Dell 2004 Annual Report Download - page 52

Table of Contents
NOTE 4 — Capitalization
Preferred Stock
Authorized Shares — Dell has the authority to issue five million shares of preferred stock, par value $.01 per share. At January 28, 2005 and
January 30, 2004, no shares of preferred stock were issued or outstanding.
Series A Junior Participating Preferred Stock — In conjunction with the distribution of Preferred Share Purchase Rights (see below), Dell's
Board of Directors designated 200,000 shares of preferred stock as Series A Junior Participating Preferred Stock ("Junior Preferred Stock") and
reserved such shares for issuance upon exercise of the Preferred Share Purchase Rights. At January 28, 2005 and January 30, 2004, no
shares of Junior Preferred Stock were issued or outstanding.
Common Stock
Authorized Shares — As of January 28, 2005, Dell is authorized to issue seven billion shares of common stock, par value $.01 per share.
Share Repurchase Program — Dell has a share repurchase program that authorizes the company to purchase shares of common stock in
order to both distribute cash to stockholders and manage dilution resulting from shares issued under Dell's equity compensation plans.
However, Dell does not currently have a policy that requires the repurchase of common stock in conjunction with share-based payment
arrangements. As of January 28, 2005, Dell's share repurchase program authorized the purchase of up to 1.25 billion shares of common stock
at an aggregate cost not to exceed $20 billion. Dell expects to repurchase shares of common stock through a systematic program of open
market purchases. As of the end of fiscal 2005, Dell had cumulatively repurchased 1.2 billion shares for an aggregate cost of approximately
$18.3 billion. During fiscal 2005, Dell repurchased 119 million shares of common stock for an aggregate cost of $4.2 billion.
Dell historically utilized equity instrument contracts to facilitate its repurchase of common stock; however, all remaining put and call contracts
were settled in full during the fourth quarter of fiscal 2003.
Preferred Share Purchase Rights
In December 1995, Dell distributed a dividend of one Preferred Share Repurchase Right (a "Right") for each outstanding share of common
stock, and since that distribution, shares of common stock have been issued with accompanying Rights. Each Right entitles the holder to
purchase shares of Junior Preferred Stock at specified prices and rates. The Rights become exercisable when a person or group acquires 15%
or more of Dell's outstanding common stock. When it becomes exercisable, a Right will entitle the holder (other than the acquiring person or
group) to purchase, at the Right's then current exercise price, the number of shares of common stock having a market value of twice the
exercise price of the Right. The Rights also contain provisions relating to mergers or other business combinations.
In certain circumstances, the Board of Directors may, at its option, exchange Rights (other than Rights held by the acquiring person or group)
for shares of common stock or shares of Junior Preferred Stock at specified exchange rates. In addition, Dell will be entitled to redeem the
Rights at $.001 per Right at any time before a person or group has acquired 15% or more of Dell's outstanding common stock. The Rights
expire on November 29, 2005. The Board of Directors may amend the terms of the Rights to lower the 15% acquisition threshold to not less
than the greater of (a) any percentage greater than the largest percentage of common stock known by Dell to be owned by any person (other
than Michael S. Dell) or (b) 10%. 49