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Item 1. Financial Statements

2023-06-12 compared with 2022-12-05 · 322 added, 533 removed, 970 unchanged (47% of the section changed)

ITEM 1 — FINANCIAL STATEMENTS (UNAUDITED)

Condensed Consolidated Statements of Financial Position as of October 28, 2022 and January 28, 2022

Condensed Consolidated Statements of Income for the three and nine months ended October 28, 2022 and October 29, 2021

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended October 28, 2022 and October 29, 2021

Condensed Consolidated Statements of Cash Flows for the nine months ended October 28, 2022 and October 29, 2021

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended October 28, 2022 and October 29, 2021

C ondensed C onsolidated Statements of Financial Position as of May 5 , 2023 and February 3, 2023

C ondensed C onsolidated Statements of Income for the three months ended May 5 , 2023 and April 29 , 2 022

C ondensed C onsolidated Statements of Comprehensive Income for the three months ended May 5, 2023 and A pril 29, 2022

Con densed Con solidated Statements of Cash Flows for the three months ended May 5 , 2023 and April 29, 202 2

Con densed Con solidated Statements of Stockholders’ Equity (Deficit) for the three months ended May 5, 2 023 and April 29, 202 2

Notes to the Condensed Consolidated Financial Statements

Note 1 — Overview and Basis of Presentation

Note 2 — Discontinued Operations

Note 2 — Fair Value Measurements

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(in millions;

October 28, 2022 January 28, 2022

May 5, 2023 February 3, 2023

Current assets:

1 unchanged sentence

Accounts receivable, net of allowance of $ 77 and $ 78

11,431 12,912

Due from related party, net 384 378

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(in millions, except per share amounts;

Three Months Ended Nine Months Ended

October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021

Three Months Ended

May 5, 2023 April 29, 2022

Products $ 15,036 $ 20,464

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Income tax expense 127 144

Net income from continuing operations 241 3,683 1,816 4,971

Income from discontinued operations, net of income taxes (Note 2)

Net income 578 1,069

Net loss attributable to non-controlling interests ( 5 ) ( 3 )

Net income attributable to non-controlling interests of discontinued operations — 47 — 150

Net income attributable to Dell Technologies Inc.

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Earnings per share attributable to Dell Technologies Inc.

Continuing operations $ 0.34 $ 4.81 $ 2.47 $ 6.53

Discontinued operations $ — $ 0.21 $ — $ 0.77

Earnings per share attributable to Dell Technologies Inc.

Continuing operations $ 0.33 $ 4.68 $ 2.41 $ 6.34

Discontinued operations $ — $ 0.19 $ — $ 0.74

Basic $ 0.81 $ 1.42

Diluted $ 0.79 $ 1.37

(a) Includes related party cost of net revenue as follows (Note 15):

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(in millions;

Three Months Ended Nine Months Ended

October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021

Three Months Ended

May 5, 2023 April 29, 2022

Net income $ 578 $ 1,069

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Change in unrealized gains 10 372

Reclassification adjustment for net gains included in net income ( 324 ) ( 74 ) ( 726 ) ( 34 )

Reclassification adjustment for net (gains) losses included in net income 91 ( 96 )

Net change in cash flow hedges 101 276

Pension and other postretirement plans:

Recognition of actuarial net gains (losses) from pension and other postretirement plans ( 2 ) 1 11 2

Reclassification adjustments for net losses from pension and other postretirement plans 1 1 1 3

Net change in actuarial net gains (losses) from pension and other postretirement plans ( 1 ) 2 12 5

Total other comprehensive (loss), net of tax expense of $ 6 and $ 1 , respectively, and $ 14 and $ 6 , respectively

( 215 ) ( 47 ) ( 490 ) ( 80 )

Recognition of actuarial net gains from pension and other postretirement plans 1 17

Net change in actuarial net gains from pension and other postretirement plans 1 17

Total other comprehensive income, net of tax expense (benefit) of $ 5 and $ 16 , respectively

Comprehensive income, net of tax 711 1,076

Net income (loss) attributable to non-controlling interests ( 5 ) ( 3 )

Other comprehensive (loss) attributable to non-controlling interests — — ( 1 ) —

Comprehensive income attributable to Dell Technologies Inc.

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(in millions;

continued on next page;

Nine Months Ended

October 28, 2022 October 29, 2021

Three Months Ended

May 5, 2023 April 29, 2022

Cash flows from operating activities:

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Deferred income taxes ( 93 ) ( 246 )

Other, net (a) 648 ( 4,312 )

Other, net 308 ( 91 )

Changes in assets and liabilities, net of effects from acquisitions and dispositions:

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Capital expenditures and capitalized software development costs ( 701 ) ( 690 )

Acquisition of businesses and assets, net — ( 16 )

Divestitures of businesses and assets, net — 3,957

Change in cash from investing activities ( 684 ) ( 720 )

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Proceeds from the issuance of common stock 2 4

Repurchases of parent common stock

( 3,090 ) ( 35 )

Repurchases of subsidiary common stock ( 8 ) ( 1,174 )

Payments of dividends to stockholders ( 728 ) —

Repurchases of common stock ( 240 ) ( 1,436 )

Repurchases of common stock for employee tax withholdings ( 306 ) ( 350 )

Payments of dividends and dividend equivalents ( 276 ) ( 248 )

Proceeds from debt 2,521 3,034

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Change in cash, cash equivalents, and restricted cash ( 967 ) ( 2,806 )

____________________

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

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

DELL TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

October 28, 2022 October 29, 2021

Change in cash, cash equivalents, and restricted cash ( 4,858 ) 8,185

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 5,224 23,369

Cash, cash equivalents, and restricted cash attributable to discontinued operations — 12,553

Cash, cash equivalents, and restricted cash from continuing operations $ 5,224 $ 10,816

Cash, cash equivalents, and restricted cash at beginning of the period 8,894 10,082

Cash, cash equivalents, and restricted cash $ 7,927 $ 7,276

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

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Common Stock and Capital in Excess of Par Value Treasury Stock

Three Months Ended October 28, 2022 Issued Shares Amount Shares Amount Accumulated Deficit Accumulated Other Comprehensive Income/(Loss) Dell Technologies

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 29, 2022 796 $ 8,005 62 $ ( 3,054 ) $ ( 7,106 ) $ ( 705 ) $ ( 2,860 ) $ 105 $ ( 2,755 )

Net income — — — — 245 — 245 ( 4 ) 241

Dividends and dividend equivalents declared ($ 0.33 per common share)

Balances as of February 3, 2023

798 $ 8,424 82 $ ( 3,813 ) $ ( 6,732 ) $ ( 1,001 ) $ ( 3,122 ) $ 97 $ ( 3,025 )

Foreign currency translation adjustments — — — — — ( 196 ) ( 196 ) — ( 196 )

Cash flow hedges, net change — — — — — ( 18 ) ( 18 ) — ( 18 )

Pension and other post-retirement — — — — — ( 1 ) ( 1 ) — ( 1 )

Issuance of common stock 1 ( 22 ) — — — — ( 22 ) — ( 22 )

Stock-based compensation expense — 226 — — — — 226 9 235

Treasury stock repurchases — — 17 ( 609 ) — — ( 609 ) — ( 609 )

Impact from equity transactions of non-controlling interests — 7 — — — — 7 ( 9 ) ( 2 )

Balances as of October 28, 2022 797 $ 8,216 79 $ ( 3,663 ) $ ( 7,102 ) $ ( 920 ) $ ( 3,469 ) $ 101 $ ( 3,368 )

Common Stock and Capital in Excess of Par Value Treasury Stock

Nine Months Ended October 28, 2022 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 — — — — 1,828 — 1,828 ( 12 ) 1,816

Net income (loss) — — — — 583 — 583 ( 5 ) 578

Dividends and dividend equivalents declared ($ 0.37 per common share)

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Pension and other post-retirement — — — — — 1 1 — 1

Issuance of common stock 20 ( 366 ) — — — — ( 366 ) — ( 366 )

Issuance of common stock, net of shares repurchased for employee tax withholding

19 ( 299 ) — — — — ( 299 ) — ( 299 )

Stock-based compensation expense — 218 — — — — 218 7 225

Treasury stock repurchases — — 59 ( 2,699 ) — — ( 2,699 ) — ( 2,699 )

Repurchases of common stock — — 6 ( 251 ) — — ( 251 ) — ( 251 )

Impact from equity transactions of non-controlling interests — ( 4 ) — — — — ( 4 ) — ( 4 )

Balances as of October 28, 2022 797 $ 8,216 79 $ ( 3,663 ) $ ( 7,102 ) $ ( 920 ) $ ( 3,469 ) $ 101 $ ( 3,368 )

Balances as of May 5, 2023

817 $ 8,339 88 $ ( 4,064 ) $ ( 6,430 ) $ ( 868 ) $ ( 3,023 ) $ 99 $ ( 2,924 )

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

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

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

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

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

Dividends and dividend equivalents declared ($ 0.33 per common share)

— — — — ( 253 ) — ( 253 ) — ( 253 )

Foreign currency translation adjustments — — — — — ( 286 ) ( 286 ) — ( 286 )

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Pension and other post-retirement — — — — — 17 17 — 17

Issuance of common stock 14 19 — — — — 19 — 19

Issuance of common stock, net of shares repurchased for employee tax withholding

18 ( 339 ) — — — — ( 339 ) — ( 339 )

Stock-based compensation expense — 224 — — — — 224 8 232

Revaluation of redeemable shares — 472 — — — — 472 — 472

Repurchases of common stock — — 28 ( 1,482 ) — — ( 1,482 ) — ( 1,482 )

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

Balances as of October 29, 2021 775 $ 17,843 8 $ ( 305 ) $ ( 8,190 ) $ ( 394 ) $ 8,954 $ 5,240 $ 14,194

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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NOTE 1 — OVERVIEW AND BASIS OF PRESENTATION

Dell Technologies Inc.

is a leading global end-to-end technology provider that designs, develops, manufactures, markets, sells, and supports a wide range of comprehensive and integrated solutions, products, and services.

Dell Technologies is a leading global end-to-end technology provider that designs, develops, manufactures, markets, sells, and supports a wide range of comprehensive and integrated solutions, products, and services.

Dell Technologies offerings include servers and networking, storage, cloud solutions, desktops, notebooks, services, software, and third-party software and peripherals.

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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 28, 2022.

Securities and Exchange Commission (“SEC”) in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2023.

These Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

In the opinion of management, the accompanying Condensed Consolidated Financial Statements reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of the Company as of October 28, 2022 and January 28, 2022, the results of its operations, corresponding comprehensive income, statement of stockholders’ equity for the three and nine months ended October 28, 2022 and October 29, 2021, and cash flows for the nine months ended October 28, 2022 and October 29, 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.

In the opinion of management, the accompanying Condensed Consolidated Financial Statements reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of the Company as of May 5, 2023 and February 3, 2023 and the results of its operations, corresponding comprehensive income, changes in stockholders’ equity, and cash flows for the three months ended May 5, 2023 and April 29, 2022.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and the accompanying Notes.

Actual results could differ materially from those estimates.

The results of its operations, corresponding comprehensive income, statement of stockholders’ equity for the three and nine months ended October 28, 2022 and October 29, 2021, and cash flows for the nine months ended October 28, 2022 and October 29, 2021 are not necessarily indicative of the results to be expected for the full fiscal year or for any other fiscal period.

The results of its operations, corresponding comprehensive income, changes in stockholders’ equity, and cash flows for the three months ended May 5, 2023 and April 29, 2022 are not necessarily indicative of the results to be expected for the full fiscal year or for any other fiscal period.

The Company’s fiscal year is the 52- or 53-week period ending on the Friday nearest January 31.

The fiscal year ended January 28, 2022 (“Fiscal 2022”) was a 52-week period while the fiscal year ending February 3, 2023 (“Fiscal 2023”) will be a 53-week period.

The fiscal year ended February 3, 2023 (“Fiscal 2023”) was a 53-week period while the fiscal year ending February 2, 2024 (“Fiscal 2024”) will be a 52-week period.

Principles of Consolidation — These Condensed Consolidated Financial Statements include the accounts of Dell Technologies Inc., its wholly-owned subsidiaries, and the accounts of SecureWorks Corp.

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All intercompany transactions have been eliminated.

Secureworks — As of October 28, 2022 and January 28, 2022, the Company held approximately 82.7 % and 83.9 %, respectively, of the outstanding equity interest in Secureworks, excluding restricted stock awards (“RSAs”), and approximately 82.7 % and 83.1 %, respectively, of the equity interest, including RSAs.

Secureworks — As of May 5, 2023 and February 3, 2023, the Company held approximately 81.4 % and 82.6 %, respectively, of the outstanding equity interest in Secureworks, both including and excluding restricted stock awards (“RSAs”).

The portion of the results of operations of Secureworks allocable to its other owners is shown as net income (loss) attributable to the non-controlling interests in the Condensed Consolidated Statements of Income, as an adjustment to net income attributable to Dell Technologies stockholders.

The non-controlling interests’ share of equity in Secureworks is reflected as a component of the non-controlling interests in the Condensed Consolidated Statements of Financial Position and was $ 101 million and $ 105 million as of October 28, 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.

The non-controlling interests’ share of equity in Secureworks is reflected as a component of the non-controlling interests in the Condensed Consolidated Statements of Financial Position and was $ 99 million and $ 97 million as of May 5, 2023 and February 3, 2023, respectively.

Variable Interest Entities — The Company consolidates Variable Interest Entities ("VIEs") where it has been determined that the Company is the primary beneficiary of the applicable entities’ operations.

For each VIE, the primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to such VIE.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Spin-Off of VMware, Inc.

— On November 1, 2021, the Company completed its spin-off of VMware, Inc.

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”).

Pursuant to the Commercial Framework Agreement (the “CFA”) between Dell Technologies and VMware, Dell Technologies continues to act as a distributor of VMware’s standalone products and services and purchase such products and services for 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 such operations are presented as continuing operations within the Company’s Condensed Consolidated Statements of Income for all periods presented.

In accordance with applicable accounting guidance, the results of VMware, excluding Dell Technologies' 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 and nine months ended October 29, 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 on the VMware Spin-off.

Boomi Divestiture — On October 1, 2021, Dell Technologies completed the sale of Boomi, Inc.

(“Boomi”) and certain related 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 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 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 Dell APEX offerings.

Prior to the divestiture, Boomi’s operating results were included within other businesses and the divestiture did not qualify for presentation as a discontinued operation.

Other Events — During the nine months ended October 28, 2022, Dell Technologies recognized $ 181 million in costs associated with exiting the Company’s business in Russia, primarily related to asset impairments and other exit related costs.

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.

Adoption of the guidance is not expected to have a material impact on the Company’s financial results.

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, 2024.

Adoption of the new guidance is not expected to have a material impact on the Company’s financial results.

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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, which could have 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 Technologies 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 Technologies’ 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 and nine months ended October 29, 2021.

The Condensed Consolidated Statements of Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations.

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 and nine months ended October 29, 2021:

Three Months Ended Nine Months Ended

October 29, 2021 October 29, 2021

(in millions)

Net revenue $ 1,970 $ 5,798

Cost of net revenue ( 556 ) ( 1,632 )

Operating expenses 2,223 6,384

Interest and other, net 65 232

Income from discontinued operations before income taxes 238 814

Income tax expense 33 79

Income from discontinued operations, net of income taxes $ 205 $ 735

____________________

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 nine months ended October 29, 2021 included within the Condensed Consolidated Statements of Cash Flows:

Nine Months Ended

October 29, 2021

(in millions)

Depreciation and amortization $ 1,004

Capital expenditures $ 263

Stock-based compensation expense $ 814

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 2 — FAIR VALUE MEASUREMENTS

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

October 28, 2022 January 28, 2022

May 5, 2023 February 3, 2023

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

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The Company reviews security pricing and assesses liquidity on a quarterly basis.

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.

As of May 5, 2023, the Company’s portfolio had no material exposure to money market funds with a fluctuating net asset value.

Marketable Equity and Other Securities — 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.

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Deferred Compensation Plans —The Company offers deferred compensation plans for eligible employees, which allow participants to defer a portion of their compensation.

Assets were the same as liabilities associated with the plans at approximately $ 166 million and $ 192 million as of October 28, 2022 and January 28, 2022, respectively, and are included in other assets and other liabilities on the Condensed Consolidated Statements of Financial Position.

Assets were the same as liabilities associated with the plans at approximately $ 190 million and $ 179 million as of May 5, 2023 and February 3, 2023, 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.

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See Note 8 of the Notes to the Condensed Consolidated Financial Statements for additional information about goodwill and intangible assets.

As of October 28, 2022 and January 28, 2022, the Company held strategic investments in non-marketable equity and other securities of $ 1.3 billion and $ 1.4 billion, respectively.

As of both May 5, 2023 and February 3, 2023, the Company held strategic investments in non-marketable equity and other securities of $ 1.3 billion.

As these investments represent early-stage companies without readily determinable fair values, they are not included in the recurring fair value table above.

See Note 4 of the Notes to the Condensed Consolidated Financial Statements for additional information about our strategic investments.

See Note 3 of the Notes to the Condensed Consolidated Financial Statements for additional information about the Company’s strategic investments.

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 6 of the Notes to the Condensed Consolidated Financial Statements, including the current portion, as of the dates indicated:

October 28, 2022 January 28, 2022

May 5, 2023 February 3, 2023

Carrying Value Fair Value Carrying Value Fair Value

2 unchanged sentences

Legacy Notes and Debentures $ 0.9 $ 1.0 $ 0.9 $ 1.0

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.

DFS Debt $ 10.2 $ 9.8 $ 10.3 $ 9.9

The fair values of the outstanding debt shown in the table above 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.

DELL TECHNOLOGIES INC.

4 unchanged sentences

Short-term fixed income debt securities are recorded as other current assets in the Condensed Consolidated Statements of Financial Position.

As of October 28, 2022 and January 28, 2022, total investments were $ 1.6 billion and $ 1.8 billion, respectively.

As of both May 5, 2023 and February 3, 2023, total investments were $ 1.6 billion.

Equity and Other Securities

7 unchanged sentences

The following table presents the cost, cumulative unrealized gains, cumulative unrealized losses, and carrying value of the Company's strategic investments in marketable and non-marketable equity securities as of the dates indicated:

October 28, 2022 January 28, 2022

May 5, 2023 February 3, 2023

Cost Unrealized Gain Unrealized Loss Carrying Value Cost Unrealized Gain Unrealized Loss Carrying Value

7 unchanged sentences

The following table presents unrealized gains and losses on marketable and non-marketable equity and other securities for the periods indicated:

Three Months Ended Nine Months Ended

October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021

Three Months Ended

May 5, 2023 April 29, 2022

(in millions)

Marketable securities:

Unrealized gain $ 50 $ — $ 57 $ 40

Unrealized loss $ ( 23 ) $ ( 18 )

3 unchanged sentences

Unrealized loss ( 5 ) —

Net unrealized gain (loss) (a) (b) ( 13 ) 75 ( 261 ) 381

Net unrealized gain (a) 4 21

Net unrealized gain (loss) on equity and other securities $ ( 19 ) $ 3

____________________

(a) For the three and nine months ended October 28, 2022, net unrealized losses on non-marketable securities were primarily attributable to the recognition of impairments on equity and other securities, which were generally in line with extended public equity market declines.

In evaluating these investments for impairment, the Company used 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.

(b) For the three and nine months ended October 29, 2021, net unrealized gains on non-marketable securities were due to upward adjustments for observable price changes offset by losses primarily attributable to downward adjustments for observable price changes.

(a) For all periods presented, net unrealized gains on non-marketable securities were primarily due to upward adjustments for observable price changes.

Fixed Income Debt Securities

1 unchanged sentence

The Company intends to hold the investments to maturity.

As of May 5, 2023, the Company held $ 200 million in fixed income debt securities which will mature within one year and $ 123 million in fixed income debt securities which will mature within two to five years.

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

October 28, 2022 January 28, 2022

Cost Unrealized Gains Unrealized Loss Carrying Value Cost Unrealized Gains Unrealized Loss Carrying Value

May 5, 2023 February 3, 2023

Cost Unrealized Gain Unrealized Loss Carrying Value Cost Unrealized Gain Unrealized Loss Carrying Value

(in millions)

3 unchanged sentences

NOTE 4 — FINANCIAL SERVICES

The Company offers or arranges various financing options and services and alternative payment structures for its customers globally primarily through Dell Financial Services and its affiliates (“DFS”).

The Company offers or arranges various financing options and alternative payment structures for its customers globally.

Alternative payment structures consist of various flexible consumption models, including utility, subscription, and as-a-Service models.

Financing options are offered to our customers 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.

1 unchanged sentence

In some cases, DFS also offers financing for the purchase of third-party technology products that complement the Dell Technologies portfolio of products and services.

New financing originations were $ 2.3 billion and $ 2.0 billion for the three months ended October 28, 2022 and October 29, 2021, respectively, and $ 6.7 billion and $ 5.8 billion for the nine months ended October 28, 2022 and October 29, 2021, respectively.

New financing originations were $ 1.8 billion and $ 2.1 billion for the three months ended May 5, 2023 and April 29, 2022, respectively.

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

12 unchanged sentences

The carrying value of these loans approximates fair value.

The Company further strengthens customer relationships through flexible consumption models, including utility, subscription, and as-a-Service models, which enable the Company to offer its customers the option to pay over time to provide them with financial flexibility to meet their changing technological requirements.

Flexible consumption models, as defined above, enable the Company to offer its customers the option to pay over time to provide them with financial flexibility to meet their changing technological requirements.

Such models may result in identification of embedded lease arrangements that lead to the recognition of operating or sales-type leases.

DELL TECHNOLOGIES INC.

2 unchanged sentences

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

October 28, 2022 January 28, 2022

May 5, 2023 February 3, 2023

Revolving Fixed-term Total Revolving Fixed-term Total

9 unchanged sentences

____________________

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

(a) Customer receivables, gross include amounts due from customers under revolving loans, fixed-term loans, fixed-term leases, and accrued interest.

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

Three Months Ended

October 28, 2022 October 29, 2021

Revolving Fixed-term Total Revolving Fixed-term Total

(in millions)

Allowance for financing receivable losses:

Balances at beginning of period $ 91 $ 92 $ 183 $ 126 $ 161 $ 287

Charge-offs, net of recoveries ( 12 ) ( 1 ) ( 13 ) ( 9 ) ( 20 ) ( 29 )

Provision charged to income statement 8 8 16 ( 5 ) ( 28 ) ( 33 )

Balances at end of period $ 87 $ 99 $ 186 $ 112 $ 113 $ 225

Nine Months Ended

October 28, 2022 October 29, 2021

May 5, 2023 April 29, 2022

Revolving Fixed-term Total Revolving Fixed-term Total

5 unchanged sentences

Balances at end of period $ 84 $ 135 $ 219 $ 94 $ 87 $ 181

The Company recognizes an allowance for financing receivable losses, including both the lease receivable and unguaranteed residual, in an amount equal to the expected losses net of recoveries.

The allowance for financing receivable losses on the lease receivable is determined based on various factors, including lifetime expected losses determined using macroeconomic forecast assumptions and management judgments applicable to and through the expected life of the portfolios as well as past due receivables, receivable type, and customer risk profile.

The Company continues to monitor broader economic indicators and their potential impact on future credit loss performance.

DELL TECHNOLOGIES INC.

1 unchanged sentence

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 28, 2022 January 28, 2022

May 5, 2023 February 3, 2023

Current Past Due

9 unchanged sentences

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.

The receivables identified as doubtful for collectibility may be classified as current for aging purposes.

4 unchanged sentences

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

October 28, 2022

Fixed-term — Consumer and Commercial

6 unchanged sentences

Total $ 1,539 $ 4,574 $ 2,316 $ 1,103 $ 385 $ 34 $ 482 $ 176 $ 10,609

January 28, 2022

February 3, 2023

Fixed-term — Consumer and Commercial

9 unchanged sentences

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.

The higher quality category includes prime accounts generally comparable to U.S.

customer FICO scores of 720 or above.

1 unchanged sentence

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.

The lower category is generally sub-prime and represents accounts that are comparable to U.S.

customer FICO scores below 660.

5 unchanged sentences

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

October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021

Three Months Ended

May 5, 2023 April 29, 2022

(in millions)

Net revenue — products

$ 207 $ 183 $ 646 $ 607

Cost of net revenue — products

164 162 532 467

Gross margin — products

$ 43 $ 21 $ 114 $ 140

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 28, 2022

(in millions)

Fiscal 2023 (remaining three months) $ 723

Fiscal 2024 (remaining nine months) $ 1,997

Fiscal 2025 1,894

8 unchanged sentences

Operating Leases

The Company’s operating leases primarily consist of DFS captive fixed-term leases and contractually committed embedded leases identified within flexible consumption arrangements.

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 28, 2022 January 28, 2022

May 5, 2023 February 3, 2023

(in millions)

2 unchanged sentences

Equipment under operating lease, net $ 2,183 $ 2,208

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 Nine Months Ended

October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021

Three Months Ended

May 5, 2023 April 29, 2022

(in millions)

1 unchanged sentence

Depreciation expense $ 233 $ 165

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 28, 2022

(in millions)

Fiscal 2023 (remaining three months) $ 287

Fiscal 2024 (remaining nine months) $ 862

Fiscal 2025 824

6 unchanged sentences

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:

October 28, 2022 January 28, 2022

May 5, 2023 February 3, 2023

DFS debt (in millions)

12 unchanged sentences

Total long-term DFS debt $ 4,925 $ 4,890

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

2 unchanged sentences

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 28, 2022, the total debt capacity related to the U.S.

As of May 5, 2023, the total debt capacity related to the U.S.

asset-based financing and securitization facilities was $ 5.6 billion.

1 unchanged sentence

See Note 7 of the Notes to the Condensed Consolidated Financial Statements for additional information about interest rate swaps.

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s U.S.

2 unchanged sentences

asset-based financing facilities for fixed-term leases and loans are effective through July 10, 2023 and June 21, 2024, respectively.

The Company intends to extend the facility currently effective through July 10, 2023 during the second quarter of Fiscal 2024.

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 28, 2022, these criteria were met.

As of May 5, 2023, 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.

fixed-term lease and loan payments and associated equipment, which are held by Special Purpose Entities (“SPEs”), as discussed below.

The interest rate on these securities is fixed and ranges from 0.33 % to 6.80 % per annum, and the duration of these securities is based on the terms of the underlying lease and loan payment streams.

1 unchanged sentence

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 $ 797 million as of October 28, 2022.

Subsequent to October 28, 2022, the Company extended the term of this facility to be effective through December 21, 2024.

The debt under this facility has a variable interest rate, and the duration of the debt is based on the terms of the underlying loan and lease payment streams.

This facility is effective through December 23, 2024 and had a total debt capacity of $ 881 million as of May 5, 2023.

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 28, 2022, these criteria were met.

As of May 5, 2023, these criteria were met.

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 $ 332 million as of October 28, 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 $ 598 million as of October 28, 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 $ 290 million as of October 28, 2022 and is effective through April 20, 2023.

The debt under these programs has a variable interest rate, and the duration of the debt is based on the terms of the underlying loan and lease payment streams.

The Canadian facility, which is collateralized solely by Canadian loan and lease payments and associated equipment, had a total debt capacity of $ 332 million as of May 5, 2023 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 $ 661 million as of May 5, 2023 and is effective through June 14, 2025.

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 $ 301 million as of May 5, 2023 and is effective through April 20, 2025.

The Middle East facility, which is collateralized solely by Middle East loan and lease payments and associated equipment, had a total debt capacity of $ 150 million as of May 5, 2023 and is effective through March 24, 2025.

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Note Payable — On May 25, 2022, the Company entered into an unsecured credit agreement to fund receivables in Mexico.

As of October 28, 2022, the aggregate principal amount of the note payable was $ 250 million.

As of May 5, 2023, the aggregate principal amount of the note payable was $ 250 million.

The note bears interest at an annual rate of 4.24 % and will mature on May 31, 2024.

3 unchanged sentences

The issuances of the senior unsecured eurobonds support the expansion of the financing operations in Europe.

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Variable Interest Entities

In connection with the asset-based financing facilities, securitization facilities, and fixed-term securitization offerings discussed above, the Company transfers certain U.S.

and European lease and loan payments and associated equipment to SPEs that meet the definition of a VIE and are consolidated, along with the associated debt detailed above, into the Condensed Consolidated Financial Statements, as the Company is the primary beneficiary of the VIEs.

and European lease and loan payments and associated equipment to SPEs that meet the definition of a VIE and are consolidated, along with the associated debt described 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.

5 unchanged sentences

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:

October 28, 2022 January 28, 2022

May 5, 2023 February 3, 2023

(in millions)

9 unchanged sentences

Long-term $ 1,980 $ 2,685

Lease and loan payments and associated equipment transferred via securitization through SPEs were $ 1.6 billion and $ 1.4 billion for the three months ended October 28, 2022 and October 29, 2021, respectively, and $ 4.5 billion and $ 4.1 billion for the nine months ended October 28, 2022 and October 29, 2021, respectively.

Lease and loan payments and associated equipment transferred via securitization through SPEs were $ 1.5 billion and $ 1.7 billion for the three months ended May 5, 2023 and April 29, 2022, 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 $ 431 million and $ 180 million for the nine months ended October 28, 2022 and October 29, 2021, respectively.

The amount of customer receivables sold for this purpose was $ 169 million and $ 148 million for the three months ended May 5, 2023 and April 29, 2022, respectively.

The Company’s continuing involvement in these customer receivables is primarily limited to servicing arrangements.

6 unchanged sentences

The Company also leases certain global logistics warehouses, employee vehicles, and equipment.

As of October 28, 2022, the remaining terms of the Company’s leases range from less than one month to approximately ten years .

As of October 28, 2022 and January 28, 2022, there were no material finance leases for which the Company was a lessee.

As of May 5, 2023, the remaining terms of the Company’s leases range from one month to approximately ten years .

As of May 5, 2023 and February 3, 2023, there were no material finance leases for which the Company was a lessee.

The Company also enters into leasing transactions in which the Company is the lessor, primarily through customer financing arrangements offered through DFS.

2 unchanged sentences

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 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021

Three Months Ended

May 5, 2023 April 29, 2022

(in millions)

2 unchanged sentences

Total lease costs $ 103 $ 97

During the nine months ended October 28, 2022 and October 29, 2021, sublease income, finance lease costs, and short-term lease costs were immaterial.

During the three months ended May 5, 2023 and April 29, 2022, 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 28, 2022 January 28, 2022

Classification May 5, 2023 February 3, 2023

(in millions, except for term and discount rate)

8 unchanged sentences

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

Nine Months Ended

October 28, 2022 October 29, 2021

Three Months Ended

May 5, 2023 April 29, 2022

(in millions)

Cash paid for amounts included in the measurement of lease liabilities —

operating cash outflows from operating leases (a) $ 230 $ 379

operating cash outflows from operating leases $ 77 $ 80

Right-of-use assets obtained in exchange for new operating lease liabilities $ 81 $ 72

____________________

(a) Cash paid for amounts included in the measurement of lease liabilities - operating cash outflows from operating leases from discontinued operations was $ 135 million for the nine months ended October 29, 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:

October 28, 2022

(in millions)

Fiscal 2023 (remaining three months) $ 65

Fiscal 2024 (remaining nine months) $ 205

Fiscal 2025 224

7 unchanged sentences

Non-current operating lease liabilities $ 623

As of October 28, 2022, the Company’s undiscounted operating leases that had not yet commenced were immaterial .

As of May 5, 2023, the Company’s undiscounted operating leases that had not yet commenced were immaterial.

DELL TECHNOLOGIES INC.

2 unchanged sentences

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

October 28, 2022 January 28, 2022

May 5, 2023 February 3, 2023

(in millions)

1 unchanged sentence

5.45 % due June 2023

$ 1,000 $ 1,000

4.00 % due July 2024

3 unchanged sentences

6.10 % due July 2027

5.25 % due February 2028

5.30 % due October 2029

6.20 % due July 2030

5.75 % due February 2033

8.10 % due July 2036

7 unchanged sentences

DFS Debt (Note 4)

10,157 10,290

Other 336 325

5 unchanged sentences

Total long-term debt, carrying value $ 22,962 $ 23,015

Commercial Paper Program

On July 18, 2022, the Company established a commercial paper program under which the Company may issue unsecured notes in a maximum aggregate face amount of $ 5.0 billion outstanding at any time, with maturities up to 397 days from the date of issue.

The notes will be sold on customary terms in the U.S.

commercial paper market on a private placement basis.

The proceeds of the notes will be used for general corporate purposes.

As of October 28, 2022, the Company had no outstanding borrowings under the commercial paper program.

Commercial paper issuances and repayments with maturities of 90 days or less are presented on a net basis within cash flows from financing activities on the Condensed Consolidated Statements of Cash Flows.

During the three months ended May 5, 2023, the net decrease in the Company’s debt balance primarily reflected the repayment of $ 1 billion principal amount of the 5.45 % Senior Notes due June 2023.

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 (together with the registered senior notes subsequently issued in exchange, the “Senior Notes”).

Senior Notes — The Company completed offerings of multiple series of senior notes which were issued on June 1, 2016, June 22, 2016, March 20, 2019, April 9, 2020, December 13, 2021, and January 24, 2023 in aggregate principal amounts of $ 20.0 billion, $ 3.3 billion, $ 4.5 billion, $ 2.3 billion, $ 2.3 billion, and $ 2.0 billion, respectively (the “Senior Notes”).

Interest on these borrowings is payable semiannually.

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In June 2021, Dell International L.L.C.

and EMC Corporation, wholly-owned subsidiaries of Dell Technologies Inc.

and issuers of the Senior Notes (the “Issuers”), completed an offer 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 unregistered Senior Notes.

The aggregate principal amount of unregistered Senior Notes remaining outstanding following the settlement of the exchange offer 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 Inc.

2 unchanged sentences

Interest on these borrowings is payable semiannually.

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

DFS Debt — See Note 4 and Note 7 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 — As of October 28, 2022, the Company’s revolving credit facility, which was entered into on November 1, 2021 (the “2021 Revolving Credit Facility”), matures on November 1, 2026.

This facility provides the Company with revolving commitments in an aggregate principal amount of $ 5.0 billion as of October 28, 2022 for general corporate purposes, including liquidity support for the Company’s commercial paper program, 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.

2021 Revolving Credit Facility — The Company’s revolving credit facility, which was entered into on November 1, 2021 (the “2021 Revolving Credit Facility”), matures on November 1, 2027.

This facility provides the Company with revolving commitments in an aggregate principal amount of $ 6.0 billion for general corporate purposes, including liquidity support for the Company’s commercial paper program, 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.

Borrowings under the 2021 Revolving Credit Facility bear interest at a rate per annum equal to an applicable margin plus, at the borrowers’ option, either (a) the specified London Interbank Offered Rate (“LIBOR”) or (b) a base rate.

The margin applicable to LIBOR and base rate borrowings varies based upon the Company’s existing date ratings.

The base rate is calculated based upon the greatest of the specified prime rate, the specified federal reserve bank rate, or LIBOR plus 1 %.

Borrowings under the 2021 Revolving Credit Facility bear interest at a rate per annum equal to an applicable margin plus, at the borrowers’ option, either (a) the specified adjusted term Secured Overnight Financing Rate (“SOFR”) or (b) a base rate.

The margin applicable to SOFR and base rate borrowings varies based upon the Company’s existing credit ratings.

The base rate is calculated based upon the greatest of the specified prime rate, the specified federal reserve bank rate, or SOFR 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 October 28, 2022, available borrowings under the 2021 Revolving Credit Facility totaled $ 5.0 billion.

Subsequent to October 28, 2022, the Company entered into an amendment to the 2021 Revolving Credit Facility to (i) transition from a LIBOR-based borrowing rate to a borrowing rate based on SOFR (Secured Overnight Financing Rate), (ii) extend the maturity date by one year to November 1, 2027, and (iii) increase the revolving commitments by $ 1.0 billion to an aggregate principal amount of $ 6.0 billion.

The other terms of the 2021 Revolving Credit Facility remain unchanged.

As of May 5, 2023, the Company had no oustanding borrowings under the 2021 Revolving Credit Facility.

Commercial Paper Program — During Fiscal 2023, the Company established a commercial paper program under which the Company may issue unsecured notes in a maximum aggregate face amount of $ 5.0 billion outstanding at any time, with maturities up to 397 days from the date of issuance.

The notes are sold on customary terms in the U.S.

commercial paper market on a private placement basis.

The proceeds of the notes are used for general corporate purposes.

As of May 5, 2023, the Company had no outstanding borrowings under the commercial paper program.

The Company may purchase, redeem, prepay, refinance, or otherwise retire any amount of 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 considered appropriate in light of market conditions and other relevant factors.

Covenants — The credit agreement governing the 2021 Revolving Credit Facility and the indentures governing the Senior Notes and the Legacy Notes and Debentures impose various limitations, subject to exceptions, on creating certain liens and entering into sale and lease-back transactions.

1 unchanged sentence

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 October 28, 2022.

The Company was in compliance with this financial covenant as of May 5, 2023.

DELL TECHNOLOGIES INC.

1 unchanged sentence

Aggregate Future Maturities

The following table presents the aggregate future maturities of the Company’s debt as of October 28, 2022 for the periods indicated:

The following table presents the aggregate future maturities of the Company’s debt as of May 5, 2023 for the periods indicated:

Maturities by Fiscal Year

2023 (remaining three months) 2024 2025 2026 2027 Thereafter Total

2024 (remaining nine months) 2025 2026 2027 2028 Thereafter Total

(in millions)

12 unchanged sentences

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.

For derivatives designated as cash flow hedges, the Company assesses hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the instruments.

For derivatives designated as fair value hedges, the Company assesses hedge effectiveness on qualifying instruments using the shortcut method whereby the hedges are considered perfectly effective at the onset of the hedge and over the life of the hedging relationship.

Foreign Exchange Risk

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The majority of these contracts typically expire in twelve months or less.

During the three and nine months ended October 28, 2022 and October 29, 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.

During the three months ended May 5, 2023 and April 29, 2022, 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.

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The interest rate swaps economically convert the fixed rate on financing receivables to a three-month Euribor floating rate 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 also uses interest rate swaps to manage the cash flows related to interest payments on Eurobonds.

The interest rate swaps economically convert the fixed rate on its bonds to a floating rate to match the underlying lease repayments profile.

None of these contracts are designated for hedge accounting and most expire within five years or less.

The Company utilizes cross-currency amortizing swaps to hedge the currency and interest rate risk exposure associated with the European securitization program.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Periodically, the Company also uses interest rate swaps to modify the market risk exposures in connection with long-term debt.

During Fiscal 2023, the Company entered into interest rate swaps designated as fair value hedges intended to hedge a portion of its interest rate exposure by converting the fixed interest rate of a certain tranche of debt to a floating interest rate based on the benchmark SOFR Overnight Index Swap rate.

As of May 5, 2023, the carrying amount of the hedged debt was $ 1 billion.

The gains and losses related to changes in the fair value of the interest rate swaps perfectly offset changes in the fair value of the hedged portion of the underlying debt that are attributable to the changes in the underlying benchmark interest rate.

During the three months ended May 5, 2023, the cumulative amount of fair value hedge accounting adjustments was immaterial.

These contracts expire within four years .

Derivative Instruments

The following table presents the notional amounts of outstanding derivative instruments as of the dates indicated:

October 28, 2022 January 28, 2022

May 5, 2023 February 3, 2023

(in millions)

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Interest rate contracts:

Designated as fair value hedging instruments $ 1,000 $ 1,000

Non-designated as hedging instruments 6,710 7,214

The following tables present the effect of derivative instruments designated as 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 October 28, 2022:

Total net revenue $ 324

Foreign exchange contracts $ 306 Total cost of net revenue —

Interest rate contracts — Interest and other, net —

Total $ 7,710 $ 8,214

For the three months ended October 29, 2021:

Total net revenue $ 65

Foreign exchange contracts $ 86 Total cost of net revenue 8

Interest rate contracts — Interest and other, net —

Total $ 86 Income from discontinued operations $ 1

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table presents the effect of derivative instruments designated as cash flow hedging instruments on the Condensed Consolidated Statements of Financial Position and the Condensed Consolidated Statements of Income for the periods indicated:

(in millions) (in millions)

For the nine months ended October 28, 2022:

For the three months ended May 5, 2023:

Total net revenue $ ( 88 )

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Total $ 10 Total $ ( 91 )

For the nine months ended October 29, 2021:

For the three months ended April 29, 2022:

Total net revenue $ 123

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Interest rate contracts — Interest and other, net —

Total $ 150 Income from discontinued operations $ 3

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 Nine Months Ended

October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021 Location of Gain (Loss) Recognized

Total $ 372 Total $ 96

The following table presents the effect of derivative instruments not designated as hedging instruments on the Condensed Consolidated Statements of Income for the periods indicated:

Three Months Ended

May 5, 2023 April 29, 2022 Location of Gain (Loss) Recognized

(in millions)

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Interest rate contracts ( 21 ) 17 Interest and other, net

Foreign exchange contracts — 12 — 27 Income from discontinued operations

Total $ 36 $ ( 214 )

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 Company presents its 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 28, 2022

Other Current

Assets Other Non-

Current Assets Other Current

Liabilities Other Non-Current

Assets Other Non-Current Assets Other Current Liabilities Other Non-Current

Liabilities Total

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Foreign exchange contracts in a liability position ( 2 ) — ( 5 ) — ( 7 )

Net asset 207 — 16 — 223

Interest rate contracts in an asset position — 2 — — 2

Interest rate contracts in a liability position — — — — —

Net asset (liability) 2 2 ( 4 ) — —

Derivatives not designated as hedging instruments:

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Total derivatives at fair value $ 68 $ 73 $ ( 48 ) $ ( 43 ) $ 50

January 28, 2022

February 3, 2023

Other Current

Assets Other Non-

Current Assets Other Current

Liabilities Other Non-Current

Assets Other Non-Current Assets Other Current Liabilities Other Non-Current

Liabilities Total

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Foreign exchange contracts in a liability position ( 21 ) — ( 142 ) — ( 163 )

Interest rate contracts in an asset position — — — — —

Interest rate contracts in a liability position — — — ( 6 ) ( 6 )

Net asset ( 14 ) — ( 112 ) ( 6 ) ( 132 )

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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 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

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Total derivative instruments $ 50 $ — $ 50 $ — $ ( 39 ) $ 11

January 28, 2022

February 3, 2023

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(in millions)

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

Balances as of February 3, 2023 $ 15,017 $ 4,232 $ 427 $ 19,676

Impact of foreign currency translation and other ( 15 ) — — ( 15 )

Balances as of October 28, 2022 $ 14,708 $ 4,232 $ 426 $ 19,366

Balances as of May 5, 2023 $ 15,002 $ 4,232 $ 427 $ 19,661

Intangible Assets

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

October 28, 2022 January 28, 2022

May 5, 2023 February 3, 2023

Gross Accumulated

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Total intangible assets $ 30,382 $ ( 24,113 ) $ 6,269 $ 30,382 $ ( 23,914 ) $ 6,468

Amortization expense related to definite-lived intangible assets was $ 0.2 billion and $ 0.4 billion for the three months ended October 28, 2022 and October 29, 2021, respectively, and $ 0.7 billion and $ 1.3 billion for the nine months ended October 28, 2022 and October 29, 2021, respectively.

There were no material impairment charges related to intangible assets during the three or nine months ended October 28, 2022 and October 29, 2021.

Amortization expense related to definite-lived intangible assets was $ 199 million and $ 243 million for the three months ended May 5, 2023 and April 29, 2022, respectively.

There were no material impairment charges related to intangible assets during the three months ended May 5, 2023 and April 29, 2022.

DELL TECHNOLOGIES INC.

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

October 28, 2022

(in millions)

Fiscal 2023 (remaining three months) $ 244

Fiscal 2024 (remaining nine months) $ 591

Fiscal 2025 619

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Total $ 3,184

Goodwill and Intangible Assets Impairment Testing

Goodwill and Indefinite-Lived 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 during the three months ended October 28, 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.

For the annual impairment review during the third quarter of Fiscal 2023, 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 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.

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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 ended October 28, 2022, the fair values of each of the reporting units exceeded their carrying values.

No impairment test was performed during the nine months ended October 28, 2022 other than the Company’s annual impairment review.

Based on the results of the annual impairment test performed during Fiscal 2023, the fair values of each of the reporting units and indefinite-lived intangibles exceeded their carrying values.

No goodwill or indefinite-lived assets impairment test was performed during the three months ended May 5, 2023.

DELL TECHNOLOGIES INC.

5 unchanged sentences

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

Three Months Ended Nine Months Ended

October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021

Three Months Ended

May 5, 2023 April 29, 2022

(in millions)

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____________________

(a) For the nine months ended October 28, 2022, Other represents the reclassification of deferred revenue to accrued and other liabilities.

For the nine months ended October 29, 2021, Other consists of divested deferred revenue from the sale of Boomi.

(a) Other represents the reclassification of deferred revenue to accrued and 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 28, 2022 was approximately $ 39 billion.

The value of the transaction price allocated to remaining performance obligations as of May 5, 2023 was approximately $ 39 billion.

The Company expects to recognize approximately 57 % of remaining performance obligations as revenue in the next twelve months , and the remainder thereafter.

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NOTE 10 — COMMITMENTS AND CONTINGENCIES

Purchase Obligations

The Company has contractual obligations to purchase goods or services, which specify significant terms (including fixed or minimum quantities to be purchased), fixed, minimum, or variable price provisions;

and the approximate timing of the transaction.

As of October 28, 2022, such purchase obligations were $ 2.7 billion, $ 0.6 billion, and $ 0.8 billion for the remaining three months of Fiscal 2023, Fiscal 2024, and Fiscal 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.

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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, four purported stockholders brought putative class action complaints arising out of the Class V 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.

2018-0816-JTL).

The suit currently names as defendants Michael S.

Dell and certain of the 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 (“Goldman Sachs”), which served as financial advisor to the Company 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 offering a transaction value that was allegedly billions of dollars below the 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 shares of VMware, Inc.

common stock, and that 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.

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 defendants filed a motion to dismiss the action in September 2019.

The court denied the motion in June 2020.

Trial was scheduled to begin on December 5, 2022.

The Company is not a defendant in this action but is subject to director indemnification provisions under its certificate of incorporation and bylaws, and is a party to agreements with the defendants that contain indemnification

Certain stockholders of the Company, subsequently brought class action complaints arising out of the Class V transaction in which they named as defendants (collectively, the “defendants”) Michael S.

Dell and certain other directors serving on the Company’s board of directors at the time of the Class V transaction (collectively, the “director defendants”), certain stockholders of the Company, consisting of Mr.

Dell and Silver Lake Group LLC and certain of its affiliated funds (collectively, the “stockholder defendants”), and Goldman Sachs & Co.

LLC (“Goldman Sachs”), which served as financial advisor to the Company in connection with the transaction.

The plaintiffs generally alleged that the director defendants and the stockholder defendants breached their fiduciary duties under Delaware law to the former holders of the Class V common stock in connection with the Class V transaction by offering a transaction value that was allegedly billions of dollars below fair value.

As previously reported, during the fourth quarter of Fiscal 2023, the plaintiffs and the defendants entered into an agreement to settle the lawsuit.

Under the terms of the settlement, the plaintiffs agreed to the dismissal of all claims upon payment of a total of $ 1.0 billion (the “settlement amount”), which includes all costs, expenses and fees of the plaintiff class relating to the action and its resolution.

The settlement terms required that the settlement amount be paid by the Company and/or the Company’s insurers pursuant to indemnification obligations of the Company to the defendants.

The Company is subject to indemnification obligations, upon the satisfaction of specified conditions, to the director and stockholder defendants and their affiliates pursuant to provisions of the Delaware General Corporation Law, the Company’s certificate of incorporation and bylaws, and agreements with the defendants.

A special committee of the Board consisting of directors who were not defendants in the action, advised by independent counsel, informed the Board of its determination that the defendants are entitled to indemnification under the foregoing obligations.

During Fiscal 2023, the Company established a $ 1.0 billion liability on the Consolidated Statements of Financial Position and recognized $ 0.9 billion expense, net of $ 106 million in insurance proceeds, within interest and other, net within the Consolidated Statements of Income related to the settlement agreement.

The Company accounted for the expected insurance proceeds as a loss recovery and recognized a benefit within interest and other, net within the Condensed Consolidated Statements of Income and corresponding receivable on the Condensed Consolidated Statements of Financial Position.

On May 16, 2023, subsequent to the close of the three months ended May 5, 2023, the Company paid the settlement amount following approval of the settlement by the Delaware Court of Chancery.

The Company does not expect to incur additional expenses with respect to the settlement.

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

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

obligations of the Company, conditioned on the satisfaction of the requirements set forth in such agreements, relating to service as a director, ownership of the Company’s securities, and provision of services, as applicable.

As described in Note 19 of the Notes to the Condensed Consolidated Financial Statements, the plaintiffs and the defendants agreed to settle this action, subject to court approval, subsequent to October 28, 2022.

Class Actions Related to VMware, Inc.’s Acquisition of Pivotal Software, Inc.

— Two purported stockholders brought putative class action complaints arising out of VMware, Inc.’s acquisition of Pivotal Software, Inc.

(“Pivotal”) on December 30, 2019.

The two 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 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 parties reached a settlement on June 2, 2022, subject to court approval.

On October 4, 2022, the court entered a final order and judgment approving the settlement.

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 28, 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.

As of May 5, 2023, 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.

4 unchanged sentences

Historically, payments related to these 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”).

Under the Separation and Distribution Agreement entered into with VMware, Inc.

upon the completion of the spin-off of VMware, Inc.

by means of a special stock dividend (the “VMware Spin-off”), 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, Inc.

(individually and together with its subsidiaries, “VMware”) and their respective businesses (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.

For information on the cross-indemnifications related to the tax matters agreement between the Company and VMware effective upon the Separation on November 1, 2021, see Note 15 of the Notes to the Condensed Consolidated Financial Statements.

DELL TECHNOLOGIES INC.

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NOTE 11 — INCOME AND OTHER TAXES

For the three months ended October 28, 2022, the Company’s effective income tax rate was 46.9 % on pre-tax income of $ 0.5 billion compared to 19.0 % on pre-tax income of $ 4.5 billion for the three months ended October 29, 2021.

For the nine months ended October 28, 2022, the Company’s effective income tax rate was 21.1 % on pre-tax income of $ 2.3 billion compared to 16.7 % on pre-tax income of $ 6.0 billion for the nine months ended October 29, 2021.

For both the three and nine months ended October 28, 2022, the changes in the Company’s effective tax rates were primarily attributable to changes in

discrete tax items.

The Company’s effective tax rate for both the three and nine months ended October 28, 2022 includes the impact of a $ 1.0 billion expense recognized in connection with an agreement to settle the Class V transaction litigation described in Note 11 and Note 19 of the Notes to the Condensed Consolidated Financial Statements.

Other changes to the Company’s effective income tax rates were primarily driven by a change in the jurisdictional mix of income and higher U.S.

tax on foreign operations, the effects of which were partially offset by higher benefits from foreign tax credits.

tax on foreign operations is attributable 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 Company’s effective income tax rate for the remaining quarter 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.

For the three months ended May 5, 2023, the Company’s effective income tax rate was 18.0 % on pre-tax income of $ 0.7 billion compared to 11.9 % on pre-tax income of $ 1.2 billion for the three months ended April 29, 2022.

The change in the Company’s effective income tax rate was attributable to a change in the Company’s jurisdictional mix of income as well as higher U.S.

tax on foreign operations.

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 discrete tax items.

federal statutory rate of 21% principally result from the geographical distribution of income, differences between the book and tax treatment of certain items, and discrete tax 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 2030 through 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 28, 2022, the Company was not aware of any matters of non-compliance related to these tax holidays.

A significant portion of these income tax benefits relates to a tax holiday that will be effective until January 31, 2029.

Most of the Company’s other tax holidays will expire in whole or in part during fiscal years 2030 through 2033.

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 or as a result of changes in tax legislation.

As of May 5, 2023, the Company was not aware of any matters of noncompliance related to these tax holidays or enacted tax legislative changes affecting these tax holidays.

The Internal Revenue Service is currently 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 also currently under income tax audits in various U.S.

state and foreign taxing 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.

The Company believes 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.

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.

Unrecognized tax benefits were $ 1.2 billion as of both October 28, 2022 and January 28, 2022, and are included in 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 unrecognized tax benefits were $ 1.3 billion as of both May 5, 2023 and February 3, 2023 and are included in accrued and other and other non-current liabilities in the Condensed Consolidated Statements of Financial Position.

The Company does not expect 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.

11 unchanged sentences

(in millions)

Balances as of January 28, 2022 $ ( 526 ) $ 129 $ ( 34 ) $ ( 431 )

Other comprehensive income (loss) before reclassifications ( 620 ) 844 11 235

Balances as of February 3, 2023 $ ( 747 ) $ ( 222 ) $ ( 32 ) $ ( 1,001 )

Other comprehensive income before reclassifications 31 10 1 42

Amounts reclassified from accumulated other comprehensive income (loss) — 91 — 91

Total change for the period 31 101 1 133

Change in comprehensive (loss) attributable to non-controlling interests ( 1 ) — — ( 1 )

Balances as of October 28, 2022 $ ( 1,145 ) $ 247 $ ( 22 ) $ ( 920 )

Balances as of May 5, 2023 $ ( 716 ) $ ( 121 ) $ ( 31 ) $ ( 868 )

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 7 of the Notes to the Condensed Consolidated Financial Statements for more information on the Company’s derivative instruments.

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

October 28, 2022 October 29, 2021

Cash Flow Hedges Pensions Total Cash Flow Hedges Pensions Total

(in millions)

Total reclassifications, net of tax:

Net revenue $ 324 $ — $ 324 $ 65 $ — $ 65

Cost of net revenue — — — 8 — 8

Operating expenses — ( 1 ) ( 1 ) — ( 1 ) ( 1 )

Income from discontinued operations — — — 1 — 1

Total reclassifications, net of tax $ 324 $ ( 1 ) $ 323 $ 74 $ ( 1 ) $ 73

Nine Months Ended

October 28, 2022 October 29, 2021

Cash Flow Hedges Pensions Total Cash Flow Hedges Pensions Total

May 5, 2023 April 29, 2022

Cash Flow Hedges Cash Flow Hedges

(in millions)

3 unchanged sentences

Operating expenses — —

Income from discontinued operations — — — 3 — 3

Total reclassifications, net of tax $ ( 91 ) $ 96

5 unchanged sentences

(in millions)

Common stock as of October 28, 2022

Common stock as of May 5, 2023

Class A 600 379 379

3 unchanged sentences

8,800 817 729

Common stock as of January 28, 2022

Common stock as of February 3, 2023

Class A 600 379 379

2 unchanged sentences

Class D 100 — —

Class V 343 — —

8,800 798 716

On June 29, 2022, the authorized capital stock provisions of the Company’s certificate of incorporation were amended to eliminate the Class V Common Stock as the fifth authorized series of Dell Technologies common stock.

In connection with the elimination of authorized Class V Common Stock, the Company’s certificate of incorporation also was amended to decrease by 343 million shares the total number of shares of common stock which Dell Technologies is authorized to issue.

Preferred Stock

The Company is authorized to issue one million shares of preferred stock, par value $ 0.01 per share.

As of October 28, 2022 and January 28, 2022, no shares of preferred stock were issued or outstanding.

As of May 5, 2023 and February 3, 2023, no shares of preferred stock were issued or outstanding.

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.

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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 months ended October 28, 2022, there were no conversions of shares of Class A Common Stock or Class B Common Stock into shares of Class C Common Stock.

During the three months ended May 5, 2023, there were no conversions of shares of Class A Common Stock or Class B Common Stock into shares of Class C Common Stock.

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 the outstanding Dell Technologies Common Stock at an initial rate of $ 0.33 per share per fiscal quarter.

The Company paid the following dividends during the nine months ended October 28, 2022:

Declaration Date Record Date Payment Date Dividend per Share Amount

On February 24, 2022, the Company announced that the Board of Directors adopted a dividend policy providing for our payment of quarterly cash dividends on the Dell Technologies Common Stock at a rate of $ 0.33 per share per fiscal quarter beginning in the first quarter of Fiscal 2023.

On March 2, 2023, the Company announced that the Board of Directors approved a 12 % increase in the quarterly dividend rate from $ 0.33 per share per fiscal quarter to a rate of $ 0.37 per share per fiscal quarter beginning in the first quarter of Fiscal 2024.

The Company paid the following dividends during the periods presented:

Three Months Ended Declaration Date Record Date Payment Date Dividend per Share Amount

( in millions )

February 24, 2022 April 20, 2022 April 29, 2022 $ 0.33 $ 248

June 7, 2022 July 20, 2022 July 29, 2022 $ 0.33 $ 242

September 6, 2022 October 19, 2022 October 28, 2022 $ 0.33 $ 238

May 5, 2023 March 2, 2023 April 25, 2023 May 5, 2023 $ 0.37 $ 270

April 29, 2022 February 24, 2022 April 20, 2022 April 29, 2022 $ 0.33 $ 248

During the three months ended May 5, 2023, the Company also paid an immaterial amount of dividend equivalents on eligible vested equity awards which are not reflected above.

Repurchases of Common Stock

Effective as of September 23, 2021, the Company’s Board of Directors terminated the Company’s previous stock repurchase program and approved a new stock repurchase program under which the Company is authorized to repurchase up to $ 5 billion of shares of the Company’s Class C Common Stock with no fixed expiration date.

During the nine months ended October 28, 2022, the Company repurchased approximately 59 million shares of Class C Common Stock for a total purchase price of approximately $ 2.7 billion.

Effective as of September 23, 2021, the Company’s Board of Directors approved a stock repurchase program under which the Company is authorized to repurchase up to $ 5 billion of shares of Class C Common Stock with no fixed expiration date.

During the three months ended May 5, 2023, the Company repurchased approximately 6.1 million shares of Class C Common Stock for a total purchase price of approximately $ 0.25 billion.

During the three months ended April 29, 2022, the Company repurchased approximately 28.8 million shares of Class C Common Stock for a total purchase price of approximately $ 1.5 billion.

The above repurchases of Class C Common Stock exclude shares withheld from stock awards to settle employee tax withholding obligations related to the vesting of such awards.

The Company did not repurchase any shares of Class C Common Stock during the nine months ended October 29, 2021 under the previous stock repurchase program.

DELL TECHNOLOGIES INC.

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

Three Months Ended Nine Months Ended

October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021

Earnings per share attributable to Dell Technologies Inc.

Continuing operations $ 0.34 $ 4.81 $ 2.47 $ 6.53

Discontinued operations $ — $ 0.21 $ — $ 0.77

Three Months Ended

May 5, 2023 April 29, 2022

Earnings per share attributable to Dell Technologies Inc.

Continuing operations $ 0.33 $ 4.68 $ 2.41 $ 6.34

Discontinued operations $ — $ 0.19 $ — $ 0.74

Dell Technologies Common Stock — Basic $ 0.81 $ 1.42

Dell Technologies Common Stock — Diluted $ 0.79 $ 1.37

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

Three Months Ended Nine Months Ended

October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021

Three Months Ended

May 5, 2023 April 29, 2022

(in millions)

Continuing operations

Dell Technologies Common Stock

Net income attributable to Dell Technologies Inc.

from continuing operations - basic and diluted $ 245 $ 3,685 $ 1,828 $ 4,976

Discontinued operations

Income from discontinued operations, net of income taxes - basic $ — $ 158 $ — $ 585

Incremental dilution from VMware, Inc.

(a) — ( 2 ) — ( 7 )

Income from discontinued operations, net of income taxes, attributable to Dell Technologies Inc.

- diluted $ — $ 156 $ — $ 578

- basic and diluted $ 583 $ 1,072

Dell Technologies Common Stock weighted-average shares outstanding

Weighted-average shares outstanding — basic

728 766 740 762

Dilutive effect of options, restricted stock units, restricted stock, and other 13 26

Weighted-average shares outstanding — diluted

743 788 759 785

Weighted-average shares outstanding — antidilutive

____________________

(a) The incremental dilution from VMware, Inc.

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 before the VMware Spin-off.

DELL TECHNOLOGIES INC.

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VMware is considered to be a related party of the Company as a result of Michael Dell’s ownership interests 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.

Dell’s service as Chairman and Chief Executive Officer of Dell Technologies and as Chairman of the Board of VMware, Inc.

The information provided below includes a summary of transactions with VMware.

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• Dell Technologies procures products and services from VMware for its internal use.

For the three and nine months ended October 28, 2022 and October 29, 2021, costs incurred associated with products and services purchased from VMware for internal use were immaterial.

For the three months ended May 5, 2023 and April 29, 2022, costs incurred associated with products and services purchased from VMware for internal use were immaterial.

• Dell Technologies sells and leases products and sells services to VMware.

For the three and nine months ended October 28, 2022 and October 29, 2021, revenue recognized from sales of services to VMware was immaterial.

For the three months ended May 5, 2023 and April 29, 2022, revenue recognized from sales of services to VMware was immaterial.

• DFS provides financing to certain VMware end-users.

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• Dell Technologies and VMware also enter into joint marketing, sales, and branding arrangements, for which both parties may incur costs.

For the three and nine months ended October 28, 2022 and October 29, 2021, consideration received from VMware for joint marketing, sales, and branding arrangements was immaterial.

• 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 and nine months ended October 28, 2022 and October 29, 2021, collaborative technology projects were immaterial.

For the three months ended May 5, 2023 and April 29, 2022, consideration received from VMware for joint marketing, sales, and branding arrangements was 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 and nine months ended October 28, 2022.

• Prior to the completion of the VMware Spin-off, Dell Technologies provided support services and support from Dell Technologies personnel to VMware in certain geographic regions where VMware did not have an established legal entity.

These employees were managed by VMware but Dell Technologies incurred the costs for these such services.

The costs incurred by Dell Technologies on VMware’s behalf to these employees were charged to VMware.

For the three and nine months ended October 29, 2021, costs associated with such seconded employees were immaterial.

Remaining activity related to seconded employees occurring after the completion of the VMware Spin-off is governed by the transition services agreement discussed above.

Costs associated with this agreement were immaterial for the three months ended April 29, 2022.

Activities under the agreement concluded during Fiscal 2023.

DELL TECHNOLOGIES INC.

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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 Nine Months Ended

Classification October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021

Three Months Ended

Classification May 5, 2023 April 29, 2022

(in millions)

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

Classification October 28, 2022 January 28, 2022

Classification May 5, 2023 February 3, 2023

(in millions)

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

October 28, 2022 January 28, 2022

May 5, 2023 February 3, 2023

(in millions)

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Amounts, excluding tax, are generally settled in cash within 60 days of each quarter-end.

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

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

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

2 unchanged sentences

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.

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

Net receipts from VMware pursuant to the Tax Agreements were immaterial during the three and nine months ended October 28, 2022 and October 29, 2021, and primarily relate to VMware’s portion of the Transition Tax, federal income taxes on Dell Technologies’ consolidated tax return, and state tax payments for combined states.

As a result of the activity under the Tax Agreements with VMware, amounts due from VMware were $ 569 million and $ 621 million as of October 28, 2022 and January 28, 2022, respectively, primarily related to VMware’s estimated tax obligation resulting from the Transition Tax.

Pursuant to the Tax Agreements, net receipts from VMware during the three months ended May 5, 2023 and net payments to VMware during the three months ended April 29, 2022 were immaterial.

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As a result of the activity under the Tax Agreements with VMware, amounts due from VMware were $ 596 million and $ 599 million as of May 5, 2023 and February 3, 2023, 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.

2 unchanged sentences

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 October 28, 2022 and January 28, 2022 was $ 157 million and$ 144 million, respectively.

The net receivable as of May 5, 2023 and February 3, 2023 was $ 150 million and $ 146 million, respectively.

DELL TECHNOLOGIES INC.

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Infrastructure Solutions Group (“ISG”) and Client Solutions Group (“CSG”).

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 enables the Company’s customers’ digital transformation with solutions that address the fundamental shift to multicloud environments, machine learning, artificial intelligence, and data analytics.

The Company’s comprehensive storage portfolio includes traditional as well as next-generation storage solutions, including all-flash arrays, scale-out file, object platforms, hyperconverged infrastructure, and software-defined storage.

The Company’s server portfolio includes high-performance rack, blade, and tower servers.

The ISG networking portfolio helps the Company’s 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.

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The Company does not allocate assets to 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”).

Pursuant to the Commercial Framework Agreement (the “CFA”) established between Dell Technologies and VMware in association with the VMware Spin-off, 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.

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.

DELL TECHNOLOGIES INC.

1 unchanged sentence

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 segment operating income to the Company’s consolidated operating income for the periods indicated:

Three Months Ended Nine Months Ended

October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021

Three Months Ended

May 5, 2023 April 29, 2022

(in millions)

5 unchanged sentences

Unallocated transactions (b) 3 5

Impact of purchase accounting (c) — ( 8 ) — ( 24 )

Total consolidated net revenue $ 20,922 $ 26,116

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(c) Impact of purchase accounting includes non-cash purchase accounting adjustments that are primarily related to the EMC merger transaction that was completed in September 2016.

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

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

(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, facility action, payroll taxes associated with stock-based compensation, and other costs.

During the nine months ended October 28, 2022, other corporate expenses includes impairment and other costs incurred in connection with exiting the Company’s business in Russia.

DELL TECHNOLOGIES INC.

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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

October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021

Three Months Ended

May 5, 2023 April 29, 2022

(in millions)

11 unchanged sentences

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

October 28, 2022 January 28, 2022

May 5, 2023 February 3, 2023

(in millions)

21 unchanged sentences

(b) Deferred costs are included in other current assets in the Condensed Consolidated Statements of Financial Position.

Amounts classified as long-term deferred costs are included in other non-current assets and are not disclosed above.

Supply Chain Finance Program

The Company maintains a Supply Chain Finance Program (the “SCF Program”), which enables eligible suppliers of the Company, at the supplier's sole discretion, to sell receivables due from the Company to a third-party financial institution.

The Company has no involvement in establishing the terms or conditions of the arrangement between its suppliers and the financial institution and no economic interest in a supplier's decision to sell a receivable.

Suppliers may elect to sell varying amounts of their outstanding receivables as part of the SCF Program.

The Company does not provide secured legal assets or other forms of guarantees under the arrangement.

The SCF Program does not impact the Company's liquidity as payments for participating supplier invoices are remitted by the Company to the financial institution on the original invoice due date.

Further, the Company negotiates payment terms with suppliers regardless of their decision to participate in the SCF Program.

Payment terms with such suppliers vary and do not exceed 120 days.

Any amounts due to the financial institution for suppliers participating in the SCF Program are recorded within Accounts Payable on the Company's Condensed Consolidated Statements of Financial Position and associated payments are included in cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows.

As of both May 5, 2023 and February 3, 2023, the Company had $ 1 billion included within Accounts Payable representing invoices due to suppliers confirmed as valid under the SCF Program.

DELL TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021

Three Months Ended

May 5, 2023 April 29, 2022

(in millions)

7 unchanged sentences

The Company’s warranty liability process does not differentiate between estimates made for pre-existing warranties and those made for new warranty obligations.

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 accrued and other current liabilities in the Condensed Consolidated Statements of Financial Position.

During the three months ended May 5, 2023, the Company announced to its employees reorganizations and actions to align its investments more closely with its previously discussed strategic and customer priorities as it continues to take prudent steps in light of a challenging global economic environment.

These actions impacted approximately 5 % of the Company’s workforce.

The Company recognized $ 367 million of expense associated with these actions in the fourth quarter of Fiscal 2023 and $ 48 million in the first quarter of Fiscal 2024.

The following table presents the activity related to the Company’s severance liability for the periods indicated:

Three Months Ended

May 5, 2023 April 29, 2022

(in millions)

Severance liability:

Severance liability at beginning of period $ 408 $ 74

Severance charges 48 17

Cash paid and other ( 294 ) ( 28 )

Severance liability at end of period $ 162 $ 63

DELL TECHNOLOGIES INC.

2 unchanged sentences

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

Three Months Ended Nine Months Ended

October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021

Three Months Ended

May 5, 2023 April 29, 2022

(in millions)

4 unchanged sentences

Foreign exchange ( 32 ) ( 89 )

Gain on disposition of businesses and assets — 3,968 — 3,968

Legal settlement ( 1,000 ) — ( 1,000 ) —

Other 29 ( 12 )

3 unchanged sentences

NOTE 18 — SUBSEQUENT EVENTS

Settlement of Class Action Litigation Related to the Class V Transaction

Subsequent to October 28, 2022, the plaintiffs and the defendants in the class action litigation related to the Class V transaction described in Note 11 of the Notes to the Condensed Consolidated Financial Statements agreed to settle the action (the “settlement”), subject to approval of the settlement by the Delaware Chancery Court.

Under the terms of the settlement, the plaintiffs have agreed to dismissal of all claims upon payment of a total of $ 1.0 billion (the “settlement amount”), which amount will include all costs, expenses and fees of the plaintiff class relating to the action and its resolution.

The settlement terms provide that it is a condition of the settlement that the settlement amount will be paid by the Company and/or the Company’s insurers on behalf of the defendants pursuant to indemnification obligations of the Company to the defendants.

The settlement is further conditioned on the execution of a definitive settlement agreement containing the foregoing terms and customary terms for class action settlements, and final approval of the settlement by the court.

If the court does not grant final approval of the settlement and all of its material terms, or the settlement does not otherwise become final or effective, proceedings in the action will continue.

The settlement agreement provided additional information surrounding conditions that existed as of October 28, 2022 and, as such, was treated as a recognized subsequent event.

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.

Accordingly, the Company established a $ 1.0 billion liability on the Condensed Consolidated Statements of Financial Position as of October 28, 2022 and recognized $ 1.0 billion expense within interest and other, net within the Condensed Consolidated Statements of Income for the three months ended October 28, 2022.

Other than the matter identified above, there were no known events occurring after October 28, 2022 and up until the date of issuance of this report that would materially affect the information presented herein.

There were no known events occurring after May 5, 2023 and up until the date of issuance of this report that would materially affect the information presented herein.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements