Dell 2009 Annual Report Download - page 46

Table of Contents
receivables. We believe that we can generate cash flow from operations in excess of net income over the long term and can operate our
cash conversion cycle at mid negative thirty days or better. The deterioration in DSI from January 30, 2009, was primarily attributable to
an increase in finished goods inventory and strategic materials purchases.
Our cash conversion cycle contracted by eleven days at January 30, 2009, from February 1, 2008, driven by a thirteen day decrease in
DPO, which was partially offset by a one day decrease in DSO and a one day decrease in DSI. The decrease in DPO from February 1,
2008, was attributable to procurement throughput declines as a result of declining demand, reduction in inventory levels, and a decrease
in non-production supplier payables, as we continue to control our operating expense spending, and the timing of purchases from and
payments to suppliers during the fourth quarter of Fiscal 2009 as compared to the fourth quarter of Fiscal 2008. The decrease in DSO
from February 1, 2008, was attributable to the timing of revenue due to seasonal impact, partially offset by a shift in customers with
longer payment terms.
We defer the cost of revenue associated with customer shipments not yet recognized as revenue until they are delivered. These deferred
costs are included in our reported DSO because we believe this reporting results in a more accurate presentation of our DSO and cash
conversion cycle. These deferred costs are recorded in other current assets in our Consolidated Statements of Financial Position and
totaled $523 million, $556 million, and $519 million, at January 29, 2010, January 30, 2009, and February 1, 2008, respectively.
Capital Commitments
Share Repurchase Program — Our Board of Directors has approved a share repurchase program that authorizes us to purchase shares of
common stock through a systematic program of open market purchases in order to increase shareholder value and manage dilution
resulting from shares issued under our equity compensation plans. However, we do not currently have a policy that requires the
repurchase of common stock to offset share-based compensation arrangements. For more information regarding share repurchases, see
"Part II — Item 5 — Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities."
Capital Expenditures — During Fiscal 2010 and Fiscal 2009, we spent $367 million and $440 million, respectively, on property, plant,
and equipment primarily on our global expansion efforts and infrastructure investments in order to support future growth. Product
demand, product mix, and the increased use of contract manufacturers, as well as ongoing investments in operating and information
technology infrastructure, influence the level and prioritization of our capital expenditures. Capital expenditures for Fiscal 2011, related
to infrastructure refreshment and strategic initiatives, are currently expected to reach approximately $500 million. These expenditures are
expected to be funded from our cash flows from operating activities.
Restricted Cash — Pursuant to an agreement between DFS and CIT, we are required to maintain escrow cash accounts that are held as
recourse reserves for credit losses, performance fee deposits related to our private label credit card, and deferred servicing revenue.
Restricted cash in the amount of $147 million and $213 million is included in other current assets at January 29, 2010, and January 30,
2009, respectively.
42