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Table of Contents
Consolidation of Leasing Affiliate — We are currently a partner in Dell Financial Services, L.P. ("DFS"), a joint venture with CIT Group Inc.
("CIT"). The joint venture allows us to provide our customers with various financing alternatives. We began consolidating DFS's financial results
at the beginning of the third quarter of fiscal 2004 due to the adoption of Financial Accounting Standards Board ("FASB") Interpretation No. 46R
("FIN 46R"). See Note 6 of "Notes to Consolidated Financial Statements" included in "Item 8 — Financial Statements and Supplementary
Data."
Off-Balance Sheet Arrangements
Financing Asset Securitization — During fiscal 2006, we continued to sell fixed-term loans and leases and revolving loans to unconsolidated
qualifying special purpose entities. The qualifying special purpose entities are bankruptcy remote legal entities with assets and liabilities
separate from ours. The sole purpose of the qualifying special purpose entities is to facilitate the funding of finance receivables in the capital
markets. The qualifying special purpose entities have entered into financing arrangements with three multi-seller conduits that, in turn, issue
asset-backed debt securities in the capital markets. Transfers of financing receivables are recorded in accordance with the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities. We expect to continue to purchase loan and lease receivables in the future and expect that the amount of Dell-
funded loan and lease receivables will increase over time. See Note 6, "Financial Services" for further discussion.
Liquidity, Capital Commitments, and Contractual Cash Obligations
Liquidity
In fiscal 2006, we continued to maintain strong liquidity with cash flow from operations of $4.8 billion, compared to $5.3 billion in fiscal 2005. We
ended fiscal 2006 with $11.7 billion in cash and investments, a decrease of $2.4 billion over the prior fiscal year end. The following table
summarizes our ending cash, cash equivalents, and investments and the results of our consolidated statements of cash flows for the past three
fiscal years:
February 3, January 28, January 30,
2006 2005 2004
(in millions)
Cash, cash equivalents, and investments(a):
Cash and cash equivalents $ 7,042 $ 4,747 $ 4,317
Debt securities 4,607 9,253 7,454
Equity and other securities 100 101 151
Cash, cash equivalents and investments $ 11,749 $ 14,101 $ 11,922
Net cash flow provided by (used in):
Operating activities $ 4,839 $ 5,310 $ 3,670
Investing activities 3,878 (2,317) (2,814)
Financing activities (6,226) (3,128) (1,383)
Effect of exchange rate changes on cash and cash equivalents (196) 565 612
Net increase in cash and cash equivalents $ 2,295 $ 430 $ 85
(a) Financing receivables have been separately classified on the balance sheet as of February 3, 2006. As a result, certain items previously included in investments have been reclassified as
financing receivables to conform to the fiscal 2006 presentation. These reclassifications have no effect on the results of operations or stockholders' equity as previously reported.
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