Dell 10-Q 10 Jun 10 2011 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information (USD $)
In Billions, except Share data	3 Months Ended Apr. 30, 2010	Jun. 03, 2010	Jul. 31, 2009
Document and Entity Information [Abstract]
Entity Registrant Name	DELL INC
Entity Central Index Key	0000826083
Document Type	10-Q
Document Period End Date	2010-04-30
Amendment Flag	false
Document Fiscal Year Focus	2,011
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--01-28
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			22.7
Entity Common Stock, Shares Outstanding		1,958,270,699

Condensed Consolidated Statemen

Condensed Consolidated Statements of Financial Position (USD $)
In Millions	3 Months Ended Apr. 30, 2010	12 Months Ended Jan. 29, 2010
Current assets:
Cash and cash equivalents	$10,255	$10,635
Short-term investments	627	373
Accounts receivable, net	5,880	5,837
Financing receivables, net	3,221	2,706
Inventories, net	1,182	1,051
Other current assets	3,619	3,643
Total current assets	24,784	24,245
Property, plant, and equipment, net	2,049	2,181
Investments	714	781
Long-term financing receivables, net	528	332
Goodwill	4,181	4,074
Purchased intangible assets, net	1,658	1,694
Other non-current assets	327	345
Total assets	34,241	33,652
Current liabilities:
Short-term debt	1,079	663
Accounts payable	11,402	11,373
Accrued and other	3,549	3,884
Short-term deferred services revenue	2,950	3,040
Total current liabilities	18,980	18,960
Long-term debt	3,582	3,417
Long-term deferred services revenue	3,194	3,029
Other non-current liabilities	2,607	2,605
Total liabilities	28,363	28,011
Commitments and contingencies (Note 12)
Stockholders' equity:
Common stock and capital in excess of $.01 par value; shares authorized: 7,000; shares issued: 3,361 and 3,351, respectively; shares outstanding: 1,955 and 1,957, respectively	11,534	11,472
Treasury stock at cost: 931 shares and 919 shares, respectively	(28,104)	(27,904)
Retained earnings	22,439	22,110
Accumulated other comprehensive income (loss)	9	(37)
Total stockholders' equity	5,878	5,641
Total liabilities and stockholders' equity	$34,241	$33,652

1_Condensed Consolidated Statem

Condensed Consolidated Statements of Financial Position (Parenthetical)
Share data in Millions	Apr. 30, 2010	Jan. 29, 2010
Stockholders' equity:
Common stock and capital in excess, par value	0.01	0.01
Common stock and capital in excess, shares authorized	7,000	7,000
Common stock and capital in excess, shares issued	3,361	3,351
Common stock and capital in excess, shares outstanding	1,955	1,957
Treasury stock at cost, shares	931	919

2_Condensed Consolidated Statem

Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Millions, except Per Share data	3 Months Ended Apr. 30, 2010	3 Months Ended May. 01, 2009
Net revenue:
Products	$12,086	$10,232
Services, including software related	2,788	2,110
Total net revenue	14,874	12,342
Cost of net revenue:
Products	10,385	8,786
Services, including software related	1,973	1,388
Total cost of net revenue	12,358	10,174
Gross margin	2,516	2,168
Operating expenses:
Selling, general, and administrative	1,830	1,613
Research, development, and engineering	167	141
Total operating expenses	1,997	1,754
Operating income	519	414
Interest and other, net	(68)	(2)
Income before income taxes	451	412
Income tax provision	110	122
Net income	$341	$290
Earnings per common share:
Basic	0.17	0.15
Diluted	0.17	0.15
Weighted-average shares outstanding:
Basic	1,961	1,949
Diluted	1,973	1,952

3_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Millions	3 Months Ended Apr. 30, 2010	3 Months Ended May. 01, 2009
Cash flows from operating activities:
Net income	$341	$290
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	247	201
Stock-based compensation	76	67
Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies	30	0
Deferred income taxes	(31)	(26)
Provision for doubtful accounts - including financing receivables	122	105
Other	0	18
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable	(119)	380
Financing receivables	(208)	(27)
Inventories	(132)	24
Other assets	69	547
Accounts payable	22	(483)
Deferred services revenue	72	(25)
Accrued and other liabilities	(251)	(310)
Change in cash from operating activities	238	761
Cash flows from investing activities:
Purchases	(350)	(428)
Maturities and sales	169	642
Capital expenditures	(46)	(80)
Acquisition of business, net of cash received	(133)	(3)
Change in cash from investing activities	(360)	131
Cash flows from financing activities:
Repurchase of common stock	(200)	0
Issuance of common stock under employee plans	7	0
Issuance of commercial paper (maturity 90 days or less), net	234	0
Proceeds from debt	268	497
Repayments of debt	(566)	(12)
Other	3	0
Change in cash from financing activities	(254)	485
Effect of exchange rate changes on cash and cash equivalents	(4)	(38)
Change in cash and cash equivalents	(380)	1,339
Cash and cash equivalents at beginning of period	10,635	8,352
Cash and cash equivalents at end of period	$10,255	$9,691

Basis of Presentation

Basis of Presentation
	3 Months Ended Apr. 30, 2010
Basis of Presentation [Abstract]
BASIS OF PRESENTATION	NOTE1 BASIS OF PRESENTATION Basis of Presentation The accompanying Condensed Consolidated Financial Statements of Dell Inc. individually and together with its consolidated subsidiaries, (Dell) should be read in conjunction with the Consolidated Financial Statements and accompanying Notes filed with the U.S. Securities and Exchange Commission (SEC) in Dells Annual Report on Form10-K for the fiscal year ended January29, 2010. The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). In the opinion of management, the accompanying Condensed Consolidated Financial Statements reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of Dell and its consolidated subsidiaries at April30, 2010, the results of its operations for the three months ended April30, 2010, and May1, 2009, and its cash flows for the three months ended April30, 2010, and May1, 2009. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in Dells Condensed Consolidated Financial Statements and the accompanying Notes. Actual results could differ materially from those estimates. The results of operations and cash flows for the three months ended April30, 2010, and May1, 2009, are not necessarily indicative of the results to be expected for the full year. Recently Issued and Adopted Accounting Pronouncements Revenue Arrangements with Multiple Deliverables In September2009, the Emerging Issues Task Force of the Financial Accounting Standards Board (FASB) reached consensus on two issues which affects the timing of revenue recognition. The first consensus changes the level of evidence of standalone selling price required to separate deliverables in a multiple deliverable arrangement by allowing a company to make its best estimate of the selling price (ESP) of deliverables when more objective evidence of selling price is not available and eliminates the use of the residual method. The consensus applies to multiple deliverable revenue arrangements that are not accounted for under other accounting pronouncements and retains the use of vendor specific objective evidence of selling price (VSOE) if available and third-party evidence of selling price (TPE), when VSOE is unavailable. The second consensus excludes sales of tangible products that contain essential software elements, that is, software enabled devices, from the scope of revenue recognition requirements for software arrangements. Dell has elected to early adopt this accounting guidance at the beginning of the first quarter of Fiscal 2011 on a prospective basis for applicable transactions originating or materially modified after January29, 2010. Dells multiple deliverable arrangements generally include hardware products that are sold with services such as extended warranty services, installation, maintenance, and other services contracts. The nature and terms of these multiple deliverable arrangements will vary based on the customize

Inventories

Inventories
	3 Months Ended Apr. 30, 2010
Inventories [Abstract]
INVENTORIES	NOTE2 INVENTORIES April30, January29, 2010 2010 (in millions) Inventories: Production materials $ 631 $ 487 Work-in-process 131 168 Finished goods 420 396 Inventories $ 1,182 $ 1,051

Fair Value Measurements

Fair Value Measurements
	3 Months Ended Apr. 30, 2010
Fair Value Measurements [Abstract]
FAIR VALUE MEASUREMENTS	NOTE3 FAIR VALUE MEASUREMENTS The following table presents Dells hierarchy for its assets and liabilities measured at fair value on a recurring basis as of April30, 2010, and January29, 2010: April30, 2010 January29, 2010 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Quoted Prices Quoted Prices in Active Significant in Active Significant Markets for Other Significant Markets for Other Significant Identical Observable Unobservable Identical Observable Unobservable Assets Inputs Inputs Assets Inputs Inputs (in millions) Assets: Cash equivalents: Commercial paper $ - $ 1,260 $ - $ 1,260 $ - $ 197 $ - $ 197 U.S. government and agencies - 95 - 95 - - - - Debt Securities: U.S. government and agencies - 109 - 109 - 66 - 66 U.S. corporate - 565 30 595 - 553 30 583 International corporate - 512 - 512 - 391 - 391 State municipal bonds - 1 - 1 - 2 - 2 Equity and other securities - 99 - 99 - 90 - 90 Retained interest - - - - - - 151 151 Derivative instruments - 167 - 167 - 96 - 96 Total assets $ - $ 2,808 $ 30 $ 2,838 $ - $ 1,395 $ 181 $ 1,576 Liabilities: Derivative instruments $ - $ 32 $ - $ 32 $ - $ 12 $ - $ 12 Total liabilities $ - $ 32 $ - $ 32 $ - $ 12 $ - $ 12 The following section describes

Investments

Investments
	3 Months Ended Apr. 30, 2010
Investments [Abstract]
INVESTMENTS	NOTE4 INVESTMENTS The following table summarizes, by major security type, the fair value and amortized cost of Dells investments. All debt security investments with remaining maturities in excess of one year and substantially all equity and other securities are recorded as long-term investments in the Condensed Consolidated Statements of Financial Position. April30, 2010 January29, 2010 Fair Unrealized Unrealized Fair Unrealized Unrealized Value Cost Gain (Loss) Value Cost Gain (Loss) (in millions) Investments: U.S. government and agencies $ 108 $ 108 $ - $ - $ 65 $ 65 $ - $ - U.S. corporate 271 270 1 - 233 232 1 - International corporate 248 248 - - 75 75 - - Total short-term investments 627 626 1 - 373 372 1 - U.S. government and agencies 1 1 - - 1 1 - - U.S. corporate 324 324 1 (1 ) 350 349 2 (1 ) International corporate 264 264 1 (1 ) 316 316 1 (1 ) State and municipal governments 1 1 - - 2 2 - - Equity and other securities 124 124 - - 112 112 - - Total long-term investments 714 714 2 (2 ) 781 780 3 (2 ) Total investments $ 1,341 $ 1,340 $ 3 $ (2 ) $ 1,154 $ 1,152 $ 4 $ (2 ) Dells investments in debt securities are classified as available-for-sale. Equity and other securities primarily relate to investments held in Dells 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. All other investments are initially recorded at cost and reduced for any impairment losses. The fair value of Dells portfolio is affected primarily by interest rate movements rather than credit and liquidity r

Financial Services

Financial Services
	3 Months Ended Apr. 30, 2010
Financial Services [Abstract]
FINANCIAL SERVICES	NOTE5 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 U.S. through Dell Financial Services L.L.C. (DFS), a wholly-owned subsidiary of Dell. DFSs key activities include the origination, collection, and servicing of customer receivables related to the purchase of Dell products and services. New financing originations, which represent the amounts of financing provided to customers for equipment and related software and services through DFS, were approximately $900million during the three months ended both April30, 2010, and May1, 2009. Dell transfers certain customer financing receivables to special purpose entities (SPEs). The SPEs are bankruptcy remote legal entities with separate assets and liabilities. The purpose of the SPEs is to facilitate the funding of customer receivables in the capital markets. These SPEs have entered into financing arrangements with multi-seller conduits that, in turn, issue asset-backed debt securities in the capital markets. Dells risk of loss related to securitized receivables is limited to the amount of Dells right to receive collections for assets securitized exceeding the amount required to pay interest, principal, and other fees and expenses. Dell provides credit enhancement to the securitization in the form of over-collateralization. Prior to the first quarter of Fiscal 2011, the SPE that funds revolving loans was consolidated, and the two SPEs that fund fixed-term leases and loans were not consolidated. In accordance with the new accounting guidance on variable interest entities (VIEs), and transfers of financial assets and extinguishment of financial liabilities, Dell determined that these two SPEs would be consolidated as of the beginning of the first quarter of Fiscal 2011. The primary factors in this determination were the obligation to absorb losses due to the interest Dell retains in the assets transferred to the SPEs in the form of over-collateralization, and the power to direct activities through the servicing role performed by Dell. Dell recorded the assets and liabilities at their carrying amount as of the beginning of Fiscal 2011 with a cumulative effect adjustment of $13million to the opening balance of retained earnings in Fiscal 2011. Dells securitization programs contain standard structural features related to the performance of the securitized receivables. These structural features include defined credit losses, delinquencies, average credit scores, and excess collections above or below specified levels. In the event one or more of these criteria are not met and Dell is unable to restructure the program, no further funding of receivables will be permitted and the timing of Dells expected cash flows from over-collateralization will be delayed. At April30, 2010, these criteria were met. Financing Receivables The following table summarizes the components of Dells financing receivables: April30, January29, 2010 2010 (in millions) Financing receivables, net: Customer

Borrowings

Borrowings
	3 Months Ended Apr. 30, 2010
Borrowings [Abstract]
BORROWINGS	NOTE6 BORROWINGS The following table summarizes Dells outstanding debt at: April30, January29, 2010 2010 (in millions) Long-Term Debt Notes: $400million issued on June10, 2009, at 3.375% due June2012 (2012 Notes) with interest payable June15 and December15 (includes hedge accounting adjustments) $ 401 $ 401 $600million issued on April17, 2008, at 4.70% due April2013 (2013 Notes) with interest payable April15 and October15 (includes hedge accounting adjustments) 602 599 $500million issued on April1, 2009, at 5.625% due April2014 (2014 Notes) with interest payable April15 and October15 500 500 $500million issued on April17, 2008, at 5.65% due April2018 (2018 Notes) with interest payable April15 and October15 499 499 $600million issued on June10, 2009, at 5.875% due June2019 (2019 Notes) with interest payable June15 and December15 600 600 $400million issued on April17, 2008, at 6.50% due April2038 (2038 Notes) with interest payable April15 and October15 400 400 Senior Debentures $300million issued on April3, 1998 at 7.10% due April2028 with interest payable April15 and October15 (includes the impact of interest rate swap terminations) 393 394 Other India term loan: entered into on October15, 2009 at 8.9% due October2011 with interest payable monthly 24 24 Structured financing debt 163 - Total long-term debt 3,582 3,417 Short-Term Debt Commercial paper 410 496 Structured financing debt 667 164 Other 2 3 Total short-term debt 1,079 663 Total debt $ 4,661 $ 4,080 The estimated fair value of total debt at April30, 2010, was approximately $4.9billion. The fair values of the India term loan, structured financing debt, commercial paper, and other short-term debt approximate their carrying values. The carrying value of the Senior Debentures includes an unamortized amount related to the termination of interest rate swap agreements in the fourth quarter of Fiscal 2009, which were previously designated as hedges of the debt. During the first quarter of Fiscal 2011 and fourth quarter of Fiscal 2010, Dell entered into interest rate swap agreements to effectively convert the fixed rates of the 2012 Notes and 2013 Notes to floating rates. The floating rates are based on six-month or three-month LIBOR plus a fixed rate. The interest rate swaps qualified for hedge accounting treatment as fair value hedges. See Note7 of Notes to Condensed Consolidated Financial Statements for additional information about interest rate swaps. Commercial Paper In the first quarter of Fiscal 2011, Dell had a $1.5billion c

Derivative Instruments and Hedg

Derivative Instruments and Hedging Activities
	3 Months Ended Apr. 30, 2010
Derivative Instruments and Hedging Activities [Abstract]
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES	NOTE7 DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Derivative Instruments As part of its risk management strategy, Dell uses derivative instruments, primarily forward contracts and purchased options, to hedge certain foreign currency exposures and interest rate swaps to manage the exposure of its debt portfolio to interest rate risk. Dells objective is to offset gains and losses resulting from these exposures with gains and losses on the derivative contracts used to hedge the exposures, thereby reducing volatility of earnings and protecting fair values of assets and liabilities. Dell applies hedge accounting based upon the criteria established by accounting guidance for derivative instruments and hedging activities, including designation of its derivatives as fair value hedges or cash flow hedges and assessment of hedge effectiveness. Dell records all derivatives in its Condensed 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 transactions denominated in currencies other than the U.S. dollar. The risk of loss associated with purchased options is limited to premium amounts paid for the option contracts. The risk of loss associated with forward contracts is equal to the exchange rate differential from the time the contract is entered into until the time it is settled. The majority of these contracts typically expire in 12months or less. Dell uses interest rate swaps designated as cash flow hedges to hedge the variability in cash flows related to the interest rate payments on structured financing debt. The interest rate swaps economically convert the variable rate on the structured financing debt to a fixed interest rate to match the underlying fixed rate being received on fixed term customer leases and loans. The duration of these contracts typically ranges from 30 to 42months. For derivative instruments that are designated and qualify as cash flow hedges, Dell records the effective portion of the gain or loss on the derivative instrument in accumulated other comprehensive income (loss) (OCI) as a separate component of stockholders equity and reclassifies these amounts into earnings in the period during which the hedged transaction is recognized in earnings. Dell reports the effective portion of cash flow hedges in the same financial statement line item within earnings as the changes in value of the hedged item. For derivative instruments designated as cash flow hedges, Dell assesses hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the derivative. Dell measures hedge ineffectiveness by comparing the cumulative change in the fair value of the hedge contract with the cumulative change in the fair value of the hedged item, both of which are based on forward rates. Dell recognizes any ineffective portion of the hedge, as well as amounts not included in the assessment of effectiveness, in earnings as a component of interest and other, net. Hedge ine

Acquisitions

Acquisitions
	3 Months Ended Apr. 30, 2010
Acquisitions [Abstract]
ACQUISITIONS	NOTE8 ACQUISITIONS Dell completed its acquisition of Kace Networks, Inc. (KACE) in the first quarter of Fiscal 2011 for approximately $123million in cash. Dell has recorded this acquisition using the acquisition method of accounting and recorded the assets and liabilities of KACE at fair value at the date of acquisition. The excess of the purchase price over the estimated fair values was recorded as goodwill. Dell recorded approximately $104million in goodwill and $43million in intangible assets related to this acquisition. KACE is a leading systems management appliance company with solutions tailored to the requirements of mid-sized businesses. KACE is being integrated primarily into Dells Small and Medium Business and Public segments. Dell has not presented pro forma results of operations for KACE because this acquisition is not material to Dells consolidated results of operations, financial position, or cash flows.

Goodwill and Intangible Assets

Goodwill and Intangible Assets
	3 Months Ended Apr. 30, 2010
Goodwill and Intangible Assets [Abstract]
GOODWILL AND INTANGIBLE ASSETS	NOTE9 GOODWILL AND INTANGIBLE ASSETS Goodwill Goodwill allocated to Dells business segments as of April30, 2010, and January29, 2010, and changes in the carrying amount of goodwill were as follows: Small and Large Medium Enterprise Public Business Consumer Total (in millions) Balance at January29, 2010 $ 1,361 $ 2,026 $ 389 $ 298 $ 4,074 Goodwill acquired during the period 16 41 47 - 104 Adjustments - 3 - - 3 Balance at April30, 2010 $ 1,377 $ 2,070 $ 436 $ 298 $ 4,181 Goodwill and indefinite-lived intangibles are tested annually during the second fiscal quarter and whenever events or circumstances indicate impairment may have occurred. If the carrying amount of goodwill exceeds its fair value, estimated based on discounted cash flow analyses, an impairment charge would be recorded. Based on the results of its annual impairment tests during the first half of Fiscal 2010, Dell determined that no impairment of goodwill and indefinite-lived intangible assets existed at July31, 2009. Further, no triggering events have transpired since July31, 2009, that would indicate a potential impairment of goodwill as of April30, 2010. Dell does not have any accumulated goodwill impairment charges as of April30, 2010.

Warranty and Deferred Extended

Warranty and Deferred Extended Warranty Revenue
	3 Months Ended Apr. 30, 2010
Warranty and Deferred Extended Warranty Revenue [Abstract]
WARRANTY AND DEFERRED EXTENDED WARRANTY REVENUE	NOTE10 WARRANTY AND DEFERRED EXTENDED WARRANTY REVENUE Dell records liabilities for its standard limited warranties at the time of sale for the estimated costs that may be incurred. The liability for standard warranties is included in accrued and other current and other non-current liabilities on Dells Condensed Consolidated Statements of Financial Position. Revenue from the sale of extended warranties is recognized over the term of the contract or when the service is completed, and the costs associated with these contracts are recognized as incurred. Deferred extended warranty revenue is included in deferred services revenue on Dells Condensed Consolidated Statements of Financial Position. Changes in Dells liabilities for standard limited warranties and deferred services revenue related to extended warranties are presented in the following tables: Three Months Ended April30, May1, 2010 2009 (in millions) Warranty liability: Warranty liability at beginning of period $ 912 $ 1,035 Costs accrued for new warranty contracts and changes in estimates for pre-existing warranties(a) 310 294 Services obligations honored (295 ) (297 ) Warranty liability at end of period $ 927 $ 1,032 Current portion $ 626 $ 715 Non-current portion 301 317 Warranty liability at end of period $ 927 $ 1,032 Three Months Ended April30, May1, 2010 2009 (in millions) Deferred extended warranty revenue: Deferred extended warranty revenue at beginning of period $ 5,910 $ 5,587 Revenue deferred for new extended warranties(b) 882 749 Revenue recognized (821 ) (760 ) Deferred extended warranty revenue at end of period $ 5,971 $ 5,576 Current portion $ 2,809 $ 2,635 Non-current portion 3,162 2,941 Deferred extended warranty revenue at end of period $ 5,971 $ 5,576 (a) Changes in cost estimates related to pre-existing warranties are aggregated with accruals for new standard warranty contracts. Dells warranty liability process does not differentiate between estimates made for pre-existing warranties and new warranty obligations. (b) Includes the impact of foreign currency exchange rate fluctuations.

Severance and Facility Actions

Severance and Facility Actions
	3 Months Ended Apr. 30, 2010
Severance and Facility Actions [Abstract]
SEVERANCE AND FACILITY ACTIONS	NOTE11 SEVERANCE AND FACILITY ACTIONS During Fiscal 2010 and Fiscal 2009, Dell completed a series of individual cost reduction and facility exit activities designed to enhance operating efficiency and to reduce costs. Dell continued to incur costs related to these activities during the first quarter of Fiscal 2011. As of April30, 2010, and January29, 2010, the accrual related to these various cost reductions and efficiency actions was $79million and $105million, respectively, and is included in accrued and other liabilities in the Condensed Consolidated Statements of Financial Position. The following table sets forth the activity related to Dells severance and facility actions liability: Severance Facility Costs Actions Total (in millions) Balance as of January29, 2010 $ 78 $ 27 $ 105 Severance and facility charges to provision 20 7 27 Cash paid (48 ) (4 ) (52 ) Other adjustments(a) (1 ) - (1 ) Balance as of April30, 2010 $ 49 $ 30 $ 79 (a) Other adjustments relate primarily to foreign currency translation adjustments. Severance and facility action charges of $57million and $185million for the three months ended April30, 2010, and May1, 2009, respectively, are composed of the following: Three Months Ended April30, May1, 2010 2009 (in millions) Severance and facility charges to provision $ 27 $ 175 Accelerated depreciation and other facility charges 30 10 Total severance and facility action costs $ 57 $ 185 Severance and facility action charges are included in cost of net revenue, selling, general and administrative expenses, and research, development, and engineering in the Condensed Consolidated Statements of Income as follows: Three Months Ended April30, May1, 2010 2009 (in millions) Severance and facility action costs: Cost of revenue $ 29 $ 65 Selling, general, and administrative 25 120 Research, development, and engineering 3 - Total severance and facility action costs $ 57 $ 185

Commitments and Contingencies

Commitments and Contingencies
	3 Months Ended Apr. 30, 2010
Commitments and Contingencies [Abstract]
COMMITMENTS AND CONTINGENCIES	NOTE12 COMMITMENTS AND CONTINGENCIES Restricted Cash As of April30, 2010, and January29, 2010, Dell had restricted cash in the amount of $179million and $147million, respectively, included in other current assets. These balances primarily relate to an agreement between DFS and CIT Group Inc. (CIT), which requires Dell to maintain escrow cash accounts that are held as recourse reserves for credit losses, performance fee deposits related to Dells private label credit card, and deferred servicing revenue. Legal Matters Dell is involved in various claims, suits, assessments, investigations, and legal proceedings that arise from time-to-time in the ordinary course of its business, including matters involving consumer, antitrust, tax, intellectual property, and other issues on a global basis. While Dell does not expect that the ultimate outcomes in these proceedings, individually or collectively, will have a material adverse effect on its business, financial position, results of operations, or cash flows, the results and timing of the ultimate resolutions of these various proceedings are inherently unpredictable. Whether the outcome of any claim, suit, assessment, investigation, or legal proceeding, individually or collectively, could have a material effect on Dells business, financial condition, results of operations, or cash flows, will depend on a number of variables, including the nature, timing, and amount of any associated expenses, amounts paid in settlement, damages or other remedies or consequences. Dell accrues a liability when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. Dell reviews these accruals at least quarterly and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other relevant information. To the extent new information is obtained and Dells views on the probable outcomes of claims, suits, assessments, investigations, or legal proceedings change, changes in Dells accrued liabilities would be recorded in the period in which such determination is made. The following is a discussion of Dells significant on-going legal matters and other proceedings: Investigations and Related Litigation In August 2005, the SEC initiated an inquiry into certain of Dells accounting and financial reporting matters and requested that Dell provide certain documents. The SEC expanded that inquiry in June 2006 and entered a formal order of investigation in October 2006. In August 2006, because of potential issues identified in the course of responding to the SECs requests for information, Dells Audit Committee, on the recommendation of management and in consultation with PricewaterhouseCoopers LLP, Dells independent registered public accounting firm, initiated an independent investigation, which was completed in the third quarter of Fiscal 2008. During the first quarter of Fiscal 2011, Dell learned that, in connection with the SEC investigation, several former Dell employees received Wells Notices from the SEC staff, which indicate that the SEC staff has made a preliminary decision to recommend that t

Comprehensive Income

Comprehensive Income
	3 Months Ended Apr. 30, 2010
Comprehensive Income [Abstract]
COMPREHENSIVE INCOME	NOTE13 COMPREHENSIVE INCOME The following table summarizes comprehensive income for the three months ended April30, 2010, and May1, 2009: Three Months Ended April30, May1, 2010 2009 (in millions) Comprehensive income (loss): Net income $ 341 $ 290 Change related to hedging instruments, net 13 (358 ) Change related to marketable securities, net (1 ) - Foreign currency translation adjustments 34 (8 ) Comprehensive income (loss) $ 387 $ (76 )

Income and Other Taxes

Income and Other Taxes
	3 Months Ended Apr. 30, 2010
Income and Other Taxes [Abstract]
INCOME AND OTHER TAXES	NOTE14 INCOME AND OTHER TAXES Dells effective income tax rate was 24.4% for the first quarter of Fiscal 2011, as compared to 29.6% for the same quarter in the prior year. The decrease in Dells effective income tax rate for the first quarter of Fiscal 2011 is primarily due to a favorable effective settlement of a tax audit in a foreign jurisdiction. The differences between the estimated effective income tax rates and the U.S. federal statutory rate of 35% principally result from Dells geographical distribution of taxable income and differences between the book and tax treatment of certain items. The income tax rate for future quarters of Fiscal 2011 will be impacted by the actual mix of jurisdictions in which income is generated. Dell is currently under income tax audits 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 2010. As a result of these audits, Dell maintains ongoing discussions and negotiations relating to tax matters with the taxing authorities in these various jurisdictions. Dells U.S. federal income tax returns for fiscal years 2007 through 2009 are under examination. The Internal Revenue Service (IRS) has issued a Revenue Agents Report for fiscal years 2004 through 2006 proposing certain assessments primarily related to transfer pricing matters. Dell disagrees with certain of the proposed assessments and has contested them through the IRS administrative procedures. The first meeting between Dell and the IRS Appeals Division was held in March, 2010. Dell anticipates the appeals process will involve multiple meetings and could take an extended period of time to resolve. Dell believes that it has provided adequate reserves related to all matters contained in tax periods open to examination. However, should Dell experience an unfavorable outcome in this matter, it could have a material impact on its results of operations, financial position, and cash flows. Although the timing of income tax audit resolutions and negotiations with taxing authorities are highly uncertain, Dell does not anticipate a significant change to the total amount of unrecognized income tax benefits within the next 12months. 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 litigation matters are supportable, that a liability is not probable, and that it will ultimately prevail. In the normal course of business, Dells positions and conclusions related to its non-income taxes could be challenged and assessments may be made. To the extent new information is obtained and Dells views on its positions, probable outcomes of assessments, or litigation change, changes in estimates to Dells accrued liabilities would be recorded in the period in which such determination is made.

Earnings Per Share

Earnings Per Share
	3 Months Ended Apr. 30, 2010
Earnings Per Share [Abstract]
EARNINGS PER SHARE	NOTE15 EARNINGS PER SHARE Basic earnings per share is based on the weighted-average effect of all common shares issued and outstanding and is calculated by dividing net income by the weighted-average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares used in the basic earnings per share calculation plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding. Dell excludes equity instruments from the calculation of diluted earnings per share if the effect of including such instruments is anti-dilutive. Accordingly, certain stock-based incentive awards have been excluded from the calculation of diluted earnings per share totaling 204million shares and 247million shares for the first quarters of Fiscal 2011 and Fiscal 2010, respectively. The following table sets forth the computation of basic and diluted earnings per share for the three months ended April30, 2010, and May1, 2009: Three Months Ended April30, May1, 2010 2009 (in millions, except per share) Numerator: Net income $ 341 $ 290 Denominator: Weighted-average shares outstanding: Basic 1,961 1,949 Effect of dilutive options, restricted stock units, restricted stock, and other 12 3 Diluted 1,973 1,952 Earnings per share: Basic $ 0.17 $ 0.15 Diluted $ 0.17 $ 0.15

Segment Information

Segment Information
	3 Months Ended Apr. 30, 2010
Segment Information [Abstract]
SEGMENT INFORMATION	NOTE16 SEGMENT INFORMATION Dells four global business segments are Large Enterprise, Public, Small and Medium Business (SMB), and Consumer. Large Enterprise includes sales of IT infrastructure 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 includes sales to individual consumers and retailers around the world. The business segments disclosed in the accompanying Condensed Consolidated Financial Statements are based on this organizational structure and information reviewed by Dells management to evaluate the business segment results. Dells measure of segment operating income for management reporting purposes excludes severance and facility closure expenses, broad based long-term incentives, amortization of intangibles, acquisition-related charges, and accruals for a potential settlement for the SEC investigation as well as a securities litigation class action lawsuit that were accrued during the first quarter of Fiscal 2011. The following table presents net revenue by Dells reportable global segments as well as a reconciliation of consolidated segment operating income to Dells consolidated operating income: Three Months Ended April30, May1, 2010 2009 (in millions) Net revenue: Large Enterprise $ 4,246 $ 3,400 Public 3,856 3,171 Small and Medium Business 3,524 2,967 Consumer 3,248 2,804 Net revenue $ 14,874 $ 12,342 Consolidated operating income: Large Enterprise $ 283 $ 192 Public 298 293 Small and Medium Business 313 230 Consumer 17 (1 ) Consolidated segment operating income 911 714 Severance and facility actions (57 ) (185 ) Broad based long-term incentives(a) (87 ) (76 ) Amortization of intangible assets (88 ) (39 ) Acquisition-related costs(b) (20 ) - Other(c) (140 ) - Consolidated operating income $ 519 $ 414 (a) Broad based long-term incentives include stock-based compensation and other long-term incentives that are not allocated to Dells global segments. (b) Acquisition-related charges consist primarily of retention payments, integration costs, and consulting fees that are primarily attributable to the acquisition of Perot Systems Corporation. (c) Other includes a $100million accrual for a potential settlement for the SEC investigation and a $40million securities litigation accrual.