Dell 2001 Annual Report Download - page 44

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Table of Contents
recorded as long-term investments in the accompanying Consolidated Statement of Financial Position.
February 1, 2002 February 2, 2001
Fair Fair
Market Unrealized Market Unrealized
Value Cost Gain Value Cost Gain
(in millions)
Debt securities:
U.S. corporate and bank debt $ 2,393 $ 2,375 $ 18 $ 1,451 $ 1,439 $ 12
State and municipal securities 87 84 3 105 104 1
U.S. government and agencies 1,663 1,657 6 449 439 10
International corporate and bank debt 168 165 3 — — —
Total debt securities 4,311 4,281 30 2,005 1,982 23
Equity securities 335 332 3 938 826 112
Total investments $ 4,646 $ 4,613 $ 33 $ 2,943 $ 2,808 $ 135
Short-term $ 273 $ 271 $ 2 $ 525 $ 525 $ —
Long-term 4,373 4,342 31 2,418 2,283 135
Total investments $ 4,646 $ 4,613 $ 33 $ 2,943 $ 2,808 $ 135
The following table summarizes the Company's recognized gains and losses on investments, including impairments of certain investments.
Fiscal Year Ended
February 1, February 2, January 28,
2002 2001 2000
(in millions)
Gains $ 185 $ 473 $ 81
Losses (462) (166) (1)
Net gains (losses) $ (277) $ 307 $ 80
The fiscal 2002 loss on investments includes a $260 million charge in the second quarter for other-than-temporary declines in fair value of its venture
investments due to ongoing market conditions. Gross unrealized gains and losses at February 1, 2002 were $49 million and $16 million, respectively. Gross
unrealized gains and losses at February 2, 2001 were $262 million and $127 million, respectively.
Foreign Currency Instruments
The Company uses purchased option contracts and forward contracts designated as cash flow hedges to protect against the foreign currency exchange risk
inherent in its forecasted transactions denominated in currencies other than U.S. dollar. Hedged transactions include international sales by U.S. dollar
functional currency entities, foreign currency denominated purchases of certain components and intercompany shipments to certain international subsidiaries.
The risk of loss associated with purchased options is limited to premium amounts paid for the option contracts. The risk of loss associated with forward
contracts is equal to the exchange rate differential from the time the contract is entered into until the time it is settled. These contracts generally expire in
twelve months or less.
The Company also uses forward contracts to economically hedge monetary assets and liabilities, primarily receivables and payables, denominated in a foreign
currency. These contracts are not designated as hedging instruments under generally accepted accounting principles, and therefore, the change in the
instrument's fair value is recognized currently in earnings and is reported as a component of investment and other income (loss), net. The change in the fair
value of these
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