Dell 2002 Annual Report Download - page 26

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Table of Contents
continue to repurchase shares of common stock through a systematic program of open market purchases that will return cash to stockholders and mitigate
dilution. For the first quarter of fiscal 2004, Dell expects to spend approximately $500 million repurchasing shares.
Capital Expenditures — Dell spent approximately $300 million on capital projects during fiscal 2003. Product demand and mix, as well as ongoing
efficiencies in operating and information technology infrastructure, influence the level and prioritization of Dell's capital expenditures. Cash flows for similar
capital expenditures for fiscal 2004 are currently expected to also be approximately $300 million.
Long Term Debt — As of January 31, 2003, Dell had outstanding $200 million in Senior Notes due April 15, 2008 and $300 million in Senior Debentures due
April 15, 2028. For additional information regarding these issuances, see Note 2 of Notes to Consolidated Financial Statements included in "Item 8 —
Financial Statements and Supplementary Data."
Concurrent with the issuance of the Senior Notes and Senior Debentures, Dell entered into interest rate swap agreements converting Dell's interest rate
exposure from a fixed rate to a floating rate basis to better align the associated interest rate characteristics to its cash and investments portfolio. The interest
rate swap agreements have an aggregate notional amount of $200 million maturing April 15, 2008 and $300 million maturing April 15, 2028. The floating
rates are based on three-month London Interbank Offered Rates ("LIBOR") plus 0.41% and 0.79% for the Senior Notes and Senior Debentures, respectively.
As a result of the interest rate swap agreements, Dell's effective interest rates for the Senior Notes and Senior Debentures were 2.365% and 2.698%,
respectively, for fiscal 2003.
Lease Commitments, including Master Lease Facilities — Dell maintains master lease facilities providing the capacity to fund up to $1.1 billion. The
combined facilities provide for the ability of Dell to lease certain real property, buildings and equipment (collectively referred to as the "Properties") to be
constructed or acquired. At January 31, 2003, $640 million of the combined facilities had been utilized.
As described in Note 1 of Notes to Consolidated Financial Statements included in "Item 8 — Financial Statements and Supplementary Data," Dell will be
required to consolidate its master lease facilities effective during the third quarter of fiscal year 2004. However, prior to the effective date of FASB
Interpretation No. 46 ("FIN 46"), Consolidation of Variable Interest Entities ("VIE"), Dell expects to expend approximately $640 million to acquire the assets
held in master lease facilities. Should the assets not be acquired, Dell's obligation under the terms of its lease agreements will continue as described in Note 6
of Notes to Consolidated Financial Statements included in "Item 8 — Financial Statements and Supplementary Data."
As part of the above lease transactions, Dell restricted $94 million of its investment securities as collateral for specified lessor obligations under the leases as
of January 31, 2003. These investment securities are restricted as to withdrawal and are managed by third parties subject to certain limitations under Dell's
investment policy and are included in Investments on the accompanying Consolidated Statement of Financial Position included in "Item 8 — Financial
Statements and Supplementary Data." In addition, as part of these lease agreements Dell must meet certain financial covenant requirements. Dell is in
compliance with all such covenants.
Dell leases other property and equipment, manufacturing facilities and office space under non-cancelable leases. Certain leases obligate Dell to pay taxes,
maintenance and repair costs. Future minimum lease payments under all non-cancelable leases (excluding the master lease facilities described above) as of
January 31, 2003 are as follows: $45 million in fiscal 2004; $35 million in fiscal 2005; $21 million in fiscal 2006; $15 million in fiscal 2007; $14 million in
fiscal 2008; and $44 million thereafter. Rent expense under all leases totaled $96 million, $93 million, and $95 million for fiscal 2003, 2002, and 2001,
respectively.
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