Dell 2004 Annual Report Download - page 56

Table of Contents
that may be incurred under its basic limited warranty. Changes in Dell's aggregate deferred revenue and warranty liability (basic and extended
warranties), which are included in other current and non-current liabilities on Dell's consolidated statement of financial position, are presented in
the following table:
Fiscal Year Ended
January 28, January 30,
2005 2004
(in millions)
Aggregate deferred revenue and warranty liability at beginning of period $ 2,694 $ 2,042
Revenue deferred and costs accrued for new warranties 3,435 2,547
Service obligations honored (1,176) (983)
Amortization of deferred revenue (1,359) (912)
Aggregate deferred revenue and warranty liability at end of period $ 3,594 $ 2,694
Current portion $ 1,893 $ 1,333
Non-current portion 1,701 1,361
Aggregate deferred revenue and warranty liability at end of period $ 3,594 $ 2,694
NOTE 8 — Commitments, Contingencies, and Certain Concentrations
Lease Commitments — Dell leases property and equipment, manufacturing facilities, and office space under non-cancelable leases. Certain of
these leases obligate Dell to pay taxes, maintenance, and repair costs. As of January 28, 2005, future minimum lease payments under these
non-cancelable leases were as follows: $52 million in fiscal 2006; $40 million in fiscal 2007; $36 million in fiscal 2008; $28 million in fiscal 2009;
$18 million in fiscal 2010; and $83 million thereafter.
Dell historically maintained master lease facilities which provided the company with the ability to lease certain real property, buildings, and
equipment to be constructed or acquired. These leases were accounted for as operating leases by Dell. During fiscal 2004, Dell paid
$636 million to purchase all of the assets covered by its master lease facilities. Accordingly, the assets formerly covered by these facilities are
included in Dell's consolidated statement of financial position and Dell has no remaining lease commitments under these master lease facilities.
Rent expense under all leases totaled $60 million, $76 million, and $96 million for fiscal 2005, 2004, and 2003, respectively.
DFS Purchase Commitment — Pursuant to the joint venture agreement between DFS and CIT, Dell has a minimum purchase obligation to
purchase CIT's 30% interest in DFS at the expiration of the joint venture on January 29, 2010, for a purchase price ranging from $100 million to
$345 million. See Note 6 of "Notes to Consolidated Financial Statements."
Restricted Cash — Pursuant to the joint venture agreement between DFS and CIT, DFS is required to maintain certain escrow cash accounts.
Due to the consolidation of DFS, $438 million in restricted cash is included in other current assets on Dell's consolidated statement of financial
position as of January 28, 2005.
Legal Matters — Dell is subject to various legal proceedings and claims arising in the ordinary course of business. Dell's management does not
expect that the outcome in any of these legal proceedings, individually or collectively, will have a material adverse effect on Dell's financial
condition, results of operations, or cash flows.
Certain Concentrations — All of Dell's foreign currency exchange and interest rate derivative instruments involve elements of market and credit
risk in excess of the amounts recognized in the consolidated financial statements. The counterparties to the financial instruments consist of a
number of major financial institutions. In addition to limiting the amount of agreements and contracts it enters into with any one party, Dell
monitors its positions with and the credit quality of the 53