| DEBT | NOTE 6 — DEBT The following table presents the Company’s outstanding debt as of the dates indicated: November 1, 2019 February 1, 2019 (in millions) Secured Debt Senior Secured Credit Facilities: 4.24% Term Loan B Facility due September 2023 $ — $ 4,938 3.79% Term Loan B-1 Facility due September 2025 4,750 — 4.16% Term Loan A-2 Facility due September 2021 — 4,116 3.54% Term Loan A-4 Facility due December 2023 679 1,650 4.25% Term Loan A-5 Facility due December 2019 — 2,016 3.60% Term Loan A-6 Facility due March 2024 3,543 — 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 1,075 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 Public Subsidiary Debt 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 VMware Term Loan Facility 600 — DFS Debt (Note 4) 7,568 5,929 Other 4.18% Margin Loan Facility due April 2022 4,000 3,350 Other 84 38 Total debt, principal amount $ 53,026 $ 54,239 November 1, 2019 February 1, 2019 (in millions) Total debt, principal amount $ 53,026 $ 54,239 Unamortized discount, net of unamortized premium (246 ) (271 ) Debt issuance costs (389 ) (447 ) Total debt, carrying value $ 52,391 $ 53,521 Total short-term debt, carrying value $ 7,664 $ 4,320 Total long-term debt, carrying value $ 44,727 $ 49,201 During the nine months ended November 1, 2019 , the Company repaid $550 million principal amount of its 5.875% senior unsecured notes due June 2021, $600 million principal amount of its 5.875% senior unsecured notes due June 2019 upon maturity, $950 million principal amount of its Term Loan A-4 Facility, and approximately $136 million of principal amortization under its term loan facilities. The Company also repaid $162.5 million principal amount as part of the Term Loan B Facility refinancing and the remaining principal amount of approximately $1,277 million of its Term Loan A-2 Facility in connection with the First Lien Notes issued on March 20, 2019, as described below under “Refinancing Transactions.” Additionally, during the nine months ended November 1, 2019 , the Company issued an additional $1.6 billion , net, in DFS debt to support the expansion of its financing receivables portfolio. Refinancing Transactions On March 7, 2019, the Company amended the Margin Loan Agreement to increase the aggregate principal amount of borrowings under the Margin Loan Facility by $650 million . On March 13, 2019, the Company entered into an amendment to the credit agreement for the Senior Secured Credit Facilities to obtain a new senior secured Term Loan A-6 Facility in order to refinance the $5 billion aggregate principal amount of debt incurred in connection with the Class V transaction described in Note 14 of the Notes to the Condensed Consolidated Financial Statements . The Term Loan A-6 Facility aggregate principal amount of $3,634 million matures on March 13, 2024, of which $2,839 million aggregate principal amount represents the amounts outstanding under the Term Loan A-2 Facility that rolled-over into the new facility. Immediately after the rollover, an aggregate principal amount of $1,277 million remained outstanding under the Term Loan A-2 Facility. On March 20, 2019, Dell International L.L.C. and EMC Corporation, both of which are wholly-owned subsidiaries of Dell Technologies Inc., completed a private offering of multiple series of First Lien Notes in an aggregate principal amount of $4.5 billion . The principal amount, interest rate, and maturity of each series of such First Lien Notes were $1,000 million of 4.00% First Lien Notes due July 15, 2024 , $1,750 million of 4.90% First Lien Notes due October 1, 2026 , and $1,750 million of 5.30% First Lien Notes due October 1, 2029 . A majority of the proceeds from the First Lien Notes issued on March 20, 2019 was used to repay all of the outstanding $3,750 million principal amount of the 3.48% First Lien Notes due June 2019. In addition, proceeds of approximately $800 million of borrowings under the new Term Loan A-6 Facility, the proceeds of the $650 million increase in the Margin Loan Facility, and a portion of the proceeds from the 2019 First Lien Notes were used to repay all $2,016 million of the Company’s outstanding amounts under the Term Loan A-5 Facility due December 2019. During the three months ended May 3, 2019 , the remaining proceeds available from the 2019 First Lien Notes were used to repay $550 million of outstanding amounts under the Term Loan A-2 Facility and to pay related premiums, accrued interest, fees, and expenses. The Term Loan A-2 Facility was subsequently paid off as of August 2, 2019 . On September 19, 2019, the Company entered into a sixth refinancing amendment to the Senior Secured Credit Agreement (the “Sixth Refinancing Amendment”) to refinance the Term Loan B Facility due September 2023 with a new term loan B facility consisting of an aggregate principal amount of $4,750 million refinancing term B-1 loans maturing on September 19, 2025 (“Term Loan B-1 Facility due September 2025” or “Term Loan B-1 Facility”). The Company used the proceeds from the Term Loan B-1 Facility, together with other funds available, to repay $4,913 million of outstanding amounts under the Term Loan B Facility due September 2023 and to pay related accrued interest, fees and expenses. The refinancing and amendments were evaluated in accordance with FASB ASC 470, “Debt-Modifications and Extinguishments.” The amendment to the Margin Loan Agreement and the term debt refinancing were accounted for as modifications for all existing lenders and as new issuances for new lenders. The First Lien Notes issued on March 20, 2019 were accounted for as new issuances for all lenders, and repayment of the Company’s outstanding amounts under the Term Loan A-5 Facility was accounted for as an extinguishment. During the three months ended May 3, 2019 , the Company capitalized $74.5 million in new fees paid to creditors as a result of the modifications and new issuances. In addition, the Company recognized expenses of $32.3 million in unamortized costs and $7.1 million in new third-party costs during the three months ended May 3, 2019 . The Term Loan B Facility refinancing was accounted for as a modification for all existing lenders and as a new issuance for new lenders. During the three months ended November 1, 2019 , the Company capitalized $5.9 million in new fees paid to creditors as a result of the modifications and new issuances. In addition, the Company recognized expenses of $1.5 million in unamortized costs and $5.1 million in new third-party costs during the three months ended November 1, 2019 . 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”) 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 1, 2019 , available borrowings under the Revolving Credit Facility totaled $4.5 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, or (b) the London Interbank Offered Rate (“LIBOR”). The Term Loan B-1 Facility bears interest at LIBOR plus an applicable margin of 2.00% or a base rate plus an applicable margin of 1.00% . The Term Loan A-4 Facility and the Term Loan A-6 Facility bear interest at LIBOR plus an applicable margin ranging from 1.25% to 2.00% or a base rate plus an applicable margin ranging from 0.25% to 1.00% . 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 B-1 Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 1% of the original principal amount. The Term Loan A-4 Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 5% of the original principal amount in each of the first four years after the facility closing date of December 20, 2018, and 80% of the original principal amount in the fifth year after December 20, 2018. The Term Loan A-6 Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 5% of the original principal amount in each of the first four years after the facility closing date of March 13, 2019, and 80% of the original principal amount in the fifth year after March 13, 2019. 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. 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. First Lien Notes — The senior secured notes (collectively, the “First Lien Notes”) were issued on June 1, 2016 and March 20, 2019 in an aggregate principal amount of $20.0 billion and $4.5 billion , respectively. As discussed above, during the three months ended May 3, 2019 , the Company used a portion of the $4.5 billion proceeds from the First Lien Notes issued on March 20, 2019 to repay all of the outstanding $3,750 million principal amount of its 3.48% First Lien Notes due June 2019. 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, in the case of the First Lien Notes issued on June 1, 2016, and within five years after their issue date, in the case of the First Lien Notes issued on March 20, 2019. China Revolving Credit Facility — During the three months ended May 3, 2019, the Company renewed its 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 will expire on February 26, 2020. As of November 1, 2019 , there were no outstanding borrowings under the China Revolving Credit Facility. Unsecured Debt Unsecured Notes and Debentures — The Company has outstanding unsecured notes and debentures (collectively, the “Unsecured Notes and Debentures”) that were issued by Dell 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, $1.5 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 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 1, 2019 , there were no outstanding borrowings under the VMware Revolving Credit Facility. VMware Term Loan Facility — On September 26, 2019, VMware, Inc. entered into a senior unsecured term loan facility (the “VMware Term Loan Facility”) with a syndicate of lenders that provides VMware, Inc. with a borrowing capacity of up to $2.0 billion for VMware, Inc. general corporate purposes. VMware, Inc. may borrow against the VMware Term Loan Facility two times up to its borrowing capacity of $2.0 billion until February 7, 2020. The VMware Term Loan Facility matures on the 364 th day following the initial funding under the facility. The VMware Term Loan Facility bears interest at LIBOR plus 0.75% to 1.25% , or an alternative base rate plus 0.00% to 0.25% , depending on VMware Inc.’s external credit ratings. VMware, Inc. drew down $2.0 billion and repaid $1.4 billion during the three months ended November 1, 2019 . As of November 1, 2019 , the outstanding balance was $600 million , and $1.4 billion remained available to be drawn down for future borrowing purposes. The VMware Term Loan Facility contains certain representations, warranties, and covenants. 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. 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. 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 . In connection with the Class V transaction, on December 20, 2018, the Company amended the Margin Loan Facility to increase the aggregate principal amount to $3.35 billion . In connection with obtaining the Term Loan A-6 Facility, the Company increased the aggregate principal amount of the Margin Loan Facility to $4.0 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 provided for a senior secured revolving loan facility in an aggregate principal amount not to exceed $100 million . The credit facility contained customary representations, warranties, and covenants, including financial covenants. During the three months ended November 1, 2019 , the Pivotal Revolving Credit Facility was terminated. Aggregate Future Maturities The following table presents the aggregate future maturities of the Company’s debt as of November 1, 2019 for the periods indicated: Maturities by Fiscal Year 2020 (remaining three months) 2021 2022 2023 2024 Thereafter Total (in millions) Senior Secured Credit Facilities and First Lien Notes $ 91 $ 184 $ 4,717 $ 286 $ 6,702 $ 17,742 $ 29,722 Unsecured Notes and Debentures — — 400 — — 952 1,352 Senior Notes and EMC Notes — 2,000 1,075 — 1,000 1,625 5,700 VMware Notes — 1,850 — 1,500 — 1,250 4,600 DFS Debt 1,249 3,611 1,418 1,198 84 8 7,568 Margin Loan Facility — — — 4,000 — — 4,000 Other 11 21 7 8 7 30 84 Total maturities, principal amount 1,351 7,666 7,617 6,992 7,793 21,607 53,026 Associated carrying value adjustments — (8 ) (57 ) (26 ) (53 ) (491 ) (635 ) Total maturities, carrying value amount $ 1,351 $ 7,658 $ 7,560 $ 6,966 $ 7,740 $ 21,116 $ 52,391 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 1, 2019 , 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. Substantially all of the net assets of the Company’s consolidated subsidiaries were restricted, with the exception of the Company’s unrestricted subsidiaries, primarily VMware, Inc., Pivotal, Secureworks, and their respective subsidiaries, as of November 1, 2019 . The Term Loan A-4 Facility, the Term Loan A-6 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 1, 2019 . |
