Dell 2009 Annual Report Download - page 86

Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
state district court in Williamson County, Texas, and the previously reported shareholder demand letter dated November 12,
2008, asserting allegations similar to those made in these lawsuits. The settlement received final approval by the court on
December 15, 2009. The settlement required Dell to initiate and maintain certain corporate governance changes and
provided for the payment of approximately $1.75 million in fees to the plaintiffs' counsel.
Copyright Levies — Rights holders associations in Europe seek to impose levies on information technology equipment such as
personal computers and multifunction devices that facilitate making private copies of copyrighted materials. The total levies due, if
imposed, would be based on the number of products sold and the per-product amounts of the levies, which vary by product and
country. Dell, along with other companies and various industry associations, is opposing unreasonable levies and advocating
compensation to rights holders through digital rights management systems.
On December 29, 2005, Zentralstelle Für private Überspielungrechte ("ZPÜ"), a joint association of various German collection
societies, instituted arbitration proceedings against Dell's German subsidiary before the Arbitration Body in Munich. ZPÜ claims an
audio-video levy of €18.42 per PC that Dell sold in Germany from January 1, 2002, through December 31, 2005. On July 31, 2007,
the Arbitration Body recommended a levy of €15 on each PC sold during that period for audio and visual copying capabilities. Dell
and ZPÜ rejected the recommendation, and on February 21, 2008, ZPÜ filed a lawsuit in the German Regional Court in Munich
with respect to levies to be paid through the end of calendar year 2007. On December 23, 2009, ZPÜ and the German industry
association, BCH, reached a settlement regarding audio-video copyright levy litigation providing for payment of levies in the
amount of €3.15 for calendar years 2002 and 2003, and €6.30 for calendar years 2004 through 2007, and €12.15 (for units excluding
a burner) and €13.65 (units including a burner) for calendar years 2008 through 2010. Dell joined this settlement on February 23,
2010. Dell believes that it has accrued amounts sufficient to cover payment of levies following accession to this settlement.
However, the amount of levies payable after calendar 2010, as well as Dell's ability to recover such amounts through increased
prices, remains uncertain.
Other Litigation — The various legal proceedings in which Dell is involved include commercial litigation and a variety of patent
suits. In some of these cases, Dell is the sole defendant but more often Dell is one of a number of defendants in the electronics and
technology industries.
Certain Concentrations — The counterparties to the financial instruments consist of a number of major financial institutions rated AA
and A. In addition to limiting the amount of agreements and contracts it enters into with any one party, Dell monitors its positions with,
and the credit quality of the counterparties to, these financial instruments. Dell does not anticipate nonperformance by any of the
counterparties.
Dell's investments in debt securities are in high quality financial institutions and companies. As part of its cash and risk management
processes, Dell performs periodic evaluations of the credit standing of the institutions in accordance with its investment policy. Dell's
investments in debt securities have effective maturities of less than five years. Management believes that no significant concentration of
credit risk for investments exists for Dell.
As of January 29, 2010, Dell does not have significant concentrations of cash and cash equivalent deposits with its financial institutions.
Dell markets and sells its products 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 components from single or limited sources. In some cases, alternative sources of supply are not available. In
other cases, Dell may establish a working relationship with a single source or a limited number of sources if Dell believes it is
advantageous to do so based on performance, quality, support, delivery, capacity, or price considerations.
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