Dell 2007 Annual Report Download - page 79

Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Financing Receivables
The following table summarizes the components 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 $ 1,063 $ 805
Fixed-term leases and loans, gross 654 632
Customer receivables, gross 1,717 1,437
Customer receivables allowance (96) (39)
Customer receivables, net 1,621 1,398
Residual interest 295 296
Retained interest 223 159
Financing receivables, net $ 2,139 $ 1,853
Short-term $ 1,732 $ 1,530
Long-term 407 323
Financing receivables, net $ 2,139 $ 1,853
Financing receivables consist of customer receivables, residual interest, and retained interest in securitized receivables. Customer
receivables include fixed-term loans and leases and revolving loans resulting from the sale of Dell products and services. For customers
who desire lease financing, Dell enters into sales-type lease arrangements with the customers. Of the customer receivables balance,
$444 million represent balances which are due from CIT in connection with specified promotional programs.
• Customer receivables are presented net of allowance for uncollectible accounts. The allowance is based on factors including
historical experience, past due receivables, receivable type, and the risk composition of the receivables. The composition and credit
quality varies from investment grade commercial customers to subprime consumers. Subprime receivables comprise less than 20% of
the net customer receivable balance at February 1, 2008. Financing receivables are charged to the allowance at the earlier of when an
account is deemed to be uncollectible or when an account is 180 days delinquent. Recoveries on customer receivables previously
charged off as uncollectible are recorded to the allowance for uncollectible accounts. The following is a description of the
components of financing receivables.
– Revolving loans offered under private label credit financing programs provide qualified customers with a revolving credit line for
the purchase of products and services offered by Dell. Revolving loans bear interest at a variable annual percentage rate that is tied
to the prime rate. From time to time, account holders may have the opportunity to finance their Dell purchases with special
programs during which, if the outstanding balance is paid in full, no interest is charged. These special programs generally range
from 3 to 12 months and have an average original term of approximately 11 months. At February 1, 2008 and February 2, 2007,
$668 million and $694 million, respectively, were receivables under these special programs.
– Leases with business customers generally have fixed terms of two to three years. Future maturities of minimum lease payments at
February 1, 2008, are as follows: 2009: $137 million; 2010: $74 million; 2011:
75