Dell 2009 Annual Report Download - page 45

Table of Contents
new $1.0 billion senior unsecured revolving credit facility upon expiration of the current $500 million facility, thereby expanding the size
of our commercial paper program with supporting credit facilities to $2.0 billion.
We issued $164 million in structured financing-related debt to fund our financing receivables as previously discussed in the "Financing
Receivables" section above.
Standard and Poor's Rating Services, Moody's Investors Service, and Fitch Ratings currently rate our senior unsecured long-term debt A-,
A2, and A, respectively, and our short-term debt A-1, P-1, and F1, respectively. These rating agencies use proprietary and independent
methods of evaluating our credit risk. Factors used in determining our rating include, but are not limited to, publically available
information, industry trends and ongoing discussions between the company and the agencies. We are not aware of any planned changes to
our corporate credit ratings by the rating agencies. However, any credit rating downgrade will increase our borrowing costs and may limit
our ability to issue commercial paper or additional term debt.
See the debt section in Note 3 of the Notes to Consolidated Financial Statements under "Part II — Item 8 Financial Statements and
Supplementary Data" for further discussion of our debt.
In Fiscal 2010, the amount of shares repurchased was immaterial to financing activities. During Fiscal 2009, we repurchased
approximately 134 million shares at an aggregate cost of $2.9 billion compared to approximately 179 million shares at an aggregate cost
of $4.0 billion in Fiscal 2008. We also paid, in Fiscal 2009, the principal on the senior notes of $200 million that matured in April 2008.
Key Performance Metrics — Our cash conversion cycle for the fiscal quarter ended January 30, 2010 improved from the fiscal quarter
January 30, 2009, and was consistent with the fiscal quarter ended February 1, 2008, as our direct business model allows us to maintain
an efficient cash conversion cycle, which compares favorably with that of others in our industry.
The following table presents the components of our cash conversion cycle for the fourth quarter of each of the past three fiscal years:
January 29, January 30, February 1,
2010 2009 2008
Days of sales outstanding(a) 38 35 36
Days of supply in inventory(b) 8 7 8
Days in accounts payable(c) (82) (67) (80)
Cash conversion cycle (36) (25) (36)
(a) Days of sales outstanding ("DSO") calculates the average collection period of our receivables. DSO is based on the ending net trade receivables and the most recent
quarterly revenue for each period. DSO also includes the effect of product costs related to customer shipments not yet recognized as revenue that are classified in
other current assets. DSO is calculated by adding accounts receivable, net of allowance for doubtful accounts, and customer shipments in transit and dividing that
sum by average net revenue per day for the current quarter (90 days). At January 29, 2010, January 30, 2009, and February 1, 2008, DSO and days of customer
shipments not yet recognized were 35 and 3 days, 31 and 4 days, and 33 and 3 days, respectively.
(b) Days of supply in inventory ("DSI") measures the average number of days from procurement to sale of our product. DSI is based on ending inventory and most
recent quarterly cost of sales for each period. DSI is calculated by dividing inventory by average cost of goods sold per day for the current quarter (90 days).
(c) Days in accounts payable ("DPO") calculates the average number of days our payables remain outstanding before payment. DPO is based on ending accounts
payable and most recent quarterly cost of sales for each period. DPO is calculated by dividing accounts payable by average cost of goods sold per day for the
current quarter (90 days).
Our cash conversion cycle improved by eleven days at January 29, 2010, from January 30, 2009, driven by a fifteen day improvement in
DPO, the effect of which was partially offset by a three day increase in DSO and one day increase in DSI. The improvement in DPO from
January 30, 2009, was attributable to our ongoing transition to contract manufacturing, further standardization of vendor agreements, and
the timing of supplier purchases and payments during Fiscal 2010 as compared to Fiscal 2009. The increase in DSO from January 30,
2009, was primarily attributable to our growth in consumer retail, whose customers typically have longer payment terms, and to foreign
currency movements due to the U.S. Dollar weakening slightly, offset by a reduction in past-due
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