended
	April 29, 2022		April 30, 2021
Cash flows from operating activities:
Net income	$	1,069	$	938
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	726		1,239
Stock-based compensation expense	232		435
Deferred income taxes	(246)		(170)
Other, net	(91)		(82)
Changes in assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable	864		1,850
Financing receivables	280		276
Inventories	(419)		(396)
Other assets and liabilities	(885)		(2,292)
Due from/to related party, net	(777)		—
Accounts payable	(1,501)		(125)
Deferred revenue	479		565
Change in cash from operating activities	(269)		2,238
Cash flows from investing activities:
Purchases of investments	(52)		(146)
Maturities and sales of investments	18		256
Capital expenditures and capitalized software development costs	(690)		(625)
Acquisition of businesses and assets, net	—		(10)

Other	4		6
Change in cash from investing activities	(720)		(519)
Cash flows from financing activities:

Proceeds from the issuance of common stock	4		160
Repurchases of parent common stock	(1,779)		(9)
Repurchases of subsidiary common stock	(7)		(434)

Payment of dividend to stockholders	(248)		—
Proceeds from debt	3,034		2,726
Repayments of debt	(2,703)		(4,070)
Debt-related costs and other, net	(7)		(11)
Change in cash from financing activities	(1,706)		(1,638)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(111)		(5)
Change in cash, cash equivalents, and restricted cash	(2,806)		76

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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DELL TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS’ EQUITY (DEFICIT)~~CASH FLOWS

(continued; in millions; ~~continued on next page;~~ unaudited)

Capital in Excess of Par Value Treasury Stock
Three Months Ended October 29, 2021 Issued Shares Amount Shares Amount Accumulated Deficit Accumulated Other Comprehensive Income/(Loss) Dell Technologies
Stockholders’ Equity (Deficit) Non-Controlling Interests Total Stockholders’ Equity (Deficit)
Balances as of July 31, 2021 773 $ 17,510 8 $ (305) $ (12,033) $ (347) $ 4,825 $ 5,118 $ 9,943
Net income — — — — 3,843 — 3,843 45 3,888
Foreign currency translation adjustments — — — — — (61) (61) — (61)
Cash flow hedges, net change — — — — — 12 12 — 12
Pension and other post-retirement — — — — — 2 2 — 2
Issuance of common stock 2 (9) — — — — (9) — (9)
Stock-based compensation expense — 204 — — — — 204 268 472
Treasury stock repurchases — — — — — — — — —
Revaluation of redeemable shares — — — — — — — — —
Impact from equity transactions of non-controlling interests — 138 — — — — 138 (191) (53)
Balances as of October 29, 2021 775 $ 17,843 8 $ (305) $ (8,190) $ (394) $ 8,954 $ 5,240 $ 14,194

Capital in Excess of Par Value Treasury Stock
Nine Months Ended October 29, 2021 Issued Shares Amount Shares Amount Accumulated Deficit Accumulated Other Comprehensive Income/(Loss) Dell Technologies
Stockholders’ Equity (Deficit) Non-Controlling Interests Total Stockholders’ Equity (Deficit)
Balances as of January 29, 2021 761 $ 16,849 8 $ (305) $ (13,751) $ (314) $ 2,479 $ 5,074 $ 7,553
Net income — — — — 5,561 — 5,561 145 5,706
Foreign currency translation adjustments — — — — — (201) (201) — (201)
Cash flow hedges, net change — — — — — 116 116 — 116
Pension and other post-retirement — — — — — 5 5 — 5
Issuance of common stock 14 19 — — — — 19 — 19
Stock-based compensation expense — 569 — — — — 569 837 1,406
Revaluation of redeemable shares — 472 — — — — 472 — 472
Impact from equity transactions of non-controlling interests — (66) — — — — (66) (816) (882)
Balances as of October 29, 2021 775 $ 17,843 8 $ (305) $ (8,190) $ (394) $ 8,954 $ 5,240 $ 14,194


	Three Months Ended
	April 29, 2022		April 30, 2021
Change in cash, cash equivalents, and restricted cash	(2,806)		76
Cash, cash equivalents, and restricted cash at beginning of the period, including cash attributable to discontinued operations	10,082		15,184
Cash, cash equivalents, and restricted cash at end of the period, including cash attributable to discontinued operations	7,276		15,260
Less: Cash, cash equivalents, and restricted cash attributable to discontinued operations	—		5,667
Cash, cash equivalents, and restricted cash from continuing operations	$	7,276	$	9,593

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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DELL TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS’~~STOCKHOLDERS' EQUITY (DEFICIT)

(in millions; continued on next page; unaudited)


	Common Stock and Capital in Excess of Par Value			Treasury Stock
	Issued Shares	Amount		Shares	Amount		Accumulated Deficit		Accumulated Other Comprehensive Income/(Loss)		Dell Technologies Stockholders’ Equity (Deficit)		Non-Controlling Interests		Total Stockholders’ Equity (Deficit)
Balances as of January 28, 2022	777	$	7,898	20	$	(964)	$	(8,188)	$	(431)	$	(1,685)	$	105	$	(1,580)

Net income	—	—		—	—		1,072		—		1,072		(3)		1,069
Cash dividend declared ($0.33 per common share)	—	—		—	—		(253)		—		(253)		—		(253)
Foreign currency translation adjustments	—	—		—	—		—		(286)		(286)		—		(286)
Cash flow hedges, net change	—	—		—	—		—		276		276		—		276
Pension and other post-retirement	—	—		—	—		—		17		17		—		17
Issuance of common stock	18	(339)		—	—		—		—		(339)		—		(339)
Stock-based compensation expense	—	224		—	—		—		—		224		8		232
Treasury stock repurchases	—	—		28	(1,482)		—		—		(1,482)		—		(1,482)

Impact from equity transactions of non-controlling interests	—	(6)		—	—		—		—		(6)		(3)		(9)

Balances as of April 29, 2022	795	$	7,777	48	$	(2,446)	$	(7,369)	$	(424)	$	(2,462)	$	107	$	(2,355)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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DELL TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(continued; in ~~millions~~millions; unaudited~~; unaudited)~~)

Capital in Excess of Par Value Treasury Stock
Three Months Ended October 30, 2020 Issued Shares Amount Shares Amount Accumulated Deficit Accumulated Other Comprehensive Income/(Loss) Dell Technologies
Stockholders’ Equity (Deficit) Non-Controlling Interests Total Stockholders’ Equity (Deficit)
Balances as of July 31, 2020 753 $ 16,356 8 $ (305) $ (15,810) $ (660) $ (419) $ 4,977 $ 4,558
Net income — — — — 832 — 832 49 881
Foreign currency translation adjustments — — — — — (21) (21) — (21)
Cash flow hedges, net change — — — — — 128 128 1 129
Issuance of common stock 4 46 — — — — 46 — 46
Stock-based compensation expense — 126 — — — — 126 310 436
Revaluation of redeemable shares — 83 — — — — 83 — 83
Impact from equity transactions of non-controlling interests — 108 — — — — 108 (281) (173)
Balances as of October 30, 2020 757 $ 16,719 8 $ (305) $ (14,978) $ (553) $ 883 $ 5,056 $ 5,939


		Capital in Excess of Par Value			Treasury Stock															Common Stock and Capital in Excess of Par Value			Treasury Stock
Nine Months Ended October 30, 2020		Issued Shares	Amount		Shares		Amount		Accumulated Deficit		Accumulated Other Comprehensive Income/(Loss)		Dell Technologies Stockholders’ Equity (Deficit)		Non-Controlling Interests		Total Stockholders’ Equity (Deficit)
Balances as of January 31, 2020		745	$	16,091	$	2	$	(65)	$	(16,891)	$	(709)	$	(1,574)	$	4,729	$	3,155
Adjustment for adoption of accounting standards		—	—		—		—		(110)		—		(110)		—		(110)
																				Issued Shares	Amount		Shares	Amount		Accumulated Deficit		Accumulated Other Comprehensive Income/(Loss)		Dell Technologies Stockholders’ Equity (Deficit)		Non-Controlling Interests		Total Stockholders’ Equity (Deficit)
Balances as of January 29, 2021																			Balances as of January 29, 2021	761	$	16,849	8	$	(305)	$	(13,751)	$	(314)	$	2,479	$	5,074	$	7,553

Net income	Net income	—	—		—		—		2,023		—		2,023		139		2,162		Net income	—	—		—	—		887		—		887		51		938
Foreign currency translation adjustments	Foreign currency translation adjustments	—	—		—		—		—		243		243		—		243		Foreign currency translation adjustments	—	—		—	—		—		(7)		(7)		—		(7)
Cash flow hedges, net change	Cash flow hedges, net change	—	—		—		—		—		(69)		(69)		—		(69)		Cash flow hedges, net change	—	—		—	—		—		26		26		—		26
Pension and other post-retirement	Pension and other post-retirement	—	—		—		—		—		(18)		(18)		—		(18)		Pension and other post-retirement	—	—		—	—		—		1		1		—		1
Issuance of common stock	Issuance of common stock	12	124		—		—		—		—		124		—		124		Issuance of common stock	11	19		—	—		—		—		19		—		19
Stock-based compensation expense	Stock-based compensation expense	—	332		—		—		—		—		332		887		1,219		Stock-based compensation expense	—	166		—	—		—		—		166		269		435
Treasury stock repurchases		—	—		6		(240)		—		—		(240)		—		(240)

Revaluation of redeemable shares	Revaluation of redeemable shares	—	102		—		—		—		—		102		—		102		Revaluation of redeemable shares	—	(86)		—	—		—		—		(86)		—		(86)
Impact from equity transactions of non-controlling interests	Impact from equity transactions of non-controlling interests	—	70		—		—		—		—		70		(699)		(629)		Impact from equity transactions of non-controlling interests	—	2		—	—		—		—		2		(295)		(293)

Balances as of October 30, 2020		757	$	16,719	8		$	(305)	$	(14,978)	$	(553)	$	883	$	5,056	$	5,939
Balances as of April 30, 2021																			Balances as of April 30, 2021	772	$	16,950	8	$	(305)	$	(12,864)	$	(294)	$	3,487	$	5,099	$	8,586

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 — OVERVIEW AND BASIS OF PRESENTATION

Dell Technologies Inc. is a leading global end-to-end technology provider that offers a broad range of comprehensive and integrated solutions, which include servers and networking products, storage products, cloud solutions products, 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.

Basis of Presentation — 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 January ~~29, 2021.~~28, 2022. 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 ~~Dell Technologies Inc.~~the Company as of ~~October~~April 29, ~~2021~~2022 and January ~~29, 2021,~~28, 2022 and the results of its operations, ~~and~~ corresponding comprehensive income, ~~(loss) for the three~~ and ~~nine months ended October 29, 2021 and October 30, 2020,~~ its cash flows for the ~~nine~~three months ended ~~October~~April 29, ~~2021~~2022 and ~~October~~April 30, ~~2020, and its statements of stockholders’ equity for the three and nine months ended October 29, 2021 and October 30, 2020.~~2021.

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. ~~Management has considered the actual and potential economic impacts of the coronavirus disease 2019 (“COVID-19”) pandemic on the Company’s critical and significant accounting estimates.~~ Actual results could differ materially from those estimates. The results of operations, ~~and~~ comprehensive income, ~~(loss),~~and cash flows ~~and statements of stockholders’ equity~~ for the three ~~and nine~~ months ended ~~October~~April 29, ~~2021~~2022 and ~~October~~April 30, ~~2020~~2021 are not necessarily indicative of the results to be expected for the full fiscal year or for any other fiscal period.

The Company’s fiscal year is the 52- or 53-week period ending on the Friday nearest January 31. ~~Both the~~The fiscal year ~~ending~~ended January 28, 2022 (“Fiscal 2022”) ~~and~~was a 52-week period while the fiscal year ~~ended January 29, 2021~~ending February 3, 2023 (“Fiscal ~~2021”~~2023”) ~~are 52-week periods.~~will be a 53-week period.

Principles of Consolidation— These Condensed Consolidated Financial Statements include the accounts of Dell Technologies ~~and~~Inc., its wholly-owned subsidiaries, ~~as well as~~and the accounts of ~~VMware, Inc. and~~ SecureWorks Corp. (“Secureworks”), ~~each of~~ which is majority-owned by Dell Technologies. All intercompany transactions have been eliminated.

~~Unless~~Secureworks — As of April 29, 2022 and January 28, 2022, the ~~context indicates otherwise, references~~Company held approximately 82.9% and 83.9%, respectively, of the outstanding equity interest in ~~these Notes~~Secureworks, excluding restricted stock awards (“RSAs”), and approximately 82.5% and 83.1%, respectively, of the equity interest, including RSAs. The portion of the results of operations of Secureworks allocable to its other owners is shown as net income 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 ~~Statements to “VMware” mean the VMware reportable segment, which reflects the operations~~Position and was $107 million and $105 million as of ~~VMware, Inc. (NYSE: VMW) within Dell Technologies.~~April 29, 2022 and January 28, 2022, respectively.

Variable Interest Entities — The Company also 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 35 of the Notes to the Condensed Consolidated Financial Statements for more information regarding consolidated VIEs.

~~Spin-off~~Spin-Off of VMware, Inc. — On November 1, 2021, ~~subsequent to the close of the Company’s third quarter of Fiscal 2022,~~ the Company completed its ~~previously announced~~ spin-off of VMware, Inc. (NYSE: VMW) (individually and together with its consolidated subsidiaries, “VMware”) by means of a special stock dividend (the “VMware Spin-off”). The VMware Spin-off was effectuated pursuant to a Separation and Distribution Agreement, dated as of April 14, 2021, between Dell Technologies and VMware (the “Separation and Distribution Agreement”).

Immediately prior to the VMware Spin-off, on November 1, 2021, VMware paid a special cash dividend of $11.5 billion, in aggregate, to VMware, Inc. common stockholders of record as of 5:00 p.m., New York City time, on October 29, 2021 (the “Record Date”), of which Dell Technologies received approximately $9.3 billion. Dell Technologies used the net proceeds from its pro rata share of the cash dividend to repay a portion of its outstanding core debt.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Dell Technologies stockholders received approximately 0.440626 of a share of VMware Class A common stock for each share of Dell Technologies common stock held as of the Record Date, based on shares outstanding as of the completion of the VMware Spin-off, with no change to the capital structure of Dell Technologies. As a result of the VMware Spin-off, the pre-transaction stockholders of Dell Technologies own shares in two separate public companies, consisting of (1) VMware, Inc., which continues to own the businesses of VMware, Inc. and its subsidiaries, and (2) Dell Technologies, which continues to own Dell Technologies’ other businesses and subsidiaries.

Pursuant to the Commercial Framework Agreement (the “CFA”) between Dell Technologies ~~Inc. 2013 Stock Incentive Plan that provides~~and VMware, Dell Technologies continues to act as a distributor of VMware’s standalone products and services and purchase such products and services for ~~equitable adjustments in the event~~resale to customers. Dell Technologies also continues to integrate VMware’s products and services with Dell Technologies’ offerings and sell them to customers. The results of ~~a restructuring event, stock awards that were outstanding at the time of the VMware spin-off were adjusted in the ratio of approximately 1.97 to 1. The conversion ratio was based on~~such operations are presented as continuing operations within the Company’s ~~pre-VMware Spin-off closing stock price on November 1, 2021 and post-VMware Spin-off opening stock price on November 2, 2021. The adjustment resulted in an increase~~Condensed Consolidated Statements of 30.1 million restricted stock units and 1.9 million stock options. The adjustment did not result in material incremental stock-based compensation expense as it was required by the Company’s equity incentive plan.Income for all periods presented.

In ~~connection~~accordance with ~~and upon completion~~applicable accounting guidance, the results of ~~the~~ VMware, ~~Spin-off,~~excluding Dell ~~Technologies and~~Technologies' resale of VMware Inc. entered into various agreements that provide a framework for the relationship between the companies after the transaction, including, among others, a commercial framework agreement, a tax matters agreement, and a transition services agreement.

The Commercial Framework Agreement (“CFA”) provides a framework under which the Company and VMware, Inc. will continue their strategic commercial relationship after the transaction, particularly with respect to projects mutually agreed by the parties as having the potential to accelerate the growth of an industry, product, service, or platform that may provide one or both companies with a strategic market opportunity. The CFA has an initial term of five years, with automatic one-year renewals occurring annually thereafter, subject to certain terms and conditions.

The Tax Matters Agreement governs the respective rights, responsibilities, and obligations of Dell Technologies and VMware, Inc. with respect to tax liabilities (including taxes, if any, incurred as a result of any failure of the VMware Spin-off to qualify for tax-free treatment for U.S. federal income tax purposes) and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, cooperation, and other matters regarding tax.

~~The Company will report VMware, Inc. results~~offerings, are presented as discontinued operations ~~beginning~~ in the ~~fourth quarter~~Condensed Consolidated Statements of ~~Fiscal 2022.~~

Income and, as such, have been excluded from both continuing operations and segment results for the three months ended April 30, 2021. The Condensed Consolidated Statements of Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations. See Note ~~5 and Note 18~~2 of the Notes to the Condensed Consolidated Financial Statements for ~~more~~additional information ~~regarding debt repayments and the completion of~~on the VMware Spin-off.

Boomi Divestiture — On October 1, 2021, Dell Technologies completed the sale of Boomi, Inc. (“Boomi”) and certain related ~~assets to Francisco Partners and TPG Capital.~~assets. At the completion of the sale, the Company received total cash consideration of approximately $4.0 billion, resulting in a pre-tax gain on sale of $4.0 ~~billion.~~billion recognized in interest and other, net on the Condensed Consolidated Statements of Income. The Company ultimately recorded a $3.0 billion gain, net of $1.0 billion in tax expense. The transaction was intended to support ~~the Company’s focus on fueling~~general corporate purposes and fuel growth initiatives through targeted investments to modernize Dell Technologies’ core infrastructure and by expanding in high-priority areas, including hybrid and private cloud, edge, telecommunications solutions, and the Company’s APEX offerings. Prior to the divestiture, Boomi’s operating results were included within ~~Other~~other businesses and the divestiture did not qualify for presentation as a discontinued operation.

~~RSA Security Divestiture~~ — On September 1, 2020, Dell Technologies completed the sale of RSA Security to a consortium led by Symphony Technology Group, Ontario Teachers’ Pension Plan Board and AlpInvest Partners for total cash consideration of approximately $2.082 billion, resulting in a pre-tax gain on sale of $338 million. The Company ultimately recorded a $21 million loss, net of $359 million in tax expense due to the relatively low tax basis for the assets sold, particularly goodwill. The transaction included the sale of RSA Archer, RSA NetWitness Platform, RSA SecurID, RSA Fraud and Risk Intelligence, and RSA Conference and was intended to further simplify Dell Technologies’ product portfolio and corporate structure. Prior to the divestiture, RSA Security’s operating results were included within Other businesses and did not qualify for presentation as a discontinued operation.

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~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

~~VMware, Inc. Acquisition of Pivotal~~ — On December 30, 2019, VMware, Inc. completed its acquisition of Pivotal Software, Inc. (“Pivotal”) from the Company by merger (the “Pivotal acquisition”). As of the transaction date, Pivotal’s Class A common stock (NYSE: PVTL) ceased to be listed and traded on the New York Stock Exchange (“NYSE”). Due to the Company’s ownership of a controlling interest in Pivotal, the Company and VMware, Inc. accounted for the acquisition of the controlling interest in Pivotal as a transaction between entities under common control, and, consequently, the transaction had no net effect on the Company’s consolidated financial statements. Subsequent to the Pivotal acquisition, Pivotal operates as a wholly-owned subsidiary of VMware, Inc. and Dell Technologies reports Pivotal results within the VMware reportable segment. Prior to the Pivotal acquisition, Pivotal results were reported within Other businesses. This change in Pivotal segment classification was reflected retrospectively in the Company’s reportable segment results.

~~Class V Transaction~~ —On December 28, 2018, the Company completed a transaction (the “Class V transaction”) in which it paid $14.0 billion in cash and issued 149,387,617 shares of its Class C Common Stock to holders of its Class V Common Stock in exchange for all outstanding shares of Class V Common Stock. The non-cash consideration portion of the Class V transaction totaled $6.9 billion. As a result of the Class V transaction, the tracking stock feature of the Company’s capital structure associated with the Class V Common Stock was terminated. The Class C Common Stock is traded on the NYSE.

~~EMC Merger Transaction~~ ~~— On September 7, 2016, the Company completed its acquisition of EMC Corporation (“EMC”) by merger (the “EMC merger transaction”).~~

Recently Issued Accounting Pronouncements

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers — — In October 2021, the Financial Accounting Standards Board (“FASB”) issued guidance which requires companies to apply Topic 606, Revenue from Contracts with Customers,, to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. Public entities must adopt the new guidance for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact and timing of adoption of this guidance.

Reference Rate Reform — In March 2020, the FASB issued guidance which provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and certain hedging relationships to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate to alternative reference rates. The Company may elect to apply the amendments prospectively through December 31, 2022. Adoption of the new guidance is not expected to have a material impact on the Company’s financial results.

~~Recently Adopted Accounting Pronouncements~~

~~Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity~~ —In August 2020, the FASB issued guidance to simplify the accounting for convertible debt instruments and convertible preferred stock, and the derivatives scope exception for contracts in an entity's own equity. In addition, the guidance on calculating diluted earnings per share has been simplified and made more internally consistent. The Company early adopted this standard as of January 30, 2021. There was no impact on the Condensed Consolidated Financial Statements or to diluted earnings per share as of the adoption date.

~~Simplifying Accounting for Income Taxes~~ —~~In December 2019, the FASB issued guidance to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740,~~ ~~Income Taxes~~, and by clarifying and amending existing guidance in order to improve consistent application of GAAP for other areas of Topic 740. The Company adopted the standard during the three months ended April 30, 2021. The impact of the adoption of this standard was immaterial to the Condensed Consolidated Financial Statements.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 2 — DISCONTINUED OPERATIONS

VMware Spin-Off — As disclosed in Note 1 of the Notes to the Condensed Consolidated Financial Statements, on November 1, 2021, the Company completed its spin-off of VMware by means of a special stock dividend of 30,678,605 shares of Class A common stock and 307,221,836 shares of Class B common stock of VMware to Dell Technologies stockholders of record as of October 29, 2021.

Prior to receipt of the VMware common stock by the Company’s stockholders, each share of VMware Class B common stock automatically converted into one share of VMware Class A common stock. As a result of these transactions, each holder of record of shares of Dell Technologies common stock as of the distribution record date received approximately 0.440626 of a share of VMware Class A common stock for each share of Dell Technologies common stock held as of such date, based on shares outstanding as of the completion of the VMware Spin-off. Following completion of the transaction, the pre-transaction stockholders of Dell Technologies owned shares in two separate public companies, consisting of (1) VMware, which continues to own the businesses of VMware, Inc. and its subsidiaries, and (2) Dell Technologies, which continues to own Dell Technologies’ other businesses and subsidiaries. After the separation, Dell Technologies does not beneficially own any shares of VMware common stock.

VMware paid a cash dividend, pro rata, to each of the holders of VMware common stock in an aggregate amount equal to $11.5 billion, of which Dell Technologies received $9.3 billion. Following the payment by VMware to its stockholders, the separation of VMware from Dell Technologies occurred, including the termination or settlement of certain intercompany accounts and intercompany contracts. Dell Technologies used the net proceeds from its pro rata share of the cash dividend to repay a portion of its outstanding debt.

Dell Technologies determined that the VMware Spin-off, and related distributions, qualified as tax-free for U.S. federal income tax purposes, which required significant judgment by management. In making these determinations, Dell Technologies applied U.S. federal tax law to relevant facts and circumstances and obtained a favorable private letter ruling from the Internal Revenue Service, a tax opinion, and other external tax advice related to the concluded tax treatment. If the completed transactions were to fail to qualify for tax-free treatment for U.S. federal income tax purposes, the Company could be subject to significant liabilities, and there could be material adverse impacts on the Company’s business, financial condition, results of operations and cash flows in future reporting periods.

In connection with and upon completion of the VMware Spin-off, Dell Technologies and VMware entered into various agreements that provide a framework for the relationship between the companies after the transaction, including, among others, a commercial framework agreement, a tax matters agreement, and a transition services agreement.

The CFA referred to in Note 1 to the Notes to the Condensed Consolidated Financial Statements provides a framework under which the Company and VMware will continue their commercial relationship after the transaction, particularly with respect to projects mutually agreed by the parties as having the potential to accelerate the growth of an industry, product, service, or platform that may provide one or both companies with a strategic market opportunity. The CFA has an initial term of five years, with automatic one-year renewals occurring annually thereafter, subject to certain terms and conditions.

Pursuant to the CFA, Dell Technologies continues to act as a distributor of VMware’s standalone products and services and purchases such products and services for resale to end-user customers. Dell Technologies also continues to integrate VMware’s products and services with Dell Technologies’ offerings and sell them to end users. Cash flows between Dell and VMware primarily relate to such transactions. The Company has determined that it is generally acting as principal in these arrangements. The results of such operations are classified as continuing operations within the Company’s Condensed Consolidated Statements of Income. See Note 16 of the Notes to the Condensed Consolidated Financial Statements for additional information regarding transactions between Dell Technologies and VMware.

In accordance with applicable accounting guidance, the results of VMware, excluding Dell's resale of VMware offerings, are presented as discontinued operations in the Condensed Consolidated Statements of Income and, as such, have been excluded from both continuing operations and segment results for the three months ended April 30, 2021. The Condensed Consolidated Statements of Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The tax matters agreement between the Company and VMware governs the respective rights, responsibilities, and obligations of Dell Technologies and VMware with respect to tax liabilities (including taxes, if any, incurred as a result of any failure of the VMware Spin-off to qualify for tax-free treatment for U.S. federal income tax purposes) and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, cooperation, and other matters regarding tax.

The transition services agreement between the Company and VMware governs the various administrative services which the Company will provide to VMware on an interim transitional basis. Transition services may be provided for up to one year.

The following table presents key components of “Income from discontinued operations, net of income taxes” for the three months ended April 30, 2021:


	Three Months Ended (a)
	April 30, 2021
	(in millions)
Net revenue	$	1,897
Cost of net revenue	(497)
Operating expenses	2,006
Interest and other, net	100
Income from discontinued operations before income taxes	288
Income tax expense	9
Income from discontinued operations, net of income taxes	$	279

____________________

(a) The table above reflects the offsetting effects of historical intercompany transactions which are presented on a gross basis within continuing operations on the Condensed Consolidated Statements of Income.

The following table presents significant cash flow items from discontinued operations for the three months ended April 30, 2021 included within the Condensed Consolidated Statements of Cash Flows:


	Three Months Ended
	April 30, 2021
	(in millions)
Depreciation and amortization	$	333
Capital expenditures	$	70
Stock-based compensation expense	$	263

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 3 — FAIR VALUE MEASUREMENTS ~~AND INVESTMENTS~~

The following table presents the Company’s hierarchy for its assets and liabilities measured ~~and recorded~~ at fair value on a recurring basis as of the dates indicated:


		October 29, 2021								January 29, 2021									April 29, 2022								January 28, 2022
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs					Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
		(in millions)																	(in millions)
Assets:	Assets:																	Assets:

Cash and cash equivalents:																		Cash and cash equivalents:
Money market funds	Money market funds	$	16,757	$	—	$	—	$	16,757	$	8,846	$	—	$	—	$	8,846	Money market funds	$	1,977	$	—	$	—	$	1,977	$	3,737	$	—	$	—	$	3,737

Equity and other securities		155		—		—		155		449		—		—		449
Marketable equity and other securities																		Marketable equity and other securities	61		—		—		61		86		—		—		86
Derivative instruments	Derivative instruments	—		195		—		195		—		104		—		104		Derivative instruments	—		471		—		471		—		253		—		253
Total assets	Total assets	$	16,912	$	195	$	—	$	17,107	$	9,295	$	104	$	—	$	9,399	Total assets	$	2,038	$	471	$	—	$	2,509	$	3,823	$	253	$	—	$	4,076
Liabilities:	Liabilities:																	Liabilities:
Derivative instruments	Derivative instruments	$	—	$	100	$	—	$	100	$	—	$	133	$	—	$	133	Derivative instruments	$	—	$	180	$	—	$	180	$	—	$	138	$	—	$	138
Total liabilities	Total liabilities	$	—	$	100	$	—	$	100	$	—	$	133	$	—	$	133	Total liabilities	$	—	$	180	$	—	$	180	$	—	$	138	$	—	$	138

The following section describes the valuation methodologies the Company uses to measure financial instruments at fair value:

Money Market Funds — The Company’s ~~investments~~investment in money market funds that are classified as cash equivalents hold underlying investments with a weighted average maturity of 90 days or less and are recognized at fair value. The valuations of these securities are based on quoted prices in active markets for identical assets, when available, or pricing models whereby all significant inputs are observable or can be derived from or corroborated by observable market data. The Company reviews security pricing and assesses liquidity on a quarterly basis. ~~As of October 29, 2021, the Company’s U.S. portfolio had no material exposure to money market funds with a fluctuating net asset value.~~

Marketable Equity and Other Securities — The majority of the Company’s investments in equity and other securities that are measured at fair value on a recurring basis consist of strategic investments in publicly-traded companies. The valuation of these securities is based on quoted prices in active markets.

Derivative Instruments — 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 68 of the Notes to the Condensed Consolidated Financial Statements for a description of the Company’s derivative financial instrument activities.

Deferred Compensation Plans—The Company offers deferred compensation plans for eligible employees, which allow participants to defer ~~payment for~~ a portion of their compensation. Assets were the same as liabilities associated with the plans at approximately ~~$361~~$187 million and ~~$308~~$192 million as of ~~October~~April 29, ~~2021~~2022 and January ~~29, 2021,~~28, 2022, respectively, and are included in other assets and other liabilities on the Condensed Consolidated Statements of Financial Position. The net impact to the Condensed Consolidated Statements of Income is not material since changes in the fair value of the assets substantially offset changes in the fair value of the liabilities. As such, assets and liabilities associated with these plans have not been included in the recurring fair value table above.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis — Certain assets are measured at fair value on a nonrecurring basis and therefore are not included in the recurring fair value table above. These assets consist primarily of non-financial assets such as goodwill and intangible assets. See Note 79 of the Notes to the Condensed Consolidated Financial Statements for additional information about goodwill and intangible assets.

As of ~~October~~April 29, ~~2021~~2022 and January ~~29, 2021,~~28, 2022, the Company held ~~private~~ strategic investments in non-marketable equity and other securities of ~~$1.3~~$1.5 billion and ~~$1.0~~$1.4 billion, respectively. As these investments represent early-stage companies without readily determinable fair values, they are not included in the recurring fair value table above.

Carrying Value and Estimated Fair Value of Outstanding Debt — The following table presents the carrying value and estimated fair value of the Company’s outstanding debt as described in Note 7 of the Notes to the Condensed Consolidated Financial Statements, including the current portion, as of the dates indicated:


	April 29, 2022				January 28, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in billions)

Senior Notes	$	16.1	$	16.7	$	16.1	$	18.5
Legacy Notes and Debentures	$	0.8	$	1.0	$	0.8	$	1.1

The fair values of the outstanding debt shown in the table above, as well as the DFS debt described in Note 5 of the Notes to the Condensed Consolidated Financial Statements, were determined based on observable market prices in a less active market or based on valuation methodologies using observable inputs and were categorized as Level 2 in the fair value hierarchy. The carrying value of DFS debt approximates fair value.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 4 — INVESTMENTS

The Company has strategic investments in equity and other securities as well as investments in fixed-income debt securities. As of April 29, 2022 and January 28, 2022, total investments were $1.9 billion and $1.8 billion, respectively.

Equity and Other Securities

Equity and other securities include strategic investments in marketable and non-marketable securities. Investments in marketable securities are measured at fair value on a recurring basis. The Company has elected to apply the measurement alternative for ~~these investments.~~non-marketable securities. Under the alternative, the Company measures investments without readily determinable fair values at cost, less impairment, adjusted by observable price changes. The Company ~~must make~~makes a separate election to use the alternative for each eligible investment and is required to reassess at each reporting period whether an investment qualifies for the alternative. In evaluating these investments for impairment or observable price changes, the Company uses inputs including pre- and post-money valuations of recent financing events and the impact of those events on its fully diluted ownership percentages, as well as other available information regarding the issuer’s historical and forecasted performance.

Carrying Value of Equity and ~~Estimated Fair Value of Outstanding Debt~~ Other Securities

—

The following table presents the ~~carrying value~~amortized cost, cumulative unrealized gains, cumulative unrealized losses, and ~~estimated fair~~carrying value of the ~~Company’s outstanding debt as described~~Company's strategic investments in ~~Note 5 of the Notes to the Condensed Consolidated Financial Statements, including the current portion,~~marketable and non-marketable equity securities as of the dates indicated:


	April 29, 2022								January 28, 2022
	Cost		Unrealized Gain		Unrealized Loss		Carrying Value		Cost		Unrealized Gain		Unrealized Loss		Carrying Value
	(in millions)
Marketable	$	114	$	78	$	(131)	$	61	$	126	$	79	$	(119)	$	86
Non-marketable	668		910		(65)		1,513		593		900		(52)		1,441
Total equity and other securities	$	782	$	988	$	(196)	$	1,574	$	719	$	979	$	(171)	$	1,527

October 29, 2021 January 29, 2021
Carrying Value Fair Value Carrying Value Fair Value
(in billions)
Senior Secured Credit Facilities $ 6.2 $ 6.3 $ 6.2 $ 6.3
First Lien Notes $ 18.3 $ 22.8 $ 18.3 $ 22.8
Unsecured Notes and Debentures $ 0.8 $ 1.2 $ 1.2 $ 1.6
Senior Notes $ 1.6 $ 1.7 $ 2.7 $ 2.8
EMC Notes $ — $ — $ 1.0 $ 1.0
VMware Notes $ 10.7 $ 11.1 $ 4.7 $ 5.3
Margin Loan Facility $ — $ — $ 4.0 $ 3.9
Gains and Losses on Equity and Other Securities

The ~~fair values of~~following table presents unrealized gains and losses on marketable and non-marketable equity and other securities for the ~~outstanding debt shown in the table above, as well as the debt of Dell Financial Services and its affiliates (“DFS”) described in Note 3 of the Notes~~periods indicated:


	April 29, 2022		April 30, 2021
	(in millions)
Marketable securities
Unrealized gain	$	—	$	16
Unrealized loss	(18)		(8)
Net unrealized gain (loss)	(18)		8
Non-marketable securities
Unrealized gain	21		182
Unrealized loss	—		(77)
Net unrealized gain (a)	21		105
Total net gain on equity and other securities	$	3	$	113

____________________

(a) For all periods presented, net gains on non-marketable securities are due to ~~the Condensed Consolidated Financial Statements, were determined based on~~upward adjustments for observable market prices in a less active market or based on valuation methodologies using observable inputs and were categorized as Level 2 in the fair value hierarchy. The carrying value of DFS debt approximates fair value. Outstanding debt is recorded at carrying value and, as such, is not included in the recurring fair value table above.price changes offset by losses primarily attributable to impairments.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

~~Investments~~

Fixed Income Debt Securities

~~The following table presents the carrying value of the Company’s investments as of the dates indicated:~~

October 29, 2021 January 29, 2021
Cost Unrealized Gain Unrealized (Loss) Carrying Value Cost Unrealized Gain Unrealized (Loss) Carrying Value
(in millions)
Equity and other securities $ 1,236 $ 488 $ (224) $ 1,500 $ 907 $ 677 $ (145) $ 1,439
Fixed income debt securities 333 — (6) 327 176 9 — 185
Total securities $ 1,827 $ 1,624

~~Equity and other securities~~ — The Company has strategic investments in publicly-traded and privately-held companies. For the nine months ended October 29, 2021, the equity and other securities without readily determinable fair values of $1.3 billion increased by $411 million, primarily due to upward adjustments for observable price changes of $448 million, partially offset by $37 million of downward adjustments that were primarily attributable to observable price changes. The remainder of equity and other securities consists of publicly-traded investments that are measured at fair value on a recurring basis.

~~Fixed income debt securities~~ — The Company has fixed income debt securities carried at amortized ~~cost. The debt securities~~cost which are held as collateral for borrowings. The Company intends to hold the investments to maturity. ~~Unrealized gains relate to foreign currency impacts.~~

The following table summarizes the Company’s debt securities as of the dates indicated:


	April 29, 2022								January 28, 2022
	Amortized Cost		Unrealized Gains		Unrealized Loss		Carrying Value		Amortized Cost		Unrealized Gains		Unrealized Loss		Carrying Value
	(in millions)
Fixed income debt securities	$	334	$	28	$	(68)	$	294	$	333	$	26	$	(47)	$	312

1619

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 35 — FINANCIAL SERVICES

The Company offers or arranges various financing options and services and alternative payment structures for its customers ~~in North America, Europe, Australia, and New Zealand~~globally primarily through Dell Financial Services and its affiliates (“DFS”). The Company also arranges financing for some of its customers in various countries where DFS does not currently operate as a captive enterprise. The Company further strengthens customer relationships through flexible consumption models, which enable the Company to offer its customers the option to pay over time and, in certain cases, based on utilization, to provide them with financial flexibility to meet their changing technological requirements. The key activities of DFS include originating, collecting, and servicing customer financing arrangements primarily related to the purchase or use of Dell Technologies products and services. In some cases, DFS also offers financing onfor the purchase of third-party technology products that complement the Dell Technologies portfolio of products and services. New financing originations were ~~$2.0~~$2.1 billion and ~~$2.1~~$1.9 billion for the three months ended ~~October~~April 29, ~~2021~~2022 and ~~October~~April 30, ~~2020, respectively, and $5.8 billion and $6.5 billion for the nine months ended October 29,~~ 2021, ~~and October 30, 2020,~~ respectively.

The Company’s ~~loan~~lease and ~~lease~~loan arrangements with customers are aggregated primarily into the following categories:

Revolving loans — Revolving loans offered under private label credit financing programs provide qualified customers with a revolving credit line for the purchase of products and services offered by Dell Technologies. These private label credit financing programs are referred to as Dell Preferred Account (“DPA”) and Dell Business Credit (“DBC”). The DPA product is primarily offered to individual consumer customers, and the DBC product is primarily offered to small and medium-sized commercial customers. Revolving loans in the United States bear interest at a variable annual percentage rate that is tied to the prime rate. Based on historical payment patterns, revolving loan transactions are typically repaid within twelve months on average. Due to the short-term nature of the revolving loan portfolio, the carrying value of the portfolio approximates fair value.

Fixed-term leases and loans — The Company enters into financing arrangements with customers who seek lease financing for equipment. DFS leases are generally classified as sales-type leases ~~direct financing leases,~~ or operating leases. Direct financing leases are immaterial. Leases that commenced prior to the effective date of the current lease accounting standard continue to be accounted for under previous lease accounting guidance. Leases with business customers have fixed terms of generally two to four years.

The Company also offers fixed-term loans to qualified small businesses, large commercial accounts, governmental organizations, educational entities, and certain individual consumer customers. These loans are repaid in equal payments including interest and have defined terms of generally three to five years. The fair value of the fixed-term loan portfolio is determined using market observable inputs. The carrying value of these loans approximates fair value.

The Company further strengthens customer relationships through flexible consumption models, which enable the Company to offer its customers the option to pay over time and, in certain cases, based on utilization, to provide them with financial flexibility to meet their changing technological requirements.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Financing Receivables

The following table presents the components of the Company’s financing receivables segregated by portfolio segment as of the dates indicated:


		October 29, 2021						January 29, 2021							April 29, 2022						January 28, 2022
		Revolving		Fixed-term		Total		Revolving		Fixed-term		Total			Revolving		Fixed-term		Total		Revolving		Fixed-term		Total
		(in millions)													(in millions)
Financing receivables, net:	Financing receivables, net:													Financing receivables, net:
Customer receivables, gross (a)	Customer receivables, gross (a)	$	705	$	9,495	$	10,200	$	796	$	9,595	$	10,391	Customer receivables, gross (a)	$	716	$	9,483	$	10,199	$	750	$	9,833	$	10,583
Allowances for losses	Allowances for losses	(112)		(113)		(225)		(148)		(173)		(321)		Allowances for losses	(94)		(87)		(181)		(102)		(87)		(189)
Customer receivables, net	Customer receivables, net	593		9,382		9,975		648		9,422		10,070		Customer receivables, net	622		9,396		10,018		648		9,746		10,394
Residual interest	Residual interest	—		265		265		—		424		424		Residual interest	—		176		176		—		217		217
Financing receivables, net	Financing receivables, net	$	593	$	9,647	$	10,240	$	648	$	9,846	$	10,494	Financing receivables, net	$	622	$	9,572	$	10,194	$	648	$	9,963	$	10,611
Short-term	Short-term	$	593	$	4,377	$	4,970	$	648	$	4,507	$	5,155	Short-term	$	622	$	4,174	$	4,796	$	648	$	4,441	$	5,089
Long-term	Long-term	$	—	$	5,270	$	5,270	$	—	$	5,339	$	5,339	Long-term	$	—	$	5,398	$	5,398	$	—	$	5,522	$	5,522

____________________

(a) Customer receivables, gross ~~includes~~include amounts due from customers under revolving loans, fixed-term loans, fixed-term sales-type or direct financing leases, and accrued interest.

The following ~~tables present~~table presents the changes in allowance for financing receivable losses for the periods indicated:


		Three Months Ended													Three Months Ended
		October 29, 2021						October 30, 2020							April 29, 2022						April 30, 2021
		Revolving		Fixed-term		Total		Revolving		Fixed-term		Total			Revolving		Fixed-term		Total		Revolving		Fixed-term		Total
		(in millions)													(in millions)
Allowance for financing receivable losses:	Allowance for financing receivable losses:													Allowance for financing receivable losses:
Balances at beginning of period	Balances at beginning of period	$	126	$	161	$	287	$	143	$	180	$	323	Balances at beginning of period	$	102	$	87	$	189	$	148	$	173	$	321

Charge-offs, net of recoveries	Charge-offs, net of recoveries	(9)		(20)		(29)		(13)		(6)		(19)		Charge-offs, net of recoveries	(13)		(2)		(15)		(13)		(2)		(15)
Provision charged to income statement	Provision charged to income statement	(5)		(28)		(33)		12		(9)		3		Provision charged to income statement	5		2		7		4		6		10
Balances at end of period	Balances at end of period	$	112	$	113	$	225	$	142	$	165	$	307	Balances at end of period	$	94	$	87	$	181	$	139	$	177	$	316

Nine Months Ended
October 29, 2021 October 30, 2020
Revolving Fixed-term Total Revolving Fixed-term Total
(in millions)
Allowance for financing receivable losses:
Balances at beginning of period $ 148 $ 173 $ 321 $ 70 $ 79 $ 149
Adjustment for adoption of accounting standard — — — 40 71 111
Charge-offs, net of recoveries (32) (25) (57) (51) (22) (73)
Provision charged to income statement (4) (35) (39) 83 37 120
Balances at end of period $ 112 $ 113 $ 225 $ 142 $ 165 $ 307

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

Aging

The following table presents the aging of the Company’s customer financing receivables, gross, including accrued interest, segregated by class, as of the dates indicated:


		October 29, 2021								January 29, 2021									April 29, 2022								January 28, 2022
		Current		Past Due 1 — 90 Days		Past Due >90 Days		Total		Current		Past Due 1 — 90 Days		Past Due >90 Days		Total			Current		Past Due 1 — 90 Days		Past Due >90 Days		Total		Current		Past Due 1 — 90 Days		Past Due >90 Days		Total
		(in millions)																	(in millions)
Revolving — DPA	Revolving — DPA	$	485	$	34	$	10	$	529	$	578	$	30	$	13	$	621	Revolving — DPA	$	488	$	35	$	12	$	535	$	520	$	40	$	11	$	571
Revolving — DBC	Revolving — DBC	157		16		3		176		157		14		4		175		Revolving — DBC	164		14		3		181		158		18		3		179
Fixed-term — Consumer and Commercial	Fixed-term — Consumer and Commercial	9,063		411		21		9,495		9,192		316		87		9,595		Fixed-term — Consumer and Commercial	8,962		485		36		9,483		9,444		345		44		9,833
Total customer receivables, gross	Total customer receivables, gross	$	9,705	$	461	$	34	$	10,200	$	9,927	$	360	$	104	$	10,391	Total customer receivables, gross	$	9,614	$	534	$	51	$	10,199	$	10,122	$	403	$	58	$	10,583

Aging is likely to fluctuate as a result of the variability in volume of large transactions entered into over the period, and the administrative processes that accompany those ~~larger~~ transactions. Aging is also impacted by the timing of the Dell Technologies

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

fiscal period end date relative to calendar month-end customer payment due dates. As a result of these factors, fluctuations in aging from period to period do not necessarily indicate a material change in the collectibility of the portfolio.

Fixed-term consumer and commercial customer receivables are placed on non-accrual status if principal or interest is past due and considered delinquent, or if there is concern about collectibility of a specific customer receivable. ~~These~~The receivables identified as doubtful for collectibility may be classified as current for aging purposes. Aged revolving portfolio customer receivables identified as delinquent are ~~charged-off. Receivables are moved back to accrual status when the collection of interest is probable, or the collection of the net investment is no longer doubtful.~~charged off.

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

Credit Quality

The following tables present customer receivables, gross, including accrued interest, by credit quality indicator segregated by class, ~~and year of origination,~~ as of the dates indicated:


		October 29, 2021																			April 29, 2022
		Fixed-term — Consumer and Commercial																			Fixed-term — Consumer and Commercial
		Fiscal Year of Origination																			Fiscal Year of Origination
		2022		2021		2020		2019		2018		Years Prior		Revolving — DPA		Revolving — DBC		Total			2023		2022		2021		2020		2019		Years Prior		Revolving — DPA		Revolving — DBC		Total
		(in millions)																			(in millions)
Higher	Higher	$	2,441	$	2,055	$	1,108	$	297	$	45	$	5	$	135	$	45	$	6,131	Higher	$	1,223	$	2,587	$	1,450	$	695	$	145	$	15	$	132	$	46	$	6,293
Mid	Mid	765		863		426		126		24		1		163		55		2,423		Mid	345		866		621		235		64		8		155		57		2,351
Lower	Lower	486		515		267		60		10		1		231		76		1,646		Lower	179		505		369		142		29		5		248		78		1,555
Total	Total	$	3,692	$	3,433	$	1,801	$	483	$	79	$	7	$	529	$	176	$	10,200	Total	$	1,747	$	3,958	$	2,440	$	1,072	$	238	$	28	$	535	$	181	$	10,199

January 29, 2021
Fixed-term — Consumer and Commercial
Fiscal Year of Origination
2021 2020 2019 2018 2017 Years Prior Revolving — DPA Revolving — DBC Total
(in millions)
Higher $ 3,125 $ 1,802 $ 661 $ 166 $ 26 $ — $ 172 $ 47 $ 5,999
Mid 1,121 671 287 73 9 — 188 52 2,401
Lower 865 499 243 38 9 — 261 76 1,991
Total $ 5,111 $ 2,972 $ 1,191 $ 277 $ 44 $ — $ 621 $ 175 $ 10,391


	January 28, 2022
	Fixed-term — Consumer and Commercial
	Fiscal Year of Origination
	2022		2021		2020		2019		2018		Years Prior		Revolving — DPA		Revolving — DBC		Total
	(in millions)
Higher	$	3,279	$	1,824	$	914	$	221	$	25	$	3	$	150	$	46	$	6,462
Mid	1,071		751		329		94		17		—		166		57		2,485
Lower	599		450		208		42		6		—		255		76		1,636
Total	$	4,949	$	3,025	$	1,451	$	357	$	48	$	3	$	571	$	179	$	10,583

The categories shown in the tables above segregate customer receivables based on the relative degrees of credit risk. The credit quality indicators for DPA revolving accounts are measured primarily as of each quarter-end date, while all other indicators are generally updated on a periodic basis.

For DPA revolving receivables shown in the table above, the Company makes credit decisions based on proprietary scorecards, which include the customer’s credit history, payment history, credit usage, and other credit agency-related elements. The higher quality category includes prime accounts generally of a higher credit quality that are comparable to U.S. customer FICO scores of 720 or above. The mid-category represents the mid-tier accounts that are comparable to U.S. customer FICO scores from 660 to 719. The lower category is generally sub-prime and represents lower credit quality accounts that are comparable to U.S. customer FICO scores below 660. For the DBC revolving receivables and fixed-term commercial receivables shown in the table above, an internal grading system is utilized that assigns a credit level score based on a number of considerations, including liquidity, operating performance, and industry outlook. The grading criteria and classifications for the fixed-term products differ from those for the revolving products as loss experience varies between these product and customer groups. The credit quality categories cannot be compared between the different classes as loss experience varies substantially between the classes.

2022

Table of Contents

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Leases

Interest income on sales-type lease receivables was $59 million and $69 million for the three months ended October 29, 2021 and October 30, 2020, respectively, and $186 million and $200 million for the nine months ended October 29, 2021, and October 30, 2020, respectively.

The following table presents the net revenue, cost of net revenue, and gross margin recognized at the commencement date of sales-type leases for the periods indicated:


		Three Months Ended				Nine Months Ended					Three Months Ended
		October 29, 2021		October 30, 2020		October 29, 2021		October 30, 2020			April 29, 2022		April 30, 2021
		(in millions)									(in millions)
Net revenue — products	Net revenue — products	$	183	$	184	$	607	$	648	Net revenue — products	$	220	$	230
Cost of net revenue — products	Cost of net revenue — products	162		102		467		435		Cost of net revenue — products	204		163
Gross margin — products	Gross margin — products	$	21	$	82	$	140	$	213	Gross margin — products	$	16	$	67

The following table presents the future maturity of the Company’s fixed-term customer leases and associated financing payments, and reconciles the undiscounted cash flows to the customer receivables, gross recognized on the Condensed Consolidated Statements of Financial Position as of the date indicated:


	~~October~~April 29, ~~2021~~2022
	(in millions)
Fiscal ~~2022~~2023 (remaining ~~three~~nine months)	$	~~775~~
~~Fiscal 2023~~	~~2,207~~1,876
Fiscal 2024	~~1,445~~1,721
Fiscal 2025	~~735~~1,050
Fiscal 2026	474
Fiscal 2027 and beyond	~~335~~144
Total undiscounted cash flows	~~5,497~~5,265
Fixed-term loans	~~4,620~~4,814
Revolving loans	~~705~~716
Less: ~~unearned~~Unearned income	~~(622)~~(596)
Total customer receivables, gross	$	~~10,200~~10,199

Operating Leases

The following table presents the components of the Company’s operating lease portfolio included in property, plant, and equipment, net as of the dates indicated:

October 29, 2021 January 29, 2021
(in millions)
Equipment under operating lease, gross $ 2,367 $ 1,746
Less: accumulated depreciation (787) (432)
Equipment under operating lease, net $ 1,580 $ 1,314

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~


	April 29, 2022		January 28, 2022
	(in millions)
Equipment under operating lease, gross	$	2,942	$	2,643
Less: Accumulated depreciation	(1,076)		(935)
Equipment under operating lease, net	$	1,866	$	1,708

The following table presents operating lease income related to lease payments and depreciation expense for the Company’s operating lease portfolio for the periods indicated:


	Three Months Ended
	April 29, 2022	April 30, 2021
	(in millions)
Income related to lease payments	$232	$156
Depreciation expense	$165	$116

Three Months Ended Nine Months Ended
October 29, 2021 October 30, 2020 October 29, 2021 October 30, 2020
(in millions)
Income related to lease payments $187 $120 $510 $310
Depreciation expense $140 $92 $383 $228

Table of Contents

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The following table presents the future payments to be received by the Company as lessor in operating lease contracts as of the date indicated:


	~~October~~April 29, ~~2021~~2022
	(in millions)
Fiscal ~~2022~~2023 (remaining ~~three~~nine months)	$	~~220~~
~~Fiscal 2023~~	~~702~~663
Fiscal 2024	~~437~~650
Fiscal 2025	~~189~~397
Fiscal 2026	122
Fiscal 2027 and beyond	2132
Total	$	~~1,569~~1,864

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

DFS Debt

The Company maintains programs that facilitate the funding of leases, loans, and other alternative payment structures in the capital markets. The majority of DFS debt is non-recourse to Dell Technologies and represents borrowings under securitization programs and structured financing programs, for which the Company’s risk of loss is limited to transferred loan and lease payments and associated equipment.

The following table presents DFS debt as of the dates ~~indicated. The table~~indicated and excludes the allocated portion of the Company’s other borrowings, which represents the additional amount considered to fund the DFS ~~business.~~business:


		October 29, 2021		January 29, 2021			April 29, 2022		January 28, 2022
		(in millions)
DFS debt						DFS debt	(in millions)
DFS U.S. debt:	DFS U.S. debt:					DFS U.S. debt:
Asset-based financing and securitization facilities	Asset-based financing and securitization facilities	$	2,650	$	3,311	Asset-based financing and securitization facilities	$	2,720	$	3,054
Fixed-term securitization offerings	Fixed-term securitization offerings	3,618		2,961		Fixed-term securitization offerings	3,607		3,011
Other	Other	147		140		Other	125		135
Total DFS U.S. debt	Total DFS U.S. debt	6,415		6,412		Total DFS U.S. debt	6,452		6,200
DFS international debt:	DFS international debt:					DFS international debt:
Securitization facility	Securitization facility	751		786		Securitization facility	730		739
Other borrowings	Other borrowings	809		1,006		Other borrowings	818		785
Note payable	Note payable	250		250		Note payable	250		250
Dell Bank Senior Unsecured Eurobonds		1,752		1,212
Dell Bank senior unsecured eurobonds						Dell Bank senior unsecured eurobonds	1,575		1,672
Total DFS international debt	Total DFS international debt	3,562		3,254		Total DFS international debt	3,373		3,446
Total DFS debt	Total DFS debt	$	9,977	$	9,666	Total DFS debt	$	9,825	$	9,646
Total short-term DFS debt	Total short-term DFS debt	$	5,475	$	4,888	Total short-term DFS debt	$	5,907	$	5,803
Total long-term DFS debt	Total long-term DFS debt	$	4,502	$	4,778	Total long-term DFS debt	$	3,918	$	3,843

DFS U.S. Debt

Asset-Based Financing and Securitization Facilities — The Company maintains separate asset-based financing facilities and a securitization facility in the United States, which are revolving facilities for fixed-term leases and loans and for revolving loans, respectively. This debt is collateralized solely by the U.S. ~~lease~~loan and ~~loan~~lease payments and associated equipment in the facilities. The debt has a variable interest rate and the duration of the debt is based on the terms of the underlying loan and lease payment streams. As of ~~October~~April 29, ~~2021,~~2022, the total debt capacity related to the U.S. asset-based financing and securitization facilities was $4.5 billion. The Company enters into interest swap agreements to effectively convert a portion of this debt from a floating rate to a fixed rate. See Note 68 of the Notes to the Condensed Consolidated Financial Statements for additional information about interest rate swaps.

Table of Contents

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The Company’s U.S. securitization facility for revolving loans is effective through June 25, ~~2022.~~2025. The Company’s ~~two~~2 U.S. asset-based financing facilities for fixed-term leases and loans are effective through July 10, 2023 and July 26, 2022, respectively.

The asset-based financing and securitization facilities contain standard structural features related to the performance of the funded receivables, which include defined credit losses, delinquencies, average credit scores, and minimum collection requirements. In the event one or more of these criteria are not met and the Company is unable to restructure the facility, no further funding of receivables will be permitted and the timing of the Company’s expected cash flows from over-collateralization will be delayed. As of ~~October~~April 29, ~~2021,~~2022, these criteria were met.

Fixed-Term Securitization Offerings — The Company periodically issues asset-backed debt securities under fixed-term securitization programs to private investors. The asset-backed debt securities are collateralized solely by the U.S. fixed-term leases and loans in the offerings, which are held by Special Purpose Entities (“SPEs”), as discussed below. The interest rate on these securities is fixed and ranges from 0.18% to 5.92% per annum, and the duration of these securities is based on the terms of the underlying ~~loan~~lease and ~~lease~~loan payment streams.

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

DFS International Debt

Securitization Facility — The Company maintains a securitization facility in Europe for fixed-term leases and loans. This facility is effective through December 21, 2022 and had a total debt capacity of ~~$934~~$840 million as of ~~October~~April 29, ~~2021.~~2022.

The securitization facility contains standard structural features related to the performance of the securitized receivables, which include defined credit losses, delinquencies, average credit scores, and minimum collection requirements. In the event one or more of these criteria are not met and the Company is unable to restructure the program, no further funding of receivables will be permitted and the timing of the Company’s expected cash flows from over-collateralization will be delayed. As of ~~October~~April 29, ~~2021,~~2022, these criteria were met.

Other Borrowings — In connection with the Company’s international financing operations, the Company ~~enters~~has entered into revolving structured financing debt programs related to its fixed-term lease and loan products sold in Canada, Europe, Australia, and New Zealand. The Canadian facility, which is collateralized solely by Canadian ~~lease~~loan and ~~loan~~lease payments and associated equipment, had a total debt capacity of ~~$364~~$351 millionas of ~~October~~April 29, ~~2021,~~2022 and is effective through January 16, 2025. The European facility, which is collateralized solely by European loan and lease payments and associated equipment, had a total debt capacity of ~~$701~~$630 million as of ~~October~~April 29, ~~2021,~~2022 and is effective through December 14, 2023. The Australia and New Zealand facility, which is collateralized solely by Australia and New Zealand loan and lease payments and associated equipment, had a total debt capacity of ~~$339~~$319 million as of ~~October~~April 29, ~~2021,~~2022 and is effective through April 20, 2023.

Note Payable —On August 7, 2020, the Company entered into 2 ~~new~~ unsecured credit agreements to fund receivables in Mexico. As of ~~October~~April 29, ~~2021,~~2022, the aggregate principal amount of the notes payable was $250 million. The notes bear interest at an annual rate of 3.37% and will mature on June 1, 2022.

Dell Bank Senior Unsecured Eurobonds — On October 17, 2019, Dell Bank International D.A.C.~~, a wholly-owned subsidiary of~~ (“Dell ~~Technologies Inc.,~~Bank”) issued 500 million Euro of 0.625% senior unsecured three year eurobonds due October 2022. On June 24, 2020, Dell Bank ~~International D.A.C.~~ issued 500 million Euro of 1.625% senior unsecured four year eurobonds due June 2024. On October 27, 2021, Dell Bank ~~International D.A.C.~~ issued 500 million Euro of 0.5% senior unsecured five year eurobonds due October 2026. The ~~issuances~~issuance of the senior unsecured eurobonds support the expansion of the financing operations in Europe.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

~~Variable Interest Entities~~DFS Debt

~~In connection with~~The Company maintains programs that facilitate the ~~asset-based~~funding of leases, loans, and other alternative payment structures in the capital markets. The majority of DFS debt is non-recourse to Dell Technologies and represents borrowings under securitization programs and structured financing ~~facilities, securitization facilities, and fixed-term securitization offerings discussed above,~~programs, for which the ~~Company transfers certain U.S. and European~~Company’s risk of loss is limited to transferred loan and lease payments and associated ~~equipment to SPEs that meet the definition of a Variable Interest Entity (“VIE”) and are consolidated, along with the associated~~equipment.

The following table presents DFS debt ~~detailed above, into the Condensed Consolidated Financial Statements,~~ as ~~the Company is the primary beneficiary of those VIEs. The SPEs are bankruptcy-remote legal entities with separate assets and liabilities. The purpose~~ of the ~~SPEs~~dates indicated and excludes the allocated portion of the Company’s other borrowings, which represents the additional amount considered to fund the DFS business:


	April 29, 2022		January 28, 2022
DFS debt	(in millions)
DFS U.S. debt:
Asset-based financing and securitization facilities	$	2,720	$	3,054
Fixed-term securitization offerings	3,607		3,011
Other	125		135
Total DFS U.S. debt	6,452		6,200
DFS international debt:
Securitization facility	730		739
Other borrowings	818		785
Note payable	250		250
Dell Bank senior unsecured eurobonds	1,575		1,672
Total DFS international debt	3,373		3,446
Total DFS debt	$	9,825	$	9,646
Total short-term DFS debt	$	5,907	$	5,803
Total long-term DFS debt	$	3,918	$	3,843

DFS U.S. Debt

~~Some~~facilities. The debt has a variable interest rate and the duration of the ~~SPEs have entered into financing arrangements with multi-seller conduits that, in turn, issue asset-backed~~ debt ~~securities in~~is based on the ~~capital markets. DFS debt outstanding held by~~terms of the ~~consolidated VIEs is collateralized by the~~underlying loan and lease ~~payments and associated equipment. The Company’s risk~~payment streams. As of ~~loss related to securitized receivables is limited to~~April 29, 2022, the ~~amount by which the Company’s right to receive collections for assets securitized exceeds the amount required to pay interest, principal, and fees and expenses~~total debt capacity related to the ~~asset-backed securities. The Company provides credit enhancement to the~~U.S. asset-based financing and securitization ~~in the form of over-collateralization.~~

~~The following table presents financing receivables and equipment under operating leases, net held by the consolidated VIEs as of the dates indicated:~~

October 29, 2021 January 29, 2021
(in millions)
Assets held by consolidated VIEs
Other current assets $ 843 $ 838
Financing receivables, net of allowance
Short-term $ 3,467 $ 3,534
Long-term $ 3,294 $ 3,314
Property, plant, and equipment, net $ 874 $ 792
Liabilities held by consolidated VIEs
Debt, net of unamortized debt issuance costs
Short-term $ 4,180 $ 4,208
Long-term $ 2,826 $ 2,841

Loan and lease payments and associated equipment transferred via securitization through SPEs were $1.4 billion and $1.6 billion for the three months ended October 29, 2021 and October 30, 2020, respectively, and $4.1 billion and $4.6 billion for the nine months ended October 29, 2021 and October 30, 2020, respectively.

~~Customer Receivables Sales~~

To manage certain concentrations of customer credit exposure, the Company may sell selected fixed-term customer receivables to unrelated third parties on a periodic basis, without recourse. The amount of customer receivables sold for this purposefacilities was $180 million and $414 million for the nine months ended October 29, 2021 and October 30, 2020, respectively. The Company’s continuing involvement in such customer receivables is primarily limited to servicing arrangements. The transactions are accounted for as sales and, accordingly, the customer receivables are derecognized from the Condensed Consolidated Statements of Financial Position at the time of sale.

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

~~NOTE 4 — LEASES~~

$4.5 billion. The Company enters into ~~leasing transactions in which the Company is the lessee. These lease contracts are typically classified as operating leases. The Company’s lease contracts are generally for office buildings used~~interest swap agreements to ~~conduct its business, and the determination~~effectively convert a portion of whether such contracts contain leases generally does not require significant estimates or judgments. The Company also leases certain global logistics warehouses, employee vehicles, and equipment. As of October 29, 2021, the remaining terms of the Company’s leases rangethis debt from ~~less than one month~~a floating rate to ~~approximately 25 years.~~

The Company also enters into leasing transactions in which the Company is the lessor, primarily through customer financing arrangements offered through DFS. DFS originates leases that are primarily classified as either sales-type leases or operating leases.a fixed rate. See Note 38 of the Notes to the Condensed Consolidated Financial Statements for ~~more~~additional information ~~on the DFS lease portfolio and related lease disclosures.~~

about interest rate swaps.

Financial information associated with the Company’s leases in which the Company is the lessee is contained in this Note. As of both October 29, 2021 and January 29, 2021, there were no material finance leases for which the Company was a lessee.

~~The following table presents components of lease costs included in the Condensed Consolidated Statements of Income for the periods indicated:~~

Three Months Ended Nine Months Ended
October 29, 2021 October 30, 2020 October 29, 2021 October 30, 2020
(in millions)
Operating lease costs $ 129 $ 129 $ 404 $ 384
Variable costs 35 37 97 113
Total lease costs $ 164 $ 166 $ 501 $ 497

~~During both the nine months ended October 29, 2021 and October 30, 2020, sublease income, finance lease costs, and short-term lease costs were immaterial.~~

~~The following table presents supplemental information related to operating leases included in the Condensed Consolidated Statements of Financial Position as of the dates indicated:~~

Classification October 29, 2021 January 29, 2021
(in millions, except for term and discount rate)
Operating lease right of use assets Other non-current assets $ 1,953 $ 2,117
Current operating lease liabilities Accrued and other current liabilities $ 439 $ 436
Non-current operating lease liabilities Other non-current liabilities 1,657 1,787
Total operating lease liabilities $ 2,096 $ 2,223
Weighted-average remaining lease term (in years) 8.75 8.85
Weighted-average discount rate 3.18 % 3.47 %

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The ~~following table presents supplemental cash flow information related to~~Company’s U.S. securitization facility for revolving loans is effective through June 25, 2025. The Company’s 2 U.S. asset-based financing facilities for fixed-term leases ~~for the periods indicated:~~

Nine Months Ended
October 29, 2021 October 30, 2020
(in millions)
Cash paid for amounts included in the measurement of lease liabilities —
operating cash outflows from operating leases $ 379 $ 384
Right-of-Use assets obtained in exchange for new operating lease liabilities $ 232 $ 763
and loans are effective through July 10, 2023 and July 26, 2022, respectively.

The ~~following table presents~~asset-based financing and securitization facilities contain standard structural features related to the ~~future maturities~~performance of the funded receivables, which include defined credit losses, delinquencies, average credit scores, and minimum collection requirements. In the event one or more of these criteria are not met and the Company is unable to restructure the facility, no further funding of receivables will be permitted and the timing of the Company’s ~~operating lease liabilities under non-cancelable leases and reconciles the undiscounted~~expected cash flows ~~for~~from over-collateralization will be delayed. As of April 29, 2022, these ~~leases to the lease liability recognized on the Condensed Consolidated Statements of Financial Position as of the date indicated:~~


	~~October 29, 2021~~
	~~(in millions)~~
~~Fiscal 2022 (remaining three months)~~	$	~~111~~
~~Fiscal 2023~~	~~475~~
~~Fiscal 2024~~	~~374~~
~~Fiscal 2025~~	~~276~~
~~Fiscal 2026~~	~~228~~
~~Thereafter~~	~~995~~
~~Total lease payments~~	~~2,459~~
~~Less: Imputed interest~~	~~(363)~~
~~Total~~	$	~~2,096~~
~~Current operating lease liabilities~~	$	~~439~~
~~Non-current operating lease liabilities~~	$	~~1,657~~

criteria were met.

~~Future~~Fixed-Term Securitization Offerings —The Company periodically issues asset-backed debt securities under fixed-term securitization programs to private investors. The asset-backed debt securities are collateralized solely by the U.S. fixed-term leases and loans in the offerings, which are held by Special Purpose Entities (“SPEs”), as discussed below. The interest rate on these securities is fixed and ranges from 0.18% to 5.92% per annum, and the duration of these securities is based on the terms of the underlying lease ~~commitments after Fiscal 2026 include the ground lease on VMware, Inc.’s Palo Alto, California headquarters facilities, which expires in Fiscal 2047.~~and loan payment streams.

DFS International Debt

Securitization Facility —The Company maintains a securitization facility in Europe for fixed-term leases and loans. This facility is effective through December 21, 2022 and had a total debt capacity of $840 million as of April 29, 2022.

Other Borrowings —In connection with the Company’s international financing operations, the Company has ~~additional operating leases that have not yet commenced representing $64~~entered into revolving structured financing debt programs related to its fixed-term lease and loan products sold in Canada, Europe, Australia, and New Zealand. The Canadian facility, which is collateralized solely by Canadian loan and lease payments and associated equipment, had a total debt capacity of $351 millionas of ~~undiscounted~~April 29, 2022 and is effective through January 16, 2025. The European facility, which is collateralized solely by European loan and lease ~~liabilities. These operating leases~~payments and associated equipment, had a total debt capacity of$630 million as of April 29, 2022 and is effective through December 14, 2023. The Australia and New Zealand facility, which is collateralized solely by Australia and New Zealand loan and lease payments and associated equipment, had a total debt capacity of $319 million as of April 29, 2022 and is effective through April 20, 2023.

Note Payable —On August 7, 2020, the Company entered into 2 unsecured credit agreements to fund receivables in Mexico. As of April 29, 2022, the aggregate principal amount of the notes payable was $250 million. The notes bear interest at an annual rate of 3.37% and will ~~commence~~mature on June 1, 2022.

Dell Bank Senior Unsecured Eurobonds — On October 17, 2019, Dell Bank International D.A.C. (“Dell Bank”) issued 500 million Euro of 0.625% senior unsecured three year eurobonds due October 2022. On June 24, 2020, Dell Bank issued 500 million Euro of 1.625% senior unsecured four year eurobonds due June 2024. On October 27, 2021, Dell Bank issued 500 million Euro of 0.5% senior unsecured five year eurobonds due October 2026. The issuance of the senior unsecured eurobonds support the expansion of the financing operations in ~~the remaining three months of Fiscal 2022 or Fiscal 2023 with lease terms of one year to 10 years.~~Europe.

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

~~NOTE 5 — DEBT~~

~~The following table presents the Company’s outstanding debt as of the dates indicated:~~

October 29, 2021 January 29, 2021
(in millions)
Secured Debt
Senior Secured Credit Facilities:
2.00% Term Loan B-2 Facility due September 2025 (a) $ 3,120 $ 3,143
1.84% Term Loan A-6 Facility due March 2024 (a) 3,134 3,134
First Lien Notes:
5.45% due June 2023 (a) 3,750 3,750
4.00% due July 2024 1,000 1,000
5.85% due July 2025 1,000 1,000
6.02% due June 2026 4,500 4,500
4.90% due October 2026 1,750 1,750
6.10% due July 2027 500 500
5.30% due October 2029 1,750 1,750
6.20% due July 2030 750 750
8.10% due July 2036 1,500 1,500
8.35% due July 2046 2,000 2,000
Unsecured Debt
Unsecured Notes and Debentures:
4.625% due April 2021 — 400
7.10% due April 2028 300 300
6.50% due April 2038 388 388
5.40% due September 2040 264 264
Senior Notes:
5.875% due June 2021 — 1,075
7.125% due June 2024 (a) 1,625 1,625
EMC Notes:
3.375% due June 2023 — 1,000
VMware Notes:
2.95% due August 2022 1,500 1,500
0.60% due August 2023 1,000 —
1.00% due August 2024 1,250 —
4.50% due May 2025 750 750
1.40% due August 2026 1,500 —
4.65% due May 2027 500 500
3.90% due August 2027 1,250 1,250
1.80% due August 2028 750 —
4.70% due May 2030 750 750
2.20% due August 2031 1,500 —
DFS Debt (Note 3) 9,977 9,666
Other
2.44% Margin Loan Facility due April 2022 — 4,000
Other 400 235
Total debt, principal amount $ 48,458 $ 48,480

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

October 29, 2021 January 29, 2021
(in millions)
Total debt, principal amount $ 48,458 $ 48,480
Unamortized discount, net of unamortized premium (175) (194)
Debt issuance costs (304) (302)
Total debt, carrying value $ 47,979 $ 47,984
Total short-term debt, carrying value (b) $ 16,280 $ 6,362
Total long-term debt, carrying value $ 31,699 $ 41,622

~~____________________~~

(a) Subsequent to October 29, 2021, the Company used the net proceeds from its $9.3 billion pro rata share of the cash dividend received in connection with the VMware Spin-off, as well as cash on hand, to repay $3.12 billion principal amount of the 2.00% Term Loan B-2 Facility due September 2025, $3.13 billion principal amount of the 1.84% Term Loan A-6 Facility due March 2024, $1.63 billion principal amount of the 7.125% Senior Notes due June 2024, and $1.50 billion principal amount of the 5.45% First Lien Notes due June 2023.

(b) Given the probability of the close of the VMware Spin-off and the Company’s intent and ability to repay, the Company classified $9.4 billion principal amount of debt as short-term liabilities on the Condensed Consolidated Statements of Financial Position as of October 29, 2021.

~~During the nine months ended October 29, 2021, the net decrease in the Company’s debt balance was primarily due to:~~

•~~repayment of $1.0 billion principal amount of the 3.375% EMC Notes due June 2023;~~

•~~repayment of $4.0 billion principal amount of the 2.44% Margin Loan Facility due April 2022;~~

•~~repayment of $1.1 billion principal amount of the 5.875% Senior Notes due June 2021; and~~

•~~repayment of $0.4 billion principal amount of the 4.625% Unsecured Notes due April 2021.~~

~~See Note 18 of the Notes to the Condensed Consolidated Financial Statements for more information about debt repayments that occurred subsequent to October 29, 2021.~~

~~Secured Debt~~

~~Senior Secured Credit Facilities~~—The Company has entered into a credit agreement (the “Existing Credit Agreement”) that provides for senior secured credit facilities (the “Senior Secured Credit Facilities”) comprising (a) term loan facilities and (b) a senior secured Revolving Credit Facility, which provides for a borrowing capacity of up to $4.5 billion for general corporate purposes, including capacity for up to $0.5 billion of letters of credit and for borrowings of up to $0.4 billion under swing-line loans. The Revolving Credit Facility expires December 20, 2023.

As of October 29, 2021, available borrowings under the Revolving Credit Facility totaled $4.5 billion. The Senior Secured Credit Facilities provide that the borrowers have the right at any time, subject to customary conditions, to request incremental term loans or incremental revolving commitments.

On February 18, 2021, the Company entered into an eighth refinancing amendment to the credit agreement for the Senior Secured Credit Facilities to refinance the existing term B loans (the “Original Term B Loans”) with a new term loan B facility consisting of an aggregate principal amount of $3.1 billion refinancing term B-2 loans (the “Refinancing Term B-2 Loans”) maturing on September 19, 2025. Proceeds from the Refinancing Term B-2 Loans, together with other funds available to the borrowers, were used to repay in full the Original Term B Loans and all accrued and unpaid fees in respect thereof.

Except for a change in the interest rate, the Refinancing Term B-2 Loans have substantially the same terms as the Original Term B Loans under the sixth refinancing amendment to the Senior Secured Credit Agreement. Amortization payments on the Refinancing Term B-2 Loans are equal to 0.25% of the aggregate principal amount of Refinancing Term B-2 Loans outstanding on the effective date of the eighth refinancing amendment, payable at the end of each fiscal quarter, commencing with the fiscal quarter ended April 30, 2021.

Borrowings under the Senior Secured Credit Facilities bear interest at a rate per annum equal to an applicable margin, plus, at the borrowers’ option, either (a) a base rate, or (b) the London Interbank Offered Rate (“LIBOR”). The Term Loan A-6 Facility

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

bears interest at LIBOR plus an applicable margin ranging from 1.25% to 2.00% or a base rate plus an applicable margin ranging from 0.25% to 1.00%. The Refinancing Term B-2 Loans bear interest at LIBOR plus an applicable margin of 1.75% or a base rate plus an applicable margin of 0.75%. Interest is payable, in the case of loans bearing interest based on LIBOR, at the end of each interest period (but at least every three months), in arrears and, in the case of loans bearing interest based on the base rate, quarterly in arrears.

The Term Loan A-6 Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 5% of the original principal amount in each of the first four years after the facility closing date of March 13, 2019, and 80% of the original principal amount in the fifth year after March 13, 2019. The Revolving Credit Facility has no amortization.

The borrowers may voluntarily repay outstanding loans under the term loan facilities and the Revolving Credit Facility at any time without premium or penalty, other than customary “breakage” costs.

All obligations of the borrowers under the Senior Secured Credit Facilities and certain swap agreements, cash management arrangements, and certain letters of credit provided by any lender or agent party to the Senior Secured Credit Facilities or any of its affiliates and certain other persons are secured by (a) a first-priority security interest in certain tangible and intangible assets of the borrowers and the guarantors and (b) a first-priority pledge of 100% of the capital stock of the borrowers, Dell Inc., a wholly-owned subsidiary of the Company (“~~Dell~~”~~), and each wholly-owned material restricted subsidiary of the borrowers and the guarantors, in each case subject to certain thresholds, exceptions, and permitted liens.~~

Subsequent to October 29, 2021, the Company repaid the remaining $3.12 billion principal amount of the Term B-2 Loans and the remaining $3.13 billion principal amount of the Term Loan A-6 Facility. On November 1, 2021, the Company entered into a new senior secured Revolving Credit Facility (the “2021 Revolving Credit Facility”) to replace the old senior secured Revolving Credit Facility under the Existing Credit Agreement. Following the full redemption of the outstanding term loan facilities and placement of the Revolving Credit Facility, the Existing Credit Agreement was terminated. See Note 18 of the Notes to the Condensed Consolidated Financial Statements for more information.

~~First Lien Notes~~ — Dell International L.L.C. and EMC Corporation (collectively, the “Issuers”), both of which are wholly-owned subsidiaries of Dell Technologies Inc., completed offerings of multiple series of senior secured notes (collectively, the “First Lien Notes”) pursuant to Rule 144A and Regulation S. Various series of the First Lien Notes were issued on June 1, 2016, March 20, 2019, and April 9, 2020 in aggregate principal amounts of $20.0 billion, $4.5 billion, and $2.25 billion, respectively. Interest on the First Lien Notes is payable semiannually. The First Lien Notes are secured on an equal and ratable basis with the Senior Secured Credit Facilities by substantially all of the tangible and intangible assets of the issuers and guarantors that secure obligations under the Senior Secured Credit Facilities, including pledges of all capital stock of the issuers, Dell, and certain wholly-owned material subsidiaries of the issuers and the guarantors, subject to certain exceptions.

In June 2021, Dell International L.L.C and EMC Corporation completed the previously announced offers to exchange any and all outstanding First Lien Notes for registered first lien notes having terms substantially identical to the terms of the First Lien Notes. The Issuers issued an aggregate $18.4 billion principal amount of registered first lien notes in exchange for the same principal amount of First Lien Notes. The aggregate principal amount of unregistered First Lien Notes remaining outstanding following the settlement of the exchange offers was approximately $0.1 billion. Following the exchange offer, such registered first lien notes, together with the remaining unregistered First Lien Notes, are collectively referred to as “First Lien Notes” in these Notes to the Condensed Consolidated Financial Statements.

Subsequent to October 29, 2021, the Company repaid $1.5 billion principal amount of First Lien Notes. Further, in conjunction with the termination of the Existing Credit Agreement, the tangible and intangible assets of the issuers and guarantors that secure obligations under the Senior Secured Credit Facilities were released as collateral and the First Lien Notes became fully unsecured. See Note 18 of the Notes to the Condensed Consolidated Financial Statements for more information about the First Lien Notes principal repayment subsequent to October 29, 2021.

~~Unsecured Debt~~

~~Unsecured Notes and Debentures~~ — The Company has outstanding unsecured notes and debentures (collectively, the “Unsecured Notes and Debentures”) that were issued by Dell prior to the acquisition of Dell by Dell Technologies Inc. in the going-private transaction that closed in October 2013. Interest on outstanding borrowings is payable semiannually.

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

~~Senior Notes~~ — The senior unsecured notes (collectively, the “Senior Notes”) were issued on June 22, 2016 in an aggregate principal amount of $3.3 billion. Interest on outstanding borrowings is payable semiannually. Subsequent to October 29, 2021, the Company repaid the remaining $1.63 billion principal amount of Senior Notes. Following the full redemption of the Senior Note, the indenture governing the Senior Notes was terminated. See Note 18 of the Notes to the Condensed Consolidated Financial Statements for more information about the Senior Notes principal repayment subsequent to October 29, 2021.

~~EMC Notes~~— On September 7, 2016, as result of the merger with EMC, Dell acquired multiple outstanding Notes (collectively, the “EMC Notes”). During the three months ended October 29, 2021, the Company repaid the remaining $1.0 billion principal amount of the EMC Notes.

~~VMware Notes~~ — VMware, Inc. completed public offerings of unsecured senior notes in the aggregate amounts of $4.0 billion, $2.0 billion, and $6.0 billion on August 21, 2017, April 7, 2020, and August 2, 2021, respectively (the “VMware Notes”). None of the net proceeds of such borrowings will be made available to support the operations or satisfy any corporate purposes of Dell Technologies, other than the operations and corporate purposes of VMware, Inc. and VMware, Inc.’s subsidiaries. Interest on outstanding borrowings is payable semiannually.

~~VMware Revolving Credit Facility and Term Loan Facilities~~ — On September 12, 2017, VMware, Inc. entered into an unsecured credit agreement, that established a revolving credit facility (the “VMware Revolving Credit Facility”) with a syndicate of lenders that provided the company with a borrowing capacity of up to $1.0 billion for VMware, Inc. general corporate purposes. On September 2, 2021, VMware, Inc. entered into an unsecured credit agreement establishing a revolving credit facility with a syndicate of lenders that provides VMware, Inc. with a borrowing capacity of up to $1.5 billion for general corporate purposes (the “2021 VMware Revolving Credit Facility”). The 2021 VMware Revolving Credit Facility replaced VMware, Inc.’s existing $1.0 billion revolving credit facility that was undrawn. Commitments under the 2021 Revolving Credit Facility are available for a period of five years, which may be extended, subject to the satisfaction of certain conditions, by up to 2 one-year periods. The credit agreement contains certain representations, warranties and covenants. Commitment fees, interest rates and other terms of borrowing under the 2021 Revolving Credit Facility may vary based on VMware’s external credit ratings. As of October 29, 2021, there were no outstanding borrowings under the 2021 VMware Revolving Credit Facility.

In addition, VMware, Inc. received commitments from financial institutions for a 3-year senior unsecured term loan facility and a 5-year senior unsecured term loan facility that would provide VMware, Inc. with a borrowing capacity of up to $4.0 billion (the “VMware Term Loan Facilities”). VMware, Inc. may borrow against the term loan once up to its borrowing capacity of $4.0 billion. Subsequent to October 29, 2021, and in advance of the close of the VMware Spin-off on November 1, 2021, VMware, Inc. borrowed $4.0 billion against the VMware Term Loan Facilities with the proceeds utilized to fund a portion of the special cash dividend paid by VMware, Inc. in connection with the VMware Spin-off transaction. See Note 18 of the Notes to the Condensed Consolidated Financial Statements for more information about the VMware Spin-off transaction.

None of the net proceeds of the 2021 VMware Revolving Credit Facility or the VMware Term Loan Facilities will be made available to support the operations or satisfy any corporate purposes of Dell Technologies, other than the operations and corporate purposes of VMware, Inc. and VMware, Inc.’s subsidiaries.

DFS Debt

The following table presents DFS debt as of the dates indicated and excludes the allocated portion of the Company’s other borrowings, which represents the additional amount considered to fund the DFS business:


	April 29, 2022		January 28, 2022
DFS debt	(in millions)
DFS U.S. debt:
Asset-based financing and securitization facilities	$	2,720	$	3,054
Fixed-term securitization offerings	3,607		3,011
Other	125		135
Total DFS U.S. debt	6,452		6,200
DFS international debt:
Securitization facility	730		739
Other borrowings	818		785
Note payable	250		250
Dell Bank senior unsecured eurobonds	1,575		1,672
Total DFS international debt	3,373		3,446
Total DFS debt	$	9,825	$	9,646
Total short-term DFS debt	$	5,907	$	5,803
Total long-term DFS debt	$	3,918	$	3,843

DFS U.S. Debt

Asset-Based Financing and Securitization Facilities —The Company maintains separate asset-based financing facilities and a securitization facility in the United States, which are revolving facilities for fixed-term leases and loans and for revolving loans, respectively. This debt is collateralized solely by the U.S. loan and lease payments and associated equipment in the facilities. The debt has a variable interest rate and the duration of the debt is based on the terms of the underlying loan and lease payment streams. As of April 29, 2022, the total debt capacity related to the U.S. asset-based financing and securitization facilities was $4.5 billion. The Company enters into interest swap agreements to effectively convert a portion of this debt from a floating rate to a fixed rate. See Note ~~3 and Note 6~~8 of the Notes to the Condensed Consolidated Financial Statements ~~respectively,~~ for ~~discussion of DFS debt and the~~additional information about interest rate ~~swap agreements that hedge a portion of that debt.~~swaps.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

~~Other~~The Company’s U.S. securitization facility for revolving loans is effective through June 25, 2025. The Company’s 2 U.S. asset-based financing facilities for fixed-term leases and loans are effective through July 10, 2023 and July 26, 2022, respectively.

~~Margin Loan Facility~~Fixed-Term Securitization Offerings — The Company periodically issues asset-backed debt securities under fixed-term securitization programs to private investors. The asset-backed debt securities are collateralized solely by the U.S. fixed-term leases and loans in the offerings, which are held by Special Purpose Entities (“SPEs”), as discussed below. The interest rate on these securities is fixed and ranges from 0.18% to 5.92% per annum, and the duration of these securities is based on the terms of the underlying lease and loan payment streams.

DFS International Debt

Securitization Facility —The Company maintains a securitization facility in Europe for fixed-term leases and loans. This facility is effective through December 21, 2022 and had a total debt capacity of $840 million as of April 29, 2022.

Other Borrowings —In connection with the Company’s international financing operations, the Company has entered into revolving structured financing debt programs related to its fixed-term lease and loan products sold in Canada, Europe, Australia, and New Zealand. The Canadian facility, which is collateralized solely by Canadian loan and lease payments and associated equipment, had a total debt capacity of $351 millionas of April 29, 2022 and is effective through January 16, 2025. The European facility, which is collateralized solely by European loan and lease payments and associated equipment, had a total debt capacity of$630 million as of April 29, 2022 and is effective through December 14, 2023. The Australia and New Zealand facility, which is collateralized solely by Australia and New Zealand loan and lease payments and associated equipment, had a total debt capacity of $319 million as of April 29, 2022 and is effective through April 20, 2023.

Note Payable —On ~~April 12, 2017,~~August 7, 2020, the Company entered into ~~the Margin Loan Facility~~2 unsecured credit agreements to fund receivables in ~~an aggregate principal amount~~Mexico. As of $2.0 billion. In connection with the Class V transaction described in Note 1 of the Notes to the Condensed Consolidated Financial Statements, on December 20, 2018, the Company amended the Margin Loan Facility to increase the aggregate principal amount to $3.4 billion. In connection with obtaining the Term Loan A-6 Facility during the fiscal year ended January 31, 2020, the Company increasedApril 29, 2022, the aggregate principal amount of the ~~Margin Loan Facility to $4.0 billion. VMware Holdco LLC, a wholly-owned subsidiary~~notes payable was $250 million. The notes bear interest at an annual rate of ~~EMC, was the borrower under the Margin Loan Facility, which was secured by approximately 76 million shares of Class B common stock of VMware, Inc.~~3.37% and ~~approximately 24 million shares of Class A common stock of VMware, Inc.~~will mature on June 1, 2022.

Loans under the Margin Loan Facility bore interest at a rate per annum payable, at the borrower’s option, either at (a) a base rate plus 1.25% per annum or (b) a LIBOR-based rate plus 2.25% per annum. Interest under the Margin Loan Facility was payable quarterly.Dell Bank Senior Unsecured Eurobonds — On October 17, 2019, Dell Bank International D.A.C. (“Dell Bank”) issued 500 million Euro of 0.625% senior unsecured three year eurobonds due October 2022. On June 24, 2020, Dell Bank issued 500 million Euro of 1.625% senior unsecured four year eurobonds due June 2024. On October 27, 2021, Dell Bank issued 500 million Euro of 0.5% senior unsecured five year eurobonds due October 2026. The Margin Loan Facility was scheduled to mature in April 2022. The borrower had the option to voluntarily repay outstanding loans under the Margin Loan Facility at any time without premium or penalty, other than customary “breakage” costs, subject to certain minimum threshold amounts for prepayment. During the nine months ended October 29, 2021, the Company repaid the $4.0 billion principal amountissuance of the ~~Margin Loan Facility. Upon repayment,~~senior unsecured eurobonds support the ~~VMware, Inc. common stock pledged to secure~~expansion of the ~~Margin Loan Facility was released as collateral~~financing operations in ~~accordance with the associated Margin Loan Facility agreement.~~Europe.

~~Aggregate Future Maturities~~

~~The following table presents the aggregate future maturities of the Company’s debt as of October 29, 2021 for the periods indicated:~~

Maturities by Fiscal Year (a)
2022
(remaining three months) 2023 2024 2025 2026 Thereafter Total
(in millions)
Senior Secured Credit Facilities and First Lien Notes $ 7,754 $ — $ 2,250 $ 1,000 $ 1,000 $ 12,750 $ 24,754
Unsecured Notes and Debentures — — — — — 952 952
Senior Notes and EMC Notes 1,625 — — — — — 1,625
VMware Notes — 1,500 1,000 1,250 750 6,250 10,750
DFS Debt 1,378 5,019 1,888 1,016 86 590 9,977
Other 9 33 187 124 23 24 400
Total maturities, principal amount 10,766 6,552 5,325 3,390 1,859 20,566 48,458
Associated carrying value adjustments (94) (7) (20) (20) (6) (332) (479)
Total maturities, carrying value amount $ 10,672 $ 6,545 $ 5,305 $ 3,370 $ 1,853 $ 20,234 $ 47,979

~~____________________~~

~~(a)~~Maturities by Fiscal Year reflects $9.4 billion principal amount of debt within the remaining three months of Fiscal 2022 to align to the classification of this debt as short-term on the Condensed Consolidated Statements of Financial Position and reflect the Company’s intent to repay during the fourth quarter of Fiscal 2022.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

~~Covenants and Unrestricted Net Assets~~— The credit agreement for the Senior Secured Credit Facilities contains customary negative covenants that generally limit the ability of Denali Intermediate Inc., a wholly-owned subsidiary of Dell Technologies (“Denali Intermediate”), Dell, and Dell’s and Denali Intermediate’s other restricted subsidiaries to incur debt, create liens, make fundamental changes, enter into asset sales, make certain investments, pay dividends or distribute or redeem certain equity interests, prepay or redeem certain debt, and enter into certain transactions with affiliates. The indenture governing the Senior Notes contains customary negative covenants that generally limit the ability of Denali Intermediate, Dell, and Dell’s and Denali Intermediate’s other restricted subsidiaries to incur additional debt or issue certain preferred shares, pay dividends on or make other distributions in respect of capital stock or make other restricted payments, make certain investments, sell or transfer certain assets, create liens on certain assets to secure debt, consolidate, merge, sell, or otherwise dispose of all or substantially all assets, enter into certain transactions with affiliates, and designate subsidiaries as unrestricted subsidiaries. The negative covenants under such credit agreements and indenture are subject to certain exceptions, qualifications, and “baskets.” The indentures governing the First Lien Notes, the Unsecured Notes and Debentures, and the EMC Notes variously impose limitations, subject to specified exceptions, on creating certain liens, entering into sale and lease-back transactions, and entering into certain asset sales. The foregoing credit agreements and indentures contain customary events of default, including failure to make required payments, failure to comply with covenants, and the occurrence of certain events of bankruptcy and insolvency.Variable Interest Entities

~~As of October 29, 2021,~~In connection with the asset-based financing facilities, securitization facilities, and fixed-term securitization offerings discussed above, the Company ~~had~~transfers certain U.S. and European lease and loan payments and associated equipment to SPEs that meet the definition of a Variable Interest Entity (“VIE”) and are consolidated, subsidiaries that were designated as unrestricted subsidiaries for all purposes of the applicable credit agreements and the indentures governing the First Lien Notes and the Senior Notes. Substantially all of the net assets of the Company’s consolidated subsidiaries were restricted,along with the ~~exception of the Company’s unrestricted subsidiaries, primarily VMware, Inc., Secureworks, and their respective subsidiaries, as of October 29, 2021.~~

The Senior Secured Credit Facilities and the Revolving Credit Facility are subject to a first lien leverage ratio covenant that is tested at the end of each fiscal quarter of Dell with respect to Dell’s preceding four fiscal quarters. The Company was in compliance with all financial covenants as of October 29, 2021.

Subsequent to October 29, 2021 and following the full redemption of the outstanding term loan facilities and Senior Notes, the Existing Credit Agreement and the indenture governing the Senior Notes were terminated. The 2021 Revolving Credit Facility contains customary negative covenants that generally limit the ability of Dell, Dell International L.L.C, and EMC to create liens and make fundamental changes. The 2021 Revolving Credit Facility is subject to an interest coverage ratio covenant that is tested at the end of each fiscal quarter of Dell with respect to Dell’s preceding four fiscal quarters. See Note 18 of the Notes toassociated debt detailed above, into the Condensed Consolidated Financial Statements, as the Company is the primary beneficiary of the VIEs. The SPEs are bankruptcy-remote legal entities with separate assets and liabilities. The purpose of the SPEs is to facilitate the funding of customer loan and lease payments and associated equipment in the capital markets.

Some of the SPEs have entered into financing arrangements with multi-seller conduits that, in turn, issue asset-backed debt securities in the capital markets. DFS debt outstanding held by the consolidated VIEs is collateralized by the lease and loan payments and associated equipment. The Company’s risk of loss related to securitized receivables is limited to the amount by which the Company’s right to receive collections for ~~more information about debt repayments that occurred subsequent~~assets securitized exceeds the amount required to ~~October~~pay interest, principal, and fees and expenses related to the asset-backed securities. The Company provides credit enhancement to the securitization in the form of over-collateralization.

The following table presents the assets and liabilities held by the consolidated VIEs as of the dates indicated, which are included in the Condensed Consolidated Statements of Financial Position:


	April 29, 2022		January 28, 2022
	(in millions)
Assets held by consolidated VIEs
Other current assets	$	547	$	535
Financing receivables, net of allowance
Short-term	$	3,376	$	3,368
Long-term	$	3,270	$	3,141
Property, plant, and equipment, net	$	1,030	$	945
Liabilities held by consolidated VIEs
Debt, net of unamortized debt issuance costs
Short-term	$	4,545	$	4,560
Long-term	$	2,500	$	2,235

Lease and loan payments and associated equipment transferred via securitization through SPEs were $1.7 billion and $1.4 billion for the three months ended April 29, ~~2021.~~2022 and April 30, 2021, respectively.

Customer Receivable Sales

To manage certain concentrations of customer credit exposure, the Company may sell selected fixed-term customer receivables to unrelated third parties on a periodic basis, without recourse. The amount of customer receivables sold for this purpose was $148 million and $101 million for the three months ended April 29, 2022 and April 30, 2021, respectively. The Company’s continuing involvement in these customer receivables is primarily limited to servicing arrangements.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 6 — LEASES

The Company enters into leasing transactions in which the Company is the lessee. These lease contracts are typically classified as operating leases. The Company’s lease contracts are generally for office buildings used to conduct its business, and the determination of whether such contracts contain leases generally does not require significant estimates or judgments. The Company also leases certain global logistics warehouses, employee vehicles, and equipment. As of April 29, 2022, the remaining terms of the Company’s leases range from less than one month to approximately ten years.

The Company also enters into leasing transactions in which the Company is the lessor, primarily through customer financing arrangements offered through DFS. DFS originates leases that are primarily classified as either sales-type leases or operating leases. See Note 5 of the Notes to the Condensed Consolidated Financial Statements for more information on the DFS lease portfolio and related lease disclosures.

Financial information associated with the Company’s leases in which the Company is the lessee is contained in this Note. As of April 29, 2022 and January 28, 2022, there were no material finance leases for which the Company was a lessee.

The following table presents components of lease costs included in the Condensed Consolidated Statements of Income for the periods indicated:


	Three Months Ended
	April 29, 2022		April 30, 2021
	(in millions)
Operating lease costs	$	72	$	94
Variable costs	25		26
Total lease costs	$	97	$	120

During the three months ended April 29, 2022 and April 30, 2021, sublease income, finance lease costs, and short-term lease costs were immaterial.

The following table presents supplemental information related to operating leases included in the Condensed Consolidated Statements of Financial Position as of the dates indicated:


	Classification	April 29, 2022			January 28, 2022
		(in millions, except for term and discount rate)
Operating lease right-of-use assets	Other non-current assets	$	837		$	871

Current operating lease liabilities	Accrued and other current liabilities	$	273		$	287
Non-current operating lease liabilities	Other non-current liabilities	687			720
Total operating lease liabilities		$	960		$	1,007

Weighted-average remaining lease term (in years)		5.43			5.51
Weighted-average discount rate		2.97		%	3.01		%

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The following table presents supplemental cash flow information related to leases for the periods indicated:


	Three Months Ended
	April 29, 2022		April 30, 2021
	(in millions)
Cash paid for amounts included in the measurement of lease liabilities — operating cash outflows from operating leases (a)	$	80	$	134

Right-of-use assets obtained in exchange for new operating lease liabilities	$	72	$	97

____________________

(a) Cash paid for amounts included in the measurement of lease liabilities - operating cash outflows from operating leases from discontinued operations was $50 million for the three months ended April 30, 2021.

The following table presents the future maturity of the Company’s operating lease liabilities under non-cancelable leases and reconciles the undiscounted cash flows for these leases to the lease liability recognized on the Condensed Consolidated Statements of Financial Position as of the date indicated:


	April 29, 2022
	(in millions)
Fiscal 2023 (remaining nine months)	$	209
Fiscal 2024	225
Fiscal 2025	160
Fiscal 2026	128
Fiscal 2027	105
Thereafter	215
Total lease payments	1,042
Less: Imputed interest	(82)
Total	$	960
Current operating lease liabilities	$	273
Non-current operating lease liabilities	$	687

As of April 29, 2022, the Company’s undiscounted operating leases that had not yet commenced were immaterial.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 7 — DEBT

The following table summarizes the Company’s outstanding debt as of the dates indicated:


	April 29, 2022		January 28, 2022
	(in millions)
Senior Notes:
5.45% due June 2023	1,000		1,000
4.00% due July 2024	1,000		1,000
5.85% due July 2025	1,000		1,000
6.02% due June 2026	4,500		4,500
4.90% due October 2026	1,750		1,750
6.10% due July 2027	500		500
5.30% due October 2029	1,750		1,750
6.20% due July 2030	750		750
8.10% due July 2036	1,000		1,000
3.38% due December 2041	1,000		1,000
8.35% due July 2046	800		800
3.45% due December 2051	1,250		1,250
Legacy Notes and Debentures:
7.10% due April 2028	300		300
6.50% due April 2038	388		388
5.40% due September 2040	264		264
DFS Debt (Note 5)	9,825		9,646
Other	320		337
Total debt, principal amount	$	27,397	$	27,235
Unamortized discount, net of unamortized premium	(131)		(134)
Debt issuance costs	(144)		(147)
Total debt, carrying value	$	27,122	$	26,954
Total short-term debt, carrying value	$	5,925	$	5,823
Total long-term debt, carrying value	$	21,197	$	21,131

Outstanding Debt

Senior Notes — The Company completed private offerings of multiple series of senior notes which were issued on June 1, 2016, June 22, 2016, March 20, 2019, April 9, 2020, and December 13, 2021 in aggregate principal amounts of $20.0 billion, $3.3 billion, $4.5 billion, $2.3 billion, and $2.3 billion respectively (the “Senior Notes”).Interest on these borrowings is payable semiannually.

In June 2021, Dell International L.L.C. and EMC Corporation, wholly-owned subsidiaries of Dell Technologies and issuers of the Senior Notes (the “Issuers”), completed offers to exchange any and all outstanding Senior Notes issued on June 1, 2016, March 20, 2019, and April 9, 2020 for senior notes registered under the Securities Act of 1933 having terms substantially identical to the terms of the outstanding Senior Notes. The Issuers issued $18.4 billion aggregate principal amount of registered senior notes in exchange for the same aggregate principal amount of Senior Notes. The aggregate principal amount of unregistered Senior Notes remaining outstanding following the settlement of the exchange offers was approximately $0.1 billion.

Legacy Notes and Debentures — The Company has outstanding unsecured notes and debentures (collectively, the “Legacy Notes and Debentures”) that were issued by Dell prior to the acquisition of Dell Inc. by Dell Technologies Inc. in the going-private transaction that closed in October 2013. Interest on these borrowings is payable semiannually.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

DFS Debt — See Note 5 and Note 8 of the Notes to the Condensed Consolidated Financial Statements, respectively, for discussion of DFS debt and the interest rate swap agreements that hedge a portion of that debt.

2021 Revolving Credit Facility — The 2021 Revolving Credit Facility, which was entered into on November 1, 2021, matures on November 1, 2026, This facility provides the Company with revolving commitments in an aggregate principal amount of $5.0 billion for general corporate purposes and includes a letter of credit sub-facility of up to $0.5 billion and a swing-line loan sub-facility of up to $0.5 billion. The 2021 Revolving Credit Facility also allows the Company to obtain incremental additional commitments on one or more occasions in minimum amounts of $10 million.

The Company may conduct borrowings under the 2021 Revolving Credit Facility through London Interbank Offered Rate (“LIBOR”) borrowings or Base Rate Loan borrowings. LIBOR borrowings bear interest at a rate per annum equal to the LIBOR, plus an applicable rate that varies based upon the Company’s existing debt ratings (the “applicable rate”). Base Rate Loan borrowings bear interest at a rate per annum equal to the base rate plus the applicable rate. The base rate is calculated based upon the greatest of the specified prime rate, the specified federal reserve bank rate, or LIBOR plus 1%.

The borrowers may voluntarily repay outstanding loans under the 2021 Revolving Credit Facility at any time without premium or penalty, other than customary breakage costs.

As of April 29, 2022, available borrowings under the 2021 Revolving Credit Facility totaled $5.0 billion.

Covenants — The credit agreement governing the 2021 Revolving Credit Facility and the indentures governing the Senior Notes and the Legacy Notes and Debentures variously impose limitations, subject to exceptions, on creating certain liens and entering into sale and lease-back transactions. The foregoing credit agreement and indentures contain customary events of default, including failure to make required payments, failure to comply with covenants, and the occurrence of certain events of bankruptcy and insolvency. The 2021 Revolving Credit Facility is also subject to an interest coverage ratio covenant that is tested at the end of each fiscal quarter with respect to the Company’s preceding four fiscal quarters. The Company was in compliance with this financial covenant as of April 29, 2022.

Aggregate Future Maturities

The following tables presents the aggregate future maturities of the Company’s debt as of April 29, 2022 for the periods indicated:


	Maturities by Fiscal Year
	2023 (remaining nine months)		2024		2025		2026		2027		Thereafter		Total
	(in millions)
Senior Notes	$	—	$	1,000	$	1,000	$	1,000	$	6,250	$	7,050	$	16,300
Legacy Notes and Debentures	—		—		—		—		—		952		952
DFS Debt	5,201		2,612		1,294		165		550		3		9,825
Other	23		165		109		20		1		2		320
Total maturities, principal amount	5,224		3,777		2,403		1,185		6,801		8,007		27,397
Associated carrying value adjustments	(5)		(6)		(9)		(8)		(56)		(191)		(275)
Total maturities, carrying value amount	$	5,219	$	3,771	$	2,394	$	1,177	$	6,745	$	7,816	$	27,122

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 8 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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.

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 derivative. The Company does not have any derivatives designated as fair value hedges.

Foreign Exchange Risk

The Company uses foreign currency forward and option contracts designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted transactions denominated in currencies other than the U.S. Dollar. Hedge accounting is applied based upon the criteria established by accounting guidance for derivative instruments and hedging activities. The risk of loss associated with purchased options is limited to premium amounts paid for the option contracts. The risk of loss associated with forward contracts is equal to the exchange rate differential from the time the contract is entered into until the time it is settled. The majority of these contracts typically expire in twelve months or less.

During the three ~~and nine~~ months ended ~~October~~April 29, ~~2021~~2022 and ~~October~~April 30, ~~2020,~~2021, the Company did not discontinue any cash flow hedges related to foreign exchange contracts that had a material impact on the Company’s results of operations due to the probability that the forecasted cash flows would not occur.

The Company uses forward contracts to hedge monetary assets and liabilities denominated in a foreign currency. These contracts generally expire in three months or less, are considered economic hedges, and are not designated for hedge accounting. The change in the fair value of these instruments represents a natural hedge as their gains and losses offset the changes in the underlying fair value of the monetary assets and liabilities due to movements in currency exchange rates.

In connection with expanded offerings of DFS in Europe, forward contracts are used to hedge financing receivables denominated in foreign currencies other than Euro. These contracts are not designated for hedge accounting and most expire within three years or less.

Interest Rate Risk

The Company uses interest rate swaps to hedge the variability in cash flows related to the interest rate payments on structured financing debt. The interest rate swaps economically convert the variable rate on the structured financing debt to a fixed interest rate to match the underlying fixed rate being received on fixed-term customer leases and loans. These contracts are not designated for hedge accounting and most expire within four years or less.

Interest rate swaps are utilized to manage the interest rate risk, at a portfolio level, associated with DFS operations in Europe. The interest rate swaps economically convert the fixed rate on financing receivables to a three-month Euribor floating rate ~~basis~~ in order to match the floating rate nature of the banks’ funding pool. These contracts are not designated for hedge accounting and most expire within five years or less.

The Company utilizes ~~cross currency~~cross-currency amortizing swaps to hedge the currency and interest rate risk exposure associated with the European securitization program. The cross currency swaps combine a Euro-based interest rate swap with a British Pound or U.S. Dollar foreign exchange forward contract in which the Company pays a fixed or floating British Pound or U.S. Dollar amount and receives a fixed or floating amount in Euros linked to the one-month Euribor. The notional value of the swaps amortizes in line with the expected cash flows and run-off of the securitized assets. The swaps are not designated for hedge accounting and expire within five yearsor less.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Derivative Instruments

~~Notional Amounts~~The following table presents the notional amounts of ~~Outstanding Derivative Instruments~~outstanding derivative instruments as of the dates indicated:


		October 29, 2021		January 29, 2021			April 29, 2022		January 28, 2022
		(in millions)					(in millions)
Foreign exchange contracts:	Foreign exchange contracts:					Foreign exchange contracts:
Designated as cash flow hedging instruments	Designated as cash flow hedging instruments	$	8,354	$	6,840	Designated as cash flow hedging instruments	$	8,758	$	7,879
Non-designated as hedging instruments	Non-designated as hedging instruments	9,570		9,890		Non-designated as hedging instruments	8,047		8,713
Total	Total	$	17,924	$	16,730	Total	$	16,805	$	16,592
Interest rate contracts:	Interest rate contracts:					Interest rate contracts:
Non-designated as hedging instruments	Non-designated as hedging instruments	$	6,393	$	5,859	Non-designated as hedging instruments	$	6,146	$	6,715

~~Effect~~The following table presents the effect of ~~Derivative Instruments Designated~~derivative instruments designated as ~~Hedging Instruments~~hedging instruments on the Condensed Consolidated Statements of Financial Position and the Condensed Consolidated Statements of Income for the periods indicated:


Derivatives in Cash Flow Hedging Relationships	Gain (Loss) Recognized in Accumulated OCI, Net of Tax, on Derivatives		Location of Gain (Loss) Reclassified from Accumulated OCI into Income	Gain (Loss) Reclassified from Accumulated OCI into Income
	(in millions)			(in millions)
For the three months ended April 29, 2022
			Total net revenue	$	123
Foreign exchange contracts	$	372	Total cost of net revenue	(27)
Interest rate contracts	—		Interest and other, net	—
Total	$	372	Total	$	96


For the three months ended April 30, 2021
			Total net revenue	$	(30)
Foreign exchange contracts	$	(1)	Total cost of net revenue	2
Interest rate contracts	—		Interest and other, net	—
Total	$	(1)	Income from discontinued operations	1
			Total	$	(27)

Derivatives in Cash Flow Hedging Relationships Gain (Loss) Recognized in Accumulated OCI, Net of Tax, on Derivatives Location of Gain (Loss) Reclassified from Accumulated OCI into Income Gain (Loss) Reclassified from Accumulated OCI into Income
(in millions) (in millions)
For the three months ended October 29, 2021
Total net revenue $ 66
Foreign exchange contracts $ 86 Total cost of net revenue 8
Interest rate contracts — Interest and other, net —
Total $ 86 $ 74
For the three months ended October 30, 2020
Total net revenue $ (88)
Foreign exchange contracts $ 45 Total cost of net revenue 4
Interest rate contracts — Interest and other, net —
Total $ 45 $ (84)
For the nine months ended October 29, 2021
Total net revenue $ 31
Foreign exchange contracts $ 150 Total cost of net revenue 3
Interest rate contracts — Interest and other, net —
Total $ 150 $ 34
For the nine months ended October 30, 2020
Total net revenue $ 17
Foreign exchange contracts $ (45) Total cost of net revenue 7
Interest rate contracts — Interest and other, net —
Total $ (45) $ 24
The following table presents the effect of derivative instruments not designated as hedging instruments on the Condensed Consolidated Statements of Income as of the dates indicated:


	Three Months Ended
	April 29, 2022		April 30, 2021		Location of Gain (Loss) Recognized
	(in millions)
Foreign exchange contracts	$	(231)	$	(29)	Interest and other, net
Interest rate contracts	17		1		Interest and other, net
Foreign exchange contracts	—		5		Income from discontinued operations
Total	$	(214)	$	(23)

3532

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

~~Effect of Derivative Instruments Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income~~

Three Months Ended Nine Months Ended
October 29, 2021 October 30, 2020 October 29, 2021 October 30, 2020 Location of Gain (Loss) Recognized
(in millions)
Gain (Loss) Recognized:
Foreign exchange contracts $ (85) $ (127) $ (242) $ 87 Interest and other, net
Interest rate contracts 4 1 1 (43) Interest and other, net
Total $ (81) $ (126) $ (241) $ 44

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

~~Fair Value of Derivative Instruments in the Condensed Consolidated Statements of Financial Position~~

The Company presents its foreign exchange derivative instruments on a net basis in the Condensed Consolidated Statements of Financial Position due to the right of offset by its counterparties under master netting arrangements. The following tables present the fair value of those derivative instruments presented on a gross basis as of the dates indicated:


		October 29, 2021											April 29, 2022
		Other Current Assets		Other Non- Current Assets		Other Current Liabilities		Other Non-Current Liabilities		Total Fair Value			Other Current Assets		Other Non- Current Assets		Other Current Liabilities		Other Non-Current Liabilities		Total Fair Value
		(in millions)											(in millions)
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:											Derivatives designated as hedging instruments:
Foreign exchange contracts in an asset position	Foreign exchange contracts in an asset position	$	112	$	—	$	8	$	—	$	120	Foreign exchange contracts in an asset position	$	290	$	—	$	200	$	—	$	490
Foreign exchange contracts in a liability position	Foreign exchange contracts in a liability position	(19)		—		(12)		—		(31)		Foreign exchange contracts in a liability position	(1)		—		(8)		—		(9)
Net asset (liability)		93		—		(4)		—		89
Net asset												Net asset	289		—		192		—		481
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:											Derivatives not designated as hedging instruments:
Foreign exchange contracts in an asset position	Foreign exchange contracts in an asset position	244		—		25		—		269		Foreign exchange contracts in an asset position	480		1		303		—		784
Foreign exchange contracts in a liability position	Foreign exchange contracts in a liability position	(159)		—		(82)		(7)		(248)		Foreign exchange contracts in a liability position	(389)		—		(609)		(2)		(1,000)
Interest rate contracts in an asset position	Interest rate contracts in an asset position	—		17		—		—		17		Interest rate contracts in an asset position	—		90		—		0		90
Interest rate contracts in a liability position	Interest rate contracts in a liability position	—		—		—		(32)		(32)		Interest rate contracts in a liability position	—		—		—		(64)		(64)
Net asset (liability)	Net asset (liability)	85		17		(57)		(39)		6		Net asset (liability)	91		91		(306)		(66)		(190)
Total derivatives at fair value	Total derivatives at fair value	$	178	$	17	$	(61)	$	(39)	$	95	Total derivatives at fair value	$	380	$	91	$	(114)	$	(66)	$	291

		January 29, 2021											January 28, 2022
		Other Current Assets		Other Non- Current Assets		Other Current Liabilities		Other Non-Current Liabilities		Total Fair Value			Other Current Assets		Other Non- Current Assets		Other Current Liabilities		Other Non-Current Liabilities		Total Fair Value
		(in millions)											(in millions)
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:											Derivatives designated as hedging instruments:
Foreign exchange contracts in an asset position	Foreign exchange contracts in an asset position	$	28	$	—	$	18	$	—	$	46	Foreign exchange contracts in an asset position	$	135	$	—	$	50	$	—	$	185
Foreign exchange contracts in a liability position	Foreign exchange contracts in a liability position	(10)		—		(15)		—		(25)		Foreign exchange contracts in a liability position	(5)		—		(8)		—		(13)
Net asset (liability)		18		—		3		—		21
Net asset												Net asset	130		—		42		—		172
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:											Derivatives not designated as hedging instruments:
Foreign exchange contracts in an asset position	Foreign exchange contracts in an asset position	184		—		58		—		242		Foreign exchange contracts in an asset position	280		2		106		—		388
Foreign exchange contracts in a liability position	Foreign exchange contracts in a liability position	(108)		—		(159)		(4)		(271)		Foreign exchange contracts in a liability position	(189)		—		(244)		(5)		(438)
Interest rate contracts in an asset position	Interest rate contracts in an asset position	—		10		—		—		10		Interest rate contracts in an asset position	—		30		—		0		30
Interest rate contracts in a liability position	Interest rate contracts in a liability position	—		—		—		(31)		(31)		Interest rate contracts in a liability position	—		—		—		(37)		(37)
Net asset (liability)	Net asset (liability)	76		10		(101)		(35)		(50)		Net asset (liability)	91		32		(138)		(42)		(57)
Total derivatives at fair value	Total derivatives at fair value	$	94	$	10	$	(98)	$	(35)	$	(29)	Total derivatives at fair value	$	221	$	32	$	(96)	$	(42)	$	115

3733

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The following tables present the gross amounts of the Company’s derivative instruments, amounts offset due to master netting agreements with the Company’s counterparties, and the net amounts recognized in the Condensed Consolidated Statements of Financial Position as of the dates indicated:


		October 29, 2021													April 29, 2022
		Gross Amounts of Recognized Assets/ (Liabilities)		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets/ (Liabilities) Presented in the Statement of Financial Position		Gross Amounts not Offset in the Statement of Financial Position				Net Amount of Assets/ (Liabilities) Recognized in the Statement of Financial Position			Gross Amounts of Recognized Assets/ (Liabilities)		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets/ (Liabilities) Presented in the Statement of Financial Position		Gross Amounts not Offset in the Statement of Financial Position				Net Amount of Assets/ (Liabilities) Recognized in the Statement of Financial Position
								Financial Instruments		Cash Collateral Received or Pledged											Financial Instruments		Cash Collateral Received or Pledged
		(in millions)													(in millions)
Derivative instruments:	Derivative instruments:													Derivative instruments:
Financial assets	Financial assets	$	406	$	(211)	$	195	$	—	$	—	$	195	Financial assets	$	1,364	$	(893)	$	471	$	—	$	—	$	471
Financial liabilities	Financial liabilities	(311)		211		(100)		—		21		(79)		Financial liabilities	(1,073)		893		(180)		—		42		(138)
Total derivative instruments	Total derivative instruments	$	95	$	—	$	95	$	—	$	21	$	116	Total derivative instruments	$	291	$	—	$	291	$	—	$	42	$	333

		January 29, 2021													January 28, 2022
		Gross Amounts of Recognized Assets/ (Liabilities)		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets/ (Liabilities) Presented in the Statement of Financial Position		Gross Amounts not Offset in the Statement of Financial Position				Net Amount of Assets/ (Liabilities) Recognized in the Statement of Financial Position			Gross Amounts of Recognized Assets/ (Liabilities)		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets/ (Liabilities) Presented in the Statement of Financial Position		Gross Amounts not Offset in the Statement of Financial Position				Net Amount of Assets/ (Liabilities) Recognized in the Statement of Financial Position
								Financial Instruments		Cash Collateral Received or Pledged											Financial Instruments		Cash Collateral Received or Pledged
		(in millions)													(in millions)
Derivative instruments:	Derivative instruments:													Derivative instruments:
Financial assets	Financial assets	$	298	$	(194)	$	104	$	—	$	—	$	104	Financial assets	$	603	$	(350)	$	253	$	—	$	—	$	253
Financial liabilities	Financial liabilities	(327)		194		(133)		—		2		(131)		Financial liabilities	(488)		350		(138)		—		24		(114)
Total derivative instruments	Total derivative instruments	$	(29)	$	—	$	(29)	$	—	$	2	$	(27)	Total derivative instruments	$	115	$	—	$	115	$	—	$	24	$	139

3834

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 79 — GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Infrastructure Solutions Group and Client Solutions Group ~~and VMware~~ reporting units are consistent with the reportable segments identified in Note 1617 of the Notes to the Condensed Consolidated Financial Statements. Other businesses consists of VMware Resale, Secureworks, and Virtustream, which each represent separate reporting units.

The following table presents goodwill allocated to the Company’s reportable segments and changes in the carrying amount of goodwill as of the dates indicated:

Infrastructure Solutions Group Client Solutions Group VMware Other Businesses Total
(in millions)
Balance as of January 29, 2021 $ 15,324 $ 4,237 $ 20,802 $ 466 $ 40,829
Goodwill acquired — — (1) — (1)
Impact of foreign currency translation (88) — — — (88)
Goodwill divested (a) — — — (39) (39)
Balance as of October 29, 2021 $ 15,236 $ 4,237 $ 20,801 $ 427 $ 40,701

~~____________________~~

(a) During the three months ended October 29, 2021, Dell Technologies completed its sale of Boomi. Prior to the divestiture, Boomi was included within Other businesses. See Note 1 of the Notes to the Condensed Consolidated Financial Statements for additional information about the divestiture of Boomi.


	Infrastructure Solutions Group		Client Solutions Group		Other Businesses		Total
	(in millions)





Balances as of January 28, 2022	$	15,106	$	4,237	$	427	$	19,770

Impact of foreign currency translation	(172)		—		—		(172)



Balances as of April 29, 2022	$	14,934	$	4,237	$	427	$	19,598

Intangible Assets

The following table presents the Company’s intangible assets as of the dates indicated:


		October 29, 2021						January 29, 2021							April 29, 2022						January 28, 2022
		Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net			Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
		(in millions)													(in millions)
Customer relationships	Customer relationships	$	22,387	$	(16,672)	$	5,715	$	22,394	$	(15,448)	$	6,946	Customer relationships	$	16,956	$	(14,071)	$	2,885	$	16,956	$	(13,938)	$	3,018
Developed technology	Developed technology	15,479		(12,939)		2,540		15,488		(12,136)		3,352		Developed technology	9,634		(8,507)		1,127		9,635		(8,405)		1,230
Trade names	Trade names	1,286		(977)		309		1,285		(909)		376		Trade names	885		(765)		120		885		(757)		128

Definite-lived intangible assets	Definite-lived intangible assets	39,152		(30,588)		8,564		39,167		(28,493)		10,674		Definite-lived intangible assets	27,475		(23,343)		4,132		27,476		(23,100)		4,376
Indefinite-lived trade names	Indefinite-lived trade names	3,755		—		3,755		3,755		—		3,755		Indefinite-lived trade names	3,085		—		3,085		3,085		—		3,085
Total intangible assets	Total intangible assets	$	42,907	$	(30,588)	$	12,319	$	42,922	$	(28,493)	$	14,429	Total intangible assets	$	30,560	$	(23,343)	$	7,217	$	30,561	$	(23,100)	$	7,461

Amortization expense related to definite-lived intangible assets was ~~approximately $0.7 billion~~$243 million and ~~$0.8 billion~~$445 million for the three months ended ~~October~~April 29, ~~2021~~2022 and ~~October~~April 30, ~~2020, respectively, and $2.1 billion and $2.5 billion for the nine months ended October 29,~~ 2021, ~~and October 30, 2020,~~ respectively. There were no material impairment charges related to intangible assets during the three ~~and nine~~ months ended ~~October~~April 29, ~~2021 or October~~2022 and April 30, ~~2020.~~

~~During the three months ended May 1, 2020, the Company recognized proceeds and a gain of $120 million from the sale of certain internally developed intellectual property assets.~~2021.

3935

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The following table presents the estimated future annual pre-tax amortization expense of definite-lived intangible assets as of the date indicated:


	~~October~~April 29, ~~2021~~2022
	(in millions)
Fiscal ~~2022~~2023 (remaining ~~three~~nine months)	$	~~589~~
~~Fiscal 2023~~	~~1,826~~732
Fiscal 2024	~~1,458~~776
Fiscal 2025	~~1,107~~607
Fiscal 2026	~~858~~474
Fiscal 2027	361
Thereafter	~~2,726~~1,182
Total	$	~~8,564~~4,132

Goodwill and Intangible Assets Impairment Testing

Goodwill and indefinite-lived intangible assets are tested for impairment annually during the third fiscal quarter and whenever events or circumstances may indicate that an impairment has occurred.

For the annual impairment review in the third quarter of Fiscal 2022, the Company elected to bypass the assessment of qualitative factors to determine whether it was more likely than not that the fair value of a reporting unit was less than its carrying amount, including goodwill. In electing to bypass the qualitative assessment, the Company proceeded directly to ~~performing~~perform a quantitative goodwill impairment test to measure the fair value of each goodwill reporting unit relative to its carrying amount, and to determine the amount of goodwill impairment loss to be recognized, if any.

Management exercised significant judgment related to the above assessment, including the identification of goodwill reporting units, assignment of assets and liabilities to goodwill reporting units, assignment of goodwill to reporting units, and determination of the fair value of each goodwill reporting unit. The fair value of each goodwill reporting unit is generally estimated using a combination of public company multiples and discounted cash flow methodologies, ~~unless the reporting unit relates~~except with respect to Secureworks, which is a publicly-traded entity, ~~(VMware, Inc. or Secureworks),~~ in which case the fair value is determined based primarily on the public company market valuation. The discounted cash flow and public company multiples methodologies require significant judgment, including estimation of future revenues, gross margins, and operating expenses, which are dependent on internal forecasts, current and anticipated economic conditions and trends, selection of market multiples through assessment of the reporting unit’s performance relative to peer competitors, the estimation of the long-term revenue growth rate and discount rate of the Company’s business, and the determination of the Company’s weighted average cost of capital. Changes in these estimates and assumptions could materially affect the fair value of the goodwill reporting unit, potentially resulting in a non-cash impairment charge.

The fair value of the indefinite-lived trade names is generally estimated using discounted cash flow methodologies. The discounted cash flow methodology requires significant judgment, including estimation of future revenue, the estimation of the long-term revenue growth rate of the Company’s business and the determination of the Company’s weighted average cost of capital and royalty rates. Changes in these estimates and assumptions could materially affect the fair value of the indefinite-lived intangible assets, potentially resulting in a non-cash impairment charge.

Based on the results of the annual impairment test performed during the ~~three months~~fiscal year ended ~~October 29, 2021,~~January 28, 2022, the fair values of each of the reporting units exceeded their carrying values. No impairment test was performed during the ~~nine~~three months ended ~~October~~April 29, ~~2021 other than the Company’s annual impairment review.~~2022.

4036

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 810 — DEFERRED REVENUE

Deferred Revenue — Deferred revenue ~~is recorded for~~consists of support and deployment services, software maintenance, training, Software-as-a-Service, and undelivered hardware and professional services, ~~training,~~consisting of installations and ~~software-as-a-service~~consulting engagements. Deferred revenue is recorded when the Company has ~~a right to invoice~~invoiced or payments have been received for undelivered products or services where transfer of control has not occurred. Revenue is recognized on these items when the revenue recognition criteria are met, generally resulting in ratable recognition over the contract term. The Company also has deferred revenue related to undelivered hardware and professional services, consisting of installations and consulting engagements, which are recognized as the Company’s performance obligations under the contract are completed.

The following table presents the changes in the Company’s deferred revenue for the periods indicated:


		Three Months Ended				Nine Months Ended					Three Months Ended
		October 29, 2021		October 30, 2020		October 29, 2021		October 30, 2020			April 29, 2022		April 30, 2021
		(in millions)									(in millions)
Deferred revenue:	Deferred revenue:									Deferred revenue:
Deferred revenue at beginning of period	Deferred revenue at beginning of period	$	31,843	$	28,791	$	30,801	$	27,800	Deferred revenue at beginning of period	$	27,573	$	25,592
Revenue deferrals	Revenue deferrals	5,706		5,432		18,889		17,560		Revenue deferrals	4,975		5,279
Revenue recognized	Revenue recognized	(6,095)		(5,542)		(18,092)		(16,418)		Revenue recognized	(4,980)		(4,589)
Other (a)	Other (a)	—		—		(144)		(261)		Other (a)	(165)		—
Deferred revenue at end of period	Deferred revenue at end of period	$	31,454	$	28,681	$	31,454	$	28,681	Deferred revenue at end of period	$	27,403	$	26,282
Short-term deferred revenue	Short-term deferred revenue	$	16,569	$	15,259	$	16,569	$	15,259	Short-term deferred revenue	$	14,329	$	13,641
Long-term deferred revenue	Long-term deferred revenue	$	14,885	$	13,422	$	14,885	$	13,422	Long-term deferred revenue	$	13,074	$	12,641

____________________

(a) ~~For~~Other represents the ~~nine months ended October 29, 2021, Other consists~~reclassification of ~~divested~~ deferred revenue ~~from the sale of Boomi. For the nine months ended October 30, 2020, Other consists of divested deferred revenue from the sale of RSA Security. See Note 1 of the Notes~~ to ~~the Condensed Consolidated Financial Statements for more information about the divestitures of Boomi~~accrued and ~~of RSA Security. There was no impact to deferred revenue for the three months ended October 29, 2021 or October 30, 2020 as liabilities in both instances were previously classified as held for sale.~~other liabilities.

Remaining Performance Obligations — Remaining performance obligations represent the aggregate amount of the transaction price allocated to performance obligations not delivered, or partially undelivered, as of the end of the reporting period. Remaining performance obligations include deferred revenue plus unbilled amounts not yet recorded in deferred revenue. The value of the transaction price allocated to remaining performance obligations as of ~~October~~April 29, ~~2021~~2022 was approximately ~~$47~~$42 billion. The Company expects to recognize approximately 62% of remaining performance obligations as revenue in the next twelve months, and the remainder thereafter.

The aggregate amount of the transaction price allocated to remaining performance obligations does not include amounts owed under ~~cancellable~~cancelable contracts where there is no substantive termination penalty. The Company applied the practical expedient to exclude the value of remaining performance obligations for contracts for which revenue is recognized inat the amount to which the Company has the right to invoice for services performed.

Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidation, adjustments for revenue that have not materialized, and adjustments for currency.

4137

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 911 — COMMITMENTS AND CONTINGENCIES

Purchase Obligations

The Company has contractual obligations to purchase goods or services, which specify significant terms ~~including~~(including fixed or minimum quantities to be ~~purchased;~~purchased), fixed, minimum, or variable price provisions; and the approximate timing of the transaction. As of ~~October~~April 29, ~~2021,~~2022, such purchase obligations were ~~$5.2~~$3.1 billion, ~~$0.7~~$0.4 billion, and $0.8 billion for the remaining ~~three~~nine months of Fiscal ~~2022, for~~2023, Fiscal ~~2023,~~2024, and ~~for~~ Fiscal ~~2024~~2025 and thereafter, respectively.

Legal Matters

The Company is involved in various claims, suits, assessments, investigations, and legal proceedings that arise from time to time in the ordinary course of its business, including those identified below, consisting of matters involving consumer, antitrust, tax, intellectual property, and other issues on a global basis. Pursuant to the Separation and Distribution Agreement referred to below, Dell Technologies shares responsibility with VMware for certain matters, as indicated below, and VMware has agreed to indemnify Dell Technologies in whole or in part with respect to certain matters.

The Company accrues a liability when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. The Company reviews these accruals at least quarterly and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other relevant information. ~~As additional~~To the extent new information is obtained and the Company’s views on the probable outcomes of claims, suits, assessments, investigations, or legal proceedings change, changes in the ~~Company would record related impacts to~~Company’s accrued liabilities are recorded in the period in which such a determination is made. For some matters, the ~~incurrence~~amount of a liability is not probable or the amount cannot be reasonably estimated and therefore accruals have not been made.

The following is a discussion of the Company’s significant legal matters and other proceedings:

Class Actions Related to the Class V Transaction — ~~NaN~~On December 28, 2018, the Company completed a transaction (the “Class V transaction”) in which it paid $14.0 billion in cash and issued 149,387,617 shares of its Class C Common Stock to holders of its Class V Common Stock in exchange for all outstanding shares of Class V Common Stock. As a result of the Class V transaction, the tracking stock feature of the Company’s capital structure associated with the Class V Common Stock was terminated. In November 2018, 4 purported stockholders brought putative class action complaints arising out of the Class V ~~transaction described in Note 1 of the Notes to the Condensed Consolidated Financial Statements.~~transaction. The actions were captioned Hallandale Beach Police and Fire Retirement Plan v. Michael Dell et al. (Civil Action No. 2018-0816-JTL), Howard Karp v. Michael Dell et al. (Civil Action No. 2019-0032-JTL), Miramar Police Officers’ Retirement Plan v. Michael Dell et al. (Civil Action No. 2019-0049-JTL), and Steamfitters Local 449 Pension Plan v. Michael Dell et al. (Civil Action No. 2019-0115-JTL). The four actions were consolidated in the Delaware Chancery Court into In Re Dell Class V Litigation (Consol. C.A. No. 2018-0816-JTL)~~, which~~. The suit currently names as defendants Michael S. Dell and certain of the ~~Company’s~~other directors serving on the board of directors at the time of the Class V transaction, certain stockholders of the Company, consisting of Michael S. Dell and Silver Lake Group LLC and certain of its affiliated funds, and Goldman Sachs & Co. LLC ~~and certain stockholders of~~(“Goldman Sachs”), which served as financial advisor to the Company ~~including Michael S. Dell. The~~in connection with the Class V transaction. In an amended complaint filed in August 2019, the plaintiffs generally allege that the director and stockholder defendants breached their fiduciary duties under Delaware law to the former holders of Class V Common Stock in connection with the Class V transaction by ~~allegedly causing the Company to enter into~~offering a transaction value that ~~favored~~was allegedly billions of dollars below the ~~interests~~fair value. The plaintiffs contend that the offer understated the value of shares surrendered by the former stockholders, which the plaintiffs allege should have reflected higher alternative valuations, including a valuation related to the value of the ~~controlling stockholders at~~shares of VMware, Inc. common stock, and that the ~~expense of such former stockholders. The~~difference in values was wrongfully appropriated by the stockholder defendants. On August 20, 2021, the plaintiffs added Goldman Sachs as a defendant and allege that it aided and abetted the alleged primary violations. In the complaint, the plaintiffs seek, among other remedies, a judicial declaration that the director and stockholder defendants breached their fiduciary ~~duties~~duties. The plaintiffs also seek in the complaint disgorgement of all profits, benefits, and other compensation obtained by the defendants as a result of such alleged conduct and an award of unspecified damages, fees, and costs. ~~The plaintiffs filed an amended complaint in August 2019 making substantially similar allegations to those described above.~~ The defendants filed a motion to dismiss the action in September 2019. The court denied the motion in June 2020 and the case is currently in the discovery phase. Trial is ~~currently~~ scheduled to begin on December 5, 2022.

~~Patent Litigation~~ ~~— On April 25, 2019, Cirba Inc.~~ The Company is not a defendant in this action but is subject to director indemnification provisions under its certificate of incorporation and ~~Cirba IP, Inc. (collectively, “Cirba”) filed~~bylaws, and is a lawsuit against VMware, Inc. in the United States District Court for the District of Delaware (the “Delaware Court”), alleging 2 patent infringement claims and 3 trademark infringement-related claims (the “First Action”). Following a hearing on August 6, 2019, the Delaware Court denied Cirba’s preliminary injunction motion. On August 20, 2019, VMware, Inc. filed counterclaims against Cirba, asserting among other claims that Cirba is infringing 4 VMware, Inc. patents. The Delaware Court severed those claims from the January 2020 trial on Cirba’s claims. On January 24, 2020, a jury returned a verdict that VMware, Inc. had willfully infringed Cirba’s 2 patents and awarded approximately $237 million in damages. Asparty to Cirba’s trademark-related claims, the jury found that VMware, Inc. was not liable. A total of $237 million was accrued for the First Action as of January 31, 2020, which reflected the estimated losses that were considered both probable and reasonably estimable at that time. The amount accrued for this matter was included in Accrued and other in the Consolidated Statements of Financial Position as of January 31, 2020, and the charge was classified in Selling, general and administrative in the Consolidated Statements of Income (Loss) for the fiscal year ended January 31, 2020. On March 9, 2020, the parties filed post-trial motions in the First Action. On December 21, 2020, the Delaware Court granted VMware, Inc.’s request for a new trial based, in part, on Cirba’s Inc.’s lack of standing, set aside the verdict and damages award, and denied Cirba’s post-trial motions (the “Post-Trial Order”).

agreements with

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(unaudited)

~~On October 22, 2019, VMware, Inc. filed a separate lawsuit against Cirba in~~ the United States District Court for the Eastern District of Virginia alleging infringement of 4 additional VMware, Inc. patents (The “Second Action”). The Virginia court transferred the Second Action to the Delaware Court on February 25, 2020. On March 23, 2020, Cirba filed a counterclaim asserting 1 additional patent against VMware, Inc. The Delaware Court consolidated the First and Second Actions and ordered a consolidated trial on alldefendants that contain indemnification obligations of the ~~parties’ patent infringement claims and counterclaims. On May 3, 2021,~~Company, conditioned on the Court denied Cirba’s motion to certify the Post-Trial Order to enable an interlocutory appeal to the United States Court of Appeals for the Federal Circuit. Also, on May 3, 2021, the Court granted Cirba’s motion for leave to assert an additional patent against VMware, Inc. Separately, VMware has filed challenges with the United States Patent and Trademark Office against eachsatisfaction of the ~~4 patents that are subject of Cirba’s allegation. To date,~~requirements set forth in such agreements, relating to service as a director, ownership of the ~~4 challenges, 2~~ ~~ex parte~~ ~~reexams have been granted~~Company’s securities, and 1 ~~Inter Partes~~ ~~Review has been instituted. As~~provision of January 29, 2021, VMware, Inc. reassessed its estimated loss accrual for the First Action based on the Post-Trial Order and determined that a loss was no longer probable and reasonably estimable with respect to the consolidated First and Second Actions. Accordingly, the estimated loss accrual recognized during the fiscal year ended January 31, 2020 totaling $237 million was adjusted to $0 with the credit included in Selling, general, and administrative in the Consolidated Statements of Income (Loss) for the fiscal year ended January 29, 2021. VMware, Inc. has reported that it is unable at this time to assess whether, or to what extent, it may be found liable and, if found liable, the amount any damages that may be awarded. VMware, Inc. intends to vigorously defend itself in this matter.services, as applicable.

Class Actions Related to VMware, Inc.’s Acquisition of Pivotal — NaN purported stockholders brought putative class action complaints arising out of VMware, Inc.’s acquisition of Pivotal Software, Inc. on December 30, ~~2019 as described in Note 1 of the Notes to the Condensed Consolidated Financial Statements.~~2019. The 2two actions were consolidated in the Delaware Chancery Court into In re: Pivotal Software, Inc. Stockholders Litigation (Civil Action No. 2020-0440-KSJM). The complaint names as defendants the Company, VMware, Inc., Michael S. Dell, and certain officers of Pivotal. The plaintiffs generally allege that the defendants breached their fiduciary duties to the former holders of Pivotal Class A ~~common stock~~Common Stock in connection with VMware, Inc.’s acquisition of Pivotal by allegedly causing Pivotal to enter into a transaction that favored the interests of Pivotal’s controlling stockholders at the expense of such former stockholders. The ~~plaintiffs seek, among other remedies, a judicial declaration that~~parties have reached an agreement to settle the ~~defendants breached their fiduciary duties~~litigation and ~~an award~~are seeking the court’s approval of ~~damages, fees, and costs. Trial is currently scheduled to begin on July 6, 2022.~~the settlement.

Other Litigation— Dell does not currently ~~expect~~anticipate that any of the other various legal proceedings ~~or matters~~it is involved in will have a material adverse effect on its business, financial condition, results of operations, or cash flows.

In accordance with the relevant accounting guidance, the Company provides disclosures of matters where it is at least reasonably possible that the Company could experience a material loss exceeding the amounts already accrued for these or other proceedings or matters. In addition, the Company also discloses matters based on its consideration of other matters and qualitative factors, including the experience of other companies in the industry, and investor, customer, and employee relations considerations. As of ~~October~~April 29, ~~2021,~~2022, the Company does not believe there is a reasonable possibility that a material loss exceeding the amounts already accrued for these or other proceedings or matters has been incurred. However, since the ultimate resolution of any such proceedings and matters is inherently unpredictable, the Company’s business, financial condition, results of operations, or cash flows could be materially affected in any particular period by unfavorable outcomes in one or more of these proceedings or matters. Whether the outcome of any claim, suit, assessment, investigation, or legal proceeding, individually or collectively, could have a material adverse effect on the Company’s business, financial condition, results of operations, or cash flows will depend on a number of factors, including the nature, timing, and amount of any associated expenses, amounts paid in settlement, damages, or other remedies or consequences.

Indemnifications Obligations

In the ordinary course of business, the Company enters into ~~contractual arrangements~~various contracts under which it may agree to indemnify other parties for losses incurred from certain events as defined in the relevant contract, such as litigation, regulatory penalties, or claims relating to past performance. Such indemnification obligations may not be subject to maximum loss clauses. Historically, payments related to these ~~indemnifications~~indemnification obligations have not been material to the Company.

Under the Separation and Distribution Agreement described in Note 2 of the Notes to the Condensed Consolidated Financial Statements, Dell Technologies has agreed to indemnify VMware, Inc., each of its subsidiaries and each of their respective directors, officers, and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to Dell Technologies as part of the separation of Dell Technologies and VMware and their respective businesses as a result of the VMware Spin-off (the “Separation”). VMware similarly has agreed to indemnify Dell Technologies, Inc., each of its subsidiaries and each of their respective directors, officers, and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to VMware as part of the Separation. Dell Technologies expects VMware to fully perform under the terms of the Separation and Distribution Agreement.

For information on the cross-indemnifications related to the tax matters agreement between the Company and VMware described in Note 2 of the Notes to the Condensed Consolidated Financial Statements effective upon the Separation on November 1, 2021, see Note 2 and Note 16 of the Notes to the Condensed Consolidated Financial Statements.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 1012 — INCOME AND OTHER TAXES

For the three months ended ~~October~~April 29, ~~2021 and October 30, 2020,~~2022, the Company’s effective income tax rate was ~~18.7% and 37.2%, respectively,~~11.9% on pre-tax income of ~~$4.8~~$1.2 billion ~~and $1.4~~compared to 5.7% on pre-tax income of $0.7 billion ~~respectively. For~~for the ~~nine~~three months ended ~~October 29, 2021 and October~~April 30, ~~2020,~~2021. The change in the Company’s effective income tax rate was ~~15.9%~~attributable in part to the impact of discrete tax benefits related to stock-based compensation of $91 million and ~~-6.1%, respectively, on pre-tax income of $6.8 billion and $2.0 billion, respectively.~~

~~For~~$97 million for the three ~~and nine~~ months ended ~~October~~April 29, 2022 and April 30, 2021, respectively. The change in the Company’s effective income tax rate ~~includes tax expense of $1.0 billion related~~was also due to the divestiture of Boomi during the period. In comparison, for the nine months ended October 30, 2020, the Company’s effective income tax rate includes discrete tax benefits of $746 million related to an audit settlement that was recorded in the second quarter of Fiscal 2021 and tax expenses of $359 million relating to the divestiture of RSA Security during the third quarter of Fiscal 2021. The Company’s effective income tax rates were also impacted by changesa change in the Company’s jurisdictional mix of income and ~~lower overall taxes~~higher U.S. tax on foreign ~~operations.~~operations, the effects of which were partially offset by higher benefits from foreign tax credits.

Higher U.S. tax on foreign operations was due to the capitalization of research and development costs. Under the Tax Cuts and Jobs Act, which was enacted on December 22, 2017, research and development costs incurred for tax years beginning after December 31, 2021 must be capitalized and amortized ratably over five or 15 years for tax purposes, depending on where the research activities are conducted. The effective income tax rate for future quarters of Fiscal 2023 may be impacted by actions taken by the U.S. government to defer or repeal this provision, as well as by the actual mix of jurisdictions in which income is generated and the impact of any discrete tax items.

The differences between the estimated effective income tax rates and the U.S. federal statutory rate of 21% principally result from the Company’s geographical distribution of income, differences between the book and tax treatment of certain items, and ~~the~~ discrete tax ~~items discussed above.~~items. In certain jurisdictions, the Company’s tax rate is significantly less than the applicable statutory rate as a result of tax holidays. The majority of the Company’s foreign income that is subject to these tax holidays and lower tax rates is attributable to Singapore and China. A significant portion of these income tax benefits relate to a tax holiday that will be effective until January 31, 2029. The Company’s other tax holidays will expire in whole or in part during fiscal years ~~2022~~2030 through ~~2030.~~2031. Many of these tax holidays and reduced tax rates may be extended when certain conditions are met or may be terminated early if certain conditions are not met. As of ~~October~~April 29, ~~2021,~~2022, the Company was not aware of any matters of non-compliance related to these tax holidays.

The Internal Revenue Service is currently ~~examining~~conducting tax examinations of the Company for fiscal years 2015 through 2019. The Company is also currently under income tax audits in various state and foreign jurisdictions. The Company is undergoing negotiations, and in some cases contested proceedings, relating to tax matters with the taxing authorities in these jurisdictions. The Company believes that it has valid positions supporting its tax returns and that it has provided adequate reserves related to all matters contained in tax periods open to examination. Although the Company believes it has made adequate provisions for the uncertainties surrounding these audits, should the Company experience unfavorable outcomes, such outcomes could have a material impact on its results of operations, financial position, and cash flows. With respect to major U.S., state and foreign taxing jurisdictions, the Company is generally not subject to tax examinations for years prior to the fiscal year ended January 29, 2010.

Judgment is required in evaluating the Company’s uncertain tax positions and determining the Company’s provision for income taxes. The unrecognized tax benefits were ~~$1.5 billion and $1.4~~$1.2 billion as of ~~October~~both April 29, ~~2021~~2022 and January ~~29, 2021, respectively,~~28, 2022, and are included in ~~Other~~other non-current liabilities in the Condensed Consolidated Statements of Financial Position. The Company does not anticipate a significant change to the total amount of unrecognized tax benefits within the next twelve months.

The Company takes certain non-income tax positions in the jurisdictions in which it operates and has received certain non-income tax assessments from various jurisdictions. The Company believes that a material loss in these matters is not probable and that it is not reasonably possible that a material loss exceeding amounts already accrued has been incurred. The Company believes its positions in these non-income tax litigation matters are supportable and that it ultimately will prevail in the matters. In the normal course of business, the Company’s positions and conclusions related to its non-income taxes could be challenged and assessments may be made. To the extent new information is obtained and the Company’s views on its positions, probable outcomes of assessments, or litigation change, changes in estimates to the Company’s accrued liabilities would be recorded in the period in which such a determination is made. In the resolution process for income tax and non-income tax audits, the Company is required in certain situations to provide collateral guarantees or indemnification to regulators and tax authorities until the matter is resolved.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 1113 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) is presented in stockholders’ equity (deficit) in the Condensed Consolidated Statements of Financial Position and consists of amounts related to foreign currency translation adjustments, unrealized net gains (losses) on cash flow hedges, and actuarial net gains (losses) from pension and other postretirement plans.

The following table presents changes in accumulated other comprehensive income (loss), net of tax, by the following components as of the dates indicated:


		Foreign Currency Translation Adjustments		Cash Flow Hedges		Pension and Other Postretirement Plans			Accumulated Other Comprehensive Income (Loss)			Foreign Currency Translation Adjustments		Cash Flow Hedges		Pension and Other Postretirement Plans		Accumulated Other Comprehensive Income (Loss)
		(in millions)						(in millions)
Balances as of January 29, 2021		$	(150)	$	(86)	$	(78)		$	(314)

Balances as of January 28, 2022											Balances as of January 28, 2022	$	(526)	$	129	$	(34)	$	(431)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(201)		150		2			(49)		Other comprehensive income (loss) before reclassifications	(286)		372		17		103
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	—		(34)		3			(31)		Amounts reclassified from accumulated other comprehensive income (loss)	—		(96)		—		(96)
Total change for the period	Total change for the period	(201)		116		5			(80)		Total change for the period	(286)		276		17		7
Less: Change in comprehensive income (loss) attributable to non-controlling interests		—		—		—			—
Balances as of October 29, 2021		$	(351)	$	30	$	(73)		$	(394)

Balances as of April 29, 2022											Balances as of April 29, 2022	$	(812)	$	405	$	(17)	$	(424)

Amounts related to the Company’s cash flow hedges are reclassified to net income during the same period in which the items being hedged are recognized in earnings. See Note 68 of the Notes to the Condensed Consolidated Financial Statements for more information on the Company’s derivative instruments.

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

The following table presents reclassifications out of accumulated other comprehensive income (loss), net of tax, to net income for the periods indicated:


		Three Months Ended													Three Months Ended
		October 29, 2021						October 30, 2020								April 29, 2022						April 30, 2021
		Cash Flow Hedges		Pensions		Total		Cash Flow Hedges		Pensions		Total				Cash Flow Hedges		Pensions		Total		Cash Flow Hedges		Pensions		Total
		(in millions)													(in millions)
Total reclassifications, net of tax:	Total reclassifications, net of tax:													Total reclassifications, net of tax:
Net revenue	Net revenue	$	66	$	—	$	66	$	(88)	$	—	$	(88)	Net revenue		$	123	$	—	$	123	$	(30)	$	—	$	(30)
Cost of net revenue	Cost of net revenue	8		—		8		4		—		4		Cost of net revenue		(27)		—		(27)		2		—		2
Operating expenses		—		(1)		(1)		—		1		1

Total reclassifications, net of tax		$	74	$	(1)	$	73	$	(84)	$	1	$	(83)

		Nine Months Ended
		October 29, 2021						October 30, 2020
		Cash Flow Hedges		Pensions		Total		Cash Flow Hedges		Pensions		Total
		(in millions)
Total reclassifications, net of tax:
Net revenue		$	31	$	—	$	31	$	17	$	—	$	17
Cost of net revenue		3		—		3		7		—		7
Operating expenses		—		(3)		(3)		—		(3)		(3)

Income from discontinued operations														Income from discontinued operations		—		—		—		1		—		1
Total reclassifications, net of tax	Total reclassifications, net of tax	$	34	$	(3)	$	31	$	24	$	(3)	$	21	Total reclassifications, net of tax		$	96	$	—	$	96	$	(27)	$	—	$	(27)

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 12~~— NON-CONTROLLING INTERESTS~~

~~VMware, Inc.~~ — The non-controlling interests’ share of equity in VMware, Inc. is reflected as a component of the non-controlling interests in the Condensed Consolidated Statements of Financial Position and was $5.1 billion and $5.0 billion as of October 29, 2021 and January 29, 2021, respectively. As of October 29, 2021 and January 29, 2021, the Company held approximately 80.5% and 80.6%, respectively, of the outstanding equity interest in VMware, Inc. On November 1, 2021, subsequent to the close of the third quarter of Fiscal 2022, the Company completed the VMware Spin-off. See Note 1 and Note 18 of the Notes to the Condensed Consolidated Financial Statements for more information regarding the completion of the VMware Spin-off.

~~Secureworks~~ — 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 $105 million and $96 million as of October 29, 2021 and January 29, 2021, respectively. As of October 29, 2021 and January 29, 2021, the Company held approximately 84.0% and 85.7%, respectively, of the outstanding equity interest in Secureworks, excluding restricted stock awards (“RSAs”) and 83.1% and 84.9%, respectively, including RSAs.

~~The following table presents the effect of changes in the Company’s ownership interest in VMware, Inc. and Secureworks on the Company’s equity for the period indicated:~~


	~~Nine Months Ended~~
	~~October 29, 2021~~
	~~(in millions)~~
~~Net income attributable to Dell Technologies Inc.~~	$	~~5,561~~
~~Transfers (to)/from the non-controlling interests:~~
~~Increase in Dell Technologies Inc. additional paid-in-capital for equity issuances and other equity activity~~	~~762~~
~~Decrease in Dell Technologies Inc. additional paid-in-capital for equity issuances and other equity activity~~	~~(828)~~
~~Net transfers to non-controlling interests~~	~~(66)~~
~~Change from net income attributable to Dell Technologies Inc. and transfers to the non-controlling interests~~	$	~~5,495~~

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

~~NOTE 13~~14 — CAPITALIZATION

The following table presents the Company’s authorized, issued, and outstanding common stock as of the dates indicated:


		Authorized	Issued	Outstanding		Authorized	Issued	Outstanding
		(in millions)				(in millions)
Common stock as of October 29, 2021
Common stock as of April 29, 2022					Common stock as of April 29, 2022
Class A	Class A	600	379	379	Class A	600	379	379
Class B	Class B	200	95	95	Class B	200	95	95
Class C	Class C	7,900	301	293	Class C	7,900	321	273
Class D	Class D	100	—	—	Class D	100	—	—
Class V	Class V	343	—	—	Class V	343	—	—
		9,143	775	767		9,143	795	747

Common stock as of January 29, 2021
Common stock as of January 28, 2022					Common stock as of January 28, 2022
Class A	Class A	600	385	385	Class A	600	379	379
Class B	Class B	200	102	102	Class B	200	95	95
Class C	Class C	7,900	274	266	Class C	7,900	303	283
Class D	Class D	100	—	—	Class D	100	—	—
Class V	Class V	343	—	—	Class V	343	—	—
		9,143	761	753		9,143	777	757

Under the Company’s certificate of incorporation, ~~as amended and restated upon the completion of the Class V transaction described in Note 1 of the Notes to the Condensed Consolidated Financial Statements,~~ the Company is prohibited from issuing any of the authorized shares of Class V Common Stock.

Preferred Stock

The Company is authorized to issue 1000000 shares of preferred stock, par value $0.01 per share. As of ~~October~~April 29, ~~2021~~2022 and January ~~29, 2021,~~28, 2022, no shares of preferred stock were issued or outstanding.

Common Stock

Dell Technologies Common Stock — The Class A Common Stock, the Class B Common Stock, the Class C Common Stock, and the Class D Common Stock are collectively referred to as Dell Technologies Common Stock. The par value for all classes of Dell Technologies Common Stock is $0.01 per share. The Class A Common Stock, the Class B Common Stock, the Class C Common Stock, and the Class D Common Stock share equally in dividends declared or accumulated and have equal participation rights in undistributed earnings.

Voting Rights — Each holder of record of (a) Class A Common Stock is entitled to 10 votes per share of Class A Common Stock; (b) Class B Common Stock is entitled to 10 votes per share of Class B Common Stock; (c) Class C Common Stock is entitled to 1 vote per share of Class C Common Stock; and (d) Class D Common Stock is not entitled to any vote on any matter except to the extent required by provisions of Delaware law (in which case such holder is entitled to 1 vote per share of Class D Common Stock).

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

Conversion Rights — Under the Company’s certificate of incorporation, at any time and from time to time, any holder of Class A Common Stock or Class B Common Stock has the right to convert all or any of the shares of Class A Common Stock or Class B Common Stock, as applicable, held by such holder into shares of Class C Common Stock on a one-to-one basis.

During the ~~nine~~three months ended ~~October~~April 29, ~~2021, the Company issued 5,912,845~~2022, there were no conversions of shares of Class A or Class B Common Stock into shares of Class C Common ~~Stock~~Stock.

Table of Contents

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Dividends

On February 24, 2022, the Company announced that its Board of Directors has adopted a dividend policy under which the Company intends to ~~stockholders upon~~pay quarterly cash dividends on its common stock at an initial rate of $0.33 per share per fiscal quarter.

During the ~~conversion~~three months ended April 29, 2022, the Company paid an initial quarterly dividend under the new policy in the amount of $248 million to the holders of record of all of the ~~same number of~~issued and outstanding shares of Class A Common Stock into Class C Common Stock in accordance with the Company’s certificate of incorporation. During the nine months ended October 29, 2021, the Company issued 6,334,990 shares of Class C Common Stock to stockholders upon their conversioncommon stock as of the ~~same number~~close of ~~shares of Class B Common Stock into Class C Common Stock in accordance with the Company’s certificate of incorporation.~~business on April 20, 2022.

Repurchases of Common Stock

~~Dell Technologies Common Stock Repurchases by Dell Technologies~~

On February 24, 2020, the Company’s board of directors approved a stock repurchase program under which the Company was authorized to repurchase up to $1.0 billion of shares of the Class C Common Stock over a 24-month period expiring on February 28, 2022. During the nine months ended October 30, 2020, the Company repurchased approximately 6 million shares of Class C Common Stock for approximately $240 million and subsequently suspended activity under its stock repurchase program.

Effective as of September 23, 2021, the Company’s ~~board~~Board of ~~directors~~Directors terminated the Company’s previous stock repurchase program and approved a new stock repurchase program (the “2021 Stock Repurchase Program”) under which the Company is authorized to use assets to repurchase up to $5 billion of shares of the Company’s Class C Common Stock with no established expiration date. ~~The repurchase of shares commenced in the fourth quarter of Fiscal 2022 and, accordingly, as of October 29, 2021 the cumulative authorized amount remaining for stock repurchases was $5 billion.~~

~~To the extent not retired, shares repurchased under the repurchase program are placed in the Company’s treasury.~~

~~VMware, Inc. Class A Common Stock Repurchases by VMware, Inc.~~

On May 29, 2019, VMware, Inc.’s board of directors authorized the repurchase of up to $1.5 billion of VMware, Inc.’s Class A common stock through January 29, 2021. On July 15, 2020, VMware, Inc.’s board of directors extended authorization of VMware, Inc.’s existing repurchase program and authorized the repurchase of up to an additional $1.0 billion of VMware, Inc.’s Class A common stock through January 28, 2022. On October 7, 2021, VMware authorized the termination of the existing stock repurchase program, under which $183 million remained authorized and unpurchased as of October 29, 2021, and authorized a new repurchase program of up to $2.0 billion of Class A common stock through the end of fiscal 2024, in each case, effective upon the close of the VMware Spin-off.

During the ~~nine~~three months ended ~~October~~April 29, ~~2021, VMware, Inc.~~2022, the Company repurchased ~~5.7~~approximately 28.8 million shares of ~~its~~ Class ~~A common stock in the open market~~C Common Stock for a total purchase price of approximately $872 million. During the nine months ended October 30, 2020, VMware, Inc. repurchased approximately 4.2 million shares of its Class A common stock in the open market for approximately $566 million.

~~All shares repurchased under VMware, Inc.’s stock repurchase programs are retired.~~$1.5 billion.

The above ~~VMware, Inc.~~repurchases of Class ~~A common stock repurchases for the nine months ended October 29, 2021 and October 30, 2020~~C Common Stock exclude shares repurchased to settle employee tax withholding related to the vesting of ~~VMware, Inc.~~ stock ~~awards~~awards. Pursuant to the respective award agreements, these shares were withheld in conjunction with the net share settlement upon the vesting of ~~$284 million and $315 million, respectively.~~restricted stock units during the period.

The Company did not repurchase any shares of Class C Common Stock during the three months ended April 30, 2021 under the previous stock repurchase program.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 1415 — EARNINGS PER SHARE

Basic earnings per share is based on the weighted-average effect of all common shares issued and outstanding and is calculated by dividing net income by the weighted-average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares used in the basic earnings per share calculation ~~adjusted for incremental dilution from non-controlling interests,~~ plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive instruments. The Company excludes equity instruments from the calculation of diluted earnings per share if the effect of including such instruments is antidilutive.

For purposes of calculating earnings per share, the Company uses the two-class method. As all classes of Dell Technologies Common Stock share the same rights in dividends, basic and diluted earnings per share are the same for each class of Dell Technologies Common Stock.

The following table presents ~~the~~ basic and diluted earnings per share for ~~Dell Technologies Common Stock for~~ the periods indicated:

Three Months Ended Nine Months Ended
October 29, 2021 October 30, 2020 October 29, 2021 October 30, 2020
Earnings per share attributable to Dell Technologies Inc.
Dell Technologies Common Stock — Basic $ 5.02 $ 1.11 $ 7.30 $ 2.73
Dell Technologies Common Stock — Diluted $ 4.87 $ 1.08 $ 7.08 $ 2.64


	Three Months Ended
		April 29, 2022		April 30, 2021
Earnings per share attributable to Dell Technologies Inc. - basic
Continuing operations		$	1.42	$	0.87
Discontinued operations		$	—	$	0.30

Earnings per share attributable to Dell Technologies Inc. — diluted
Continuing operations		$	1.37	$	0.84
Discontinued operations		$	—	$	0.29

The following table presents the computation of basic and diluted earnings per share for the periods indicated:


		Three Months Ended				Nine Months Ended					Three Months Ended
		October 29, 2021		October 30, 2020		October 29, 2021		October 30, 2020			April 29, 2022		April 30, 2021
		(in millions)									(in millions)
Numerator: Dell Technologies Common Stock
Net income attributable to Dell Technologies — basic		$	3,843	$	832	$	5,561	$	2,023
Incremental dilution from VMware, Inc. attributable to Dell Technologies (a)		(2)		(3)		(7)		(8)
Net income attributable to Dell Technologies — diluted		$	3,841	$	829	$	5,554	$	2,015
Numerator: Continuing operations										Numerator: Continuing operations
Net income attributable to Dell Technologies Inc. from continuing operations - basic and diluted										Net income attributable to Dell Technologies Inc. from continuing operations - basic and diluted	$	1,072	$	660

Numerator: Discontinued operations										Numerator: Discontinued operations
Income from discontinued operations, net of income taxes - basic										Income from discontinued operations, net of income taxes - basic	$	—	$	227
Incremental dilution from VMware (a)										Incremental dilution from VMware (a)	—		(2)
Income from discontinued operations, net of income taxes, attributable to Dell Technologies Inc. - diluted										Income from discontinued operations, net of income taxes, attributable to Dell Technologies Inc. - diluted	$	—	$	225

Denominator: Dell Technologies Common Stock weighted-average shares outstanding	Denominator: Dell Technologies Common Stock weighted-average shares outstanding									Denominator: Dell Technologies Common Stock weighted-average shares outstanding
Weighted-average shares outstanding — basic	Weighted-average shares outstanding — basic	766		747		762		742		Weighted-average shares outstanding — basic	754		757
Dilutive effect of options, restricted stock units, restricted stock, and other	Dilutive effect of options, restricted stock units, restricted stock, and other	22		24		23		22		Dilutive effect of options, restricted stock units, restricted stock, and other	26		25
Weighted-average shares outstanding — diluted	Weighted-average shares outstanding — diluted	788		771		785		764		Weighted-average shares outstanding — diluted	780		782
Weighted-average shares outstanding — antidilutive	Weighted-average shares outstanding — antidilutive	—		—		—		1		Weighted-average shares outstanding — antidilutive	1		—

____________________

(a)The incremental dilution from VMware ~~Inc. attributable to Dell Technologies~~ represents the impact of VMware, Inc.’s dilutive securities on diluted earnings per share of Dell Technologies Common Stock, and is calculated by multiplying the difference between VMware, Inc.’s basic and diluted earnings (loss) per share by the number of shares of VMware, Inc. common stock held by the Company. ~~For both periods presented, there was no incremental dilution from Secureworks due to its net loss position.~~

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

~~NOTE 15— REDEEMABLE SHARES~~

Through June 27, 2021, awards under the Company’s stock incentive plans included certain rights that allowed the holder to exercise a put feature for the underlying Class A or Class C Common Stock after a six month holding period following the issuance of such common stock. The put feature required the Company to purchase the stock at its fair market value. Accordingly, these awards and such common stock were subject to reclassification from equity to temporary equity.~~The put feature expired on June 27, 2021, and as a result there were no issued and outstanding awards that were reclassified as temporary equity as of October 29, 2021.~~

~~As of the fiscal year ended January 29, 2021, the Company determined the award amounts to be classified as temporary equity as follows:~~

•For stock options to purchase Class C Common Stock subject to service requirements, the intrinsic value of the option was multiplied by the portion of the option for which services had been rendered. Upon exercise of the option, the amount in temporary equity represented the fair value of the Class C Common Stock.

•For stock appreciation rights, restricted stock units, or restricted stock awards, any of which stock award types are subject to service requirements, the fair value of the share is multiplied by the portion of the share for which services have been rendered.

•For share-based arrangements that were subject to the occurrence of a contingent event, those amounts were reclassified to temporary equity based on a probability assessment performed by the Company on a periodic basis. Contingent events included the achievement of performance-based metrics.

~~The following table presents the amount of redeemable shares classified as temporary equity and summarizes the award type as of the fiscal year ended January 29, 2021:~~


		~~January 29, 2021~~
	~~(in millions)~~
~~Redeemable shares classified as temporary equity~~		$	~~472~~
~~Issued and outstanding unrestricted common shares~~		2


~~Outstanding stock options~~		6

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 16 — RELATED PARTY TRANSACTIONS

Effective upon the completion of the VMware Spin-off, VMware is considered to be a related party of the Company. The related party relationship is a result of Michael Dell’s ownership interest in both Dell Technologies and VMware as well as Mr. Dell’s continued service as Chairman and Chief Executive Officer of Dell Technologies and as Chairman of the Board of VMware, Inc. See Note 1 and Note 2 of the Notes to the Condensed Consolidated Financial Statements for more information about the VMware Spin-off.

The information provided below includes a summary of transactions with VMware, Inc. and with its consolidated subsidiaries (collectively, “VMware”). Transactions with related parties other than VMware during the periods presented were immaterial, individually and in aggregate.

Transactions with VMware

Dell Technologies and VMware engage in the following ongoing related party transactions:

•Pursuant to original equipment manufacturer and reseller arrangements, Dell Technologies integrates or bundles VMware’s products and services with Dell Technologies’ products and sells them to end-users. Dell Technologies also acts as a distributor, purchasing VMware’s standalone products and services for resale to end-user customers. Where applicable, costs under these arrangements are presented net of rebates received by Dell Technologies.

•Dell Technologies procures products and services from VMware for its internal use. For the three months ended April 29, 2022 and April 30, 2021, cost incurred associated with products and services purchased from VMware for internal use was immaterial.

•Dell Technologies sells and leases products and sells services to VMware. For the three months ended April 29, 2022 and April 30, 2021, revenue recognized from sales of services to VMware was immaterial.

•Dell Technologies and VMware also enter into joint marketing, sales, and branding arrangements, for which both parties may incur costs. For the three months ended April 29, 2022 and April 30, 2021, consideration received from VMware for joint marketing, sales, and branding arrangements was immaterial.

•DFS provides financing to certain VMware end users. Upon acceptance of the financing arrangement by both VMware’s end users and DFS, DFS recognizes amounts due to related parties on the Condensed Consolidated Statements of Financial Position. Associated financing fees are recorded to product net revenue on the Condensed Consolidated Statements of Income.

•Dell Technologies and VMware enter into agreements to collaborate on technology projects in which one party pays the corresponding party for services or the reimbursement of costs. For the three months ended April 29, 2022 and April 30, 2021, collaborative technology projects were immaterial.

•Dell Technologies provides support services and support from Dell Technologies personnel to VMware in certain geographic regions where VMware does not have an established legal entity. These employees are managed by VMware but Dell Technologies incurs the costs for these such services. The costs incurred by Dell Technologies on VMware’s behalf to these employees are charged to VMware. For the three months ended April 29, 2022 and April 30, 2021, costs associated with such seconded employees were immaterial.

•Dell Technologies and VMware entered into a transition services agreement in connection with the VMware Spin-off to provide various support services including investment advisory services, certain support services from Dell Technologies personnel, and other transitional services. Costs associated with this agreement were immaterial for the three months ended April 29, 2022.

Table of Contents

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The following table presents information about the impact of Dell Technologies’ related party transactions with VMware on the Condensed Consolidated Statements of Income for the periods indicated:

Three Months Ended

Classification

April 29, 2022

April 30, 2021

(in millions)

Sales and leases of products to VMware

Net revenue - products

Purchase of VMware products for resale

Cost of net revenue - products

255

319

Purchase of VMware services for resale

Cost of net revenue - services

709

578

The following table presents information about the impact of Dell Technologies’ related party transactions with VMware on the Condensed Consolidated Statements of Financial Position for the periods indicated:


	Classification	April 29, 2022		January 28, 2022
		(in millions)
Deferred costs related to VMware products and services for resale	Other current assets	$	2,493	$	2,571
Deferred costs related to VMware products and services for resale	Other non-current assets	$	2,060	$	2,311

Related Party Tax Matters

Tax Agreements — In connection with the VMware Spin-off and concurrently with the execution of the Separation and Distribution Agreement, effective as of April 14, 2021, Dell Technologies and VMware entered into a Tax Matters Agreement (the “Tax Matters Agreement”) and agreed to terminate the tax sharing agreement as amended on December 30, 2019 (together with the Tax Matters Agreement, the “Tax Agreements”). The Tax Matters Agreement governs Dell Technologies’ and VMware’s respective rights and obligations, both for pre-spin-off periods and post-spin-off periods, regarding income and other taxes, and related matters, including tax liabilities and benefits, attributes, and returns.

Net payments made to VMware pursuant to the Tax Agreements were immaterial during the three months ended April 29, 2022 and April 30, 2021, and relate to VMware’s portion of federal income taxes on Dell Technologies’ consolidated tax return as well as state tax payments for combined states.

The timing of the tax payments due to and from related parties is governed by the Tax Agreements. VMware’s portion of the mandatory one-time transition tax on accumulated earnings of foreign subsidiaries (the “Transition Tax”) is governed by a letter agreement between VMware and Dell Technologies entered into on April 1, 2019.

As a result of the activity under the Tax Agreements with VMware, amounts due from VMware were $630 million and $621 million as of April 29, 2022 and January 28, 2022, respectively, primarily related to VMware’s estimated tax obligation resulting from the Transition Tax. The 2017 Tax Cuts and Jobs Act included a deferral election for an eight-year installment payment method on the Transition Tax. Dell Technologies expects VMware to pay the remainder of its Transition Tax over a period of four years.

Indemnification — Upon consummation of the VMware Spin-off, Dell Technologies recorded net income tax indemnification receivables from VMware related to certain income tax liabilities for which Dell Technologies is jointly and severally liable, but for which it is indemnified by VMware under the Tax Matters Agreement. The amounts that VMware may be obligated to pay Dell Technologies could vary depending on the outcome of certain unresolved tax matters, which may not be resolved for several years. The net receivable as of April 29, 2022 was $147 million.

Table of Contents

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Due To/From Related Party

The following table presents amounts due to and from VMware as of the dates indicated:


	April 29, 2022		January 28, 2022
	(in millions)
Due from related party, net, current (a)	$	131	$	131
Due from related party, net, non-current (b)	$	713	$	710
Due to related party, current (c)	$	622	$	1,414

____________________

(a) Amounts due from related party, current consists of amounts due from VMware, inclusive of current net tax receivables from VMware under the Tax Agreements. Amounts, excluding tax, are generally settled in cash within 60 days of each quarter-end.

(b) Amounts in due from related party, non-current consists of non-current portion of net receivables from VMware under the Tax Agreements.

(c) Amounts in due to related party, current includes amounts due to VMware which are generally settled in cash within 60 days of each quarter-end.

Table of Contents

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 17 — SEGMENT INFORMATION

The Company has 32 reportable segments that are based on the following business units: Infrastructure Solutions Group (“ISG”); and Client Solutions Group (“CSG”)~~; and VMware.~~.

ISG enables the digital transformation of the Company’s customers through its trusted multi-cloud and big data solutions, which are built upon a modern data center infrastructure. The ISG comprehensive portfolio of advanced storage solutions includes traditional storage solutions as well as next-generation storage solutions (such as all-flash arrays, scale-out file, object platforms, and software-defined solutions), while the Company’s server portfolio includes high-performance rack, blade, tower, and hyperscale servers. The ISG networking portfolio helps business customers transform and modernize their infrastructure, mobilize and enrich end-user experiences, and accelerate business applications and processes. ISG also offers attached software, peripherals, and services, including support and deployment, configuration, and extended warranty services.

CSG includes sales to commercial and consumer customers of branded hardware (such as desktops, workstations, and notebooks) and branded peripherals (such as displays and projectors), as well as services and third-party software and peripherals. CSG also offers attached software, peripherals, and services, including support and deployment, configuration, and extended warranty services.

VMware works with customers in the areas of hybrid and multi-cloud, virtual cloud networking, digital workspaces, modern applications, and intrinsic security, helping customers manage their IT resources across private clouds and complex multi-cloud, multi-device environments. VMware enables its customers to digitally transform their operations as they ready their applications, infrastructure, and employees for constantly evolving business needs.

As described in Note 1 and Note 18 of the Notes to the Condensed Consolidated Financial Statements, the Company completed the VMware Spin-off on November 1, 2021, subsequent to the close of the third quarter of Fiscal 2022. Beginning in the fourth quarter of Fiscal 2022, the Company’s Consolidated Statements of Income will be recast to reflect VMware results as discontinued operations. As such, VMware will no longer be identified as a reportable segment. Pursuant to the CFA, Dell Technologies will continue to integrate VMware, Inc.’s products and services with Dell Technologies’ offerings and sell them to end users. The results of those transactions will be reflected within CSG and ISG, based on the nature of the underlying offering sold. Dell Technologies will also continue to act as a distributor, purchasing VMware, Inc.’s standalone products and services for resale to end-user customers. The results of this business will be reflected in Other businesses. The Company's prior period segment results will be recast to reflect the change.

The reportable segments disclosed herein are based on information reviewed by the Company’s management to evaluate the business segment results. The Company’s measure of segment revenue and segment operating income for management reporting purposes excludes ~~the impact~~operating results of ~~Other~~other businesses, unallocated corporate transactions, the impact of purchase accounting, amortization of intangible assets, transaction-related expenses, stock-based compensation expense, and other corporate expenses, as applicable. The Company does not allocate assets to ~~its~~the above reportable segments for internal reporting purposes.

As described in Note 1 and Note 2 of the Notes to the Condensed Consolidated Financial Statements, the Company completed the VMware Spin-off on November 1, 2021.

Pursuant to the CFA described in such Notes, Dell Technologies continues to act as a distributor of VMware’s standalone products and services and purchase such products and services for resale to end-user customers (“VMware Resale”). Dell Technologies also continues to integrate VMware’s products and services with Dell Technologies’ offerings and sell them to end users. The results of such operations are classified as continuing operations within the Company’s Condensed Consolidated Statements of Income. The results of standalone VMware Resale transactions are reflected in other businesses. The results of integrated offering transactions are reflected within CSG or ISG, depending upon the nature of the underlying offering sold. The Company's prior period segment results have been recast to reflect this change.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The following table presents a reconciliation of net revenue by the Company’s reportable segments to the Company’s consolidated net revenue as well as a reconciliation of ~~consolidated~~ segment operating income to the Company’s consolidated operating income for the periods indicated:


		Three Months Ended				Nine Months Ended					Three Months Ended
		October 29, 2021		October 30, 2020		October 29, 2021		October 30, 2020				April 29, 2022		April 30, 2021
		(in millions)										(in millions)
Consolidated net revenue:	Consolidated net revenue:									Consolidated net revenue:
Infrastructure Solutions Group	Infrastructure Solutions Group	$	8,428	$	8,024	$	24,771	$	23,800	Infrastructure Solutions Group		$	9,285	$	8,033
Client Solutions Group	Client Solutions Group	16,546		12,286		44,114		34,593		Client Solutions Group		15,587		13,311
VMware		3,178		2,893		9,317		8,556
Reportable segment net revenue	Reportable segment net revenue	28,152		23,203		78,202		66,949		Reportable segment net revenue		24,872		21,344
Other businesses (a)	Other businesses (a)	251		314		829		1,288		Other businesses (a)		1,239		1,252
Unallocated transactions (b)	Unallocated transactions (b)	2		4		6		4		Unallocated transactions (b)		5		2
Impact of purchase accounting (c)	Impact of purchase accounting (c)	(11)		(39)		(34)		(129)		Impact of purchase accounting (c)		—		(8)
Total consolidated net revenue	Total consolidated net revenue	$	28,394	$	23,482	$	79,003	$	68,112	Total consolidated net revenue		$	26,116	$	22,590

Consolidated operating income:	Consolidated operating income:									Consolidated operating income:
Infrastructure Solutions Group	Infrastructure Solutions Group	$	892	$	882	$	2,650	$	2,587	Infrastructure Solutions Group		$	1,082	$	778
Client Solutions Group	Client Solutions Group	1,147		1,002		3,232		2,309		Client Solutions Group		1,115		1,080
VMware		837		837		2,527		2,504
Reportable segment operating income	Reportable segment operating income	2,876		2,721		8,409		7,400		Reportable segment operating income		2,197		1,858
Other businesses (a)	Other businesses (a)	(9)		3		(17)		105		Other businesses (a)		(64)		(90)
Unallocated transactions (b)	Unallocated transactions (b)	1		1		1		(1)		Unallocated transactions (b)		2		2
Impact of purchase accounting (c)	Impact of purchase accounting (c)	(17)		(49)		(62)		(165)		Impact of purchase accounting (c)		(9)		(20)
Amortization of intangibles	Amortization of intangibles	(694)		(845)		(2,114)		(2,547)		Amortization of intangibles		(243)		(445)
Transaction-related expenses (d)	Transaction-related expenses (d)	(311)		(52)		(422)		(211)		Transaction-related expenses (d)		(5)		(29)
Stock-based compensation expense (e)	Stock-based compensation expense (e)	(472)		(436)		(1,406)		(1,219)		Stock-based compensation expense (e)		(232)		(172)
Other corporate expenses (f)	Other corporate expenses (f)	(25)		(214)		(293)		(395)		Other corporate expenses (f)		(96)		(117)
Total consolidated operating income	Total consolidated operating income	$	1,349	$	1,129	$	4,096	$	2,967	Total consolidated operating income		$	1,550	$	987

____________________

(a)Other businesses consists of (i) VMware Resale, (ii) Secureworks, and (iii) Virtustream, ~~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. On September 1, 2020, the Company completed the sale of RSA Security. On October 1, 2021, the Company completed the sale of Boomi. Prior to the divestitures, Boomi and RSA Security’s results were included within Other businesses. See Note 1 of the Notes to the Condensed Consolidated Financial Statements for more information about the divestitures of Boomi and RSA Security.

(b)Unallocated transactions includes 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.~~transaction that was completed in September 2016.

(d)Transaction-related expenses includes acquisition, integration, and divestiture related ~~costs.~~costs, as well as the costs incurred in the VMware Spin-off described in Note 1 and Note 2 of the Notes to the Condensed Consolidated Financial Statements.

(e)Stock-based compensation expense consists of equity awards granted based on the estimated fair value of those awards at grant date.

(f)Other corporate expenses includes impairment charges, incentive charges related to equity investments, severance, ~~facilities~~facility action, payroll taxes associated with stock-based compensation, and other costs.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The following table presents the disaggregation of net revenue by reportable segment, and by major product categories within the segments for the periods indicated:


		Three Months Ended				Nine Months Ended					Three Months Ended
		October 29, 2021		October 30, 2020		October 29, 2021		October 30, 2020				April 29, 2022		April 30, 2021
		(in millions)										(in millions)
Net revenue:	Net revenue:									Net revenue:
Infrastructure Solutions Group:	Infrastructure Solutions Group:									Infrastructure Solutions Group:
Servers and networking	Servers and networking	$	4,533	$	4,164	$	13,104	$	12,118	Servers and networking		$	5,048	$	4,140
Storage	Storage	3,895		3,860		11,667		11,682		Storage		4,237		3,893
Total ISG net revenue	Total ISG net revenue	8,428		8,024		24,771		23,800		Total ISG net revenue		$	9,285	$	8,033
Client Solutions Group:	Client Solutions Group:									Client Solutions Group:
Commercial	Commercial	12,292		8,783		32,668		25,456		Commercial		$	11,971	$	9,808
Consumer	Consumer	4,254		3,503		11,446		9,137		Consumer		3,616		3,503
Total CSG net revenue	Total CSG net revenue	16,546		12,286		44,114		34,593		Total CSG net revenue		$	15,587	$	13,311
VMware:
Total VMware net revenue		3,178		2,893		9,317		8,556
Total segment net revenue		$	28,152	$	23,203	$	78,202	$	66,949

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 1718 — SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION

The following table presents additional information on selected asset accounts included in the Condensed Consolidated Statements of Financial Position as of the dates indicated:


		October 29, 2021		January 29, 2021			April 29, 2022		January 28, 2022
		(in millions)					(in millions)
Cash, cash equivalents, and restricted cash:	Cash, cash equivalents, and restricted cash:					Cash, cash equivalents, and restricted cash:
Cash and cash equivalents	Cash and cash equivalents	$	22,406	$	14,201	Cash and cash equivalents	$	6,654	$	9,477
Restricted cash - other current assets (a)	Restricted cash - other current assets (a)	889		891		Restricted cash - other current assets (a)	546		534
Restricted cash - other non-current assets (a)	Restricted cash - other non-current assets (a)	74		92		Restricted cash - other non-current assets (a)	76		71
Total cash, cash equivalents, and restricted cash	Total cash, cash equivalents, and restricted cash	$	23,369	$	15,184	Total cash, cash equivalents, and restricted cash	$	7,276	$	10,082
Inventories, net:	Inventories, net:					Inventories, net:
Production materials	Production materials	$	3,209	$	1,717	Production materials	$	4,123	$	3,653
Work-in-process	Work-in-process	812		677		Work-in-process	885		855
Finished goods	Finished goods	1,421		1,008		Finished goods	1,269		1,390
Total inventories, net	Total inventories, net	$	5,442	$	3,402	Total inventories, net	$	6,277	$	5,898

Deferred Costs:						Deferred Costs:
Total deferred costs, current (b)						Total deferred costs, current (b)	$	4,979	$	4,996
Property, plant, and equipment, net:	Property, plant, and equipment, net:					Property, plant, and equipment, net:
Computer equipment	Computer equipment	$	7,628	$	6,506	Computer equipment	$	6,851	$	6,497
Land and buildings	Land and buildings	4,775		4,745		Land and buildings	3,052		3,095
Machinery and other equipment	Machinery and other equipment	4,173		3,933		Machinery and other equipment	2,798		2,714
Total property, plant, and equipment	Total property, plant, and equipment	16,576		15,184		Total property, plant, and equipment	12,701		12,306
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(9,651)		(8,753)		Accumulated depreciation and amortization	(7,185)		(6,891)
Total property, plant, and equipment, net	Total property, plant, and equipment, net	$	6,925	$	6,431	Total property, plant, and equipment, net	$	5,516	$	5,415
Other non-current assets:
Deferred and other tax assets		$	6,450	$	6,230
Operating lease right of use assets		1,953		2,117
Deferred commissions		1,158		1,094
Other		1,895		1,755
Total other non-current assets		$	11,456	$	11,196

____________________

(a) Restricted cash ~~primarily~~ includes cash required to be held in escrow pursuant to DFS securitization arrangements.

~~Table of Contents~~

~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

~~Trade Receivables — Allowance for Expected Credit Losses~~

~~The following table presents the changes~~(b) Deferred costs are included in other current assets in the ~~Company’s allowance for expected credit losses for the periods indicated:~~

Three Months Ended Nine Months Ended
October 29, 2021 October 30, 2020 October 29, 2021 October 30, 2020
(in millions)
Trade Receivables — Allowance for expected credit losses:
Balance at beginning of period $ 98 $ 146 $ 104 $ 94
Adjustment for adoption of accounting standard (a) — — — 27
Allowance charged to provision 12 (4) 25 43
Bad debt write-offs (10) (27) (29) (49)
Balance at end of period $ 100 $ 115 $ 100 $ 115

~~____________________~~

~~(a)The Company adopted the current expected credit losses standard as~~Condensed Consolidated Statements of ~~February 1, 2020 using the modified retrospective method, with the cumulative-effect adjustment to the opening balance of stockholders’ equity (deficit) as of the adoption date.~~Financial Position.

Warranty Liability

The following table presents changes in the Company’s liability for standard limited warranties for the periods indicated:


		Three Months Ended				Nine Months Ended					Three Months Ended
		October 29, 2021		October 30, 2020		October 29, 2021		October 30, 2020				April 29, 2022		April 30, 2021
		(in millions)										(in millions)
Warranty liability:	Warranty liability:									Warranty liability:
Warranty liability at beginning of period	Warranty liability at beginning of period	$	471	$	479	$	473	$	496	Warranty liability at beginning of period		$	480	$	473

Costs accrued for new warranty contracts and changes in estimates for pre-existing warranties (a) (b)		281		219		724		573
Costs accrued for new warranty contracts and changes in estimates for pre-existing warranties (a)										Costs accrued for new warranty contracts and changes in estimates for pre-existing warranties (a)		223		202
Service obligations honored	Service obligations honored	(248)		(206)		(693)		(577)		Service obligations honored		(235)		(217)
Warranty liability at end of period	Warranty liability at end of period	$	504	$	492	$	504	$	492	Warranty liability at end of period		$	468	$	458
Current portion		$	377	$	362	$	377	$	362
Non-current portion		$	127	$	130	$	127	$	130

____________________

(a)Changes in cost estimates related to pre-existing warranties are aggregated with accruals for new standard warranty contracts. The Company’s warranty liability process does not differentiate between estimates made for pre-existing warranties and those made for new warranty obligations.

~~(b)Includes the impact of foreign currency exchange rate fluctuations.~~

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

~~Severance Charges~~

The Company incurs costs related to employee severance and records a liability for these costs when it is probable that employees will be entitled to termination benefits and the amounts can be reasonably estimated. The liability related to these actions is included in accruedInterest and other, ~~current liabilities in the Condensed Consolidated Statements of Financial Position. The following table presents the activity related to the Company’s severance liability for the periods indicated:~~

Three Months Ended Nine Months Ended
October 29, 2021 October 30, 2020 October 29, 2021 October 30, 2020
(in millions)
Severance liability:
Severance liability at beginning of period $ 126 $ 168 $ 138 $ 196
Severance charges to provision 10 226 120 417
Cash paid and other (a) (50) (181) (172) (400)
Severance liability at end of period $ 86 $ 213 $ 86 $ 213

~~____________________~~

~~(a)Other adjustments include the impact of foreign currency exchange rate fluctuations.~~net

The following table presents ~~severance charges as included in the Condensed Consolidated Statements of Income for the periods indicated:~~

Three Months Ended Nine Months Ended
October 29, 2021 October 30, 2020 October 29, 2021 October 30, 2020
(in millions)
Severance charges:
Cost of net revenue $ 2 $ 46 $ 24 $ 58
Selling, general, and administrative 7 139 90 308
Research and development 1 41 6 51
Total severance charges $ 10 $ 226 $ 120 $ 417

~~Interest and Other, Net~~

~~The following table provides~~ information regarding interest and other, net for the periods indicated:


		Three Months Ended				Nine Months Ended					Three Months Ended
		October 29, 2021		October 30, 2020		October 29, 2021		October 30, 2020			April 29, 2022		April 30, 2021
		(in millions)									(in millions)
Interest and other, net:	Interest and other, net:									Interest and other, net:
Investment income, primarily interest	Investment income, primarily interest	$	11	$	11	$	32	$	47	Investment income, primarily interest	$	15	$	10
Gain on investments, net	Gain on investments, net	27		489		352		591		Gain on investments, net	14		193
Interest expense	Interest expense	(482)		(566)		(1,475)		(1,855)		Interest expense	(265)		(433)
Foreign exchange	Foreign exchange	(33)		(31)		(146)		(130)		Foreign exchange	(89)		(52)
Gain on disposition of businesses and assets		3,968		338		3,968		458

Other	Other	(55)		32		(42)		(40)		Other	(12)		(6)
Total interest and other, net	Total interest and other, net	$	3,436	$	273	$	2,689	$	(929)	Total interest and other, net	$	(337)	$	(288)

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~~DELL TECHNOLOGIES INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

~~NOTE 18 — SUBSEQUENT EVENTS~~

~~Spin-off of VMware, Inc.~~

On November 1, 2021, the Company completed its previously announced spin-off of VMware, Inc. as described in Note 1 of the Notes to the Condensed Consolidated Financial Statements. Dell Technologies effectuated the VMware Spin-off by means of a special stock dividend of 30,678,605 shares of Class A common stock and 307,221,836 shares of Class B common stock of VMware, Inc. to Dell Technologies stockholders of record as of 5:00 p.m., New York City time, on October 29, 2021.

Prior to receipt of the VMware, Inc. common stock by the Company’s stockholders, each share of VMware, Inc. Class B common stock automatically converted into one share of VMware, Inc. Class A common stock. As result of these transactions, each holder of record of shares of Dell Technologies common stock as of the distribution record date received approximately 0.440626 of a share of VMware Class A common stock for each share of Dell Technologies common stock held as of such date, based on shares outstanding as of the completion of the VMware Spin-off.

Immediately following the payment by VMware, Inc. to its stockholders of a special cash dividend of $11.5 billion, of which Dell Technologies received approximately $9.3 billion, the separation of VMware, Inc. from Dell Technologies occurred, including through the termination or settlement of certain intercompany accounts and intercompany contracts.

~~Repayment of Indebtedness and Termination of the Existing Credit Agreement~~

The Company used the net proceeds from its $9.3 billion pro rata portion of the cash dividend received in connection with the VMware Spin-off, as well as cash on hand, to repay outstanding debt as described below.

On November 1, 2021, the Company repaid the remaining $3,134 million and $3,120 million principal amounts related to the 1.84% Term Loan A-6 Facility due March 2024 and the 2.00% Term Loan B-2 Facility due September 2025, respectively, and terminated all obligations and commitments under the Existing Credit Agreement.

On November 2, 2021, the Company repaid $1,500 million principal amount of the 5.45% First Lien Notes due June 2023 and the remaining $1,625 million principal amount of the 7.125% Senior Notes due June 2024. Further, in conjunction with the termination of the Existing Credit Agreement, the tangible and intangible assets of the issuers and guarantors that secure obligations under the Senior Secured Credit Facilities were released as collateral and the First Lien Notes became fully unsecured.

In connection with the above debt repayments, the Company incurred $181 million of debt breakage fees and recognized $110 million in unamortized debt discounts associated with the early extinguishment of the debt.

~~2021 Revolving Credit Facility~~

On November 1, 2021, the Company entered into the 2021 Revolving Credit Facility, a senior unsecured revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and each of the lenders and other parties from time to time party thereto.

The 2021 Revolving Credit Facility, which matures on November 1, 2026, provides the Company with revolving commitments in an aggregate principal amount of $5.0 billion for general corporate purposes and includes a letter of credit sub-facility of up to $500 million and a swing-line loan sub-facility of up to $500 million. The 2021 Revolving Credit Facility also allows the Company to request incremental commitments on one or more occasions in a minimum amount of $10 million.

~~2023 First Lien Notes Notice of Prepayment~~

On November 19, 2021, the Company issued a partial redemption notice of $1.25 billion principal amount of the 5.45% First Lien Notes due June 2023 with the repayment expected to occur on December 6, 2021.

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DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

~~Common Stock Repurchases~~

NOTE 19 — SUBSEQUENT EVENTS

Subsequent to October 29, 2021, the Company began repurchases under the 2021 Stock Repurchase Program described in Note 13 of the Notes to the Condensed Consolidated Financial Statements. Through November 30, 2021, the Company repurchased approximately 3.1 million shares of Class C Common Stock for approximately $173 million.

~~Other than the matters identified above, there~~There were no known events occurring after ~~October~~April 29, ~~2021~~2022 and up until the date of the issuance of this report that would materially affect the information presented herein.

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ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This management’s discussion and analysis should be read in conjunction with the audited Consolidated Financial Statements and accompanying Notes included in the Company’s annual report on Form 10-K for the fiscal year ended January ~~29, 2021~~28, 2022 and the unaudited Condensed Consolidated Financial Statements included in this report. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs, and that are subject to numerous risks and uncertainties. Our actual results may differ materially from those expressed or implied in any forward-looking statements.

Unless otherwise indicated, all results presented are prepared in a manner that complies, in all material respects, with generally accepted accounting principles in the United States of America (“GAAP”). Unless otherwise indicated, all changes identified for the current-period results represent comparisons to results for the prior corresponding fiscal period.

Unless the context indicates otherwise, references in this report to “we,” “us,” “our,” the “Company,” and “Dell Technologies” mean Dell Technologies Inc. and its consolidated subsidiaries, references to “Dell” mean Dell Inc. and Dell Inc.’s consolidated subsidiaries, and references to “EMC” mean EMC Corporation and EMC Corporation’s consolidated subsidiaries.

On November 1, 2021, the Company completed its spin-off of VMware, Inc (“VMware”). In accordance with applicable accounting guidance, the results of VMware, excluding Dell's resale of VMware offerings, are presented as discontinued operations in the Condensed Consolidated Statements of Income and, as such, have been excluded from both continuing operations and segment results for prior periods presented. The Condensed Consolidated Statements of Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations.

Our fiscal year is the 52- or 53-week period ending on the Friday nearest January 31. We refer to our fiscal year ending ~~January 28, 2022~~February 3, 2023 as “Fiscal 2023” and our fiscal year ended January ~~29, 2021~~28, 2022 as “Fiscal ~~2022”~~2022.” Fiscal 2023 includes 53 weeks and ~~“Fiscal 2021,” respectively.~~ Fiscal 2022 ~~and Fiscal 2021 include~~includes 52 weeks.

INTRODUCTION

Company Overview

Dell Technologies helps organizations ~~and individuals~~ build their digital ~~future~~futures and individuals transform how they work, live and play. We provide customers with one of the industry’s broadest and most innovative ~~technology and services~~solutions portfolio for the data era, ~~spanning~~including traditional infrastructure ~~emerging~~and extending to multi-cloud ~~technologies, and essential technology needed in the “do anything from anywhere” economy.~~environments. We continue to seamlessly deliver differentiated and holistic ~~information technology (“IT”)~~IT solutions to our customers which has ~~driven significant~~helped drive consistent revenue ~~growth and share gains.~~growth.

Dell Technologies’ integrated solutions help customers modernize their IT infrastructure, manage and operate in a multi-cloud world, address workforce transformation, and provide critical solutions that keep people and organizations connected, which has proven even more important ~~in this current time of disruption caused by~~through the COVID-19 pandemic. We are helping customers accelerate their digital transformations to improve and strengthen business and workforce productivity. With our extensive portfolio and our commitment to innovation, we offer secure, integrated solutions that extend from the edge to the core to the cloud, and we are at the forefront of the software-defined and cloud native infrastructure era. As further evidence of our commitment to innovation, we are evolving and expanding our IT as-a-Service and cloud offerings ~~through APEX,~~including APEX-branded solutions which ~~will~~ provide our customers with greater flexibility to scale IT to meet their evolving business needs and budgets.

Dell Technologies’ end-to-end portfolio is supported by a world-class organization ~~with unmatched size and scale. We operate~~that operates globally in approximately 180 countries across key functional areas, including technology and product development, marketing, sales, financial services, and ~~global~~ services. Our go-to-market engine includes a ~~39,000-person~~32,000-person sales force and a global network of over 200,000 channel partners. Dell Financial Services and its affiliates (“DFS”) offer ~~customer~~customers payment flexibility and enable synergies across the business. We employ ~~34,000~~approximately 35,000 full-time service and support professionals and maintain more than 2,400 vendor-managed service centers. We manage a world-class supply chain that drives long-term growth and operating efficiencies, with approximately ~~$70~~$75 billion in annual procurement expenditures and over 750 parts distribution centers. Together, these elements provide a critical foundation for our ~~success, enabling us to offer unparalleled capability to our customers and making us the integrator of choice.~~success.

~~Dell Technologies Vision and Innovation~~ — Our vision is to be the essential technology company for the data era and a leader in end-user computing, software-defined data center solutions, data management, virtualization, edge computing, and cloud software. We believe that our results will benefit from an integrated go-to-market strategy, including enhanced coordination across all segments of our business, and from our differentiated products and solutions capabilities. We intend to continue to execute on our business model and seek to balance liquidity, profitability, and growth to position our company for long-term success.

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~~We are seeing an accelerated rate of change in~~Our Vision and Strategy

Our vision is to become the ~~IT industry.~~most essential technology company for the data era. We seek to address our customers’ evolving needs and their broader digital transformation objectives as they embrace ~~the~~today’s hybrid multi-cloud ~~environment of today. For many customers, a top digital priority is~~environment. We intend to ~~build stable~~execute on our vision by focusing on two overarching strategic priorities:

•Grow and ~~resilient remote operational capabilities.~~ modernize our core offerings in the markets in which we predominantly compete

•Pursue attractive new growth opportunities such as Edge, Telecom, data management, and as-a-Service consumption models

We believe that we are uniquely positioned in the data and multi-cloud era and that our results will benefit from our durable competitive advantages. We intend to continue to execute our business model to position our company for long-term success while balancing liquidity, profitability, and growth.

We are seeing an accelerated rate of change in the IT industry and increased demand for simpler, more agile IT ~~across~~as companies leverage multiple ~~clouds. The pandemic~~clouds in their IT environments. COVID-19 has accelerated the introduction and adoption of new technologies to ensure productivity and collaboration from anywhere. ~~In light of this rapid pace of innovation,~~To meet our customer needs, we continue to invest in research and development, sales, and other key areas of our business to deliver superior products and solutions capabilities and to drive long-term sustainable growth.

~~Spin-off of VMware, Inc.~~

As described in Note 1 of the Notes to the Condensed Consolidated Financial Statements included in this report, on November 1, 2021, subsequent to the close of the Company’s third quarter of Fiscal 2022, the Company completed its previously announced spin-off of VMware, Inc. by means of a special stock dividend (the “VMware Spin-off”). The VMware Spin-off was effectuated pursuant to a Separation and Distribution Agreement, dated as of April 14, 2021 (the “Separation and Distribution Agreement”).

Dell Technologies effectuated the VMware Spin-off by means of a special stock dividend of 30,678,605 shares of Class A common stock and 307,221,836 of Class B common stock of VMware, Inc. to Dell Technologies stockholders of record as of 5:00 p.m., New York City time, on October 29, 2021. Prior to receipt of the VMware, Inc. common stock by the Company’s stockholders, each share of VMware, Inc. Class B common stock automatically converted into one share of VMware, Inc. Class A common stock. As a result of these transactions, each holder of record of shares of Dell Technologies common stock as of the distribution record date received approximately 0.440626 of a share of VMware, Inc. Class A common stock for each outstanding share of Dell Technologies common stock owned by such holder as of such date. VMware, Inc. paid a special cash dividend, pro rata, to each holder of VMware, Inc. common stock in an aggregate amount equal to $11.5 billion, of which Dell Technologies received $9.3 billion.

Immediately following VMware, Inc.’s payment of the special cash dividend, pursuant to the Separation and Distribution Agreement, the businesses of VMware, Inc. were separated from the remaining businesses of Dell Technologies through a series of transactions that resulted in the pre-transaction stockholders of Dell Technologies owning shares in two separate public companies, consisting of (1) VMware, Inc., which continues to own the businesses of VMware, Inc. and its subsidiaries, and (2) Dell Technologies, which continues to own Dell Technologies’ other businesses and subsidiaries. In connection with and upon completion of the VMware Spin-off, Dell Technologies and VMware, Inc. entered into a Commercial Framework Agreement (the “CFA”). The CFA provides a framework under which Dell Technologies and VMware, Inc. will continue their strategic commercial relationship after the transaction. The CFA has an initial term of five years, with automatic one-year renewals occurring annually thereafter, subject to certain terms and conditions. Dell Technologies and VMware, Inc. also entered into other agreements that will govern other aspects of their relationship, including, among others, a tax matters agreement and a transition services agreement.

Dell Technologies used the net proceeds from its pro rata share of the special cash dividend received from VMware, Inc., as well as cash on hand, to repay a total of $9.4 billion principal amount of debt. For information about the debt repayments, see Note 18 of the Notes to the Condensed Consolidated Financial Statements included in this report.

The Company will report VMware results as discontinued operations beginning in the fourth quarter of Fiscal 2022. See Note 1 and Note 18 of the Notes to the Condensed Consolidated Financial Statements included in this report for more information regarding the VMware Spin-off.

Products and Services

We design, develop, manufacture, market, sell, and support a wide range of comprehensive and integrated solutions, products, and services. We are organized into ~~the following~~two business units, referred to as Infrastructure Solutions Group and Client Solutions Group, which are our reportable ~~segments: Infrastructure Solutions Group; Client Solutions Group; and VMware.~~segments.

•Infrastructure Solutions Group (“ISG”) — ISG enables ~~the~~our customers’ digital transformation ~~of our customers~~ through our trusted multi-cloud and big data solutions, which are built upon a modern data center infrastructure. ISG ~~works with~~helps customers in the area of hybrid cloud deployment with the goal of simplifying, streamlining, and automating cloud operations. ISG solutions are built for multi-cloud environments and are optimized to run cloud native workloads in both public and private clouds, as well as traditional on-premise workloads.

~~Table of Contents~~

Our comprehensive portfolio of advanced storage solutions includes traditional storage solutions as well as next-generation storage solutions (such as all-flash arrays, scale-out file, object platforms, and software-defined solutions). We have simplified our storage portfolio to ensure that we deliver the technology needed for our customers’ digital transformation. We continue to make enhancements to our portfolio of storage solutions and expect that these enhancements will drive long-term improvements in the business. In May 2020, we released our newOur PowerStore offering, a differentiated midrange storage solution that enables seamless updates using microservices and container-based software ~~architecture. This offering~~architecture, allows us to compete more effectively within midrange storage. We continue to make enhancements to our storage solutions offerings and ~~as a result, we are seeing early signs of improving revenue velocity.~~expect that these offerings will drive long-term improvements in the business.

Our server portfolio includes high-performance rack, blade, tower, and hyperscale servers, optimized ~~for~~to run high value workloads, including artificial intelligence and machine ~~learning workloads.~~learning. Our networking portfolio helps our business customers transform and modernize their infrastructure, mobilize and enrich end-user experiences, and accelerate business applications and processes.

Our strengths in server, storage, and virtualization software solutions enable us to offer leading converged and hyper-converged solutions, allowing our customers to accelerate their IT transformation by acquiring scalable integrated IT solutions instead of building and assembling their own IT platforms. ISG also offers attached software, peripherals and services, including support and deployment, configuration, and extended warranty services.

Approximately half of ISG revenue is generated by sales to customers in the Americas, with the remaining portion derived from sales to customers in the Europe, Middle East, and Africa region (“EMEA”) and the Asia-Pacific and Japan region (“APJ”).

•Client Solutions Group (“CSG”) — CSG includes branded hardware (such as desktops, workstations, and notebooks) and branded peripherals (such as displays and projectors), as well as third-party software and peripherals. Our computing devices are designed with our commercial and consumer customers’ needs in mind, and we seek to

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optimize performance, reliability, manageability, design, and security. ~~In addition to our traditional hardware business, we have a portfolio of thin client offerings that we believe will allow us to benefit from the growth trends in cloud computing.~~ For our customers that are seeking to simplify client lifecycle management, ~~our~~Dell PC ~~as-a-Service~~as a Service offering combines hardware, software, lifecycle services, and financing into one all-encompassing solution that provides predictable pricing per seat per ~~month through DFS.~~month. CSG also offers attached software, peripherals, and services, including support and deployment, configuration, and extended warranty services.

Approximately half of CSG revenue is generated by sales to customers in the Americas, with the remaining portion derived from sales to customers in EMEA and APJ.

Our other businesses, described below, consists of our resale of standalone VMware offerings, referred to as VMware Resale, as well as product and service offerings of SecureWorks Corp. (“Secureworks”) and Virtustream. These businesses are not classified as reportable segments, either individually or collectively.

•VMware Resale ~~— The~~consists of our sale of standalone VMware ~~reportable segment (“VMware”) reflects~~offerings. Under the ~~operations~~Commercial Framework Agreement entered into as part of our spin-off of VMware, ~~Inc. (NYSE: VMW) within~~ Dell ~~Technologies.~~ Technologies continues to act as a key channel partner in this relationship, reselling VMware offerings to our customers. This partnership is intended to facilitate mutually beneficial growth for both Dell and VMware.

VMware works with customers in the areas of hybrid and multi-cloud, ~~virtual cloud networking, digital workspaces,~~ modern applications, networking, security, and ~~intrinsic security,~~digital workspaces, helping customers manage their IT resources across private clouds and complex multi-cloud, multi-device environments. VMware’s portfolio supports and addresses the key IT priorities of customers: accelerating their cloud journey, modernizing their applications, empowering digital workspaces, transforming networking, and embracing intrinsic security. VMware enables its customers to digitally transform their operations as they ready their applications, infrastructure, and employees for constantly evolving business needs.

~~Approximately half of VMware revenue is generated by sales to customers in the United States.~~

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Effective upon the completion of the VMware Spin-off in the fourth quarter of Fiscal 2022, as described under “Spin-off of VMware, Inc.,” our Consolidated Statements of Income will be recast to reflect VMware results as discontinued operations and as such, VMware will no longer be identified as a reportable segment. Pursuant to the CFA, Dell Technologies will continue to integrate VMware, Inc.’s products and services with Dell Technologies’ offerings and sell them to end users. The results of those transactions will be reflected within CSG and ISG, based on the nature of the underlying offering sold. Dell Technologies will also continue to act as a distributor for VMware, Inc., purchasing VMware, Inc.’s standalone products and services for resale to end-user customers. The results of this business will be reflected in Other businesses. The Company's prior period segment results will be recast to reflect the change. See Note 1 and Note 18 of the Notes to the Condensed Consolidated Financial Statements included in this report for more information regarding the VMware Spin-off.

Our Other businesses, described below, consist of products and services offerings of Secureworks and Virtustream, which are both majority-owned by Dell Technologies. These businesses are not classified as reportable segments, either individually or collectively, as the results of the businesses are not material to our overall results and the businesses do not meet the criteria for reportable segments.

•Secureworks (NASDAQ: SCWX) is a leading global provider of intelligence-driven information security solutions singularly focused on protecting its clients from cyber attacks. The solutions offered by Secureworks enable organizations of varying size and complexity to fortify their cyber defenses to prevent security breaches, detect malicious activity in near real time, prioritize and respond rapidly to security incidents and predict emerging threats.

•Virtustream offers cloud software and ~~infrastructure-as-a-service~~Infrastructure-as-a-Service solutions that enable customers to migrate, run, and manage mission-critical applications in cloud-based IT environments.

~~On October 1, 2021, we completed~~We believe the ~~sale of Boomi~~collaboration, innovation, and certain related assets to Francisco Partners and TPG Capital for a total cash consideration of approximately $4.0 billion, resulting in a pre-tax gain on sale of $4.0 billion. The Company ultimately recorded a $3.0 billion gain, net of $1.0 billion in tax expense. The transaction was intended to support the Company’s focus on fueling growth initiatives through targeted investments to modernize Dell Technologies’ core infrastructure and by expanding in high-priority areas, including hybrid and private cloud, edge, telecommunications solutions, and the Company’s APEX offerings.

On September 1, 2020, we completed the sale of RSA Security to a consortium of investors for total cash consideration of approximately $2.082 billion, resulting in a pre-tax gain on sale of $338 million. The Company ultimately recorded a $21 million loss net of taxes. The transaction was intended to further simplify our product portfolio and corporate structure.

~~Prior to the divestitures, the operating results of Boomi and RSA Security were included within Other businesses and did not qualify for presentation as a discontinued operation. See Note 1~~coordination of the ~~Notes~~operations and strategies across all segments of our business, as well as our differentiated go-to-market model, will continue to drive revenue synergies. Through our research and development activities, we are able to engineer leading innovative solutions that incorporate the ~~Condensed Consolidated Financial Statements included in this report for more information about these transactions.~~distinct set of hardware, software, and services across all segments of our business.

Our products and services offerings are continually evolving in response to industry dynamics. As a result, reclassifications of certain products and services solutions in major product categories may be required. For further discussion regarding our current reportable segments, see “Results of Operations — Business Unit Results” and Note 1617 of the Notes to the Condensed Consolidated Financial Statements included in this report.

Dell Financial Services

DFS supports our businesses by offering and arranging various financing options and services for our customers ~~primarily in North America, Europe, Australia, and New Zealand.~~globally. DFS originates, collects, and services customer receivables primarily related to the purchase or use of our product, software, and ~~service~~services solutions. We also arrange financing for some of our customers in various countries where DFS does not currently operate as a captive ~~enterprise.~~entity. DFS further strengthens our customer relationships through its flexible consumption models which provide our customers with financial flexibility to meet their changing technological requirements. Our flexible consumption models enable us to offer our customers the option to pay over time and, in certain cases, based on ~~utilization, to provide them with financial flexibility to meet their changing technological requirements.~~utilization. The results of these operations are allocated to our segments based on the underlying product or service financed. For additional information about our financing arrangements, see Note 35 of the Notes to the Condensed Consolidated Financial Statements included in this report.

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Recent Transactions

Spin-Off of VMware, Inc. — On November 1, 2021, we completed our spin-off of VMware by means of a special stock dividend (the “VMware Spin-off”). The VMware Spin-off was effectuated pursuant to a Separation and Distribution Agreement, dated as of April 14, 2021 between Dell Technologies and VMware. As part of the transaction, VMware paid a special cash dividend, pro rata, to each holder of VMware common stock in an aggregate amount equal to $11.5 billion, of which Dell Technologies received $9.3 billion.

In connection with and upon completion of the VMware Spin-off, we entered into a Commercial Framework Agreement (the “CFA”) with VMware, which provides the framework under which we and VMware will continue our commercial relationship after the transaction. Pursuant to the CFA, we continue to act as a distributor of VMware’s standalone products and services and purchase such products and services for resale to customers. We also continue to integrate VMware’s products and services with Dell Technologies’ offerings and sell them to customers. The results of such operations are presented as continuing operations within our Condensed Consolidated Statements of Income for all periods presented.

The results of VMware, excluding Dell's resale of VMware offerings, are presented as discontinued operations in the Condensed Consolidated Statements of Income and, as such, have been excluded from both continuing operations and segment results for the three months ended April 30, 2021. The Condensed Consolidated Statements of Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations. See Note 2 of the Notes to the Condensed Consolidated Financial Statements for additional information about the VMware Spin-off.

Boomi Divestiture —On October 1, 2021, we completed the sale of Boomi, Inc. (“Boomi”) and certain related assets for a total cash consideration of approximately $4.0 billion, resulting in a pre-tax gain on sale of $4.0 billion. The Company ultimately recorded a $3.0 billion gain, net of $1.0 billion in tax expense. Prior to the divestiture, the operating results of Boomi were included within other businesses and did not qualify for presentation as discontinued operations. See Note 1 of the Notes to the Condensed Consolidated Financial Statements included in this report for more information about this transaction.

Relationship with VMware

Effective upon the completion of the VMware Spin-off, VMware is considered to be a related party of the Company. The related party relationship is as a result of Michael Dell’s ownership interest in both Dell Technologies and VMware and Mr. Dell’s continued service as Chairman and Chief Executive Officer of Dell Technologies and as Chairman of the Board of VMware. Following the completion of the VMware Spin-off, the majority of transactions that occur between Dell Technologies and VMware consist of Dell Technologies’ purchase of VMware products and services for resale, either on a standalone basis or as a part of integrated offerings. For more information regarding related party transactions with VMware, see Note 16 of the Notes to the Condensed Consolidated Financial Statements included in this report.

Strategic Investments and Acquisitions

As part of our strategy, we will continue to evaluate opportunities for strategic investments through our venture capital investment arm, Dell Technologies Capital, with a focus on emerging technology areas that are relevant to all segments of our business and that will complement our existing portfolio of solutions. Our investment areas include storage, software-defined networking, management and orchestration, security, machine learning and artificial intelligence, Big Data and analytics, cloud, edge computing, and software development operations. The technologies or products these companies have under development are typically in the early stages and may never materialize, which could result in a loss of a substantial part of our initial investment in the companies. As of ~~October~~April 29, ~~2021~~2022 and January ~~29, 2021,~~28, 2022, Dell Technologies held strategic investments in non-marketable securities of $1.5 billion and $1.4 billion, respectively.

In addition to these investments, we also may make disciplined acquisitions targeting businesses that advance our strategic objectives and accelerate our innovation agenda.

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Business Trends and Challenges

Ukraine — We are monitoring and responding to effects of the ongoing military conflict in Ukraine. As a result of the conflict, we are not selling, servicing or supporting products in Russia, Belarus, and the Donetsk and Luhansk regions of Ukraine. Operations in Russia and Ukraine accounted for less than 1% of net revenue in Fiscal 2022 and assets attributable to Russian operations accounted for less than 0.5% of total assets as of April 29, 2022.

The conflict and the related economic sanctions are impacting markets worldwide. Our business may be adversely affected by effects of the conflict, which could include supply chain disruptions, product shipping delays, macroeconomic impacts resulting from the exclusion of Russian financial institutions from the global banking system, volatility in foreign exchange rates and interest rates, inflationary pressures, and heightened cybersecurity and data theft threats. The full impact of the conflict on our business operations and financial performance remains uncertain and will depend on future developments. We will continue to monitor the conflict and assess the related restrictions and other effects and pursue prudent decisions for our team members, customers, and business.

COVID-19 Pandemic and Response — ~~In March 2020,~~We continue to monitor the ~~World Health Organization (“WHO”) declared the outbreak of~~ COVID-19 ~~a pandemic. This declaration was followed by significant governmental measures implemented in the United States~~pandemic and globally, including travel bans and restrictions, shelter-in-place orders, limitations and closures of non-essential businesses, and social distancing requirements in efforts to slow down and control the spreadvariants of the ~~virus.~~

~~The health of~~virus, as well as the impact the pandemic has on our employees, customers, business partners, and ~~communities remains our primary focus. During Fiscal 2021, we took numerous actions in response to COVID-19, including a swift implementation of our business continuity plans.~~communities. Our crisis management team ~~remains~~is actively engaged ~~to respond to~~in evaluating changes in our environment ~~quickly~~ and ~~effectively, and~~aligning our response to ~~ensure that our ongoing response activities are aligned with~~ recommendations of the ~~WHO~~World Health Organization and the U.S. Centers for Disease Control and Prevention, and with governmental regulations. We are ~~adjusting restrictions previously implemented as new information becomes available, governmental regulations are updated, and vaccines become more widely distributed.~~

In September 2021, the President of the United States signed an executive order that requires employers with U.S. Government contracts to ensure that their U.S.-based employees, contractors, and subcontractors that work on or in support of such contracts are fully vaccinated against COVID-19 (subject to medical and religious exemptions). We are a covered federal contractor due to a number of our agreements. We are taking steps to comply with the executive order for federal contractors. It is currently not possible to predict the impact the executive order may have on our workforce.

Most of our employees were previously equipped with remote work capabilities over the past several years, which enabled us to quickly establish a work-from-home posture for the majority of our employees. Further, we implemented pandemic-specific protocols for our essential employees whose jobs require them to be on-site or with customers. We are deploying return-to-site processes based on our ongoing assessments of local ~~conditions by our management team, including a global policy requiring vaccination or a negative COVID-19 test for persons entering a Dell site.~~conditions. We ~~will~~ continue to monitor regional conditions and utilize remote work practices to ensure the health and safety of our employees, customers, and business partners.

We continue to work closely with our customers and business partners to support them as they expand their own remote work solutions and contingency plans and to help them access our products and services remotely. Our agility, our breadth, and our scale has and will continue to benefit us in serving our customers and business partners during this period of accelerated digital transformation, evolution of the “do anything from anywhere” economy, and uncertainty relating to the effects of COVID-19.

~~Notable actions include the following:~~

•~~Our global sales teams continue to successfully support our customers and partners remotely.~~

•~~We are helping to address our customers’ cash flow requirements by expanding our as-a-service and financing offerings.~~

•Our close relationships and ability to connect directly with our customers through our e-commerce business have enabled us to quickly meet the immediate demands of the work- and learn-from-home environments as well as the long-term demands of in-office, remote, and hybrid workforce environments.

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•~~The strength, scale, and resiliency of our global supply chain have afforded us flexibility~~As discussed below, we continue to manage through the ~~significant disruption in~~impacts of the COVID-19 pandemic on our supply ~~chain environment. We~~chain. The full impact of the COVID-19 pandemic on our business operations and financial performance remains uncertain and will depend on future developments, including the severity, duration, and scope of the pandemic across different geographies; the effectiveness of actions taken to contain, mitigate or prevent the spread of variants of the virus; the further development, availability, and acceptance of effective treatments or vaccines; and governmental, business, and individuals’ actions that have been and continue to ~~adapt in real time to events as they unfold by applying predictive analytics to model a variety of outcomes to respond quickly to the changing envi~~ronment. We continue to optimize our global supply chain footprint to maximize factory uptime, for both Dell Technologies and our suppliers, by working through various local governmental regulations and mandates and by establishing robust safety measures to protect the health and safety of our essential team members.

•We continue to drive innovation and excellence in engineering with a largely remote workforce. Engineers and product teams have delivered several critical solutions, including cloud updates, key client product refreshes, PowerStore midrange storage and software, and recently announced IT as-a-Service and cloud offerings within the APEX portfolio.

During Fiscal 2021, we took precautionary measures to increase our cash position and preserve financial flexibility. We also took a series of prudent steps to manage expenses and preserve liquidity that included, among others, global hiring limitations, a reduction in consulting, contractor and facilities-related costs, global travel restrictions, and a temporary suspension of the Dell 401(k) match program for U.S. employees. Effective January 1, 2021, we resumed the Dell 401(k) match program, and in the fourth quarter of Fiscal 2021, we began to reinstate selected employee-related compensation benefits. We will continue to invest in long-term projects to support our growth and innovation initiatives, while focusing on operating expense controls in certain areas of the business. All of these actions are aligned with our strategy, which remains unchanged, of focusing on gaining share, integrating and innovating across the Dell Technologies portfolio, and strengthening our capital structure.

~~The impact of COVID-19 is accelerating digital transformation, and~~ ~~we continue to see opportunities to create value and grow~~be taken in response to ~~resilient demand for our IT solutions~~ ~~driven by a technology-enabled world.~~the pandemic. We will continue to actively monitor global events and pursue prudent decisions to navigate in this uncertain and ever-changing environment. For additional information about impacts of COVID-19 on our operations, see “Results of Operations—Consolidated Results” and “—Business Unit Results.”

Supply Chain —Dell Technologies maintains limited-source supplier relationships for certain components, because the relationships are advantageous in the areas of performance, quality, support, delivery, capacity, and price considerations.

~~We continue~~During the first quarter of Fiscal 2023, we continued to be impacted by industry-wide constraints in the supply of limited-source components in certain product offerings as a result of the global impacts of COVID-19. ~~Further, global economic recovery has led~~Demand for such components continues to ~~growth in demand that has outpaced~~outpace supply, resulting in an increase in orders pending fulfillment and extended lead times for our customers for certain ~~products.~~products, as well as an increase in logistics costs. Logistics costs remain elevated as a result of both expedited shipments of components and overall rate costs in the freight network as capacity remains constrained.

~~These supply constraints coupled with increasing demand are leading to increases in component costs, which, during the third quarter of Fiscal 2022, increased in the aggregate.~~ Component cost trends are dependent on the strength or weakness of actual ~~end-user~~end user demand and supply dynamics, which will continue to evolve and ultimately impact the translation of the cost environment to pricing and operating results. ~~For both ISG~~Component costs were deflationary during the first quarter of Fiscal 2023.

We expect to continue to manage supply constraints and ~~CSG, we expect~~anticipate that the overall ~~component~~ cost environment ~~to remain~~will be inflationary ~~but begin to stabilize~~ for the remainder of Fiscal ~~2022. Further, we continue to experience increased freight costs for expedited shipments of components and rate increases in the freight network as capacity remains constrained.~~2023. In response to these pressures, we continue to ~~assess and~~ take ~~proactive~~ steps to actively address our customers’ demands while balancing ~~both~~ profitability and growth. ~~We expect to continue navigating supply chain dynamics in to Fiscal 2023.~~

ISG — We expect that ISG will continue to be impacted by the changing nature of the IT infrastructure market and competitive environment. During the first ~~nine months~~quarter of Fiscal ~~2022,~~2023, ISG net revenue benefited from ~~improvements~~continued demand for IT infrastructure. While we expect ISG net revenue growth to continue throughout the remainder of Fiscal 2023, we anticipate that the rate of growth will moderate in the ~~macroeconomic environment that we expect will continue through~~second half of the ~~remaining three months of Fiscal 2022.~~ fiscal year. With our scale and strong solutions portfolio, we believe we are well-positioned to respond to ongoing competitive dynamics. Within servers and networking, we will continue to be selective in determining whether to pursue certain large hyperscale and other server transactions. We continue to focus on customer base expansion and lifetime value of customer relationships.

~~The unprecedented data growth~~

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Growth throughout ~~all~~ industries is generating continued demand for our storage solutions and services. Cloud native applications are expected to continue as a primary growth driver in the infrastructure market. ~~We believe the complementary cloud solutions across our business position us to meet these demands for our customers.~~ We benefit from offering solutions that address the emerging trends of enterprises deploying software-defined storage, hyper-converged infrastructure, and modular solutions based on server-centric architectures. These trends are changing the way customers are consuming our traditional storage offerings. We continue to expand our offerings in external storage arrays, which incorporate flexible, cloud-based functionality.

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Through our research and development efforts, we are developing new solutions in this rapidly changing industry that we believe will enable us to continue to provide superior solutions to our customers. Our customer base includes a growing number of service providers, such as cloud service providers, ~~software-as-a-service~~Software-as-a-Service companies, consumer webtech providers, and telecommunications companies. These service providers turn to Dell Technologies for our advanced solutions that enable efficient service delivery at cloud scale. Through our collaborative, customer-focused approach to innovation, we strive to deliver new and relevant solutions and software to the market quickly and efficiently.

CSG — Our CSG offerings are an important element of our strategy, generating strong cash flow and opportunities for cross-selling of complementary solutions. During the first ~~nine months~~quarter of Fiscal ~~2022,~~2023, CSG net revenue growth continued at a more moderate rate than in Fiscal 2022. We expect CSG net revenue growth to ~~be strong across product~~continue to moderate throughout Fiscal 2023 as customers shift investment towards IT infrastructure and industry-wide demand for consumer offerings ~~driven primarily by the global economic recovery coupled with customers seeking improved connectivity and productivity in both personal and professional environments.~~

~~While~~declines. Further, we expect that the CSG demand environment will continue to be subject to seasonal ~~trends, we anticipate continued strong CSG demand through the remaining three months of Fiscal 2022, in line with industry demand forecasts.~~ trends.

Competitive dynamics continue to be a factor in our CSG business and will impact pricing and operating results. We remain committed to our long-term strategy for CSG and we will continue to make investments to innovate across the portfolio while benefiting from consolidation trends that are occurring in the markets in which we compete.

Recurring Revenue and Consumption Models — Our customers are seeking new and innovative models that address how they consume our solutions. We offer options including ~~as-a-service,~~as-a-Service, utility, leases, and immediate pay models ~~all~~ designed to match customers’ consumption and financing preferences. ~~Our multiyear agreements typically result in recurring revenue streams over the term of the arrangement.~~ We continue to evolve and build momentum across our family of as-a-Service offerings as we pursue our strategy of modernizing our core business solutions, with APEX at the forefront. We expect that our flexible consumption models and ~~as-a-service~~as-a-Service offerings ~~through APEX~~ will further strengthen our customer relationships and provide a foundation for growth in recurring revenue.

These offerings typically result in multiyear agreements which generate recurring revenue streams over the term of the arrangement. We define recurring revenue as revenue recognized primarily related to hardware and software maintenance as well as subscription, as-a-Service, and usage-based offerings, and operating leases.

Macroeconomic Risks and Uncertainties — The impacts of trade protection measures, including increases in tariffs and trade barriers, ~~and~~ changes in government policies and international trade arrangements, and geopolitical issues may affect our ability to conduct business in some non-U.S. markets. We monitor and seek to mitigate these risks with adjustments to our manufacturing, supply chain, and distribution networks.

We manage our business on a U.S. dollar basis. However, we have a large global presence, generating approximately half of our net revenue byfrom sales to customers outside of the United States during ~~both~~ the ~~third quarter and~~ first ~~nine months~~quarters of Fiscal ~~2022~~2023 and Fiscal ~~2021.~~2022. As a result,, our revenue can be ~~and in such periods has been,~~ impacted by fluctuations in foreign currency exchange rates. We utilize a comprehensive hedging strategy intended to mitigate the impact of foreign currency volatility over time, and we adjust pricing when possible to further minimize foreign currency impacts.

Key Performance Metrics

Our key performance metrics ~~are~~include net revenue, operating income, ~~adjusted~~ ~~earnings before interest and other, net, taxes, depreciation, and amortization~~ ~~(“adjusted EBITDA”),~~ and cash flows from operations, which are discussed elsewhere in this management’s discussion and analysis.

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NON-GAAP FINANCIAL MEASURES

In this management’s discussion and analysis, we use supplemental measures of our performance which are derived from our consolidated financial information but which are not presented in our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures include non-GAAP product net revenue; non-GAAP services net revenue; non-GAAP net revenue; non-GAAP product gross margin; non-GAAP services gross margin; non-GAAP gross margin; non-GAAP operating expenses; non-GAAP operating income; non-GAAP net income; ~~EBITDA;~~earnings before interest and other, net, taxes, depreciation, and amortization (“EBITDA”); and adjusted EBITDA. The non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from or as a substitute for net revenue, gross margin, operating expenses, operating income, or net income from continuing operations prepared in accordance with GAAP, and should be read only in conjunction with financial information presented on a GAAP basis.

Effective in the first quarter of Fiscal 2023, non-GAAP product net revenue, non-GAAP services net revenue, and non-GAAP net revenue no longer differ from the most comparable GAAP financial measures. Such non-GAAP financial measures are provided below for all periods presented as a result of purchase accounting adjustments that impacted such financial measures in prior periods.

We use non-GAAP financial measures to supplement financial information presented on a GAAP basis. Management considers these non-GAAP measures in evaluating our operating trends and performance. Moreover, we believe these non-GAAP financial measures provide our stakeholders with useful and transparent information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period to period comparisons. There are limitations to the use of the non-GAAP financial measures presented in this report. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

Non-GAAP product net revenue, non-GAAP services net revenue, non-GAAP net revenue, non-GAAP product gross margin, non-GAAP services gross margin, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, and non-GAAP net income, as defined by us, exclude amortization of intangible assets, the impact of purchase accounting, transaction-related expenses, ~~and gains,~~ stock-based compensation expense, other corporate expenses and, for non-GAAP net income, fair value adjustments on equity ~~investments~~adjustments and an aggregate adjustment for income taxes. As the excluded items have a material impact on our financial results, our management compensates for this limitation by relying primarily on our GAAP results and using non-GAAP financial measures supplementally or for projections when comparable GAAP financial measures are not available.

Reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure are presented below. We encourage you to review the reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. The discussion below includes information on each of the excluded items as well as our reasons for excluding them from our non-GAAP results. In future fiscal periods, we may exclude such items and may incur income and expenses similar to these excluded items. Accordingly, the exclusion of these items and other similar items in our non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent, or unusual.

The following is a summary of the items excluded from the most comparable GAAP financial measures to calculate our non-GAAP financial measures:

•Amortization of Intangible Assets — Amortization of intangible assets primarily consists of amortization of customer relationships, developed technology, and trade names. In connection with our acquisition by merger of EMC on September 7, 2016, referred to as the ~~EMC~~“EMC merger transaction,” and the acquisition of Dell Inc. by Dell Technologies Inc. on October 29, 2013, referred to as the ~~going-private~~“going-private transaction,” all of the tangible and intangible assets and liabilities of EMC and Dell, Inc. and its consolidated subsidiaries, respectively, were accounted for and recognized at fair value on the transaction dates. Accordingly, for the periods presented, amortization of intangible assets ~~primarily~~ represents amortization associated with intangible assets recognized in connection with the EMC merger transaction and the going-private transaction. Amortization charges for purchased intangible assets are significantly impacted by the timing and magnitude of our acquisitions, and these charges may vary in amount from period to period. We exclude these charges for purposes of calculating the non-GAAP financial measures presented below to facilitate an enhanced understanding of our current operating performance and provide more meaningful period to period comparisons.

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•Impact of Purchase Accounting — The impact of purchase accounting includes purchase accounting adjustments related to the EMC merger transaction and, to a lesser extent, the going-private transaction, recorded under the acquisition method of accounting in accordance with the accounting guidance for business combinations. This guidance prescribes that the purchase price be allocated to assets acquired and liabilities assumed based on the estimated fair value of such assets and liabilities on the date of the transaction. Accordingly, all of the assets and liabilities acquired in ~~the EMC merger transaction and the going-private transaction~~such transactions were accounted for and recognized at fair value as of the respective

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transaction dates, and the fair value adjustments are being amortized over the estimated useful lives in the periods following the transactions. The fair value adjustments primarily relate to ~~deferred revenue and~~ property, plant, and equipment. Although the purchase accounting adjustments and related amortization of those adjustments are reflected in our GAAP results, we evaluate the operating results of the underlying businesses on a non-GAAP basis, after removing such adjustments. We believe that excluding the impact of purchase accounting for purposes of calculating the non-GAAP financial measures presented below facilitates an enhanced understanding of our current operating performance and provides more meaningful period to period comparisons.

•Transaction-related ~~Expenses and Gains~~(income) expenses — Transaction-related expenses typically consist of acquisition, integration, and ~~divestiture-related~~divestiture related costs, as well as the costs incurred in the VMware Spin-off, and are expensed as incurred. These expenses primarily represent costs for legal, banking, consulting, and advisory services. From time to time, this category also may include transaction-related ~~gains on~~income related to divestitures of businesses or asset sales. During the third quarter of Fiscal 2022, we recognized a gain of $4.0 billion on the sale of Boomi, while during the third quarter of Fiscal 2021, we recognized a gain of $338 million on the sale of RSA Security. We exclude these items for purposes of calculating the non-GAAP financial measures presented below to facilitate an enhanced understanding of our current operating performance and provide more meaningful period to period comparisons.

•Stock-based Compensation Expense — Stock-based compensation expense consists of equity awards granted based on the estimated fair value of those awards at grant date. We estimate the fair value of service-based stock options using the Black-Scholes valuation model. To estimate the fair value of performance-based awards containing a market condition, we use the Monte Carlo valuation model. For all other share-based awards, the fair value is based on the closing price of the Class C Common Stock as reported on the NYSE on the date of grant. Although stock-based compensation is an important aspect of the compensation of our employees and executives, the fair value of the stock-based awards may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. We believe that excluding stock-based compensation expense for purposes of calculating the non-GAAP financial measures presented below facilitates an enhanced understanding of our current operating performance and provides more meaningful period to period comparisons.

•Other Corporate Expenses — Other corporate expenses consist ~~primarily~~ of impairment charges, incentive charges related to equity investments, severance, ~~facilities~~facility action, payroll taxes associated with stock-based compensation, and other costs. Severance costs are primarily related to severance and benefits for employees terminated pursuant to cost savings initiatives. We continue to optimize our facilities footprint and may incur additional costs as we seek opportunities for operational efficiencies. Other corporate expenses vary from period to period and are significantly impacted by the timing and nature of these events. Therefore, although we may incur these types of expenses in the future, we believe that eliminating these charges for purposes of calculating the non-GAAP financial measures presented below facilitates an enhanced understanding of our current operating performance and provides more meaningful period to period comparisons.

•Fair Value Adjustments on Equity Investments — Fair value adjustments on equity investments primarily consist of the gain (loss) on ~~our~~ strategic ~~investment portfolio,~~investments, which includes the recurring fair value adjustments of investments in publicly-traded companies, as well as those in privately-held companies, which are adjusted for observable price changes, and, to a lesser extent, any potential impairments. See Note 3 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information on our strategic investment activity. Given the volatility in the ongoing adjustments to the valuation of these strategic investments, we believe that excluding these gains and losses for purposes of calculating non-GAAP net income presented below facilitates an enhanced understanding of our current operating performance and provides more meaningful period to period comparisons.

•Aggregate Adjustment for Income Taxes — The aggregate adjustment for income taxes is the estimated combined income tax effect for the adjustments described above, as well as an adjustment for discrete tax items. Due to the variability in recognition of discrete tax items from period to period, we believe that excluding these benefits or charges for purposes of calculating non-GAAP net income facilitates an enhanced understanding of our current operating performance and provides more meaningful period to period comparisons. The tax effects ~~for the adjustments described above~~ are determined based on the tax jurisdictions ~~in which~~where the above items were incurred. See Note 1012 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information ~~about~~on our income taxes.

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The following table ~~below~~ presents a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP measure for the periods indicated:

Three Months Ended Nine Months Ended
October 29, 2021 % Change October 30, 2020 October 29, 2021 % Change October 30, 2020
(in millions, except percentages)
Product net revenue $ 21,540 24 % $ 17,352 $ 58,968 18 % $ 50,127
Non-GAAP adjustments:
Impact of purchase accounting — 2 — 8
Non-GAAP product net revenue $ 21,540 24 % $ 17,354 $ 58,968 18 % $ 50,135
Services net revenue $ 6,854 12 % $ 6,130 $ 20,035 11 % $ 17,985
Non-GAAP adjustments:
Impact of purchase accounting 11 37 34 121
Non-GAAP services net revenue $ 6,865 11 % $ 6,167 $ 20,069 11 % $ 18,106
Net revenue $ 28,394 21 % $ 23,482 $ 79,003 16 % $ 68,112
Non-GAAP adjustments:
Impact of purchase accounting 11 39 34 129
Non-GAAP net revenue $ 28,405 21 % $ 23,521 $ 79,037 16 % $ 68,241
Product gross margin $ 3,988 12 % $ 3,563 $ 11,831 16 % $ 10,204
Non-GAAP adjustments:
Amortization of intangibles 277 376 828 1,122
Impact of purchase accounting 1 3 3 13
Stock-based compensation expense 14 7 35 17
Other corporate expenses 1 12 5 15
Non-GAAP product gross margin $ 4,281 8 % $ 3,961 $ 12,702 12 % $ 11,371
Services gross margin $ 4,071 10 % $ 3,698 $ 11,871 7 % $ 11,066
Non-GAAP adjustments:
Amortization of intangibles (2) (1) (2) —
Impact of purchase accounting 11 37 34 121
Stock-based compensation expense 48 44 148 124
Other corporate expenses 1 32 17 40
Non-GAAP services gross margin $ 4,129 8 % $ 3,810 $ 12,068 6 % $ 11,351


	Three Months Ended
		April 29, 2022		% Change		April 30, 2021
		(in millions, except percentages)
Product net revenue		$	20,464	17	%	$	17,487
Non-GAAP adjustments:
Impact of purchase accounting		—				(1)
Non-GAAP product net revenue		$	20,464	17	%	$	17,486

Services net revenue		$	5,652	11	%	$	5,103
Non-GAAP adjustments:
Impact of purchase accounting		—				9
Non-GAAP services net revenue		$	5,652	11	%	$	5,112

Net revenue		$	26,116	16	%	$	22,590
Non-GAAP adjustments:
Impact of purchase accounting		—				8
Non-GAAP net revenue		$	26,116	16	%	$	22,598

Product gross margin		$	3,455	13	%	$	3,053
Non-GAAP adjustments:
Amortization of intangibles		104				151
Impact of purchase accounting		2				—

Stock-based compensation expense		13				9
Other corporate expenses		3				3
Non-GAAP product gross margin		$	3,577	11	%	$	3,216

Services gross margin		$	2,329	5	%	$	2,211
Non-GAAP adjustments:
Amortization of intangibles		—				(1)
Impact of purchase accounting		—				9

Stock-based compensation expense		25				19
Other corporate expenses		10				10
Non-GAAP services gross margin		$	2,364	5	%	$	2,248

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Three Months Ended Nine Months Ended
October 29, 2021 % Change October 30, 2020 October 29, 2021 % Change October 30, 2020
(in millions, except percentages)
Gross margin $ 8,059 11 % $ 7,261 $ 23,702 11 % $ 21,270
Non-GAAP adjustments:
Amortization of intangibles 275 375 826 1,122
Impact of purchase accounting 12 40 37 134
Stock-based compensation expense 62 51 183 141
Other corporate expenses 2 44 22 55
Non-GAAP gross margin $ 8,410 8 % $ 7,771 $ 24,770 9 % $ 22,722
Operating expenses $ 6,710 9 % $ 6,132 $ 19,606 7 % $ 18,303
Non-GAAP adjustments:
Amortization of intangibles (419) (470) (1,288) (1,425)
Impact of purchase accounting (5) (9) (25) (31)
Transaction-related expenses (311) (52) (422) (211)
Stock-based compensation expense (410) (385) (1,223) (1,078)
Other corporate expenses (23) (170) (271) (340)
Non-GAAP operating expenses $ 5,542 10 % $ 5,046 $ 16,377 8 % $ 15,218
Operating income $ 1,349 19 % $ 1,129 $ 4,096 38 % $ 2,967
Non-GAAP adjustments:
Amortization of intangibles 694 845 2,114 2,547
Impact of purchase accounting 17 49 62 165
Transaction-related expenses 311 52 422 211
Stock-based compensation expense 472 436 1,406 1,219
Other corporate expenses 25 214 293 395
Non-GAAP operating income $ 2,868 5 % $ 2,725 $ 8,393 12 % $ 7,504
Net income $ 3,888 341 % $ 881 $ 5,706 164 % $ 2,162
Non-GAAP adjustments:
Amortization of intangibles 694 845 2,114 2,547
Impact of purchase accounting 17 49 62 165
Transaction-related (income) and expenses (3,607) (286) (3,508) (247)
Stock-based compensation expense 472 436 1,406 1,219
Other corporate expenses 25 106 293 287
Fair value adjustments on equity investments (27) (489) (352) (591)
Aggregate adjustment for income taxes 553 169 24 (1,067)
Non-GAAP net income $ 2,015 18 % $ 1,711 $ 5,745 28 % $ 4,475


	Three Months Ended
		April 29, 2022		% Change		April 30, 2021
		(in millions, except percentages)
Gross margin		$	5,784	10	%	$	5,264
Non-GAAP adjustments:
Amortization of intangibles		104				150
Impact of purchase accounting		2				9

Stock-based compensation expense		38				28
Other corporate expenses		13				13
Non-GAAP gross margin		$	5,941	9	%	$	5,464

Operating expenses		$	4,234	(1)	%	$	4,277
Non-GAAP adjustments:
Amortization of intangibles		(139)				(295)
Impact of purchase accounting		(7)				(11)
Transaction-related expenses		(5)				(29)
Stock-based compensation expense		(194)				(144)
Other corporate expenses		(83)				(104)
Non-GAAP operating expenses		$	3,806	3	%	$	3,694

Operating income		$	1,550	57	%	$	987
Non-GAAP adjustments:
Amortization of intangibles		243				445
Impact of purchase accounting		9				20
Transaction-related expenses		5				29
Stock-based compensation expense		232				172
Other corporate expenses		96				117
Non-GAAP operating income		$	2,135	21	%	$	1,770

Net income from continuing operations		$	1,069	62	%	$	659
Non-GAAP adjustments:
Amortization of intangibles		243				445
Impact of purchase accounting		9				20
Transaction-related (income) expenses		(2)				29
Stock-based compensation expense		232				172
Other corporate expenses		96				117
Fair value adjustments on equity investments		(14)				(194)
Aggregate adjustment for income taxes		(199)				(193)
Non-GAAP net income		$	1,434	36	%	$	1,055

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In addition to the above measures, we also use EBITDA and adjusted EBITDA to provide additional information for evaluation of our operating performance. Adjusted EBITDA excludes purchase accounting adjustments related to the EMC merger transaction and the going-private transaction, acquisition, integration, and divestiture related costs, impairment charges, and severance, facility action, and other costs, and stock-based compensation ~~expense, transaction-related expenses, and other corporate expenses. Due~~expense. We believe that, due to the non-operational nature of ~~these transactions, we believe that~~the purchase accounting entries, it is appropriate to exclude these ~~items.~~adjustments.

As is the case with the non-GAAP measures presented above, users should consider the limitations of using EBITDA and adjusted EBITDA, including the fact that those measures do not provide a complete measure of our operating performance. EBITDA and adjusted EBITDA do not purport to be alternatives to net income ~~(loss)~~ as measures of operating performance or to cash flows from operating activities as a measure of liquidity. In particular, EBITDA and adjusted EBITDA are not intended to be a measure of free cash flow available for management’s discretionary use, as these measures do not consider certain cash requirements, such as working capital needs, capital expenditures, contractual commitments, interest payments, tax payments, and other debt service requirements.

The following table ~~below~~ presents a reconciliation of EBITDA and adjusted EBITDA to net income for the periods indicated:


		Three Months Ended						Nine Months Ended							Three Months Ended
		October 29, 2021		% Change		October 30, 2020		October 29, 2021		% Change		October 30, 2020				April 29, 2022		% Change		April 30, 2021
		(in millions, except percentages)														(in millions, except percentages)
Net income		$	3,888	341	%	$	881	$	5,706	164	%	$	2,162
Net income from continuing operations														Net income from continuing operations		$	1,069	62	%	$	659
Adjustments:	Adjustments:													Adjustments:
Interest and other, net (a)	Interest and other, net (a)	(3,436)				(273)		(2,689)				929		Interest and other, net (a)		337				288
Income tax expense (benefit) (b)	Income tax expense (benefit) (b)	897				521		1,079				(124)		Income tax expense (benefit) (b)		144				40
Depreciation and amortization	Depreciation and amortization	1,242				1,361		3,721				4,017		Depreciation and amortization		726				905
EBITDA	EBITDA	$	2,591	4	%	$	2,490	$	7,817	12	%	$	6,984	EBITDA		$	2,276	20	%	$	1,892

EBITDA	EBITDA	$	2,591	4	%	$	2,490	$	7,817	12	%	$	6,984	EBITDA		$	2,276	20	%	$	1,892
Adjustments:	Adjustments:													Adjustments:
Stock-based compensation expense	Stock-based compensation expense	472				436		1,406				1,219		Stock-based compensation expense		232				172
Impact of purchase accounting (c)	Impact of purchase accounting (c)	11				39		38				129		Impact of purchase accounting (c)		—				12
Transaction-related expenses (d)	Transaction-related expenses (d)	311				52		422				211		Transaction-related expenses (d)		5				29
Other corporate expenses (e)	Other corporate expenses (e)	25				214		293				395		Other corporate expenses (e)		96				117
Adjusted EBITDA	Adjusted EBITDA	$	3,410	6	%	$	3,231	$	9,976	12	%	$	8,938	Adjusted EBITDA		$	2,609	17	%	$	2,222

____________________

(a)See “Results of Operations — Interest and Other, Net” for more information on the components of interest and other, net.

(b)See Note 1012 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information on discrete tax items recorded during the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022~~2023 and Fiscal ~~2021.~~2022.

(c)This amount includes the non-cash purchase accounting adjustments related to the EMC merger transaction and the going-private ~~transaction, excluding depreciation.~~transaction.

(d)Transaction-related expenses consist of acquisition, integration, and ~~divestiture-related costs.~~divestiture related costs, as well as the costs incurred in the VMware Spin-off.

(e)Other corporate expenses ~~include~~includes impairment charges, incentive charges related to equity investments, severance, ~~facilities~~facility action, payroll taxes associated with stock-based compensation, and other costs.

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RESULTS OF OPERATIONS

Consolidated Results

The following table summarizes our consolidated results for ~~each of~~ the periods ~~presented.~~indicated. Unless otherwise indicated, all changes identified for the current period results represent comparisons to results for the prior corresponding fiscal period.


		Three Months Ended										Nine Months Ended													Three Months Ended
		October 29, 2021						October 30, 2020				October 29, 2021								October 30, 2020						April 29, 2022						April 30, 2021
		Dollars		% of Net Revenue		% Change		Dollars		% of Net Revenue		Dollars			% of Net Revenue			% Change		Dollars		% of Net Revenue							Dollars			% of Net Revenue			% Change			Dollars			% of Net Revenue
		(in millions, except percentages)																											(in millions, except percentages)
Net revenue:	Net revenue:																							Net revenue:
Products	Products	$	21,540	75.9	%	24	%	$	17,352	73.9	%	$	58,968		74.6	%		18	%	$	50,127	73.6	%	Products					$	20,464		78.4	%		17	%		$	17,487		77.4	%
Services	Services	6,854		24.1	%	12	%	6,130		26.1	%	20,035			25.4	%		11	%	17,985		26.4	%	Services					5,652			21.6	%		11	%		5,103			22.6	%
Total net revenue	Total net revenue	$	28,394	100.0	%	21	%	$	23,482	100.0	%	$	79,003		100.0	%		16	%	$	68,112	100.0	%	Total net revenue					$	26,116		100.0	%		16	%		$	22,590		100.0	%
Gross margin:	Gross margin:																							Gross margin:
Products (a)	Products (a)	$	3,988	18.5	%	12	%	$	3,563	20.5	%	$	11,831		20.1	%		16	%	$	10,204	20.4	%	Products (a)					$	3,455		16.9	%		13	%		$	3,053		17.5	%
Services (b)	Services (b)	4,071		59.4	%	10	%	3,698		60.3	%	11,871			59.3	%		7	%	11,066		61.5	%	Services (b)					2,329			41.2	%		5	%		2,211			43.3	%
Total gross margin	Total gross margin	$	8,059	28.4	%	11	%	$	7,261	30.9	%	$	23,702		30.0	%		11	%	$	21,270	31.2	%	Total gross margin					$	5,784		22.1	%		10	%		$	5,264		23.3	%
Operating expenses	Operating expenses	$	6,710	23.6	%	9	%	$	6,132	26.1	%	$	19,606		24.8	%		7	%	$	18,303	26.9	%	Operating expenses					$	4,234		16.2	%		(1)	%		$	4,277		18.9	%
Operating income	Operating income	$	1,349	4.8	%	19	%	$	1,129	4.8	%	$	4,096		5.2	%		38	%	$	2,967	4.4	%	Operating income					$	1,550		5.9	%		57	%		$	987		4.4	%
Net income		$	3,888	13.7	%	341	%	$	881	3.8	%	$	5,706		7.2	%		164	%	$	2,162	3.2	%
Net income attributable to Dell Technologies Inc.		$	3,843	13.5	%	362	%	$	832	3.5	%	$	5,561		7.0	%		175	%	$	2,023	3.0	%
Net income from continuing operations																								Net income from continuing operations					$	1,069		4.1	%		62	%		$	659		2.9	%

Non-GAAP Financial Information	Non-GAAP Financial Information																							Non-GAAP Financial Information
																	Three Months Ended
																									April 29, 2022		April 30, 2021
																												Dollars			% of Non-GAAP Net Revenue			% Change			Dollars			% of Non-GAAP Net Revenue
														(in millions, except percentages)
Non-GAAP net revenue:	Non-GAAP net revenue:																							Non-GAAP net revenue:
Products	Products	$	21,540	75.8	%	24	%	$	17,354	73.8	%	$	58,968		74.6	%		18	%	$	50,135	73.5	%	Products					$	20,464		78.4	%		17	%		$	17,486		77.4	%
Services	Services	6,865		24.2	%	11	%	6,167		26.2	%	20,069			25.4	%		11	%	18,106		26.5	%	Services					5,652			21.6	%		11	%		5,112			22.6	%
Total non-GAAP net revenue	Total non-GAAP net revenue	$	28,405	100.0	%	21	%	$	23,521	100.0	%	$	79,037		100.0	%		16	%	$	68,241	100.0	%	Total non-GAAP net revenue					$	26,116		100.0	%		16	%		$	22,598		100.0	%
Non-GAAP gross margin:	Non-GAAP gross margin:																							Non-GAAP gross margin:
Products (a)	Products (a)	$	4,281	19.9	%	8	%	$	3,961	22.8	%	$	12,702		21.5	%		12	%	$	11,371	22.7	%	Products (a)					$	3,577		17.5	%		11	%		$	3,216		18.4	%
Services (b)	Services (b)	4,129		60.1	%	8	%	3,810		61.8	%	12,068			60.1	%		6	%	11,351		62.7	%	Services (b)					2,364			41.8	%		5	%		2,248			44.0	%
Total non-GAAP gross margin	Total non-GAAP gross margin	$	8,410	29.6	%	8	%	$	7,771	33.0	%	$	24,770		31.3	%		9	%	$	22,722	33.3	%	Total non-GAAP gross margin					$	5,941		22.7	%		9	%		$	5,464		24.2	%
Non-GAAP operating expenses	Non-GAAP operating expenses	$	5,542	19.5	%	10	%	$	5,046	21.5	%	$	16,377		20.7	%		8	%	$	15,218	22.3	%	Non-GAAP operating expenses					$	3,806		14.5	%		3	%		$	3,694		16.4	%
Non-GAAP operating income	Non-GAAP operating income	$	2,868	10.1	%	5	%	$	2,725	11.6	%	$	8,393		10.6	%		12	%	$	7,504	11.0	%	Non-GAAP operating income					$	2,135		8.2	%		21	%		$	1,770		7.8	%
Non-GAAP net income	Non-GAAP net income	$	2,015	7.1	%	18	%	$	1,711	7.3	%	$	5,745		7.3	%		28	%	$	4,475	6.6	%	Non-GAAP net income					$	1,434		5.5	%		36	%		$	1,055		4.7	%
EBITDA	EBITDA	$	2,591	9.1	%	4	%	$	2,490	10.6	%	$	7,817		9.9	%		12	%	$	6,984	10.2	%	EBITDA					$	2,276		8.7	%		20	%		$	1,892		8.4	%
Adjusted EBITDA	Adjusted EBITDA	$	3,410	12.0	%	6	%	$	3,231	13.7	%	$	9,976		12.6	%		12	%	$	8,938	13.1	%	Adjusted EBITDA					$	2,609		10.0	%		17	%		$	2,222		9.8	%

____________________

(a) Product gross margin percentages represent product gross margin as a percentage of product net revenue, and non-GAAP product gross margin percentages represent non-GAAP product gross margin as a percentage of non-GAAP product net revenue.

(b) Services gross margin percentages represent services gross margin as a percentage of services net revenue, and non-GAAP services gross margin percentages represent non-GAAP services gross margin as a percentage of non-GAAP services net revenue.

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Non-GAAP product net revenue, non-GAAP services net revenue, non-GAAP net revenue, non-GAAP product gross margin, non-GAAP services gross margin, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, EBITDA, and adjusted EBITDA are not measurements of financial performance prepared in accordance with GAAP. Non-GAAP financial measures as a percentage of ~~net~~ revenue are calculated based on non-GAAP net revenue. See “~~Non-GAAP~~“Non‑GAAP Financial ~~Measures~~”Measures” for additional information about these non-GAAP financial measures, including our reasons for including these measures, material limitations with respect to the usefulness of the measures, and a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure.

Overview

During the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022, both net revenue and non-GAAP~~2023, our net revenue increased ~~21% and~~ 16%~~, respectively. These increases were~~ due ~~primarily~~ to growth in net revenue for both CSG and ~~to a lesser extent, increases in net revenue for ISG and VMware.~~ISG. CSG net revenue benefited primarily from ~~increased sales of~~strength in our commercial ~~and consumer offerings, driven by strong demand as a result of the global economic recovery coupled with customers seeking improved connectivity and productivity.~~offerings. ISG net revenue ~~continued to benefit~~growth resulted from demand for overall ~~improvements in the macroeconomic environment and a shift towards~~ investment in IT ~~infrastructure. VMware net revenue increased primarily due~~infrastructure as customers continue to ~~continued growth~~invest in ~~sales of subscriptions and software-as-a-service (“SaaS”) offerings.~~digital transformation.

During the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022,~~2023, our operating income increased ~~19% and 38%, respectively,~~57% to $1.6 billion and our non-GAAP operating income increased ~~5% and 12%, respectively. The~~21% to $2.1 billion. These increases were primarily due to ~~increases~~growth in operating income for ~~CSG,~~ISG, driven ~~primarily~~principally by our ~~commercial offerings and, to a lesser extent, our consumer~~storage offerings. Operating income also benefited from ~~decreases in amortization~~the favorable impact of ~~intangible assets during both Fiscal 2022 periods presented.~~

Our operating income as a percentage of net revenue remained flat at 4.8% and increased 80 basis points to 5.2% for the third quarter and first nine months of Fiscal 2022, respectively. The increase in our operating income as a percentage of net revenue for the first nine months of Fiscal 2022 was driven primarily by a decrease in amortization of intangible assets. ~~Our~~

Operating income and non-GAAP operating income as a percentage of net revenue ~~decreased~~increased 150 basis points to ~~10.1%~~5.9% and 40 basis points to ~~10.6% during the third quarter and first nine months of Fiscal 2022, respectively. The decreases in our non-GAAP~~8.2%, respectively, primarily driven by ISG. ISG operating income as a percentage of net revenue increased as a result of a decrease in operating expenses as a percentage of net revenue due to strong revenue growth coupled with disciplined cost management. These factors were ~~driven primarily~~partially offset by declines in gross margin as a percentage of net revenue ~~principally due to supply chain challenges~~for both CSG and ISG which declined in part as a result of increased cost of net revenue that was not entirely offset by pricing adjustments. Operating income as a percentage of net revenue also increased as a result of the ~~inflationary cost environment coupled with~~favorable impact of a ~~shift~~decrease in ~~mix towards CSG offerings.~~amortization of intangible assets.

Cash used by operating activities was $0.3 billion during the first quarter of Fiscal 2023. Operating cash flows during the first quarter of the fiscal year are typically lower due to seasonal revenue trends as well as the timing of annual personnel-related payments. Operating cash flows were also impacted by higher than normal inventory balances as we continue to proactively manage supply chain challenges. During the first quarter of Fiscal 2022, cash provided by operating activities was $7.2 billion and $5.5 billion for the first nine months of Fiscal 2022 and Fiscal 2021, respectively. The increase in operating cash flows during the first nine months of Fiscal 2022 was driven by strong growth coupled with favorable working capital dynamics, compared to unfavorable working capital impacts during the first nine months of Fiscal 2021.$2.2 billion. See “Market Conditions, Liquidity, Capital Commitments, and ~~Capital Commitments”~~Contractual Cash Obligations” for further information on our cash flow metrics.

We continue to see opportunities to create value and grow in response to resilient demand for our IT solutions driven by a technology-enabled world. We have demonstrated our ability to adjust ~~as needed~~ to changing market conditions with complementary solutions across ~~all~~both segments of our business, an agile workforce, and the strength of our global supply chain. As we continue to innovate and modernize our core offerings, we believe that Dell Technologies is well-positioned for long-term profitable growth.

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Net Revenue

During the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022, both net revenue and non-GAAP~~2023, our net revenue increased ~~21% and~~ 16%~~, respectively, driven~~ primarily ~~by increases~~due to an increase in net revenue for both CSG and ~~to a lesser extent, increases in net revenue for ISG and VMware.~~ISG. See “Business Unit Results” for further information.

•Product Net Revenue — Product net revenue includes revenue from the sale of hardware products and software licenses. During the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022, both product net revenue and non-GAAP~~2023, our product net revenue increased ~~24% and 18%, respectively,~~17% driven ~~primarily~~ by growth inwithin both CSG ~~product net revenue~~ and ~~to a lesser extent, ISG product net revenue.~~ISG. CSG product net revenue increased ~~during the third quarter and first nine months of Fiscal 2022 primarily~~principally due to ~~increases~~an increase in ~~units sold of both~~average selling price for our commercial offerings. ISG product net revenue growth was primarily attributable to growth in net revenue for servers and ~~consumer product offerings as a result of continued strength~~networking, driven by an increase in ~~the demand environment~~average selling price, and, to a lesser extent, an increase in ~~average selling price of our commercial offerings. During the third quarter and first nine months of Fiscal 2022, ISG product~~ net revenue ~~increased due to increased sales volumes of our server offerings. Additionally, we experienced an increase in average selling price of our server offerings during the third quarter only.~~for storage.

•Services Net Revenue — Services net revenue includes revenue from our services offerings and support services related to hardware products and software licenses. During the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022,~~2023, services net revenue increased ~~12% and~~ 11%, ~~respectively. Non-GAAP services net revenue increased 11% during both Fiscal 2022 periods presented. These increases were~~ driven primarily by growth in CSG services net revenue and, to a lesser extent, growth in ~~both VMware and~~ ISG services net revenue. Growth in CSG services net revenue was primarily due to increases ~~were primarily~~in services net revenue attributable to ~~growth within CSG~~both hardware support and maintenance and third-party software support and ~~maintenance, while~~maintenance. ISG services net revenue increased primarily as a result of growth within hardware support services. ~~VMware services net revenue increases were primarily driven by growth within VMware subscriptions and SaaS offerings.~~ A substantial portion of services net revenue is derived from

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offerings that have been deferred over a period of time, and, as a result, reported services net revenue growth rates will be different than reported product net revenue growth rates.

From a geographical perspective, net revenue generated by sales to customers in all regions increased during the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022,~~2023, driven by ~~strong~~both CSG ~~performance.~~and ISG.

Gross Margin

During the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022,~~2023, our gross margin increased ~~11%~~10% to ~~$8.1~~$5.8 billion and ~~11% to $23.7 billion, respectively. Our~~our non-GAAP gross margin increased ~~8% to $8.4 billion and~~ 9% to ~~$24.8 billion during the third quarter and first nine months of Fiscal 2022, respectively. Both~~$5.9 billion. These increases were driven primarily by growth in ISG gross margin ~~and non-GAAP gross margin benefited from an increase in gross margin for CSG~~ and, to a lesser extent, ~~increases for both VMware and ISG. Gross margin and non-GAAP~~growth within CSG gross margin ~~increases during~~as we benefited from continued strength across both businesses.

During the first ~~nine months of Fiscal 2022 were partially offset by a decrease in gross margin for other businesses as a result of the impact of the divestiture of RSA Security during the third~~ quarter of Fiscal ~~2021.~~

~~During the third quarter and first nine months of Fiscal 2022,~~2023, our gross margin percentage decreased ~~250 basis points to 28.4% and~~ 120 basis points to ~~30.0%, respectively. The decrease~~ 22.1% due to a decline in gross margin percentage ~~during the third quarter of Fiscal 2022 was primarily due to unfavorable impacts in gross margin percentage across~~for both CSG ~~VMware,~~ and ISG, ~~driven in part by supply chain challenges and~~ the ~~inflationary cost environment, coupled with a shift in mix towards CSG. These decreases were~~effect of which was partially offset by the favorable impact of a decrease in amortization of intangible assets. ~~For~~Both CSG and ISG gross margin percentage declined in part as a result of increased cost of net revenue that was not entirely offset by pricing adjustments. Increased cost of net revenue was principally driven by the cumulative effect of cost inflation that occurred throughout Fiscal 2022, which broadly impacted our product offerings. ISG gross margin percentage also declined as a result of a shift in revenue mix towards servers and networking. Non-GAAP gross margin percentage decreased 150 basis points to 22.7% due to the same CSG and ISG dynamics discussed above.

•Products Gross Margin — During the first ~~nine months~~quarter of Fiscal ~~2022,~~2023, product gross margin increased 13% to $3.5 billion and non-GAAP product gross margin increased 11% to $3.6 billion primarily driven by growth within ISG. ISG product gross margin increased principally due to revenue growth in our storage offerings coupled with an increase in the ~~decrease~~average selling price of our server offerings.

During the first quarter of Fiscal 2023, product gross margin percentage decreased 60 basis points to 16.9%, primarily due to a decline in product gross margin percentage for CSG. The decline in CSG product gross margin percentage was ~~driven by the same unfavorable impacts within VMware and ISG as well as a shift in mix towards CSG,~~ partially offset by ~~an increase~~growth in product gross margin percentage for ~~CSG and~~ISG coupled with the favorable impact of a decrease in amortization of intangible assets. Non-GAAP gross margin percentage decreased 340 basis points to 29.6% and 200 basis points to 31.3% during the third quarter and first nine months of Fiscal 2022, respectively, driven by the same ISG, CSG, and VMware dynamics discussed above.

•~~Products~~ — During the third quarter and first nine months of Fiscal 2022, product gross margin increased 12% to $4.0 billion and 16% to $11.8 billion, respectively. The increases in product gross margin were primarily driven by growth in CSG product gross margin coupled with a decrease in amortization of intangible assets. During the same Fiscal 2022 periods, non-GAAP product gross margin increased 8% to $4.3 billion and 12% to $12.7 billion, respectively. The increases in non-GAAP product gross margin were primarily driven by an increase in CSG product gross margin.

~~Table of Contents~~

~~During the third quarter and first nine months of Fiscal 2022,~~ product gross margin percentage decreased ~~200~~90 basis points to ~~18.5%~~17.5% and ~~30 basis points to 20.1%, respectively. For the third quarter of Fiscal 2022, the decrease in product gross margin percentage~~ was driven primarily by a decrease in CSG product gross margin percentage coupled with a shift in mix towards CSG, the effects of which were partially offset by a decrease in amortization of intangible assets. The decrease in product gross margin percentage during the first nine months of Fiscal 2022 was driven primarily by a shift in product mix towards CSG. During the same Fiscal 2022 periods, non-GAAP product gross margin percentage decreased 290 basis points to 19.9% and 120 basis points to 21.5%, respectively. The decreases in non-GAAP product gross margin percentage for the third quarter and first nine months of Fiscal 2022 were driven by the same CSG ~~dynamics~~and ISG impacts discussed above.

•Services Gross Margin — During the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022,~~2023, services gross margin and non-GAAP services gross margin both increased ~~10%~~5% to ~~$4.1~~$2.3 billion and ~~7% to $11.9~~$2.4 billion, respectively. The increases inwere driven primarily by increased CSG services gross margin ~~were primarily driven by VMware and CSG and, to a lesser extent, ISG. VMware services gross margin increased~~ as a result of growth within ~~subscription and SaaS offerings while CSG services gross margin increased due to growth in~~ hardware support and maintenance. During the same Fiscal 2022 periods, non-GAAP services gross margin increased 8% to $4.1 billion and 6% to $12.1 billion, respectively. The changes were driven by the same dynamics discussed above.maintenance associated with products sold in prior periods.

~~During the third quarter~~Services gross margin percentage decreased 210 basis points to 41.2% and ~~first nine months of Fiscal 2022,~~non-GAAP services gross margin percentage decreased ~~90 basis points to 59.4% and~~ 220 basis points to ~~59.3%, respectively. During the same Fiscal 2022 periods, non-GAAP services gross margin percentage decreased~~ ~~170 basis points to 60.1% and 260 basis points to 60.1%, respectively. For the third quarter of Fiscal 2022, the~~41.8%. The decreases were ~~as a result of~~primarily driven by declines in services gross margin percentage ~~for VMware~~across CSG and ISG, ~~coupled with~~to a lesser extent, a shift in mix towards ~~CSG, partially offset by an increase in services gross margin percentage for~~ CSG. ~~The declines for the first nine months of Fiscal 2022 were driven by a shift in mix towards CSG coupled with decreases in services gross margin percentage for CSG, VMware, and ISG.~~

Vendor Programs and Settlements

Our gross margin is affected by our ability to achieve competitive pricing with our vendors and contract manufacturers, including through our negotiation of a variety of vendor rebate programs to achieve lower net costs for the various components we include in our products. Under these programs, vendors provide us with rebates or other discounts from the list prices for the components, which are generally elements of their pricing strategy. We account for vendor rebates and other discounts as a reduction in cost of net revenue. We manage our costs on a total net cost basis, which includes supplier list prices reduced by vendor rebates and other discounts.

The terms and conditions of our vendor rebate programs are largely based on product volumes and are generally negotiated either at the beginning of the annual or quarterly period, depending on the program. The timing and amount of vendor rebates and other discounts we receive under the programs may vary from period to period, reflecting changes in the competitive environment. We monitor our component costs and seek to address the effects of any changes to terms that might arise under our vendor rebate programs. Our gross margins for the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022~~2023 and the first quarter of Fiscal ~~2021~~2022 were not materially affected by any changes to the terms of our vendor rebate programs, as the amounts we received under these programs were generally stable relative to our total net cost. We are not aware of any significant changes to vendor pricing or rebate programs that may impact our results in the near term.

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Operating Expenses

The following table presents information regarding our operating expenses for the periods indicated:


		Three Months Ended										Nine Months Ended											Three Months Ended
		October 29, 2021						October 30, 2020				October 29, 2021						October 30, 2020						April 29, 2022				April 30, 2021
		Dollars		% of Net Revenue		% Change		Dollars		% of Net Revenue		Dollars		% of Net Revenue		% Change		Dollars		% of Net Revenue						Dollars		% of Net Revenue		% Change		Dollars		% of Net Revenue
		(in millions, except percentages)																								(in millions, except percentages)
Operating expenses:	Operating expenses:																					Operating expenses:
Selling, general, and administrative	Selling, general, and administrative	$	5,293	18.6	%	11	%	$	4,772	20.3	%	$	15,398	19.5	%	7	%	$	14,419	21.1	%	Selling, general, and administrative				$	3,553	13.6	%	(3)	%	$	3,658	16.2	%
Research and development	Research and development	1,417		5.0	%	4	%	1,360		5.8	%	4,208		5.3	%	8	%	3,884		5.7	%	Research and development				681		2.6	%	10	%	619		2.7	%
Total operating expenses	Total operating expenses	$	6,710	23.6	%	9	%	$	6,132	26.1	%	$	19,606	24.8	%	7	%	$	18,303	26.8	%	Total operating expenses				$	4,234	16.2	%	(1)	%	$	4,277	18.9	%

		Three Months Ended										Nine Months Ended														Three Months Ended
		October 29, 2021						October 30, 2020				October 29, 2021						October 30, 2020								April 29, 2022						April 30, 2021
		Dollars		% of Non-GAAP Net Revenue		% Change		Dollars		% of Non-GAAP Net Revenue		Dollars		% of Net Revenue		% Change		Dollars		% of Net Revenue						Dollars		% of Non-GAAP Net Revenue		% Change		Dollars		% of Non-GAAP Net Revenue
		(in millions, except percentages)																							(in millions, except percentages)
Non-GAAP operating expenses	Non-GAAP operating expenses	$	5,542	19.5	%	10	%	$	5,046	21.4	%	$	16,377	20.7	%	8	%	$	15,218	22.3	%	Non-GAAP operating expenses				$	3,806	14.5	%	3	%	$	3,694	16.4	%

During the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022,~~2023, total operating expenses ~~increased 9%~~remained essentially flat as a decrease in selling, general, and ~~7%, respectively.~~administrative expenses was mostly offset by an increase in research and development expenses. Non-GAAP operating expenses increased ~~10% and 8% for the third quarter and first nine months of Fiscal 2022, respectively. These increases were~~3% primarily ~~driven by employee-related expenses~~ as a result of ~~performance-based~~increased employee compensation ~~associated with strong operating results, coupled with the reintroduction of expenses that were temporarily reduced during Fiscal 2021~~and benefits driven by growth in ~~response to the COVID-19 pandemic.~~employee headcount.

•Selling, General, and Administrative — Selling, general, and administrative (“SG&A”) expenses ~~increased 11% and 7%, respectively,~~decreased 3% during the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022.~~2023. The ~~increases were~~decrease was primarily ~~due~~attributable to a decrease in amortization of intangible assets, partially offset by an increase in ~~employee-related~~employee compensation and benefits ~~expense as well as an increase~~principally due to growth in ~~outside services expense incurred in connection with our transformational initiatives, primarily the VMware Spin-off.~~employee headcount.

•Research and Development — Research and development (“R&D”) expenses are primarily composed of personnel-related expenses ~~incurred~~related to ~~develop~~product development. During the ~~software that powers our solutions.~~first quarter of Fiscal 2023, R&D expenses grew 4%10% as a result of an increase in employee compensation and ~~8% during the third quarter and first nine months of Fiscal 2022, respectively.~~benefits primarily due to growth in employee headcount. As a percentage of net revenue, R&D expenses ~~were approximately 5.0% and 5.8% for the third quarter of Fiscal 2022 and Fiscal 2021, respectively, and 5.3% and 5.7%~~ for the first ~~nine~~three months of Fiscal ~~2022~~2023 and Fiscal ~~2021,~~2022 were essentially flat at approximately 2.6% and 2.7%, respectively. ~~The decreases in R&D expenses as a percentage of net revenue were attributable to revenue growth that outpaced the scale of R&D investments.~~ We intend to continue ~~to support~~supporting R&D initiatives to innovate and introduce new and enhanced solutions into the market.

We continue to make ~~targeted~~selective investments designed to enable growth, marketing, and R&D, while balancing ~~these investments with~~ our efforts to drive cost efficiencies in the business. We also expect to continue ~~to make~~making investments in support of our own digital transformation to modernize ~~and streamline~~ our IT operations.

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Operating Income

During the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022,~~2023, our operating income increased ~~19% and 38%~~57% to ~~$1.3~~$1.6 billion ~~and $4.1 billion, respectively,~~ and our non-GAAP operating income increased ~~5% and 12%~~21% to ~~$2.9 billion and $8.4 billion, respectively. The~~$2.1 billion. These increases were ~~primarily due~~principally attributable to growth in operating income for ~~CSG,~~ISG, driven primarily by our ~~commercial offerings and, to a lesser extent, our consumer~~storage offerings. Operating income ~~during the third quarter and first nine months of Fiscal 2022~~ also benefited from the favorable impact of a decrease in amortization of intangible assets.

~~Our operating~~

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Operating income ~~as a percentage of net revenue remained flat at 4.8%~~ and increased 80 basis points to 5.2% for the third quarter and first nine months of Fiscal 2022. The increase in our operating income as a percentage of net revenue for the first nine months of Fiscal 2022 was driven primarily by a decrease in amortization of intangible assets. Our non-GAAP operating income as a percentage of net revenue ~~decreased~~increased 150 basis points to ~~10.1%~~5.9% and 40 basis points to ~~10.6% during the third quarter and first nine months of Fiscal 2022, respectively. The decreases in our non-GAAP~~8.2%, respectively, primarily driven by ISG. ISG operating income as a percentage of net revenue increased as a result of a decrease in operating expenses as a percentage of net revenue due to strong revenue growth coupled with disciplined cost management. These factors were ~~driven primarily~~partially offset by ~~declines~~a decline in gross margin as a percentage of net revenue ~~principally due to supply chain challenges~~for both CSG and ISG which declined in part as a result of increased cost of net revenue that was not entirely offset by pricing adjustments. Operating income as a percentage of net revenue further benefited from the ~~inflationary cost environment coupled with a shift~~favorable impact of the decrease in ~~mix towards CSG offerings.~~amortization of intangible assets.

Interest and Other, Net

The following table presents information regarding interest and other, net for the periods indicated:


		Three Months Ended				Nine Months Ended					Three Months Ended
		October 29, 2021		October 30, 2020		October 29, 2021		October 30, 2020				April 29, 2022		April 30, 2021
		(in millions)										(in millions)
Interest and other, net:	Interest and other, net:									Interest and other, net:
Investment income, primarily interest	Investment income, primarily interest	$	11	$	11	$	32	$	47	Investment income, primarily interest		$	15	$	10
Gain on investments, net	Gain on investments, net	27		489		352		591		Gain on investments, net		14		193
Interest expense	Interest expense	(482)		(566)		(1,475)		(1,855)		Interest expense		(265)		(433)
Foreign exchange	Foreign exchange	(33)		(31)		(146)		(130)		Foreign exchange		(89)		(52)
Gain on disposition of businesses and assets		3,968		338		3,968		458

Other	Other	(55)		32		(42)		(40)		Other		(12)		(6)
Total interest and other, net	Total interest and other, net	$	3,436	$	273	$	2,689	$	(929)	Total interest and other, net		$	(337)	$	(288)

During the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022,~~2023, the change in interest and other, net was ~~favorable~~unfavorable by ~~$3.2 billion and $3.6 billion, respectively. The favorability in both periods was~~$49 million primarily ~~driven by the pre-tax gain of $4.0 billion on the sale of Boomi and,~~due to ~~a lesser extent,~~ a decrease in ~~interest expense due to debt paydowns. The favorability was~~gain on investments, net, partially offset by a decrease in ~~net gains on our strategic investments portfolio. For further details on the Boomi divestiture, see Note 1 of the Notes to the Condensed Consolidated Financial Statements included in this report.~~interest expense resulting from debt repayments.

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Income and Other Taxes

The following table presents information regarding our income and other taxes for the periods indicated:


		Three Months Ended						Nine Months Ended							Three Months Ended
		October 29, 2021			October 30, 2020			October 29, 2021			October 30, 2020				April 29, 2022			April 30, 2021
		(in millions, except percentages)						(in millions, except percentages)							(in millions, except percentages)
Income before income taxes	Income before income taxes	$	4,785		$	1,402		$	6,785		$	2,038		Income before income taxes	$	1,213		$	699
Income tax expense (benefit)		$	897		$	521		$	1,079		$	(124)
Income tax expense														Income tax expense	$	144		$	40
Effective income tax rate	Effective income tax rate	18.7		%	37.2		%	15.9		%	-6.1		%	Effective income tax rate	11.9		%	5.7		%

For the ~~third~~first quarter of Fiscal 2023 and the first quarter of Fiscal 2022, our effective income tax rates were 11.9% on pre-tax income of $1.2 billion, and ~~Fiscal 2021,~~ 5.7% on pre-tax income of $0.7 billion, respectively. The change in our effective income tax rate was ~~18.7% and 37.2%, respectively. For~~primarily driven by the ~~first nine months~~impact of ~~Fiscal 2022 and Fiscal 2021, our effective income tax rate was 15.9% and -6.1%, respectively. For~~ ~~the third quarter and first nine months of Fiscal 2022,~~ ~~our effective income tax rate includes tax expense of $1.0 billion related to the divestiture of Boomi during the third quarter of Fiscal 2022. In comparison, for the first nine months of Fiscal 2021, our effective income tax rate included~~ discrete tax benefits ~~of $746 million related to an audit settlement that was recorded in the second quarter of Fiscal 2021 and tax expense of~~ ~~$359 million~~ related to ~~the divestiture of RSA Security during the third quarter of Fiscal 2021. Our effective income tax rates are also impacted by~~stock-based compensation, a change in our jurisdictional mix of income, and ~~lower overall taxes~~higher U.S. tax on foreign ~~operations.~~operations, the effects of which were partially offset by higher benefits from foreign tax credits.

Higher U.S. tax on foreign operations was due to the capitalization of research and development costs. Under the Tax Cuts and Jobs Act, which was enacted on December 22, 2017, research and development expenses incurred for tax years beginning after December 31, 2021 must be capitalized and amortized ratably over five or 15 years for tax purposes, depending on where the research activities were conducted. Our effective income tax rate for future quarters of Fiscal 2023 may be impacted by actions taken by the U.S. government to defer or repeal this provision, as well as by the actual mix of jurisdictions in which income is generated and the impact of any discrete tax items. In addition, if the provision is not deferred or repealed, we expect it will result in a significant increase in our cash tax liabilities for Fiscal 2023, as well as significantly reduce our deferred tax liabilities.

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Our effective income tax rate can fluctuate depending on the geographic distribution of our worldwide earnings, as our foreign earnings are generally taxed at lower rates than in the United States. The differences between our effective income tax rate and the U.S. federal statutory rate of 21% principally result from the geographical distribution of income, differences between the book and tax treatment of certain items, and ~~the~~ discrete tax ~~items discussed above.~~items. In certain jurisdictions, our tax rate is significantly less than the applicable statutory rate as a result of tax holidays. The majority of our foreign income that is subject to these tax holidays ~~and lower tax rates~~ is attributable to Singapore and China. A significant portion of these income tax benefits relates to a tax holiday that will be effective until January 31, 2029. Our other tax holidays will expire in whole or in part during Fiscal ~~2022~~2030 through Fiscal ~~2030.~~2031. Many of these tax holidays and reduced tax rates may be extended when certain conditions are met or may be terminated early if certain conditions are not met. As of ~~October~~April 29, ~~2021,~~2022, we were not aware of any matters of ~~non-compliance~~noncompliance related to these tax holidays.

For further discussion regarding tax matters, including the status of income tax audits, see Note ~~10 of the Notes to the Condensed Consolidated Financial Statements included in this report.~~

~~Net Income~~

~~During the third quarter and first nine months of Fiscal 2022, net income increased 341% to $3.9 billion and 164% to $5.7 billion, respectively.~~ ~~The increases for~~ the third quarter and first nine months of Fiscal 2022 were primarily attributable to a favorable change in interest and other, net, as result of the gain on sale of Boomi and, to a lesser extent, an increase in operating income. Non-GAAP net income increased 18% to $2.0 billion and 28% to $5.7 billion during the third quarter and first nine months of Fiscal 2022, respectively. ~~The increases in non-GAAP net income during both the third quarter and first nine months of Fiscal 2022 were primarily attributable to an increase in non-GAAP operating income and a reduction in interest expense during the first nine months of Fiscal 2022, partially offset by an increase in tax expense.~~

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~~Non-controlling Interests~~

Net income attributable to non-controlling interests consists of net income or loss attributable to our non-controlling interests in VMware, Inc. and Secureworks. During the third quarter of Fiscal 2022 and Fiscal 2021, net income attributable to non-controlling interests was $45 million and $49 million, respectively. The decrease in net income attributable to non-controlling interests during the third quarter of Fiscal 2022 was primarily due to a decrease in net income attributable to our non-controlling interest in VMware, Inc.

During the first nine months of Fiscal 2022 and Fiscal 2021, net income attributable to non-controlling interests was $145 million and $139 million, respectively. The increase in net income attributable to non-controlling interests during the first nine months of Fiscal 2022 was primarily due to an increase in net income attributable to our non-controlling interest in VMware, Inc. For more information about our non-controlling interests, see Note 12 of the Notes to the Condensed Consolidated Financial Statements included in this report.

Net Income ~~Attributable to Dell Technologies Inc.~~from Continuing Operations

Net income ~~attributable~~from continuing operations was $1.1 billion in the first quarter of Fiscal 2023, compared to ~~Dell Technologies Inc. represents net income and an adjustment for non-controlling interests. During~~$0.7 billion in the ~~third~~first quarter of Fiscal 2022 ~~and Fiscal 2021,~~while non-GAAP net income ~~attributable to Dell Technologies Inc.~~ was ~~$3.8~~$1.4 billion ~~and $0.8 billion, respectively. During~~in the first ~~nine months~~quarter of Fiscal ~~2022 and Fiscal 2021, net income attributable~~2023, compared to ~~Dell Technologies Inc. was $5.6~~$1.1 billion ~~and $2.0 billion, respectively. The increase~~ in ~~net income attributable to Dell Technologies Inc. during~~ the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022 was~~2022. The increases were primarily attributable to ~~increases~~an increase in operating income, partially offset by an increase in tax expense during the period. Non-GAAP net income ~~for both periods.~~further benefited from a favorable change in interest and other, net.

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Business Unit Results

Our reportable segments are based on the ~~following~~ISG and CSG business ~~units: ISG, CSG, and VMware.~~units. A description of our ~~three~~ business units is provided under “Introduction.” See Note 1617 of the Notes to the Condensed Consolidated Financial Statements included in this report for a reconciliation of net revenue and operating income by reportable segment to consolidated net revenue and consolidated operating income (loss), respectively.

Infrastructure Solutions Group

The following table presents net revenue and operating income attributable to ISG for the periods indicated:


		Three Months Ended								Nine Months Ended									Three Months Ended
		October 29, 2021			% Change		October 30, 2020			October 29, 2021			% Change		October 30, 2020					April 29, 2022			% Change		April 30, 2021
		(in millions, except percentages)																		(in millions, except percentages)
Net revenue:	Net revenue:																	Net revenue:
Servers and networking	Servers and networking	$	4,533		9	%	$	4,164		$	13,104		8	%	$	12,118		Servers and networking		$	5,048		22	%	$	4,140
Storage	Storage	3,895			1	%	3,860			11,667			—	%	11,682			Storage		4,237			9	%	3,893
Total ISG net revenue	Total ISG net revenue	$	8,428		5	%	$	8,024		$	24,771		4	%	$	23,800		Total ISG net revenue		$	9,285		16	%	$	8,033

Operating income:	Operating income:																	Operating income:
ISG operating income	ISG operating income	$	892		1	%	$	882		$	2,650		2	%	$	2,587		ISG operating income		$	1,082		39	%	$	778
% of segment net revenue	% of segment net revenue	10.6		%			11.0		%	10.7		%			10.9		%	% of segment net revenue		11.7		%			9.7		%

Net Revenue — During the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022,~~2023, ISG net revenue increased ~~5% and 4%, respectively. These increases were primarily driven by sales of~~16% due to growth in net revenue for both servers and networking ~~attributable to improvements in the macroeconomic environment~~ and ~~a shift towards investment in IT infrastructure. In comparison, net revenue during the third quarter and first nine months of Fiscal 2021 was affected by a weaker demand environment~~storage as a result of ~~COVID-19, when~~demand for IT infrastructure as customers ~~shifted their investments toward remote work and business continuity solutions.~~continue to invest in digital transformation.

~~Net revenue~~Revenue from the sales of servers and networking increased ~~9% and 8%~~22% during the ~~third quarter and~~ first ~~nine months of Fiscal 2022, respectively, as a result of an increase in units sold due to continued demand for our PowerEdge servers. During the third~~ quarter of Fiscal ~~2022, the increase in net~~2023. The increased revenue was ~~further~~primarily driven by an increase in average selling price ~~for~~of our ~~PowerEdge servers~~server offerings as we ~~managed~~continue to manage pricing in response to ~~the cost environment.~~supply chain challenges including component availability and increased logistics costs.

~~Storage revenue increased 1% and remained flat during~~During the ~~third quarter and~~ first ~~nine months of Fiscal 2022, respectively. We benefited from growth within hyper-converged infrastructure which was offset by a decline in other storage offerings. To a lesser extent, during the third~~ quarter of Fiscal ~~2022, we also benefited from growth within our data protection offerings. Overall, we have experienced growth in demand for~~2023, storage revenue increased 9% due to strength across the majority of our storage ~~offerings, most notably within midrange storage, that we expect will benefit net revenue in future periods.~~offerings.

ISG customers are ~~seeking~~interested in new and innovative models that address how they consume our solutions. We offer options ~~including as-a-service,~~that include as-a-Service, utility, leases, and immediate pay models ~~all~~which are designed to match customers’ consumption and financing preferences. Our multiyear agreements typically result in recurring revenue streams over the term of the arrangement. We expect that our flexible consumption models and ~~as-a-service~~as-a-Service offerings through APEX will further strengthen our customer relationships and provide a foundation for growth in recurring revenue.

From a geographical perspective, net revenue attributable to ISG increased in all regions during the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022.~~2023.

Operating Income— During the first quarter of Fiscal 2023, ISG operating income as a percentage of net revenue increased 200 basis points to 11.7% primarily due to a decrease in operating expenses as a percentage of revenue that resulted from strong revenue growth coupled with disciplined cost management. The favorable impact of the decrease in operating expenses as a percentage of revenue was partially offset by the impact of a shift in revenue mix towards servers and networking.

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~~Operating Income~~— During the third quarter and first nine months of Fiscal 2022, ISG operating income as a percentage of net revenue decreased 40 basis points to 10.6% and 20 basis points to 10.7%, respectively. The declines in operating income as a percentage of net revenue during both Fiscal 2022 periods were driven by declines in ISG gross margin percentage. ISG gross margin percentage decreased as a result of a shift in mix within ISG towards servers and networking coupled with a decline in gross margin percentage for storage, in part due to a shift in mix of storage offerings sold. The decrease in gross margin percentage was partially offset by a decrease in operating expense as a percentage of net revenue.

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Client Solutions Group

The following table presents net revenue and operating income attributable to CSG for the periods indicated:


		Three Months Ended								Nine Months Ended									Three Months Ended
		October 29, 2021			% Change		October 30, 2020			October 29, 2021			% Change		October 30, 2020					April 29, 2022			% Change		April 30, 2021
		(in millions, except percentages)																		(in millions, except percentages)
Net revenue:	Net revenue:																	Net revenue:
Commercial	Commercial	$	12,292		40	%	$	8,783		$	32,668		28	%	$	25,456		Commercial		$	11,971		22	%	$	9,808
Consumer	Consumer	4,254			21	%	3,503			11,446			25	%	9,137			Consumer		3,616			3	%	3,503
Total CSG net revenue	Total CSG net revenue	$	16,546		35	%	$	12,286		$	44,114		28	%	$	34,593		Total CSG net revenue		$	15,587		17	%	$	13,311

Operating income:	Operating income:																	Operating income:
CSG operating income	CSG operating income	$	1,147		14	%	$	1,002		$	3,232		40	%	$	2,309		CSG operating income		$	1,115		3	%	$	1,080
% of segment net revenue	% of segment net revenue	6.9		%			8.2		%	7.3		%			6.7		%	% of segment net revenue		7.2		%			8.1		%

Net Revenue — During the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022,~~2023, CSG net revenue increased ~~35% and 28%, respectively,~~17% primarily driven ~~primarily~~ by ~~increases~~an increase in ~~units sold across the majority of product offerings as a result of continued strong demand. Increases in average selling price, principally within~~revenue attributable to our commercial ~~offerings, also contributed to revenue growth.~~offerings.

Commercial and consumer net revenue increased ~~40%~~22% and ~~28% during the third quarter and first nine months of Fiscal 2022,~~3%, respectively, primarily due to an increase in ~~sales of commercial desktops and notebooks driven by continued strong demand as customers invest in in-office, remote, and hybrid workforce environments. Increases in~~ average selling price also contributed to revenue growth, most notably in the third quarter of Fiscal 2022, as we continue to navigate through supply chain shortages and managed pricing in response to the current inflationary cost environment.

~~Consumer revenue increased 21% and 25% during the third quarter and first nine months of Fiscal 2022, respectively,~~ ~~primarily due to~~across our product offerings. To a lesser extent, an increase in units sold of commercial offerings also contributed to net revenue growth. Within consumer, the effect of increased average selling price was partially offset by a decrease in units sold. We increased average selling prices for both our commercial and consumer offerings as ~~a result of strong demand across the majority of consumer product offerings.~~we continued to manage pricing in response to supply chain challenges including component availability and increased logistic costs.

From a geographical perspective, net revenue attributable to CSG increased across all regions during the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022.~~2023.

Operating Income — During the ~~third~~first quarter of Fiscal ~~2022,~~2023, CSG operating income as a percentage of net revenue decreased ~~130~~90 basis points to ~~6.9%. The decrease~~7.2% primarily as a result of increased cost of net revenue that was ~~primarily attributable to declines in both commercial and consumer gross margin percentages~~not entirely offset by pricing adjustments. Increased cost of net revenue was principally driven by the cumulative effect of cost inflation that occurred throughout Fiscal 2022, which ~~were~~broadly impacted ~~by heightened supply chain challenges, logistics costs, and the inflationary component cost environment. The gross margin percentage decreases~~our product offerings. These factors were partially offset by ~~a shift in mix towards commercial product offerings and~~ a decrease in operating expenses as a percentage of ~~net~~ revenue.

During the first nine months of Fiscal 2022, CSG operating income as a percentage of net revenue increased 60 basis points to 7.3%. The increase was primarily driven by an increase in gross margin percentage, principally within our consumer offerings, coupled with a decrease in operating expenses as a percentage of net revenue. The increase in gross margin percentage was primarily driven by disciplined pricing as we managed through both cost and supply chain challenges discussed above. These challenges were more unfavorable to the third quarter of Fiscal 2022 as compared to the first half of Fiscal 2022.

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~~VMware~~

~~The following table presents net revenue and operating income attributable to VMware for the periods indicated:~~

Three Months Ended Nine Months Ended
October 29, 2021 % Change October 30, 2020 October 29, 2021 % Change October 30, 2020
(in millions, except percentages)
Net revenue:
VMware net revenue $ 3,178 10 % $ 2,893 $ 9,317 9 % $ 8,556
Operating income:
VMware operating income $ 837 — % $ 837 $ 2,527 1 % $ 2,504
% of segment net revenue 26.3 % 28.9 % 27.1 % 29.3 %

~~Net Revenue~~— VMware net revenue primarily consists of revenue from the sale of software licenses under perpetual licenses and subscription and SaaS offerings, as well as related software maintenance services, support, training, consulting services, and hosted services. VMware net revenue for the third quarter and first nine months of Fiscal 2022 increased 10% and 9%, respectively, primarily due to growth in sales of subscription and SaaS offerings, driven by increased demand for cloud offerings. Both license revenue and software maintenance revenue also increased to a lesser extent, with the latter continuing to benefit from maintenance contracts sold in previous periods.

~~VMware net revenue for the third quarter and first nine months of Fiscal 2022 increased in both the United States and internationally.~~

~~Operating Income~~— During the third quarter and first nine months of Fiscal 2022, VMware operating income as a percentage of net revenue decreased 260 basis points to 26.3% and 220 basis points to 27.1%, respectively. These decreases were due to a decline in VMware gross margin percentage and an increase in operating expense as a percentage of net revenue. VMware gross margin percentage declined in part due to a transition towards subscription and SaaS offerings. Operating expenses increased as a result of higher employee compensation expense primarily attributable to investments in key R&D initiatives, coupled with the reintroduction of expenses that were temporarily reduced in Fiscal 2021.

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OTHER BALANCE SHEET ITEMS

Accounts Receivable

We sell products and services directly to customers and through a variety of sales channels, including retail distribution. Our accounts receivable, net, was ~~$14.2~~$11.8 billion and ~~$12.8~~$12.9 billion as of ~~October~~April 29, ~~2021~~2022 and January ~~29, 2021,~~28, 2022, respectively. We maintain an allowance for expected credit losses to cover receivables that may be deemed uncollectible. The allowance for expected credit losses is an estimate based on an analysis of historical loss experience, current receivables aging, management’s assessment of current conditions and reasonable and supportable expectation of future conditions, and specific identifiable customer accounts that are deemed at risk. Given this uncertainty, our allowance for expected credit losses in future periods may vary from our current estimates. As of ~~October~~April 29, ~~2021~~2022 and January ~~29, 2021,~~28, 2022, the allowance for expected credit losses was ~~$100~~$72 million and ~~$104~~$90 million, respectively. Based on our assessment, we believe that we are adequately reserved for expected credit losses. We will continue to monitor the aging of our accounts receivable and take actions, where necessary, to reduce our exposure to credit losses.

Dell Financial Services and Financing Receivables

~~DFS supports Dell Technologies by offering and arranging~~The Company offers or arranges various financing options and services for our customers globally, including through captive financing ~~operations in North America, Europe, Australia, and New Zealand.~~operations. DFS originates, collects, and services customer receivables primarily related to the purchase of our product, software, and service solutions. ~~DFS~~The Company further strengthens our customer relationships through its flexible consumption models, ~~provided through APEX,~~ which enable us to offer our customers the option to pay over time and, in certain cases, based on utilization, to provide them with financial flexibility to meet their changing technological requirements. New financing originations were ~~$2.0~~$2.1 billion and ~~$2.1 billion for the third quarter of Fiscal 2022 and Fiscal 2021, respectively, and $5.8 billion and $6.5~~ $1.9 billion for the first ~~nine months~~quarter of Fiscal ~~2022~~2023 and Fiscal ~~2021,~~2022, respectively. ~~We experienced a decline in new financing originations during Fiscal 2022 as more customers leveraged financing during Fiscal 2021 in the early stages of the COVID-19 pandemic.~~

~~DFS~~The Company’s leases are generally classified as sales-type ~~leases, direct financing~~ leases or operating leases. Amounts due from lessees under sales-type leases or direct financing leases are recorded as part of financing receivables, with interest income recognized over the contract term. On commencement of sales-type leases, we typically qualify for up-front revenue recognition. On originations of operating leases, we record equipment under operating leases, classified as property, plant, and equipment, and recognize rental revenue and depreciation expense, classified as cost of net revenue, over the contract term. Direct financing leases are immaterial. Leases that commenced prior to the effective date of the current lease accounting standard continue to be accounted for under previous lease accounting guidance.

As of ~~October~~April 29, ~~2021~~2022 and January ~~29, 2021,~~28, 2022, our financing receivables, net were $10.2 billion and ~~$10.5~~$10.6 billion, ~~respectively.~~ respectively. We maintain an allowance to cover expected financing receivable credit losses and evaluate credit loss expectations based on our total portfolio. ~~Our allowance for expected credit losses in future periods may vary from our current estimates.~~ For both the ~~third~~first quarter of Fiscal ~~2022~~2023 and Fiscal ~~2021,~~2022, the principal charge-off rate for our financing receivables portfolio was ~~1.1% and 0.7%, respectively. For the first nine months of Fiscal 2022 and Fiscal 2021, the principal charge-off rate for our total portfolio was 0.7% and 0.9%, respectively.~~0.5%. The credit quality of our financing receivables has improved in recent years ~~due to an overall improvement in the credit environment and~~ as the mix of high-quality commercial accounts in our portfolio has continued to increase. We continue to monitor broader economic indicators and their potential impact on future credit loss performance. We have an extensive process to manage our exposure to customer credit risk, including active management of credit lines and our collection activities. We also sell selected fixed-term financing receivables without recourse to unrelated third parties on a periodic basis, primarily to manage certain concentrations of customer credit exposure. Based on our assessment of the customer financing receivables, we believe that we are adequately reserved.

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We retain a residual interest in equipment leased under our ~~fixed-term~~ lease programs. As of ~~October~~April 29, ~~2021~~2022 and January ~~29, 2021,~~28, 2022, the residual interest recorded as part of financing receivables was ~~$265~~$176 million and ~~$424~~$217 million, respectively. The decline in residual interest was principally attributable to a corresponding increase in originations of operating leases. The amount of the residual interest is established at the inception of the lease based upon estimates of the value of the equipment at the end of the lease term using historical studies, industry data, and future value-at-risk demand valuation methods. WeOn a quarterly basis, we assess the carrying amount of our recorded residual values for ~~expected losses.~~impairment. Generally, expected losses as a result of residual value risk on equipment under lease are not considered to be significant primarily because of the existence of a secondary market with respect to the equipment. ~~The~~Further, the lease agreement ~~also~~ clearly defines applicable return conditions and remedies for non-compliance, to ensure that the leased equipment will be in good operating condition upon return. Model changes and updates, as well as market strength and product acceptance, are monitored, and adjustments are made to residual values in accordance with the significance of any such changes. To mitigate our exposure, we work closely with customers and dealers to manage the sale of returned assets. No ~~material~~ expected losses were recorded related to residual assets during the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022~~2023 and Fiscal ~~2021.~~2022.

As of ~~October~~April 29, ~~2021~~2022 and January ~~29, 2021,~~28, 2022, equipment under operating leases, net was ~~$1.6~~$1.9 billion and ~~$1.3~~$1.7 billion, respectively. ~~Based on triggering events, we~~We assess the carrying amount of the equipment under operating leases ~~recorded~~ for ~~impairment.~~impairment whenever events or circumstances may indicate that an impairment has occurred. No material impairment losses were recorded related to such equipment during the ~~third~~first quarter ~~and first nine months~~ of Fiscal ~~2022~~2023 and Fiscal ~~2021.~~2022.

DFS offerings are initially funded through cash on hand at the time of origination, most of which is subsequently replaced with ~~third-party~~asset-backed financing. For DFS offerings which qualify as sales-type leases, the initial funding of financing receivables is reflected as an impact to cash flows from operations, and is largely subsequently offset by cash proceeds from financing.

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For DFS operating leases, ~~which have increased under the current lease standard,~~ the initial funding is classified as a capital expenditure and reflected as an impact to cash flows used in investing activities.

See Note 35 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information about our financing receivables and the associated allowances, and ~~the~~ equipment under operating leases.

~~Off-Balance Sheet Arrangements~~

~~As of October 29, 2021, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition or results of operations.~~

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LIQUIDITY, CAPITAL COMMITMENTS, AND MARKET CONDITIONS ~~LIQUIDITY, AND CAPITAL COMMITMENTS~~

~~Market Conditions~~

We regularly monitor economic conditions and associated impacts on the financial markets and our business. We consistently evaluate the financial health of our supplier base, carefully manage customer credit, diversify counterparty risk, and monitor the concentration risk of our cash and cash equivalents balances globally. We routinely monitor our financial exposure to borrowers and counterparties.

We monitor credit risk associated with our financial counterparties using various market credit risk indicators such as credit ratings issued by nationally recognized credit rating agencies and changes in market credit default swap levels. We perform periodic evaluations of our positions with these counterparties and may limit exposure to any one counterparty in accordance with our policies. We monitor and manage these activities depending on current and expected market developments.

We use derivative instruments to hedge certain foreign currency exposures. We use forward contracts and purchased options designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted transactions denominated in currencies other than the U.S. dollar. In addition, we primarily use forward contracts and may use purchased options to hedge monetary assets and liabilities denominated in a foreign currency. See Note 6 of the Notes to the Condensed Consolidated Financial Statements included in this report for more information about our use of derivative instruments.

We are exposed to interest rate risk related to our variable-rate debt portfolio. In the normal course of business, we follow established policies and procedures to manage this risk, including monitoring of our asset and liability mix. As a result, we do not anticipate any material losses from interest rate risk.

~~The impact of any credit adjustments related to our use of counterparties on our Condensed Consolidated Financial Statements included in this report has been immaterial.~~

Liquidity and Capital Resources

To support our ongoing business operations, we rely on operating cash flows as our primary source of liquidity. We monitor the efficiency of our balance sheet to ensure that we have adequate liquidity to support our business and strategic initiatives. In addition to internally generated cash, we have access to other capital sources to finance our strategic initiatives and fund growth in our financing operations. Our strategy is to deploy capital from any potential source, whether internally generated cash or debt, depending on the adequacy and availability of that source of capital and whether it can be accessed in a cost-effective manner.

~~The following table presents our cash and cash equivalents as well as our available borrowings as of the dates indicated:~~

October 29, 2021 January 29, 2021
(in millions)
Cash and cash equivalents, and available borrowings:
Cash and cash equivalents (a) $ 22,406 $ 14,201
Remaining available borrowings under revolving credit facilities (b) 5,969 5,467
Total cash, cash equivalents, and available borrowings $ 28,375 $ 19,668

~~____________________~~

~~(a) Of the $22.4 billion of cash and cash equivalents as of October 29, 2021, $12.5 billion was held by VMware, Inc.~~

~~(b) Of the $6.0 billion of remaining available borrowings under revolving credit facilities, $1.5 billion was attributable to the VMware Revolving Credit Facility.~~

Our revolving credit facilities as of October 29, 2021 consist of the Revolving Credit Facility and the VMware Revolving Credit Facility. The Revolving Credit Facility has a maximum aggregate borrowing capacity of $4.5 billion, and available borrowings under this facility are reduced by draws on the facility and outstanding letters of credit. As of October 29, 2021, there were no borrowings outstanding under the facility. Borrowings under the Revolving Credit Facility are used for general corporate purposes on a short-term basis.

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On November 1, 2021, we entered into a new senior secured Revolving Credit Facility (the “2021 Revolving Credit Facility”) to replace the old senior secured Revolving Credit Facility under the Existing Credit Agreement. The 2021 Revolving Credit Facility, which matures on November 1, 2026, provides us with revolving commitments in an aggregate principal amount of $5.0 billion for general corporate purposes and includes a letter of credit sub-facility of up to $500 million and a swing-line loan sub-facility of up to $500 million. See Note 18 of the Notes to the Condensed Consolidated Financial Statements included in this report for more information.

The VMware Revolving Credit Facility has a maximum capacity of $1.5 billion. As of October 29, 2021, there were no outstanding borrowings under the facility. None of the net proceeds of borrowings under the VMware Revolving Credit Facility will be made available to support the operations or satisfy any corporate purposes of Dell Technologies, other than the operations and corporate purposes of VMware, Inc. and VMware, Inc.’s subsidiaries.

~~See Note 5 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information about each of the foregoing revolving credit facilities.~~

We believe that our current cash and cash equivalents, together with cash that will be provided by future operations and borrowings expected to be available under our revolving credit ~~facilities,~~facility, will be sufficient over at least the next twelve months and for the foreseeable future thereafter ~~to fund~~meet our material cash requirements, including funding of our operations, ~~debt service requirements and maturities,~~debt-related payments, capital expenditures, ~~share repurchases, dividend payments,~~ and other corporate needs.

~~Debt~~As part of our overall capital allocation strategy, we intend to drive growth while maintaining our investment grade rating and focusing on returning capital to our stockholders through both share repurchase programs and dividend payments.

The following table ~~summarizes~~presents our ~~outstanding debt~~cash and cash equivalents as well as our available borrowings as of the dates indicated:

October 29, 2021 Increase (decrease) January 29, 2021
(in millions)
Core debt
Senior Secured Credit Facilities and First Lien Notes $ 24,754 $ (23) $ 24,777
Unsecured Notes and Debentures 952 (400) 1,352
Senior Notes 1,625 (1,075) 2,700
EMC Notes — (1,000) 1,000
DFS allocated debt (366) 300 (666)
Total core debt 26,965 (2,198) 29,163
DFS related debt
DFS debt 9,977 311 9,666
DFS allocated debt 366 (300) 666
Total DFS related debt 10,343 11 10,332
Margin Loan Facility and other 400 (3,835) 4,235
Debt of public subsidiary
VMware Notes 10,750 6,000 4,750
Total public subsidiary debt 10,750 6,000 4,750
Total debt, principal amount 48,458 (22) 48,480
Carrying value adjustments (479) 17 (496)
Total debt, carrying value $ 47,979 $ (5) $ 47,984


	April 29, 2022		January 28, 2022
	(in millions)
Cash and cash equivalents, and available borrowings:
Cash and cash equivalents	$	6,654	$	9,477
Remaining available borrowings under revolving credit facilities	4,969		4,969
Total cash, cash equivalents, and available borrowings	$	11,623	$	14,446

During the first quarter of Fiscal 2023, cash and cash equivalents decreased by $2.8 billion, primarily driven by return of approximately $1.75 billion of capital to stockholders through both share repurchases and our first quarterly dividend payment.

Our revolving credit facilities as of April 29, 2022 consist of the 2021 Revolving Credit Facility, which has a maximum capacity of $5.0 billion. Available borrowings under this facility are reduced by draws on the facility and outstanding letters of credit. As of April 29, 2022, there were no borrowings outstanding under the facility and remaining available borrowings totaled approximately $5.0 billion. We may regularly use our available borrowings from the 2021 Revolving Credit Facility on a short-term basis for general corporate purposes. See Note 7 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information about the 2021 Revolving Credit Facility.

~~During the first nine months of Fiscal 2022, the outstanding principal amount of our debt~~

~~remained relatively flat, primarily as a result of principal repayments of $6.5 billion offset by the issuance of $6.0 billion of VMware Notes and $0.4 billion of net DFS debt activity.~~

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Debt

The following table presents our outstanding debt as of the dates indicated:


	April 29, 2022		Change		January 28, 2022
	(in millions)
Core debt
Senior Notes	$	16,300	$	—	$	16,300
Legacy Notes and Debentures	952		—		952

DFS allocated debt	(728)		405		(1,133)
Total core debt	16,524		405		16,119
DFS related debt
DFS debt	9,825		179		9,646
DFS allocated debt	728		(405)		1,133
Total DFS related debt	10,553		(226)		10,779
Other	320		(17)		337
Total debt, principal amount	27,397		162		27,235
Carrying value adjustments	(275)		6		(281)
Total debt, carrying value	$	27,122	$	168	$	26,954

During the first quarter of Fiscal 2023, the outstanding principal amount of our debt increased by $0.2 billion to $27.4 billion as of April 29, 2022, primarily driven by net DFS debt activity.

We define core debt as the total principal amount of our debt, less DFS related debt ~~our Margin Loan Facility~~ and other ~~debt, and public subsidiary~~ debt. Our core debt was ~~$27.0~~$16.5 billion and $16.1 billion as of ~~October~~April 29, ~~2021. During the first nine months of Fiscal~~ 2022 the decrease in our core debt was driven by principal repayments, including $1.1 billion principal amount of our 5.875% Senior Notes due June 2021, $1.0 billion principal amount of our 3.375% EMC Notes due June 2023, and ~~$0.4 billion principal amount of our 4.625% Unsecured Notes due April 2021.~~

In connection with the VMware Spin-off executed on November 1, 2021, VMware, Inc. paid a cash dividend, pro rata, to each of the holders of VMware, Inc. common stock in an aggregate amount equal to $11.5 billion, of which Dell Technologies received $9.3 billion. Subsequent to October 29, 2021 and the completion of the transaction, the Company utilized the net proceeds from its pro rata share, as well as cash on hand, to repay $9.4 billion in outstanding principal amount of core debt. Further, in connection with the termination of the Existing Credit Agreement, which governed the Senior Secured Credit Facilities, the tangible and intangible assets that secured the First Lien Notes were released as collateral and, as such, our remaining core debt became unsecured. Additionally, on November 19, 2021, the Company issued a partial redemption notice of $1.25 billion principal amount of the 5.45% First Lien Notes due June 2023 with the repayment expected to occur on December 6, 2021.

January 28, 2022, respectively. See Note 187 of the Notes to the Condensed Consolidated Financial Statements included in this report for more information about ~~VMware Spin-off and debt-related activity subsequent to October 29, 2021.~~

~~As of October 29, 2021,~~ our ~~Margin Loan Facility and other debt was $0.4 billion and consisted only of other~~ debt. ~~During the first nine months of Fiscal 2022, we fully repaid the Margin Loan Facility in the principal amount of $4.0 billion.~~

DFS related debt primarily represents debt from our securitization and structured financing programs. ~~The majority of DFS debt is non-recourse to Dell Technologies and represents borrowings under securitization programs and structured financing programs, for which our~~Our risk of loss under these programs is limited to transferred lease and loan payments and associated equipment, ~~and under which~~as the credit holders have no recourse to Dell Technologies.

To fund expansion of the DFS business, we balance the use of the securitization and structured financing programs with other sources of liquidity. We approximate the amount of our debt used to fund the DFS business by applying a 7:1 debt to equity ratio to the sum of our financing receivables balance and equipment under our DFS operating leases, net. The debt to equity ratio ~~used~~ is based on the underlying credit quality of the assets. See Note 35 of the Notes to the Condensed Consolidated Financial Statements included in this report for more information about our DFS debt.

Public subsidiary debt represents VMware, Inc. indebtedness. VMware, Inc. and its respective subsidiaries are unrestricted subsidiaries for purposes of the core debt of Dell Technologies. Neither Dell Technologies nor any of its subsidiaries, other than VMware, Inc., is obligated to make payment on the VMware Notes. None of the net proceeds of the VMware Notes will be made available to support the operations or satisfy any corporate purposes of Dell Technologies, other than the operations and corporate purposes of VMware, Inc. and its subsidiaries.

~~See Note 5 of the Notes to the Condensed Consolidated Financial Statements included in this report for more information about our debt and VMware, Inc. debt.~~

We have made steady progress in paying down debt and we will continue to ~~include~~pursue deleveraging as an important component of our overall strategy. ~~We have~~As a result of our debt reduction and liability management strategy, we achieved an investment grade corporate family rating from three major credit rating agencies ~~with the final upgrade occurring subsequent to October 29, 2021.~~during Fiscal 2022.

We believe we will continue to be able to make our debt principal and interest payments, including the short-term maturities, from existing and expected sources of cash, primarily from operating cash flows. Cash used for debt principal and interest payments may ~~also~~ include short-term borrowings under our revolving credit ~~facilities.~~facility. Under our variable-rate debt, we could experience variations in our future interest expense from potential fluctuations in applicable reference rates, or from possible fluctuations in the level of DFS debt required to meet future demand for customer financing. ~~We or~~There are no scheduled maturities related to our ~~affiliates or their related persons,~~outstanding core debt during Fiscal 2023. However, at our ~~or their~~ sole discretion, ~~and without public announcement,~~we may purchase, redeem, prepay, refinance, or otherwise retire any amount of our outstanding indebtedness under the terms of such indebtedness at any time and from time to time, in open market or negotiated transactions with the holders of such indebtedness or otherwise, as appropriate market conditions exist.

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Cash Flows

The following table presents a summary of our Condensed Consolidated Statements of Cash Flows for the periods indicated:


		Nine Months Ended					Three Months Ended
		October 29, 2021		October 30, 2020			April 29, 2022		April 30, 2021
		(in millions)					(in millions)
Net change in cash from:	Net change in cash from:					Net change in cash from:
Operating activities	Operating activities	$	7,214	$	5,530	Operating activities	$	(269)	$	2,238
Investing activities	Investing activities	2,053		26		Investing activities	(720)		(519)
Financing activities	Financing activities	(1,028)		(3,483)		Financing activities	(1,706)		(1,638)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(54)		(67)		Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(111)		(5)
Change in cash, cash equivalents, and restricted cash	Change in cash, cash equivalents, and restricted cash	$	8,185	$	2,006	Change in cash, cash equivalents, and restricted cash	$	(2,806)	$	76

Cash flows for the three months ended April 30, 2021 are inclusive of cash flows attributable to VMware. Effective November 1, 2021, as a result of the VMware Spin-off, cash flows ceased to include VMware. See “Introduction” and Note 1 and Note 2 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information regarding the VMware Spin-off.

Operating Activities — Cash used by operating activities of $0.3 billion during the first quarter of Fiscal 2023 primarily reflected lower seasonal sales trends affecting parts of our business as well as the timing of annual personnel-related payments. Operating cash flows were also impacted by higher than normal inventory balances as we continue to proactively manage supply chain challenges. During the first quarter of Fiscal 2022, cash provided by operating activities was ~~$7.2~~$2.2 billion, ~~for the first nine months~~ of ~~Fiscal 2022 compared~~which $1.3 billion related to ~~cash provided by operating activities of $5.5 billion for the first nine months of Fiscal 2021. The increase in operating cash flows during the first nine months of Fiscal 2022~~VMware, and was ~~primarily~~ driven by ~~strong growth. Additionally,~~both working capital ~~dynamics were favorable for the period primarily due to timing of purchases~~management and payments to vendors, partially offset by higher end of quarter shipments and increased inventory as we continue to navigate the current supply chain environment. In comparison, during the first nine months of Fiscal 2021 we experienced unfavorable working capital impacts.profitability.

Investing Activities — Investing activities primarily consist of cash used to fund capital expenditures for property, plant, and equipment, which includes equipment under DFS operating leases. Additional activities include capitalized software development costs, strategic investments, and the maturities, sales, and purchases of investments. During the first quarter of Fiscal 2023 and Fiscal 2022, cash used in investing activities was $0.7 billion and $0.5 billion, respectively, and was primarily used by capital expenditures.

Financing Activities — Financing activities primarily consist of the proceeds and repayments of debt and cash used to repurchase common stock. Cash used in financing activities was $1.7 billion during the first quarter of Fiscal 2023 and primarily consisted of repurchases of common stock, including shares repurchased to settle employee tax withholding on stock-based compensation, and the payment of our first quarterly dividend. Cash used in financing activities of $1.6 billion during the first quarter of Fiscal 2022 primarily consisted of debt repayments and repurchases of common stock by our public subsidiaries.

DFS Cash Flow Impacts — DFS offerings are initially funded through cash on hand at the time of origination, most of which is subsequently replaced with ~~third-party~~asset-backed financing. For DFS offerings ~~which~~that qualify as sales-type leases, the initial funding of financing receivables is reflected as an impact to cash flows from operations and is largely subsequently offset by cash proceeds from ~~financing activities.~~financing. For DFS operating leases, which have increased under the current ~~leasing~~lease accounting standard, the initial funding is classified as a capital expenditure and reflected as cash flows used in investing activities. DFS new financing originations were ~~$5.8~~$2.1 billion and ~~$6.5~~$1.9 billion during the first ~~nine months~~quarter of Fiscal ~~2022~~2023 and Fiscal ~~2021,~~2022, respectively. As of ~~October~~April 29, ~~2021,~~2022, DFS had $10.2 billion of total net financing receivables ~~net~~ and ~~$1.6~~$1.9 billion of equipment under DFS operating leases, net.

~~Investing Activities~~ — Investing activities primarily consist of cash used to fund capital expenditures for property, plant, and equipment, which includes equipment under operating leases, as well as capitalized software development costs, acquisitions and divestitures, strategic investments, and the maturities, sales, and purchases of investments. During the first nine months of Fiscal 2022, cash provided by investing activities was $2.1 billion and was primarily driven by net cash proceeds related to the divestiture of Boomi, partially offset by capital expenditures and capitalized software development costs. In comparison, cash provided by investing activities was $26 million during the first nine months of Fiscal 2021, which was primarily attributable to net cash proceeds from the divestiture of RSA Security during the the third quarter of Fiscal 2021, largely offset by capital expenditures and acquisitions of businesses.

~~Financing Activities~~ — Financing activities primarily consist of the proceeds and repayments of debt, cash used to repurchase common stock, and proceeds from the issuance of common stock. Cash used in financing activities was $1.0 billion during the first nine months of Fiscal 2022 and primarily consisted of debt repayments and repurchases of common stock by our public subsidiaries, partially offset by net cash proceeds from the issuance of VMware Notes and DFS debt. In comparison, cash used in financing activities of $3.5 billion during the first nine months of Fiscal 2021 primarily consisted of debt repayments and repurchases of common stock by our public subsidiaries, partially offset by cash proceeds from the issuances of multiple series of First Lien Notes and VMware Notes.

Capital Commitments

Capital Expenditures — ~~During~~We spent $0.7 billion during the first ~~nine months~~quarter of Fiscal ~~2022~~2023 and Fiscal ~~2021, we spent $2.1 billion and $1.6 billion, respectively,~~2022 on property, plant, and equipment and capitalized software development ~~costs.~~costs, of which the funding of equipment under DFS operating leases totaled $0.2 billion for both periods. Product demand, product mix, ~~and~~ the use of contract manufacturers, ~~as well as~~and ongoing investments in operating and ITinformation technology infrastructure, ~~and software development,~~ influence the level and prioritization of our capital expenditures. Aggregate capital expenditures for Fiscal ~~2022~~2023 are currently expected to total between $2.9 billion and $3.1 billion, of which approximately ~~$1.0~~$0.9 billion isof expenditures are expected to be ~~expended for~~applied to equipment under DFS operating leases and approximately $0.3 billion ~~for~~to capitalized software development costs.

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Repurchases of Common Stock ~~—Effective~~— Effective as of September 23, 2021, our board of directors approved a stock repurchase program ~~(the “2021 Stock Repurchase Program”)~~with no established expiration date under which we are authorized ~~to use assets~~ to repurchase up to $5 billion of shares of our Class C Common ~~Stock with no established expiration date. As of October 29, 2021,~~Stock. During the ~~cumulative authorized amount remaining for stock repurchases was $5 billion. Subsequent to the third~~first quarter of Fiscal ~~2022 through November 30, 2021,~~2023, we repurchased approximately ~~3.1~~29 million shares of Class C Common Stock for a total purchase price of approximately ~~$173 million.~~$1.5 billion. These amounts exclude shares repurchased to settle employee tax withholding related to the vesting of stock awards.

Dividend Payments— On February 24, 2022, the Company announced that its Board of Directors has adopted a dividend policy under which the Company intends to pay quarterly cash dividends on its common stock at an initial rate of $0.33 per share per fiscal quarter.

During the three months ended April 29, 2022, the Company paid an initial quarterly dividend under the new policy in the amount of $248 million to the holders of record of all of the issued and outstanding shares of common stock as of the close of business on April 20, 2022.

Purchase Obligations — Purchase obligations are defined as contractual obligations to purchase goods or services that are enforceable and legally binding on us. These obligations specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. Purchase obligations do not include contracts that may be canceled without penalty.

We utilize several suppliers to manufacture sub-assemblies for our products. Our efficient supply chain management allows us to enter into flexible and mutually beneficial purchase arrangements with our suppliers in order to minimize inventory risk. Consistent with industry practice, we acquire raw materials or other goods and services, including product components, by issuing to suppliers authorizations to purchase based on our projected demand and manufacturing needs. These purchase orders are typically fulfilled within 30 days and are entered into during the ordinary course of business in order to establish best pricing and continuity of supply for our production. Purchase orders are not included in purchase obligations, as they typically represent our authorization to purchase rather than binding purchase obligations.

As of ~~October~~April 29, ~~2021,~~2022, such purchase obligations were ~~$5.2~~$3.1 billion, ~~$0.7~~$0.4 billion, and $0.8 billion for the remaining ~~three~~nine months of Fiscal ~~2022, and for Fiscal~~ 2023, ~~and~~ Fiscal 2024, and Fiscal 2025 and thereafter, respectively.

Market Conditions

We use derivative instruments to hedge certain foreign currency exposures. We use forward contracts and purchased options designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted transactions denominated in currencies other than the U.S. dollar. In addition, we primarily use forward contracts and may use purchased options to hedge monetary assets and liabilities denominated in a foreign currency. See Note 8 of the Notes to the Condensed Consolidated Financial Statements included in this report for more information about our use of derivative instruments.

We are exposed to interest rate risk related to our variable-rate debt portfolio. In the normal course of business we follow established policies and procedures to manage this risk, including monitoring of our asset and liability mix. As a result, we do not anticipate any material losses from interest rate risk.

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Summarized Guarantor Financial Information

As discussed in Note 57 of the Notes to the Condensed Consolidated Financial Statements included in this report, Dell International L.L.C. and EMC Corporation (the “Issuers”), both of which are wholly-owned subsidiaries of Dell Technologies, completed private offerings of multiple series of senior secured notes issued on June 1, 2016, March 20, 2019, and April 9, 2020 (collectively, the “First Lien Notes”). On May 17, 2021, the Issuers launched an exchange offer of the outstanding First Lien Notes for registered senior secured notes with substantially similar terms (the ~~“Exchange~~“Senior Notes”). In June 2021, the Issuers completed ~~the~~an exchange offer and issued ~~an aggregate of~~ $18.4 billion aggregate principal amount of ~~Exchange Notes~~registered senior notes under the Securities Act of 1933 in exchange for the same principal amount and substantially identical terms of ~~First Lien~~the Senior Notes. ~~As of October 29, 2021, the~~The aggregate principal amount of unregistered ~~First Lien~~Senior Notes remaining outstanding following the settlement of the exchange offer was approximately $0.1 billion. During Fiscal 2022, the tangible and intangible assets of the Issuers and guarantors that secured obligations under the Senior Notes were released as collateral. As a result, the Senior Notes became fully unsecured. In addition, all guarantees of the Senior Notes by subsidiaries of Dell Inc. were released.

Guarantees — The ~~Exchange~~Senior Notes are guaranteed on a joint and several unsecured basis by Dell Technologies and ~~on a joint and several secured basis by~~its wholly-owned subsidiaries, Denali Intermediate, Inc. ~~(“Denali Intermediate”),~~and Dell ~~and each of Denali Intermediate’s wholly-owned domestic subsidiaries that guarantees the Issuers’ Senior Credit Facility obligations~~Inc. (collectively, the “Guarantors”). Not all of Denali Intermediate’s subsidiaries guarantee the Exchange Notes, including none of Denali Intermediate’s non-wholly-owned subsidiaries, foreign subsidiaries, receivables subsidiaries and subsidiaries designated as unrestricted subsidiaries under the Senior Credit Facility (such non-guarantor subsidiaries, collectively, the “Non-Guarantor Subsidiaries”). SecureWorks Corp., Virtustream, Inc., VMware, Inc., EMC Equity Assets LLC and VMW Holdco L.L.C. (collectively, the “Unrestricted Subsidiaries”) have been designated as unrestricted subsidiaries under the Senior Credit Facility and therefore do not guarantee the Exchange Notes or the Senior Credit Facility obligations. See Exhibit 22.1 filed with this report for a list of subsidiary guarantors and issuers of guaranteed securities.

The guarantees are full and unconditional, subject to certain customary release provisions. The indentures that govern the Exchange Notes provide that guarantees by subsidiaries of Denali Intermediate may be released in the event, among other things, (1) such Guarantor is sold or sells all of its assets in compliance with the applicable provisions of the indentures; (2) such Guarantor is released from its guaranty under the Senior Credit Facility, including the declaration of such subsidiary as “unrestricted” under the Senior Credit Facility; (3) the merger, amalgamation or consolidation, or liquidation, of such Guarantor; or (4) the achievement of investment grade ratings with respect to the Issuers and the Exchange Notes. In addition, all Guarantors will be released from their guarantees if the requirements for legal defeasance or covenant defeasance or to discharge the indentures have been satisfied.

Basis of Preparation of the Summarized Financial Information — The tables below are summarized financial information provided in conformity with Rule 13-01 of the SEC’s Regulation S-X. The summarized financial information of the Issuers and Guarantors (collectively, the “Obligor Group”) is presented on a combined basis, excluding intercompany balances and transactions between entities in the Obligor Group. ~~To the extent material, the~~The Obligor Group’s amounts due from, amounts due to, and transactions with ~~Non-Guarantor~~Non-Obligor Subsidiaries and VMware, Inc. and its consolidated subsidiaries (the “Related Party”) have been presented separately. The Obligor Group’s investment balances in ~~Non-Guarantor~~Non-Obligor Subsidiaries have been excluded.

The following table presents summarized results of operations information for the Obligor Group for the period indicated:


	~~Nine~~Three Months Ended
	~~October~~April 29, ~~2021~~2022
	(in millions)
Net revenue (a)	$	~~18,608~~2,504
Gross margin (b)	$		~~6,492~~1,115
Operating ~~loss (c)~~income	$		~~(687)~~275
Interest and other, net (c)	~~2,936~~ (544)
~~Income~~Loss before income taxes	$		~~2,249~~ (269)
Net ~~income~~loss attributable to Obligor Group	$	~~1,801~~ (171)

____________________

(a) Includes net revenue from services provided and product sales to ~~Non-Guarantor~~Non-Obligor Subsidiaries of ~~$2,069~~$277 million and ~~$122~~$35 million, respectively.

(b) Includes cost of net revenue from resale of solutions purchased from ~~Non-Guarantor~~Non-Obligor Subsidiaries and the Related Party of ~~$1,837 million.~~

~~(c)~~$251 million and $171 million, respectively. Includes ~~operating expenses~~costs of net revenue from shared services provided by ~~Non-Guarantor~~Non-Obligor Subsidiaries of ~~$59~~$184 million.

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The following table presents summarized balance sheet information for the Obligor Group as of the dates indicated:

October 29, 2021
January 29, 2021 (a)
(in millions)
ASSETS
Current assets $ 16,429 $ 12,160
Short-term intercompany loan receivables 2,379 —
Total current assets 18,808 12,160
Goodwill and intangible assets 15,592 16,229
Other non-current assets 6,910 6,185
Long-term intercompany loan receivables 2,236 4,714
Total assets $ 43,546 $ 39,288
LIABILITIES
Current liabilities $ 26,552 $ 15,761
Intercompany payables 5,574 5,527
Total current liabilities 32,126 21,288
Long-term debt 17,749 27,951
Other non-current liabilities 9,248 7,549
Total liabilities $ 59,123 $ 56,788

~~____________________~~

(a) During the three months ended October 29, 2021, two Non-Guarantor Subsidiaries transferred their respective businesses to the Guarantors. Prior period balances have been reclassified to conform to current period presentation.

~~Summarized Affiliate Financial Information~~

The equity interests of various affiliates within Dell Technologies’ consolidated group have been pledged as collateral for the Exchange Notes. Dell Technologies is therefore subject to Rule 13-02 of the SEC’s Regulation S-X, which requires that summarized financial information for the affiliates whose securities are pledged as collateral (collectively, the “Affiliate Group”) be provided on a combined basis to the extent such information is material and materially different than the corresponding amounts presented in the Consolidated Financial Statements of Dell Technologies. The summarized financial information for the Affiliate Group would produce results materially consistent with information presented in Dell Technologies’ Consolidated Financial Statements and we have therefore not included such information in this report. In particular, the assets, liabilities, and results of operations of the Affiliate Group are not materially different than the corresponding amounts presented in the Consolidated Financial Statements of Dell Technologies, except with respect to the redeemable shares as of January 29, 2021. The redeemable shares balance was $472 million as reflected on the Condensed Consolidated Statements of Financial Position included in this report, as compared to no redeemable shares reflected on the Affiliate Group balance sheet as of the respective dates.

~~Collateral Arrangement~~ ~~— The collateral (“Collateral”) securing the Exchange Notes generally consists of the following, whether now owned or hereafter acquired:~~

•100% of the equity interests of the Issuers, Dell and each Material Subsidiary (as defined in the applicable indenture) that is a wholly-owned subsidiary of the Issuers and the Guarantors (which pledge, in the case of capital stock of any Foreign Subsidiary or FSHCO (each as defined in the applicable indenture), is limited to 65% of the voting capital stock and 100% of the non-voting capital stock of such Foreign Subsidiary or FSHCO); and

•substantially all tangible and intangible personal property and material fee-owned real property of the Issuers and Guarantors (other than Dell Technologies) including but not limited to, accounts receivable, inventory, equipment, general intangibles (including contract rights), investment property, intellectual property, real property, intercompany notes, instruments, chattel paper and documents, letter of credit rights, commercial tort claims, and proceeds of the foregoing.

See Exhibit 22.1 filed with this report for a list of each affiliate of Dell Technologies whose security is pledged as collateral to secure the Exchange Notes. There is no trading market for the applicable affiliates’ securities pledged as collateral.

~~Table of Contents~~

Delivery of the Collateral securing the Exchange Notes would be required in certain customary events of default, including failure to make required payments, failure to comply with covenants, and the occurrence of certain events of bankruptcy and insolvency.

The Collateral may be released in certain circumstances, including, (1) to enable the sale, transfer or other disposition of such property or assets, (2) upon the release of the guarantee of a Guarantor, (3) upon such property or asset becoming an “excluded asset” as defined in the indentures governing the Exchange Notes, (4) upon the achievement of investment grade ratings with respect to the Issuers and the Exchange Notes, and (5) to the extent the liens on the Collateral securing the Senior Credit Facility obligations are released (other than in connection with the payment in full of the Senior Credit Facility).

The Collateral does not include, and will not include, among other things, (1) a pledge of the assets or equity interests of certain subsidiaries, including the Unrestricted Subsidiaries and their respective subsidiaries, (2) any fee-owned real property with a book value of less than $150 million, (3) any commercial tort claims or letter of credit rights with an individual value of less than $50 million, (4) any “principal property” as defined in the indentures governing the Unsecured Notes and Debentures of Dell and the EMC Notes, and capital stock of any subsidiary holding “principal property” as defined in the indenture governing the Unsecured Notes and Debentures of Dell, or (5) certain excluded assets.


	April 29, 2022		January 28, 2022
	(in millions)
ASSETS
Current assets	$	3,038	$	3,106
Intercompany receivables	623		988
Due from related party, net	65		59
Total current assets	3,726		4,153
Due from related party, net	713		710
Goodwill and intangible assets	15,259		15,399
Other non-current assets	2,857		2,810
Total assets	$	22,555	$	23,072
LIABILITIES
Current liabilities	$	4,616	$	4,625
Due to related party	81		192
Total current liabilities	4,697		4,817
Long-term debt	17,006		17,001
Intercompany loan payables	37,476		37,509
Other non-current liabilities	3,515		3,473
Total liabilities	$	62,694	$	62,800

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ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures about market risk affecting us, see “Part II — Item 7A — Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended January ~~29, 2021.~~28, 2022. Our exposure to market risks has not changed materially from that set forth in our Annual Report.

ITEM 4 — CONTROLS AND PROCEDURES

This report includes the certifications of our Chief Executive Officer and Chief Financial Officer required by Rule 13a-14 under the Securities Exchange Act of 1934 (the “Exchange Act”). See Exhibits 31.1 and 31.2 filed with this report. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to provide reasonable assurance that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

In connection with the preparation of this report, our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~October~~April 29, ~~2021.~~2022. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of ~~October~~April 29, ~~2021.~~2022.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the fiscal quarter ended ~~October~~April 29, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

The information required by this item is incorporated herein by reference to the information set forth under the caption “Legal Matters” in Note 911 of the Notes to the Condensed Consolidated Financial Statements included in Part I of this report.

ITEM 1A — RISK FACTORS

In addition to the other information set forth in this report, the risks discussed in “Part I — Item 1A — Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January ~~29, 2021~~28, 2022 could materially affect our business, operating results, financial condition, or prospects. ~~Further, as a result of the completion of the VMware Spin-off on November 1, 2021, we are subject to the following additional risks:~~

~~Risks Related to the Spin-Off of VMware, Inc.~~

~~Our spin-off of VMware, Inc. may not achieve the intended benefits.~~

On November 1, 2021, as described in this report, VMware, Inc. distributed to its stockholders, including us, a special one-time cash dividend, and we distributed all of the issued and outstanding shares of VMware common stock then owned by us to the holders of record of shares of Dell Technologies as of the distribution record date (the “VMware Spin-off”). Upon completion of the VMware Spin-off, the businesses of VMware, Inc. were separated from our remaining businesses, and we and VMware, Inc. entered into various agreements that will govern our future relationship. Among those agreements, a commercial framework agreement provides a framework under which we and VMware, Inc. will continue our strategic relationship, particularly with respect to projects we and VMware, Inc. believe have the potential to accelerate the growth of the industry, product, service, or platform that may provide one or both of our companies with a strategic market opportunity. The VMware Spin-off may not provide the benefits that we intend, including the benefits we seek from a continuation of our strategic relationship with VMware, Inc. under the commercial framework and other arrangements.

There is the potential for business disruption and significant separation costs. Planning and executing the VMware Spin-off has required significant additional time, effort, and expense. The VMware Spin-off could cause our customers to delay or defer decisions to purchase products or renew contracts, or to end their relationships. Any of these factors could have a material adverse effect on our business, financial condition, results of operations, cash flows or the price of our Class C Common Stock. In addition, the combined value of the common stock of the two companies held by our stockholders may not be equal to or greater than what the value of our common stock alone would have been had the proposed VMware Spin-off not occurred.

The risks described in our Annual Report on Form 10-K and our subsequent SEC reports ~~and other risks described above~~ are not the only risks facing us. There are additional risks and uncertainties not currently known to us or that we currently deem to be immaterial that also may materially adversely affect our business, operating results, financial condition, or prospects.

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ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Sales of Unregistered Securities~~

During the third quarter of Fiscal 2022, we issued to employees an aggregate of 2,019 shares of the Class C Common Stock for an immaterial amount pursuant to exercises of stock options granted under the Dell Inc. Amended and Restated 2002 Long-Term Incentive Plan. The foregoing transactions were affected without registration in reliance on the exemption from registration under the Securities Act of 1933 afforded by Rule 701 thereunder as transactions pursuant to compensatory benefit plans or contracts relating to compensation as provided under such rule.

During October 2021, we issued 363,636 shares of Class C Common Stock to a stockholder upon the conversion of the same number of shares of our Class A Common Stock held by such stockholder. The issuance of the Class C Common Stock in this transaction was made in reliance on the exemption from registration under the Securities Act of 1933 afforded by Section 3(a)(9) thereof. No commission or other remuneration was paid or given directly or indirectly for soliciting the exchange of these securities.

Purchases of Equity Securities

The following table presents information with respect to our purchases of Class C Common Stock during the ~~third~~first quarter of Fiscal ~~2022.~~2023.

Period Total Number of Shares Purchased Weighted Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
Repurchases from July 31, 2021 through August 27, 2021
Share repurchase program — $ — — NA
Employee transactions — $ — — NA
Repurchases from August 28, 2021 through September 24, 2021
Share repurchase program(1)
— $ — — $ 5,000,000,000
Employee transactions (2)
178,530 $ 97.14 — NA
Repurchases from September 25, 2021 through October 29, 2021
Share repurchase program — $ — — $ 5,000,000,000
Employee transactions — $ — — NA
Total 178,530 $ 97.14 — $ 5,000,000,000


Period	Total Number of Shares Purchased	Weighted Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
Repurchases from January 28, 2022 through February 25, 2022	5,519,159	$	58.41	5,519,159	$	4,018,878,121
Repurchases from February 26, 2022 through March 25, 2022	10,080,160	$	51.66	10,080,160	$	3,498,165,262
Repurchases from March 26, 2022 through April 29, 2022	13,167,300	$	48.49	13,167,300	$	2,859,681,208
Total	28,766,619				$	2,859,681,208

~~____________________~~

(1) On February 24, 2020, the Company’s board of directors approved a stock repurchase program under which the Company is authorized to repurchase up to $1 billion of shares of the Class C Common Stock over a 24-month period expiring on February 28, 2022. During the nine months ended October 30, 2020, the Company suspended activity under the program. Effective as of September 23, 2021, ~~the Company’s~~our board of directors ~~approved a~~terminated our previous stock repurchase program and approved a new stock repurchase program with no established expiration date under which ~~the Company is authorized~~we may repurchase from time to ~~use assets to repurchase~~time, through open market purchases, block trades, or accelerated or other structured share purchases, up to $5 billion of shares of ~~the Company’s~~ Class C Common Stock, ~~with no established expiration date and terminated the Company’s previous stock repurchase program. The repurchase~~exclusive of ~~shares is expected~~any fees, commissions, or other expenses related to ~~commence in the fourth quarter of the Company’s fiscal year ending January 28, 2022.~~

~~(2) Represents previously issued shares delivered to the Company to satisfy tax withholding obligations in connection with the vesting of employee restricted stock awards.~~

such repurchases.

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ITEM 5 — OTHER INFORMATION

Iran Threat Reduction and Syria Human Rights Act of 2012

Set forth below is a description of matters reported by us pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 and Section 13(r) of the Exchange Act. Concurrently with the filing of this quarterly report, we are filing a notice pursuant to Section 13(r) of the Exchange Act that such matters have been disclosed in this quarterly report.

On March 2, 2021, the U.S. government designated the Russian Federal Security Service (the “FSB”) as a blocked party under Executive Order 13382. On the same day, the U.S. Department of the Treasury’s Office of Foreign Assets Control issued General License No. 1B (the “OFAC General License”), which generally authorizes U.S. companies to engage in certain licensing, permitting, certification, notification and related transactions with the FSB to the extent such activities are required for the importation, distribution, or use of information technology products in the Russian Federation.

As permitted under the OFAC General License, our subsidiary Dell LLC and other subsidiaries periodically file notifications with the FSB in connection with the importation and distribution of our products in the Russian Federation. During our fiscal quarter ended ~~October~~April 29, ~~2021,~~2022, Dell LLC filed notifications with the FSB. No payments were issued or received, and no gross revenue or net profits were generated, in connection with these filing activities. Dell Technologies and its subsidiaries do not sell products or provide services to the FSB. To the extent permitted by applicable law, including by the OFAC General License, we expect to continue to file notifications with the FSB to qualify our products for importation and distribution in the Russian Federation.

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ITEM 6 — ~~EXHIBITS~~

~~The Company hereby files or furnishes the exhibits listed below:~~EXHIBIT AND FINANCIAL STATEMENT SCHEDULES


Exhibit Number						Description
~~2.1~~4.1						Letter Agreement, dated as of October 7, 2021, between Dell Technologies Inc. (the “Company”) and VMware, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “Commission”) on October 7, 2021) (Commission File No. 001-37867)
~~4.1†~~††						Consent to the Extension of Registration Rights Under the Second Amended and Restated Registration Rights Agreement, dated ~~September 30, 2021,~~March 31, 2022, among Dell Technologies Inc. (the ~~“Company”~~“Company”) and SL SPV-2 L.P., Silver Lake Partners IV, L.P., Silver Lake Technology Investors IV, L.P., Silver Lake Partners V DE (AIV), L.P., Silver Lake Technology Investors V, L.P.
~~22.1~~†22.1††						List of Guarantor Subsidiaries and Issuers of Guaranteed Securities ~~and Affiliates~~a nd Affi liate s Whose Securities Collateralize Securities of Dell ~~Technologies~~T echnolog ies Inc.
31.1††						Certification of Michael S. Dell, Chairman and Chief Executive Officer, pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2††						Certification of Thomas W. Sweet, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1†††						Certifications of Michael S. Dell, Chairman and Chief Executive Officer, and Thomas W. Sweet, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 .INS††						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101 .SCH††						Inline XBRL Taxonomy Extension Schema Document.
101 .CAL††						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101 .DEF††						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101 .LAB††						Inline XBRL Taxonomy Extension Label Linkbase Document.
101 .PRE††						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
~~104††~~104 ††						Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101).



††						Filed with this report.
†††						Furnished with this report.

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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, thereunto duly authorized.


			DELL TECHNOLOGIES INC.

			By:			/s/ BRUNILDA RIOS
						Brunilda Rios
						Senior Vice President, Corporate Finance and
						Chief Accounting Officer
						(On behalf of registrant and as principal accounting officer)

Date: ~~December 3, 2021~~June 6, 2022

9986


		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6054
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9481
Item 4.	Controls and Procedures	9481
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	9582
Item 1A.	Risk Factors	9582
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9683
Item 5.	Other Information	9684
Item 6.	Exhibits	9885
Signatures		9986


	Capital in Excess of Par Value			Treasury Stock
Three Months Ended October 29, 2021	Issued Shares	Amount		Shares	Amount		Accumulated Deficit		Accumulated Other Comprehensive Income/(Loss)		Dell Technologies Stockholders’ Equity (Deficit)		Non-Controlling Interests		Total Stockholders’ Equity (Deficit)
Balances as of July 31, 2021	773	$	17,510	8	$	(305)	$	(12,033)	$	(347)	$	4,825	$	5,118	$	9,943
Net income	—	—		—	—		3,843		—		3,843		45		3,888
Foreign currency translation adjustments	—	—		—	—		—		(61)		(61)		—		(61)
Cash flow hedges, net change	—	—		—	—		—		12		12		—		12
Pension and other post-retirement	—	—		—	—		—		2		2		—		2
Issuance of common stock	2	(9)		—	—		—		—		(9)		—		(9)
Stock-based compensation expense	—	204		—	—		—		—		204		268		472
Treasury stock repurchases	—	—		—	—		—		—		—		—		—
Revaluation of redeemable shares	—	—		—	—		—		—		—		—		—
Impact from equity transactions of non-controlling interests	—	138		—	—		—		—		138		(191)		(53)

Balances as of October 29, 2021	775	$	17,843	8	$	(305)	$	(8,190)	$	(394)	$	8,954	$	5,240	$	14,194


	Capital in Excess of Par Value			Treasury Stock
Nine Months Ended October 29, 2021	Issued Shares	Amount		Shares	Amount		Accumulated Deficit		Accumulated Other Comprehensive Income/(Loss)		Dell Technologies Stockholders’ Equity (Deficit)		Non-Controlling Interests		Total Stockholders’ Equity (Deficit)
Balances as of January 29, 2021	761	$	16,849	8	$	(305)	$	(13,751)	$	(314)	$	2,479	$	5,074	$	7,553

Net income	—	—		—	—		5,561		—		5,561		145		5,706
Foreign currency translation adjustments	—	—		—	—		—		(201)		(201)		—		(201)
Cash flow hedges, net change	—	—		—	—		—		116		116		—		116
Pension and other post-retirement	—	—		—	—		—		5		5		—		5
Issuance of common stock	14	19		—	—		—		—		19		—		19
Stock-based compensation expense	—	569		—	—		—		—		569		837		1,406

Revaluation of redeemable shares	—	472		—	—		—		—		472		—		472
Impact from equity transactions of non-controlling interests	—	(66)		—	—		—		—		(66)		(816)		(882)
Balances as of October 29, 2021	775	$	17,843	8	$	(305)	$	(8,190)	$	(394)	$	8,954	$	5,240	$	14,194


	Capital in Excess of Par Value			Treasury Stock
Three Months Ended October 30, 2020	Issued Shares	Amount		Shares	Amount		Accumulated Deficit		Accumulated Other Comprehensive Income/(Loss)		Dell Technologies Stockholders’ Equity (Deficit)		Non-Controlling Interests		Total Stockholders’ Equity (Deficit)
Balances as of July 31, 2020	753	$	16,356	8	$	(305)	$	(15,810)	$	(660)	$	(419)	$	4,977	$	4,558
Net income	—	—		—	—		832		—		832		49		881
Foreign currency translation adjustments	—	—		—	—		—		(21)		(21)		—		(21)
Cash flow hedges, net change	—	—		—	—		—		128		128		1		129

Issuance of common stock	4	46		—	—		—		—		46		—		46
Stock-based compensation expense	—	126		—	—		—		—		126		310		436

Revaluation of redeemable shares	—	83		—	—		—		—		83		—		83
Impact from equity transactions of non-controlling interests	—	108		—	—		—		—		108		(281)		(173)

Balances as of October 30, 2020	757	$	16,719	8	$	(305)	$	(14,978)	$	(553)	$	883	$	5,056	$	5,939


	Maturities by Fiscal Year (a)
	2022 (remaining three months)		2023		2024		2025		2026		Thereafter		Total
	(in millions)
Senior Secured Credit Facilities and First Lien Notes	$	7,754	$	—	$	2,250	$	1,000	$	1,000	$	12,750	$	24,754
Unsecured Notes and Debentures	—		—		—		—		—		952		952
Senior Notes and EMC Notes	1,625		—		—		—		—		—		1,625
VMware Notes	—		1,500		1,000		1,250		750		6,250		10,750
DFS Debt	1,378		5,019		1,888		1,016		86		590		9,977

Other	9		33		187		124		23		24		400
Total maturities, principal amount	10,766		6,552		5,325		3,390		1,859		20,566		48,458
Associated carrying value adjustments	(94)		(7)		(20)		(20)		(6)		(332)		(479)
Total maturities, carrying value amount	$	10,672	$	6,545	$	5,305	$	3,370	$	1,853	$	20,234	$	47,979


	October 29, 2021		Increase (decrease)		January 29, 2021
	(in millions)
Core debt
Senior Secured Credit Facilities and First Lien Notes	$	24,754	$	(23)	$	24,777
Unsecured Notes and Debentures	952		(400)		1,352
Senior Notes	1,625		(1,075)		2,700
EMC Notes	—		(1,000)		1,000
DFS allocated debt	(366)		300		(666)
Total core debt	26,965		(2,198)		29,163
DFS related debt
DFS debt	9,977		311		9,666
DFS allocated debt	366		(300)		666
Total DFS related debt	10,343		11		10,332
Margin Loan Facility and other	400		(3,835)		4,235
Debt of public subsidiary
VMware Notes	10,750		6,000		4,750

Total public subsidiary debt	10,750		6,000		4,750
Total debt, principal amount	48,458		(22)		48,480
Carrying value adjustments	(479)		17		(496)
Total debt, carrying value	$	47,979	$	(5)	$	47,984


	October 29, 2021		January 29, 2021 (a)
	(in millions)
ASSETS
Current assets	$	16,429	$	12,160
Short-term intercompany loan receivables	2,379		—
Total current assets	18,808		12,160
Goodwill and intangible assets	15,592		16,229
Other non-current assets	6,910		6,185
Long-term intercompany loan receivables	2,236		4,714
Total assets	$	43,546	$	39,288
LIABILITIES
Current liabilities	$	26,552	$	15,761
Intercompany payables	5,574		5,527
Total current liabilities	32,126		21,288
Long-term debt	17,749		27,951
Other non-current liabilities	9,248		7,549
Total liabilities	$	59,123	$	56,788