FINANCIAL SERVICES (Tables)

6 Months Ended

Aug. 03, 2018

Schedule of Components of the Company's Financing Receivables Segregated by Portfolio Segment

The following table summarizes the components of the Company's financing receivables segregated by portfolio segment as of August 3, 2018 and February 2, 2018:



	August 3, 2018									February 2, 2018
	Revolving			Fixed-term			Total			Revolving			Fixed-term			Total
	(in millions)
Financing receivables, net:
Customer receivables, gross (a)	$	825		$	6,825		$	7,650		$	900		$	6,282		$	7,182
Allowances for losses	(75		)	(51		)	(126		)	(81		)	(64		)	(145		)
Customer receivables, net	750			6,774			7,524			819			6,218			7,037
Residual interest	—			646			646			—			606			606
Financing receivables, net	$	750		$	7,420		$	8,170		$	819		$	6,824		$	7,643
Short-term	$	750		$	3,390		$	4,140		$	819		$	3,100		$	3,919
Long-term	$	—		$	4,030		$	4,030		$	—		$	3,724		$	3,724

____________________

(a) Customer financing receivables, gross, includes accrued interest.

Schedule of Changes in the Allowance for Financing Receivable Losses

The following tables present the allowance for financing receivable losses for the three months ended August 3, 2018 and August 4, 2017, and the six months ended August 3, 2018 and August 4, 2017, and changes in allowance for financing receivable losses for the respective periods:



	Three Months Ended
	August 3, 2018									August 4, 2017
	Revolving			Fixed-term			Total			Revolving			Fixed-term			Total
	(in millions)
Allowance for financing receivable losses:
Balances at beginning of period	$	77		$	62		$	139		$	85		$	51		$	136
Charge-offs, net of recoveries	(19		)	(12		)	(31		)	(20		)	(5		)	(25		)
Provision charged to income statement	17			1			18			16			8			24
Balances at end of period	$	75		$	51		$	126		$	81		$	54		$	135



	Six Months Ended
	August 3, 2018									August 4, 2017
	Revolving			Fixed-term			Total			Revolving			Fixed-term			Total
	(in millions)
Allowance for financing receivable losses:
Balances at beginning of period	$	81		$	64		$	145		$	91		$	52		$	143
Charge-offs, net of recoveries	(39		)	(17		)	(56		)	(42		)	(8		)	(50		)
Provision charged to income statement	33			4			37			32			10			42
Balances at end of period	$	75		$	51		$	126		$	81		$	54		$	135

Aging Customer Financing Receivables, Gross, Including Accrued Interest

The following table summarizes the aging of the Company's customer financing receivables, gross, including accrued interest, as of August 3, 2018 and February 2, 2018, segregated by class:



	August 3, 2018								February 2, 2018
	Current		Past Due 1 — 90 Days		Past Due >90 Days		Total		Current		Past Due 1 — 90 Days		Past Due >90 Days		Total
	(in millions)
Revolving — DPA	$	572	$	60	$	20	$	652	$	633	$	59	$	23	$	715
Revolving — DBC	151		18		4		173		162		19		4		185
Fixed-term — Consumer and Commercial	6,065		677		83		6,825		5,414		775		93		6,282
Total customer receivables, gross	$	6,788	$	755	$	107	$	7,650	$	6,209	$	853	$	120	$	7,182

Credit Quality Indicators

The following table summarizes customer receivables, gross, including accrued interest, by credit quality indicator segregated by class, as of August 3, 2018 and February 2, 2018. The categories shown in the table below segregate customer receivables based on the relative degrees of credit risk. The credit quality indicators for DPA revolving accounts are measured primarily as of each quarter-end date, while all other indicators are generally updated on a periodic basis.

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



	August 3, 2018								February 2, 2018
	Higher		Mid		Lower		Total		Higher		Mid		Lower		Total
	(in millions)
Revolving — DPA	$	133	$	195	$	324	$	652	$	131	$	223	$	361	$	715
Revolving — DBC	$	44	$	54	$	75	$	173	$	48	$	58	$	79	$	185
Fixed-term — Consumer and Commercial	$	3,665	$	1,957	$	1,203	$	6,825	$	3,334	$	1,828	$	1,120	$	6,282

Funding of Financing Receivables

The following table summarizes DFS debt as of the periods indicated. The table excludes the allocated portion of the Company's other borrowings, which represents the additional amount considered to fund the DFS business.



	August 3, 2018		February 2, 2018
	(in millions)
DFS U.S. debt
Securitization facilities	$	1,782	$	1,498
Fixed-term securitization offerings	2,305		2,034
Other	132		32
Total DFS U.S. debt	4,219		3,564
DFS international debt
Securitization facility	497		404
Other structured facilities	670		628
Note payable	200		200
Total DFS international debt	1,367		1,232
Total DFS debt	$	5,586	$	4,796
Total short-term DFS debt	$	3,130	$	3,327
Total long-term DFS debt	$	2,456	$	1,469

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



	August 3, 2018		February 2, 2018
	(in millions)
Secured Debt
Senior Secured Credit Facilities:
4.08% Term Loan B Facility due September 2023	$	4,963	$	4,988
3.83% Term Loan A-2 Facility due September 2021	4,283		4,394
3.58% Term Loan A-3 Facility due December 2018	1,213		1,213
First Lien Notes:
3.48% due June 2019	3,750		3,750
4.42% due June 2021	4,500		4,500
5.45% due June 2023	3,750		3,750
6.02% due June 2026	4,500		4,500
8.10% due July 2036	1,500		1,500
8.35% due July 2046	2,000		2,000
Unsecured Debt
Unsecured Notes and Debentures:
5.65% due April 2018	—		500
5.875% due June 2019	600		600
4.625% due April 2021	400		400
7.10% due April 2028	300		300
6.50% due April 2038	388		388
5.40% due September 2040	264		264
Senior Notes:
5.875% due June 2021	1,625		1,625
7.125% due June 2024	1,625		1,625
EMC Notes:
1.875% due June 2018	—		2,500
2.650% due June 2020	2,000		2,000
3.375% due June 2023	1,000		1,000
VMware Notes:
2.30% due August 2020	1,250		1,250
2.95% due August 2022	1,500		1,500
3.90% due August 2027	1,250		1,250
DFS Debt (Note 5)	5,586		4,796
Other
4.59% Margin Loan Facility due April 2022	2,000		2,000
Other	56		101
Total debt, principal amount	$	50,303	$	52,694



	August 3, 2018			February 2, 2018
	(in millions)
Total debt, principal amount	$	50,303		$	52,694
Unamortized discount, net of unamortized premium	(246		)	(266		)
Debt issuance costs	(499		)	(557		)
Total debt, carrying value	$	49,558		$	51,871
Total short-term debt, carrying value	$	9,144		$	7,873
Total long-term debt, carrying value	$	40,414		$	43,998

Schedule of Financing Receivables Held by the Consolidated VIEs

The following table shows financing receivables held by the consolidated VIEs as of the respective dates:



	August 3, 2018		February 2, 2018
	(in millions)
Financing receivables held by consolidated VIEs, net:
Short-term, net	$	2,794	$	2,572
Long-term, net	2,379		1,981
Financing receivables held by consolidated VIEs, net	$	5,173	$	4,553

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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