FINANCIAL SERVICES (Tables)

6 Months Ended

Jul. 31, 2020

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:

	July 31, 2020						January 31, 2020
	Revolving		Fixed-term		Total		Revolving		Fixed-term		Total
	(in millions)
Financing receivables, net:
Customer receivables, gross (a)	$	778	$	9,255	$	10,033	$	824	$	8,486	$	9,310
Allowances for losses	(143)		(180)		(323)		(70)		(79)		(149)
Customer receivables, net	635		9,075		9,710		754		8,407		9,161
Residual interest	—		523		523		—		582		582
Financing receivables, net	$	635	$	9,598	$	10,233	$	754	$	8,989	$	9,743
Short-term	$	635	$	4,220	$	4,855	$	754	$	4,141	$	4,895
Long-term	$	—	$	5,378	$	5,378	$	—	$	4,848	$	4,848

____________________

(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 table presents the changes in allowance for financing receivable losses for the periods indicated:

	Three Months Ended
	July 31, 2020						August 2, 2019
	Revolving		Fixed-term		Total		Revolving		Fixed-term		Total
	(in millions)
Allowance for financing receivable losses:
Balances at beginning of period	$	144	$	177	$	321	$	70	$	73	$	143
Charge-offs, net of recoveries	(18)		(7)		(25)		(15)		(9)		(24)
Provision charged to income statement	17		10		27		12		7		19
Balances at end of period	$	143	$	180	$	323	$	67	$	71	$	138

	Six Months Ended
	July 31, 2020						August 2, 2019
	Revolving		Fixed-term		Total		Revolving		Fixed-term		Total
	(in millions)
Allowance for financing receivable losses:
Balances at beginning of period	$	70	$	79	$	149	$	75	$	61	$	136
Adjustment for adoption of accounting standard (Note 1)	40		71		111		—		—		—
Charge-offs, net of recoveries	(38)		(16)		(54)		(35)		(12)		(47)
Provision charged to income statement	71		46		117		27		22		49
Balances at end of period	$	143	$	180	$	323	$	67	$	71	$	138

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:

	July 31, 2020								January 31, 2020
	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	$	556	$	29	$	13	$	598	$	550	$	51	$	20	$	621
Revolving — DBC	165		11		4		180		184		15		4		203
Fixed-term — Consumer and Commercial	8,803		381		71		9,255		8,005		373		108		8,486
Total customer receivables, gross	$	9,524	$	421	$	88	$	10,033	$	8,739	$	439	$	132	$	9,310

Credit quality indicators

The following table presents customer receivables, gross, including accrued interest, by credit quality indicator segregated by class and year of origination, as of the date indicated:

	July 31, 2020
	Fixed-term — Consumer and Commercial
	Fiscal Year of Origination
	2021		2020		2019		2018		2017		Years Prior		Revolving — DPA (a)		Revolving — DBC (a)		Total
	(in millions)
Higher	$	2,019	$	2,265	$	992	$	273	$	43	$	1	$	148	$	51	$	5,792
Mid	633		824		417		127		20		1		176		52		2,250
Lower	548		609		379		82		20		2		274		77		1,991
Total	$	3,200	$	3,698	$	1,788	$	482	$	83	$	4	$	598	$	180	$	10,033

____________________

(a) The revolving portfolio is exempt from the requirement to disclose the amortized cost basis by year of origination since determining the appropriate origination year can be complex due to the nature of the revolving portfolio.

The following table presents customer receivables, gross, including accrued interest, by credit quality indicator segregated by class, as of the date indicated, and was not recast to reflect the impact of adoption of the new CECL standard:

	January 31, 2020
	Fixed-term — Consumer and Commercial		Revolving — DPA		Revolving — DBC		Total
	(in millions)
Higher	$	5,042	$	137	$	55	$	5,234
Mid	2,036		175		63		2,274
Lower	1,408		309		85		1,802
Total	$	8,486	$	621	$	203	$	9,310

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
	July 31, 2020		August 2, 2019		July 31, 2020		August 2, 2019
	(in millions)
Net revenue — products	$	249	$	223	$	464	$	353
Cost of net revenue — products	174		179		333		260
Gross margin — products	$	75	$	44	$	131	$	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:

	July 31, 2020
Fiscal Years	(in millions)
Fiscal 2021 (remaining six months)	$	1,475
Fiscal 2022	2,159
Fiscal 2023	1,347
Fiscal 2024	609
Fiscal 2025 and beyond	250
Total undiscounted cash flows	5,840
Fixed-term loans	4,075
Revolving loans	778
Less: unearned income	(660)
Total customer receivables, gross	$	10,033

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 dates indicated:

	July 31, 2020		January 31, 2020
	(in millions)
Equipment under operating lease, gross	$	1,478	$	956
Less: accumulated depreciation	(258)		(116)
Equipment under operating lease, net	$	1,220	$	840

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:

	July 31, 2020
Fiscal Years	(in millions)
Fiscal 2021 (remaining six months)	$	258
Fiscal 2022	461
Fiscal 2023	351
Fiscal 2024	89
Fiscal 2025 and beyond	9
Total	$	1,168

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.

	July 31, 2020		January 31, 2020
	(in millions)
DFS U.S. debt:
Asset-based financing and securitization facilities	$	2,936	$	2,606
Fixed-term securitization offerings	2,788		2,593
Other	187		141
Total DFS U.S. debt	5,911		5,340
DFS international debt:
Securitization facility	835		743
Other borrowings	719		931
Note payable	187		200
Dell Bank Senior Unsecured Eurobonds	1,185		551
Total DFS international debt	2,926		2,425
Total DFS debt	$	8,837	$	7,765
Total short-term DFS debt	$	4,188	$	4,152
Total long-term DFS debt	$	4,649	$	3,613

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

	July 31, 2020		January 31, 2020
	(in millions)
Secured Debt
Senior Secured Credit Facilities:
2.75% Term Loan B-1 Facility due September 2025	$	4,691	$	4,738
1.93% Term Loan A-4 Facility due December 2023	679		679
1.93% Term Loan A-6 Facility due March 2024	3,316		3,497
First Lien Notes:
4.42% due June 2021	3,065		4,500
5.45% due June 2023	3,750		3,750
4.00% due July 2024	1,000		1,000
5.85% due July 2025	1,000		—
6.02% due June 2026	4,500		4,500
4.90% due October 2026	1,750		1,750
6.10% due July 2027	500		—
5.30% due October 2029	1,750		1,750
6.20% due July 2030	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:
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		1,075
7.125% due June 2024	1,625		1,625
EMC Notes:
2.650% due June 2020	—		600
3.375% due June 2023	1,000		1,000
Debt of Public Subsidiary
VMware Notes:
2.30% due August 2020	—		1,250
2.95% due August 2022	1,500		1,500
4.50% due May 2025	750		—
4.65% due May 2027	500		—
3.90% due August 2027	1,250		1,250
4.70% due May 2030	750		—
VMware Term Loan Facility	1,500		1,500
DFS Debt (Note 4)	8,837		7,765
Other
2.51% Margin Loan Facility due April 2022	4,000		4,000
Other	147		84
Total debt, principal amount	$	54,537	$	52,665

	July 31, 2020		January 31, 2020
	(in millions)
Total debt, principal amount	$	54,537	$	52,665
Unamortized discount, net of unamortized premium	(226)		(241)
Debt issuance costs	(358)		(368)
Total debt, carrying value	$	53,953	$	52,056
Total short-term debt, carrying value	$	10,345	$	7,737
Total long-term debt, carrying value	$	43,608	$	44,319

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:

	July 31, 2020		January 31, 2020
	(in millions)
Assets held by consolidated VIEs, net:
Short-term, net	$	3,315	$	3,316
Long-term, net	3,867		3,348
Assets held by consolidated VIEs, net	$	7,182	$	6,664