Dell 2006 Annual Report Download - page 25

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Table of Contents
(b) The restated amounts for long-term debt reflect (1) adjustments to record changes in the fair value of the debt where the interest rate is hedged
with interest rate swap agreements for all periods restated and (2) a correction in classification from both other current liabilities and other non-
current liabilities related to the long-term portion of outstanding advances under the DFS Credit Facilities for the periods from the third quarter of
Fiscal 2004 through Fiscal 2007.
(c) Results for Fiscal 2006 include charges aggregating $421 million ($338 million of other product charges and $83 million in selling, general and
administrative expenses) related to the cost of servicing or replacing certain OptiPlexTM systems that include a vendor part that failed to perform
to our specifications, workforce realignment, product rationalizations, excess facilities, and a write-off of goodwill recognized in the third quarter.
The related tax effect of these items was $96 million. Fiscal 2006 also includes an $85 million income tax benefit related to a revised estimate of
taxes on the repatriation of earnings under the American Jobs Creation Act of 2004 recognized in the second quarter.
(d) Results for Fiscal 2005 include an income tax charge of $280 million related to the repatriation of earnings under the American Jobs Creation
Act of 2004 recorded in the fourth quarter.
(e) The adjustments relating to fiscal years prior to Fiscal 2003 are reflected in beginning retained earnings. The cumulative impact of these
adjusting entries increased beginning retained earnings by $59 million, net of tax.
(f) The cash flows have been revised to reflect a closer approximation of the weighted-average exchange rates during the reporting periods. For
most periods, this revision reduced the previously reported effect of exchange rate changes on cash and cash equivalents with an offsetting
change in effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies and changes in operating
working capital included in cash flows from operating activities.
Cumulative Restatement Adjustments to Previously Reported Retained Earnings
The following tables present the impact of the restatement adjustments on previously reported retained earnings for Fiscal
2006, Fiscal 2005, Fiscal 2004 and Fiscal 2003. See Note 2 of Notes to Consolidated Financial Statements included in
"Part II — Item 8 — Financial Statements and Supplementary Data" for further discussion of the restatement.
February 3, January 28, January 30, January 31,
2006 2005 2004 2003
(in millions)
Retained earnings as reported $ 12,746 $ 9,174 $ 6,131 $ 3,486
Cumulative restatement adjustments (47) (77) (52) (32)(a)
Retained earnings as restated $ 12,699 $ 9,097 $ 6,079 $ 3,454
(a) Includes a $59 million increase in beginning retained earnings at January 31, 2003 for the pre- Fiscal 2003 cumulative impact of the
adjustments.
Cumulative Restatement Adjustments to Previously Reported Beginning Retained Earnings and Net Income
February 3, January 28, January 30, January 31,
2006 2005 2004 2003
(in millions)
Retained earnings as restated:
Beginning retained earnings as reported $ 9,174 $ 6,131 $ 3,486 $ 1,364
Cumulative adjustments to beginning retained earnings (77) (52) (32) 59
Beginning retained earnings as restated 9,097 6,079 3,454 1,423
Net income as reported 3,572 3,043 2,645 2,122
Net income restatement adjustments 30 (25) (20) (91)
Net income as restated 3,602 3,018 2,625 2,031
Retained earnings as restated $ 12,699 $ 9,097 $ 6,079 $ 3,454
22