Dell 2007 Annual Report Download - page 71

Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
and February 2, 2007, was $288 million and $200 million, respectively. During Fiscal 2008, $88 million related to interest and penalties
was included in income tax expense.
Dell is currently under audit in various jurisdictions, including the United States. The tax periods open to examination by the major taxing
jurisdictions to which Dell is subject include fiscal years 1997 through 2008. Dell does not anticipate a significant change to the total
amount of unrecognized benefits within the next 12 months.
NOTE 4 — CAPITALIZATION
Preferred Stock
Authorized Shares — Dell has the authority to issue five million shares of preferred stock, par value $.01 per share. At February 1, 2008
and February 2, 2007, no shares of preferred stock were issued or outstanding.
Redeemable Common Stock
In prior years, Dell inadvertently failed to register with the SEC the issuance of some shares under certain employee benefit plans. As a
result, certain purchasers of common stock pursuant to those plans may have the right to rescind their purchases for an amount equal to
the purchase price paid for the shares, plus interest from the date of purchase. At February 1, 2008 and February 2, 2007, Dell has
classified 4 million shares ($94 million) and 5 million shares ($111 million), respectively, which are subject to potential rescission rights
outside stockholders' equity, because the redemption features are not within the control of Dell. No shareholder exercised these rescission
rights in Fiscal 2008. Dell may also be subject to civil and other penalties by regulatory authorities as a result of the failure to register.
These shares have always been treated as outstanding for financial reporting purposes.
Common Stock
Authorized Shares — At February 1, 2008, Dell is authorized to issue 7.0 billion shares of common stock, par value $.01 per share.
Share Repurchase Program — Dell has a share repurchase program that authorizes it to purchase shares of common stock in order to
increase 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 approved a new authorization for an additional $10.0 billion for share repurchases. Dell
suspended its repurchase program in September 2006, and after recommencing the program during the fourth quarter of Fiscal 2008, Dell
repurchased 179 million shares for an aggregate cost of approximately $4.0 billion.
NOTE 5 — BENEFIT PLANS
Description of the Plans
Employee Stock Plans — Dell is currently issuing stock grants under the Dell Amended and Restated 2002 Long-Term Incentive Plan
("the 2002 Incentive Plan"), which was approved by shareholders on December 4, 2007. There are previous plans that have been
terminated except for options previously granted under those plans that are still outstanding. These are all collectively referred to as the
"Stock Plans".
The 2002 Incentive Plan provides for the granting of stock-based incentive awards to Dell's employees, non-employee directors, and
certain consultants and advisors to Dell. Awards may be incentive stock options within the meaning of Section 422 of the Internal
Revenue Code, nonqualified stock options, restricted stock, or restricted stock units. There were approximately 292 million, 271 million,
and 272 million shares of Dell's common stock available for future grants under the Stock Plans at February 1, 2008, February 2, 2007,
and February 3, 2006, respectively. To satisfy stock option exercises, Dell has a policy of issuing new shares as opposed to repurchasing
shares on the open market.
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