Dell 2009 Annual Report Download - page 65

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Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
total change in cash from operating activities. Finally, certain prior year amounts have been reclassified from accrued and other liabilities
on the Consolidated Statements of Financial Position to short-term deferred service revenue to conform to the current year presentation.
NOTE 2 — FAIR VALUE MEASUREMENTS
The following table presents Dell's hierarchy for its assets and liabilities measured at fair value on a recurring basis as of January 29,
2010, and January 30, 2009:
January 29, 2010 January 30, 2009
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Quoted Quoted
Prices Prices
in Active Significant in Active Significant
Markets for Other Significant Markets for Other Significant
Identical Observable Unobservable Identical Observable Unobservable
Assets Inputs Input Assets Inputs Inputs
(in millions)
Assets:
Cash equivalents $ - $ 197 $ - $ 197 $ - $ 56 $ - $ 56
Debt Securities:
U.S. government and agencies - 66 - 66 - 539 - 539
U.S. corporate - 553 30 583 - 457 27 484
International corporate - 391 - 391 - 78 - 78
State & municipal bonds - 2 - 2 - 5 - 5
Equity and other securities - 90 - 90 1 73 - 74
Retained interest - - 151 151 - - 396 396
Derivative instruments - 96 - 96 - 627 - 627
Total assets $ - $ 1,395 $ 181 $ 1,576 $ 1 $ 1,835 $ 423 $ 2,259
Liabilities:
Derivative instruments $ - $ 12 $ - $ 12 $ - $ 131 $ - $ 131
Total liabilities $ - $ 12 $ - $ 12 $ - $ 131 $ - $ 131
The following section describes the valuation methodologies Dell uses to measure financial instruments at fair value:
Cash Equivalents — The majority of Dell's cash equivalents consist of commercial paper, U.S. treasuries, and asset-backed commercial
paper with original maturities of less than ninety days and are valued at fair value which approximates cost. The valuation is based on
models whereby all significant inputs are observable or can be derived from or corroborated by observable market data. Dell utilizes a
pricing service to assist in obtaining fair value pricing for the majority of this investment portfolio. Dell conducts reviews on a quarterly
basis to verify pricing, assess liquidity, and determine if significant inputs have changed that would impact the fair value hierarchy
disclosure.
Debt Securities — The majority of Dell's debt securities consists of various fixed income securities such as U.S. government and
agencies, U.S. and international corporate, and state and municipal bonds. This portfolio of investments is valued based on model driven
valuations, whereby all significant inputs are observable or can be derived from or corroborated by observable market data for
substantially the full term of the asset. Dell utilizes a pricing service to assist management in obtaining fair value pricing for the majority
of the investment portfolio. Pricing for securities is based on proprietary models, and inputs are documented in accordance with the fair
value measurements hierarchy. Dell conducts reviews on a quarterly basis to verify pricing, assess liquidity, and determine if significant
valuation inputs have changed that would impact the fair value hierarchy disclosure.
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