FINANCIAL SERVICES (Tables)

6 Months Ended

Aug. 02, 2019

Receivables [Abstract]

Components of financing receivables segregated by portfolio segment

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

	August 2, 2019									February 1, 2019
	Revolving			Fixed-term			Total			Revolving			Fixed-term			Total
	(in millions)
Financing receivables, net:
Customer receivables, gross (a)	$	778		$	7,544		$	8,322		$	835		$	7,249		$	8,084
Allowances for losses	(67		)	(71		)	(138		)	(75		)	(61		)	(136		)
Customer receivables, net	711			7,473			8,184			760			7,188			7,948
Residual interest	—			639			639			—			674			674
Financing receivables, net	$	711		$	8,112		$	8,823		$	760		$	7,862		$	8,622
Short-term	$	711		$	3,762		$	4,473		$	760		$	3,638		$	4,398
Long-term	$	—		$	4,350		$	4,350		$	—		$	4,224		$	4,224

____________________

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

Allowance for financing receivable losses

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

	Three Months Ended
	August 2, 2019									August 3, 2018
	Revolving			Fixed-term			Total			Revolving			Fixed-term			Total
	(in millions)
Allowance for financing receivable losses:
Balances at beginning of period	$	70		$	73		$	143		$	77		$	62		$	139
Charge-offs, net of recoveries	(15		)	(9		)	(24		)	(19		)	(12		)	(31		)
Provision charged to income statement	12			7			19			17			1			18
Balances at end of period	$	67		$	71		$	138		$	75		$	51		$	126
	Six Months Ended
	August 2, 2019									August 3, 2018
	Revolving			Fixed-term			Total			Revolving			Fixed-term			Total
	(in millions)
Allowance for financing receivable losses:
Balances at beginning of period	$	75		$	61		$	136		$	81		$	64		$	145
Charge-offs, net of recoveries	(35		)	(12		)	(47		)	(39		)	(17		)	(56		)
Provision charged to income statement	27			22			49			33			4			37
Balances at end of period	$	67		$	71		$	138		$	75		$	51		$	126

Aging of customer financing receivables

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:

	August 2, 2019								February 1, 2019
	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	$	537	$	47	$	18	$	602	$	583	$	53	$	21	$	657
Revolving — DBC	153		19		4		176		155		19		4		178
Fixed-term — Consumer and Commercial	6,749		688		107		7,544		6,282		878		89		7,249
Total customer receivables, gross	$	7,439	$	754	$	129	$	8,322	$	7,020	$	950	$	114	$	8,084

Credit quality indicators

The following table presents customer receivables, gross, including accrued interest, by credit quality indicator segregated by class, as of the dates indicated. 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.

	August 2, 2019								February 1, 2019
	Higher		Mid		Lower		Total		Higher		Mid		Lower		Total
	(in millions)
Revolving — DPA	$	121	$	178	$	303	$	602	$	128	$	192	$	337	$	657
Revolving — DBC	$	45	$	54	$	77	$	176	$	47	$	54	$	77	$	178
Fixed-term — Consumer and Commercial	$	4,377	$	1,892	$	1,275	$	7,544	$	3,980	$	1,984	$	1,285	$	7,249

Finance leases

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		Six Months Ended
	August 2, 2019		August 2, 2019
	(in millions)
Net revenue — products	$	223	$	353
Cost of net revenue — products	179		260
Gross margin — products	$	44	$	93

Future maturity of fixed-term customer leases

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:

	August 2, 2019
Fiscal Years	(in millions)
Fiscal 2020 (remaining six months)	$	1,488
Fiscal 2021	2,115
Fiscal 2022	1,322
Fiscal 2023	542
Fiscal 2024 and beyond	198
Total undiscounted cash flows	5,665
Fixed-term loans	2,373
Revolving loans	778
Less: unearned income	(494		)
Total customer receivables, gross	$	8,322

Operating lease income

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

	August 2, 2019
	(in millions)
Equipment under operating lease, gross	$	455
Less: accumulated depreciation	(29		)
Equipment under operating lease, net	$	426

Operating lease income maturities

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

	August 2, 2019
Fiscal Years	(in millions)
Fiscal 2020 (remaining six months)	$	79
Fiscal 2021	140
Fiscal 2022	132
Fiscal 2023	55
Fiscal 2024 and beyond	3
Total	$	409

Summary of debt

The following table presents DFS debt as of the dates 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 2, 2019		February 1, 2019
	(in millions)
DFS U.S. debt:
Securitization facilities	$	2,287	$	1,914
Fixed-term securitization offerings	2,438		2,303
Other	201		223
Total DFS U.S. debt	4,926		4,440
DFS international debt:
Securitization facility	690		584
Other borrowings	831		708
Note payable	198		197
Total DFS international debt	1,719		1,489
Total DFS debt	$	6,645	$	5,929
Total short-term DFS debt	$	3,703	$	3,113
Total long-term DFS debt	$	2,942	$	2,816

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

	August 2, 2019		February 1, 2019
	(in millions)
Secured Debt
Senior Secured Credit Facilities:
4.24% Term Loan B Facility due September 2023	$	4,913	$	4,938
4.16% Term Loan A-2 Facility due September 2021	—		4,116
3.99% Term Loan A-4 Facility due December 2023	1,009		1,650
4.25% Term Loan A-5 Facility due December 2019	—		2,016
4.07% Term Loan A-6 Facility due March 2024	3,588		—
First Lien Notes:
3.48% due June 2019	—		3,750
4.42% due June 2021	4,500		4,500
5.45% due June 2023	3,750		3,750
4.00% due July 2024	1,000		—
6.02% due June 2026	4,500		4,500
4.90% due October 2026	1,750		—
5.30% due October 2029	1,750		—
8.10% due July 2036	1,500		1,500
8.35% due July 2046	2,000		2,000
Unsecured Debt
Unsecured Notes and Debentures:
5.875% due June 2019	—		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:
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 4)	6,645		5,929
Other
4.51% Margin Loan Facility due April 2022	4,000		3,350
Other	85		38
Total debt, principal amount	$	52,592	$	54,239

	August 2, 2019			February 1, 2019
	(in millions)
Total debt, principal amount	$	52,592		$	54,239
Unamortized discount, net of unamortized premium	(252		)	(271		)
Debt issuance costs	(418		)	(447		)
Total debt, carrying value	$	51,922		$	53,521
Total short-term debt, carrying value	$	5,949		$	4,320
Total long-term debt, carrying value	$	45,973		$	49,201

Financing receivables held by the consolidated VIEs

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

	August 2, 2019		February 1, 2019
	(in millions)
Assets held by consolidated VIEs, net:
Short-term, net	$	3,072	$	2,940
Long-term, net	3,011		2,508
Assets held by consolidated VIEs, net	$	6,083	$	5,448