Dell 1997 Annual Report Download - page 27

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The Company leases other property and equipment, manufacturing facilities and
office space under noncancelable leases. Certain leases obligate the Company to
pay taxes, maintenance and repair costs.
Future minimum lease payments under all noncancelable leases as of February 1,
1998 are as follows: $21 million in 1999; $19 million in 2000; $16 million in
2001; $9 million in 2002; $7 million in 2003; and $29 million thereafter. Rent
expense totaled $36 million, $33 million and $22 million for the fiscal years
ended 1998, 1997 and 1996, respectively.
Legal Matters -- The Company is subject to various legal proceedings and claims
arising in the ordinary course of business. The Company's management does not
expect that the outcome in any of these legal proceedings, individually or
collectively, will have a material adverse effect on the Company's financial
condition, results of operations, or cash flows.
Certain Concentrations -- All of the Company's foreign exchange and interest
rate derivative instruments involve elements of market and credit risk in excess
of the amounts recognized in the financial statements. The counterparties to
financial instruments consist of a number of major financial institutions. In
addition to limiting the amount of agreements and contracts it enters into with
any one party, the Company monitors its positions with and the credit quality of
the counterparties to these financial instruments. The Company does not
anticipate nonperformance by any of the counterparties.
The Company's marketable securities are placed with high quality financial
institutions and other companies, and the Company currently invests primarily in
equity securities and debt instruments that have maturities of less than three
years. Management believes no significant concentration of credit risk for
marketable securities exists for the Company.
The Company has business activities with large corporate, government, medical
and education customers, small-to-medium businesses and individuals and
value-added resellers. Its receivables from such parties are well diversified.
The Company purchases a number of components from single sources. In some cases,
alternative sources of supply are not available. In other cases, the Company may
establish a working relationship with a single source, even when multiple
suppliers are available, if the Company believes it is advantageous to do so due
to performance, quality, support, delivery, capacity or price considerations. If
the supply of a critical single-source material or component were delayed or
curtailed, the Company's ability to ship the related product in desired
quantities and in a timely manner could be adversely affected. Even where
alternative sources of supply are available, qualification of the alternative
suppliers and establishment of reliable supplies could result in delays and a
possible loss of sales, which could affect operating results adversely.
NOTE 11 -- GEOGRAPHIC AREA INFORMATION
The Company operates in one principal business segment across geographically
diverse markets. The Americas region includes the United States, Canada and
Latin America. Substantially all of the
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Americas' operating results and identifiable assets are in the United States.
Transfers between geographic areas are recorded using internal transfer prices
set by the Company.
FISCAL YEAR 1998
--------------------------------------------------------------
ASIA PACIFIC
AMERICAS EUROPE AND JAPAN ELIMINATIONS CONSOLIDATED
-------- ------ ------------ ------------ ------------
(IN MILLIONS)
Sales to unaffiliated customers......... $8,531 $2,956 $840 $ -- $12,327
Transfers between geographic areas...... 67 17 -- (84) --
------ ------ ---- ----- -------
Total sales................... $8,598 $2,973 $840 $ (84) $12,327
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Operating income........................ $1,152 $ 255 $ 33 $ -- $ 1,440
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Corporate expenses...................... (124)
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Total operating income........ $ 1,316
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Identifiable assets..................... $1,363 $ 605 $172 $ -- $ 2,140
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General corporate assets................ 2,128
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Total assets.................. $ 4,268
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