Dell 2009 Annual Report Download - page 77

Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
– Net principal chargeoffs for Fiscal 2010 and Fiscal 2009, were $72 million and $114 million, respectively. These amounts
represent 6.9% and 8.2% of the average quarterly outstanding securitized financing receivables balance (including accrued
interest) for the respective years.
NOTE 5 — ACQUISITIONS
During Fiscal 2010, Dell adopted the new FASB guidance on business combinations and accounted for the Fiscal 2010 acquisition using
the acquisition method of accounting. All acquisitions completed prior to Fiscal 2010 are recorded using the purchase method of
accounting in accordance with previous FASB guidance. The results of operations of the acquired companies have been included in Dell's
consolidated results since the date of each acquisition. Dell allocates the purchase price of its acquisitions to the tangible assets, liabilities,
and intangible assets acquired based on their estimated fair values. The excess of the purchase price over the fair value of the identified
assets and liabilities has been recorded as goodwill. The fair value assigned to the assets acquired and liabilities assumed is based on
valuations using management's best estimates and assumptions. Dell does not expect the majority of goodwill related to these acquisitions
to be deductible for tax purposes. In compliance with FASB guidance on goodwill and intangible assets, Dell defines its reporting units as
its reportable business segments.
Fiscal 2010 Acquisitions
On November 3, 2009, Dell completed its acquisition of all the outstanding shares of the Class A common stock of Perot Systems, a
worldwide provider of information technology and business solutions, for $3.9 billion in cash. This acquisition is expected to provide
customers a broader range of IT services and solutions and better position Dell for its own immediate and long-term growth and
efficiency. Perot Systems will be primarily integrated into the Large Enterprise and Public segments for reporting purposes. Perot
Systems' results of operations were included in Dell's results beginning November 3, 2009.
The following table summarizes the consideration paid for Perot Systems and the amounts of assets acquired and liabilities assumed
recognized at the acquisition date:
Total
(in millions)
Cash and cash equivalents $ 266
Accounts receivable, net 410
Other assets 58
Property, plant, and equipment 323
Identifiable intangible assets 1,174
Deferred tax liability, net(1) (424)
Other liabilities (256)
Total identifiable net assets 1,551
Goodwill 2,327
Total purchase price $ 3,878
(1) The deferred tax liability, net primarily relates to purchased identifiable intangible assets and property, plant, and equipment and is shown net of associated deferred
tax assets.
Any change in the estimated fair value of the net assets, prior to the finalization of the more detailed analyses, but not to exceed one year
from the date of acquisition, will change the amount of the purchase price allocable to goodwill. Any subsequent changes to the purchase
price allocation that are material to Dell's consolidated financial results will be adjusted retroactively. Dell is currently not aware of any
significant potential changes to the preliminary purchase price allocation.
73