NOTE 19—CONDENSED FINANCIAL INFORMATION FOR PARENT COMPANY
Denali Holding Inc. has no material assets or standalone operations other than its ownership in Dell Inc. and its consolidated subsidiaries.
There are restrictions under credit agreements and an indenture on the Company’s ability to obtain funds from any of its subsidiaries through dividends, loans, or advances. Although certain subsidiaries of Dell Inc. were designated unrestricted for all purposes of such credit agreements and indenture during the fiscal year ended January 29, 2016, substantially all of the net assets of Dell Inc. remain restricted as of January 29, 2016. Accordingly, this condensed financial information is presented on a “Parent-only” basis. Under a Parent-only presentation, Denali Holding Inc.’s investments in its consolidated subsidiaries are presented under the equity method of accounting.
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DENALI HOLDING INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
The following tables present the financial position of Denali Holding Inc. (Parent) as of January 29, 2016 and January 30, 2015, and the results of its operations and cash flows for the fiscal years ended January 29, 2016 and January 30, 2015 and for the period from October 29, 2013 to January 29, 2014.
| Successor | ||||||||
| Denali Holding Inc. (Parent) | January 29, 2016 |
January 30, 2015 |
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| (in millions) | ||||||||
| Assets: |
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| Investments in subsidiaries |
$ | 1,587 | $ | 2,982 | ||||
| Other current assets |
11 | — | ||||||
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| Total assets |
$ | 1,598 | $ | 2,982 | ||||
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| Long-term debt |
$ | 26 | $ | 26 | ||||
| Other non-current liabilities |
— | (1 | ) | |||||
| Redeemable shares |
106 | 53 | ||||||
| Stockholders’ equity: |
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| Common stock and capital in excess of $.01 par value; shares authorized: 700 (Series A: 350, Series B: 150, Series C: 200); shares issued and outstanding: 405 (Series A: 307, Series B: 98) and 405 (Series A: 307, Series B: 98), respectively |
5,727 | 5,708 | ||||||
| Retained earnings (deficit) |
(3,937 | ) | (2,833 | ) | ||||
| Accumulated other comprehensive income (loss) |
(324 | ) | 29 | |||||
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| Total stockholders’ equity |
1,466 | 2,904 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 1,598 | $ | 2,982 | ||||
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In connection with the acquisition of Dell by Denali Holding, Denali Holding issued a $2.0 billion subordinated note to Microsoft Global Finance, a subsidiary of Microsoft Corporation. As of January 29, 2016 and January 30, 2015, the outstanding principal amount of the Microsoft Note was $26 million, payable at maturity in October 2023.
Denali Holding Inc. (Parent) has not guaranteed the obligations of its subsidiaries. See Note 11 of the Notes to the Audited Consolidated Financial Statements for more information about the commitments and contingencies of the Company.
| Successor | ||||||||||||
| Denali Holding Inc. (Parent) | Fiscal Year Ended January 29, 2016 |
Fiscal Year Ended January 30, 2015 |
October 29, 2013 through January 31, 2014 |
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| (in millions) | ||||||||||||
| Equity in net loss of subsidiaries |
$ | (1,113 | ) | $ | (1,162 | ) | $ | (1,589 | ) | |||
| Interest and other, net |
8 | (89 | ) | (37 | ) | |||||||
| Income tax benefit |
1 | 30 | 14 | |||||||||
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| Consolidated net loss |
(1,104 | ) | (1,221 | ) | (1,612 | ) | ||||||
| Other comprehensive income (loss) of subsidiaries |
(353 | ) | 56 | (27 | ) | |||||||
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| Consolidated comprehensive loss |
$ | (1,457 | ) | $ | (1,165 | ) | $ | (1,639 | ) | |||
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- F-65 -
DENALI HOLDING INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
| Successor | ||||||||||||
| Denali Holding Inc. (Parent) | Fiscal Year Ended January 29, 2016 |
Fiscal Year Ended January 30, 2015 |
October 29, 2013 through January 31, 2014 |
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| (in millions) | ||||||||||||
| Change in cash from operating activities |
$ | (2 | ) | $ | (64 | ) | $ | (19 | ) | |||
| Cash flow from financing activities: |
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| Proceeds from equity issuance |
— | 28 | 2,096 | |||||||||
| Issuance of common stock under employee plans |
2 | — | — | |||||||||
| Proceeds from debt |
— | — | 2,000 | |||||||||
| Repayments of debt |
— | (1,974 | ) | — | ||||||||
| Receipt of capital from subsidiaries |
2 | 2,001 | 19 | |||||||||
| Capital investment in subsidiaries |
(2 | ) | — | (4,087 | ) | |||||||
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| Change in cash from financing activities |
2 | 55 | 28 | |||||||||
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| Change in cash and cash equivalents |
— | (9 | ) | 9 | ||||||||
| Cash and cash equivalents at beginning of the period |
— | 9 | — | |||||||||
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| Cash and cash equivalents at end of the period |
$ | — | $ | — | $ | 9 | ||||||
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The results of operations and cash flow information of the Parent Company are not presented for the predecessor period ended October 28, 2013, as Denali Holding Inc. (Parent) did not exist in that period.
