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DELL INC (4331)
10-K
Annual report pursuant to section 13 and 15(d)
Filed on 03/18/2010
Filed Period 01/29/2010

Table of contents

  • Page 1
    DELL INC (4331) 10-K Annual report pursuant to section 13 and 15(d) Filed on 03/18/2010 Filed Period 01/29/2010

  • 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: 1-800-BUY-DELL Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, par value...

  • Page 3
    ...DOCUMENT Directors, Executive Officers, and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accounting Fees and Services 102...

  • Page 4
    ...," "intend," "plan," "aim" and similar expressions as they relate to us or our management are intended to identify these forward-looking statements. All statements by us regarding our expected financial position, revenues, cash flows and other operating results, business strategy, legal proceedings...

  • Page 5
    ... our global supply chain to best serve our global customer base, we have transitioned a portion of our production capabilities to contract manufacturers. Our global corporate headquarters are located in Round Rock, Texas. Dell Inc. is a holding company that conducts its business worldwide through...

  • Page 6
    ... increasingly focused on data center solutions, disruptive innovation, customer segment specialization, and the value chain of design to value, price to value, market to value, and sell to value. Public - Our Public customers, which include educational institutions, government, health care, and law...

  • Page 7
    ...14 of Notes to Consolidated Financial Statements included in "Part II - Item 8 - Financial Statements and Supplementary Data." Products and Services Our aim is to provide customers with integrated business solutions. We design, develop, manufacture, market, sell, and support a wide range of products...

  • Page 8
    ...range from basic phone support to rapid response and resolution of complex problems. We also offer a full suite of solutions for customers who desire outsourcing of some or all of their IT management and operations. From planning to deployment to ongoing technical support, we offer services that are...

  • Page 9
    ...Services - We provide business process services, including claims processing, product engineering, payment and settlement management, life insurance policy administration, services to improve the collection of receivables, and call center management. - • Software and Peripherals - We offer Dell...

  • Page 10
    ... servicing customer receivables related to the purchase of Dell products. DFS offers private label credit financing programs through an unrelated, nationally chartered bank, to qualified consumer and Commercial customers and offers leases and fixed-term financing to Commercial customers. Financing...

  • Page 11
    ... contact and accountability with global account specialists, special global pricing, and consistent global service and support programs. We also maintain specific sales and marketing programs targeted at federal, state, and local governmental agencies, as well as healthcare and educational customers...

  • Page 12
    ... our focus on business efficiencies and customer satisfaction. We use open dialogue with our stockholders, customers, vendors, and other stakeholders as part of our sustainability governance process where we take candid feedback and offer honest discussions on the challenges we face globally. Our...

  • Page 13
    ... executive offices are located at One Dell Way, Round Rock, Texas 78682, and our telephone number at that address is 1-800-BUY-DELL. We maintain an Internet website at www.dell.com. All of our reports filed with the SEC (including annual reports on Form 10-K, quarterly reports on Form 10-Q, current...

  • Page 14
    ... 2009, as President of Services, Dell's global IT services and business solutions unit. In this role, he is responsible for developing and delivering a best-in-class suite of intelligent, end-to-end IT services and business solutions for global corporations, government, health care, educational...

  • Page 15
    ...Vice President, Corporate Business Group, Dell Americas. Prior to joining Dell, Mr. Felice served as Chief Executive Officer and President of DecisionOne Corp. Mr. Felice also served as Vice President, Planning and Development, with Bell Atlantic Customer Services, and he spent five years with Shell...

  • Page 16
    ..., financial markets, businesses, and sovereign nations. Weak global economic conditions could have a number of adverse effects on our business, including weaker customer demand, potential insolvency of key suppliers resulting in product delays, the inability of customers to obtain credit to finance...

  • Page 17
    .... As we reach more customers worldwide through an increasing number of new distribution channels, such as consumer retail, and continue to expand our relationships with value-added resellers, inventory management becomes more challenging and successful demand forecasting becomes more difficult. Our...

  • Page 18
    ... third party vendors. In addition, we are continuing to expand our use of contract manufacturers and manufacturing outsourcers. While these relationships generate cost efficiencies, they reduce our direct control over production. Our manufacturing and supply chain efficiencies give us the ability to...

  • Page 19
    ... U.S. for general corporate purposes, including working capital, acquisitions, capital expenditures, funding customer receivables, and share repurchases. Additionally, we have customer financing relationships with companies whose business models rely on accessing the capital markets. The inability...

  • Page 20
    ... results and financial condition could be adversely affected if any infringement or other intellectual property claim made against us by any third party is successful, or if we fail to develop non-infringing technology or license the proprietary rights on commercially reasonable terms and conditions...

  • Page 21
    ..., causing investors to lose confidence in our reported financial information. This could lead to a decline in our stock price, limit our ability to access the capital markets in the future, and require us to incur additional costs to improve our internal control systems and procedures. • Current...

  • Page 22
    ...sublet. Our principal executive offices, including global headquarters, are located at One Dell Way, Round Rock, Texas. Our business centers, which include facilities that contain operations for sales, technical support, administrative, and support functions, occupy 10.3 million square feet of space...

  • Page 23
    ...RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Common Stock Our common stock is listed on the Global Select Market of The NASDAQ Stock Market LLC under the symbol DELL. Information regarding the high and low sales prices per share of our common stock for Fiscal 2010...

  • Page 24
    ...value of our common stock relative to the indices at the end of each fiscal year and not for any interim period. Historical stock price performance is not necessarily indicative of future stock price performance. Dell Inc. S&P 500 Dow Jones US Computer Hardware $ $ $ 2005 2006 2007 2008 2009 2010...

  • Page 25
    ...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 assets Short-term...

  • Page 26
    ... manufacturing, and logistics. We are continuing to invest in initiatives that will align our new and existing products and services around customers' needs in order to drive long-term sustainable growth, profitability, and liquidity. During Fiscal 2010, we acquired Perot Systems Corporation ("Perot...

  • Page 27
    ... of Fiscal 2010, we acquired Perot Systems, a worldwide provider of information technology and business solutions, and we expect to increase our portfolio of solutions offerings to our customers. Additionally, we will continue our overall strategy of seeking to balance profitability and liquidity...

  • Page 28
    ... 2010, mostly due to our expansion into retail and a continuing shift in mix to lower-priced products. In the Consumer business, our market strategy is to expand our product offerings and customer coverage, by focusing on optimized products and services that have the features that customers value...

  • Page 29
    ... - Our services (including software related) gross margin rate is driven by our extended warranty sales, partially offset by lower margin categories such as software, consulting, and managed services. Our extended warranty services are more profitable because we sell our extended warranty offerings...

  • Page 30
    ... and benefits expense, excluding expenses related to headcount reductions, decreased approximately $300 million in Fiscal 2010 compared to Fiscal 2009. With the increase in retail volumes, which typically incur less advertising costs, advertising expenses decreased approximately $200 million year...

  • Page 31
    ... years. In addition, we will continue to review our costs across all processes and organizations with the goals of reducing complexity and eliminating redundancies. Since the second quarter of Fiscal 2008 and through the end of Fiscal 2010, excluding the 23,800 employees we added from Perot Systems...

  • Page 32
    ...impact of globalization on our customer base. Severance and facility action expenses, broad based long-term incentive expenses, in-process research and development, amortization of purchased intangible assets costs, and acquisition-related expenses in relation to our acquisition of Perot Systems are...

  • Page 33
    ...margin percentage during Fiscal 2010 as we continued to optimize our pricing and cost structure and sell higher value solutions to our customers. The addition of Perot Systems contributed 3% to the growth in operating income. Also favorably impacting operating income was a 5% year-over-year decrease...

  • Page 34
    ...consumer business. We sell desktop and notebook computers, printers, ink, toner, displays, and accessories through retailers. Our goal is to have strategic relationships with a number of major retailers in our larger geographic regions. We expanded our global retail presence over the prior year, and...

  • Page 35
    ... by a 17% decrease in average selling prices. Additionally, operating expenses declined 19% year-over-year as we began to realize the benefits from our cost-improvement initiatives. Revenue by Product and Services Categories We design, develop, manufacture, market, sell, and support a wide range of...

  • Page 36
    ... in our offerings and resources focused on increasing our solutions sales. The dynamics of our services business will change as we continue to integrate Perot Systems. With Perot Systems, we will extend our services business further into infrastructure business process outsourcing, consulting, and...

  • Page 37
    ... Contents year-over-year as we continued to align our prices and product offerings with the marketplace. During Fiscal 2010, desktop revenue decreased across all segments. Fiscal 2009 compared to Fiscal 2008 • Enterprise Solutions Servers and Networking - During Fiscal 2009, revenue from sales of...

  • Page 38
    ... fair market value adjustments related to our deferred compensation plan investments. We recognized a $24 million increase and a $35 million decline in the fair market values of our deferred compensation plan investments during Fiscal 2010 and Fiscal 2009, respectively. The year-over-year decrease...

  • Page 39
    ...items. The increase in our effective income tax rate for Fiscal 2010 from Fiscal 2009 was primarily due to an increased mix of profits in higher tax rate jurisdictions. Our foreign earnings are generally taxed at lower rates than in the United States. We continue to assess our business model and its...

  • Page 40
    ...Contents ACCOUNTS RECEIVABLE We sell products and services directly to customers and through a variety of sales channels, including retail distribution. At January 29, 2010, our accounts receivable, net was $5.8 billion, a 23% increase from our balance at January 30, 2009. This increase in accounts...

  • Page 41
    ... new restrictions on credit card companies in the areas of marketing, servicing, and pricing of consumer credit accounts. We do not expect the changes will substantially alter how consumer credit is offered to our customers or how their accounts will be serviced. Commercial credit is unaffected by...

  • Page 42
    ... 2010, as the global capital markets showed some improvements, we continued to be cautious given the downturn in the macroeconomic environment and the recent instability of the financial markets. We continue to evaluate the financial health of our supplier base, carefully manage customer credit...

  • Page 43
    ... for foreign earnings that are considered permanently reinvested outside of the U.S. We utilize a variety of tax planning and financing strategies with the objective of having our worldwide cash available in the locations where it is needed. We have an active working capital management team that...

  • Page 44
    ... of common stock under employee stock plans, the issuance of long-term debt and the repurchase of our common stock. The year-over-year increase in cash provided by financing activities was mainly due to the reduction of our share repurchase program from Fiscal 2009. During Fiscal 2010, we issued...

  • Page 45
    ...of the past three fiscal years: January 29, 2010 38 8 (82) (36) January 30, 2009 35 7 (67) (25) February 1, 2008 36 8 (80) (36) Days of sales outstanding(a) Days of supply in inventory(b) Days in accounts payable(c) Cash conversion cycle (a) Days of sales outstanding ("DSO") calculates the average...

  • Page 46
    ..., 2010, January 30, 2009, and February 1, 2008, respectively. Capital Commitments Share Repurchase Program - Our Board of Directors has approved a share repurchase program that authorizes us to purchase shares of common stock through a systematic program of open market purchases in order to increase...

  • Page 47
    ...include contracts that may be cancelled without penalty. We utilize several suppliers to manufacture sub-assemblies for our products. Our efficient supply chain management allows us to enter into flexible and mutually beneficial purchase arrangements with our suppliers in order to minimize inventory...

  • Page 48
    ... our Consolidated Statements 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, and loss contingencies. We have discussed the development, selection, and...

  • Page 49
    .... Dell sells its products directly to customers as well as through retailers. Sales to our retail customers are generally made under agreements allowing for limited rights of return, price protection, rebates, and marketing development funds. We have generally limited the return rights through...

  • Page 50
    ... cash flow methodology and then compare the fair values to the carrying values of each reportable business unit. We concluded that there were no impairment triggering events during Fiscal 2010. As of July 31, 2009, the Fiscal 2010 annual testing date, Dell's market capitalization, including...

  • Page 51
    ... Entities and Transfers of Financial Assets and Extinguishments of Liabilities - We transfer certain customer financing receivables to special purpose entities. In Fiscal 2011, the new FASB guidance on variable interest entities and transfers of financial statements and extinguishment of liabilities...

  • Page 52
    ...of Independent Registered Public Accounting Firm Consolidated Statements of Financial Position at January 29, 2010, and January 30, 2009 Consolidated Statements of Income for the fiscal years ended January 29, 2010, January 30, 2009, and February 1, 2008 Consolidated Statements of Cash Flows for the...

  • Page 53
    ... financial reporting. Perot Systems Corporation is a wholly-owned subsidiary whose total assets (excluding allocated intangibles and goodwill) and total revenues represent 3% and 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended January 29, 2010...

  • Page 54
    ...CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in millions) January 29, January 30, 2010 2009 Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Financing receivables, net Inventories, net Other current assets Total current assets Property, plant, and equipment...

  • Page 55
    ...Services, including software related Total cost of net revenue Gross margin Operating expenses: Selling, general, and administrative Research, development, and engineering In-process research and development Total operating expenses Operating income Interest and other, net Income before income taxes...

  • Page 56
    ... expenditures Proceeds from sale of facility and land Acquisition of business, net of cash received Change in cash from investing activities Cash flows from financing activities: Repurchase of common stock Issuance of common stock under employee plans Issuance of commercial paper (maturity 90 days...

  • Page 57
    ... in Fiscal 2008 is 1 million shares and $17 million related to redeemable common stock. In Fiscal 2008 through Fiscal 2010, stock issuance under employee plans is net of shares held for employee taxes. The accompanying notes are an integral part of these consolidated financial statements. 53

  • Page 58
    .... Customer receivables include revolving loans and fixed-term leases and loans resulting from the sale of Dell products and services. Financing receivables are presented net of the allowance for losses. See Note 4 of Notes to Consolidated Financial Statements for additional information. Asset...

  • Page 59
    ... over the shorter of five years or the lease term. Gains or losses related to retirements or disposition of fixed assets are recognized in the period incurred. Dell capitalizes eligible internal-use software development costs incurred subsequent to the completion of the preliminary project stage...

  • Page 60
    ... license and PCS elements, software license revenue and related costs are included in services revenue and cost of revenue and are generally recognized over the term of the arrangement. For sales of extended warranties with a separate contract price, Dell defers revenue equal to the separately...

  • Page 61
    ...deferred costs. Dell records revenue from the sale of equipment under sales-type leases as product revenue at the inception of the lease. Sales-type leases also produce financing income, which Dell recognizes at consistent rates of return over the lease term. Customer revolving loan financing income...

  • Page 62
    ... statements or tax returns, judgment and interpretation of statutes is required. Additionally, Dell uses tax planning strategies as a part of its global tax compliance program. Judgments and interpretation of statutes are inherent in this process. The accounting guidance for uncertainties in income...

  • Page 63
    ... the acquirer of a business is required to account for the business combination at fair value. As with previous guidance, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair values...

  • Page 64
    ...loss"). Credit related losses on debt securities will be considered an other-than-temporary impairment recognized in earnings, and any other losses due to a decline in fair value relative to the amortized cost deemed not to be other-than-temporary will be recorded in other comprehensive income. Dell...

  • Page 65
    ... commercial paper with original maturities of less than ninety days and are valued at fair value which approximates cost. The valuation is based on models whereby all significant inputs are observable or can be derived from or corroborated by observable market data. Dell utilizes a pricing service...

  • Page 66
    ... by observable market data. Retained Interest - The fair value of the retained interest is determined using a discounted cash flow model. Significant assumptions to the model include pool credit losses, payment rates, and discount rates. These assumptions are supported by both historical experience...

  • Page 67
    ... securities are classified as available-for-sale. Equity and other securities primarily relate to investments held in Dell's Deferred Compensation Plan, which are classified as trading securities. Both of these classes of securities are reported at fair value using the specific identification method...

  • Page 68
    .... Dell records all derivatives in its Consolidated Statements of Financial Position at fair value. Cash Flow Hedges Dell uses a combination of forward contracts and purchased options designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted...

  • Page 69
    ... buying local currency. Fair Value Hedges Dell enters into interest rate swaps designated as fair value hedges to manage the exposure of its debt portfolio to interest rate risk. Dell issues long-term debt in U.S. dollars based on market conditions at the time of financing. Dell uses interest rate...

  • Page 70
    ... January 29, 2010 Other NonOther Current Current Assets Liabilities (in millions) 5 1 6 6 $ (9) (9) 2 (5) (3) (12) Total Fair Value $ 186 (89) 1 98 65 (79) (14) 84 $ $ $ $ Dell has reviewed the existence and nature of credit-risk-related contingent features in derivative trading agreements with...

  • Page 71
    ... Entered into on October 2009 at 8.9% due October 2011 with interest payable monthly Total long-term debt Short-Term Debt Commercial paper Structured financing debt Other Total short-term debt Total debt Long-Term Debt During Fiscal 2010, Dell issued the 2012 Notes, 2014 Notes, and the 2019 Notes...

  • Page 72
    ... 29, 2010: Payments Due by Year 2013 2014 2015 (in millions) 2011 2012 Thereafter Total Aggregate future maturities of long-term debt outstanding Short-Term Debt Commercial Paper $ - $ 24 $ 400 $ 600 $ 500 $ 1,800 $ 3,324 Dell has a $1.5 billion commercial paper program with a supporting...

  • Page 73
    ... life of 12 months based on the underlying financing receivables. The total debt capacity related to this program is $250 million. NOTE 4 - FINANCIAL SERVICES Dell Financial Services L.L.C. Dell offers or arranges various financing options and services for its business and consumer customers in the...

  • Page 74
    ...five years. Future maturities of minimum lease payments at January 29, 2010, for Dell are as follows: Fiscal 2011 - $303 million; Fiscal 2012 - $188 million; Fiscal 2013 - $76 million; and Fiscal 2014 - $4 million. Fixed-term loans are offered to qualified small businesses, large commercial accounts...

  • Page 75
    ...-temporary are recorded currently in earnings. Retained Interest Certain transfers of financial assets to nonconsolidated qualified special purpose entities are accounted for as a sale. Upon the sale of the customer receivables to nonconsolidated qualifying special purpose entities, Dell recognizes...

  • Page 76
    ...key assumptions used to measure the fair value of the retained interest of the fixed term leases and loans at time of transfer within the period and at January 29, 2010, the balance sheet date: Weighted Average Key Assumptions Monthly Payment Credit Discount Rates Losses Rates (lifetime) (annualized...

  • Page 77
    ... units as its reportable business segments. Fiscal 2010 Acquisitions On November 3, 2009, Dell completed its acquisition of all the outstanding shares of the Class A common stock of Perot Systems, a worldwide provider of information technology and business solutions, for $3.9 billion in cash. This...

  • Page 78
    ... other cash compensation payments. These cash compensation payments were expensed as incurred and are recorded in selling, general, and administrative expenses in the Consolidated Statements of Income for Fiscal 2010. Dell incurred $116 million in acquisition-related costs for Perot Systems during...

  • Page 79
    ... to Dell's consolidated results of operations, financial position, or cash flows on either an individual or an aggregate basis. Fiscal 2008 Acquisitions During Fiscal 2008, Dell acquired EqualLogic Inc, ASAP Software Express, Inc, and three other smaller companies. The total purchase price for...

  • Page 80
    ... Fiscal 2010 and Fiscal 2009, Dell recorded additions to intangible assets of $1.2 billion and $64 million, respectively. The $1.2 billion in additions to intangible assets in Fiscal 2010 all relates to the acquisition of Perot Systems. See Note 5 of Notes to Consolidated Financial Statements for...

  • Page 81
    ... DELL INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Estimated future annual pre-tax amortization expense of finite-lived intangible assets as of January 29, 2010, over the next five fiscal years and thereafter is as follows: Fiscal Years 2011 2012 2013 2014 2015 Thereafter Total...

  • Page 82
    ... revenue on Dell's Consolidated Statements of Financial Position. Changes in Dell's liabilities for standard limited warranties and deferred services revenue related to extended warranties are presented in the following tables: Fiscal Year Ended January 29, January 30, February 1, 2010 2009 2008 (in...

  • Page 83
    ... and to reduce costs. Through these actions, Dell has reduced its headcount and has consolidated, closed and executed sales agreements related to selected facilities. These have included manufacturing, logistics, and call center operations in locations such as Winston-Salem, North Carolina, Limerick...

  • Page 84
    ... income as follows: Fiscal Year Ended January 29, January 30, 2010 2009 (in millions) Severance and facility action costs: Cost of revenue Selling, general, and administrative Research, development, and engineering Total NOTE 9 - COMMITMENTS AND CONTINGENCIES Lease Commitments - Dell leases property...

  • Page 85
    ...known battery problems and business model, and based on insiders' sales of Dell securities. This action also included Dell's independent registered public accounting firm, PricewaterhouseCoopers LLP, as a defendant. On October 6, 2008, the court dismissed all of the plaintiff's claims with prejudice...

  • Page 86
    ... and services to large corporate clients, governments, healthcare and education accounts, as well as small and medium-sized businesses and individuals. No single customer accounted for more than 10% of Dell's consolidated net revenue during Fiscal 2010, 2009, and 2008. Dell purchases a number of...

  • Page 87
    ... TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 10 - INCOME AND OTHER TAXES Income before income taxes included approximately $1.8 billion, $2.7 billion, and $3.3 billion related to foreign operations in Fiscal 2010, 2009, and 2008, respectively. The provision for income taxes consisted of...

  • Page 88
    ... FINANCIAL STATEMENTS (Continued) The components of Dell's net deferred tax asset are as follows: January 29, January 30, 2010 2009 (in millions) Deferred tax assets: Deferred revenue Inventory and warranty provisions Provisions for product returns and doubtful accounts Leasing and financing Credit...

  • Page 89
    ... 29, 2010 35.0% (7.5) 1.7 29.2% Fiscal Year Ended January 30, 2009 35.0% (9.8) 0.2 25.4% February 1, 2008 35.0% (12.5) 0.8 (0.3) 23.0% U.S. federal statutory rate Foreign income taxed at different rates In-process research and development Other Total At the beginning of Fiscal 2008, Dell adopted...

  • Page 90
    ... negotiations relating to tax matters with the taxing authorities in these various jurisdictions. Dell's U.S. federal income tax returns for fiscal years 2007 through 2009 are currently under examination by the Internal Revenue Service ("IRS"). In April 2009, the IRS issued a Revenue Agent's Report...

  • Page 91
    ...to the total amount of unrecognized income tax benefits within the next 12 months. Dell takes certain non-income tax positions in the jurisdictions in which it operates and has received certain non-income tax assessments from various jurisdictions. Dell believes its positions in these non-income tax...

  • Page 92
    ... Stock Plans at January 29, 2010, January 30, 2009, and February 1, 2008, respectively. To satisfy stock option exercises, Dell has a policy of issuing new shares as opposed to repurchasing shares on the open market. Stock Option Agreements - The right to purchase shares pursuant to existing stock...

  • Page 93
    ...in the table above represents the total pre-tax intrinsic value (the difference between Dell's closing stock price on January 29, 2010, and the exercise price multiplied by the number of in-the-money options) that would have been received by the option holders had the holders exercised their options...

  • Page 94
    ...in the table above represents the total pre-tax intrinsic value (the difference between Dell's closing stock price on January 30, 2009, and the exercise price multiplied by the number of in-the-money options) that would have been received by the option holders had the holders exercised their options...

  • Page 95
    ... the total pre-tax intrinsic value (the difference between the stock price at exercise and the exercise price multiplied by the number of options exercised) that was received by the option holders who exercised their options during the fiscal year. At January 29, 2010, January 30, 2009, and...

  • Page 96
    ... a reduction of $1 million for the release of the accrual for expired stock options in Fiscal 2009 and $107 million of cash expense in Fiscal 2008 for expired stock options, as previously discussed. Valuation Information Dell uses the Black-Scholes option pricing model to estimate the fair value of...

  • Page 97
    ... and service solutions to large global and national corporate customers. Public includes sales to educational institutions, governments, health care organizations, and law enforcement agencies, among others. SMB includes sales of complete IT solutions to small and medium-sized businesses. Consumer...

  • Page 98
    ... operating income: Large Enterprise Public Small and Medium Business Consumer Consolidated segment operating income Severance and facility actions Broad based long-term incentives(a) In-process research and development(b) Amortization of intangible assets(b) Acquisition-related costs(c) Total $ 14...

  • Page 99
    ... FINANCIAL STATEMENTS (Continued) The following table presents assets by Dell's reportable global segments. Segment assets primarily consist of accounts receivable and inventories. January 29, 2010 (in millions) Total assets: Corporate Large Enterprise Public Small and Medium Business Consumer Total...

  • Page 100
    ... or long-lived assets during Fiscal 2010, 2009, or 2008. No single customer accounted for more than 10% of Dell's consolidated net revenue during Fiscal 2010, 2009, or 2008. The following table presents net revenue by product and services categories: Fiscal Year Ended January 30, 2009 (in millions...

  • Page 101
    ... 30, 2010 2009 (in millions) Accounts receivable, net: Gross accounts receivable Allowance for doubtful accounts Total Inventories, net: Production materials Work-in-process Finished goods Total Prepaid expenses(a) Deferred costs(a) Property, plant, and equipment, net: Computer equipment Land and...

  • Page 102
    ... other current liabilities: Warranty liability Income taxes Compensation Other Total Other non-current liabilities: Warranty liability Income taxes Other Total Supplemental Consolidated Statements of Income The table below provides advertising costs for Fiscal 2010, 2009, and 2008. Advertising costs...

  • Page 103
    ... of Fiscal 2010 and Fiscal 2009: First Quarter Net revenue Gross margin Net income Earnings per common share: Basic Diluted Weighted-average shares outstanding: Basic Diluted Stock sales price per share: High Low 12,342 2,168 290 0.15 0.15 1,949 1,952 12.05 7.84 $ $ Fiscal Year 2010 Second Third...

  • Page 104
    ... over financial reporting the operations and related assets of Perot Systems Corporation and its subsidiaries (collectively "Perot Systems"), which Dell acquired on November 3, 2009. At January 29, 2010, and for the period from November 3, 2009, through January 29, 2010, the total assets (excluding...

  • Page 105
    ... materially affect, Dell's internal control over financial reporting. Inherent Limitations in Internal Controls Our system of controls is designed to provide reasonable, not absolute, assurance regarding the reliability and integrity of accounting and financial reporting. Management does not expect...

  • Page 106
    ... any waiver of a provision of the code for the benefit of our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website within four business days following any such amendment or waiver, or within any...

  • Page 107
    ...of Independent Registered Public Accounting Firm Consolidated Statements of Financial Position at January 29, 2010, and January 30, 2009 Consolidated Statements of Income for the fiscal years ended January 29, 2010, January 30, 2009, and February 1, 2008 Consolidated Statements of Cash Flows for the...

  • Page 108
    ... accounts 2008 Allowance for doubtful accounts Customer Financing Receivables:(a) 2010 Allowance for doubtful accounts 2009 Allowance for doubtful accounts 2008 Allowance for doubtful accounts Trade Receivables: 2010 Allowance for customer returns 2009 Allowance for customer returns 2008 Allowance...

  • Page 109
    ... 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 18, 2010 105

  • Page 110
    ..., Corporate Finance (principal accounting officer) March 18, 2010 Director March 18, 2010 Director March 18, 2010 Director March 18, 2010 Director March 18, 2010 Director March 18, 2010 Director March 18, 2010 Director March 18, 2010 Director March 18, 2010 Title Chairman and Chief Executive Officer...

  • Page 111
    ... and Restated Dell Inc. 401(k) Plan, effective as of January 1, 2008 (incorporated by reference to Exhibit 10.6 of Dell's Annual Report on Form 10-K for the fiscal year ended January 30, 2009, Commission File No. 0-17017) 10.6* - Amended and Restated Dell Inc. Deferred Compensation Plan effective as...

  • Page 112
    ... Inc. Deferred Compensation Plan for Non-Employee Directors effective as of January 1, 2005 (incorporated by reference to Exhibit 10.8 of Dell's Annual Report on Form 10-K for the fiscal year ended January 30, 2009, Commission File No. 0-17017) 10.8* - Executive Incentive Bonus Plan, adopted July...

  • Page 113
    ...Exhibit 10.22* - Form of Restricted Stock Unit Agreement for Executive Officers under the Amended and Restated 2002 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.23 of Dell's Annual Report on Form 10-K for the fiscal year ended January 30, 2009, Commission File No. 0-17017) 10.23...

  • Page 114
    Table of Contents Exhibit No. 101.CAL§ 101.LAB§ 101.PRE§ 101.DEF - - - - Description of Exhibit XBRL Taxonomy ... management contract or compensatory plan or arrangement. Filed with this report. Furnished with this report. Furnished with this report. In accordance with Rule 406T of Regulation ...

  • Page 115
    ... 3,439 45 26 71 49 January 29, 2010 Earnings Pre-tax income from continuing operations Add: Fixed Charges adjusted for capitalized interest Add: Minority Interest Total Interest Expense Capitalized interest Estimate of interest in rent expense Total Ratio of Earnings to Fixed Charges Fixed Charges...

  • Page 116
    ... and Services S.A Dell DFS Holdings Kft. Dell Emerging Markets (EMEA) Limited Magyarorszagi Kereskedelmi Kepviselet - Rep. Office Dell Hungary Technology Solutions Trade LLC Dell International Holdings Kft. Perot Systems TSI (Hungary) Liquidity Management LLC Alienware Limited Dell Direct Dell...

  • Page 117
    ... Office) Dell Emerging Markets (EMEA) Limited Representative Office - Lebanon Dell SA Perot Systems TSI (Mauritius) Pvt. Ltd. Dell Distribution Maroc (Succ) Dell SAS Dell Asia B.V. Dell B.V. Dell Global B.V. Dell Global Holdings I BV Dell Global Holdings II BV Dell Global Holdings III BV Dell Global...

  • Page 118
    ...) Limited (Uganda Representative Office) Dell Emerging Markets (EMEA) Limited - Representative Office Ukraine LLC Dell Ukraine Perot Systems TSI (Middle East) FZ-LLC Bracknell Boulevard Management Company Limited Dell Computer EEIG Dell Corporation Limited Dell Emerging Markets (EMEA) Limited Dell...

  • Page 119
    ... Limited Perot Systems Business Process Solutions India Private Limited Perot Systems India Foundation Dell Global BV (Indonesia Representative Office) PT Dell Indonesia Dell Japan Inc. EqualLogic Japan Company Limited Perot Systems (Japan) Ltd. Dell Asia Pacific Sdn. Dell Global Business Center...

  • Page 120
    ... L.L.C Dell Federal Systems Corporation Dell Federal Systems GP L.L.C. Dell Federal Systems LP L.L.C. Dell Financial Services L.L.C. Dell Global Holdings IV L.L.C. Dell Global Holdings L.L.C. Dell Global Holdings IX L.L.C. Dell International Holdings I L:.L.C Dell International L.L.C. Dell Marketing...

  • Page 121
    ... Dell Global Holdings VIII L.L.C Perot Systems Corporation Perot Systems Government Solutions, Inc. Perot Systems Government Healthcare Solutions, Inc. perot.com inc. Perot Systems Application Solutions Inc. PS eServe Corp. Solutions Consulting LLC Perot Systems Communications Services, Inc. Perot...

  • Page 122
    ... PrSM Corporation Dell Computer Holdings L.P. Dell Federal Systems L.P. Dell Marketing L.P. Dell Marketing USA L.P. Dell Products L.P. Dell Receivables L.P. Dell USA L.P. Dell World Trade L.P. Perot Systems Business Process Solutions, Inc. Perot Systems FS Limited Partnership PSC Management Limited...

  • Page 123
    ...Inc. (formerly Dell Computer Corporation) of our report dated March 18, 2010, 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 March 18...

  • Page 124
    ..., not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of...

  • Page 125
    ..., not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of...

  • Page 126
    ... information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Dell Inc. Date: March 18, 2010 /s/ MICHAEL S. DELL Michael S. Dell Chairman and Chief Executive Officer Date: March 18, 2010 /s/ BRIAN T. GLADDEN Brian T. Gladden...