DISCONTINUED OPERATIONS

12 Months Ended

Feb. 03, 2017

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

Dell Services Divestiture — On March 27, 2016, Dell entered into a definitive agreement with NTT Data International L.L.C. to divest substantially all of Dell Services. On November 2, 2016, the parties closed substantially all of the transaction. Total cash consideration received by the Company as of February 3, 2017 was approximately $3.0 billion, resulting in a gain on sale, net of tax, of $1.7 billion. The remainder of the transaction closed subsequent to the fiscal year ended February 3, 2017.

Dell Software Group Divestiture — On June 19, 2016, Dell entered into a definitive agreement with Francisco Partners and Elliot Management Corporation to divest substantially all of DSG. On October 31, 2016, the parties closed the transaction. At the completion of the sale, total cash consideration received by the Company was approximately $2.4 billion, resulting in a gain on sale, net of tax, of $0.6 billion.

Enterprise Content Division Divestiture — On September 12, 2016, EMC, a subsidiary of the Company, entered into a definitive agreement with OpenText Corporation to divest the Dell EMC Enterprise Content Division. On January 23, 2017, the parties closed the transaction. At the completion of the sale, total cash consideration received by the Company was approximately $1.6 billion, resulting in a loss on sale, net of tax, of $0.4 billion.

Discontinued Operations Presentation — In accordance with applicable accounting guidance, the Company concluded that Dell Services, DSG, and ECD have met the criteria for discontinued operations reporting as of March 27, 2016, June 19, 2016, and September 7, 2016, respectively. Accordingly, the Company reclassified the financial results of Dell Services and DSG as discontinued operations in the Consolidated Statements of Income (Loss) for all periods presented. The Company classified the results of ECD as discontinued operations for the period from September 7, 2016 through February 3, 2017 due to the ECD business only being included in the Company's consolidated results since the closing of the EMC merger transaction. These financial results and the related gains or losses on sale are presented as "Income (loss) from discontinued operations, net of income taxes" in the accompanying Consolidated Statements of Income (Loss) for the fiscal years ended February 3, 2017, January 29, 2016, and January 30, 2015. The Company reclassified the related assets and liabilities as "Current assets held for sale" and "Current liabilities held for sale" in the accompanying Consolidated Statements of Financial Position as of January 29, 2016. Cash flows from the Company's discontinued operations are included in the accompanying Consolidated Statements of Cash Flows.

Upon closing of the respective transactions, the Company entered into transition services agreements with NTT Data International L.L.C., Francisco Partners and Elliot Management, and OpenText Corporation pursuant to which the Company provides various administrative services on an interim transitional basis. Transition services may be provided for up to one year, with an option to renew after that period. The Company also entered into various commercial agreements with NTT Data International, Francisco Partners and Elliot Management, and OpenText Corporation that includes reseller agreements for certain offerings.

The following tables present key financial results of ECD, Dell Services, and DSG included in "Income (loss) from discontinued operations, net of income taxes" for the fiscal years ended February 3, 2017, January 29, 2016, and January 30, 2015:

	Fiscal Year Ended February 3, 2017
	ECD (a)			Dell Services			DSG			Total
	(in millions)
Net revenue	$	209		$	1,980		$	975		$	3,164
Cost of net revenue	56			1,563			252			1,871
Operating expenses	137			347			726			1,210
Interest and other, net	(1		)	(8		)	(2		)	(11		)
Income (loss) from discontinued operations before income taxes and gain (loss) on disposal	15			62			(5		)	72
Income tax provision (benefit)	3			(40		)	(23		)	(60		)
Income from discontinued operations, net of income taxes, before gain (loss) on disposal	12			102			18			132
Gain (loss) on disposal, net of tax expense (benefit) of $182, $(256), and $506, respectively	(356		)	1,680			563			1,887
Income (loss) from discontinued operations, net of income taxes	$	(344	)	$	1,782		$	581		$	2,019

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(a) The Company classified the results of ECD as discontinued operations for the period from September 7, 2016 through February 3, 2017 due to the ECD business only being included in the Company's consolidated results since the closing of the EMC merger transaction.

	Fiscal Year Ended January 29, 2016
	Dell Services		DSG			Total
	(in millions)
Net revenue	$	2,686	$	1,289		$	3,975
Cost of net revenue	2,157		373			2,530
Operating expenses	399		915			1,314
Interest and other, net	—		(20		)	(20		)
Income (loss) from discontinued operations before income taxes	130		(19		)	111
Income tax provision	42		5			47
Income (loss) from discontinued operations, net of income taxes	$	88	$	(24	)	$	64

	Fiscal Year Ended January 30, 2015
	Dell Services			DSG			Total
	(in millions)
Net revenue	$	2,691		$	1,286		$	3,977
Cost of net revenue	2,318			347			2,665
Operating expenses	391			1,027			1,418
Interest and other, net	—			(25		)	(25		)
Loss from discontinued operations before income taxes	(18		)	(113		)	(131		)
Income tax benefit	(15		)	(3		)	(18		)
Loss from discontinued operations, net of income taxes	$	(3	)	$	(110	)	$	(113	)

The following table presents the major classes of assets and liabilities related to Dell Services and DSG as of January 29, 2016, which were classified as held for sale:

	January 29, 2016
	Dell Services		DSG		Total
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	254	$	254
Accounts receivable, net	404		244		648
Inventories, net	—		24		24
Other current assets	73		11		84
Total current assets	477		533		1,010
Property, plant, and equipment, net	515		106		621
Goodwill	252		1,391		1,643
Intangible assets, net	388		613		1,001
Other non-current assets	50		8		58
Total assets	$	1,682	$	2,651	$	4,333
LIABILITIES
Current liabilities:
Accounts payable	$	38	$	15	$	53
Accrued and other	180		160		340
Short-term deferred revenue	82		625		707
Total current liabilities	300		800		1,100
Long-term deferred revenue	53		333		386
Other non-current liabilities	31		82		113
Total liabilities	$	384	$	1,215	$	1,599

The significant cash flow items from ECD, Dell Services, and DSG for the fiscal years ended February 3, 2017, January 29, 2016, and January 30, 2015 were as follows:

	Fiscal Year Ended
	February 3, 2017		January 29, 2016		January 30, 2015
	(in millions)
Depreciation and amortization (a)
Dell Services	$	32	$	211	$	221
DSG	66		167		157
Total depreciation and amortization	$	98	$	378	$	378
Capital expenditures
Dell Services	$	82	$	91	$	123
DSG	20		25		26
ECD	2		—		—
Total capital expenditures	$	104	$	116	$	149

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(a) Depreciation and amortization ceased upon determination that Dell Services and DSG had met the criteria for discontinued operations reporting as of March 27, 2016 and June 19, 2016, respectively. Depreciation and amortization for ECD ceased upon determination that the held for sale criteria were met as of September 7, 2016, concurrently with the closing of the EMC merger transaction.