Dell 2002 Annual Report Download - page 31

Table of Contents
prospectively for guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for Dell commencing in its annual
financial statements for the fiscal year ended January 31, 2003 (see Note 6 of the Notes to Consolidated Financial Statements included in "Item 8 — Financial
Statements and Supplementary Data" for product warranty information). Dell does not expect FIN 45 to have a material impact on its consolidated results of
operations or financial position.
In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based Compensation-Transition and Disclosure, an Amendment of FASB Statement
No. 123. SFAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS 148 amends certain provisions of SFAS 123 to require that disclosure of the pro forma effect of applying the fair value
method of accounting for stock-based compensation be prominently displayed in an entity's accounting policy in annual and interim financial statements. Dell
is required to follow the prescribed format and provide the additional disclosures required by SFAS 148 in its annual financial statements for the fiscal year
ended January 31, 2003, and must also provide the disclosures in its quarterly reports containing condensed financial statements for interim periods beginning
with the quarterly period ending May 1, 2003. Dell does not expect SFAS 148 to have a material impact on its consolidated results of operations or financial
position.
In January 2003, the FASB issued FIN 46, Consolidation of Variable Interest Entities ("VIE"). FIN 46 requires that if a company holds a controlling financial
interest in a VIE, the assets, liabilities and results of the VIE's activities should be consolidated in the entity's financial statements. As a result, Dell will be
required to consolidate its existing master lease facilities effective during the third quarter of fiscal year 2004. Dell expects to expend approximately
$640 million to acquire the assets held in master lease facilities. Dell is currently assessing the impact that FIN 46 may have on its accounting for DFS, but
does not believe that consolidation will be required.
In January 2003, the Securities and Exchange Commission ("SEC") issued a final rule requiring enhanced disclosure of material off-balance sheet
transactions, arrangements, and other relationships with unconsolidated entities that may have a material current or future effect on financial condition,
changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenue or expenses. The
rule also requires a tabular disclosure of future payments due under contractual commitments. The disclosure requirements will become effective for Dell's
fiscal 2004 annual report. Dell does not expect this pronouncement to have a material impact on its consolidated results of operations or financial position.
In January 2003, the EITF released Issue No. 02-16, Accounting by a Customer (including a Reseller) for Cash Consideration Received from a Vendor,
guiding the timing and manner in which customers should recognize consideration (e.g., rebates) received from vendors. Such consideration is generally
presumed to represent a reduction of a vendor's prices and should therefore be classified as a reduction of cost of revenue. Dell does not expect EITF 02-16 to
have a material impact on its consolidated results of operations or financial position.
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."
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