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DELL INC (4331)
10-K
Annual report pursuant to section 13 and 15(d)
Filed on 03/31/2008
Filed Period 02/01/2008

Table of contents

  • Page 1
    DELL INC (4331) 10-K Annual report pursuant to section 13 and 15(d) Filed on 03/31/2008 Filed Period 02/01/2008

  • Page 2
    ... (I.R.S. Employer Identification No.) One Dell Way, Round Rock, Texas 78682 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (512) 338-4400 Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, par value...

  • Page 3
    ... not set forth herein, is incorporated by reference from the registrant's proxy statement relating to the 2008 annual meeting of stockholders. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

  • Page 4
    .... Part III Part IV Item 15. Exhibits, Financial Statement Schedules Signatures Exhibit Index Exhibits (attached to the Report on Form 10-K) Amended and Restated 401(k) Plan Form of Performance Based Stock Unit Agreement for Executive Officers Form of Nonstatutory Stock Option Agreement for Executive...

  • Page 5
    ... solutions to meet those needs. Our corporate headquarters are located in Round Rock, Texas, and we conduct operations worldwide through subsidiaries. When we refer to our company and its business in this report, we are referring to the business and activities of our consolidated subsidiaries...

  • Page 6
    ...channels to reach additional consumers and small businesses through retail partners and value-added resellers globally. Customers can purchase custom-built products and custom-tailored services. Historically our flexible, build-to-order manufacturing process enabled us to turn over inventory quickly...

  • Page 7
    ... for quality, performance, and value. • • - - • Services - Our global services business offers a broad range of configurable IT services that help commercial customers and channel partners plan, implement and manage IT operations and consumers install, protect, and maintain their PCs and...

  • Page 8
    ... of Notes to Consolidated Financial Statements included in "Part II - Item 8 - Financial Statements and Supplementary Data." Sales and Marketing We sell our products and services directly to customers through dedicated sales representatives, telephone-based sales, online at www.dell.com, and through...

  • Page 9
    ...products we sell and have manufacturing locations worldwide to service our global customer base. See "Part I - Item 2 - Properties" for information about our manufacturing locations. We believe that our manufacturing processes and supply-chain management techniques provide us a competitive advantage...

  • Page 10
    ..., trademark, or other intellectual property rights to technologies or marks that are important to the technology industry or our business. We evaluate each claim relating to our products and, if appropriate, seek a license to use the protected technology. The licensing agreements generally do not...

  • Page 11
    ...replacement purchase. We also help commercial customers responsibly and securely manage the retirement of used information technology through our product recovery services. Since November 2003, we have offered a no-charge recycling program for Dell-branded products in Europe and also currently offer...

  • Page 12
    ... of our reportable operating segments for each of the last three fiscal years, see Note 11 of Notes to Consolidated Financial Statements included in "Part II - Item 8 - Financial Statements and Supplementary Data." Our corporate headquarters are located in Round Rock, Texas. Our manufacturing and...

  • Page 13
    ...Financial Officer in January 2007. In that role, he is responsible for all finance functions, including controller, corporate planning, tax, treasury operations, investor relations, corporate development, risk management, and internal audit. Mr. Carty has served as a member of our Board of Directors...

  • Page 14
    ... Vice President, Human Resources in March 2007 and was named an executive officer in September 2007. In this role, he is responsible for driving the strategy and supporting initiatives to attract, motivate, develop, and retain world-class talent in support of our business goals and objectives. He...

  • Page 15
    ...business for the U.S. Consumer segment; and Director and General Manager of the U.S. Asset Recovery Business. Prior to joining Dell, Mr. Marmonti spent 16 years at AT&T in a variety of senior roles, including executive positions in sales and marketing, serving corporate customers. Mr. Marmonti holds...

  • Page 16
    ... investments, which could impact our ability to manage inventory levels, collect customer receivables, and ultimately decrease our net revenue and profitability. Failure to reestablish a cost advantage may result in reduced market share, revenue, and profitability. Our success has historically...

  • Page 17
    ... to acquire companies as a part of our overall growth strategy. These acquisitions may involve significant new risks and uncertainties, including distraction of management attention away from our current business operations, insufficient new revenue to offset expenses, inadequate return of capital...

  • Page 18
    ... to properly manage the distribution of our products and services may result in reduced revenue and profitability. We use a variety of distribution methods to sell our products and services, including directly to customers and through select retailers and thirdparty value-added resellers. As we...

  • Page 19
    ... for our current needs and that we can readily meet our requirements for additional space at competitive rates by extending expiring leases or by finding alternative space. Our principal executive offices, including global headquarters, are located at One Dell Way, Round Rock, Texas, United States...

  • Page 20
    ... million - 400,000 1.5 million Owned (square feet) 100,000 Leased (square feet) 100,000 Business Centers(a) Manufacturing and Distribution APJ Properties Description Headquarters Principal Locations • Singapore • China - Dalian and Xiamen • India - Bangalore, Gurgaon, Hyderabad, and Mohali...

  • Page 21
    ... to pay cash dividends will be at the discretion of our Board of Directors. Issuance of Unregistered Securities As a result of our inability to timely file our Annual Report on Form 10-K for Fiscal 2007, we suspended our sale of Dell securities under our various employee benefit plans. In...

  • Page 22
    ...in order to increase shareholder value and manage dilution resulting from shares issued under our equity compensation plans. However, we do not currently have a policy that requires the repurchase of common stock in conjunction with share-based payment arrangements. On December 3, 2007, our Board of...

  • Page 23
    ... and Analysis of Financial Condition and Results of Operations" and "Part II - Item 8 - Financial Statements and Supplementary Data." The Audit Committee of our Board of Directors completed an independent investigation into certain accounting and financial reporting matters during Fiscal 2008. As...

  • Page 24
    ...Net revenue Gross margin Operating income Income before income taxes Net income Earnings per common share: Basic Diluted Number of weighted-average shares outstanding: Basic Diluted Cash Flow & Balance Sheet Data: Net cash provided by operating activities Cash, cash equivalents and investments Total...

  • Page 25
    ... the United States, and the number two supplier worldwide. We manufacture many of the products we sell and have manufacturing locations worldwide to service our global customer base. We believe that our manufacturing processes and supply-chain management techniques provide us a competitive advantage...

  • Page 26
    .... ("ASAP"), and we purchased CIT Group Inc.'s ("CIT") 30% interest in Dell Financial Services, L.P. ("DFS"). We expect to continue to periodically make strategic acquisitions in the future. Fiscal 2008 Performance Share position • We shipped 40 million units for calendar year 2007 according to IDC...

  • Page 27
    ... also includes an $85 million income tax benefit related to a revised estimate of taxes on the repatriation of earnings under the American Jobs Creation Act of 2004 recognized in the second quarter. Consolidated Operations Fiscal 2008 revenue increased 6% year-over-year to $61.1 billion, with unit...

  • Page 28
    ... and financial reporting structure. We will begin reporting worldwide Consumer once we complete the global consolidation of this business, which we expect to be the first quarter of Fiscal 2009. The changes have had no impact on our operating segment structure to date. The EMEA region covers Europe...

  • Page 29
    ...net revenue by reportable segment for each of the past three fiscal years: February 1, 2008 % of Dollars Revenue Fiscal Year Ended February 2, 2007 % of Dollars Revenue (in millions, except percentages) February 3, 2006 % of Dollars Revenue Net revenue Americas: Business U.S. Consumer Americas EMEA...

  • Page 30
    ... on a unit shipment increase of 24%. Growth in services revenue also contributed to EMEA's strong Fiscal 2008 performance as EMEA's services revenue grew 30% year-overyear. These increases were partially offset by a 3% decrease in desktop sales. At a country level, Poland, Austria, Greece, France...

  • Page 31
    ... a 3% decrease in revenue during Fiscal 2008 as compared to Fiscal 2007. The decline in revenue in our U.S. Consumer and EMEA segments was offset by a strong performance in APJ, where desktop sales increased 12% during Fiscal 2008 over prior year, while desktop sales in our Americas Business segment...

  • Page 32
    ... year-over-year revenue increase in Fiscal 2007 in the Americas Business segment. • Services - In Fiscal 2008, revenue from services (which includes the sale and servicing of our extended product warranties) increased 5% year-over-year compared to a 20% increase in Fiscal 2007. EMEA drove services...

  • Page 33
    ...meet customer needs and reduce product cycle times. Our goal is to introduce the latest relevant technology more quickly and to rapidly pass on component cost savings to a broader set of our customers worldwide. As we continue to evolve our inventory and manufacturing business model to capitalize on...

  • Page 34
    ... investments of $150 million to improve customer satisfaction, repurchase preferences, as well as technical support. As a result, we increased our headcount through direct hiring and replacing of temporary staff with regular employees. • Research, Development, and Engineering - Research...

  • Page 35
    ... in stock-based compensation for Fiscal 2008 and Fiscal 2007 is the fair value of stock-based awards earned during the year, including restricted stock, restricted stock units, and stock options, as well as the discount associated with stock purchased under our employee stock purchase plan ("ESPP...

  • Page 36
    ... the commercial paper program in Fiscal 2007. The increase in foreign exchange loss in Fiscal 2008 and Fiscal 2007 relative to Fiscal 2006 is mainly due to higher net losses on derivative instruments. The gain on sale of building relates to the sale of a building in EMEA. Income Taxes Our effective...

  • Page 37
    ... of customer receivables as CIT's funding rights decrease. As our funding rights increase, we expect continued growth in customer financing receivables, subject to the outcome of the strategic review noted below. To manage this growth, we will continue to balance the use of our own working capital...

  • Page 38
    ... costs and increasing credit enhancements for funding of financial assets. Our exposure to the capital markets will increase as we continue to fund additional financing receivables. We do not expect current capital market conditions to limit our ability to access liquidity for funding financing...

  • Page 39
    ... the capital markets because of the overall strength of our financial position. We ended Fiscal 2008 with $9.5 billion in cash and investments compared to $12.4 billion at the end of Fiscal 2007. The decrease in cash and investments from Fiscal 2007 was a result of spending $4.0 billion on share...

  • Page 40
    ... by which the fair value of our stock exceeds the option strike price on the day the employee exercises a stock option. The decline in tax benefits in Fiscal 2008 and Fiscal 2007 from Fiscal 2006 is due to fewer stock option exercises. Key Performance Metrics - Our direct business model allows us...

  • Page 41
    ...in order to increase shareholder value and manage dilution resulting from shares issued under our equity compensation plans. However, we do not currently have a policy that requires the repurchase of common stock in conjunction with share-based payment arrangements. On December 3, 2007, our Board of...

  • Page 42
    ... repurchase program in the fourth quarter of Fiscal 2008. For more information regarding share repurchases, see "Part II - Item 5 - Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities." Capital Expenditures - During Fiscal 2008 and Fiscal 2007...

  • Page 43
    ... fluctuations and changes in the market value of our investments. In the normal course of business, we employ established policies and procedures to manage these risks. Foreign Currency Hedging Activities Our objective in managing our exposures to foreign currency exchange rate fluctuations is to...

  • Page 44
    ...including government, agency, asset-backed, mortgage-backed and corporate debt securities of varying maturities at the date of acquisition. The fair value of our portfolio is affected primarily by interest rates more so than by the credit and liquidity issues currently facing the capital markets. We...

  • Page 45
    ... exchange rates and interest rates; obtaining licenses to intellectual property developed by others on commercially reasonable and competitive terms; our ability to attract, retain, and motivate key personnel; loss of government contracts; expiration of tax holidays or favorable tax rate structures...

  • Page 46
    ... that may affect our Consolidated Statement of Financial Position and Consolidated Statement of Income. We believe our most critical accounting policies relate to revenue recognition, business combinations, warranty accruals, income taxes, stock-based compensation, and loss contingencies. We have...

  • Page 47
    ... that the fair value of employee stock-based compensation was disclosed in the notes to our consolidated financial statements. Under APB 25, when the exercise price of our employee stock options equaled the market price of the underlying stock at the date of the grant, no compensation expense was...

  • Page 48
    ... companies with an option to report selected financial assets and liabilities at fair value with the changes in fair value recognized in earnings at each subsequent reporting date. SFAS 159 provides an opportunity to mitigate potential volatility in earnings caused by measuring related assets...

  • Page 49
    ... DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Financial Statements: Report of Independent Registered Public Accounting Firm Consolidated Statements of Financial Position at February 1, 2008 and February 2, 2007 Consolidated Statements of Income for the fiscal years ended February 1, 2008...

  • Page 50
    Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Dell Inc.: In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Dell Inc. and...

  • Page 51
    ... STATEMENTS OF FINANCIAL POSITION (in millions) February 1, February 2, 2008 2007 Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net of allowance Financing receivables, net of allowance Inventories, net of allowance Other Total current assets Property...

  • Page 52
    ... INCOME (in millions, except per share amounts) February 1, 2008 Fiscal Year Ended February 2, 2007 February 3 2006 Net revenue Cost of net revenue(1) Gross margin Operating expenses: Selling, general, and administrative(1) In-process research and development Research, development, and engineering...

  • Page 53
    ...Operating working capital Non-current assets and liabilities Net cash provided by operating activities Cash flows from investing activities: Investments: Purchases Maturities and sales Capital expenditures Acquisition of business, net of cash received Proceeds from sale of building Net cash (used in...

  • Page 54
    ... in securitized assets, net of taxes Total comprehensive income Stock issuances under employee plans(b) Repurchases Stock-based compensation expense under SFAS 123(R) Tax benefit from employee stock plans Other and shares issued to subsidiaries Balances at February 2, 2007 Net income Impact of...

  • Page 55
    ... as investments. Investments - Dell's investments in debt securities and publicly traded equity securities are classified as available-for-sale and are reported at fair value (based on quoted prices and market prices) using the specific identification method. Unrealized gains and losses, net...

  • Page 56
    ...CONSOLIDATED FINANCIAL STATEMENTS (Continued) of Dell's creditors, the transferee has the right to pledge or exchange the assets, and Dell has surrendered control over the rights and obligations of the receivables. Gains and losses from the sale of fixed-term loans and leases and revolving loans are...

  • Page 57
    ... fair value. See Note 2 of Notes to Consolidated Financial Statements for a full description of Dell's derivative financial instrument activities and related accounting policies. Treasury Stock - Effective with the beginning of the second quarter of Fiscal 2002, Dell began holding repurchased shares...

  • Page 58
    ...limited rights of return, price protection, rebates, and marketing development funds. Dell has generally limited these rights through contractual caps within Dell's agreements with its retailers. Dell's policy on sales to retailers is to recognize revenue and related costs of revenue, net of returns...

  • Page 59
    ... rights on commercially reasonable terms and conditions, Dell's business, operating results, and financial condition could be materially and adversely affected. Shipping Costs - Dell's shipping and handling costs are included in cost of sales in the accompanying Consolidated Statements of Income...

  • Page 60
    .... Pursuant to Accounting Research Bulletin 51, Consolidated Financial Statements (as amended), these shares are not considered to be outstanding. The following table sets forth the computation of basic and diluted earnings per share for each of the past three fiscal years: Fiscal Year Ended February...

  • Page 61
    ... that the fair value of employee stock-based compensation was disclosed in the notes to its financial statements. Under APB 25, when the exercise price of Dell's employee stock options equaled the market price of the underlying stock at the date of the grant, no compensation expense was recognized...

  • Page 62
    ...fair value of foreign currency purchased option contracts is based on market quoted rates at the applicable balance sheet date and the Black-Scholes option pricing model. The estimates presented herein are not necessarily indicative of the amounts that Dell could realize in a current market exchange...

  • Page 63
    ... type, the fair value and cost of Dell's investments. All investments with remaining maturities in excess of one year are recorded as long-term investments in the accompanying Consolidated Statements of Financial Position. Fair Value Cost February 1, 2008 Unrealized Gain Unrealized Fair (Loss) Value...

  • Page 64
    ... on quoted market prices, which Dell currently believes are indicative of fair value. Dell will continue to evaluate whether the inputs are market observable as it implements SFAS 157. The following table summarizes Dell's realized gains and losses on investments: February 1, 2008 Fiscal Year Ended...

  • Page 65
    ... based on quoted market prices or pricing models using current market rates and records all derivatives in the Consolidated Statements of Financial Position at fair value. Cash Flow Hedges Dell uses a combination of forward contracts and options designated as cash flow hedges to protect against the...

  • Page 66
    ...133, and therefore, the change in the instrument's fair value is recognized currently in earnings as a component of investment and other income, net. The gross notional value of foreign currency derivative financial instruments and the related net asset or liability were as follows: February 1, 2008...

  • Page 67
    ...-year U.S. Treasury Notes plus 4.45%. DFS was required to make quarterly payments if the value of the leased equipment securing the loans was less than the outstanding principal balance. At February 1, 2008, there were no outstanding advances from CIT as the credit facilities terminated upon Dell...

  • Page 68
    ... FINANCIAL STATEMENTS (Continued) and long-term debt was approximately $563 million at February 1, 2008, compared to a carrying value of $497 million at that date. NOTE 3 - INCOME TAXES The provision for income taxes consists of the following: February 1, 2008 Fiscal Year Ended February 2, 2007...

  • Page 69
    ... asset are as follows: Fiscal Year Ended February 1, February 2, 2008 2007 (in millions) Deferred tax assets: Deferred revenue Inventory and warranty provisions Investment impairments and unrealized gains Provisions for product returns and doubtful accounts Capital loss Leasing and financing Credit...

  • Page 70
    ... 1, 2008 Fiscal Year Ended February 2, 2007 February 3, 2006 Effective tax rate: U.S. federal statutory rate Foreign income taxed at different rates Tax repatriation benefit Foreign earnings subject to U.S. taxation Imputed intercompany charges In-process research and development Other Effective...

  • Page 71
    ... shareholder value and manage dilution resulting from shares issued under Dell's equity compensation plans. However, Dell does not currently have a policy that requires the repurchase of common stock in conjunction with stock-based payment arrangements. On December 3, 2007, Dell's Board of Directors...

  • Page 72
    ... to timely file its Annual Report on Form 10-K for Fiscal 2007. Dell has made payments of approximately $107 million relating to in-the-money stock options that expired in the second and third quarters of Fiscal 2008. Of the $107 million total, $17 million is included in cost of net revenue and...

  • Page 73
    ... table summarizes stock option activity for the Stock Plans during Fiscal 2008: WeightedWeightedAverage Number Average Remaining Aggregate of Exercise Contractual Intrinsic Options Price Term Value (in millions) (per share) (in years) (in millions) Options outstanding - February 2, 2007 Granted...

  • Page 74
    ... to stock options for Fiscal 2008, Fiscal 2007, and Fiscal 2006 is as follows: Fiscal Years Ended February 1, February 2, February 3, 2008 2007 2006 (in millions, except per option data) Weighted-average grant date fair value of stock options granted per option Total fair value of options vested...

  • Page 75
    ... DELL INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fiscal Years Ended February 1, February 2, February 3, 2008 2007 2006 (in millions, except per share data) Weighted-average grant date fair value of restricted stock awards granted Total estimated fair value of restricted stock...

  • Page 76
    ...earnings per share for the fiscal year ended February 3, 2006, as if Dell had applied the fair value recognition provisions of SFAS 123 to stock options and stock purchase plans: (in millions, except per share data) Fiscal Year Ended February 3, 2006 Net income Deduct: Total stock options and stock...

  • Page 77
    ... Years Ended February 2, 2007 February 3, 2006 Expected term: Stock options Employee stock purchase plan Risk-free interest rate (U.S. Government Treasury Note) Volatility Dividends (a) 3.5 years N/A(a) 4.4% 27% 0% 3.6 years 3 months 4.8% 26% 0% 3.8 years 3 months 3.9% 25% 0% No purchase rights...

  • Page 78
    ...-average fair value of the purchase rights under the ESPP during Fiscal 2007 and Fiscal 2006 was $3.89 and $6.30 per right, respectively. NOTE 6 - FINANCIAL SERVICES Dell Financial Services L.P. Dell offers or arranges various financing options and services for its business and consumer customers in...

  • Page 79
    ...of Dell's financing receivables, net of the allowance for doubtful accounts: Fiscal Year Ended February 1, February 2, 2008 2007 (in millions) Financing receivables, net: Customer receivables: Revolving loans, gross Fixed-term leases and loans, gross Customer receivables, gross Customer receivables...

  • Page 80
    ... small businesses and primarily consist of loans with short-term maturities. The following table presents the net credit losses and accounts 60 days or more past due of customer receivables. Net credit losses on leases and loans represent net investment balances. Net credit losses on revolving loans...

  • Page 81
    ... transactions completed in Fiscal 2008 and the assumptions used in calculating the fair value of the retained interest in securitized assets at February 1, 2008. Weighted Average Key Assumptions Credit Discount Losses Rates (lifetime) (annualized) Monthly Payment Rates Life (months) Time of sale...

  • Page 82
    ... of the retained interest or on Dell's ability to securitize financing receivables. The following table presents the net credit losses and accounts 60 days or more past due of the securitized financing receivables: Fiscal Year Ended February 1, 2008 February 2, 2007 Dollars % Dollars % (in millions...

  • Page 83
    ...-process research & development ("IPR&D") charges, based on their estimated fair values. The excess of the purchase price over the fair value of the identified assets and liabilities has been recorded as goodwill. The fair value assigned to the assets acquired is based on valuations using management...

  • Page 84
    ... and short-term investments Other tangible assets Liabilities Total net assets acquired Amortizable intangible assets Goodwill Total purchase price $ $ 2 175 (125) 52 171 130 353 Dell has included ASAP in its software and peripherals line of business for product revenue reporting purposes...

  • Page 85
    ... on valuations prepared using estimates and assumptions developed by management, the preliminary purchase price allocations as of the date of acquisitions are as follows: (in millions) Cash and short-term investments Other tangible assets Liabilities Total net assets acquired Amortizable intangible...

  • Page 86
    ... 2007 Balance at beginning of the year Goodwill acquired during the period Balance at end of the year $ $ 110 1,538 1,648 $ $ 110 110 Goodwill acquired during Fiscal 2008 has not yet been allocated to Dell's segments. Allocations will be completed as the preliminary purchase price allocations...

  • Page 87
    ... recognized over the term of the contract or when the service is completed. Dell records warranty liabilities at the time of sale for the estimated costs that may be incurred under its limited warranty. Changes in Dell's deferred revenue for extended warranties, and warranty liability for standard...

  • Page 88
    ... on Dell's Consolidated Statements of Financial Position, are presented in the following tables: February 1, 2008 Fiscal Year Ended February 2, February 3, 2007 2006 (in millions) Deferred service revenue: Deferred service revenue at beginning of year Revenue deferred for new extended warranty and...

  • Page 89
    ... lead plaintiffs have asserted claims under ERISA based on allegations that Dell, certain current officers, and certain current and former directors imprudently invested and managed participants' funds and failed to disclose information regarding its stock held in the 401(k) Plan. In addition, seven...

  • Page 90
    ... on February 21, 2008, ZPÜ filed a lawsuit in the German Regional Court in Munich. Dell plans to continue to defend this claim vigorously. In the fourth quarter of Fiscal 2008, the German Federal Supreme Court decided that printers are not leviable. Dell is currently not aware of any other pending...

  • Page 91
    ... quarter of Fiscal 2008, acquisition-related charges such as in-process research and development and amortization of intangibles are not allocated to Dell's reportable segments. The asset totals disclosed by geography are directly managed by those regions and include accounts receivable, inventory...

  • Page 92
    ... of consolidated segment operating income to Dell's consolidated operating income for Fiscal 2008, Fiscal 2007, and Fiscal 2006: February 1, 2008 Fiscal Year Ended February 2, 2007 (in millions) February 3, 2006 Net revenue Americas: Business U.S. Consumer Americas EMEA APJ Net revenue $ $ 31,144...

  • Page 93
    ... by Dell's reportable segments for Fiscal 2008, Fiscal 2007, and Fiscal 2006 and assets for Fiscal 2008 and Fiscal 2007: February 1, 2008 Fiscal Year Ended February 2, 2007 (in millions) February 3, 2006 Depreciation and amortization expense: Americas: Business U.S. Consumer Americas EMEA APJ...

  • Page 94
    .... No single customer accounted for more than 10% of Dell's consolidated net revenue during Fiscal 2008, 2007, and 2006. The following is net revenue by product groups: Fiscal Year Ended February 2, 2007 (in millions) February 1, 2008 February 3, 2006 Net revenue: Desktop PCs Mobility Software and...

  • Page 95
    ... CONSOLIDATED FINANCIAL INFORMATION Supplemental Consolidated Statements of Financial Position Information: Accounts receivable: Gross accounts receivable Allowance for doubtful accounts Accounts receivable Inventories: Production materials Work-in-process Finished goods Inventories Property, plant...

  • Page 96
    ...19) 275 $ Fiscal Year Ended February 2, 2007 (in millions) 308 (2) (29) (27) 3 (27) 226 Supplemental Consolidated Statements of Cash Flows Information: Changes in operating working capital accounts: Accounts receivable, net Short-term financing receivables, net Inventories Accounts payable Accrued...

  • Page 97
    ...and stock sales price data for each quarter of Fiscal 2008 and Fiscal 2007: First Quarter Fiscal Year 2008 Second Third Quarter Quarter (in millions except per share data) Fourth Quarter Net revenue Gross margin Net income Earnings per common share: Basic Diluted Weighted-average shares outstanding...

  • Page 98
    ... into Dell's Global Services organization. The acquisition of MessageOne was identified and acknowledged by Dell's Board of Directors as a related party transaction because Michael Dell and his family hold indirect ownership interests in MessageOne. Consequently, Dell's Board directed management to...

  • Page 99
    ... reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer...

  • Page 100
    ... developed and implemented comprehensive training programs for finance personnel globally covering fundamental accounting and financial reporting matters, including accounting policies, financial reporting requirements, income statement classification, revenue recognition, vendor funding, accounting...

  • Page 101
    .... - We developed, implemented, and communicated processes and controls to ensure that appropriate account reconciliations are performed, documented, and reviewed as part of standardized procedures. - We improved the processes and procedures around the completion and review of quarterly management...

  • Page 102
    ...- Business - Executive Officers of Dell," is incorporated by reference from Dell's proxy statement relating to the 2008 annual meeting of stockholders. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report...

  • Page 103
    ... "Part II - Item 8 - Financial Statements and Supplementary Data": Page Financial Statements: Report of Independent Registered Public Accounting Firm Consolidated Statements of Financial Position at February 1, 2008 and February 2, 2007 Consolidated Statements of Income for the fiscal years ended...

  • Page 104
    ... ACCOUNTS Fiscal Year Description Balance at Beginning of Period Charged to Income Statement Write-Offs Charged to Allowance Balance at End of Period Trade Receivables: 2008 Allowance for doubtful accounts 2007 Allowance for doubtful accounts 2006 Allowance for doubtful accounts Customer Financing...

  • Page 105
    ... of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DELL INC. By: /s/ MICHAEL S. DELL Michael S. Dell Chairman and Chief Executive Officer Date: March 31, 2008 101

  • Page 106
    ... Chief Executive Officer (principal executive officer) Vice Chairman and Chief Financial Officer Director March 31, 2008 March 31, 2008 March 31, 2008 Director March 31, 2008 Director March 31, 2008 Director March 31, 2008 Director March 31, 2008 Director March 31, 2008 Director March...

  • Page 107
    ... January 1, 2007 10.6* - Amended and Restated Dell Computer Corporation Deferred Compensation Plan (incorporated by reference to Exhibit 10.6 to Dell's Annual Report on Form 10-K for the fiscal year ended January 30, 2004, Commission File No. 0-17017) 10.7* - Executive Incentive Bonus Plan, adopted...

  • Page 108
    ...10.11 of Dell's Quarterly Report on Form 10-Q filed October 30, 2007, Commission File No. 0-17017) 10.17*†- Form of Performance Based Stock Unit Agreement for Executive Officers under the Amended and Restated 2002 LongTerm Incentive Plan 10.18*†- Form of Nonstatutory Stock Option Agreement for...

  • Page 109
    ... to a Vote of Security Holders from page 34 of Dell's Quarterly Report on Form 10-Q filed December 10, 2007, Commission File No. 0-17017 * Identifies Exhibit that consists of or includes a management contract or compensatory plan or arrangement. †Filed herewith. ††Furnished herewith. 105

  • Page 110
    Exhibit 10.5 DELL INC. 401(k) PLAN AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2007

  • Page 111
    ...-HIGHLY COMPENSATED EMPLOYEE 1.34. NORMAL RETIREMENT AGE 1.35. NORMAL RETIREMENT DATE 1.36. PARTICIPANT 1.37. PARTICIPATING EMPLOYER 1.38. PLAN 1.39. PLAN SPONSOR 1.40. PLAN YEAR 1.41. PREDECESSOR EMPLOYER 1.42. RELATED EMPLOYER 1.43. SERVICE 1.44. SEVERANCE FROM EMPLOYMENT 1.45. TOTAL AND PERMANENT...

  • Page 112
    .../2 OR ACCOUNT OF FINANCIAL HARDSHIP 6.3. ADDITIONAL RESTRICTIONS ON IN-SERVICE WITHDRAWALS ARTICLE VII DISTRIBUTIONS AFTER TERMINATION OF EMPLOYMENT 7.1. ELIGIBILITY DUE TO RETIREMENT, DEATH OR TOTAL AND PERMANENT DISABILITY 7.2. ELIGIBILITY DUE TO TERMINATION OF EMPLOYMENT 7.3. PAYMENT OF BENEFITS...

  • Page 113
    ...13.3. INVESTMENT IN EMPLOYER SECURITIES 13.4. INCOME AND EXPENSES 13.5. EXCLUSIVE BENEFIT 13.6. VALUATION 13.7. INVESTMENT POLICY 13.8. VALUATION OF THE TRUST FUND ARTICLE XIV PARTICIPANT LOANS 14.1. GENERAL RULES REGARDING THE PARTICIPANT LOAN PROGRAM ARTICLE XV ROLLOVERS, MERGERS, DIRECT TRANSFERS...

  • Page 114
    ...OF DEDUCTION 17.5. SPENDTHRIFT CLAUSE 17.6. TERMINATION ARTICLE XVIII CONSTRUCTION 18.1. HEADINGS 18.2. CONTEXT 18.3. EMPLOYMENT NOT GUARANTEED 18.4. WAIVER OF NOTICE 18.5. STATE LAW 18.6. PARTIES BOUND 18.7. SEVERANCE 18.8. EMPLOYEES IN QUALIFIED MILITARY SERVICE APPENDIX A EGTRRA PROVISIONS 57 60...

  • Page 115
    ... Revenue Code of 1986, as amended and the regulations promulgated thereunder; E. The provisions of this Plan, as amended and restated, shall apply solely to an Employee who terminates employment with the Employer on or after the restated Effective Date of this Plan; and F. If an Employee terminates...

  • Page 116
    ... by a domestic relations order as having a right to receive all, or a portion of, the benefits payable under the Plan with respect to such Participant. Allocation Date 1.6. Allocation Date means with respect to Employer Contributions the Anniversary Date of each Plan Year. The Allocation Date for...

  • Page 117
    ... from the sale, exchange, or other disposition of stock acquired under a qualified stock option described in Part II, Subchapter D, Chapter I of the Code; (v) premiums paid by the Employer for group term life insurance (to the extent the premiums are not includable in the Participant's gross income...

  • Page 118
    ... Term Incentive Program; and Notwithstanding the foregoing, Annual Compensation includes contributions that are made by the Employer on behalf of its Employees that are not includable in gross income under Code Section 125 relating to a cafeteria plan; Code Section 402(g) relating to a "401(k)" plan...

  • Page 119
    ... the foregoing, Annual Compensation includes contributions that are made by the Employer on behalf of its Employees that are not includable in gross income under Code Section 125 relating to a cafeteria plan; Code Section 402(g) relating to a "401(k)" plan; and Code Section 132(f)(4) relating to...

  • Page 120
    ... that consent and a notary public or the Administrator (or Plan representative) must witness that consent. The spousal consent requirements of this Subsection do not apply if: (i) the Participant and spouse are not married throughout the one year period ending on the date of the Participant's death...

  • Page 121
    ... an Employee is not employed by the Employer. Such period shall begin on the date the Employee retires, quits, is discharged, or dies, or, if earlier, the twelve (12) month anniversary of the date on which the Employee was otherwise first absent from work. (b) An Employee shall receive credit for...

  • Page 122
    ...or Reemployment Commencement Date, if applicable, and ending on the date of termination of employment. A Period of Service shall include any period required to be credited under this Section 1.11, Section 1.28, Section 1.43, Appendix C.1.1 and by federal law, but only under the conditions and to the...

  • Page 123
    ... conditions elected by a Participating Employer in the Participation Agreement) and such services are performed under the primary direction or control of the Participating Employer. If a Leased Employee is treated as an Employee because of this Section, Annual Compensation includes compensation...

  • Page 124
    ... the capital or profits interest in the Employer. 1.24. Forfeiture Forfeiture means the loss, by a Participant or Beneficiary of that part of the benefit which the Participant or Beneficiary otherwise would have received under the Plan at any time prior to the termination of the Plan or the complete...

  • Page 125
    ... shall govern and control. (c) For purposes of this Section, "Annual Compensation" means Annual Compensation as defined in Section 1.9(c). 1.28. Hour Of Service For purposes of crediting Hours of Service, the Plan will be treated as a single plan and Service with any Related Employer of the Employer...

  • Page 126
    ...the Department of Labor Regulations which are incorporated herein by this reference. The method for crediting Hours of Service under Subsection (b) above for each Participant shall be the same method used for crediting Hours of Service for which the Participant received compensation. Notwithstanding...

  • Page 127
    ... of certain Nonhighly Compensated Employees to satisfy nondiscrimination requirements under Code Section 401(k) or 401(m). Participant Contribution Accounts shall be 100% vested at all times. Limitation Year 1.30. Limitation Year means the Plan Year, as such term is defined in this Article I. 1.31...

  • Page 128
    ...related to the Employer or that is a recipient of the services of a Leased Employees pursuant to a written agreement with the Employer and who elects to adopt this Plan pursuant to Article X. Plan 1.38. Plan means the qualified retirement plan embodied in this Agreement, as amended from time to time...

  • Page 129
    ... rules and the minimum allocation requirements of Article V, the definitions of Employee, Highly Compensated Employee, Annual Compensation and Leased Employee, and for any other purpose required by the applicable Code Section or by a Plan provision. However, an Employer may contribute to the Plan...

  • Page 130
    ...no longer is an Employee of the Employer or any Related Employer and the Employee's new employer does not maintain the plan of the Employer or Related Employer. The terms Severance from Employment and "termination of employment" when used herein shall have the same meaning. 1.45. Total and Permanent...

  • Page 131
    ... Employee representatives and the employer or employers. The term "Employee representatives" does not include an organization of which more than one-half (1/2) the members are owners, officers or executives of the Employer; (iii) A nonresident alien who receives no earned income (as defined in Code...

  • Page 132
    ..., as documented in the Employer's HR Direct personnel system. Any individual designated by the Company as having a "permanent transfer" to a business location outside of the United States shall not be considered to be on the Company's US payroll for purposes of this Plan. Such individuals qualifying...

  • Page 133
    ...the employment of a Participant is terminated and the Participant subsequently is re-employed, the re-employed Employee shall become a Participant on the date of re-employment, provided such rehired Employee is not a member of an ineligible class of Employees under Section 2.1(c) of the Plan. Should...

  • Page 134
    ... to reduce Annual Compensation under this Plan shall be his Salary Reduction Contribution. The Employer shall contribute to the Trust Fund the amount of the Salary Reduction Contributions which shall be treated as Employer Contributions and credited to the Salary Reduction Contribution Account of...

  • Page 135
    ...'s gross income under Code Section 402(g). Excess Salary Deferrals shall be treated as Annual Additions under the Plan, unless such amounts are distributed no later than the first April 15 following the close of the Participant's taxable year. (i) If the statutory dollar limitation under Code...

  • Page 136
    ... such Participant's Annual Compensation for the Plan Year. The Safe Harbor Matching Contribution on behalf of each Participant shall be credited to each Participant's Safe Harbor Matching Contribution Account and shall be 100% vested at all times. The Employer may, at its election, credit the Safe...

  • Page 137
    ... Plan Year, and (ii) for Plan Years beginning on or after January 1, 2008, five percent (5%) of such Participant's Annual Compensation for such Plan Year. The Participant shall not be required to complete a specified Period of Service or be employed on the last day of the Plan Year in order to share...

  • Page 138
    ...at any time and from time to time; except that the total Employer Contribution for any Plan Year shall be paid in full not later than the time prescribed by Code Section 404(a)(6) to enable the Employer to obtain a deduction on its federal income tax return for the Employer's taxable year. The total...

  • Page 139
    ... the ninety (90)-day period immediately following the date such statement was received. If a Participant fails to report an inaccuracy within this ninety (90)-day period, the Plan shall not be required to make retroactive adjustments to the Participant's Individual Account but shall rectify any...

  • Page 140
    ... privileges as directed by the Committee. Employer Securities received by the Trustee by reason of a stock split, stock dividend, or recapitalization shall be appropriately allocated to the Individual Accounts of each affected Participant. 4.5. Participant Rights For purposes of this Article IV only...

  • Page 141
    ... 5.2. (a) Allocation Rules. As of each Anniversary Date, the Employer Retirement Savings Contributions, allocated as of the Anniversary Date, for the Plan Year which ends on the Anniversary Date shall be allocated and credited to the Employer Retirement Savings Contribution Account of each eligible...

  • Page 142
    ... Contribution Account in the same ratio that each Participant's Annual Compensation for the Plan Year bears to the total Annual Compensation of all Participants for the Plan Year. Suspension of the Allocation Rules Applicable to Employer Retirement Savings Contributions in order to Satisfy Code...

  • Page 143
    ... under Code Section 410(b)(1), an Employee is benefiting under the Plan on a particular date if he or she is entitled to an allocation for the Plan Year under this Section or as otherwise provided under applicable Treasury Regulations. Defined Contribution Plan Limits. The amount of Annual Additions...

  • Page 144
    ...Limitation Years to the extent permissible under the foregoing limitations, prior to any further Annual Additions to the Plan. If the Plan should be terminated or contributions should be completely discontinued, the funds in the suspense account will be allocated to the extent not prohibited by Code...

  • Page 145
    ... Amount, reduced by the amount of Annual Additions to such Participant's accounts for the same Limitation Year in the other plan(s). The Excess Amount attributed to this Plan equals the product of: (i) (ii) the total Excess Amount allocated as of such date (including any amount the Committee would...

  • Page 146
    ...; amounts realized from the sale, exchange, or other disposition of stock acquired under a qualified stock option described in Part II, Subchapter D, Chapter 1 of the Code; premiums paid by the Employer, a Participating Employer, and any Related Employer, for group term life insurance (to the extent...

  • Page 147
    ... Employers who are not Related Employers, but receive services of Employees of the Employer under an employee leasing arrangement shall be treated as separate employers for purposes of these top-heavy rules. Excess Amount means the excess of the Participant's Annual Additions for the Limitation Year...

  • Page 148
    5.6. Employer Contribution Accounts Defined For purposes of this Article, reference to the Employer Contribution Accounts of Participants shall include the Employer Contribution Accounts of those Participants who die, become disabled or retire during the Plan Year considered. ***** 8

  • Page 149
    ... of the amount credited to such accounts shall be made as of the most recent Valuation Date. A Participant shall make an election under this Section in the manner and format prescribed by the Committee, including electronic delivery, at any time during the Plan Year for which the election...

  • Page 150
    ...'s spouse, children, or dependents; costs directly related to the purchase, excluding mortgage payments, of a principal residence for the Employee; payment of tuition, related educational fees, and room and board expenses, for up to the next twelve (12) months of post-secondary education for the...

  • Page 151
    ... employer maintains the Plan with respect to the Employee, by assuming sponsorship of the Plan or by accepting a transfer of Plan assets and liabilities (within the meaning of Code Section 414(l)) with respect to the Employee; Attainment of age fifty-nine and one-half (591/2) years; Plan termination...

  • Page 152
    ... Distribution shall be subject to the Direct Rollover election described in Article IX. This Article shall not be applicable to a Participant following termination of employment with the Employer, and the amounts in such Participant's Individual Accounts shall be distributable only in accordance...

  • Page 153
    ...vested in the Participant's Individual Accounts and the Trustee shall hold such Individual Accounts for the Participant's benefit. If a Participant retires (or otherwise terminates employment) on or after the Participant's Normal Retirement Date, the Committee shall credit and adjust the Participant...

  • Page 154
    ... the Participant's Individual Accounts no less rapidly than is required under Article VIII. Commencement of Payments, Automatic Distribution. Unless a Participant elects otherwise, payment of benefits shall commence not later than the sixtieth (60th) day after the end of the Plan Year in which the...

  • Page 155
    ...in a Direct Rollover or to receive the distribution directly in accordance with Article IX, then the Plan shall pay the distribution in a Direct Rollover to an individual retirement account designated by the Committee. The Committee shall cause the Plan to satisfy any and all applicable notification...

  • Page 156
    ... account in the form of an annuity contract which contains distribution terms that satisfy the requirements of Code Section 401(a)(9) and the applicable Treasury Regulations on his Required Beginning Date. All distributions required under this Article shall be determined in the manner set forth...

  • Page 157
    ... earlier of the calendar year with or within which ends during the Plan Year in which the Participant becomes a Five Percent Owner, or the calendar year in which the Participant retires. For a Participant who is not a Five Percent Owner, the Required Beginning Date is the first day of April of the...

  • Page 158
    ... Former Participant's Nonforfeitable Account Balance at least as rapidly as under the method of distribution used prior to the Participant's death. The minimum distribution amount for the year of death is determined in the manner described in Section 8.4(b). The "applicable distribution period" for...

  • Page 159
    .... If the Participant or Former Participant dies before the Participant's Required Beginning date, the Trustee shall complete distribution of the Participant's or Former Participant's Nonforfeitable Account Balance by December 31 of the calendar year containing the fifth (5th) anniversary of...

  • Page 160
    ... or Former Participant dies before the Participant's Required Beginning date and there is no Designated Beneficiary as of September 30 of the year following the year of the Participant's death, distribution of the Participant's entire Nonforfeitable Account Balance will be completed by December 31...

  • Page 161
    ... by the amount of any contributions or Forfeitures allocated to the Account Balance as of the dates in the Valuation Calendar Year after the Valuation Date and decreased by distributions made in the Valuation Calendar Year after the Valuation Date. If any portion of the minimum distribution for the...

  • Page 162
    ... cash at the fair market value when distributed. Notwithstanding the above, a Participant shall have the right to receive payment of his benefits in any optional form of benefit payment to which that Participant would have been entitled under a plan sponsored by a Predecessor Employer in which that...

  • Page 163
    ...her Nonforfeitable Account Balance until Normal Retirement Date. The Trustee shall, subject to the Participant's direction, if any, invest and reinvest and shall credit and charge the Individual Accounts with their proportionate share of gains and losses of the Trust Fund pursuant to Article V until...

  • Page 164
    ... to pay a Participant's Account Balance under the applicable requirements of Article VII. 9.4. Minority or Disability During the minority or disability of an individual entitled to receive benefits under this Plan, the court may direct the Committee to instruct the Trustee to make payments due...

  • Page 165
    ... not later than 60 days after the close of the Plan Year in which the Committee restores the forfeited Account Balance. The forfeiture provisions of this Section apply solely to the Participant's, or the Beneficiary's Account Balance derived from Employer contributions. Upon termination of the Plan...

  • Page 166
    ... provide any annuity distributions to Participants nor to Surviving Spouses. A transfer agreement described in Section 15.2 may not permit a plan which is subject to Code Section 417 to transfer assets to this Plan, unless the transfer is an elective transfer as described in Section 15.3. ***** 26

  • Page 167
    ... later, the effective date) of the amendment, except as permitted by applicable Treasury Regulations. (An amendment reduces or eliminates Code Section 411(d)(6) protected benefits if the amendment has the effect of either: (A) eliminating or reducing an early retirement benefit or a retirement-type...

  • Page 168
    ... amendment; or the date the Participant receives written notice of the amendment from the Employer or Administrator. (e) The Employer as Plan Sponsor, without the consent of any Participating Employer, may amend the Plan and Trust, from time to time, in order to conform the Plan and Trust to any...

  • Page 169
    ... may be paid by the Employer. The Committee then shall adjust the balance of all Individual Accounts on the basis of the net cash balance and fair market value of all property in the Trust Fund. Thereafter, the Trustee shall distribute the amount to the credit of each Participant, Former Participant...

  • Page 170
    ..., earnings or losses, and appreciation or depreciation in value of assets totaling the amount so transferred. Upon an Employee's transfer between Participating Employers, the Employee involved shall carry accumulated Years of Vesting Service. No transfer shall effect a termination of employment...

  • Page 171
    ... providing leased employee services to the Participating Employer and their Beneficiaries, subject to all the terms and conditions of this Plan. All contributions or payments made by a Participating Employer shall be determined separately on the basis of its net profit and total Annual Compensation...

  • Page 172
    ... employee benefit pension plan for its employees. If no successor plan is designated, the Trustee shall retain the assets for the Employees of the Participating Employer under this Article X. No part of the corpus or income of the Trust Fund relating to the Participating Employer shall be used...

  • Page 173
    ... for the benefit of the Participating Employees of the Participating Employer by the other Participating Employers who are Related Employers. The contribution by each other Participating Employer shall be limited to the proportion of its total current and accumulated earnings or profits remaining...

  • Page 174
    ... the Committee. Any member of the Committee who is an Employee shall automatically cease to be a member of the Committee as of the date he terminates employment with the Employer and all Related Employers. 11.2. Committee Action and Procedure (a) Any and all acts and decisions of the Committee shall...

  • Page 175
    ... the Committee; To determine the rights of eligibility of an Employee to participate in the Plan, the value of a Participant's Account Balance and the Nonforfeitable percentage of each Participant's Individual Accounts; To adopt written rules of procedure and regulations necessary for the proper and...

  • Page 176
    (n) (o) To direct the Trustee as to the exercise of rights or privileges to acquire, convert, or exchange Employer Stock; and To establish or designate Investment Funds as investment options under the Plan as provided in Article IV. The Committee must exercise all of its powers, duties, and ...

  • Page 177
    ... Trustee in good faith on direction of the Investment Manager. 11.9. Annual Accounting As soon as administratively feasible after the Accounting Date of each Plan Year, but within the time prescribed by ERISA and the applicable Labor regulations and at least annually, the Committee shall advise each...

  • Page 178
    ... funding policy of the Plan and to determine the appropriate methods of carrying out the Plan's objectives. The Committee must communicate periodically, as it deems appropriate, to the Trustee and to any Plan Investment Manager the Plan's short-term and long-term financial needs so investment policy...

  • Page 179
    ...benefits a summary of the Annual Return/Report of the Plan containing a statement of the Plan assets and liabilities, receipts and disbursements and other information fairly summarizing the Plan's financial statement within two hundred ten (210) days after the close of each Plan Year, or an extended...

  • Page 180
    ... who terminated Service with the Employer for any of the reasons set forth in Articles VI through IX, describing the nature, amount and form of the Nonforfeitable Account Balance, if any, to which the Participant is entitled as soon as administratively feasible after the close of the Plan Year in...

  • Page 181
    ... Decision of Committee (a) If any Participant or Beneficiary files a claim for benefits under this Plan ("Claimant") and the claim is denied in whole or in part, the Administrator shall give notice of the decision to the Claimant in writing setting forth: (i) (ii) (iii) the specific reasons for the...

  • Page 182
    ... shall be given to the Claimant as soon as administratively feasible after the decision is made, but not later than sixty (60) days after the claim is filed. The Claimant shall have the right to be represented, to review pertinent documents and to present written and oral evidence. If the Claimant...

  • Page 183
    ARTICLE XIII Investment of Trust Assets 13.1. Appointment of Trustee The Employer shall determine the number of Trustees, shall appoint such Trustees, and may at any time and from time to time increase or decrease the number of Trustees. The Employer may remove any Trustee at any time and appoint a ...

  • Page 184
    ... the Stock Fund, the value of which shall be established at the end of each day that shares of Company Stock are sold on the NASDAQ exchange. All purchases and sales of units in the Stock Fund will be made based on the Stock Fund's closing value as of the close of business on the date a transaction...

  • Page 185
    ... NASDAQ for such trading date. (iii) (d) (a) No purchase of shares of Company Stock shall be made unless the Company's common stock is then traded on the NASDAQ exchange. The dividends, capital gains distributions, and other earnings received on an Investment Fund that is specifically credited to...

  • Page 186
    ... as of each Valuation Date, on the basis of the fair market value of the assets allocated to each such Participant's Individual Accounts, as appraised by the Trustee. (a) As of each Valuation Date, the Committee shall determine the fair market value of each Investment Fund being administered by the...

  • Page 187
    ... such holding necessary or advisable. 13.8. Valuation of the Trust Fund The Trustee shall value the Trust Fund as of each Accounting Date to determine the fair market value of each Participant's Account Balance as adjusted and credited under Articles IV and V; and on such other dates as directed by...

  • Page 188
    ...incorporates any written loan policy adopted by the Committee as part of this Plan. Limitations. The following limitations shall apply to the Participant Loan Program: (i) This Plan shall not provide loans in any amount that would exceed the applicable dollar limitations contained in Code Section 72...

  • Page 189
    ...Employer or a Subsidiary when the loan is initiated. A Participant who receives a loan and subsequently ceases to be on a U.S. payroll may continue to make loan payments by manual check. A Participant may have no more than two (2) loans outstanding at any one time. The Plan generally will not accept...

  • Page 190
    ... Account. The Participant, however, from time to time, may direct the Trustee in writing on the investment of the segregated Rollover Account in property, or property interests, of any kind, real, personal or mixed; however, the Participant may not direct the Trustee to make loans to the Employer...

  • Page 191
    .... As of the Accounting Date, or other Valuation Date, for each Plan Year, the Committee will allocate and credit the net income or charge the net loss from a Participant's segregated Rollover Account and credit or charge respectively the increase or decrease in the fair market value of the assets of...

  • Page 192
    ... benefit each Participant would have received had the plan terminated immediately before the merger, consolidation or transfer. 15.3. Rules Concerning Certain Rollovers, Mergers and Direct Transfers The Trustee will hold, administer and distribute the transferred assets as a part of the Trust Fund...

  • Page 193
    ...Related Employers, but receive the services of Employees of the Employer under an employee leasing arrangement shall be treated as separate employers for purposes of these top-heavy rules. A Plan shall be a Top-Heavy Plan in any Plan Year in which, as of the Determination Date, (i) the Present Value...

  • Page 194
    ... of the Participant's Aggregate Account balance, irrespective of the date on which the related rollover or plan-to-plan transfer is accepted; and (vi) (vii) The accounts of Participants who are Leased Employees of Participating Employers, for purposes of these top-heavy rules, shall be treated as...

  • Page 195
    ... the limitations of this Section. However, Participating Employers who are not Related Employers, but receive the services of Employees of the Plan Sponsor under an employee leasing arrangement shall be treated as separate employers for purposes of these top-heavy rules. Excluded Employees means...

  • Page 196
    ... value the Accrued Benefits in the aggregated plan as of the most recent Valuation Date falling within the twelve (12) month period ending on the Determination Date, except as Code Section 416 and applicable Treasury Regulations require for the first and second plan year of a defined benefit plan...

  • Page 197
    ... Non-Key Employee's Compensation or the highest contribution rate for the Plan Year made on behalf of any Key Employee. However, if a defined benefit plan maintained by the Employer which benefits a Key Employee depends on this Plan to satisfy the nondiscrimination rules of Code Section 401(a)(4) or...

  • Page 198
    ... the last day of the Plan Year. The provisions of this Section shall not apply to any Participant to the extent the Participant is covered under any other plan or plans of the Employer, Participating Employer, and any Related Employer under which the minimum allocation or benefit requirements under...

  • Page 199
    Code Section 416(c)(1) or (c)(2) are met for the Participant. Notwithstanding any limitations within the Plan's definition of Annual Compensation, amounts earned during the period preceding a Participant's Entry Date shall be included for purposes of determining the minimum top-heavy allocation ...

  • Page 200
    ... permit any portion of the Trust Fund to revert to or become a property of the Employer. 17.2. Denial of Request for Initial Approval Any contribution to the Trust Fund associated with this Plan is conditioned on initial qualification of the Plan under applicable Code Sections 401(a), 403(a) or 405...

  • Page 201
    ... or Beneficiary who has become entitled to receive payment of benefits under this Agreement is indebted to the Trustee, by virtue of a Participant Loan, the Committee may direct the Trustee to pay the indebtedness and charge it against the Account Balance of the Participant, Former Participant or...

  • Page 202
    ... cannot be located upon Plan termination, and whose Nonforfeitable Account Balance exceeds $1,000, to liquidate the Trust, the Committee will purchase a deferred annuity contract, distribute the benefits to an individual retirement account, or transfer the account to an ongoing qualified plan of the...

  • Page 203
    Notwithstanding the foregoing, distributions may not be made following termination of the Plan if the Employer establishes or maintains an alternative defined contribution plan, as more particularly described in Treasury Regulation § 1.401(k)-1(d)(4)(i). ***** 63

  • Page 204
    ..., or the payment of any benefit, shall be construed as giving any Employee, Participant or Beneficiary whomsoever any right to continue in the Service of the Employer, any legal or equitable right against the Committee, against the Employer, its stockholders, officers or directors or against the...

  • Page 205
    ... contrary, contributions, benefits and service credits with respect to qualified military service will be provided in accordance with Code Section 414(u IN WITNESS WHEREOF, the Plan Sponsor, DELL INC., has caused this instrument to be executed on this 13th day of December, 2007 (except as otherwise...

  • Page 206
    ... Article. A.1.2. Amendment to Provisions Governing Code Section 415 Limitation Except to the extent permitted under Section A.1.8 below and Code Section 414(v), if applicable, the Annual Addition that may be contributed or allocated to a Participant's account under the Plan for any Limitation Year...

  • Page 207
    ... employee" shall mean any Employee or former Employee (including any deceased Employee) who at any time during the Plan Year that includes the Determination Date was an officer of the Employer having Annual Compensation greater than $130,000 (as adjusted under Code Section 416(i)(1) for Plan Years...

  • Page 208
    ... account for amounts transferred into such plan from this Plan. The definition of Eligible Retirement Plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the Alternate Payee under a Qualified Domestic Relations Order, as defined in Code...

  • Page 209
    ... the requirements of Code Sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of the making of such Catch-up Contributions. The multiple use test described in Treasury Regulation § 1.401(m)-2 and the Plan shall not apply for Plan Years beginning after December...

  • Page 210
    ..., Qualified Matching Contributions, and earnings attributable to these contributions shall be distributed on account of the Participant's termination of employment. However, such a distribution shall be subject to the other provisions of the Plan regarding distributions, other than provisions...

  • Page 211
    ... B Model Amendment for Compliance with Final Treasury Regulations Under Code Section 401(a)(9) Section 1. General Rules. B.1.1. Effective Date. The provisions of this amendment will apply for purposes of determining required minimum distributions for calendar years beginning with the 2003 calendar...

  • Page 212
    ... beneficiary for the distribution calendar year is the participant's spouse, the quotient obtained by dividing the participant's account balance by the number in the Joint and Last Survivor Table set forth in section 1.401(a)(9)-9 of the Treasury Regulations, using the participant's and spouse...

  • Page 213
    ... dividing the participant's account balance by the participant's remaining life expectancy calculated using the age of the participant in the year of death, reduced by one for each subsequent year. Participant Survived by Designated Beneficiary. If the participant dies before distributions begin and...

  • Page 214
    ... distribution calendar year. B.5.3. Life expectancy. Life expectancy as computed by use of the Single Life Table in section 1.401(a)(9)-9 of the Treasury Regulations. B.5.4. Participant's Account Balance. The account balance as of the last valuation date in the calendar year immediately preceding...

  • Page 215
    ... receive credit for any Period of Severance of less than 365 days. Fractional periods of a year shall be expressed in terms of days. In computing an Employee's Years of Vesting Service, the following rules shall apply: (a) For a Participant who terminates employment with the Employer and all Related...

  • Page 216
    ...the Plan as actual service with the Employer or a Related Employer. Special Rules for Certain Former Dell Financial Services, L.P. Employees. A Participant or Former Participant who was a former employee of Dell Financial Services, L.P. shall receive credit for vesting purposes for Service with Dell...

  • Page 217
    Employee of the Employer or a Related Employer on the date next following the date of his or her termination of employment with Dell Financial Services, L.P. C.1.2 Vesting Schedule for Service Credited Prior to January 1, 2005 (a) A Former Participant or reemployed Participant who was not "actively ...

  • Page 218
    ... Trust Fund and shall be used to reduce Employer Contributions or to pay expenses incident to the administration of the Plan and Trust as of the Anniversary Date of the Plan Year during which the Forfeiture Event occurred. C.1.4. Determination of Amount of Vested Undistributed Account, Forfeiture...

  • Page 219
    ... Balance includes restoration of all Code Section 411(d)(6) protected benefits pertaining to that restored Account under applicable Treasury Regulations. The restored amount shall immediately become 100% vested under Plan Section 7.2(b). Notwithstanding the foregoing, if the value of a re-employed...

  • Page 220
    ... Executive Officer Amended & Restated 2002 Plan DELL INC. Performance Based Stock Unit Agreement Dell Inc., a Delaware corporation (the "Company"), is pleased to grant you units representing the right to receive shares of the Company's common stock (the "Shares"), subject to the terms and conditions...

  • Page 221
    ... the gross value of the Shares that were issued to you pursuant to this Agreement during the two-year period preceding the termination of your Employment, determined as of the date such Shares were issued to you and using the Fair Market Value (as defined in the Plan) of Dell stock on that date. You...

  • Page 222
    ...at Stock Option Administration, One Dell Way, Mail Stop 8038, Round Rock, Texas 78682, (512) 728-8644 or e-mail Stock_Option_Administrator @dell.com. 12. Notice - You agree that notices may be given to you in writing either at your home address as shown in the records of the Company or your Employer...

  • Page 223
    ....18 Executive Officer Amended & Restated 2002 Plan DELL INC. Nonstatutory Stock Option Agreement 1. Purpose - Dell Inc., a Delaware corporation (the "Company"), is pleased to grant you options to purchase shares of the Company's common stock. The number of options awarded to you (the "Options") and...

  • Page 224
    ... at http://inside.us.dell.com/ legal/corporate.htm. Additionally, you may request a copy of the prospectus free of charge from the Company by contacting Stock Option Administration in writing at Stock Option Administration, One Dell Way, Mail Stop 8038, Round Rock, Texas 78682, (512) 728-8644...

  • Page 225
    ... your home address as shown in the records of the Company or your Employer, or by electronic transmission (including e-mail or reference to a website or other URL) sent to you through the Company's normal process for communicating electronically with its employees. 12. Limitation on Rights; No Right...

  • Page 226
    ... 10.19 Executive Officer/Stock Unit Amended & Restated 2002 Plan DELL INC. Stock Unit Agreement Dell Inc., a Delaware corporation (the "Company"), is pleased to grant you units representing the right to receive shares of the Company's common stock (the "Shares"), subject to the terms and conditions...

  • Page 227
    ...at Stock Option Administration, One Dell Way, Mail Stop 8038, Round Rock, Texas 78682, (512) 728-8644 or e-mail Stock_Option_Administrator @dell.com. 11. Notice - You agree that notices may be given to you in writing either at your home address as shown in the records of the Company or your Employer...

  • Page 228
    ... at that time and you agree to return to the Company an amount of cash equal to the Fair Market Value (as defined in the Plan) of all Shares theretofore issued to you pursuant to this Agreement, determined as of the date such Shares were issued. 17. Acceptance of Terms and Conditions - This award...

  • Page 229
    ... List Europe, Middle East and Africa Dell Gesm.b.H. Dell FZ-LLC - Bahrain Branch Dell N.V. Dell Computer spol. sro Dell A/S Oy Dell A.B. Dell S.A. Dell International Holdings SAS Dell GmbH Dell Halle GmbH Dell Technology Products and Services S.A Dell Emerging Markets (EMEA) Limited Magyarorszagi...

  • Page 230
    ...Office Ukraine LLC Dell Ukraine Dell FZ - LLC Bracknell Boulevard Management Company Limited Dell Corporation Limited Dell Computer EEIG Dell Emerging Markets (EMEA) Limited Alienware Limited Dell Global Holdings I BV Dell Global Holdings II BV Dell Global Holdings III BV Dell Products Manufacturing...

  • Page 231
    ...Free Zone Company L.L.C.) Dell Emerging Markets (EMEA) Limited (Kazakhstan Representative Office) Dell Emerging Markets (EMEA) Limited Representative Office - Lebanon Asia-Pacific/Japan Dell Australia Pty. Limited Dell (China) Company Limited Dell (China) Company Limited, Beijing Liaison Office Dell...

  • Page 232
    ... World Trade Corporation Dell Receivables Corporation Dell Products GP L.L.C. Dell Products LP L.L.C. Dell Services GP L.L.C. Dell Services LP L.L.C. Dell Federal Systems GP L.L.C. Dell Federal Systems LP L.L.C. Dell World Trade GP L.L.C. Dell World Trade LP L.L.C. Dell Marketing GP L.L.C. India...

  • Page 233
    ... L.P. Dell Federal Systems L.P. Dell World Trade L.P. Dell Marketing L.P. Dell USA L.P. Dell Receivables L.P. CPS Channel Partner Solutions L.P. Dell Computer Holdings Corp. Dell Computer Holdings L.P. Dell Ventures L.P. DCC Executive Security Inc. Dell Eastern Europe Corporation Dell Computer India...

  • Page 234
    ...de C.V. Dell Computer Services de Mexico SA de CV Dell Canada Inc. Dell Panama S. de R.L. Dell Perú, SAC Dell Puerto Rico Corp. Dell Quebec Inc. Dell Trinidad and Tobago Limited Alienware Latinoamerica, S.A Dell Global Holdings Ltd. Dell Global Holdings L.P. Dell Global Holdings V L.P. Dell Jamaica...

  • Page 235
    ...of Dell Inc. (formerly Dell Computer Corporation) of our report dated March 31, 2008, relating to the financial statements, financial statement schedule, and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP Austin, Texas...

  • Page 236
    ... end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual...

  • Page 237
    ... end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual...

  • Page 238
    ...SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned officers of Dell Inc. hereby certify that (a) Dell's Annual Report on Form 10-K for the fiscal year ended February 1, 2008, as filed with the Securities and Exchange Commission, fully complies with the requirements of Section 13(a) of the...

  • Page 239
    ... requirement for executive officers. (5) Stockholder Proposal 2 (Declaration of Dividend) - A proposal regarding the declaration of a dividend. At the close of business on the record date for the meeting (which was October 26, 2007), there were 2,235,845,755 shares of common stock outstanding and...