Dell 2008 Annual Report Download - page 45

Table of Contents
facility in place prior to the expiration of the current facility on April 3, 2009. In November 2008, we filed a shelf registration statement with the
SEC, which provides us with the ability to issue additional term debt, subject to market conditions. We intend to establish the appropriate debt levels
based upon cash flow expectations, the overall cost of capital, cash requirements for operations, and discretionary spending — including items such
as share repurchases, funding customer receivables, and acquisitions. Depending on our requirements and market conditions, we may access the
capital markets under our debt shelf registration statement that became effective in November 2008. We do not believe that the overall credit
concerns in the markets would impede our ability to access the capital markets in the future because of the overall strength of our financial position.
The following table summarizes our ending cash, cash equivalents, and investments balances:
Fiscal Year Ended
January 30, February 1,
2009 2008
(in millions)
Cash, cash equivalents, and investments:
Cash and cash equivalents $ 8,352 $ 7,764
Debt securities 1,079 1,657
Equity and other securities 115 111
Cash, cash equivalents, and investments $ 9,546 $ 9,532
We ended Fiscal 2009 and Fiscal 2008 with $9.5 billion in cash, cash equivalents, and investments. Since February 1, 2008, we have spent
$2.9 billion on share repurchases offset primarily by our $1.5 billion debt issuance and $1.9 billion in cash flow from operations. We use cash
generated by operations as our primary source of liquidity and believe that internally generated cash flows are sufficient to support business
operations. Over the past year, we have utilized external capital sources to supplement our domestic liquidity to fund a number of strategic
initiatives. We ended the fourth quarter of Fiscal 2009 with a negative cash conversion cycle of 25 days, which is a contraction of 11 days from the
fourth quarter of Fiscal 2008. The contraction is due to a decrease in our accounts payable balance, which is primarily driven by a reduction in
purchases related to declining unit volumes. A negative cash conversion cycle combined with a slowdown in revenue growth could result in cash use
in excess of cash generated. Generally, as our growth stabilizes, our cash generation from operating activities will improve. For further discussion of
the results of our cash conversion cycle, see "Operating Activities" below.
The following table contains a summary of our Consolidated Statements of Cash Flows for the past three fiscal years:
Fiscal Year Ended
January 30, February 1, February 2,
2009 2008 2007
(in millions)
Net change in cash from:
Operating activities $ 1,894 $ 3,949 $ 3,969
Investing activities 177 (1,763) 1,003
Financing activities (1,406) (4,120) (2,551)
Effect of exchange rate changes on cash and cash equivalents (77) 152 71
Net increase (decrease) in cash and cash equivalents $ 588 $ (1,782) $ 2,492
Operating Activities — Cash flows from operating activities during Fiscal 2009, 2008, and 2007 resulted primarily from net income, which
represents our principal source of cash. Cash flows from operating activities were $1.9 billion during Fiscal 2009, compared to $3.9 billion during
Fiscal 2008 and $4.0 billion during Fiscal 2007. For Fiscal 2009, the decrease in operating cash flows was primarily led by the deterioration of our
cash conversion cycle, slower growth in deferred service revenue, and a decrease in net income. In Fiscal 2008, the slight decrease in operating cash
flows was primarily due to changes in working capital slightly offset by an increase in net income. See discussion of our cash conversion cycle in
"Key Performance Metrics" below.
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