Dell 2011 Annual Report Download - page 53

Table of Contents
Contractual Cash Obligations
The following table summarizes our contractual cash obligations at February 3, 2012 :
Payments Due by Period
Fiscal Fiscal Fiscal
Total 2013 2014-2015 2016-2017 Thereafter
(in millions)
Contractual cash obligations:
Principal payments on long-term debt $ 7,220 $ 924 $ 2,695 $ 1,101 $ 2,500
Operating leases 465 107 165 108 85
Purchase obligations 2,896 2,865 25 6 —
Interest 2,417 255 429 326 1,407
Uncertain tax positions (a) — — — — —
Contractual cash obligations $ 12,998 $ 4,151 $ 3,314 $ 1,541 $ 3,992
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(a) We had approximately $2.6 billion in additional liabilities associated with uncertain tax positions that are not expected to be liquidated in Fiscal 2013. We are unable to reliably estimate the
expected payment dates for these additional non-current liabilities.
Principal Payments on Long-Term Debt — Our expected principal cash payments related to long term debt are exclusive of hedge accounting adjustments or
discounts and premiums. We have outstanding long-term unsecured notes with varying maturities. For additional information, see Note 5 of Notes to
Consolidated Financial Statements under “Part II — Item 8 — Financial Statements and Supplementary Data."
Operating Leases — We lease property and equipment, manufacturing facilities, and office space under non-cancellable leases. Certain of these leases
obligate us to pay taxes, maintenance, and repair costs.
Purchase Obligations — Purchase obligations are defined as contractual obligations to purchase goods or services that are enforceable and legally binding on
us. These obligations specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and
the approximate timing of the transaction. Purchase obligations do not include contracts that may be canceled without penalty.
We utilize several suppliers to manufacture sub-assemblies for our products. Our efficient supply chain management allows us to enter into flexible and
mutually beneficial purchase arrangements with our suppliers in order to minimize inventory risk. Consistent with industry practice, we acquire raw materials
or other goods and services, including product components, by issuing to suppliers authorizations to purchase based on our projected demand and
manufacturing needs. These purchase orders are typically fulfilled within 30 days and are entered into during the ordinary course of business in order to
establish best pricing and continuity of supply for our production. Purchase orders are not included in the table above as they typically represent our
authorization to purchase rather than binding purchase obligations.
Our purchase obligations increased from $0.4 billion at January 28, 2011, to approximately $2.9 billion at February 3, 2012. This increase was primarily
attributable to our entry into purchase commitments with selected suppliers of hard disk drives in order to ensure continuity of supply for these components
following disruption of the HDD supply chain as a result of severe flooding in Thailand during the third quarter of Fiscal 2012. The agreements provide for
some variation in the amount of units we are required to purchase and allow us to purchase these components at market-competitive rates. The HDD purchase
commitments totaled approximately $2.6 billion as of February 3, 2012, and have terms expiring on various dates through December 2012.
Interest — See Note 5 of the Notes to Consolidated Financial Statements included in “Part II — Item 8 — Financial Statements and Supplementary Data” for
further discussion of our debt and related interest expense.
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