Dell 2010 Annual Report Download - page 84

Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
During Fiscal 2011, Dell issued the 2013B Notes, the 2015 Notes, and the 2040 Notes (collectively, the "Fiscal 2011 Notes") under an
automatic shelf registration statement that was filed in November 2008. The net proceeds from the Fiscal 2011 Notes, after payment of
expenses, were approximately $1.5 billion. The Fiscal 2011 Notes are unsecured obligations and rank equally in right of payment with
Dell's existing and future unsecured senior indebtness. The Fiscal 2011 Notes effectively rank junior to all indebtness and other liabilities,
including trade payables, of Dell's subsidiaries. The Fiscal 2011 Notes were issued pursuant to a Supplemental Indenture dated
September 10, 2010, between Dell and a trustee, with terms and conditions substantially the same as those governing the Notes
outstanding as of January 29, 2010 (such outstanding Notes, together with the Fiscal 2011 Notes, the "Notes").
The estimated fair value of total debt at January 28, 2011, was approximately $6.1 billion. The fair values of the structured financing
debt, commercial paper, and other short-term debt approximate their carrying values as their interest rates vary with the market.
During the first quarter of Fiscal 2011 and fourth quarter of Fiscal 2010, Dell entered into interest rate swap agreements to effectively
convert the fixed rates of the 2012 Notes and 2013A Notes to floating rates. The floating rates are based on six-month or three-month
LIBOR plus a fixed rate. In January 2011, Dell terminated the interest rate swap agreements with notional amounts totaling $1 billion.
The interest rate swaps qualified for hedge accounting treatment as fair value hedges at the time they were designated. As a result of the
termination, the fair value adjustment to the carrying value of the 2012 Notes and 2013A Notes will be amortized to earnings as a
reduction of interest expense over the remaining life of the debt. The carrying value of the senior debentures, the 2012 Notes, and the
2013A Notes includes an unamortized amount related to the termination of interest rate swap agreements, which were previously
designated as hedges of the debt. See Note 6 of Notes to Consolidated Financial Statements for additional information about interest rate
swaps.
The indentures governing the Notes, the senior debentures, and the structured financing debt contain customary events of default,
including failure to make required payments, failure to comply with certain agreements or covenants, and certain events of bankruptcy
and insolvency. The indentures also contain covenants limiting Dell's ability to create certain liens; enter into sale-and-lease back
transactions; and consolidate or merge with, or convey, transfer or lease all or substantially all of its assets to, another person. As of
January 28, 2011, there were no events of default with respect to the Notes, the Senior Debentures, or the structured financing debt.
Aggregate future maturities of long-term debt at face value were as follows at January 28, 2011:
Maturities by Fiscal Year
2012 2013 2014 2015 2016 Thereafter Total
(in millions)
Aggregate future maturities of long-term debt outstanding $ - $ 595 $ 1,155 $ 500 $ 700 $ 2,100 $ 5,050
Structured Financing Debt — As of January 28, 2011, Dell had $1.1 billion outstanding in structured financing related debt primarily
through the fixed term lease and loan and revolving loan securitization programs. The weighted average interest rate for short-term
structured financing debt for Fiscal 2011 was 0.44%. See Note 4 and Note 6 of the Notes to Consolidated Financial Statements for further
discussion on structured financing debt and interest rate swap agreements that hedge a portion of that debt.
Commercial Paper — As of January 28, 2011, there was no outstanding commercial paper. As of January 29, 2010, there was
$496 million outstanding under the commercial paper program. The weighted-average interest rate on the outstanding commercial paper
for Fiscal 2010 was 0.24%.
Dell's commercial paper program is $2 billion with corresponding revolving credit facilities of $2 billion. Dell's credit facilities consist of
two agreements, with $1 billion expiring on June 1, 2011 and the remaining $1 billion expiring on April 2, 2013. The credit facilities
require compliance with conditions that must be satisfied prior to any
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