Dell 2011 Annual Report Download - page 91

Table of Contents DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 10 — COMMITMENTS AND CONTINGENCIES
Lease Commitments — Dell lease s 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. At February 3, 2012 , future minimum lease payments under these non-cancelable leases are as
follows: $107 million in Fiscal 2013; $86 million in Fiscal 2014; $79 million in Fiscal 2015; $58 million in Fiscal 2016; $50 million in Fiscal 2017; and $85
million thereafter.
Rent expense under all leases totaled $107 million , $87 million , and $93 million for Fiscal 2012 , Fiscal 2011 , and Fiscal 2010 , respectively.
Purchase Obligations — Dell has contractual obligations to purchase goods or services, which specify significant terms, including fixed or minimum
quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. As of February 3, 2012, Dell had
$2,865 million, $15 million, and $16 million in p urchase obligations for Fiscal 2013, Fiscal 2014, and Fiscal 2015, and thereafter, respectively.
Legal Matters — Dell is involved in various claims, suits, assessments, investigations, and legal proceedings that arise from time to time in the ordinary
course of its business, including those identified below, consisting of matters involving consumer, antitrust, tax, intellectual property, and other issues on a
global basis. Dell accrues a liability when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of
the loss. Dell reviews these accruals at least quarterly and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other
relevant information. To the extent new information is obtained and Dell's views on the probable outcomes of claims, suits, assessments, investigations, or
legal proceedings change, changes in Dell's accrued liabilities would be recorded in the period in which such determination is made. For some matters, the
amount of liability is not probable or the amount cannot be reasonably estimated and therefore accruals have not been made. The following is a discussion of
Dell's significant legal matters and other proceedings pending at February 3, 2012:
Securities Litigation — Four putative securities class actions filed between September 13, 2006, and January 31, 2007, in the U.S. District Court for the
Western District of Texas, Austin Division, against Dell and certain of its current and former directors and officers were consolidated as In re Dell Securities
Litigation, and a lead plaintiff was appointed by the court. The lead plaintiff asserted claims under Sections 10(b), 20(a), and 20A of the Securities Exchange
Act of 1934 based on alleged false and misleading disclosures or omissions regarding Dell's financial statements, governmental investigations, internal
controls, known battery problems and business model, and based on insiders' sales of Dell securities. This action also included Dell's independent registered
public accounting firm, PricewaterhouseCoopers LLP, as a defendant. On October 6, 2008, the court dismissed all of the plaintiff's claims with prejudice and
without leave to amend. On November 3, 2008, the plaintiff appealed the dismissal of Dell and the officer defendants to the Fifth Circuit Court of Appeals.
The appeal was fully briefed, and oral argument on the appeal was heard by the Fifth Circuit Court of Appeals on September 1, 2009. On November 20, 2009,
the parties to the appeal entered into a written settlement agreement whereby Dell would pay $40 million to the proposed class and the plaintiff would dismiss
the pending litigation. The settlement was preliminarily approved by the District Court on December 21, 2009. The settlement was subject to certain
conditions, including opt-outs from the proposed class not exceeding a specified percentage and final approval by the District Court. During the first quarter
of Fiscal 2011, the original opt-out period in the notice approved by the District Court expired without the specified percentage being exceeded. The District
Court subsequently granted final approval for the settlement and entered a final judgment on July 20, 2010. Dell paid $40 million into an escrow account to
satisfy this settlement and discharged the liability during the second quarter of Fiscal 2011. Certain objectors to the settlement filed notices of appeal to the
Fifth Circuit Court of Appeals with regard to approval of the settlement. On February 7, 2012, the Fifth Circuit Court of Appeals affirmed the District Court's
approval of the settlement.
Copyright Levies — Dell's obligation to collect and remit copyright levies in certain European Union (“EU”) countries may be affected by the resolution of
legal proceedings pending in Germany against various companies, including Dell's German subsidiary, and elsewhere in the EU against other companies in
Dell's industry. The plaintiffs in those proceedings, some of which are described below, generally seek to impose or modify the levies with respect to sales of
such equipment as multifunction devices, phones, personal computers, and printers, alleging that such products enable the copying of copyrighted materials.
Some of the proceedings also challenge whether the levy schemes in those countries comply with EU law. Certain EU member countries that do not yet
impose levies on digital devices are expected to implement legislation to enable them to extend existing levy schemes, while some other
88