Dell 1997 Annual Report Download - page 16

Marketable Securities
The fair value of the Company's investments in marketable securities at February
1, 1998 was $1.5 billion. The Company's investment policy is to manage its
marketable securities portfolio to preserve principal and liquidity while
maximizing the return on the investment portfolio through the full investment of
available funds. The Company diversifies the marketable securities portfolio by
investing in multiple types of investment-grade securities and through the use
of different investment brokers. The Company's marketable securities portfolio
is primarily invested in short-term securities with at least an investment grade
rating to minimize interest rate and credit risk as well as to provide for an
immediate source of funds. Based on the Company's marketable securities
portfolio and interest rates at February 1, 1998, a 175 basis point increase or
decrease in interest rates would result in a decrease or increase of $17
million, respectively, in the fair value of the marketable securities portfolio.
Although changes in interest rates may affect the fair value of the marketable
securities portfolio and cause unrealized gains or losses, such gains or losses
would not be realized unless the investments are sold.
FACTORS AFFECTING THE COMPANY'S BUSINESS AND PROSPECTS
There are numerous factors that may affect the Company's business and the
results of its operations. These factors include general economic and business
conditions; the level of demand for personal computers; the level and intensity
of competition in the personal computer industry and the pricing pressures that
may result; the ability of the Company to timely and effectively manage
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periodic product transitions and component availability; the ability of the
Company to develop new products based on new or evolving technology and the
market's acceptance of those products; the ability of the Company to manage its
inventory levels to minimize excess inventory, declining inventory values and
obsolescence; the product, customer and geographic sales mix of any particular
period; the Company's ability to continue to improve its infrastructure
(including personnel and systems) to keep pace with the growth in its overall
business activities; and the Company's ability to ensure its products and
information systems and those of its third party providers will be Year 2000
compliant. For a discussion of these and other factors affecting the Company's
business and prospects, see "Item 1 -- Business -- Factors Affecting the
Company's Business and Prospects" above.
ITEM 7A -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Response to this item is included in "Item 7 -- Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Market Risk" above.
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ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
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Financial Statements:
Report of Independent Accountants......................... 20
Consolidated Statement of Financial Position at February
1, 1998 and February 2, 1997........................... 21
Consolidated Statement of Income for the three fiscal
years ended February 1, 1998........................... 22
Consolidated Statement of Cash Flows for the three fiscal
years ended February 1, 1998........................... 23
Consolidated Statement of Stockholders' Equity for the
three fiscal years ended February 1, 1998.............. 24
Notes to Consolidated Financial Statements................ 25
Financial Statement Schedule:
For the three fiscal years ended February 1, 1998
Schedule II -- Valuation and Qualifying Accounts....... 58
All other schedules are omitted because they are not applicable.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Dell Computer Corporation
In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of Dell
Computer Corporation and its subsidiaries at February 1, 1998 and February 2,