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Table of Contents DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
acquisition. Dell also acquired a liquidating portfolio of computer equipment operating leases. The gross amount of the equipment associated with these
operating leases at the date of acquisition was $67 million and is included in Property, plant, and equipment in the Consolidated Statements of Financial
Position. See Note 7 of Notes to Consolidated Financial Statements for additional information about Dell's acquisitions.
In Fiscal 2012 , Dell entered into a definitive agreement to acquire CIT Vendor Finance's Dell-related financing assets portfolio and sales and servicing
functions in Europe. The acquisition of these assets will enable global expansion of Dell's direct finance model. Subject to customary closing, regulatory, and
other conditions, Dell expects to close substantially all of this acquisition in the fiscal year ending February 1, 2013.
Purchased Credit-Impaired Loans
During the third quarter of Fiscal 2011, Dell purchased a portfolio of revolving loan receivables from CIT Group Inc. Prior to the acquisition, it was evident
that Dell would not collect on all contractually required principal and interest payments. As such, these receivables met the definition of Purchased Credit-
Impaired (“PCI”) loans. At February 3, 2012, the outstanding balance of these receivables, including principal and accrued interest, was $419 million and the
carrying amount was $184 million.
The excess of cash flows expected to be collected over the carrying value of PCI loans is referred to as the accretable yield and is accreted into interest income
using the effective yield method based on the expected future cash flows over the estimated lives of the PCI loans. Due to improved expectations of the
amount of expected cash flows and higher post charge-off recoveries, Dell increased the accretable yield associated with these PCI loans in Fiscal 2012. The
increases in accretable yield will be amortized over the remaining life of the loans.
The following table shows activity for the accretable yield on the PCI loans for the fiscal years ended February 3, 2012, and January 28, 2011. We expect the
remaining balance of the accretable yield as of February 3, 2012 to accrete over the next 3 years, using the effective interest method.
Fiscal Year Ended
February 3, 2012 January 28, 2011
(in millions)
Accretable Yield:
Balance at beginning of period $ 137 $ —
Additions/ Purchases — 166
Accretion (88) (29)
Prospective yield adjustment 93 —
Balance at end of period $ 142 $ 137
75