Dell 2003 Annual Report Download - page 27

Table of Contents
Capital Expenditures — During fiscal 2004, Dell spent $329 million on property, plant, and equipment and $636 million to purchase all of the assets covered
by its master lease facilities. Product demand and mix, as well as ongoing efficiencies in operating and information technology infrastructure, influence the
level and prioritization of Dell's capital expenditures. Capital expenditures for fiscal 2005 are currently expected to be approximately $450 million. Capital
expenditures during fiscal 2005 are anticipated to be funded by cash flows from operating activities and are estimated to increase compared to recent years
due to Dell's worldwide expansion and the need for additional capacity.
Restricted Cash — Pursuant to the joint venture agreement between DFS and CIT, DFS is required to maintain certain escrow cash accounts. Due to the
consolidation of DFS, $253 million in restricted cash is included in other current assets on Dell's consolidated statement of financial position as of January 30,
2004.
Contractual Cash Obligations
The following table summarizes Dell's contractual cash obligations as of January 30, 2004. As of the end of fiscal 2004, Dell had no material purchase
obligations other than those obligations included as liabilities in Dell's consolidated statement of financial position. Purchase orders for raw materials or other
goods and services are not included in the table below as they typically represent authorizations to purchase rather than binding agreements.
Payments Due by Period
Fiscal 2006- Fiscal 2008-
Total Fiscal 2005 2007 2009 Beyond
(in millions)
Operating leases $ 197 $ 53 $ 69 $ 40 $ 35
Advances under credit facilities 159 57 102 — —
Long-term debt, including current portion 507 2 3 3 499
Total contractual cash obligations $ 863 $ 112 $ 174 $ 43 $ 534
Operating Leases — Dell leases property and equipment, manufacturing facilities, and office space under non-cancelable leases. Certain of these leases
obligate Dell to pay taxes, maintenance, and repair costs.
Advances Under Credit Facilities — DFS maintains credit facilities with CIT which provide DFS with a funding capacity of up to $1.0 billion. Due to the
consolidation of DFS, outstanding advances under these facilities totaled $159 million and are included in other current and non-current liabilities on Dell's
consolidated statement of financial position as of January 30, 2004.
Long-Term Debt — As of January 30, 2004, Dell had outstanding $200 million in Senior Notes due April 15, 2008 and $300 million in Senior Debentures due
April 15, 2028. For additional information regarding these issuances, see Note 2 of Notes to Consolidated Financial Statements included in "Item 8 —
Financial Statements and Supplementary Data."
Concurrent with the issuance of the Senior Notes and Senior Debentures, Dell entered into interest rate swap agreements converting Dell's interest rate
exposure from a fixed rate to a floating rate basis to better align the associated interest rate characteristics to its cash and investments portfolio. The interest
rate swap agreements have an aggregate notional amount of $200 million maturing April 15, 2008 and $300 million maturing April 15, 2028. The floating
rates are based on three-month London Interbank Offered Rates ("LIBOR") plus 0.41% and 0.79% for the Senior Notes and Senior Debentures, respectively.
As a result of the interest rate swap agreements, Dell's effective interest rates for the Senior Notes and Senior Debentures were 1.733% and 2.068%,
respectively, for fiscal 2004.
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