| DEBT | NOTE 6 — DEBT The following table summarizes the Company’s outstanding debt as of the dates indicated: November 2, 2018 February 2, 2018 (in millions) Secured Debt Senior Secured Credit Facilities: 4.31% Term Loan B Facility due September 2023 $ 4,950 $ 4,988 4.06% Term Loan A-2 Facility due September 2021 4,228 4,394 3.81% Term Loan A-3 Facility due December 2018 — 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) 5,937 4,796 Other 4.78% Margin Loan Facility due April 2022 2,000 2,000 Other 47 101 Total debt, principal amount $ 49,364 $ 52,694 November 2, 2018 February 2, 2018 (in millions) Total debt, principal amount $ 49,364 $ 52,694 Unamortized discount, net of unamortized premium (238 ) (266 ) Debt issuance costs (469 ) (557 ) Total debt, carrying value $ 48,657 $ 51,871 Total short-term debt, carrying value $ 8,150 $ 7,873 Total long-term debt, carrying value $ 40,507 $ 43,998 During the nine months ended November 2, 2018 , the Company repaid $3 billion principal amount of its unsecured notes and $1.4 billion principal amount of its term loan facilities, which included approximately $0.2 billion of amortization. Additionally, during the nine months ended November 2, 2018 , the Company issued an additional $1.2 billion , net, in DFS debt to support the expansion of its financing receivables portfolio. Secured Debt Senior Secured Credit Facilities — The Company has entered into a credit agreement that provides for senior secured credit facilities (the “Senior Secured Credit Facilities”) in the aggregate principal amount of $17.6 billion comprising (a) term loan facilities and (b) a senior secured Revolving Credit Facility, which includes capacity for up to $0.5 billion of letters of credit and for borrowings of up to $0.4 billion under swing-line loans. As of November 2, 2018 , available borrowings under the Revolving Credit Facility totaled $3.3 billion . The Senior Secured Credit Facilities provide that the borrowers have the right at any time, subject to customary conditions, to request incremental term loans or incremental revolving commitments. Borrowings under the Senior Secured Credit Facilities bear interest at a rate per annum equal to an applicable margin, plus, at the borrowers’ option, either (a) a base rate, which, under the Term Loan B Facility, is subject to an interest rate floor of 1.75% per annum, and under all other borrowings is subject to an interest rate floor of 0% per annum, or (b) a London interbank offered rate (“LIBOR”), which, under the Term Loan B Facility, is subject to an interest rate floor of 0.75% per annum, and under all other borrowings is subject to an interest rate floor of 0% per annum. Interest is payable, in the case of loans bearing interest based on LIBOR, at the end of each interest period (but at least every three months), in arrears and, in the case of loans bearing interest based on the base rate, quarterly in arrears. The Term Loan A-2 Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 5% of the original principal amount in the first year after the closing date of the refinancing transaction on October 20, 2017, 10% of the original principal amount in each of the second and third years after October 20, 2017, and 70% of the original principal amount in the fourth year after October 20, 2017. The Term Loan B Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 1% of the original principal amount. The Revolving Credit Facility has no amortization. The borrowers may voluntarily repay outstanding loans under the term loan facilities and the Revolving Credit Facility at any time without premium or penalty, other than customary “breakage” costs. The Term Loan A-3 Facility was fully repaid during the three months ended November 2, 2018 . All obligations of the borrowers under the Senior Secured Credit Facilities and certain swap agreements, cash management arrangements, and certain letters of credit provided by any lender or agent party to the Senior Secured Credit Facilities or any of its affiliates and certain other persons are secured by (a) a first-priority security interest in certain tangible and intangible assets of the borrowers and the guarantors and (b) a first-priority pledge of 100% of the capital stock of the borrowers, Dell Inc., a wholly‑owned subsidiary of the Company ( “ Dell ” ), and each wholly-owned material restricted subsidiary of the borrowers and the guarantors, in each case subject to certain thresholds, exceptions, and permitted liens. On November 14, 2018, the Company entered into a commitment letter with bank lenders providing for bridge financing in an aggregate principal amount of up to $5.0 billion under the Senior Secured Credit Facilities. See Note 20 of the Notes to the Condensed Consolidated Financial Statements included in this report for further information regarding the bridge financing. First Lien Notes — The senior secured notes (collectively, the “First Lien Notes”) were issued on June 1, 2016 in an aggregate principal amount of $20.0 billion . Interest on these borrowings is payable semiannually. The First Lien Notes are secured, on a pari passu basis with the Senior Secured Credit Facilities, on a first-priority basis by substantially all of the tangible and intangible assets of the issuers and guarantors that secure obligations under the Senior Secured Credit Facilities, including pledges of all capital stock of the issuers, Dell, and certain wholly-owned material subsidiaries of the issuers and the guarantors, subject to certain exceptions. The Company has agreed to use commercially reasonable efforts to register with the SEC notes having terms substantially identical to the terms of the First Lien Notes as part of an offer to exchange such registered notes for the First Lien Notes. The Company will be obligated to pay additional interest on the First Lien Notes if it fails to consummate such an exchange offer within five years after the closing date of the EMC merger transaction. China Revolving Credit Facility — On October 31, 2017, the Company entered into a credit agreement (the “China Revolving Credit Facility”) with a bank lender for a secured revolving loan facility in an aggregate principal amount not to exceed $500 million at an interest rate of LIBOR plus 0.6% per annum. The facility expired on October 31, 2018, with no outstanding borrowings due. Unsecured Debt Unsecured Notes and Debentures — The Company has outstanding unsecured notes and debentures (collectively, the “Unsecured Notes and Debentures”) that were issued prior to the acquisition of Dell by Dell Technologies Inc. in the going-private transaction that closed in October 2013. Interest on these borrowings is payable semiannually. Senior Notes — The senior unsecured notes (collectively, the “Senior Notes”) were issued on June 22, 2016 in an aggregate principal amount of $3.25 billion . Interest on these borrowings is payable semiannually. EMC Notes — On September 7, 2016, EMC had outstanding $2.5 billion aggregate principal amount of its 1.875% Notes due June 2018, which the Company fully repaid during the three months ended August 3, 2018, $2.0 billion aggregate principal amount of its 2.650% Notes due June 2020, and $1.0 billion aggregate principal amount of its 3.375% Notes due June 2023 (collectively, the “EMC Notes”). Interest on these borrowings is payable semiannually. VMware Notes — On August 21, 2017, VMware, Inc. completed a public offering of unsecured senior notes in the aggregate amount of $4.0 billion , consisting of outstanding principal due on the following dates: $1.25 billion due August 21, 2020, $1.50 billion due August 21, 2022, and $1.25 billion due August 21, 2027 (collectively, the “VMware Notes”). The VMware Notes bear interest, payable semiannually, at annual rates of 2.30% , 2.95% , and 3.90% , respectively. None of the net proceeds of such borrowings will be made available to support the operations or satisfy any corporate purposes of Dell Technologies, other than the operations and corporate purposes of VMware, Inc. and VMware, Inc.’s subsidiaries. VMware Revolving Credit Facility — On September 12, 2017, VMware, Inc. entered into an unsecured credit agreement, establishing a revolving credit facility (the “VMware Revolving Credit Facility”), with a syndicate of lenders that provides the company with a borrowing capacity of up to $1.0 billion which may be used for VMware, Inc. general corporate purposes. Commitments under the VMware Revolving Credit Facility are available for a period of five years , which may be extended, subject to the satisfaction of certain conditions, by up to two one year periods. The credit agreement contains certain representations, warranties, and covenants. Commitment fees, interest rates, and other terms of borrowing under the VMware Revolving Credit Facility may vary based on VMware, Inc.’s external credit ratings. None of the net proceeds of such borrowings will be made available to support the operations or satisfy any corporate purposes of Dell Technologies, other than the operations and corporate purposes of VMware, Inc. and VMware, Inc.’s subsidiaries. As of November 2, 2018 , there were no outstanding borrowings under the VMware Revolving Credit Facility. DFS Debt See Note 5 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. Other Margin Loan Facility — On April 12, 2017, the Company entered into the Margin Loan Facility in an aggregate principal amount of $2.0 billion . VMW Holdco LLC, a wholly-owned subsidiary of EMC, is the borrower under the Margin Loan Facility, which is secured by 60 million shares of Class B common stock of VMware, Inc. and 20 million shares of Class A common stock of VMware, Inc. Loans under the Margin Loan Facility bear interest at a rate per annum payable, at the borrower’s option, either at (a) a base rate plus 1.25% per annum or (b) a LIBOR-based rate plus 2.25% per annum. Interest under the Margin Loan Facility is payable quarterly. The Margin Loan Facility will mature in April 2022. The borrower may voluntarily repay outstanding loans under the Margin Loan Facility at any time without premium or penalty, other than customary “breakage” costs, subject to certain minimum threshold amounts for prepayment. Pivotal Revolving Credit Facility — On September 7, 2017, Pivotal entered into a credit agreement (the “Pivotal Revolving Credit Facility”) that provides for a senior secured revolving loan facility in an aggregate principal amount not to exceed $100 million . The credit facility contains customary representations, warranties, and covenants, including financial covenants. The credit agreement will expire on September 8, 2020, unless it is terminated earlier. None of the net proceeds of borrowings under the facility will be made available to support the operations or satisfy any corporate purposes of Dell Technologies, other than the operations and corporate purposes of Pivotal and Pivotal’s subsidiaries. As of November 2, 2018 , there were no outstanding borrowings under the Pivotal Revolving Credit Facility. Aggregate Future Maturities As of November 2, 2018 , aggregate future maturities of the Company’s debt were as follows: Maturities by Fiscal Year 2019 (remaining three months) 2020 2021 2022 2023 Thereafter Total (in millions) Senior Secured Credit Facilities and First Lien Notes $ 124 $ 4,245 $ 371 $ 7,888 $ 62 $ 16,488 $ 29,178 Unsecured Notes and Debentures — 600 — 400 — 952 1,952 Senior Notes and EMC Notes — — 2,000 1,625 — 2,625 6,250 VMware Notes — — 1,250 — 1,500 1,250 4,000 DFS Debt 1,011 2,812 1,712 318 75 9 5,937 Margin Loan Facility 2,000 — 2,000 Other 7 24 16 — — — 47 Total maturities, principal amount 1,142 7,681 5,349 10,231 3,637 21,324 49,364 Associated carrying value adjustments — (14 ) (7 ) (151 ) (26 ) (509 ) (707 ) Total maturities, carrying value amount $ 1,142 $ 7,667 $ 5,342 $ 10,080 $ 3,611 $ 20,815 $ 48,657 Covenants and Unrestricted Net Assets — The credit agreement for the Senior Secured Credit Facilities contains customary negative covenants that generally limit the ability of Denali Intermediate Inc., a wholly-owned subsidiary of Dell Technologies (“Dell Intermediate”), Dell, and Dell’s and Denali Intermediate’s other restricted subsidiaries to incur debt, create liens, make fundamental changes, enter into asset sales, make certain investments, pay dividends or distribute or redeem certain equity interests, prepay or redeem certain debt, and enter into certain transactions with affiliates. The indenture governing the Senior Notes contains customary negative covenants that generally limit the ability of Denali Intermediate, Dell, and Dell’s and Denali Intermediate’s other restricted subsidiaries to incur additional debt or issue certain preferred shares, pay dividends on or make other distributions in respect of capital stock or make other restricted payments, make certain investments, sell or transfer certain assets, create liens on certain assets to secure debt, consolidate, merge, sell, or otherwise dispose of all or substantially all assets, enter into certain transactions with affiliates, and designate subsidiaries as unrestricted subsidiaries. The negative covenants under such credit agreements and indenture are subject to certain exceptions, qualifications, and “baskets.” The indentures governing the First Lien Notes, the Unsecured Notes and Debentures, and the EMC Notes variously impose limitations, subject to specified exceptions, on creating certain liens, entering into sale and lease-back transactions, and entering into certain asset sales. The foregoing credit agreements and indentures contain customary events of default, including failure to make required payments, failure to comply with covenants, and the occurrence of certain events of bankruptcy and insolvency. As of November 2, 2018 , the Company had certain consolidated subsidiaries that were designated as unrestricted subsidiaries for all purposes of the applicable credit agreements and the indentures governing the First Lien Notes and the Senior Notes. The Term Loan A-2 Facility and the Revolving Credit Facility are subject to a first lien leverage ratio covenant that is tested at the end of each fiscal quarter of Dell with respect to Dell’s preceding four fiscal quarters. The Company was in compliance with all financial covenants as of November 2, 2018 |
