10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended January 30, 2004

Commission File Number: 0-17017

Dell Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 74-2487834
(I.R.S. Employer
Identification No.)

One Dell Way, Round Rock, Texas 78682

(Address, including Zip Code, of registrant’s principal executive offices)

(512) 338-4400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $.01 per share

Preferred Stock Purchase Rights

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes x     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).     Yes x     No o

Approximate aggregate market value of common stock held by non-affiliates of the registrant as of August 1, 2003	$	75.6 billion
Number of shares of common stock outstanding as of March 26, 2004		2,530,660,582

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this Report, to the extent not set forth herein, is incorporated by reference from the registrant’s definitive proxy statement relating to the annual meeting of stockholders to be held in July 2004, which definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates.

TABLE OF CONTENTS

PART I
	ITEM 1 -- BUSINESS
	ITEM 2 -- PROPERTIES
	ITEM 3 -- LEGAL PROCEEDINGS
	ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
		PART II
	ITEM 5 -- MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
	ITEM 6 -- SELECTED FINANCIAL DATA
	ITEM 7 -- MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 7A -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
	ITEM 9A -- CONTROLS AND PROCEDURES
PART III
PART IV
	ITEM 15 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
SIGNATURES
Amended and Restated 401(k) Plan
Amended and Restated Deferred Compensation Plan
Subsidiaries
Consent of PricewaterhouseCoopers LLP
Certification of Chairman and CEO-Rule 13a-14(a)
Certification of SVP and CFO-Rule 13a-14(a)
Certifications of CEO & CFO Pursuant to 18 U.S.C.

This Report contains forward-looking statements that are based on Dell’s current expectations. Actual results in future periods may differ materially from those expressed or implied by those forward-looking statements because of a number of risks and uncertainties. For a discussion of factors affecting Dell’s business and prospects, see “Item 1 — Business — Factors Affecting Dell’s Business and Prospects.”

All percentage amounts and ratios were calculated using the underlying data in thousands. All references to industry market share and growth data are based upon information provided by IDC. Market share data is for the full calendar year and all Dell growth rates are on a fiscal year-over-year basis.

PART I

ITEM 1 — BUSINESS

General

Dell Inc. (formerly Dell Computer Corporation), with annual revenue of $41.4 billion, is a premier provider of computing products and services. As a result of its direct business model, Dell was the leading seller of computer systems worldwide and the number one seller in all customer segments in the United States during calendar 2003.

Dell was founded in 1984 by Michael Dell on a simple concept: by selling computer systems directly to customers, it could best understand customer needs and efficiently provide the most effective computing solutions to meet those needs. Dell’s climb to market leadership is the result of a relentless focus on delivering the best customer experience by selling computer systems and services directly to customers.

Dell is a Delaware corporation that was incorporated in May 1984. Dell is based in Round Rock, Texas and conducts operations worldwide through wholly owned subsidiaries. See “Item 1 — Business — Geographic Areas of Operations.” Unless otherwise specified, references in this Report to Dell include its consolidated subsidiaries. Dell operates principally in one industry segment.

Dell’s common stock is listed on The Nasdaq National Market under the symbol DELL. See “Item 5 — Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.”

Business Strategy

Dell’s business strategy combines its direct customer model with a highly efficient manufacturing and supply chain management organization and an emphasis on standards-based technologies. This strategy enables Dell to provide customers with superior value; high-quality, relevant technology; customized systems; superior service and support; and products and services that are easy to buy and use. The key tenets of Dell’s business strategy are:

•  A direct relationship is the most efficient path to the customer. Direct customer relationships provide a constant flow of information about customers’ plans and requirements and enable Dell to continually refine its product offerings. The direct model also eliminates the need to support an extensive network of wholesale and retail dealers. As a result, Dell reduces customers’ prices by avoiding expenditures associated with the retail channel, such as higher inventory carrying costs, obsolescence associated with technology products, and retail mark-ups.

•  Customers can purchase custom-built products and custom-tailored services. Dell believes the direct model is the most effective business model for providing solutions that truly address customer needs. In addition, Dell’s flexible, build-to-order manufacturing process enables Dell to

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	achieve faster inventory turnover and reduced inventory levels. This allows Dell to rapidly incorporate new technologies and components into its product offerings and to rapidly pass on component cost savings directly to its customers.
•	Dell is the low-cost leader. Dell’s highly efficient supply chain management and manufacturing organization, efficient direct-to-customer model, and concentration on standards-based technologies allow Dell to maintain the lowest cost structure in the industry and pass on those savings to its customers. Additionally, Dell’s focus on cost control during fiscal 2004 resulted in the lowest operating expense (measured as a percent of net revenue) in Dell’s history and the lowest among its major competitors during the year. Dell’s relentless focus on reducing its costs allows it to consistently provide customers with a superior value.
•	Dell provides a single point of accountability for its customers. Dell recognizes that as technology needs become more complex, it becomes more challenging for customers to efficiently address their computing needs. Dell therefore strives to be the single point of accountability for customers with complex technological challenges. Dell offers an array of services designed to provide customers the ability to maximize system performance, efficiency, and return on investment.
•	Standards-based technologies deliver the best value to customers. Dell believes that standards-based technologies are critical to providing customers with relevant, high-value products and services. Focusing on standards gives customers the benefit of extensive research and development from Dell and its entire supply chain, rather than a single company. Unlike proprietary technologies, standards provide customers with flexibility and choice while allowing their purchasing decisions to be based on performance, cost, and customer service.

Products

Dell designs, develops, manufactures, markets, sells, and supports a wide range of computer systems that are customized to customer requirements. These include enterprise systems (servers, storage, networking products, and workstations), client systems (notebook and desktop computer systems), printing and imaging systems, and software and peripherals.

•  Servers. Dell’s standards-based PowerEdge^TM line of servers is designed to provide customers affordable performance, reliability, and scalability. Options include high performance rack and tower servers for enterprise customers and aggressively priced tower and appliance servers for small organizations and networks. Dell ranks number one in the U.S. and number two worldwide in shipments of x86 servers (based on standard Intel architecture). During calendar 2003, Dell increased its worldwide market share ranking by 1.8 points and maintained its No. 2 position at 23.4%.

•  Storage. Dell/ EMC^TM and Dell’s PowerVault^TM lines of storage products offer customers a comprehensive portfolio of cost-effective hardware and software solutions to protect customer data. Dell offers external storage, tape backup products, network attached storage, fibre channel arrays, storage area networks, and rack solutions. Net revenue for Dell’s PowerVault and Dell/ EMC systems grew 58% during fiscal 2004 and continues to become an increasing portion of Dell’s consolidated revenues.

•  Networking Products. Dell’s PowerConnect^TM switches are standards-based network switches that connect computers and servers in small- to medium-sized networks. PowerConnect products offer customers enterprise-class features and reliability at a low cost. Dell introduced the PowerConnect line of network switches in the third quarter of fiscal 2002.

•  Workstations. Dell offers the Dell Precision^TM desktop workstation and the Dell Precision mobile workstation. These products are intended for professional users who demand exceptional performance to run sophisticated applications, such as three-dimensional computer-aided design, digital content creation, geographic information systems, computer animation, software

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	development, and financial analysis. In calendar 2003, Dell held the number one position in the U.S. and worldwide for branded workstation unit shipments.
•	Notebook Computers. Dell offers two lines of notebook computer systems. The LatitudeTM line of notebooks is designed to address a wide range of business and organizational needs, including powerful performance, portability, and flexibility. Latitude offerings range from wireless-ready, highly expandable full-featured models to thin, light ultra-portable models. The InspironTM line of notebooks is targeted to customers who require high-performance computer systems at aggressive prices. Typical customers are individuals or small-to-medium sized businesses that require optimum performance for their investment. Dell ranked number one in the U.S. and number two worldwide in notebook computer shipments in calendar 2003.
•	Desktop Computer Systems. Dell offers two lines of desktop computer systems. The OptiPlexTM line of desktop systems is designed for corporate, institutional, and small business customers who demand highly-reliable, stable, manageable, and easily serviced systems within networked environments. The DimensionTM line of desktop systems is designed for small businesses and home users requiring fast technology turns and high-performance computing. The Dimension product line typically features the latest high-performance components. Dimension customers include corporate and institutional customers as well as small businesses and home users. Dell ranked number one in the U.S. and worldwide in desktop shipments in calendar 2003.
•	Printing and Imaging Systems. Dell offers a wide array of Dell-branded printers, ranging from consumer inkjets to large workgroup lasers. The Dell printer product line is focused on making printing easier to buy, easier to own, and easier to use. All Dell printers feature the Dell Ink Management SystemTM or Dell Toner Management SystemTM, which simplifies the purchasing process by displaying ink or toner levels on the status window during every print job and proactively prompting users to order replacement cartridges directly from Dell. During fiscal 2004, Dell launched its branded printer line and shipped almost two million Dell-branded printers.
•	Software and Peripheral Products. Dell offers a multitude of competitively priced software and peripheral products including those from leading manufacturers. Products offered include software, monitors, printers, handhelds, notebook accessories, networking and wireless products, memory, digital cameras, projectors, and scanners. During fiscal 2004, Dell announced several new Dell peripheral products, including power adaptors, LCD televisions, and MP3 players.

Services

By applying the direct model to its services business, Dell seeks to simplify customers’ computing experience by offering a full range of flexible, tailored solutions. Dell offers a portfolio of services that help maximize information technology (“IT”), rapidly deploy systems, and educate IT professionals and consumers.

•  Managed Services. Dell Managed Services offers customers a wide range of IT management services. These services allow customers to lower annual service costs and enhance system performance without sacrificing control of their IT systems. Dell Managed Services assists customers in planning, deployment, maintenance, asset management, on-site field services, and other related services.

•  Professional Services. Dell Professional Services offers services to help businesses utilize emerging technology, enhance efficiencies, reduce business risk, and maximize return on technology investment. Using its expertise and best practices in technology consulting, application development, solutions integration, and infrastructure design, Dell designs, develops, and implements end-to-end technology solutions.

•  Deployment Services. Dell’s deployment services are designed to rapidly configure and deploy Dell systems and products into IT environments. Dell’s custom factory integration services allow

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	customers to configure systems to meet their specific hardware and software needs. Additional deployment services include asset management and recovery services, custom delivery services, installation services, managed deployment services, and image management services.
•	Support Services. Dell Support Services helps maximize the value and performance of customer technology, while minimizing expense and inconvenience. Offering a variety of customized services and support programs tailored to meet specific customer requirements, Dell’s support ranges from remote software and enterprise support to on-site support. For example, for enterprise customers, Dell offers four tiers of service through Enterprise Support for server and storage systems, ranging from comprehensive around-the-clock support for mission-critical systems to next business day on-site support for non mission-critical systems. For customers in the U.S., Dell’s Total Satisfaction Policy currently allows customers to return desktop and notebook systems to Dell for any reason within 30 days of purchase. In addition, Dell provides a limited warranty for all computer systems for a period generally ranging from 90 days to three years and offers 24 hour telephone and online technical support. Dell also offers warranty upgrades and services such as CompleteCare accidental damage protection, At Home Service for technical support service at home or work, Express Tech Support for priority access to Dell’s technical support team, and home installation services.
•	Training and Certification Services. Dell offers training and certification programs for business and consumer customers worldwide. Dell’s online training programs feature over 1,200 courses for consumer, business, and IT professionals. The courses are designed for all skill levels and range from personal finance to business productivity to IT certification. For enterprise customers, Dell offers Dell service technician training and system administration training and certification (both on-site and at Dell labs) through Dell Certification Programs. These programs provide system administrators and technicians the ability to learn the intricacies of Dell equipment both before and after installation to allow customers to maximize their return on investment.

Financial Services

Dell offers various financing alternatives, asset management services, and other customer financial services for its business and consumer customers in the U.S. through Dell Financial Services L.P. (“DFS”), a joint venture between Dell and CIT Group, Inc. (“CIT”). For government, some small businesses, and international customers, Dell partners with a variety of third-party financial services companies to offer financial services. For additional information about DFS, see “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Consolidation of Off-Balance Sheet Arrangements — Consolidation of Leasing Affiliate,” and Note 6 of Notes to Consolidated Financial Statements included in “Item 8 — Financial Statements and Supplementary Data.” See also “Item 1 — Business — Factors Affecting Dell’s Business and Prospects” for information about the risks associated with DFS.

Sales and Marketing

Dell sells its products and services directly to its customers through dedicated sales representatives, telephone-based sales, and online sales through www.dell.com. Dell’s customers include large corporate, government, healthcare and education accounts, as well as small-to-medium businesses and individuals. Within each of Dell’s geographic regions, Dell has divided its sales and marketing resources among these various customer groups. No single customer accounted for more than 10% of Dell’s consolidated net revenue during any of the last three fiscal years.

Dell’s sales and marketing efforts are organized around the needs, trends, and characteristics of Dell’s customers. Dell’s direct model provides direct and continuous feedback from its customers, thereby allowing the company to develop and refine its products and marketing programs for specific customer segments. This constant flow of communication, which is unique to the direct model, also allows Dell to rapidly gauge customer satisfaction and target new or existing products.

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For large business and institutional customers, Dell maintains a field sales force throughout the world. Dedicated account teams, which include field-based system engineers and consultants, form long-term relationships to provide each customer with a single source of assistance and develop specific marketing programs for these customers. For large, multinational customers, Dell offers several programs designed to provide single points of contact and accountability with global account specialists, special global pricing, consistent service and support programs across global regions, and access to central purchasing facilities. Dell also maintains specific sales and marketing programs targeted at federal, state, and local governmental agencies as well as specific healthcare and educational markets.

Dell markets its products and services to small-to-medium businesses and consumers primarily by advertising on television and the Internet, advertising in a variety of print media, and by mailing a broad range of direct marketing publications, such as promotional pieces, catalogs, and customer newsletters. A majority of the sales to small-to-medium businesses and consumers occur online through www.dell.com. Dell also operates Dell Direct Stores in certain states as well as non-U.S. locations, which are kiosks typically located within shopping centers, that allow customers to view Dell products in person and purchase online from Dell with the assistance of a Dell expert.

Manufacturing

Dell manufactures most of the products it sells. Dell has six manufacturing locations worldwide to service its global customer base. Dell believes that its manufacturing processes and supply-chain management techniques provide it a distinct competitive advantage. Its build-to-order manufacturing process is designed to allow Dell to significantly reduce cost while simultaneously providing customers the ability to customize their product purchases. Dell’s supply chain management decreases Dell’s exposure to the risk of declining inventory values, allows Dell to quickly incorporate new technologies or components into its product offerings and allows Dell to rapidly pass component cost savings directly to customers.

Dell’s manufacturing process consists of assembly, functional testing, and quality control. Testing and quality control processes are also applied to components, parts, and subassemblies obtained from suppliers. Quality control is maintained through the testing of components, parts, and subassemblies at various stages in the manufacturing process. Quality control also includes a burn-in period for completed units after assembly, on-going production reliability audits, failure tracking for early identification of production and component problems, and information from Dell’s customers obtained through services and support programs. Dell is certified, worldwide, by the International Standards Organization to the requirements of ISO 9001: 2000. This includes the design, manufacture, and service of computer products in all Dell regions.

Product Development

Dell’s product development efforts are focused on designing and developing standards-based, competitively priced products that incorporate the technologies and features that Dell believes are most desired by its customers. To accomplish this objective, Dell has developed cooperative, working relationships with many of the world’s most advanced technology companies. Working with these companies, Dell engineers manage quality, integrate technologies, and design and manage system architecture. This cooperative approach allows Dell to determine the best method and timing for delivering new technologies to the market.

During fiscal 2004, Dell’s research, development, and engineering expenses were $464 million, compared with $455 million for fiscal 2003 and $452 million for fiscal 2002. Dell invests in research, development, and engineering activities to develop and introduce new products and to support its continued goal of improving and developing efficient procurement, manufacturing, and distribution processes.

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Patents, Trademarks, and Licenses

Dell holds a portfolio of 980 U.S. patents and 629 U.S. patent applications pending as of January 30, 2004, and has a number of related foreign patents and patent applications pending. Dell’s U.S. patents expire in years 2005 through 2022. The inventions claimed in those patents and patent applications cover aspects of Dell’s current and possible future computer system products, manufacturing processes, and related technologies. Dell is developing a portfolio of patents that it anticipates will be of value in negotiating intellectual property rights with others in the industry.

Dell has obtained U.S. federal trademark registration for its DELL word mark and its Dell logo mark. Dell owns registrations for 52 of its other marks in the U.S. As of January 30, 2004, Dell had pending applications for registration of 23 other trademarks. Dell believes that establishment of the DELL mark and logo in the U.S. is material to Dell’s operations. Dell has also applied for or obtained registration of the DELL mark and several other marks in approximately 185 other countries.

Dell has entered into a variety of intellectual property licensing and cross-licensing agreements. In addition, Dell has entered into nonexclusive licensing agreements with Microsoft Corporation for various operating system and application software. Dell has also entered into various software licensing agreements with other companies.

From time to time, other companies and individuals assert exclusive patent, copyright, trademark, or other intellectual property rights to technologies or marks that are important to the technology industry or Dell’s business. Dell evaluates each claim relating to its products and, if appropriate, seeks a license to use the protected technology. The licensing agreements generally do not require the licensor to assist Dell in duplicating its patented technology nor do these agreements protect Dell from trade secret, copyright, or other violations by Dell or its suppliers in developing or selling these products. See “Item 1 — Business — Factors Affecting Dell’s Business and Prospects” for information about the risks associated intellectual property rights.

Employees

On January 30, 2004, Dell had approximately 46,000 regular employees. Approximately 22,200 of those employees were located in the U.S., and approximately 23,800 were located in other countries. Dell believes that its ability to attract and retain qualified personnel is critical to its success and achievement of its business plan. Dell has never experienced a work stoppage due to labor difficulties and believes that its employee relations are good. Workforce diversity is an essential part of Dell’s commitment to quality and the future of Dell.

Government Regulation

Dell’s business is subject to regulation by various federal and state governmental agencies. Such regulation includes the radio frequency emission regulatory activities of the U.S. Federal Communications Commission, the anti-trust regulatory activities of the U.S. Federal Trade Commission and Department of Justice, the consumer protection laws of the Federal Trade Commission, the import/export regulatory activities of the U.S. Department of Commerce, the product safety regulatory activities of the U.S. Consumer Products Safety Commission, and environmental regulation by a variety of regulatory authorities in each of the areas in which Dell conducts business. Dell is also subject to regulation in other countries where it conducts business. In certain jurisdictions, such regulatory requirements may be more stringent than in the U.S.

Backlog

Dell believes that backlog is not a meaningful indicator of net revenue that can be expected for any period. There can be no assurance that the backlog at any point in time will translate into net revenue in any subsequent period, as unfilled orders can generally be canceled at any time by the customer. At the end of fiscal 2004, 2003, and 2002, backlog was not material.

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Geographic Areas of Operations

Dell conducts operations worldwide and is managed in three geographic segments: the Americas, Europe, and Asia Pacific-Japan regions. The Americas region, which is based in Round Rock, Texas, covers the U.S., Canada, and Latin America. Within the Americas, Dell is further segmented into Business and U.S. Consumer. The Americas Business segment includes sales to corporate, government, healthcare, and education customers while the U.S. Consumer segment includes sales primarily to individual consumers. The European region, which is based in Bracknell, England, covers Europe, the Middle East, and Africa. The Asia Pacific-Japan region covers the Pacific Rim, including Australia and New Zealand, and is based in Singapore. In fiscal 2004, approximately 36% of Dell’s net revenue was attributable to international sales. Dell has recently established technical and customer support and related operations in India, Panama, Slovakia, Morocco, and China and intends to continue such efforts in other regions throughout the world as its international business continues to expand. Dell also recently established design centers in China and Taiwan. See “Item 1 — Business — Factors Affecting Dell’s Business and Prospects” for information about certain risks of international activities. For financial information about the results of Dell’s operating segments for each of the last three fiscal years, see Note 8 of Notes to Consolidated Financial Statements included in “Item 8 — Financial Statements and Supplementary Data.”

Dell’s corporate headquarters are located in Round Rock, Texas. Its manufacturing facilities are located in Austin, Texas; Eldorado do Sul, Brazil; Nashville, Tennessee; Limerick, Ireland; Penang, Malaysia; and Xiamen, China. See “Item 2 — Properties.”

Factors Affecting Dell’s Business and Prospects

There are many factors that affect Dell’s business and the results of its operations, some of which are beyond Dell’s control. The following is a description of some of the important factors that may cause the actual results of Dell’s operations in future periods to differ materially from those currently expected or desired.

•  General economic, business, or industry conditions may result in a decrease in net revenue. As a global company with customers in virtually every business and industry, Dell’s net revenue could deteriorate as a result of macroeconomic trends in both the U.S. and abroad. If the economic climate deteriorates, customers or potential customers could reduce or delay their technology investments. As a result, Dell’s net revenue and earnings could be negatively affected.

•  Dell’s business is extremely competitive and no assurances can be offered that Dell can maintain its competitive advantage. Dell’s success is based on its ability to profitably offer its products at a lower price than its competitors. However, Dell encounters aggressive competition from numerous companies globally in all aspects of its business. Accordingly, Dell cannot provide any assurance that it can maintain or extend this advantage if its competitors alter their cost structure or business model, or take other actions that affect Dell’s current competitive advantage. If Dell is unable to maintain its competitive advantage, a loss of market share, revenue, or profitability may result.

•  A substantial portion of Dell’s net revenue is dependent upon international sales, which are subject to risks and uncertainties. Sales outside the U.S. accounted for approximately 36% of Dell’s net revenue in fiscal 2004. Dell’s future growth rates and success are dependent on continued growth and success in international markets. The success and profitability of Dell’s international operations are subject to numerous risks and uncertainties, including local economic and labor conditions, political instability, unexpected changes in the regulatory environment, trade protection measures, tax laws (including U.S. taxes on foreign operations), and foreign currency exchange rates, any of which could potentially adversely affect Dell’s operations. Further, as Dell generates cash flow in non-U.S. jurisdictions, Dell may experience difficulty transferring such funds to the U.S. in a tax efficient manner.

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•  Dell’s overall profitability may not meet expectations if its product, customer, and geographic mix is substantially different than anticipated. The profit margins realized by Dell vary among its products, customers, and geographic markets. Consequently, if Dell’s mix of any of these is substantially different from what it anticipates in any particular period, Dell’s earnings could be less than expected.

•  Dell’s net revenue may not meet expectations if it is unable to accurately predict the effect of seasonality on its business. Dell experiences seasonal trends in the sale of its products. For example, sales to governments (particularly U.S. federal sales) are often stronger in Dell’s third quarter, European sales are often weaker in the third quarter, and consumer sales are typically stronger in the fourth quarter. As Dell increases its market share in the highly seasonal consumer market, this seasonal effect may become more pronounced. If Dell is not able to accurately anticipate seasonal trends, Dell’s net revenue and earnings could be less than expected.

•  Infrastructure failures could have a material adverse effect on Dell’s business. Dell is highly dependent on its infrastructure in order to achieve its business objectives. If Dell experiences a problem that impairs its infrastructure, such as a computer virus, intentional disruption of IT systems by a third-party, manufacturing failure, or telephone system failure, the resulting disruptions could impede Dell’s ability to book or process orders, manufacture, and ship in a timely manner or otherwise carry on its business in the ordinary course. Any such events could cause Dell to lose significant customers or revenue and could require Dell to incur significant expense to eliminate these problems and address related security concerns. Further, because Dell’s sales are not generally linear during any particular quarterly period, the potential adverse effect resulting from any such events or any other disruption to Dell’s business could be accentuated if it occurs during a disproportionately heavy demand or shipping cycle during any quarterly period.

•  A failure on the part of Dell to effectively manage a product transition will directly affect the demand for Dell’s products and the profitability of Dell’s operations. The technology industry is characterized by continuing improvements in technology, which result in the frequent introduction of new products, short product life cycles, and continual improvement in product price/performance characteristics. Product transitions present some of the greatest executional challenges and risks for any technology company. Accordingly, if Dell is unable to effectively manage a product transition, its business and results of operations could be negatively affected. In addition, continuing technological advancement, which is a significant driver of customer demand, is largely beyond Dell’s control.

•  Disruptions in component availability could unfavorably affect Dell’s performance. Dell’s direct business model gives it the ability to operate with reduced levels of component and finished goods inventories. Dell’s financial success in recent periods has been due in part to its supply chain management practices, including its ability to achieve rapid inventory turns. However, because Dell maintains only minimal levels of component inventory, Dell’s financial performance, as well as its ability to satisfy customer needs, could be negatively affected if it suffers a disruption in component availability.

•  Dell’s reliance on suppliers creates risks and uncertainties. Dell’s manufacturing process requires a high volume of quality components that are procured from third-party suppliers. Reliance on suppliers, as well as industry supply conditions, generally involves several risks, including the possibility of defective parts (which can adversely affect the reliability and reputation of Dell’s products), a shortage of components and reduced control over delivery schedules (which can adversely affect Dell’s manufacturing efficiencies), and increases in component costs (which can adversely affect Dell’s profitability).

•  Dell could experience manufacturing interruptions, delays, or inefficiencies if it is unable to timely and reliably procure components from certain single-sourced suppliers. Dell maintains several single-source supplier relationships, either because alternative sources are not available or the

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	relationship is advantageous due to performance, quality, support, delivery, capacity, or price considerations. Even where alternative sources of supply are available, qualification of the alternative suppliers and establishment of reliable supplies could result in delays and a possible loss of sales, which could affect operating results adversely.
•	Dell’s results may be affected if it does not effectively hedge its exposure to fluctuations in foreign currency exchange rates. Dell utilizes derivative instruments to hedge its exposure to fluctuations in foreign currency exchange rates and interest rates. Some of these instruments and contracts may involve elements of market and credit risk in excess of the amounts recognized in the Consolidated Financial Statements. For additional information about risk on financial instruments, see “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk.” Further, Dell may experience a decrease in revenue from its international operations if it is does not effectively hedge its exposure to currency fluctuations.
•	Dell’s continued business success may be largely dependent on its ability to obtain licenses to intellectual property developed by others on commercially reasonable and competitive terms. If Dell or its suppliers are unable to obtain desirable technology licenses, Dell could be prohibited from marketing products, could be forced to market products without desirable features or could incur substantial costs to redesign its products, defend legal actions, or pay damages.
•	Dell cannot provide any assurance that current environmental laws, or any laws enacted in the future, will not have a material adverse effect on Dell. Dell’s operations are subject to environmental regulation in each of the jurisdictions in which Dell conducts business. Some of Dell’s manufacturing operations use substances that are highly regulated in various jurisdictions. If Dell does not comply with applicable rules and regulations in connection with the use of such substances, Dell could be subject to significant liability.
•	If DFS is unable to provide financing to Dell’s customers, Dell would be forced to find alternative sources for financing for its customers or self-finance these activities and, as a result, could experience a decline in its cash flow from operations. Although Dell has no economic exposure to the existing assets and liabilities of DFS, should the joint venture experience an interruption in operations, Dell would likely have to find alternative sources for future financing arrangements with its customers. Dell is dependent upon DFS to provide financing for a significant number of customers who elect to finance Dell products, and DFS is highly dependent upon CIT to access the capital markets to provide funding for these transactions. If CIT is unable to access the capital markets, DFS may not be able to fund customer financing arrangements. Upon any such interruption in services, Dell would be forced to find alternative sources for financing for its customers or self-finance these activities. Dell’s alternatives could include negotiating a financing arrangement with another entity or financing customer purchases itself. Absent such an alternative financing arrangement, Dell could experience reductions in cash flows due to losses in originations of financing arrangements. Although Dell believes that it can find alternative sources for financing for these activities, Dell could nonetheless experience a decline in its cash flow from operations if it is unable to do so in a timely manner. Currently, Dell does not anticipate any such interruption in DFS operations.
•	Armed hostilities, terrorism or public health issues could have a material adverse effect on Dell’s business. Armed hostilities, terrorism, or public health issues, whether in the U.S. or abroad, could cause damage or disruption to Dell, its suppliers or customers, or could create political or economic instability, any of which could have a material adverse effect on Dell’s business. Although it is impossible to predict the consequences of any such events, such events could result in a decrease in demand for Dell’s products, could make it difficult or impossible for Dell to deliver products or for its suppliers to deliver components, and could create delay and inefficiencies in Dell’s supply chain.

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Trademarks and Service Marks

Unless otherwise noted, trademarks appearing in this Report are trademarks of Dell. Dell disclaims proprietary interest in the marks and names of others. EMC is a registered trademark of EMC Corporation.

Website Access to Dell’s SEC Reports

Dell maintains an Internet website at www.dell.com. Dell’s periodic reports with the Securities and Exchange Commission (“SEC”) (including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and Section 16 filings) are accessible through Dell’s Investor Relations website at www.dell.com/investor, free of charge, as soon as reasonably practicable after these reports are filed electronically with the SEC.

Executive Officers of Dell

The following table sets forth the name, age, and position of each of the persons who were serving as executive officers of Dell as of March 31, 2004:

Name	Age		Title
Michael S. Dell		39	Chairman of the Board and Chief Executive Officer
Kevin B. Rollins		51	President and Chief Operating Officer
William J. Amelio		46	Senior Vice President, Asia Pacific-Japan
Paul D. Bell		43	Senior Vice President, Europe, Middle East and Africa
Jeffrey W. Clarke		41	Senior Vice President, Product Group
Thomas B. Green		49	Senior Vice President, Law and Administration and Secretary
John S. Hamlin		38	Senior Vice President, U.S. Consumer Business
Joseph A. Marengi		50	Senior Vice President, Americas
John K. Medica		45	Senior Vice President, Product Group
Rosendo G. Parra		44	Senior Vice President, Americas
James M. Schneider		51	Senior Vice President and Chief Financial Officer

Michael S. Dell — Mr. Dell has served as the Chairman of the Board and Chief Executive Officer of Dell since he founded the company in 1984. He serves as an IT governor of the World Economic Forum, is a member of the World Economic Forum Foundation Board, serves on the executive committee of the International Business Council, and is a member of the U.S. Business Council. He is also a member of the Computer Systems Policy Project, serves on the U.S. President’s Council of Advisors on Science and Technology, and sits on the governing board of the Indian School of Business in Hyderabad, India.

Kevin B. Rollins — Mr. Rollins currently serves as President and Chief Operating Officer of Dell. In this role, he is responsible for Dell’s day-to-day global operations and, with Mr. Dell, establishes Dell’s strategic direction. Mr. Rollins joined Dell in April 1996 as Senior Vice President, Corporate Strategy, was named Senior Vice President, General Manager — Americas in May 1996, and was named Vice Chairman in 1997. In 2001, Mr. Rollins’ title was changed from Vice Chairman to President and Chief Operating Officer. For 12 years prior to joining Dell, Mr. Rollins was employed by Bain & Company, an international strategy consulting firm, most recently serving as a director and partner. Mr. Rollins received a Master of Business Administration degree and a Bachelor of Arts degree from Brigham Young University. Mr. Rollins is the Co-Chairman of the President’s Leadership Council at Brigham Young University, where he founded and continues to sponsor the Rollins Center for E-Commerce. In April 2003, Mr. Rollins was appointed by President George W. Bush to serve on the Advisory Committee for Trade Policy and Negotiation, offering counsel to the U.S. Trade Representative on matters of policy affecting national interests. Mr. Rollins is also active in the American Enterprise Institute.

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William J. Amelio — Mr. Amelio joined Dell in March 2001 as Senior Vice President, Relationship Group, a position he shared with Mr. Marengi, and was named Senior Vice President, Asia Pacific-Japan in May 2001. In this position, Mr. Amelio is responsible for Dell’s operations in all markets in the Asia Pacific-Japan region, including Dell’s manufacturing and customer service centers in that region. Prior to joining Dell, Mr. Amelio was employed by NCR Corp., last serving as Executive Vice President and Chief Operating Officer of NCR’s Retail and Financial Group. Prior to joining NCR, Mr. Amelio served as the President and Chief Executive Officer for Honeywell International Inc.’s transportation and power systems divisions. Preceding that, he led the turbo charging systems business at AlliedSignal Inc. before its merger with Honeywell. His career also includes 18 years with IBM in a variety of senior-management positions, including general manager of operations for IBM’s personal computer company. Mr. Amelio holds a master’s degree in Management from Stanford University and a bachelor’s degree in Chemical Engineering from Lehigh University.

Paul D. Bell — Mr. Bell joined Dell in 1996 and has served as Senior Vice President, Europe, Middle East and Africa since February 2000. In this role, Mr. Bell is responsible for Dell’s operations in all markets in the Europe, Middle East and Africa region, including Dell’s manufacturing and customer service centers in that region. Prior to this, Mr. Bell served as Senior Vice President, Home and Small Business. Prior to joining Dell, Mr. Bell was a management consultant with Bain & Company for six years, including two years as a consultant for Dell. Mr. Bell received bachelor’s degrees in Fine Arts and Business Administration from Pennsylvania State University and a Master of Business Administration degree from the Yale School of Organization and Management.

Jeffrey W. Clarke — Mr. Clarke has served as Senior Vice President, Product Group since January 2003. In this role, he is responsible, along with Mr. Medica, for the worldwide development, marketing, quality, and delivery into manufacturing of all Dell client, workstation, networking, server and storage systems, as well as the strategic technology direction for these businesses. Mr. Clarke joined Dell in 1987 as a quality engineer and has served in a variety of engineering, and management roles. In 1995 Mr. Clarke became the director of desktop development, and most recently Mr. Clarke served as Vice President and General Manager, Relationship Product Group. Mr. Clarke received a bachelor’s degree in Electrical Engineering from the University of Texas at San Antonio.

Thomas B. Green — Mr. Green has served as Senior Vice President, Law and Administration since 1997, and is responsible for overseeing Dell’s legal and governmental affairs. Mr. Green joined Dell in 1994 as General Counsel and Secretary, positions he continues to hold. Before joining Dell, Mr. Green served as Executive Vice President and General Counsel of Chicago Title & Trust Company for two years and as Executive Vice President and General Counsel of Trammell Crow Company for two years. Prior to joining Trammel Crow, Mr. Green was a partner in the law firm of Jones, Day, Reavis & Pogue. Mr. Green served as a law clerk to former U.S. Supreme Court Chief Justice Warren Burger and received a Bachelor of Arts degree in English and a Juris Doctor degree from the University of Utah.

John S. Hamlin — Mr. Hamlin has served as general manager of the U.S. Consumer business since May 2000 and was named Senior Vice President, U.S. Consumer Business in January 2003. In this role, he is responsible for all sales, marketing, and customer service activities for the consumer market in the U.S. Prior to his current role, Mr. Hamlin served as Vice President, Home and Small Business in Japan and managed Dell’s Preferred Accounts segment in Japan. Mr. Hamlin joined Dell in March 1996 and held a variety of positions within Dell prior to moving to Japan. Prior to joining Dell, Mr. Hamlin was in venture capital for three years and a management consultant for Bain & Company for six years. Mr. Hamlin is a graduate of Dartmouth College and holds a master’s degree in Business Administration from Harvard Business School.

Joseph A. Marengi — Mr. Marengi joined Dell in 1997 and serves as Senior Vice President, Americas. In this position, Mr. Marengi shares responsibility with Mr. Parra for Dell’s Americas units, serving large and small corporate, government, education, healthcare, and small and medium business customers in the U.S., Canada, and Latin America. He is also responsible for Dell’s

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services business and for Dell’s manufacturing operations in Austin and Nashville. Prior to joining Dell, Mr. Marengi worked at Novell, Inc., most recently serving as its President and Chief Operating Officer. Prior to joining Novell in 1989, Mr. Marengi served as Vice President of Channel Sales for Excelan, Inc. and in various other executive, sales, and information management positions. From 1978 through 1981, Mr. Marengi served in the U.S. Coast Guard and Coast Guard Reserve, reaching the rank of Lieutenant Commander. Mr. Marengi earned a bachelor’s degree in Public Administration from the University of Massachusetts and a master’s degree in Management from the University of Southern California. Mr. Marengi serves on the Corporate Advisory Board of the USC Marshall School of Business.

John K. Medica — Mr. Medica was named Senior Vice President, Product Group in January 2003. In this role, he is responsible, along with Mr. Clarke, for the worldwide development, marketing, quality, and delivery into manufacturing of all Dell client, workstation, networking, server and storage systems, as well as the strategic technology direction for these businesses. Mr. Medica joined Dell in 1993 as Vice President, Portable Systems. In 1996, Mr. Medica was named President and Chief Operating Officer of Dell’s Japan division. Mr. Medica returned to the U.S. as Vice President, Procurement in August 1997 and later served as Vice President, Web Products Group and Vice President and General Manager, Transactional Product Group. Prior to joining Dell, Mr. Medica held a variety of development and operations positions over a ten-year period at Apple Computer. Mr. Medica graduated from Wake Forest University with a master’s degree in Business Administration and holds a bachelor’s degree in Electrical Engineering from Manhattan College.

Rosendo G. Parra — Mr. Parra joined Dell in 1993 and serves as Senior Vice President, Americas. In this position, he shares responsibility with Mr. Marengi for Dell’s Americas units, serving large and small corporate, government, education, healthcare, and small and medium business customers in the U.S., Canada, and Latin America. He is also responsible for Dell’s services business and for Dell’s manufacturing operations in Austin and Nashville. Prior to joining Dell, Mr. Parra held various sales and general management positions with GRiD Systems Corporation, including Regional Sales Director and Vice President and General Manager of the PC Strategic Business Unit. Before his association with GRiD, Mr. Parra spent nine years in various sales and management positions for the business products division of RadioShack. Mr. Parra earned a bachelor’s degree in Marketing from the University of Maryland.

James M. Schneider — Mr. Schneider is Dell’s Chief Financial Officer. In this role, he is responsible for Dell’s finance function for all business units worldwide, including the controller function, corporate planning, tax, treasury operations, investor relations, corporate development, real estate, risk management, and internal audit. Mr. Schneider joined Dell in 1996 as Vice President of Finance and Chief Accounting Officer, was named Senior Vice President in 1998 and Chief Financial Officer in 2000. For three years prior to joining Dell, Mr. Schneider was employed by MCI Communications Corporation, last serving as Senior Vice President of Corporate Finance. For 19 years prior to joining MCI, Mr. Schneider was associated with Price Waterhouse LLP, serving as a partner for 10 years. Mr. Schneider holds a bachelor’s degree in Accounting from Carroll College in Waukesha, Wisconsin, and is a Certified Public Accountant. He is a member of the board of directors of General Communications, Inc. and Gap, Inc.

ITEM 2 — PROPERTIES

At January 30, 2004, Dell owned or leased a total of approximately 11.3 million square feet of office, manufacturing, and warehouse space worldwide, approximately 6.9 million square feet of which is located in the U.S. and the remainder located in various non-U.S. countries. Dell believes that it can readily obtain additional space as may be required at competitive rates by extending expiring leases or finding alternative space.

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Domestic Properties

Dell’s principal offices are located in Round Rock, Texas (north of Austin), and its U.S. manufacturing facilities are located in Austin, Texas and Middle Tennessee.

Dell owns approximately 350 acres of land in Round Rock, Texas, and the on-site buildings. These buildings, comprising Dell’s Round Rock Campus, contain an aggregate of approximately 2.1 million square feet of office and lab space. Dell’s sales, marketing, and support staff for the Americas region, as well as the corporate headquarters and support functions, are located on the Round Rock campus.

Dell also owns approximately 550 acres of land in Austin, Texas referred to as the Parmer Campus. Approximately 2.0 million square feet of office, lab, manufacturing, and distribution space are located on the campus, including owned office and lab buildings totaling 1.1 million square feet and manufacturing/distribution facilities totaling 900,000 square feet. Approximately 220,000 square feet of the manufacturing/distribution space is currently leased to an unrelated third-party.

Dell leases approximately 1.2 million square feet of space in Middle Tennessee. This includes a 360,000 square foot office building leased in Nashville, Tennessee that houses sales, technical support, and administrative support staff. Also included is a 300,000 square foot manufacturing facility in Lebanon, Tennessee and a 305,000 square foot manufacturing facility in Nashville, Tennessee. Approximately 215,000 square feet of warehouse/distribution space is subleased to an unrelated third-party.

In addition to the campuses, Dell also leases approximately 1.5 million square feet of additional space, which is primarily located in Central Texas. Approximately 460,000 square feet is used for manufacturing and distribution and 195,000 square feet houses remote call center and professional services sites. The remaining 860,000 square feet of office and manufacturing space, with lease expiration dates ranging from February 2004 to December 2010, has been taken out of service and has either been subleased or is being marketed for sale or sublease.

International Properties

At January 30, 2004, Dell’s non-U.S. facilities consisted of approximately 4.3 million square feet of office and manufacturing space in approximately 41 countries. Approximately 2.4 million square feet of this space is leased property, with lease expiration dates ranging from February 2004 to June 2020. Dell owns approximately 1.9 million square feet of space.

Dell has manufacturing and office facilities in Eldorado do Sul, Brazil; Limerick, Ireland; Penang, Malaysia; and Xiamen, China. Approximately 100,000 square feet is leased in Eldorado do Sul. Dell has approximately 865,000 square feet of office and manufacturing space in Ireland, the majority of which is owned by Dell. Dell owns two facilities in Penang, Malaysia totaling 580,000 square feet that combine both office and manufacturing space. Both facilities are located on land leased from the State Authority of Penang. Approximately 340,000 square feet of office and manufacturing space is owned in Xiamen, China. Dell also leases approximately 645,000 square feet of office space in Bangalore and Hyderabad, India, where it is expanding its customer phone support and back-office capabilities. Dell has recently established technical and customer support and related operations in India, Panama, Slovakia, Morocco, and China as well as design centers in China and Taiwan.

ITEM 3 — LEGAL PROCEEDINGS

Dell is subject to various legal proceedings and claims arising in the ordinary course of business. Dell’s management does not expect that the results in any of these legal proceedings will have a material adverse effect on Dell’s financial condition, results of operations, or cash flows.

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ITEM 4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of Dell’s stockholders, through the solicitation of proxies or otherwise, during the fourth quarter of fiscal 2004.

PART II

ITEM 5 — MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Dell’s common stock is listed on The Nasdaq National Market under the symbol DELL. Information regarding the market prices of Dell’s common stock may be found in Note 10 of Notes to Consolidated Financial Statements included in “Item 8 — Financial Statements and Supplementary Data.”

Holders

As of March 26, 2004, Dell’s closing stock price was $33.40 and there were 46,495 holders of record of Dell’s common stock.

Dividends

Dell has never declared or paid any cash dividends on shares of its common stock and currently does not anticipate paying any cash dividends in the immediate future. Any future determination to pay cash dividends will be at the discretion of Dell’s Board of Directors.

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ITEM 6 — SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8 — Financial Statements and Supplementary Data.”

				Fiscal Year Ended
				January 30,		January 31,		February 1,		February 2,		January 28,
				2004		2003		2002(a)		2001(b)		2000(c)
				(in millions, except per share data)
Results of Operations:
	Net revenue			$	41,444	$	35,404	$	31,168	$	31,888	$	25,265
	Gross margin				7,552		6,349		5,507		6,443		5,218
	Operating income				3,544		2,844		1,789		2,663		2,263
	Income before cumulative effect of change in accounting principle(d)				2,645		2,122		1,246		2,236		1,666
	Net income			$	2,645	$	2,122	$	1,246	$	2,177	$	1,666
	Earnings per common share:
		Before cumulative effect of change in accounting principle:
			Basic	$	1.03	$	0.82	$	0.48	$	0.87	$	0.66
			Diluted	$	1.01	$	0.80	$	0.46	$	0.81	$	0.61
		After cumulative effect of change in accounting principle:
			Basic	$	1.03	$	0.82	$	0.48	$	0.84	$	0.66
			Diluted	$	1.01	$	0.80	$	0.46	$	0.79	$	0.61
		Number of weighted average shares outstanding:
			Basic		2,565		2,584		2,602		2,582		2,536
			Diluted		2,619		2,644		2,726		2,746		2,728
Cash Flow and Balance Sheet Data:
	Net cash provided by operating activities			$	3,670	$	3,538	$	3,797	$	4,195	$	3,926
	Cash, cash equivalents and investments				11,922		9,905		8,287		7,853		6,853
	Total assets				19,311		15,470		13,535		13,670		11,560
	Long-term debt				505		506		520		509		508
	Total stockholders’ equity			$	6,280	$	4,873	$	4,694	$	5,622	$	5,308

(a)	Includes a pre-tax charge of $742 million. Approximately $482 million relates to employee termination benefits, facilities closure costs, and other asset impairments and exit costs, while the balance of $260 million relates to other-than-temporary declines in the fair value of equity securities.
(b)	Includes a pre-tax charge of $105 million related to employee termination benefits and facilities closure costs.
(c)	Includes a pre-tax charge of $194 million related to a purchase of in-process research and development.
(d)	Effective January 29, 2000, Dell changed its accounting for revenue recognition in accordance with the SEC’s Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements. The cumulative effect of the change on retained earnings as of the beginning of fiscal 2001 resulted in a charge to fiscal 2001 income of $59 million (net of income taxes of $25 million). With the exception of the cumulative effect adjustment, the effect of the change on net income for the fiscal year ended February 2, 2001 was not material.

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ITEM 7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Dell — through its direct business model — designs, develops, manufactures, markets, sells, and supports a wide range of computer systems and services that are customized to customer requirements. These include enterprise systems (servers, storage and networking products, and workstations), client systems (notebooks and desktops), software and peripherals, and service and support programs. Dell markets and sells its products and services directly to its customers, which include large corporate, government, healthcare and education accounts, as well as small-to-medium businesses and individual consumers. Dell conducts operations worldwide and is managed in three geographic segments: the Americas, Europe, and Asia Pacific-Japan regions. Within the Americas, Dell is further segmented into Business and U.S. Consumer.

Dell’s business strategy combines its direct customer model with a highly efficient manufacturing and supply chain management organization and an emphasis on standards-based technologies. Dell’s objective is to maximize stockholder value by executing a strategy based upon the direct model that focuses on a balance of three priorities: liquidity, profitability, and growth. This strategy enables Dell to provide customers with superior value; high-quality, relevant technology; customized systems; superior service and support; and products and services that are easy to buy and use. Management believes that the Dell model provides the company with advantages in all environments and across all product segments and regions. In addition, management believes that opportunity exists for Dell’s continued profitable growth by increasing its presence in existing markets, entering new markets, and pursuing additional product and service opportunities.

The following table summarizes Dell’s consolidated results of operations for each of the past three fiscal years:

		Fiscal Year Ended
		January 30,			Percentage			January 31,			Percentage			February 1,
		2004			Change			2003			Change			2002
		(dollars in millions)
Net revenue		$	41,444			17	%	$	35,404			14	%	$	31,168
Gross margin		$	7,552			19	%	$	6,349			15	%	$	5,507
	% of net revenue		18.2	%					17.9	%					17.7	%
Operating expenses		$	4,008			14	%	$	3,505			(6	)%	$	3,718
	% of net revenue		9.7	%					9.9	%					11.9	%
Operating income		$	3,544			25	%	$	2,844			59	%	$	1,789
	% of net revenue		8.6	%					8.0	%					5.8	%
Net income		$	2,645			25	%	$	2,122			70	%	$	1,246
	% of net revenue		6.4	%					6.0	%					4.0	%

During fiscal 2004, Dell reinforced its position as the world’s No. 1 supplier of personal computer systems as its performance continued to outpace the industry. During the year, Dell maintained its focus on standards-based technologies and extending its capabilities further into the enterprise by utilizing its direct-to-customer model to drive down costs while achieving profitable market share growth. Year-over-year net unit shipments increased 26% during fiscal 2004, led by strong growth in Asia Pacific-Japan, U.S. Consumer, and Europe. Dell increased its worldwide market share by almost 2 points during the calendar year and captured the number one market share position at 16.7%. Net revenue increased 17% to $41.4 billion during fiscal 2004 with operating expenses reaching a record low 9.7% of net revenue. Dell’s focus on maximizing operating income dollars resulted in record operating profits and net income of $3.5 billion and $2.6 billion, respectively. Dell also delivered strong liquidity with operating cash flow of $3.7 billion and ended the year with record cash and investments of $11.9 billion.

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During calendar 2003, overall technology spending stabilized and corporate spending started to show signs of a recovery with the market producing positive year-over-year unit growth for the past six consecutive quarters. This growth was partially fueled by an intensified competitive pricing environment during the year and a shift in product mix towards lower-priced products and services. In addition, component costs continued to decline during fiscal 2004, but at a more moderate pace than fiscal 2003. These factors contributed to a 7% year-over-year decline in average revenue per-unit sold for Dell during fiscal 2004. Dell’s general practice is to aggressively pass on declines in costs to its customers in order to enhance customer value while increasing market share. Management expects that the competitive pricing environment will continue to be challenging and Dell will continue to adjust its pricing as necessary in response to future competitive and economic conditions.

Results of Operations

Net Revenue

During fiscal 2004, Dell’s strategy and execution translated to the No. 1 worldwide market share position for the calendar year. Dell produced net revenue of $41.4 billion in fiscal 2004, compared to $35.4 billion in fiscal 2003, and $31.2 billion in fiscal 2002. The year-over-year increase in net revenue during fiscal 2004 and 2003 was driven by strong unit growth across all regions and product lines. Dell’s fiscal 2004 growth continued to exceed market growth as consolidated net unit shipments increased 26% year-over-year while industry growth for the calendar year was only 9% (excluding Dell). During fiscal 2003, Dell produced net unit growth of 21%, while the industry declined 1% for the calendar year (excluding Dell). Dell’s strong unit growth during fiscal 2004 was partially offset by lower average selling prices, which can be primarily attributed to the increased competitive pricing environment and moderate declines in component costs.

Dell continues to focus on extending its enterprise computing capabilities with an increase in product mix of enterprise systems to 22% of net revenue in fiscal 2004 from 20% in fiscal 2003. Net revenue for enterprise systems increased 31% year-over-year during fiscal 2004, led by servers and storage. Dell gained 1.8 share points in shipments of x86 servers (based on standard Intel architecture) and maintained its No. 2 share position at 23.4%, compared to 21.6% in calendar 2002. Dell’s revenue growth in storage of 58% during fiscal 2004 was supported by Dell’s partnership with EMC Corporation and the Dell/ EMC storage area networking products as well as Dell’s PowerVault line of direct and network attached storage and tape.

During fiscal 2004, Dell’s desktop products produced year-over-year net unit growth of 23%, as Dell maintained its No. 1 share position worldwide. In addition, Dell held the No. 2 worldwide market share position in notebooks with net unit growth of 35%, compared to 20% in fiscal 2003, as customer trends continue to shift more toward mobile computing. This unit growth was partially offset by a 13% year-over-year decline in average revenue per-unit sold, resulting in net revenue growth of 18% in notebook products for the year in this highly competitive space.

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During the year Dell also made substantial progress in its services business as well as its software and peripheral products. Dell continues to improve on attach rates of services to Dell products, producing year-over-year revenue growth for services of 37% during the year. Software and peripherals continued to contribute to Dell’s core business with fiscal 2004 year-over-year revenue growth of 27%, which includes Dell’s recently launched printer business. The following table summarizes Dell’s net revenue and annual market share by segment for each of the past three fiscal years:

				Fiscal Year Ended
				January 30,						January 31,						February 1,
				2004			Change			2003			Change			2002
				(dollars in millions)
Net Revenue:
	Americas:
		Business		$	21,888			13	%	$	19,394			12	%	$	17,275
		U.S. Consumer			6,715			19	%		5,653			26	%		4,485
			Total Americas		28,603			14	%		25,047			15	%		21,760
	Europe				8,495			23	%		6,912			8	%		6,429
	Asia Pacific-Japan				4,346			26	%		3,445			16	%		2,979
			Total net revenue	$	41,444			17	%	$	35,404			14	%	$	31,168
Annual Market Share(a):
	Americas:
		Business			30.2	%		2.4			27.8	%		3.0			24.8	%
		U.S. Consumer			23.4	%		3.9			19.5	%		7.6			11.9	%
			Total Americas		27.6	%		2.8			24.8	%		4.5			20.3	%
	Europe				10.5	%		0.9			9.6	%		0.6			9.0	%
	Asia Pacific-Japan				7.4	%		1.5			5.9	%		0.9			5.0	%
			Worldwide		16.7	%		1.8			14.9	%		2.2			12.7	%

(a) Annual market share data represents personal computer units for the full calendar year and is based upon information provided by IDC.

Americas — Dell increased its No. 1 market share position during calendar 2003 by almost 3 points to 27.6%. Year-over-year net unit growth was 23% during fiscal 2004, compared to 25% in fiscal 2003, while net revenue increased 14% and 15% during fiscal 2004 and 2003, respectively. The fiscal 2004 year-over-year increase in revenue was broad-based, but primarily led by growth in enterprise systems of 28%.

In the Americas Business segment, net revenue increased 13% during fiscal 2004 and 12% during fiscal 2003 as corporate spending started to show signs of a recovery. Enterprise systems provided the majority of the growth during fiscal 2004, and led the increase during fiscal 2003, as Dell continues to focus on its enterprise product offerings. Servers contributed more than one-half of the increase in enterprise revenue for the segment during fiscal 2004 while storage continues to produce substantial growth.

In the U.S. Consumer segment, net revenue grew 19% and 26% during fiscal 2004 and 2003, respectively. The decrease in revenue growth during fiscal 2004, compared to fiscal 2003, was mainly due to the increased intensity of the competitive pricing environment in this space and Dell’s focus on profitable growth. Dell produced strong year-over-year net unit growth in consumer notebooks during fiscal 2004 of 67%; however, this growth was partially offset by a decline in average revenue per-unit sold with the shift in product mix towards lower-priced products.

Europe — Dell produced strong performance in Europe, which includes the Middle East and Africa, strengthening its No. 2 annual share position with 10.5% market share during calendar 2003, compared to 9.6% during calendar 2002. Dell generated net unit growth of 30%, including net unit

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growth in excess of 25% across all product groups, in a market that, aided by currency, grew at a more robust rate of 14% (excluding Dell). Net revenue during fiscal 2004 increased by 23%, compared to 8% in the prior year, which included combined year-over-year net revenue growth of 24% in the focus countries of United Kingdom, France, and Germany.

Asia Pacific-Japan — Dell’s strongest segment revenue growth rate during fiscal 2004 was in Asia Pacific-Japan at 26%, and was led by strong growth and expansion in China. During calendar 2003, Dell generated market share gains in Asia Pacific-Japan of approximately 1.5 share points to 7.4% market share and the No. 3 share position. During fiscal 2004, Dell’s net unit growth was 38% in a market that increased only 8% (excluding Dell), which produced combined net revenue growth of 26% in the focus countries of Japan and China.

For additional information regarding Dell’s segments, see Note 8 of Notes to Consolidated Financial Statements included in “Item 8 — Financial Statements and Supplementary Data.”

Gross Margin

Gross margin as a percentage of net revenue continued to improve in fiscal 2004 to 18.2%, compared to 17.9% in fiscal 2003 and 17.7% in fiscal 2002. The year-over-year improvement for fiscal 2004 and 2003 was primarily driven by Dell’s continued cost savings initiatives. As part of management’s focus on improving margins, Dell remains committed to reducing costs through four primary cost reduction initiatives: manufacturing costs, warranty costs, structural or design costs, and overhead or operating expenses. These cost savings initiatives also include providing certain customer technical support and back-office functions from cost effective locations as well as driving more efficient processes and tools globally. Dell’s general practice is to aggressively pass on declines in costs to its customers in order to add customer value while increasing market share. Dell currently expects the component cost and competitive pricing environment will continue to be challenging. However, management believes that the strength of Dell’s direct-to-customer business model, as well as its strong liquidity position, makes Dell better positioned than its competitors to continue profitable market share growth in any business climate.

Operating Expenses

The following table presents information regarding Dell’s operating expenses during each of the past three fiscal years:

			Fiscal Year Ended
			January 30,			January 31,			February 1,
			2004			2003			2002
			(dollars in millions)
Operating Expenses:
	Selling, general and administrative		$	3,544		$	3,050		$	2,784
	Research, development and engineering			464			455			452
	Special charges			—			—			482
		Total operating expenses	$	4,008		$	3,505		$	3,718
Operating Expenses as a percentage of net revenue:
	Selling, general and administrative			8.6	%		8.6	%		8.9	%
	Research, development and engineering			1.1			1.3			1.5
	Special charges			—			—			1.5
		Total operating expenses		9.7	%		9.9	%		11.9	%

During fiscal 2004, Dell continued to execute on maximizing operating income dollars by producing record low operating expenses as a percentage of net revenue of 9.7%. The decrease was primarily a result of previously referred to cost reduction initiatives and Dell’s continued focus and execution on cost control.

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Selling, General, and Administrative — During fiscal 2004, selling, general, and administrative expenses remained relatively flat as a percentage of net revenue, compared to fiscal 2003, but increased in absolute dollars. The increase was mainly due to higher compensation costs and corresponds with the increase in net revenue as Dell continues to invest in global expansion efforts as part of its strategy to profitably gain market share. Selling, general, and administrative expenses decreased as a percentage of revenue to 8.6% in fiscal 2003, as compared to 8.9% in fiscal 2002, primarily due to Dell’s previously discussed cost saving initiatives and managing expenses relative to revenue growth.

Research, Development, and Engineering — Dell continues to invest in research, development, and engineering activities to develop and introduce new products. During fiscal 2004, research, development, and engineering expenses decreased slightly as a percentage of net revenue, compared to fiscal 2003 and 2002. The efficiencies are a result of Dell’s continued leverage of its streamlined infrastructure and strategic relationships with its vendor partners. Dell expects to continue to invest in research, development, and engineering activity and has received 980 U.S. patents and applied for an additional 629 patents as of January 30, 2004.

Special Charges — During fiscal 2002, Dell reduced its workforce and exited certain activities to align its cost structure with ongoing economic and industry conditions. Special charges of $482 million related to this action were recorded in operating expenses in the second quarter of fiscal 2002 and included the elimination of approximately 4,000 employee positions worldwide from various business functions and job classes. As of January 30, 2004 and January 31, 2003, substantially all accrued costs related to the $482 million in special charges had been paid.

Investment and Other Income (Loss), net

The following table summarizes Dell’s investment and other income (loss), net for each of the past three fiscal years:

		Fiscal Year Ended
		January 30,			January 31,			February 1,
		2004			2003			2002
		(in millions)
Investment income, primarily interest		$	200		$	227		$	314
Gains/(losses) on investments, net			16			(6	)		(277	)
Interest expense			(14	)		(17	)		(29	)
Other			(22	)		(21	)		(66	)
	Investment and other income (loss), net	$	180		$	183		$	(58	)

Investment income decreased during fiscal 2004, compared to the prior fiscal year, primarily from a decline in interest rates on investments, which was partially offset by an increase in cash equivalents and investments during the year. The fiscal 2002 loss includes a $260 million impairment charge in the second quarter for other-than-temporary declines in fair value of Dell’s venture investments due to market conditions as well as the investees’ inability to execute their business plans.

Income Taxes

Dell’s effective tax rate was 29.0% in fiscal 2004 compared to 29.9% for fiscal 2003 and 28.0% for fiscal 2002. Differences between Dell’s effective tax rate and the U.S. federal statutory rate of 35% principally result from Dell’s geographical distribution of taxable income and losses and differences between book and tax treatment of certain items. Dell’s effective tax rate may decline in future periods as the company’s business outside the U.S. continues to expand and contribute an increasing portion of Dell’s consolidated operating profits.

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Consolidation of Off-Balance Sheet Arrangements

Consolidation of Leasing Affiliate — Dell is currently a partner in Dell Financial Services L.P. (“DFS”), a joint venture with CIT Group Inc. (“CIT”). The joint venture allows Dell to provide its customers with various financing alternatives while CIT provides the financing between DFS and the customer for certain transactions. See Note 6 of “Notes to Consolidated Financial Statements” included in “Item 8 — Financial Statements and Supplementary Data.”

In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46 (“FIN 46”), Consolidation of Variable Interest Entities. FIN 46 provides that if an entity is the primary beneficiary of a Variable Interest Entity (“VIE”), the assets, liabilities, and results of operations of the VIE should be consolidated in the entity’s financial statements. Based on the guidance in FIN 46, Dell concluded that DFS is a VIE and Dell is the primary beneficiary of DFS’s expected cash flows. Accordingly, Dell began consolidating DFS’s financial results at the beginning of the third quarter of fiscal 2004. The consolidation of DFS had no impact on Dell’s net income or earnings per share during fiscal 2004 because Dell has historically been recording its 70% equity interest in DFS under the equity method. The impact to any individual line item on Dell’s consolidated statement of income was not material; however, the consolidation of DFS increased Dell’s consolidated assets and liabilities by $588 million. CIT’s equity ownership in the net assets of DFS as of January 30, 2004 was $17 million, which is recorded as minority interest and included in other non-current liabilities on Dell’s consolidated statement of financial position. The consolidation has not altered the partnership agreement or risk sharing arrangement between Dell and CIT. For a discussion of certain risks associated with DFS’s activities, see “Item 1 — Business — Factors Affecting Dell’s Business and Prospects.”

Master Lease Facilities — 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 have historically been 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 as of January 30, 2004.

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Liquidity, Capital Commitments, and Contractual Cash Obligations

Liquidity

During fiscal 2004, Dell continued to maintain strong liquidity with cash flow from operations of $3.7 billion, compared to $3.5 billion in fiscal 2003. Dell ended fiscal 2004 with a record $11.9 billion in cash and investments, an increase of $2.0 billion over the prior fiscal year end. The following table summarizes Dell’s ending cash, cash equivalents, and investments and the results of Dell’s consolidated statements of cash flows for the past three fiscal years:

			January 30,			January 31,			February 1,
			2004			2003			2002
			(in millions)
Cash, cash equivalents and investments:
	Cash and cash equivalents		$	4,317		$	4,232		$	3,641
	Debt securities			7,454			5,442			4,311
	Equity securities			151			231			335
		Cash, cash equivalents and investments	$	11,922		$	9,905		$	8,287
Net cash flow provided by (used in):
	Operating activities		$	3,670		$	3,538		$	3,797
	Investing activities			(2,814	)		(1,381	)		(2,260	)
	Financing activities			(1,383	)		(2,025	)		(2,702	)
	Effect of exchange rate changes on cash and cash equivalents			612			459			(104	)
Net increase in cash and cash equivalents			$	85		$	591		$	(1,269	)

Operating Activities — During fiscal 2004, Dell continued to generate considerable operating cash flows relative to earnings. Cash flows from operating activities during fiscal 2004, 2003, and 2002 resulted primarily from net income, which represents Dell’s principal source of cash. In addition to net income, operating cash flows have historically been impacted by changes in Dell’s cash conversion cycle and, to a lesser extent, income tax benefits that result from the exercise of employee stock options. These tax benefits totaled $181 million, $260 million, and $487 million in fiscal 2004, 2003, and 2002, respectively. These benefits represent corporate tax deductions (that are considered taxable income to the employee) that represent the amount by which the fair value of Dell’s stock exceeds the option strike price on the day the employee exercises a stock option, that reduces Dell’s taxes payable, and that under generally accepted accounting principles are recorded directly to stockholders’ equity accounts rather than to earnings.

Dell’s direct model allows the company to maintain an efficient asset management system which is among the leaders in Dell’s industry. The following table presents the components of Dell’s cash conversion cycle for each of the past three fiscal years:

		Fiscal Year Ended
		January 30,			January 31,			February 1,
		2004			2003			2002
Days of sales outstanding(a)			31			28			29
Days of supply in inventory			3			3			4
Days in accounts payable			70			68			69
	Cash conversion cycle		(36	)		(37	)		(36	)

(a) Days of sales outstanding include the effect of product costs related to in-transit customer shipments (arising from the adoption of SAB 101) that are classified in other current assets. At January 30, 2004, January 31, 2003 and February 1, 2002, days of sales outstanding included days of sales in accounts receivable and days of in-transit customer shipments of 28 and 3 days; 24 and 4 days; and 25 and 4 days, respectively.

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The year-over-year increase in days of sales outstanding during fiscal 2004 was primarily due to stronger revenues during January 2004, than compared to the prior year. Dell defers the cost of revenue associated with in-transit customer shipments until they are delivered and revenue is recognized. These deferred costs are included in Dell’s reported days of sales outstanding because management believes it illustrates a more conservative and accurate presentation of Dell’s days of sales outstanding and cash conversion cycle. These deferred costs are recorded in other current assets in Dell’s consolidated statement of financial position and totaled $387 million, $423 million, and $367 million as of January 30, 2004, January 31, 2003, and February 1, 2002, respectively.

Investing Activities — Cash used in investing activities during fiscal 2004 was $2.8 billion, as compared to $1.4 billion in fiscal 2003 and $2.3 billion in fiscal 2002. Cash used in investing activities principally consists of net purchases of investments and capital expenditures for property, plant, and equipment. The increase in fiscal 2004, when compared to fiscal 2003, was primarily due to the increase in purchases of investments, net of maturities and sales, as Dell continues to invest its cash provided by operating activities. In addition, during fiscal 2004 Dell purchased $636 million in assets that were held in master lease facilities and previously classified as operating leases. The decrease in cash used in investing activities from fiscal 2002 to 2003 was primarily due to an increase of maturities and sales on investments during fiscal 2003 and timing of reinvesting cash provided by operations.

Financing Activities — Cash used in financing activities during fiscal 2004 was $1.4 billion, as compared to $2.0 billion in fiscal 2003 and $2.7 billion in fiscal 2002. Financing activities primarily consist of the repurchase of Dell common stock, partially offset by the issuance of common stock under employee stock option plans. The decrease in cash used during fiscal 2004, compared to fiscal 2003, was primarily due to an increase in the number of shares issued under employee plans and an increase in the weighted average exercise price of stock options exercised. In addition, the aggregate value of common stock repurchased by Dell declined during fiscal 2004, which was primarily due to a respective decrease in the weighted average share price of common stock repurchased by Dell. The decrease in cash used during fiscal 2003, compared to fiscal 2002, was mainly due to the settlement of put obligations at the beginning of the fourth quarter of fiscal 2003.

Dell has historically generated annual cash flows from operating activities in amounts greater than net income, driven mainly by its efficient cash conversion cycle metrics. Management currently believes that Dell’s fiscal 2005 cash flows from operations will continue to exceed net income and will be more than sufficient to support Dell’s operations and capital requirements. Dell currently anticipates that it will continue to utilize its strong liquidity and cash flows from operations to repurchase its common stock, invest in systems and processes, invest in the growth of its enterprise products, and make a limited number of strategic equity investments.

Capital Commitments

Share Repurchase Program — Dell has a share repurchase program that authorizes the purchase of up to 1.25 billion shares of common stock to manage the dilution resulting from shares issued under Dell’s employee stock plans. As of the end of fiscal 2004, Dell had cumulatively repurchased 1.1 billion shares for an aggregate cost of approximately $14 billion. During fiscal 2004, Dell repurchased 63 million shares of common stock for an aggregate cost of $2.0 billion. Through the fourth quarter of fiscal 2003, Dell previously utilized equity instrument contracts to facilitate its repurchase of common stock. All remaining put and call contracts were settled in full during the fourth quarter of fiscal 2003. Dell now effects its share repurchases entirely through open market transactions and expects to continue to repurchase shares of common stock through a systematic program of open market purchases that will return cash to stockholders and mitigate dilution. For the first quarter of fiscal 2005, Dell expects to spend approximately $1.1 billion repurchasing shares. Dell evaluates its share repurchase program quarterly and expects share repurchases during fiscal 2005 to increase compared to fiscal 2004.

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Capital Expenditures — During fiscal 2004, Dell spent $329 million on property, plant, and equipment and $636 million to purchase all of the assets covered by its master lease facilities. Product demand and mix, as well as ongoing efficiencies in operating and information technology infrastructure, influence the level and prioritization of Dell’s capital expenditures. Capital expenditures for fiscal 2005 are currently expected to be approximately $450 million. Capital expenditures during fiscal 2005 are anticipated to be funded by cash flows from operating activities and are estimated to increase compared to recent years due to Dell’s worldwide expansion and the need for additional capacity.

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, $253 million in restricted cash is included in other current assets on Dell’s consolidated statement of financial position as of January 30, 2004.

Contractual Cash Obligations

The following table summarizes Dell’s contractual cash obligations as of January 30, 2004. As of the end of fiscal 2004, Dell had no material purchase obligations other than those obligations included as liabilities in Dell’s consolidated statement of financial position. Purchase orders for raw materials or other goods and services are not included in the table below as they typically represent authorizations to purchase rather than binding agreements.

		Payments Due by Period
						Fiscal 2006-		Fiscal 2008-
		Total		Fiscal 2005		2007		2009		Beyond
		(in millions)
Operating leases		$	197	$	53	$	69	$	40	$	35
Advances under credit facilities			159		57		102		—		—
Long-term debt, including current portion			507		2		3		3		499
	Total contractual cash obligations	$	863	$	112	$	174	$	43	$	534

Operating Leases — 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.

Advances Under Credit Facilities — DFS maintains credit facilities with CIT which provide DFS with a funding capacity of up to $1.0 billion. Due to the consolidation of DFS, outstanding advances under these facilities totaled $159 million and are included in other current and non-current liabilities on Dell’s consolidated statement of financial position as of January 30, 2004.

Long-Term Debt — As of January 30, 2004, Dell had outstanding $200 million in Senior Notes due April 15, 2008 and $300 million in Senior Debentures due April 15, 2028. For additional information regarding these issuances, see Note 2 of Notes to Consolidated Financial Statements included in “Item 8 — Financial Statements and Supplementary Data.”

Concurrent with the issuance of the Senior Notes and Senior Debentures, Dell entered into interest rate swap agreements converting Dell’s interest rate exposure from a fixed rate to a floating rate basis to better align the associated interest rate characteristics to its cash and investments portfolio. The interest rate swap agreements have an aggregate notional amount of $200 million maturing April 15, 2008 and $300 million maturing April 15, 2028. The floating rates are based on three-month London Interbank Offered Rates (“LIBOR”) plus 0.41% and 0.79% for the Senior Notes and Senior Debentures, respectively. As a result of the interest rate swap agreements, Dell’s effective interest rates for the Senior Notes and Senior Debentures were 1.733% and 2.068%, respectively, for fiscal 2004.

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Market Risk

Dell is exposed to a variety of risks, including foreign currency exchange rate fluctuations and changes in the market value of its investments. In the normal course of business, Dell employs established policies and procedures to manage these risks.

Foreign Currency Hedging Activities

Dell’s objective in managing its exposure to foreign currency exchange rate fluctuations is to reduce the impact of adverse fluctuations on earnings and cash flows associated with foreign currency exchange rate changes. Accordingly, Dell utilizes foreign currency option contracts and forward contracts to hedge its exposure on forecasted transactions and firm commitments in most of the foreign countries in which it operates. The principal currencies hedged during fiscal 2004 were the Euro, British Pound, Japanese Yen, and Canadian Dollar. Dell monitors its foreign currency exchange exposures to ensure the overall effectiveness of its foreign currency hedge positions. However, there can be no assurance Dell’s foreign currency hedging activities will substantially offset the impact of fluctuations in currency exchange rates on its results of operations and financial position.

Based on Dell’s foreign currency cash flow hedge instruments outstanding at January 30, 2004 and January 31, 2003, Dell estimates a maximum potential one-day loss in fair value of approximately $53 million and $30 million, respectively, using a Value-at-Risk (“VAR”) model. The VAR model estimates were made assuming normal market conditions and a 95% confidence level. Dell used a Monte Carlo simulation type model that valued its foreign currency instruments against a thousand randomly generated market price paths. Forecasted transactions, firm commitments, fair value hedge instruments, and accounts receivable and payable denominated in foreign currencies were excluded from the model. The VAR model is a risk estimation tool, and as such, is not intended to represent actual losses in fair value that will be incurred by Dell. Additionally, as Dell utilizes foreign currency instruments for hedging forecasted and firmly committed transactions, a loss in fair value for those instruments is generally offset by increases in the value of the underlying exposure. As a result of Dell’s hedging activities, foreign currency fluctuations did not have a material impact on Dell’s results of operations and financial position during fiscal 2004, 2003, and 2002.

Cash and Investments

At January 30, 2004, Dell had $11.9 billion of total cash and investments (including investments in equity securities discussed below), all of which are stated at fair value. Dell’s investment policy is to manage its total cash and investments balances to preserve principal and liquidity while maximizing the return on the investment portfolio through the full investment of available funds. Dell diversifies its investment portfolio by investing in multiple types of investment-grade securities and through the use of third-party investment managers. Based on Dell’s investment portfolio and interest rates at January 30, 2004 and January 31, 2003, a 100 basis point increase or decrease in interest rates would result in a decrease or increase of approximately $140 million and $100 million, respectively, in the fair value of the investment portfolio. Changes in interest rates may affect the fair value of the investment portfolio; however, Dell will not recognize such gains or losses unless the investments are sold.

At January 30, 2004, the fair value of investments in equity securities of privately and publicly held technology companies was $110 million. These investments were made in order to enhance and extend Dell’s direct business model and core business initiatives. Because these companies are typically early-stage companies with products or services that are not yet fully developed or that have not yet achieved market acceptance, these investments are inherently risky. Dell currently anticipates that it will continue to make minimal additional investments in fiscal 2005 and will focus on managing its current investments.

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Debt

Dell has entered into interest rate swap arrangements that convert its fixed interest rate expense to a floating rate basis to better align the associated interest rate characteristics to its cash and investments portfolio. The interest rate swaps qualify for hedge accounting treatment pursuant to Statement of Financial Accounting Standards (“SFAS”) No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. Dell has designated the issuance of the Senior Notes and Senior Debentures and the related interest rate swap agreements as an integrated transaction. The difference between Dell’s carrying amounts and fair value of its long-term debt and related interest rate swaps was not material at January 30, 2004 and January 31, 2003. The differential to be paid or received on the interest rate swap agreements is accrued and recognized as an adjustment to interest expense as interest rates change.

Factors Affecting Dell’s Business and Prospects

There are numerous factors that affect Dell’s business and the results of its operations. These factors include general economic and business conditions; the level of demand for Dell’s products and services; the level and intensity of competition in the technology industry and the pricing pressures that have resulted; the ability of Dell to timely and effectively manage periodic product transitions, as well as component availability and cost; the ability of Dell to develop new products based on new or evolving technology and the market’s acceptance of those products; the ability of Dell to manage its inventory levels to minimize excess inventory, declining inventory values and obsolescence; the product, customer, and geographic sales mix of any particular period; Dell’s ability to effectively manage its operating costs; and the effect of armed hostilities, terrorism, or public health issues on the economy generally, on the level of demand for Dell’s products and services, and on Dell’s ability to manage its supply and delivery logistics in such an environment. For a discussion of these and other factors affecting Dell’s business and prospects, see “Item 1 — Business — Factors Affecting Dell’s Business and Prospects.”

Critical Accounting Policies

Dell prepares its financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of GAAP financial statements requires certain estimates, assumptions, and judgments to be made that may affect Dell’s consolidated statement of financial position and results of operations. Dell believes its most critical accounting policies relate to revenue recognition, warranty accruals, and income taxes. Management has discussed the development, selection, and disclosure of its critical accounting policies with the Audit Committee of Dell’s Board of Directors. These critical accounting policies and Dell’s other accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements included in “Item 8 — Financial Statements and Supplementary Data.”

Revenue Recognition — Dell frequently enters into sales arrangements with customers that contain multiple elements or deliverables such as hardware, software, peripherals, and services. Judgments and estimates are critical to ensure compliance with GAAP. These judgments relate to the allocation of the proceeds received from an arrangement to the multiple elements, the determination of whether any undelivered elements are essential to the functionality of the delivered elements, and the appropriate timing of revenue recognition. Dell offers extended warranty and service contracts to customers that extend and/or enhance the technical support, parts, and labor coverage offered as part of the base warranty included with the product. Revenue from extended warranty and service contracts, for which Dell is obligated to perform, is recorded as deferred revenue and subsequently recognized over the term of the contract or when the service is completed. Revenue from sales of third-party extended warranty and service contracts, for which Dell is not obligated to perform, is recognized on a net basis at the time of sale.

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Estimates that further impact revenue recognition relate primarily to customer sales returns and allowance for doubtful accounts. Both estimates are relatively predictable based on historical experience. The primary factors affecting Dell’s accrual for estimated customer returns include estimated return rates as well as the number of units shipped that still have a right of return as of the balance sheet date. During recent fiscal years, customer returns as a percentage of gross revenues have declined to approximately 1%. Factors affecting Dell’s allowance for doubtful accounts include historical and anticipated customer default rates of the various aging categories of accounts receivable. Each quarter, Dell reevaluates its estimates to assess the adequacy of its recorded accruals for customer returns and allowance for doubtful accounts and adjusts the amounts as necessary.

Warranty — Dell records warranty liabilities at the time of sale for the estimated costs that may be incurred under its basic limited warranty. The specific warranty terms and conditions vary depending upon the product sold and country in which Dell does business, but generally includes technical support, repair parts, labor, and a period ranging from 90 days to three years. Factors that affect Dell’s warranty liability include the number of installed units currently under warranty, historical and anticipated rates of warranty claims on those units, and cost per claim to satisfy Dell’s warranty obligation. The anticipated rate of warranty claims is the primary factor impacting Dell’s estimated warranty obligation. The other factors are relatively insignificant because the average remaining aggregate warranty period of the covered installed base is approximately 20 months, repair parts are generally already in stock or available at pre-determined prices, and labor rates are generally arranged at pre-established amounts with service providers. Warranty claims are relatively predictable based on historical experience of failure rates. Each quarter, Dell reevaluates its estimates to assess the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Income Taxes — Dell calculates a provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized by identifying the temporary differences arising from the different treatment of items for tax and accounting purposes. In determining the future tax consequences of events that have been recognized in Dell’s financial statements or tax returns, judgment is required. Differences between the anticipated and actual outcomes of these future tax consequences could have a material impact on Dell’s consolidated results of operations or financial position.

Recently Issued Accounting Pronouncements

In December 2003, the SEC issued SAB No. 104, Revenue Recognition, which supersedes SAB 101, Revenue Recognition in Financial Statements. The adoption of SAB 104 did not have a material impact on Dell’s consolidated results of operations or financial position. SAB 104 primarily rescinds the accounting guidance contained in SAB 101 related to multiple-element revenue arrangements that was superseded as a result of the issuance of Emerging Issues Task Force (“EITF”) EITF 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. While the wording of SAB 104 has changed to reflect the issuance of EITF 00-21, the revenue recognition principles of SAB 101 remain largely unchanged by the issuance of SAB 104, which was effective upon issuance.

In December 2003, the FASB issued FIN 46R, a revision to FIN 46. FIN 46R clarifies some of the provisions of FIN 46 and exempts certain entities from its requirements. Entities that have adopted FIN 46 prior to this effective date can continue to apply the provisions of FIN 46 until the effective date of FIN 46R, which is the first quarter of fiscal 2005 for Dell. Dell adopted FIN 46 at the beginning of the third quarter of fiscal 2004, which resulted in the consolidation of DFS. See Note 6 of “Notes to Consolidated Financial Statements” included in “Item 8 — Financial Statements and Supplementary Data.” FIN 46R is not expected to have a material impact on Dell’s consolidated results of operations or financial position.

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ITEM 7A — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Response to this item is included in “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk.”

28

ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Financial Statements:
	Report of Independent Auditors		30
	Consolidated Statements of Financial Position at January 30, 2004 and January 31, 2003		31
	Consolidated Statements of Income for each of the three fiscal years ended January 30, 2004		32
	Consolidated Statements of Cash Flows for each of the three fiscal years ended January 30, 2004		33
	Consolidated Statements of Stockholders’ Equity for each of the three fiscal years ended January 30, 2004		34
	Notes to Consolidated Financial Statements		35
Financial Statement Schedule:
	Schedule II — Valuation and Qualifying Accounts for each of the three fiscal years ended January 30, 2004		57

All other schedules are omitted because they are not applicable.

29

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of

Dell Inc.

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Dell Inc. and its subsidiaries at January 30, 2004 and January 31, 2003, and the results of their operations and their cash flows for each of the three fiscal years in the period ended January 30, 2004, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index, presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of Dell’s management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the consolidated financial statements, during fiscal 2004 Dell changed its method of accounting to consolidate the results of Dell Financial Services L.P., an existing joint venture.

PRICEWATERHOUSECOOPERS LLP

Austin, Texas

February 12, 2004

30

DELL INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in millions)

			January 30,			January 31,
			2004			2003
ASSETS
Current assets:
	Cash and cash equivalents		$	4,317		$	4,232
	Short-term investments			835			406
	Accounts receivable, net			3,635			2,586
	Inventories			327			306
	Other			1,519			1,394
		Total current assets		10,633			8,924
	Property, plant and equipment, net			1,517			913
	Investments			6,770			5,267
	Other non-current assets			391			366
		Total assets	$	19,311		$	15,470
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable		$	7,316		$	5,989
	Accrued and other			3,580			2,944
		Total current liabilities		10,896			8,933
Long-term debt				505			506
Other non-current liabilities				1,630			1,158
Commitments and contingent liabilities (Note 7)				—			—
		Total liabilities		13,031			10,597
Stockholders’ equity:
	Preferred stock and capital in excess of $.01 par value; shares issued and outstanding: none			—			—
	Common stock and capital in excess of $.01 par value; shares authorized: 7,000; shares issued: 2,721 and 2,681, respectively			6,823			6,018
	Treasury stock, at cost; 165 and 102 shares, respectively			(6,539	)		(4,539	)
	Retained earnings			6,131			3,486
	Other comprehensive loss			(83	)		(33	)
	Other			(52	)		(59	)
		Total stockholders’ equity		6,280			4,873
		Total liabilities and stockholders’ equity	$	19,311		$	15,470

The accompanying notes are an integral part of these consolidated financial statements.

31

DELL INC.

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts)

			Fiscal Year Ended
			January 30,		January 31,		February 1,
			2004		2003		2002
Net revenue			$	41,444	$	35,404	$	31,168
Cost of revenue				33,892		29,055		25,661
	Gross margin			7,552		6,349		5,507
Operating expenses:
	Selling, general and administrative			3,544		3,050		2,784
	Research, development and engineering			464		455		452
	Special charges			—		—		482
		Total operating expenses		4,008		3,505		3,718
		Operating income		3,544		2,844		1,789
Investment and other income (loss), net				180		183		(58	)
	Income before income taxes			3,724		3,027		1,731
Income tax provision				1,079		905		485
	Net income		$	2,645	$	2,122	$	1,246
Earnings per common share:
	Basic		$	1.03	$	0.82	$	0.48
	Diluted		$	1.01	$	0.80	$	0.46
Weighted average shares outstanding:
	Basic			2,565		2,584		2,602
	Diluted			2,619		2,644		2,726

The accompanying notes are an integral part of these consolidated financial statements.

32

DELL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

				Fiscal Year Ended
				January 30,			January 31,			February 1,
				2004			2003			2002
Cash flows from operating activities:
	Net income			$	2,645		$	2,122		$	1,246
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			263			211			239
		Tax benefits of employee stock plans			181			260			487
		Special charges			—			—			742
		(Gains)/losses on investments			(16	)		6			17
		Other, primarily effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies			(548	)		(483	)		178
	Changes in:
		Operating working capital			872			1,210			826
		Non-current assets and liabilities			273			212			62
			Net cash provided by operating activities		3,670			3,538			3,797
Cash flows from investing activities:
	Investments:
		Purchases			(12,099	)		(8,736	)		(5,382	)
		Maturities and sales			10,078			7,660			3,425
	Cash assumed in consolidation of Dell Financial Services L.P.				172			—			—
	Capital expenditures				(329	)		(305	)		(303	)
	Purchase of assets held in master lease facilities				(636	)		—			—
			Net cash used in investing activities		(2,814	)		(1,381	)		(2,260	)
Cash flows from financing activities:
	Purchase of common stock				(2,000	)		(2,290	)		(3,000	)
	Issuance of common stock under employee plans and other				617			265			298
			Net cash used in financing activities		(1,383	)		(2,025	)		(2,702	)
Effect of exchange rate changes on cash and cash equivalents					612			459			(104	)
Net increase (decrease) in cash and cash equivalents					85			591			(1,269	)
Cash and cash equivalents at beginning of period					4,232			3,641			4,910
Cash and cash equivalents at end of period				$	4,317		$	4,232		$	3,641

The accompanying notes are an integral part of these consolidated financial statements.

33

DELL INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions)

		Common Stock
		and Capital in
		Excess of
		Par Value						Treasury Stock								Other
													Retained			Comprehensive
		Shares			Amount			Shares		Amount			Earnings			Income (Loss)			Other			Total
Balances at February 2, 2001			2,601		$	4,795			—	$	—		$	839		$	62		$	(74	)	$	5,622
	Net income		—			—			—		—			1,246			—			—			1,246
	Change in net unrealized gain on investments, net of taxes of $36		—			—			—		—			—			(65	)		—			(65	)
	Foreign currency translation adjustments		—			—			—		—			—			2			—			2
	Change in net unrealized gain on derivative instruments, net of taxes of $15		—			—			—		—			—			39			—			39
Total comprehensive income																							1,222
	Stock issuances under employee plans, including tax benefits		69			843			—		—			—			—			10			853
	Purchases and retirements		(16	)		(30	)		52		(2,249	)		(721	)		—			—			(3,000	)
	Other		—			(3	)		—		—			—			—			—			(3	)
Balances at February 1, 2002			2,654			5,605			52		(2,249	)		1,364			38			(64	)		4,694
	Net income		—			—			—		—			2,122			—			—			2,122
	Change in net unrealized gain on investments, net of taxes of $14		—			—			—		—			—			26			—			26
	Foreign currency translation adjustments		—			—			—		—			—			4			—			4
	Change in net unrealized loss on derivative instruments, net of taxes of $42		—			—			—		—			—			(101	)		—			(101	)
Total comprehensive income																							2,051
	Stock issuances under employee plans, including tax benefits		27			410			—		—			—			—			6			416
	Purchases		—			—			50		(2,290	)		—			—			—			(2,290	)
	Other		—			3			—		—			—			—			(1	)		2
Balances at January 31, 2003			2,681			6,018			102		(4,539	)		3,486			(33	)		(59	)		4,873
	Net income		—			—			—		—			2,645			—			—			2,645
	Change in net unrealized gain on investments, net of taxes of $19		—			—			—		—			—			(35	)		—			(35	)
	Foreign currency translation adjustments		—			—			—		—			—			6			—			6
	Change in net unrealized loss on derivative instruments, net of taxes of $5		—			—			—		—			—			(21	)		—			(21	)
Total comprehensive income																							2,595
	Stock issuances under employee plans, including tax benefits		40			805			—		—			—			—			—			805
	Purchases		—			—			63		(2,000	)		—			—			—			(2,000	)
	Other		—			—			—		—			—			—			7			7
Balances at January 30, 2004			2,721		$	6,823			165	$	(6,539	)	$	6,131		$	(83	)	$	(52	)	$	6,280

The accompanying notes are an integral part of these consolidated financial statements.

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DELL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — Description of Business and Summary of Significant Accounting Policies

Description of Business — Dell Inc. (formerly Dell Computer Corporation), a Delaware corporation, and its consolidated subsidiaries (collectively referred to as “Dell”) designs, develops, manufactures, markets, sells, and supports a wide range of computer systems and services that are customized to customer requirements. These include enterprise systems (servers, storage and networking products, and workstations), client systems (notebooks and desktops), software and peripherals, and service and support programs. Dell markets and sells its products and services directly to its customers, which include large corporate, government, healthcare and education accounts, as well as small-to-medium businesses and individual consumers.

Fiscal Year — Dell’s fiscal year is the 52- or 53-week period ending on the Friday nearest January 31. Fiscal 2004, 2003, and 2002 all included 52 weeks.

Principles of Consolidation — The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated.

Dell is currently a partner in Dell Financial Services L.P. (“DFS”), a joint venture with CIT Group Inc. (“CIT”). The joint venture allows Dell to provide its customers with various financing alternatives while CIT provides the financing between DFS and the customer for certain transactions. In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46 (“FIN 46”), Consolidation of Variable Interest Entities. FIN 46 provides that if an entity is the primary beneficiary of a Variable Interest Entity (“VIE”), the assets, liabilities, and results of operations of the VIE should be consolidated in the entity’s financial statements. Based on the guidance in FIN 46, Dell concluded that DFS is a VIE and Dell is the primary beneficiary of DFS’s expected cash flows. Accordingly, Dell began consolidating DFS’s financial results at the beginning of the third quarter of fiscal 2004. See Note 6 of “Notes to Consolidated Financial Statements.”

Use of Estimates — The preparation of financial statements in accordance with GAAP requires the use of management’s estimates. These estimates are subjective in nature and involve judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at fiscal year end, and the reported amounts of revenues and expenses during the fiscal year. Actual results could differ from those estimates.

Cash and Cash Equivalents — All highly liquid investments with original maturities of three months or less at date of purchase are carried at cost plus accrued interest, which approximates fair value, and are considered to be cash equivalents. All other investments not considered to be cash equivalents are separately categorized as investments.

Investments — Dell’s investments in debt securities and publicly traded equity securities are classified as available-for-sale and are reported at fair market value (based on quoted market prices) using the specific identification method. Unrealized gains and losses, net of taxes, are reported as a component of stockholders’ equity. Realized gains and losses on investments are included in investment and other income (loss), net when realized. All other investments are initially recorded at cost and charged against income when a decline in the fair market value of an individual security is determined to be other-than-temporary.

Inventories — Inventories are stated at the lower of cost or market with cost being determined on a first-in, first-out basis.

Property, Plant, and Equipment — Property, plant, and equipment are carried at depreciated cost. Depreciation is provided using the straight-line method over the estimated economic lives of the assets, which range from 10 to 30 years for buildings and two to five years for all other assets.

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Leasehold improvements are amortized over the shorter of five years or the lease term. Gains or losses related to retirements or disposition of fixed assets are recognized in the period incurred. Dell performs reviews for the impairment of fixed assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Dell capitalizes eligible internal-use software development costs incurred subsequent to the completion of the preliminary project stage. Development costs are amortized over the shorter of the expected useful life of the software or five years.

Foreign Currency Translation — The majority of Dell’s international sales are made by international subsidiaries, most of which have the U.S. dollar as their functional currency. Local currency transactions of international subsidiaries, which have the U.S. dollar as the functional currency are remeasured into U.S. dollars using current rates of exchange for monetary assets and liabilities and historical rates of exchange for nonmonetary assets. Gains and losses from remeasurement of monetary assets and liabilities are included in investment and other income (loss), net. Dell’s subsidiaries that do not have the U.S. dollar as their functional currency translate assets and liabilities at current rates of exchange in effect at the balance sheet date. Revenue and expenses from these international subsidiaries are translated using the monthly average exchange rates in effect for the period in which the items occur. The resulting gains and losses from translation are included as a component of stockholders’ equity.

Hedging Instruments — Dell applies Statement of Financial Accounting Standards (“SFAS”) No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended, which establishes accounting and reporting standards for derivative instruments and hedging activities. SFAS 133 requires Dell to recognize all derivatives as either assets or liabilities in its consolidated statement of financial position and measure those instruments at fair value.

Treasury Stock — Effective with the beginning of the second quarter of fiscal 2002, Dell began holding repurchased shares of its common stock as treasury stock. Prior to that date, Dell retired all such repurchased shares which were recorded as a reduction to retained earnings. Dell accounts for treasury stock under the cost method and includes treasury stock as a component of stockholders’ equity.

Revenue Recognition — Net revenue includes sales of hardware, software and peripherals, and services (including extended service contracts and professional services). These products and services are sold either separately or as part of a multiple-element arrangement. Dell allocates fees from multiple-element arrangements to the elements based on the relative fair value of each element, which is generally based on the relative list price of each element. For sales of extended warranties with a separate contract price, Dell defers revenue equal to the separately stated price. Revenue associated with undelivered elements is deferred and recorded when delivery occurs. Product revenue is recognized, net of an allowance for estimated returns, when both title and risk of loss transfer to the customer, provided that no significant obligations remain. Revenue from extended warranty and service contracts, for which Dell is obligated to perform, is recorded as deferred revenue and subsequently recognized over the term of the contract or when the service is completed. Revenue from sales of third-party extended warranty and service contracts, for which Dell is not obligated to perform, is recognized on a net basis at the time of sale. During fiscal 2004 Dell adopted Emerging Issues Task Force (“EITF”) Issue 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. The consensus addresses not only when and how an arrangement involving multiple deliverables should be divided into separate units of accounting but also how the arrangement’s consideration should be allocated among separate units. EITF 00-21 did not have a material impact on Dell’s consolidated results of operations or financial position.

Dell defers the cost of product revenue for in-transit shipments until the goods are delivered and revenue is recognized. In-transit product shipments to customers totaled $387 million and $423 million as of January 30, 2004 and January 31, 2003, respectively, and are included in other current assets on Dell’s consolidated statement of financial position.

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Warranty — Dell records warranty liabilities at the time of sale for the estimated costs that may be incurred under its basic limited warranty. The specific warranty terms and conditions vary depending upon the product sold and country in which Dell does business, but generally includes technical support, repair parts, labor, and a period ranging from 90 days to three years. Factors that affect Dell’s warranty liability include the number of installed units currently under warranty, historical and anticipated rates of warranty claims on those units, and cost per claim to satisfy Dell’s warranty obligation. Each quarter, Dell reevaluates its estimates to assess the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Shipping Costs — Dell’s shipping and handling costs are included in cost of sales in the accompanying consolidated statement of income for all periods presented.

Advertising Costs — Advertising costs are charged to expense as incurred. Advertising expenses for fiscal 2004, 2003, and 2002, were $473 million, $426 million, and $361 million, respectively.

Website Development Costs — Dell expenses the costs of maintenance and minor enhancements to the features and functionality of its websites.

Special Charges — During the second quarter of fiscal 2002, Dell recorded a special charge of $482 million in operating expenses to reduce its workforce and exit certain activities in order to further align its cost structure with ongoing economic and industry conditions. As part of this undertaking, Dell eliminated approximately 4,000 employee positions worldwide from various business functions and job classes. As of January 30, 2004 and January 31, 2003, substantially all accrued costs related to the $482 million in special charges had been paid. In fiscal 2002, Dell also recorded a $260 million impairment charge in the second quarter for other-than-temporary declines in fair value of Dell’s venture investments due to market conditions as well as the investees’ inability to execute their business plans.

Income Taxes — Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

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Earnings Per Common Share — Basic earnings per share is based on the weighted effect of all common shares issued and outstanding, and is calculated by dividing net income by the weighted average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted average number of common shares used in the basic earnings per share calculation plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding. Dell excludes equity instruments from the calculation of diluted weighted average shares outstanding if the effect of including such instruments is antidilutive to earnings per share. Accordingly, certain employee stock options and equity put contracts (during fiscal 2003 and 2002 only) have been excluded from the calculation of diluted weighted average shares totaling 138 million, 192 million, and 232 million shares during fiscal 2004, 2003, and 2002, respectively. The following table sets forth the computation of basic and diluted earnings per share for each of the past three fiscal years:

			Fiscal Year Ended
			January 30,		January 31,		February 1,
			2004		2003		2002
			(in millions, except per share amounts)
Numerator:
	Net income		$	2,645	$	2,122	$	1,246
Denominator:
	Weighted average shares outstanding:
		Basic		2,565		2,584		2,602
		Employee stock options and other		54		60		124
		Diluted		2,619		2,644		2,726
Earnings per common share:
	Basic		$	1.03	$	0.82	$	0.48
	Diluted		$	1.01	$	0.80	$	0.46

Pro Forma Effects of Stock-Based Compensation — As of January 30, 2004, Dell had four stock-based compensation plans and an employee stock purchase plan where stock options or purchase rights were outstanding. See Note 5 of “Notes to Consolidated Financial Statements.” Dell currently applies the recognition and measurement principles of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations in accounting for those plans.

Under SFAS No. 123, Accounting for Stock-Based Compensation, the value of each option is estimated on the date of grant using the Black-Scholes option pricing model, which was developed for use in estimating the value of freely traded options. Similar to other option pricing models, it requires the input of highly subjective assumptions, including stock price volatility. Because (1) Dell’s employee stock options have characteristics significantly different from those of traded options and (2) changes in the subjective input assumptions can materially affect the estimated fair value, management’s opinion is that the existing option pricing models (including Black-Scholes) do not provide a reliable measure of the fair value of Dell’s employee stock options.

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The following table illustrates the effect on net income and earnings per share for each of the past three fiscal years as if Dell had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation:

		Fiscal Year Ended
		January 30,			January 31,			February 1,
		2004			2003			2002
		(in millions, except per share amounts)
Net income — as reported		$	2,645		$	2,122		$	1,246
Deduct: Total stock-based employee compensation determined under fair value method for all awards, net of related tax effects			(829	)		(723	)		(694	)
Net income — pro forma		$	1,816		$	1,399		$	552
Earnings per common share:
	Basic — as reported	$	1.03		$	0.82		$	0.48
	Basic — pro forma	$	0.71		$	0.54		$	0.21
	Diluted — as reported	$	1.01		$	0.80		$	0.46
	Diluted — pro forma	$	0.68		$	0.51		$	0.19

Under the Black-Scholes option pricing model, the weighted average fair value of stock options at date of grant was $10.25, $11.41, and $13.04, per option for options granted during fiscal 2004, 2003, and 2002, respectively. Additionally, the weighted average fair value of the purchase rights under the employee stock purchase plan granted in fiscal 2004, 2003, and 2002 was $7.88, $7.39, and $6.74 per right, respectively. The weighted average fair value of options and purchase rights under the employee stock purchase plan was determined based on the Black-Scholes model weighted for all grants during the period, utilizing the following assumptions:

		Fiscal Year Ended
		January 30,			January 31,			February 1,
		2004			2003			2002
Expected term:
	Stock options		3.8 years			5 years			5 years
	Employee stock purchase plan		6 months			6 months			6 months
Risk-free interest rate			2.99	%		3.76	%		4.63	%
Volatility			43	%		43	%		61	%
Dividends			0	%		0	%		0	%

During fiscal 2004, Dell evaluated the historical stock option exercise behavior of its employees, among other relevant factors, and determined that the best estimate of expected term of stock options granted in fiscal 2004 was 3.8 years, compared to the previous expected term of 5 years. Dell used expected volatility, as well as other economic data, to estimate the volatility for fiscal 2004 and 2003 option grants, because management believes such volatility is more representative of prospective trends. In fiscal 2002, Dell used historical trailing volatility.

Comprehensive Income — Dell’s comprehensive income is comprised of net income, foreign currency translation adjustments, unrealized gains and losses on derivative financial instruments related to foreign currency hedging, and unrealized gains and losses on marketable securities classified as available-for-sale.

Recently Issued Accounting Pronouncements — In December 2003, the SEC issued Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition, which supersedes SAB 101, Revenue Recognition in Financial Statements. The adoption of SAB 104 did not have a material impact on Dell’s consolidated results of operations or financial position. SAB 104 primarily rescinds the accounting guidance contained in SAB 101 related to multiple-element revenue arrangements that was superseded as a result of the issuance of EITF 00-21. While the wording of SAB 104 has changed to

39

reflect the issuance of EITF 00-21, the revenue recognition principles of SAB 101 remain largely unchanged by the issuance of SAB 104, which was effective upon issuance.

In December 2003, the FASB issued FIN 46R, a revision to FIN 46. FIN 46R clarifies some of the provisions of FIN 46 and exempts certain entities from its requirements. Entities that have adopted FIN 46 prior to this effective date can continue to apply the provisions of FIN 46 until the effective date of FIN 46R, which is the first quarter of fiscal 2005 for Dell. Dell adopted FIN 46 at the beginning of the third quarter of fiscal 2004, which resulted in the consolidation of DFS. See Note 6 of “Notes to Consolidated Financial Statements.” FIN 46R is not expected to have a material impact on Dell’s consolidated results of operations or financial position.

Reclassifications — Certain prior year amounts have been reclassified to conform to the fiscal 2004 presentation.

NOTE 2 — Financial Instruments

Disclosures About Fair Values of Financial Instruments

The fair value of investments, long-term debt, and related interest rate derivative instruments has been estimated based upon market quotes from brokers. The fair value of foreign currency forward contracts has been estimated using market quoted rates of foreign currencies at the applicable balance sheet date. The estimated fair value of foreign currency purchased option contracts is based on market quoted rates at the applicable balance sheet date and the Black-Scholes option pricing model. The estimates presented herein are not necessarily indicative of the amounts that Dell could realize in a current market exchange. Changes in assumptions could significantly affect the estimates.

Cash and cash equivalents, accounts receivable, accounts payable, and accrued and other liabilities are reflected in the accompanying consolidated financial statements at cost, which approximates fair value because of the short-term maturity of these instruments.

Investments

The following table summarizes by major security type the fair market value and cost of Dell’s investments. All investments with remaining maturities in excess of one year are recorded as long-term investments in the accompanying consolidated statement of financial position.

			January 30, 2004						January 31, 2003
			Fair						Fair
			Market				Unrealized		Market				Unrealized
			Value		Cost		Gain		Value		Cost		Gain (Loss)
			(in millions)
Debt securities:
	U.S. government and agencies		$	5,115	$	5,108	$	7	$	3,507	$	3,474	$	33
	U.S. corporate			2,175		2,169		6		1,739		1,705		34
	International corporate			159		159		—		151		146		5
	State and municipal governments			5		5		—		45		45		—
Total debt securities				7,454		7,441		13		5,442		5,370		72
Equity securities				151		138		13		231		232		(1	)
		Total investments	$	7,605	$	7,579	$	26	$	5,673	$	5,602	$	71
Short-term			$	835	$	835	$	—	$	406	$	402	$	4
Long-term				6,770		6,744		26		5,267		5,200		67
		Total investments	$	7,605	$	7,579	$	26	$	5,673	$	5,602	$	71

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As of January 30, 2004, Dell had approximately 530 debt investment positions that had fair market values below their carrying values for a period of less than 12 months. The fair market value and unrealized losses on these investment positions totaled $2.5 billion and $12 million, respectively, as of January 30, 2004. The unrealized losses are due to changes in interest rates and are expected to be temporary in nature.

The following table summarizes Dell’s recognized gains and losses on investments, including impairments of certain investments:

		Fiscal Year Ended
		January 30,			January 31,			February 1,
		2004			2003			2002
		(in millions)
Gains		$	94		$	86		$	185
Losses			(78	)		(92	)		(462	)
	Net recognized gains (losses)	$	16		$	(6	)	$	(277	)

The fiscal 2002 recognized loss on investments includes a $260 million charge incurred in the second quarter for other-than-temporary declines in fair value of Dell’s venture investments due to market conditions.

Dell routinely enters into securities lending agreements with financial institutions in order to enhance investment income. Dell requires that the loaned securities be collateralized in the form of cash or securities for values which generally exceed the value of the loaned security. As of January 30, 2004 there were no securities on loan with financial institutions.

Foreign Currency Instruments

Dell uses purchased option contracts and forward contracts designated as cash flow hedges to protect against the foreign currency exchange risk inherent in its forecasted transactions denominated in currencies other than the U.S. dollar. Hedged transactions include international sales by U.S. dollar functional currency entities, foreign currency denominated purchases of certain components and intercompany shipments to some international subsidiaries. The risk of loss associated with purchased options is limited to premium amounts paid for the option contracts. The risk of loss associated with forward contracts is equal to the exchange rate differential from the time the contract is entered into until the time it is settled. These contracts generally expire in twelve months or less.

Dell also uses forward contracts to hedge monetary assets and liabilities, primarily receivables and payables, denominated in a foreign currency. These contracts are not designated as hedging instruments under GAAP, and therefore, the change in the instrument’s fair value is recognized currently in earnings and is reported as a component of investment and other income (loss), net. The change in the fair value of these instruments represents a natural hedge as their gains and losses offset the changes in the underlying fair value of the monetary assets and liabilities due to movements in currency exchange rates. These contracts generally expire in three months or less.

If the derivative is designated as a cash flow hedge, the effective portion of the change in the fair value of the derivative is initially deferred in other comprehensive income. These amounts are subsequently recognized in income as a component of net revenue or cost of revenue in the same period the hedged transaction affects earnings. The ineffective portion of the change in the fair value of cash flow hedge is recognized currently in earnings and is reported as a component of investment and other income (loss), net. Hedge effectiveness is measured by comparing the hedging instrument’s cumulative change in fair value from inception to maturity to the forecasted transaction’s terminal value. During fiscal years 2004 and 2003, Dell did not discontinue any cash flow hedges as substantially all forecasted foreign currency transactions were realized in Dell’s actual results. Furthermore, hedge ineffectiveness was not material.

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At January 30, 2004, Dell held purchased option contracts with a notional amount of approximately $2.0 billion, a net asset value of $41 million and a net unrealized deferred loss of $58 million, net of taxes. At January 30, 2004, Dell held forward contracts with a notional amount of approximately $3.0 billion, a net liability value of $185 million and a net unrealized loss of $24 million, net of taxes.

At January 31, 2003, Dell held purchased option contracts with a notional amount of approximately $2.0 billion, a net asset value of $31 million and a net unrealized deferred loss of $37 million, net of taxes. At January 31, 2003, Dell held forward contracts with a notional amount of approximately $2.0 billion, a net liability value of $140 million and a net unrealized loss of $25 million, net of taxes.

Long-Term Debt and Interest Rate Risk Management

In April 1998, Dell issued $200 million 6.55% fixed rate senior notes due April 15, 2008 (the “Senior Notes”) and $300 million 7.10% fixed rate senior debentures due April 15, 2028 (the “Senior Debentures”). Interest on the Senior Notes and Senior Debentures is paid semi-annually, on April 15 and October 15. The Senior Notes and Senior Debentures rank pari passu and are redeemable, in whole or in part, at the election of Dell for principal, any accrued interest and a redemption premium based on the present value of interest to be paid over the term of the debt agreements. The Senior Notes and Senior Debentures generally contain no restrictive covenants, other than a limitation on liens on Dell’s assets and a limitation on sale-leaseback transactions.

Concurrent with the issuance of the Senior Notes and Senior Debentures, Dell entered into interest rate swap agreements converting Dell’s interest rate exposure from a fixed rate to a floating rate basis to better align the associated interest rate characteristics to its cash and investments portfolio. The interest rate swap agreements have an aggregate notional amount of $200 million maturing April 15, 2008 and $300 million maturing April 15, 2028. The floating rates are based on three-month London Interbank Offered Rates (“LIBOR”) plus 0.41% and 0.79% for the Senior Notes and Senior Debentures, respectively. As a result of the interest rate swap agreements, Dell’s effective interest rates for the Senior Notes and Senior Debentures were 1.733% and 2.068%, respectively, for fiscal 2004.

The interest rate swap agreements are designated as fair value hedges, and the terms of the swap agreements and hedged items are such that effectiveness can be measured using the short-cut method defined in SFAS 133. The differential to be paid or received on the interest rate swap agreements is accrued and recognized as an adjustment to interest expense as interest rates change. The difference between Dell’s carrying amounts and fair value of its long-term debt and related interest rate swaps was not material at January 30, 2004 and January 31, 2003.

NOTE 3 — Income Taxes

The provision for income taxes consists of the following:

		Fiscal Year Ended
		January 30,			January 31,		February 1,
		2004			2003		2002
		(in millions)
Current:
	Domestic	$	969		$	702	$	574
	Foreign		132			94		59
Deferred			(22	)		109		(148	)
Provision for income taxes		$	1,079		$	905	$	485

Income before income taxes included approximately $1.6 billion, $968 million, and $494 million related to foreign operations in fiscal 2004, 2003, and 2002, respectively.

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Deferred taxes have not been provided on excess book basis in the amount of approximately $5.1 billion in the shares of certain foreign subsidiaries because these basis differences are not expected to reverse in the foreseeable future and are essentially permanent in duration. These basis differences arose primarily through the undistributed book earnings of the subsidiaries. The basis differences could reverse through a sale of the subsidiaries, the receipt of dividends from the subsidiaries as well as various other events. Net of available foreign tax credits, residual income tax of approximately $1.4 billion would be due upon a reversal of this excess book basis.

The components of Dell’s net deferred tax asset are as follows:

		Fiscal Year Ended
		January 30,			January 31,
		2004			2003
		(in millions)
Deferred tax assets:
	Inventory and warranty provisions	$	260		$	155
	Capital loss carry back		96			—
	Deferred revenue		86			186
	Leasing		69			17
	Investment impairments and unrealized gains		39			118
	Provisions for product returns and doubtful accounts		21			44
	Other		104			108
			675			628
Deferred tax liabilities:
	Fixed assets		(129	)		(39	)
	Other		(74	)		(106	)
			(203	)		(145	)
Net deferred tax asset		$	472		$	483
Current portion (included in other current assets)		$	339		$	292
Non-current portion (included in other non-current assets)			133			191
Net deferred tax asset		$	472		$	483

A portion of Dell’s operations operate at a reduced tax rate or free of tax under various tax holidays which expire in whole or in part during fiscal 2010 through 2013. Many of these holidays may be extended when certain conditions are met.

The effective tax rate differed from statutory U.S. federal income tax rate as follows:

	Fiscal Year Ended
	January 30,			January 31,			February 1,
	2004			2003			2002
U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
Foreign income taxed at different rates		(7.3	)		(7.9	)		(6.6	)
Other		1.3			2.8			(0.4	)
Effective tax rate		29.0	%		29.9	%		28.0	%

NOTE 4 — Capitalization

Preferred Stock

Authorized Shares — Dell has the authority to issue five million shares of preferred stock, par value $.01 per share. At January 30, 2004 and January 31, 2003, no shares of preferred stock were issued or outstanding.

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Series A Junior Participating Preferred Stock — In conjunction with the distribution of Preferred Share Purchase Rights (see below), Dell’s Board of Directors designated 200,000 shares of preferred stock as Series A Junior Participating Preferred Stock (“Junior Preferred Stock”) and reserved such shares for issuance upon exercise of the Preferred Share Purchase Rights. At January 30, 2004 and January 31, 2003, no shares of Junior Preferred Stock were issued or outstanding.

Common Stock

Authorized Shares — As of January 30, 2004, Dell is authorized to issue seven billion shares of common stock, par value $.01 per share.

Share Repurchase Program — Dell has a share repurchase program that authorizes the purchase of up to 1.25 billion shares of common stock to manage the dilution resulting from shares issued under Dell’s employee stock plans. As of the end of fiscal 2004, Dell had cumulatively repurchased 1.1 billion shares for an aggregate cost of approximately $14 billion. During fiscal 2004, Dell repurchased 63 million shares of common stock for an aggregate cost of $2.0 billion.

Dell historically utilized equity instrument contracts to facilitate its repurchase of common stock; however, all remaining put and call contracts were settled in full during the fourth quarter of fiscal 2003.

Preferred Share Purchase Rights

In December 1995, Dell distributed a dividend of one Preferred Share Repurchase Right (a “Right”) for each outstanding share of common stock, and since that distribution, shares of common stock have been issued with accompanying Rights. Each Right entitles the holder to purchase shares of Junior Preferred Stock at specified prices and rates. The Rights become exercisable when a person or group acquires 15% or more of Dell’s outstanding common stock. When it becomes exercisable, a Right will entitle the holder (other than the acquiring person or group) to purchase, at the Right’s then current exercise price, the number of shares of common stock having a market value of twice the exercise price of the Right. The Rights also contain provisions relating to mergers or other business combinations.

In certain circumstances, the Board of Directors may, at its option, exchange Rights (other than Rights held by the acquiring person or group) for shares of common stock or shares of Junior Preferred Stock at specified exchange rates. In addition, Dell will be entitled to redeem the Rights at $.001 per Right at any time before a person or group has acquired 15% or more of Dell’s outstanding common stock. The Rights expire on November 29, 2005. The Board of Directors may amend the terms of the Rights to lower the 15% acquisition threshold to not less than the greater of (a) any percentage greater than the largest percentage of common stock known by Dell to be owned by any person (other than Michael S. Dell) or (b) 10%.

Neither the ownership nor the further acquisition of common stock by Michael S. Dell will cause the Rights to become exercisable or nonredeemable or will trigger the other features of the Rights.

NOTE 5 — Benefit Plans

Stock Option Plans — Dell has the following four stock option plans (collectively referred to as the “Option Plans”) under which options were outstanding as of January 30, 2004:

•  The Dell Computer Corporation 1989 Stock Option Plan (the “1989 Option Plan”)

•  The Dell Computer Corporation Incentive Plan (the “1994 Incentive Plan”)

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•  The Dell Computer Corporation 1998 Broad-Based Stock Option Plan (the “1998 Broad-Based Plan”), and

•  The Dell Computer Corporation 2002 Long-Term Incentive Plan (the “2002 Incentive Plan”)

The Option Plans are administered by the Compensation Committee of Dell’s Board of Directors.

The 1989 Option Plan, the 1994 Incentive Plan, and the 1998 Broad-Based Plan have been terminated (except for options previously granted under those plans that are still outstanding). Consequently, awards are currently only being made under the 2002 Incentive Plan.

The 2002 Incentive Plan provides for the granting of stock-based incentive awards to Dell’s employees, nonemployee directors, and certain consultants and advisors to Dell. Awards may be either incentive stock options within the meaning of Section 422 of the Internal Revenue Code or nonqualified options. The right to purchase shares pursuant to existing stock option agreements typically vests pro-rata at each option anniversary date over a five-year period. The options are generally granted at fair market value and must be exercised within ten years from the date of grant. Dell has not issued any options to consultants or advisors to the company since fiscal 1999.

There were 327 million, 365 million, and 290 million options to purchase Dell’s common stock available for future grants under the Option Plans as of January 30, 2004, January 31, 2003, and February 1, 2002, respectively. All of the shares available for future grants as of January 30, 2004 are under the 2002 Incentive Plan.

The following table summarizes stock option activity for the Option Plans:

		Fiscal Year Ended
		January 30, 2004					January 31, 2003					February 1, 2002
					Weighted-					Weighted-					Weighted-
		Number			Average		Number			Average		Number			Average
		of			Exercise		of			Exercise		of			Exercise
		Options			Price		Options			Price		Options			Price
		(share data in millions)
Options outstanding — beginning of year			387		$	27.09		350		$	26.36		344		$	24.36
	Granted		51			30.01		84			26.37		126			23.24
	Exercised		(35	)		14.92		(22	)		7.69		(63	)		3.11
	Cancelled		(25	)		31.62		(25	)		31.75		(57	)		32.86
Options outstanding — end of year			378			28.30		387			27.09		350			26.36
Options exercisable — end of year			154		$	26.74		130		$	22.59		98		$	17.49

The following is additional information relating to options for the Option Plans outstanding as of January 30, 2004:

	Options Outstanding						Options Exercisable
					Weighted-
			Weighted-		Average				Weighted-
	Number		Average		Remaining		Number		Average
	of		Exercise		Contractual		of		Exercise
	Shares		Price		Life (Years)		Shares		Price
	(share data in millions)
$0.01-$1.49		13	$	1.03		1.85		13	$	1.03
$1.50-$14.99		21	$	7.72		3.41		21	$	7.72
$15.00-$24.99		92	$	22.47		7.17		33	$	21.75
$25.00-$34.99		140	$	28.14		8.19		29	$	28.43
$35.00 and over		112	$	40.10		6.36		58	$	41.10
		378						154

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Employee Stock Purchase Plan — Dell has an employee stock purchase plan that qualifies under Section 423 of the Internal Revenue Code and permits substantially all employees to purchase shares of Dell’s common stock. Participating employees may purchase common stock through payroll deductions at the end of each participation period at a purchase price equal to 85% of the lower of the fair market value of the common stock at the beginning or the end of the participation period. Common stock reserved for future employee purchases under the plan aggregated 25 million shares at January 30, 2004, 29 million shares at January 31, 2003, and 33 million shares at February 1, 2002. Common stock issued under this plan totaled 4 million shares in fiscal 2004, 4 million shares in fiscal 2003, and 6 million shares in fiscal 2002.

Restricted Stock Grants — During fiscal 2004, 2003, and 2002, Dell granted 0.6 million shares, 0.3 million shares, and 2.1 million shares, respectively, of restricted stock. The weighted average fair value of restricted stock granted in fiscal 2004, 2003, and 2002 was $27.92, $25.43, and $24.15, respectively. For substantially all restricted stock grants, at the date of grant, the recipient has all rights of a stockholder, subject to certain restrictions on transferability and a risk of forfeiture. Restricted shares typically vest over a seven-year period beginning on the date of grant. Dell records unearned compensation in stockholders’ equity equal to the market value of the restricted shares on the date of grant and charges the unearned compensation to expense over the vesting period.

401(k) Plan — Dell has a defined contribution retirement plan that complies with Section 401(k) of the Internal Revenue Code. Substantially all employees in the U.S. are eligible to participate in the plan. Dell matches 100% of each participant’s voluntary contributions, subject to a maximum contribution of 3% of the participant’s compensation. Dell’s contributions during fiscal 2004, 2003, and 2002 were $42 million, $38 million, and $40 million, respectively. Dell’s contributions are invested proportionate to each participant’s voluntary contributions in the investment options provided under the plan. Investment options include Dell stock, but neither participant nor Dell contributions are required to be invested in Dell stock.

NOTE 6 — Dell Financial Services

Dell is currently a partner in DFS, a joint venture with CIT. The joint venture allows Dell to provide its customers with various financing alternatives while CIT provides the financing for the transaction between DFS and the customer. In general, DFS facilitates customer financing transactions through either loan or lease financing. For customers who desire loan financing, Dell sells equipment directly to customers who, in turn, enter into loans with CIT to finance their purchases. For customers who desire lease financing, Dell usually sells the equipment to DFS, and DFS enters into direct financing lease arrangements with the customers.

Dell currently owns a 70% equity interest in DFS. In accordance with the partnership agreement between Dell and CIT, losses generated by DFS are fully allocated to CIT. Net income generated by DFS is allocated 70% to Dell and 30% to CIT, after CIT has recovered any cumulative losses. If DFS is terminated with a cumulative deficit, Dell is not obligated to fund any losses, including any potential losses on receivables transferred to CIT. Although Dell has a 70% equity interest in DFS, prior to the third quarter of fiscal 2004 the investment was accounted for under the equity method because the company historically could not, and currently does not, exercise control over DFS.

In January 2003, the FASB issued FIN 46, Consolidation of Variable Interest Entities. FIN 46 provides that if an entity is the primary beneficiary of a VIE, the assets, liabilities, and results of operations of the VIE should be consolidated in the entity’s financial statements. Based on the guidance in FIN 46, Dell concluded that DFS is a VIE and Dell is the primary beneficiary of DFS’s expected cash flows. Accordingly, Dell began consolidating DFS’s financial results at the beginning of the third quarter of fiscal 2004. The consolidation of DFS had no impact on Dell’s net income or earnings per share during fiscal 2004 because Dell has historically been recording its 70% equity interest in DFS under the equity method. The impact to any individual line item on Dell’s consolidated statement of income

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was not material; however, the consolidation of DFS increased Dell’s consolidated assets and liabilities by $588 million. CIT’s equity ownership in the net assets of DFS as of January 30, 2004 was $17 million, which is recorded as minority interest and included in other non-current liabilities on Dell’s consolidated statement of financial position. The consolidation has not altered the partnership agreement or risk sharing arrangement between Dell and CIT.

DFS sells, assigns, and transfers all rights to its financing receivables to CIT, subject to limited recourse and servicing provisions. The limited recourse provision is fully funded by DFS through restricted cash escrow accounts which are included in other current assets on Dell’s consolidated statement of financial position as of January 30, 2004. CIT has no recourse or rights of return to Dell, except that end-user customers may return equipment pursuant to Dell’s standard return policy. DFS records transfers of financing receivables in accordance with the provisions of SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. A gain or loss is recorded in net revenue when a transfer of finance receivables qualifies as a sale of financial assets under SFAS No. 140. These gains or losses were not material to Dell’s consolidated statement of income during fiscal 2004. Financing receivables that have not been transferred to CIT, due to the timing of completing the transaction, are included in accounts receivable, net, and were not material as of January 30, 2004. Dell recognized revenue of $3.4 billion during fiscal 2004 for equipment sold to end-user customers that is financed by CIT loans. For lease financing arrangements, where Dell typically sells the equipment to DFS and DFS enters into direct financing lease arrangements with the customers, Dell recognized revenue $1.1 billion during fiscal 2004.

DFS maintains credit facilities with CIT which provide DFS with a funding capacity of up to $1.0 billion. As of January 30, 2004, outstanding advances under these facilities totaled $159 million and are included in other current and non-current liabilities on Dell’s consolidated statement of financial position.

Dell is dependent upon DFS to provide financing for a significant number of customers who elect to finance Dell products, and DFS is highly dependent upon CIT to access the capital markets to provide funding for these transactions. If CIT is unable to access the capital markets, Dell would find alternative sources for financing for its customers or self-finance these activities.

NOTE 7  — 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 30, 2004, future minimum lease payments under these non-cancelable leases were as follows: $53 million in fiscal 2005; $39 million in fiscal 2006; $30 million in fiscal 2007; $20 million in fiscal 2008; $20 million in fiscal 2009; and $35 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 have historically been 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 as of January 30, 2004.

Rent expense under all leases totaled $76 million, $96 million, and $93 million for fiscal 2004, 2003, and 2002, respectively.

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, $253 million in restricted cash is included in other current assets on Dell’s consolidated statement of financial position as of January 30, 2004.

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Aggregate Deferred Revenue and Warranty Liability — Revenue from extended warranty and service contracts, for which Dell is obligated to perform, is recorded as deferred revenue and subsequently recognized over the term of the contract or when the service is completed. Dell records warranty liabilities at the time of sale for the estimated costs that may be incurred under its basic limited warranty. Changes in Dell’s aggregate deferred revenue and warranty liability (basic and extended warranties) are presented in the following table:

		Fiscal Year Ended
		January 30,			January 31,
		2004			2003
		(in millions)
Aggregate deferred revenue and warranty liability at beginning of period		$	2,042		$	1,447
	Revenue deferred and costs accrued for new warranties		2,547			2,137
	Service obligations honored		(983	)		(868	)
	Amortization of deferred revenue		(912	)		(674	)
Aggregate deferred revenue and warranty liability at end of period		$	2,694		$	2,042
Current portion		$	1,333		$	1,034
Non-current portion			1,361			1,008
Aggregate deferred revenue and warranty liability at end of period		$	2,694		$	2,042

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 counterparties to these financial instruments. Dell does not anticipate nonperformance by any of the counterparties.

Dell’s investments in debt securities are placed with high quality financial institutions and companies. Dell’s investments in debt securities primarily have maturities of less than five years. Management believes that no significant concentration of credit risk for investments exists for Dell.

Dell markets and sells its products and services to large corporate clients, governments, healthcare and education accounts, as well as small-to-medium businesses and individuals. Dell’s receivables from such parties are well diversified.

Dell purchases a number of components from single sources. In some cases, alternative sources of supply are not available. In other cases, Dell may establish a working relationship with a single source if Dell believes it is advantageous due to performance, quality, support, delivery, capacity or price considerations. If the supply of a critical single-source material or component were delayed or curtailed, Dell’s ability to ship the related product in desired quantities and in a timely manner could be adversely affected. Even where alternative sources of supply are available, qualification of the alternative suppliers and establishment of reliable supplies could result in delays and a possible loss of sales, which may have an adverse effect on Dell’s operating results.

NOTE 8 — Segment Information

Dell conducts operations worldwide and is managed in three geographic segments: the Americas, Europe, and Asia Pacific-Japan regions. The Americas region, which is based in Round Rock, Texas, covers the U.S., Canada, and Latin America. Within the Americas, Dell is further segmented

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into Business and U.S. Consumer. The Americas Business segment includes sales to corporate, government, healthcare and education customers while the U.S. Consumer segment includes sales primarily to individual consumers. The European region, which is based in Bracknell, England, covers Europe, the Middle East, and Africa. The Asia Pacific-Japan region covers the Pacific Rim, including Australia and New Zealand, and is based in Singapore.

The accounting policies of Dell’s reportable segments are the same as those described in the summary of significant accounting policies. Dell allocates resources to and evaluates the performance of its segments based on operating income. Corporate expenses are included and special charges are excluded from Dell’s measure of segment operating income for management reporting purposes. The asset totals disclosed by geography are directly managed by those regions and include accounts receivable, inventory, certain fixed assets, and certain other assets. Assets are not allocated specifically to the Business and U.S. Consumer segments within the Americas. Corporate assets primarily include cash and cash equivalents, investments, deferred tax assets, and other assets. The table below presents information about Dell’s reportable segments:

				Fiscal Year Ended
				January 30,		January 31,		February 1,
				2004		2003		2002
				(in millions)
Net revenue
	Americas:
		Business		$	21,888	$	19,394	$	17,275
		U.S. Consumer			6,715		5,653		4,485
			Total Americas		28,603		25,047		21,760
	Europe				8,495		6,912		6,429
	Asia Pacific-Japan				4,346		3,445		2,979
			Total net revenue	$	41,444	$	35,404	$	31,168
Operating income
	Americas:
		Business		$	2,194	$	1,945	$	1,482
		U.S. Consumer			400		308		260
			Total Americas		2,594		2,253		1,742
	Europe				637		388		377
	Asia Pacific-Japan				313		203		152
	Special charges				—		—		(482	)
			Total operating income	$	3,544	$	2,844	$	1,789
Depreciation and amortization
	Americas:
		Business		$	102	$	97	$	125
		U.S. Consumer			41		38		32
			Total Americas		143		135		157
	Europe				71		47		54
	Asia Pacific-Japan				49		29		28
			Total depreciation and amortization	$	263	$	211	$	239

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			Fiscal Year Ended
			January 30,		January 31,		February 1,
			2004		2003		2002
			(in millions)
Assets
	Americas		$	3,134	$	2,847	$	2,319
	Europe			1,510		1,302		1,220
	Asia Pacific-Japan			860		634		499
	Corporate assets			13,807		10,687		9,497
		Total assets	$	19,311	$	15,470	$	13,535

The following is net revenue and long-lived asset information by geographic region:

			Fiscal Year Ended
			January 30,		January 31,		February 1,
			2004		2003		2002
			(in millions)
Net revenue
	United States		$	26,510	$	23,355	$	20,295
	Foreign countries			14,934		12,049		10,873
		Total net revenue	$	41,444	$	35,404	$	31,168
Long-lived assets
	United States		$	1,145	$	613	$	542
	Foreign countries			372		300		284
		Total long-lived assets	$	1,517	$	913	$	826

The allocation between domestic and foreign net revenue is based on the location of the customers. Net revenue and long-lived assets from no single foreign country comprised more than 10% of Dell’s total net revenues or long-lived assets during fiscal 2004, 2003, and 2002.

The following is net revenue by product groups:

		Fiscal Year Ended
		January 30,		January 31,		February 1,
		2004		2003		2002
		(in millions)
Desktop computer systems		$	21,026	$	18,865	$	16,516
Notebook computers			11,380		9,638		8,829
Enterprise systems			9,038		6,901		5,823
	Total net revenue	$	41,444	$	35,404	$	31,168

Net revenue by product group includes associated services revenue as well as software and peripherals revenue. No single customer accounted for more than 10% of Dell’s consolidated net revenue during fiscal 2004, 2003, and 2002.

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NOTE 9 — Supplemental Consolidated Financial Information

			January 30,			January 31,
			2004			2003
			(in millions)
Supplemental Consolidated Statements of Financial Position Information:
Accounts receivable:
	Gross accounts receivable		$	3,719		$	2,657
	Allowance for doubtful accounts			(84	)		(71	)
			$	3,635		$	2,586
Inventories:
	Production materials		$	161		$	164
	Work-in-process			69			72
	Finished goods			97			70
			$	327		$	306
Property, plant and equipment:
	Land and buildings		$	1,158		$	427
	Computer equipment			898			709
	Machinery and other equipment			594			526
		Total property, plant and equipment		2,650			1,662
	Accumulated depreciation and amortization			(1,133	)		(749	)
			$	1,517		$	913
Accrued and other current liabilities:
	Deferred revenue		$	961		$	760
	Compensation			603			545
	Other			2,016			1,639
			$	3,580		$	2,944
Other non-current liabilities:
	Deferred revenue		$	1,092		$	744
	Other			538			414
			$	1,630		$	1,158

		Fiscal Year Ended
		January 30,			January 31,			February 1,
		2004			2003			2002
		(in millions)
Supplemental Consolidated Statements of Income Information:
Research, development and engineering expenses:
	Research and development expenses	$	330		$	319		$	321
	Engineering expenses		134			136			131
		$	464		$	455		$	452
Investment and other income (loss), net:
	Investment income, primarily interest	$	200		$	227		$	314
	Gains/(losses) on investments, net		16			(6	)		(277	)
	Interest expense		(14	)		(17	)		(29	)
	Other		(22	)		(21	)		(66	)
		$	180		$	183		$	(58	)

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		Fiscal Year Ended
		January 30,			January 31,			February 1,
		2004			2003			2002
		(in millions)
Supplemental Consolidated Statements of Cash Flows Information:
Changes in operating working capital accounts:
	Accounts receivable, net	$	(813	)	$	190		$	222
	Inventories		(53	)		(21	)		111
	Accounts payable		1,283			844			826
	Accrued and other liabilities		867			585			(210	)
	Other, net		(412	)		(388	)		(123	)
		$	872		$	1,210		$	826
Income taxes paid		$	699		$	607		$	120
Interest paid		$	30		$	20		$	31

NOTE 10 — Unaudited Quarterly Results

The following tables contain selected unaudited consolidated statements of income and stock sales price data for each quarter of fiscal 2004 and 2003:

		Fiscal Year 2004
		4th		3rd		2nd		1st
		Quarter		Quarter		Quarter		Quarter
		(in millions, except per share data)
Net revenue		$	11,512	$	10,622	$	9,778	$	9,532
Gross margin		$	2,091	$	1,935	$	1,778	$	1,748
Net income		$	749	$	677	$	621	$	598
Earnings per common share(a):
	Basic	$	0.29	$	0.26	$	0.24	$	0.23
	Diluted	$	0.29	$	0.26	$	0.24	$	0.23
Weighted average shares outstanding:
	Basic		2,557		2,563		2,567		2,572
	Diluted		2,616		2,623		2,624		2,614
Stock sales prices per share:
	High	$	36.52	$	36.98	$	34.00	$	29.89
	Low	$	32.65	$	30.94	$	29.49	$	22.86

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		Fiscal Year 2003
		4th		3rd		2nd		1st
		Quarter		Quarter		Quarter		Quarter
		(in millions, except per share data)
Net revenue		$	9,735	$	9,144	$	8,459	$	8,066
Gross margin		$	1,781	$	1,662	$	1,515	$	1,391
Net income		$	603	$	561	$	501	$	457
Earnings per common share(a):
	Basic	$	0.23	$	0.22	$	0.19	$	0.18
	Diluted	$	0.23	$	0.21	$	0.19	$	0.17
Weighted average shares outstanding:
	Basic		2,576		2,582		2,586		2,595
	Diluted		2,621		2,634		2,649		2,672
Stock sales prices per share:
	High	$	30.94	$	29.06	$	27.95	$	28.91
	Low	$	23.86	$	23.11	$	22.33	$	23.76

(a) Earnings per common share are computed independently for each of the quarters presented. Therefore, the sum of the quarterly per common share information may not equal the annual earnings per common share.

53

ITEM 9A —  CONTROLS AND PROCEDURES

The management of Dell, with the participation of Dell’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of Dell’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that Dell’s disclosure controls and procedures are effective in enabling Dell to record, process, summarize, and report information required to be included in Dell’s periodic SEC filings within the required time period.

In addition, the management of Dell, with the participation of Dell’s Chief Executive Officer and Chief Financial Officer, has evaluated whether any change in Dell’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during Dell’s fourth fiscal quarter. Based on that evaluation, Dell’s Chief Executive Officer and Chief Financial Officer have concluded that there has been no change in Dell’s internal control over financial reporting during the fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, Dell’s internal control over financial reporting.

PART III

The information called for by Part III of Form 10-K (Item 10 — Directors and Executive Officers of the Registrant, Item 11 — Executive Compensation, Item 12  — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, Item 13 — Certain Relationships and Related Transactions, and Item 14 — Principal Accountant Fees and Services), to the extent not set forth herein under “Item 1 — Business — Executive Officers of Dell,” is incorporated by reference from Dell’s definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates.

PART IV

ITEM 15 — EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

Financial Statements

The following financial statements are filed as a part of this Report under “Item 8 — Financial Statements and Supplementary Data”:

	Page
Report of Independent Auditors		30
Consolidated Statements of Financial Position at January 30, 2004 and January 31, 2003		31
Consolidated Statements of Income for each of the three fiscal years ended January 30, 2004		32
Consolidated Statements of Cash Flows for each of the three fiscal years ended January 30, 2004		33
Consolidated Statements of Stockholders’ Equity for each of the three fiscal years ended January 30, 2004		34
Notes to Consolidated Financial Statements		35

Financial Statement Schedules

The following financial statement schedule is filed as a part of this Report under Schedule II immediately preceding the signature page: Schedule II — Valuation and Qualifying Accounts for the three fiscal years ended January 30, 2004. All other schedules called for by Form 10-K are omitted because they are inapplicable or the required information is shown in the financial statements, or notes thereto, included herein.

54

Exhibits

Exhibit
No.				Description of Exhibit
	3	.1	—	Restated Certificate of Incorporation, filed July 24, 2003 (incorporated by reference to Exhibit 3.2 to Dell’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 1, 2003, Commission File No. 0-17017)
	3	.2	—	Restated Bylaws, as adopted on July 18, 2003 (incorporated by reference to Exhibit 3.3 to Dell’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 1, 2003, Commission File No. 0-17017)
	4	.1	—	Rights Agreement, dated as of November 29, 1995 (incorporated by reference to Exhibit 4 to Dell’s Current Report on Form 8-K, dated November 29, 1995, and filed with the Securities and Exchange Commission on November 30, 1995, Commission File No. 0-17017)
	4	.2	—	Indenture, dated as of April 27, 1998, between Dell Computer Corporation and Chase Bank of Texas, National Association (incorporated by reference to Exhibit 99.2 of Dell’s Current Report on Form 8-K filed April 28, 1998, Commission File No. 0-17017)
	4	.3	—	Officers’ Certificate pursuant to Section 301 of the Indenture establishing the terms of Dell’s 6.55% Senior Notes Due 2008 (incorporated by reference to Exhibit 99.3 of Dell’s Current Report on Form 8-K filed April 28, 1998, Commission File No. 0-17017)
	4	.4	—	Officers’ Certificate pursuant to Section 301 of the Indenture establishing the terms of Dell’s 7.10% Senior Debentures Due 2028 (incorporated by reference to Exhibit 99.3 of Dell’s Current Report on Form 8-K filed April 28, 1998, Commission File No. 0-17017)
	4	.5	—	Form of Dell’s 6.55% Senior Notes Due 2008 (incorporated by reference to Exhibit 99.5 of Dell’s Current Report on Form 8-K filed April 28, 1998, Commission File No. 0-17017)
	4	.6	—	Form of Dell’s 7.10% Senior Debentures Due 2028 (incorporated by reference to Exhibit 99.6 of Dell’s Current Report on Form 8-K filed April 28, 1998, Commission File No. 0-17017)
	10	.1*	—	Dell Computer Corporation 1989 Stock Option Plan, as amended and restated (incorporated by reference to Exhibit 10.4 to Dell’s Annual Report on Form 10-K for the fiscal year ended January 31, 1993, Commission File No. 0-17017)
	10	.2*	—	Amended and Restated Dell Computer Corporation 1994 Incentive Plan (incorporated by reference to Exhibit 99 to Dell’s Registration Statement on Form S-8, filed October 31, 2000, Registration No. 333-49014)
	10	.3*	—	Amended and Restated Dell Computer Corporation 1998 Broad Based Stock Option Plan (incorporated by reference to Exhibit 99 to Dell’s Registration Statement on Form S-8, filed October 31, 2000, Registration No. 333-49016)
	10	.4*	—	Dell Computer Corporation 2002 Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Dell’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 2, 2002, Commission File No. 0-17017)
	10	.5*†	—	Amended and Restated Dell Inc. 401(k) Plan, adopted on December 19, 2003
	10	.6*†	—	Amended and Restated Dell Computer Corporation Deferred Compensation Plan

55

Exhibit
No.				Description of Exhibit
	10	.7*	—	Executive Incentive Bonus Plan, adopted July 18, 2003 (incorporated by reference to Exhibit 10.1 to Dell’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 1, 2003, Commission File No. 0-17017)
	10	.8*	—	Form of Indemnification Agreement between Dell and each Non-Employee Director of Dell
	21	†	—	Subsidiaries of Dell
	23	†	—	Consent of PricewaterhouseCoopers LLP
	31	.1†	—	Certification of Michael S. Dell, Chairman of the Board and Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
	31	.2†	—	Certification of James M. Schneider, Senior Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
	32	.1†	—	Certifications of Michael S. Dell, Chairman of the Board and Chief Executive Officer, and James M. Schneider, Senior Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350

*  Identifies Exhibit that consists of or includes a management contract or compensatory plan or arrangement.

†  Filed herewith.

Reports on Form 8-K

On November 13, 2003, Dell filed a current report on Form 8-K reporting that it had issued a press release regarding its financial results for the fiscal quarter ended October 31, 2003.

56

SCHEDULE II

DELL INC.

VALUATION AND QUALIFYING ACCOUNTS

		Balance at		Charged to		Write-Offs		Balance
Fiscal		Beginning		Bad Debt		Charged to		at End of
Year	Description	of Period		Expense		Allowance		Period
		(in millions)
2004	Allowance for doubtful accounts	$	71	$	48	$	35	$	84
2003	Allowance for doubtful accounts	$	68	$	39	$	36	$	71
2002	Allowance for doubtful accounts	$	69	$	39	$	40	$	68

57

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

DELL INC.

By:  /s/ MICHAEL S. DELL

Michael S. Dell

Chairman of the Board and

Chief Executive Officer

Date: April 12, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name	Title	Date
/s/ MICHAEL S. DELL Michael S. Dell	Chairman of the Board, Chief Executive Officer (principal executive officer) and Director	April 12, 2004
/s/ DONALD J. CARTY Donald J. Carty	Director	April 12, 2004
/s/ WILLIAM H. GRAY, III William H. Gray, III	Director	April 12, 2004
/s/ JUDY C. LEWENT Judy C. Lewent	Director	April 12, 2004
/s/ THOMAS W. LUCE III Thomas W. Luce III	Director	April 12, 2004
/s/ KLAUS S. LUFT Klaus S. Luft	Director	April 12, 2004
/s/ ALEX J. MANDL Alex J. Mandl	Director	April 12, 2004
/s/ MICHAEL A. MILES Michael A. Miles	Director	April 12, 2004
/s/ SAMUEL A. NUNN, JR. Samuel A. Nunn, Jr.	Director	April 12, 2004
/s/ MORTON L. TOPFER Morton L. Topfer	Director	April 12, 2004
/s/ JAMES M. SCHNEIDER James M. Schneider	Sr. Vice President and Chief Financial Officer (principal financial officer)	April 12, 2004
/s/ ROBERT W. DAVIS Robert W. Davis	Vice President, Corporate Finance (principal accounting officer)	April 12, 2004

58 EX-10.5 3 d14085exv10w5.htm AMENDED AND RESTATED 401(K) PLAN

Exhibit 10.5

Dell Inc.
401(k) Plan

As Amended and Restated
Effective January 1, 2003

Dell Inc.
401(k) Plan

W I T N E S S E T H:

     WHEREAS, Dell Inc. (the “Company”) has heretofore adopted and maintains the Dell Inc. 401(k) Plan (the “Plan”) for the benefit of eligible employees of the Company and participating affiliates; and

     WHEREAS, the Company desires to restate the Plan and to amend the Plan in several respects, intending thereby to provide an uninterrupted and continuing program of benefits;

     NOW THEREFORE, the Plan is hereby restated in its entirety as follows with no interruption in time, effective as of January 1, 2003, except as otherwise indicated herein:

Table of Contents

		Page
I.	DEFINITIONS AND CONSTRUCTION		1
	1.1 Definitions		1
	1.2 Number and Gender		10
	1.3 Headings		10
	1.4 Construction		10
	1.5 Profit Sharing Plan		10
II.	PARTICIPATION		11
	2.1 Participation		11
	2.2 Automatic Enrollment		12
	2.3 Cessation of Participation		12
	2.4 Suspension of Participation Requirements		12
III.	CONTRIBUTIONS		14
	3.1 Salary Reduction Contributions		14
	3.2 Employer Matching Contributions		16
	3.3 Employer Retirement Savings Contributions		16
	3.4 Employer Fail Safe Contributions		17
	3.5 Return of Contributions		18
	3.6 Disposition of Excess Deferrals and Excess Contributions		18
	3.7 Rollover Contributions		19
IV.	ALLOCATIONS AND LIMITATIONS		21
	4.1 Suspended Amounts		21
	4.2 Allocation of Contributions to Accounts		21
	4.3 Time of Allocation of Contributions		22
	4.4 Application of Forfeitures		23
	4.5 Valuation of Accounts		23
	4.6 Code Section 415 Limitations and Corrections		23
V.	INVESTMENT OF ACCOUNTS		26
	5.1 Investment of Accounts by Participants		26
	5.2 Restriction on Acquisition of Company Stock		26
	5.3 Pass-Through Voting of Company Stock		26
	5.4 Stock Rights, Stock Splits, and Stock Dividends		27
	5.5 Participant Rights		27

i

Table of Contents
(continued)

		Page
VI.	IN-SERVICE WITHDRAWALS		28
	6.1 Age 59½ Withdrawals		28
	6.2 Financial Hardship Withdrawals		28
	6.3 Restrictions on In-Service Withdrawals		29
VII.	DISTRIBUTIONS AFTER SEPARATION FROM SERVICE		31
	7.1 Retirement Benefits		31
	7.2 Disability Benefits		31
	7.3 Death Benefits		31
	7.4 Separation From Service Prior to Retirement		32
VIII.	TIME AND FORM OF PAYMENT OF BENEFITS		37
	8.1 Time of Payment		37
	8.2 Determination of Benefit Commencement Date		37
	8.3 Forms of Benefits		43
	8.4 Cash-Out of Benefit		43
	8.5 Direct Rollover Election		43
	8.6 Payee of Benefits		44
	8.7 Benefits from Account Balances		44
	8.8 Unclaimed Benefits		44
	8.9 Claims Review		44
IX.	LOANS		46
	9.1 Eligibility for Loan		46
	9.2 Minimum Loan		46
	9.3 Maximum Loan		46
	9.4 Interest, Security, and Fees		46
	9.5 Repayment Terms of Loan		47
	9.6 Default and Offset		48
X.	ADMINISTRATION OF THE PLAN		50
	10.1 Appointment of Committee		50
	10.2 Term, Vacancies, Resignation, and Removal		50
	10.3 Officers, Records, and Procedures		50
	10.4 Meetings		50
	10.5 Self-Interest of Members		50
	10.6 Compensation and Bonding		51
	10.7 Committee Powers and Duties		51
	10.8 Employer to Supply Information		52

ii

Table of Contents
(continued)

		Page
	10.9 Indemnification		52
	10.10 Temporary Restrictions		53
XI.	TRUSTEE AND ADMINISTRATION OF TRUST FUND		54
	11.1 Appointment, Resignation, Removal, and Replacement of Trustee		54
	11.2 Trust Agreement		54
	11.3 Payment of Expenses		54
	11.4 Trust Fund Property		54
	11.5 Distributions from Participants’ Accounts		54
	11.6 Payments Solely from Trust Fund		55
	11.7 No Benefits to the Employer		55
XII.	FIDUCIARY PROVISIONS		56
	12.1 Article Controls		56
	12.2 General Allocation of Fiduciary Duties		56
	12.3 Fiduciary Duty		56
	12.4 Delegation of Fiduciary Duties		56
	12.5 Investment Manager		57
XIII.	AMENDMENTS		58
	13.1 Right to Amend		58
	13.2 Limitation on Amendments		58
XIV.	DISCONTINUANCE OF CONTRIBUTIONS, TERMINATION, PARTIAL TERMINATION, AND MERGER OR CONSOLIDATION		59
	14.1 Right to Discontinue Contributions, Terminate, or Partially Terminate		59
	14.2 Procedure in the Event of Discontinuance of Contributions, Termination, or Partial Termination		59
	14.3 Merger, Consolidation, or Transfer		59
XV.	PARTICIPATING EMPLOYERS		61
	15.1 Designation of Other Employers		61
	15.2 Single Plan		62
XVI.	MISCELLANEOUS PROVISIONS		63
	16.1 Not Contract of Employment		63
	16.2 Alienation of Interest Forbidden		63

iii

Table of Contents
(continued)

		Page
	16.3 Uniformed Services Employment and Reemployment Rights Act Requirements		63
	16.4 Payments to Minors and Incompetents		63
	16.5 Acquisition and Holding of Company Stock		63
	16.6 Participant’s and Beneficiary’s Addresses		64
	16.7 Severability		64
	16.8 Jurisdiction		64
	16.9 Incorrect Information or Error		64
	16.10 Merged Plans		64
XVII.	TOP-HEAVY STATUS		65
	17.1 Article Controls		65
	17.2 Definitions		65
	17.3 Top-Heavy Status		66
	17.4 Top-Heavy Vesting Schedule		67
	17.5 Top-Heavy Contribution		67
	17.6 Termination of Top-Heavy Status		68
	17.7 Effect of Article		68
XVIII.	EGTRRA PROVISIONS		69
	18.1 General		69
	18.2 Amendment to Provisions Governing Code Section 415 Limitation		69
	18.3 Increase in Compensation Limit		69
	18.4 Modification Of Top-Heavy Rules		69
	18.5 Amendment to Direct Rollover Rules		70
	18.6 Rollovers from Other Plans		71
	18.7 Rollovers Disregarded in Involuntary Distributions		71
	18.8 Amendment to the Contribution Provisions of the Plan		71
	18.9 Suspension Period Following Hardship Distribution		72
	18.10 Distributions following a Severance from Employment		72

iv

I.
DEFINITIONS AND CONSTRUCTION

1.1 Definitions. Where the following words and phrases appear capitalized in the Plan, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary.

(a) Account(s): Accounts means accounts or records maintained by the administrator or its agent indicating the monetary value of the total interest in the Trust Fund of each Participant, each former Participant, and each beneficiary. The types of individual accounts under this Plan are:

(1)	Salary Reduction Contribution Account;
(2)	Employer Contribution Account; and
(3)	Rollover Contribution Account.

(b)	Benefit Commencement Date: With respect to each Participant or beneficiary, the first day of the first period for which such Participant’s or beneficiary’s benefit is payable to him from the Trust Fund, determined in accordance with Section 8.2.
(c)	Bonus: For periods on or before January 1, 2004, Bonus means the amount paid to an IBP Participant pursuant to the Company’s Annual Incentive Bonus Plan. All other bonus payments, if any, including “sign-on bonuses,” “on the spot awards,” and other customized bonus programs shall not be considered a Bonus under the Plan and will be included in that Participant’s Considered Compensation.
(d)	Code: The Internal Revenue Code of 1986, as amended.
(e)	Committee: The administrative committee appointed by the Directors to administer the Plan.
(f)	Company: Dell Inc.
(g)	Company Stock: The common stock of Dell Inc.
(h)	Compensation: A Participant’s Compensation for a Limitation Year shall include all the items in Section 1.1(h)(1) below, exclude all the items in Section 1.1(h)(2) below, and shall be subject to the limitation provided in Section 1.1(h)(3) below.

(1) All of the following items shall be included:

(i) The total of all wages, salaries, fees for professional services, and other amounts received by a Participant in cash or in kind for services actually rendered in the course of employment with the

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	Employer while a Participant and an Employee to the extent such amounts are includable in gross income (but determined without regard to the exclusions from gross income under Code Sections 931 and 933);
(ii)	In the case of a Participant who is an employee within the meaning of Code Section 401(c)(1) and the Treasury regulations thereunder, the Employee’s earned income (as described in Code Section 401(c)(2) and the Treasury regulations thereunder) determined without regard to the exclusions from gross income under Code Sections 931 and 933;
(iii)	Foreign earned income (as defined in Code Section 911(b)) whether or not excludable from gross income;
(iv)	Amounts described in Code Sections 104(a)(3), 105(a), and 105(h), but only to the extent these amounts are includable in the gross income of the Participant;
(v)	The value of a non-qualified stock option granted to the Participant by the Employer, but only to the extent that the value of the option is includable in the gross income of the Participant for the taxable year in which it is granted;
(vi)	The amount includable in the gross income of the Participant upon making an election described in section 83(b);
(vii)	Elective contributions made on a Participant’s behalf by the Employer that are not includable in income under Code Sections 125, 402(e)(3), 402(h), 403(b), or 457;
(viii)	Any amounts that are not includable in the gross income of a Participant under a salary reduction agreement by reason of the application of Code Section 132(f);
(ix)	On the spot awards; and
(i)	Noncash awards such as gifts and trips.

(2) All of the following items shall be excluded to the extent they would otherwise be included under Section 1.1(i)(1):

(i)	Reimbursements and other expense allowances;
(ii)	Cash and noncash fringe benefits;
(iii)	Moving expenses;

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(iv)	Deferred compensation under any plan or program other than as specifically included in Section 1.1(h)(1)(vii);
(v)	Welfare benefits;
(vi)	Employer contributions to or payments from this or any other deferred compensation program, whether such program is qualified under Code Section 401(a) or nonqualified;
(vii)	Amounts realized from the exercise of a stock option that is not an incentive stock option within the meaning of Code Section 422;
(viii)	Amounts realized at the time restricted stock or property is freely transferable or no longer subject to a substantial risk of forfeiture in accordance with Code Section 83;
(ix)	Amounts realized from the sale, exchange, disqualifying disposition or other disposition of stock acquired under an incentive stock option;
(x)	Any other amounts that receive special tax benefits under the Code, such as premiums for group life insurance (but only to the extent such premiums are not includable in the gross income of the Participant);
(xi)	On the spot awards; and
(ii)	Noncash awards such as gifts and trips.

(3) The Compensation of any Participant taken into account for purposes of the Plan shall be limited to $200,000 for any Plan Year with such limitation to be:

(i)	Adjusted automatically to reflect any amendments to Code Section 401(a)(17) and any cost-of-living increases authorized by Code Section 401(a)(17); and
(ii)	Prorated for a Plan Year of less than twelve months and to the extent otherwise required by applicable law.

(4) For purposes of this Section, amounts under Code Section 125 include any amounts not available to a Participant in cash in lieu of group health coverage because the Participant is unable to certify that he or she has other health coverage. An amount will be treated as an amount under Code Section 125 only if the Employer does not collect information regarding the Participant’s other health coverage as part of the enrollment process of its group health plan.

-3-

(i)	Considered Compensation: A Participant’s Considered Compensation for a Limitation Year shall be equal to his Compensation (as defined above). For the 2003 Plan Year, a Participant’s Considered Compensation for a Limitation Year shall include his Compensation (as defined above) reduced by any Bonus paid to the Participant. Any bonus payments made to a Participant that is not an IBP Participant shall be included in that Participant’s Considered Compensation.
(j)	Controlled Entity: Each entity that is a member of a controlled group of corporations (within the meaning of Code Sections 414(b) and 414(c)) or an affiliated service group (within the meaning of Code Sections 414(m) or 414(o)) of which the Employer is a member.
(k)	Direct Rollover: A payment by the Plan to an Eligible Retirement Plan designated by a Distributee.
(l)	Directors: The Board of Directors of the Company.
(m)	Distributee: Each (i) Participant entitled to an Eligible Rollover Distribution, (ii) Participant’s surviving spouse with respect to the interest of such surviving spouse in an Eligible Rollover Distribution, and (iii) individual who is an alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), with regard to the interest of such former spouse in an Eligible Rollover Distribution.
(n)	Effective Date: January 1, 2003, as to this restatement of the Plan, except (i) as otherwise indicated in specific provisions of the Plan, or (ii) where provisions of the Plan are required to have an earlier effective date by applicable statute or regulation such provision shall be effective as of the required effective date. The original effective date of the Plan was June 1, 1989.
(o)	Eligible Employee: Any Employee eligible to participate in the Plan in accordance with Section 2.1.
(p)	Eligible Retirement Plan: (i) With respect to a Distributee other than a surviving spouse, an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), or a qualified plan described in Code Section 401(a), which under its provisions does, and under applicable law may, accept such Distributee’s Eligible Rollover Distribution, and (ii) with respect to a Distributee who is a surviving spouse, an individual retirement account described in Code Section 408(a) or an individual retirement annuity described in Code Section 408(b).
(q)	Eligible Rollover Distribution: With respect to a Distributee, any distribution of all or part of the Accounts of a Participant other than (i) a distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee’s designated

-4-

	beneficiary or for a specified period of ten years or more, (ii) a distribution to the extent such distribution is required under Code Section 401(a)(9), (iii) the portion of a distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities), (iv) a loan treated as a distribution under Code Section 72(p) and not excepted by Code Section 72(p)(2), (v) a loan in default that is a deemed distribution, (vi) any corrective distribution provided in Section 3.6 and Subsection 4.6(b), and (vii) any other distribution so designated by the Internal Revenue Service in revenue rulings, notices, and other guidance of general applicability. Further, a distribution pursuant to Section 6.2 from the Salary Reduction Account of a Participant who has not attained age 591/2 shall not constitute an Eligible Rollover Distribution.
(r)	Employee: Each individual employed by an Employer (including Leased Employees).
(s)	Employer: The Company and each entity that has been designated to participate in the Plan pursuant to the provisions of Article XV.
(t)	Employer Contribution Account: An individual account for each Participant, which is credited with the sum of: (i) any Employer Matching Contributions made on such Participant’s behalf pursuant to Section 3.2; (ii) any Employer Retirement Savings Contributions made on such Participant’s behalf pursuant to Section 3.3; and (iii) any Employer Fail Safe Contributions made on such Participant’s behalf pursuant to Section 3.4 to satisfy the restrictions set forth in Subsection 3.2(c). The administrator or any record keeper retained by the administrator shall create such sub-accounts to the Participant’s Employer Contribution Account as are necessary to separately account for each of the Employer Contributions described above and in Section 1.1(u).
(u)	Employer Contributions: The total of (i) Employer Matching Contributions, (ii) Employer Retirement Savings Contributions, and (iii) Employer Fail Safe Contributions.
(v)	Employer Matching Contributions: Contributions made to the Plan by the Employer pursuant to Section 3.2.
(w)	Employer Retirement Savings Contributions: Contributions made to the Plan by the Employer pursuant to Section 3.3.
(x)	Employer Fail Safe Contributions: Contributions made to the Plan by the Employer pursuant to Section 3.4.
(y)	Employment Commencement Date: The date on which an individual first performs an Hour of Service.
(z)	ERISA: The Employee Retirement Income Security Act of 1974, as amended.

-5-

(aa) Highly Compensated Employee: Each Employee who performs services during the Plan Year for which the determination of who is highly compensated is being made (the “Determination Year”) and who:

(1)	Is a five-percent owner of the Employer (within the meaning of Code Section 416(i)(1)(A)(iii)) at any time during the Determination Year or the twelve-month period immediately preceding the Determination Year (the “Look-Back Year”); or
(2)	During the Determination Year or the Look-Back Year received Compensation (within the meaning of Code Section 414(q)(4)), in excess of $80,000 (with such amount to be adjusted automatically to reflect any cost-of-living adjustments authorized by Code Section 414(q)(1)).

	For purposes of the preceding sentence, (i) all employers aggregated with the Employer under Code Section 414(b), (c), (m), or (o) shall be treated as a single employer and (ii) a former Employee who had a separation year (generally, the Determination Year such Employee separates from service) prior to the Determination Year and who was an active Highly Compensated Employee for either such separation year or any Determination Year ending on or after such Employee’s fifty-fifth birthday shall be deemed to be a Highly Compensated Employee. To the extent that the provisions of this Paragraph are inconsistent or conflict with the definition of a “highly compensated employee” set forth in Code Section 414(q) and the Treasury regulations thereunder, the relevant terms and provisions of Code Section 414(q) and the Treasury regulations thereunder shall govern and control. Notwithstanding the above, the Company may apply the top paid group election permitted by Code Section 414(q).
(bb)	Hour of Service: Each hour for which an individual is directly or indirectly paid, or entitled to payment, by the Employer or a Controlled Entity for the performance of duties.
(cc)	IBP Participant: IBP Participant means any employee that is participating in the Company’s Annual Incentive Bonus Plan and is assigned an employment classification of D3 or higher, as determined by the Company.
(dd)	Investment Fund: Investment funds made available from time to time by the Committee for the investment of Plan assets as described in Article V.
(ee)	Leased Employee: Each person who is not an employee of the Employer or a Controlled Entity but who performs services for the Employer or a Controlled Entity pursuant to an agreement (oral or written) between the Employer or a Controlled Entity and any leasing organization, provided that such person has performed such services for the Employer or a Controlled Entity or for related persons (within the meaning of Code Section 144(a)(3)) on a substantially full-time basis for a period of at least one year and such services are performed under primary direction or control by the Employer or a Controlled Entity.

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(ff)	Limitation Year: The Limitation Year is equal to the Plan Year.
(gg)	Normal Retirement Date: The date a Participant attains the age of sixty-five.
(hh)	Participant: Each individual who (i) has met the eligibility requirements for participation in the Plan pursuant to Article II or (ii) has made a Rollover Contribution in accordance with Section 3.7, but only to the extent provided in Section 3.7.
(ii)	Period of Service: Each period of an individual’s Service commencing on his Employment Commencement Date or Reemployment Commencement Date, if applicable, and ending on a Severance from Service Date. Notwithstanding the foregoing:

(1)	A period during which an individual is absent from Service by reason of the individual’s pregnancy, the birth of a child of the individual, the placement of a child with the individual in connection with the adoption of such child by the individual, or for the purposes of caring for such child for the period immediately following such birth or placement shall not constitute a Period of Service between the first and second anniversary of the first date of such absence or during any subsequent period.
(2)	A Period of Service shall also include any period required to be credited as a Period of Service by federal law, but only under the conditions and to the extent so required by such federal law.
(3)	If an individual terminates his Service (at a time other than during a leave of absence) and subsequently resumes his Service, if his Reemployment Commencement Date is within twelve months of his Severance from Service Date, such Period of Severance shall be treated as a Period of Service.
(4)	If an individual terminates his Service during a leave of absence and subsequently resumes his Service, if his Reemployment Commencement Date is within twelve months of the beginning of such leave of absence, such Period of Severance shall be treated as a Period of Service.
(5)	The Committee, in its discretion, may credit an individual with Period(s) of Service for “pre-participation service” (within the meaning of Treasury Regulation Section 1.401(a)(4)-11(d)(3)(ii)(A)), but only if (i) such pre-participation service would not otherwise be credited as a Period of Service and (ii) such crediting of Period(s) of Service (A) has a legitimate business reason, (B) does not by design or operation discriminate significantly in favor of Highly Compensated Employees, and (C) is applied to all similarly situated employees. Moreover, the Committee, in its discretion, may credit an individual with Period(s) of Service for “imputed service” (within the meaning of Treasury regulation § 1.401(a)(4)-11(d)(3)(ii)(B)), but only if (i) such imputed service would not

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	otherwise be credited as a Period of Service, (ii) such crediting of Period(s) of Service (A) has a legitimate business reason, (B) does not by design or operation discriminate significantly in favor of Highly Compensated Employees, and (C) is applied to all similarly situated employees, and (iii) the individual has not permanently ceased to perform services as an employee of the Employer or a Controlled Entity, provided that clause (iii) of this sentence shall not apply if (A) the individual is not performing services for the Employer or a Controlled Entity because of a disability, (B) the individual is performing services for another employer under an arrangement that provides some ongoing business benefit to the Employer or a Controlled Entity, or (C) for purposes of vesting and accrual, the individual is performing service for another employer which is being treated under the Plan as actual service with the Employer or a Controlled Entity.
(6)	In the event that the Plan constitutes a plan of a predecessor employer within the meaning of Code Section 414(a), service for such predecessor employer shall be treated as a Period of Service to the extent required by Code Section 414(a).
(7)	An individual’s Period of Service shall include any period of employment by such individual with Dell Financial Services, L.P.; provided, however, that this provision shall apply solely to an individual who becomes an Employee immediately following the date of his or her termination of employment with Dell Financial Services, L.P.

(jj)	Period of Severance: Each period of time commencing on an individual’s Severance from Service Date and ending on a Reemployment Commencement Date.
(kk)	Plan: The Dell Inc. 401(k) Plan, as amended from time to time.
(ll)	Plan Year: The twelve-consecutive month period commencing January 1 of each year.
(mm)	Reemployment Commencement Date: The first date on which an individual performs an Hour of Service following a Severance from Service Date.
(nn)	Rollover Contribution Account: An individual account for an Eligible Employee, which is credited with the Rollover Contributions of such Employee.
(oo)	Rollover Contributions: Contributions made by an Eligible Employee pursuant to Section 3.7.
(pp)	Salary Reduction Contribution Account: An individual account for each Participant, which is credited with any Salary Reduction Contributions made by the Employer on such Participant’s behalf and any Employer Fail Safe

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	Contributions made on such Participant’s behalf pursuant to Section 3.4 to satisfy the restrictions set forth in Subsection 3.1(e).
(qq)	Salary Reduction Contributions: Contributions made to the Plan by the Employer on a Participant’s behalf in accordance with the Participant’s elections to defer Considered Compensation or Bonus under the Plan’s qualified cash or deferred arrangement as described in Section 3.1.
(rr)	Service: The period of an individual’s employment with the Employer or a Controlled Entity (but only for periods of employment while the entity is a Controlled Entity).
(ss)	Severance from Service Date: The first date on which an individual terminates his Service following his Employment Commencement Date or Reemployment Commencement Date, if applicable. Notwithstanding the foregoing, the Severance from Service Date of an individual who is absent from Service by reason of pregnancy, the birth of a child, the placement of a child with the individual in connection with the adoption of such child by the individual, or for purposes of caring for such child for the period immediately following such birth or placement shall be the second anniversary of the first date of such absence. The Severance from Service Date of an individual who is absent from Service due to an authorized leave of absence and who does not recommence Service at the end of such leave of absence shall be the first date on which the leave of absence commenced.
(tt)	Trust: The trust(s) established under the Trust Agreement(s) to hold and invest contributions made under the Plan and income thereon, and from which Plan benefits are distributed.
(uu)	Trust Agreement: The agreement(s) entered into between the Company and the Trustee establishing the Trust, as such agreement(s) may be amended from time to time.
(vv)	Trust Fund: The funds and properties held pursuant to the provisions of the Trust Agreement for the use and benefit of the Participants, together with all income, profits, and increments thereto.
(ww)	Trustee: The trustee or trustees qualified and acting under the Trust Agreement at any time.
(xx)	Valuation Date: Each day that the New York Stock Exchange is open for business.
(yy)	Vested Interest: The percentage of a Participant’s Accounts that, pursuant to the Plan, is nonforfeitable.
(zz)	Vesting Service: The measure of service used in determining a Participant’s Vested Interest as determined in accordance with Section 7.4.

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1.2	Number and Gender. Wherever appropriate herein, words used in the singular shall be considered to include the plural, and words used in the plural shall be considered to include the singular. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender.
1.3	Headings. The headings of Articles and Sections herein are included solely for convenience, and if there is any conflict between such headings and the text of the Plan, the text shall control.
1.4	Construction. It is intended that the Plan be qualified within the meaning of Code Section 401(a) and that the Trust be tax exempt under Code Section 501(a), and all provisions herein shall be construed in accordance with such intent.
1.5	Profit Sharing Plan. The Plan is intended to qualify as a profit sharing plan for purposes of Code Sections 401(a), 402, 412, and 417. Contributions to this Plan are not dependent on profits by an Employer.

* * * * *

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II.
PARTICIPATION

2.1 Participation.

(a)	Each Eligible Employee shall be eligible to become a Participant in the Plan upon the date coincident with such Eligible Employee’s Employment Commencement Date.
(b)	Notwithstanding Subsection 2.1(a), an Eligible Employee who was a Participant in the Plan on the day prior to the Effective Date shall remain a Participant in this restatement thereof as of the Effective Date.
(c)	The following groups of Employees are not eligible to participate in the Plan:

(1)	An Employee whose terms and conditions of employment are governed by a collective bargaining agreement, unless such agreement provides for his coverage under the Plan;
(2)	A nonresident alien who receives no earned income from an Employer that constitutes income from sources within the United States unless otherwise specifically covered by a participating entity pursuant to the provisions of Article XV;
(3)	An individual who is a Leased Employee or who would be a Leased Employee but for the fact that he has not performed services on a substantially full-time basis for a period of at least one year;
(4)	Any employee that is not included on the payroll records of the Company or a Controlled Entity as a common law employee or is otherwise classified or treated by an Employer as an independent contractor or other non-common law employee, and it is expressly intended that such individuals are to be excluded from Plan participation even if a court or administrative agency determines that such individuals are common law employees;
(5)	Any individual on the payroll of Spherion Corporation;
(6)	Effective July 31, 2003, any individual who is classified as a college or high school intern by the Company (including, but not limited to, individuals with job codes ADIN001, ADIN002, ADIN003), other than any individual who has submitted an election to make Salary Reduction Contributions to the Plan on or before July 31, 2003; or
(7)	Effective July 31, 2003, any individual who is classified as a security guard by the Company and who also is employed by a law enforcement agency or a security firm (other than any individual who has submitted an election to

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make Salary Reduction Contributions to the Plan on or before July 31, 2003).”

2.2	Automatic Enrollment. Each Eligible Employee shall automatically become a Participant upon the date on which he first becomes eligible under the provisions of Section 2.1.
2.3	Cessation of Participation.

(a)	Except as provided in Subsections 2.3(b) and 2.3(c), a Participant shall continue to be a Participant so long as (and only so long as) he maintains a balance in any of his Accounts.
(b)	A Participant who ceases to be an Eligible Employee but remains an Employee shall continue to be a Participant, but, on and after the date he ceases to be an Eligible Employee, he shall no longer be entitled to make deferrals hereunder or share in allocations of Employer Contributions unless and until he shall again become an Eligible Employee.
(c)	A Participant who ceases to be an Employee shall remain a Participant as long as he has any balance is his Accounts, but he shall not be entitled to actively participate in the Plan except as otherwise specifically provided herein.

2.4 Suspension of Participation Requirements. In the event that, after application of Section 3.3(b), the group of Employees covered by the Plan do not satisfy the ratio percentage test in accordance with Code Section 410(b), certain employees of Spherion Corporation who provide services to Dell (the “Spherion Employees”) shall be permitted to participate the Plan as described below. The participation requirements will be suspended, beginning first with the Spherion Employee(s) with the lowest Compensation during the Plan Year, and continuing to suspend in ascending order the participation requirements for each Spherion Employee with a higher level of Compensation, from the lowest to the highest Compensation level, until the Plan satisfies Code Section 410(b)(1). If two or more Spherion Employees have the same Compensation, the Plan will suspend the participation requirements for all such Spherion Employees, irrespective of whether the Plan can satisfy Code Section 410(b)(1) by accruing benefits for fewer than all such Spherion Employees. If the Plan suspends the participation requirements for a Spherion Employee, that Employee will share in the allocation of Employer contributions and Participant forfeitures, if any, in accordance with the following:

(a)	In addition to the Employer Retirement Savings Contribution provided for in Subsections 3.3(a) and (b), the Employer may make an Employer Retirement Savings Contribution to the Employer Retirement Savings Contribution sub-account of each Spherion Employee permitted to Participate in the Plan pursuant to Subsection 2.4 in accordance with Subsection 3.3(a);
(b)	In addition to the Employer Fail Safe Contribution provided for in Section 3.4, the Employer may make an additional Employer Fail Safe Contribution to the Employer Fail Safe Contribution sub-account of each Spherion Employee

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permitted to Participate in the Plan pursuant to Subsection 2.4 in an amount determined by multiplying the Employee’s Compensation by the “average deferral percentage” (as defined in Subsection 3.1(f)) of all other Participants in the Plan; and

(c)

In addition to the Employer Matching Contribution provided for in Section 3.2, the Employer may make an Employer Matching Contribution to the Employer Matching Contribution sub-account of each Spherion Employee permitted to Participate in the Plan pursuant to Section 2.4 of the Plan in an amount determined by multiplying the Employee’s Compensation by the “average contribution percentage” (as defined in Subsection 3.2(d)) of all other Participants in the Plan.

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III.
CONTRIBUTIONS

3.1 Salary Reduction Contributions.

(a)	A Participant shall elect to defer an integral percentage from 0% to 25% (or such lesser percentage as may be prescribed from time to time by the Committee) of his Considered Compensation for a Plan Year by having the Employer contribute the amount so deferred to the Plan.
(b)	For the 2003 Plan Year, notwithstanding the preceding, an IBP Participant must make a separate election to defer an integral percentage from 0% to 25% (or such lesser percentage as may be prescribed from time to time by the Committee) of his Bonus, if any, by having the Employer contribute the amount so deferred to the Plan.
(c)	A Participant’s election to defer an amount of his Considered Compensation and Bonus, if any, shall be made by authorizing his Employer, in the manner prescribed by the Committee, to reduce his Considered Compensation (and, for the 2003 Plan Year, Bonus, if any), in the elected amount, and the Employer, in consideration thereof, agrees to contribute an equal amount to the Plan. A Participant’s election made pursuant to this Subsection shall be implemented as soon as administratively practicable after such election is made.
	A Participant’s Considered Compensation deferral election shall remain in force and effect for all periods following its implementation until modified in accordance with Subsection 3.1(c) or canceled in accordance with Subsection 3.1(d) or until such Participant ceases to be an Eligible Employee. For the 2003 Plan Year, a Participant’s Bonus deferral election shall remain in force and effect until the end of the Plan Year for which such election was made unless earlier modified in accordance with Subsection 3.1(c) or canceled in accordance with Subsection 3.1(d) or until such Participant ceases to be an Eligible Employee. The Company shall pay to a Participant any Considered Compensation and Bonus for a Plan Year not deferred under this Plan.
(d)	A Participant may change his deferral election percentage, effective as soon as administratively feasible by communicating such new deferral election percentage to his Employer in the manner and within the time period prescribed by the Committee. For the 2003 Plan Year, a Participant may change his deferral election percentage for his Bonus deferrals, effective as of the next following Bonus payment date, by communicating such new deferral election percentage to his Employer in the manner and within the time period prescribed by the Committee.
(e)	A Participant may cancel his deferral election effective as of the first day of any pay period by communicating such cancellation to his Employer in the manner and within the time period prescribed by the Committee. A Participant who so

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	cancels his deferral election may resume deferrals, effective as of the first day of any subsequent pay period by communicating his new deferral election to his Employer in the manner and within the time period prescribed by the Committee.
	For the 2003 Plan Year, a Participant may cancel his Bonus deferral election effective as of the next following Bonus payment date by communicating such cancellation to his Employer in the manner and within the time period prescribed by the Committee. A Participant who so cancels his Bonus deferral election may resume deferrals effective as of the next following Bonus payment date by communicating his new deferral election to his Employer in the manner and within the time period prescribed by the Committee.
(f)	In restriction of the Participants’ elections, the Salary Reduction Contributions and the elective deferrals (within the meaning of Code Section 402(g)(3)) under all other plans, contracts, and arrangements of the Employer on behalf of any Participant for any calendar year shall not exceed $12,000 (with such amount to be adjusted automatically to reflect any cost-of-living adjustments authorized by Code Section 402(g)(5)).
(g)	In further restriction of the Participants’ elections, it is specifically provided that one of the “actual deferral percentage” tests set forth in Code Section 401(k)(3) and the Treasury regulations thereunder must be met in each Plan Year with respect to which the Plan does not satisfy the alternative method of satisfying the nondiscrimination requirements as set forth in Code Section 401(k)(12). Such testing shall utilize the prior year testing method as such term is defined in Internal Revenue Service Notice 98-1. If multiple use of the alternative limitation (within the meaning of Code Section 401(m)(9) and Treasury regulation § 1.401(m)-2(b)) occurs during a Plan Year, such multiple use shall be corrected in accordance with the provisions of Treasury regulation § 1.401(m)-2(c); provided, however, that if such multiple use is not eliminated by making Employer Fail Safe Contributions, then the “actual contribution percentages” of all Highly Compensated Employees participating in the Plan shall be reduced, and the excess contributions distributed, in accordance with the provisions of Subsection 3.6(c) and applicable Treasury regulations, so that there is no such multiple use.
(h)	If the Committee determines that a reduction of the Considered Compensation (or, for the 2003 Plan Year, Bonus) deferral elections made pursuant to Subsection 3.1(a), 3.1(c), or 3.1(d) is necessary to ensure that the restrictions set forth in Subsection 3.1(e) or 3.1(f) are met for any Plan Year, the deferral elections made pursuant to Subsections 3.1(a), 3.1(c), and 3.1(d) of affected Participants may be reduced by the Committee on a temporary and prospective basis in such manner as the Committee shall determine.
(i)	As soon as administratively feasible following the end of each pay period (or, with regard to Bonus deferrals, the next Bonus payment date), but no later than the time required by applicable law, the Employer shall contribute to the Trust, as

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Salary Reduction Contributions with respect to each Participant, an amount equal to the amount of Considered Compensation (or, if applicable, Bonus) deferred, pursuant to Subsection 3.1(a) (as adjusted pursuant to Subsection 3.1(g)), by such Participant during such period.

3.2 Employer Matching Contributions.

(a)	For each pay period, the Employer shall contribute to the Trust, as Employer Matching Contributions, an amount that equals 100% of the Salary Reduction Contributions that were made pursuant to Section 3.1 on behalf of each of the Participants during such pay period and that were not in excess of 3% of each such Participant’s Considered Compensation and Bonus, as applicable, for such pay period.
(b)	In addition to the Employer Matching Contributions made pursuant to Subsection 3.2(a), for each calendar quarter the Employer may in its discretion contribute to the Trust an additional Employer Matching Contribution on behalf of each Participant who is an Eligible Employee on the last day of each Plan Year. The additional Employer Matching Contribution made pursuant to this Subsection shall be an amount that equals the difference, if any, between (i) 100% of the total Salary Reduction Contributions made pursuant to Section 3.1 on behalf of each Participant for the Plan Year not in excess of 3% of each such Participant’s total Considered Compensation and Bonus for the Plan Year and (ii) the total Employer Matching Contributions made on behalf of such Participant for the Plan Year.
(c)	In restriction of the Employer Matching Contributions hereunder, it is specifically provided that one of the “actual contribution percentage” tests or alternative methods of satisfying such tests set forth in Code Section 401(m) and the Treasury regulations thereunder must be met in each Plan Year. Such testing shall utilize the prior year testing method as such term is defined in Internal Revenue Service Notice 98-1. The Committee may elect, in accordance with applicable Treasury regulations, to treat Salary Reduction Contributions to the Plan as Employer Matching Contributions for purposes of meeting this requirement.

3.3 Employer Retirement Savings Contributions.

(a) For each Plan Year, the Employer in its discretion may contribute to the Trust an Employer Retirement Savings Contribution on behalf of each Participant who either (i) was employed by the Employer on the last day of such Plan Year or (ii) terminated employment with the Employer during such Plan Year on or after his Normal Retirement Date or by reason of death or total and permanent disability (as defined in Section 7.2) during such Plan Year. The Employer Retirement Savings Contribution made pursuant to this Subsection 3.3(a) shall equal a percentage (selected by and in the discretion of the Employer) of the

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Compensation of each such eligible Participant for such Plan Year or any amount as determined by the Employer in its discretion.

(b)

For each Plan Year, the Employer in its discretion may contribute to the Trust an Employer Retirement Savings Contribution on behalf of certain Participants who are not Highly Compensated Employees for such Plan Year as described below. The Employer Retirement Savings Contribution made pursuant to this Subsection 3.3(b) shall equal an amount as determined by the Employer in its discretion. Any amounts contributed pursuant to this Subsection 3.3(b) shall be allocated in accordance with Subsection 4.2(c). The Employer Retirement Savings Contribution will be made by suspending the accrual requirements for Includable Employees who are Participants, beginning first with the Includable Employee(s) employed with the Employer on the last day of the Plan Year, then the Includable Employee(s) who have the latest Separation from Service during the Plan Year, and continuing to suspend in descending order the accrual requirements for each Includable Employee who incurred an earlier Separation from Service, from the latest to the earliest separation from service date, until the Plan satisfies the Code Section 410(b)(1) coverage test for the Plan Year. If two or more Includable Employees have a separation from service on the same day, the Committee will suspend the accrual requirements for all such Includable Employees, irrespective of whether the Plan can satisfy the Code Section 410(b)(1) coverage test by accruing benefits for fewer than all such Includable Employees. If the Plan suspends the accrual requirements for an Includable Employee, that Employee will share in the allocation of Employer contributions and Participant forfeitures, if any, without regard to the Service he has earned for the Plan Year and without regard to whether he is employed by the Employer on the last day of the Plan Year. This suspension of accrual requirements applies separately to the Code Section 401(m) portion of the Plan, and the Committee will treat an Employee as benefiting under that portion of the Plan if the Employee is an Eligible Employee for purposes of the Code Section 401(m) nondiscrimination test. “Includable Employees” are all Employees that are not Highly Compensated Employees other than: (a) those Employees excluded from participating in the Plan for the entire Plan Year by reason of the collective bargaining unit exclusion or the nonresident alien exclusion or by reason of the participation requirements Article II and (b) any Employee who incurs a separation from service during the Plan Year.

3.4 Employer Fail Safe Contributions.

(a) In addition to the Employer Matching Contributions made pursuant to Section 3.2 and the Employer Retirement Savings Contribution made pursuant to Section 3.3, for each Plan Year the Employer in its discretion may contribute to the Trust as a “fail safe contribution” for such Plan Year the amounts necessary to cause the Plan to satisfy the restrictions set forth in Subsection 3.1(e) (with respect to certain restrictions on Salary Reduction Contributions) and Subsection 3.2(c) (with respect to certain restrictions on Employer Matching Contributions). Amounts contributed in order to satisfy the restrictions set forth in

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Subsection 3.1(f) shall be considered “qualified matching contributions” (within the meaning of Treasury regulation § 1.401(k)-1(g)(13)) for purposes of such Subsection, and amounts contributed in order to satisfy the restrictions set forth in Subsection 3.2(c) shall be considered Employer Matching Contributions for purposes of the Plan. Any amounts contributed pursuant to this Section shall be allocated in accordance with Subsections 4.2(e) and 4.2(f).

3.5 Return of Contributions. Anything to the contrary herein notwithstanding, the Employer’s contributions to the Plan are contingent upon the deductibility of such contributions under Code Section 404. To the extent that a deduction for contributions is disallowed, such contributions shall, upon the written demand of the Employer, be returned to the Employer by the Trustee within one year after the date of disallowance, reduced by any net losses of the Trust Fund attributable thereto but not increased by any net earnings of the Trust Fund attributable thereto, which net earnings shall be treated as a forfeiture. Moreover, if Employer contributions are made under a mistake of fact, such contributions shall, upon the written demand of the Employer, be returned to the Employer by the Trustee within one year after the payment thereof, reduced by any net losses of the Trust Fund attributable thereto but not increased by any net earnings of the Trust Fund attributable thereto, which net earnings shall be treated as a forfeiture.

3.6 Disposition of Excess Deferrals and Excess Contributions.

(a)	Anything to the contrary herein notwithstanding, any (i) Salary Reduction Contributions to the Plan for a calendar year on behalf of a Participant in excess of the limitations set forth in Subsection 3.1(e) and (ii) “excess deferrals” from other plans that are allocated to the Plan by such Participant no later than March 1 of the next following calendar year within the meaning of, and pursuant to the provisions of, Code Section 402(g)(2) shall be distributed to such Participant not later than April 15 of the next following calendar year.
(b)	Anything to the contrary herein notwithstanding, if for any Plan Year the aggregate Salary Reduction Contributions made by the Employer on behalf of Highly Compensated Employees exceeds the maximum amount of Salary Reduction Contributions permitted on behalf of such Highly Compensated Employees pursuant to Subsection 3.1(f), such excess (determined by reducing Salary Reduction Contributions on behalf of Highly Compensated Employees in order of the highest dollar amounts contributed on behalf of such Highly Compensated Employees in accordance with Code Section 401(k)(8)(C) and the Treasury regulations thereunder) shall be distributed to the Highly Compensated Employees on whose behalf such excess was contributed before the end of the next following Plan Year.
(c)	Anything to the contrary herein notwithstanding, if, for any Plan Year, the aggregate Employer Matching Contributions allocated to the Accounts of Highly Compensated Employees exceeds the maximum amount of such Employer Matching Contributions permitted on behalf of such Highly Compensated Employees pursuant to Subsection 3.2(c), such excess (determined by reducing

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Employer Matching Contributions made on behalf of Highly Compensated Employees in order of the highest dollar amounts contributed on behalf of such Highly Compensated Employees in accordance with Code Section 401(m)(6)(C) and Treasury regulations thereunder) shall be distributed to the Highly Compensated Employees on whose behalf such excess contributions were made (or, if such excess contributions are forfeitable, they shall be forfeited) before the end of the next following Plan Year.

(d)

In coordinating the disposition of excess deferrals and excess contributions pursuant to this Section, such excess deferrals and excess contributions shall be disposed of in the following order:

(1)	First, Salary Reduction Contributions that constitute excess deferrals described in Subsection 3.6(a) that are not considered in determining the amount of Employer Matching Contributions pursuant to Section 3.2 shall be distributed;
(2)	Next, excess Salary Reduction Contributions that constitute excess deferrals described in Subsection 3.6(a) that are considered in determining the amount of Employer Matching Contributions pursuant to Section 3.2 shall be distributed, and the Employer Matching Contributions with respect to such excess Salary Reduction Contributions shall be forfeited;
(3)	Next, excess Salary Reduction Contributions described in Subsection 3.6(b) that are not considered in determining the amount of Employer Matching Contributions pursuant to Section 3.2 shall be distributed;
(4)	Next, excess Salary Reduction Contributions described in Subsection 3.6(b) that are considered in determining the amount of Employer Matching Contributions pursuant to Section 3.2 shall be distributed, and the Employer Matching Contributions with respect to such excess Salary Reduction Contributions shall be forfeited; and
(5)	Finally, excess Employer Matching Contributions described in Subsection 3.6(c) shall be distributed (or, if forfeitable, forfeited).

(e) Any distribution or forfeiture of excess deferrals or excess contributions pursuant to the provisions of this Section shall be adjusted for income or loss allocated thereto in the manner determined by the Committee in accordance with any method permissible under applicable Treasury regulations. Any forfeiture pursuant to the provisions of this Section shall be considered to have occurred on the date that is 21/2 months after the end of the Plan Year.

3.7 Rollover Contributions.

(a) Qualified Rollover Contributions may be made to the Plan by any Eligible Employee of amounts received by such Eligible Employee from certain individual

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retirement accounts or annuities or from an employees’ trust described in Code Section 401(a), which is exempt from tax under Code Section 501(a), but only if any such Rollover Contribution is an “eligible rollover distribution” within the meaning of Code Section 402(f)(2)(A) and is made pursuant to and in accordance with applicable provisions of the Code and Treasury regulations promulgated thereunder. A Rollover Contribution of such eligible rollover distribution may be made to the Plan irrespective of whether such eligible rollover distribution was paid to the Eligible Employee or paid to the Plan as a “direct” Rollover Contribution. A direct Rollover Contribution to the Plan may be effectuated only by wire transfer directed to the Trustee or by issuance of a check made payable to the Trustee that is negotiable only by the Trustee and that identifies the Eligible Employee for whose benefit the Rollover Contribution is being made. Any Eligible Employee desiring to effect a Rollover Contribution to the Plan must execute and file with the Committee the form prescribed by the Committee for such purpose. The Committee may require as a condition to accepting any Rollover Contribution that such Eligible Employee furnish any evidence that the Committee in its discretion deems satisfactory to establish that the proposed Rollover Contribution is in fact eligible for rollover to the Plan and is made pursuant to and in accordance with applicable provisions of the Code and Treasury regulations. All Rollover Contributions to the Plan must be made in cash.

(b)

An Eligible Employee who has made a Rollover Contribution in accordance with this Section, but who has not otherwise become a Participant in the Plan in accordance with Article II, shall become a Participant coincident with such Rollover Contribution; provided, however, that such Participant shall not have a right to make deferrals or have Employer Contributions made on his behalf until he has otherwise satisfied the requirements imposed by Article II.

* * * * *

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IV.
ALLOCATIONS AND LIMITATIONS

4.1	Suspended Amounts. All contributions, forfeitures, and the net income or net loss of the Trust Fund shall be held in suspense until allocated or applied as provided herein.
4.2	Allocation of Contributions to Accounts.

(a)	Salary Reduction Contributions made by the Employer on a Participant’s behalf pursuant to Section 3.1 shall be allocated to such Participant’s Salary Reduction Contribution Account.
(b)	The Employer Matching Contributions made pursuant to Subsections 3.2(a) and 3.2(b) shall be allocated to the Employer Contribution Accounts of the Participants for whom such contributions were made.
(c)	The Employer Retirement Savings Contribution, if any, made pursuant to Section 3.3 for a Plan Year shall be allocated to the Employer Contribution Accounts of the Participants eligible to receive an allocation of such contribution. The allocation to each such eligible Participant’s Employer Contribution Account shall be (i) in the case of the Employer Retirement Savings Contribution made pursuant to Subsection 3.3(a), the portion of such Employer Retirement Savings Contribution that is in the same proportion that such Participant’s Compensation for such Plan Year bears to the total of all such eligible Participants’ Compensation for such Plan Year and (ii) in the case of the Employer Retirement Savings Contribution made pursuant to Subsection 3.3(b), the amount of such Employer Retirement Savings Contribution made on behalf of such Participant in accordance with Subsection 3.3(b).
(d)	The Employer Fail Safe Contribution, if any, made pursuant to Section 3.4 for a Plan Year in order to satisfy the restrictions set forth in Subsection 3.1(f) shall be allocated to the Salary Reduction Contribution Accounts of Participants who (i) received an allocation of Salary Reduction Contributions for such Plan Year and (ii) were not Highly Compensated Employees for such Plan Year (with each such Participant individually hereinafter referred to as an “Eligible Participant” for purposes of this Subsection). Such allocation shall be made, first, to the Salary Reduction Contribution Account of the Eligible Participant who received the least amount of Compensation for such Plan Year until the limitation set forth in Section 4.6 has been reached as to such Eligible Participant, then to the Salary Reduction Contribution Account of the Eligible Participant who received the next smallest amount of Compensation for such Plan Year until the limitation set forth in Section 4.6 has been reached as to such Eligible Participant, and continuing in such manner until the Employer Fail Safe Contribution for such Plan Year has been completely allocated or the limitation set forth in Section 4.6 has been reached as to all Eligible Participants. Any remaining Employer Fail Safe

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	Contribution for such Plan Year shall be allocated among the Salary Reduction Contribution Accounts of all Participants who were Eligible Employees during such Plan Year, with the allocation to each such Participant’s Salary Reduction Contribution Account being the portion of such remaining Employer Fail Safe Contribution which is in the same proportion that such Participant’s Compensation for such Plan Year bears to the total of all such Participants’ Compensation for such Plan Year.
(e)	The Employer Fail Safe Contribution, if any, made pursuant to Section 3.4 for a Plan Year in order to satisfy the restrictions set forth in Subsection 3.2(c) shall be allocated to the Employer Contribution Accounts of Participants who (i) received an allocation of Employer Matching Contributions for such Plan Year and (ii) were not Highly Compensated Employees for such Plan Year (with each such Participant individually hereinafter referred to as an “Eligible Participant” for purposes of this Subsection). Such allocation shall be made, first, to the Employer Contribution Account of the Eligible Participant who received the least amount of Compensation for such Plan Year until the limitation set forth in Section 4.6 has been reached as to such Eligible Participant, then to the Employer Contribution Account of the Eligible Participant who received the next smallest amount of Compensation for such Plan Year until the limitation set forth in Section 4.6 has been reached as to such Eligible Participant, and continuing in such manner until the Employer Fail Safe Contribution for such Plan Year has been completely allocated or the limitation set forth in Section 4.6 has been reached as to all Eligible Participants. Any remaining Employer Fail Safe Contribution for such Plan Year shall be allocated among the Employer Contribution Accounts of all Participants who were Eligible Employees during such Plan Year, with the allocation to each such Participant’s Employer Contribution Account being the portion of such remaining Employer Fail Safe Contribution which is in the same proportion that such Participant’s Compensation for such Plan Year bears to the total of all such Participants’ Compensation for such Plan Year.
(f)	If an Employer Fail Safe Contribution is made in order to satisfy the restrictions set forth in both Subsection 3.1(f) and Subsection 3.2(c) for the same Plan Year, the Employer Fail Safe Contribution made in order to satisfy the restrictions set forth in Subsection 3.1(f) shall be allocated (pursuant to Subsection 4.2(f)) prior to allocating the Employer Fail Safe Contribution made in order to satisfy the restrictions set forth in Subsection 3.2(c) (pursuant to Subsection 4.2(f)). In determining the application of the limitations set forth in Section 4.6 to the allocations of Employer Fail Safe Contributions, all Annual Additions (as such term is defined in Section 4.6) to a Participant’s Accounts other than Employer Fail Safe Contributions shall be considered allocated prior to Employer Fail Safe Contributions.

4.3 Time of Allocation of Contributions. All contributions to the Plan shall be considered allocated to Participants’ Accounts when received by the Trustee, but no later than the last day of the Plan Year for which they were made, as determined pursuant to Article III,

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	except that, for purposes of valuation of the Participants’ Accounts under Section 4.5, contributions shall be considered allocated to Participants’ Accounts only when received by the Trustee notwithstanding that this may be later than the last day of the Plan Year for which such contributions were made.
4.4	Application of Forfeitures. Any amounts that are forfeited under any provision hereof during a Plan Year shall be applied in the manner determined by the Committee to reduce Employer Contributions or to pay expenses incident to the administration of the Plan and Trust. Prior to such application, forfeited amounts shall be invested in the Investment Fund(s) designated from time to time by the Committee.
4.5	Valuation of Accounts. All amounts contributed to the Trust Fund shall be invested as soon as administratively feasible following their receipt by the Trustee, and the balance of each Account shall reflect the result of daily pricing of the assets in which such Account is invested from the time of receipt by the Trustee until the time of distribution. Such daily pricing shall include the valuation of assets of the Investment Funds in which each such Account is invested, the earnings and losses attributable to such Investment Fund allocable to each such Account, and the payment of any expenses or fees charged against each such Account. In the case of any contributions temporarily held in suspense pursuant to Section 4.1, any earnings (or losses) attributable to such contributions during such period of suspension shall be allocated to the Accounts of Participants receiving an allocation of such contributions under any reasonable allocation method determined by the Committee.
4.6	Code Section 415 Limitations and Corrections.

(a)

Contrary Plan provisions notwithstanding, in no event shall the Annual Additions credited to a Participant’s Accounts for any Limitation Year exceed the Maximum Annual Additions for such Participant for such year. For purposes of determining whether the Annual Additions under this Plan exceed the limitations herein provided, all defined contribution plans of the Employer are to be treated as one defined contribution plan. In addition, all defined contribution plans of Controlled Entities (as defined in Subsection 4.6(c)) shall be aggregated for this purpose.

(b)

If as a result of a reasonable error in estimating a Participant’s compensation, a reasonable error in determining the amount of elective deferrals (within the meaning of Code Section 402(g)(3)) that may be made with respect to any individual under the limits of Code Section 415, or because of other limited facts and circumstances, the Annual Additions that would be credited to a Participant’s Accounts for a Limitation Year would nonetheless exceed the Maximum Annual Additions for such Participant for such year, the excess Annual Additions that, but for this Section, would have been allocated to such Participant’s Accounts shall be disposed of as follows:

(1) First, any such excess Annual Additions in the form of Salary Reduction Contributions on behalf of such Participant that would not have been

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	considered in determining the amount of Employer Matching Contributions pursuant to Section 3.2 shall be distributed to such Participant, adjusted for income or loss allocated thereto;
(2)	Next, any such excess Annual Additions in the form of Salary Reduction Contributions on behalf of such Participant that would have been considered in determining the amount of Employer Matching Contributions pursuant to Section 3.2 shall be distributed to such Participant, adjusted for income or loss allocated thereto, and the Employer Matching Contributions that would have been allocated to such Participant’s Accounts based upon such distributed Salary Reduction Contributions shall, to the extent such amounts would have otherwise been allocated to such Participant’s Accounts, be treated as a forfeiture;
(3)	Finally, any such excess Annual Additions in the form of Employer Retirement Savings Contributions shall, to the extent such amounts would otherwise have been allocated to such Participant’s Accounts, be treated as a forfeiture.
	If the Annual Additions credited to a Participant’s Accounts for any Limitation Year under this Plan plus the additions credited on his behalf under other defined contribution plans required to be aggregated pursuant to this Subsection would exceed the Maximum Annual Additions for such Participant for such Limitation Year, the Annual Additions under this Plan and the additions under such other plans shall be reduced on a pro rata basis and allocated, reallocated, or returned in accordance with applicable plan provisions regarding Annual Additions in excess of Maximum Annual Additions.

(c) For purposes of this Section, the following terms and phrases when capitalized shall have these respective meanings:

(1)	Annual Additions: With respect to a Participant for any Limitation Year, the total of (i) the Employer Contributions, Salary Reduction Contributions, and forfeitures, if any, allocated to such Participant’s Accounts for such year, (ii) Participant’s contributions, if any, (excluding any Rollover Contributions) for such year, and (iii) amounts referred to in Code Sections 415(l)(1) and 419A(d)(2).
(2)	Controlled Entity: For purposes of this Section only, a “Controlled Entity” as defined in Subsection 1.1(j), but excluding an affiliated service group member within the meaning of Code Section 414(m) and determined by application of a more than a 50% control standard in lieu of an 80% control standard.
(3)	Maximum Annual Additions: With respect to a Participant for any Limitation Year, the lesser of (i) $40,000 (with such amount to be adjusted

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automatically to reflect any cost-of-living adjustment authorized by Code Section 415(d)) or (ii) 100% of such Participant’s Compensation during such Limitation Year.

(d) If the Committee determines that a reduction of the Considered Compensation and Bonus deferral elections, if any, made pursuant to Section 3.1 is necessary to ensure that the limitations set forth in this Section are met for any Limitation Year, the Considered Compensation or Bonus deferral elections of affected Participants made pursuant to Section 3.1 may be reduced by the Committee on a temporary and prospective basis in such manner as the Committee shall determine.

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V.
INVESTMENT OF ACCOUNTS

5.1 Investment of Accounts by Participants. Each Participant shall designate, in accordance with the following Subsections and the procedures established from time to time by the Committee, the manner in which the amounts allocated to each of his Accounts shall be invested among the Investment Funds made available from time to time by the Committee for this purpose.

(a)

A Participant may designate one of such Investment Funds for all amounts allocated to his Accounts, or he may split the investment of such amounts among such Investment Funds in such increments as the Committee may prescribe. If a Participant fails to make a designation with respect to all or any of such amounts, then such non-designated amounts shall be invested in the Investment Fund or Investment Funds designated by the Committee from time to time in a uniform and nondiscriminatory manner.

(b)

A Participant may (i) change his investment designation for future contributions to be allocated to his Accounts or (ii) convert his investment designation with respect to amounts already allocated to his Accounts. Any such change shall be made in accordance with the procedures established by the Committee, and the Committee may limit the frequency of such changes.

5.2

Restriction on Acquisition of Company Stock. Notwithstanding any other provision hereof, it is specifically provided that the Trustee shall not purchase Company Stock or other Company securities during any period in which such purchase is, in the opinion of counsel for the Company or the Committee, restricted by any law or regulation applicable thereto. During such period, amounts that would otherwise be invested in Company Stock or other Company securities pursuant to an investment designation shall be invested in such other assets as the Trustee may in its discretion determine, or the Trustee may hold such amounts uninvested for a reasonable period pending the purchase of such stock or securities.

5.3

Pass-Through Voting of Company Stock. To the extent permitted by section 404(a) of ERISA, at each annual meeting and special meeting of the shareholders of the Company, a Participant may direct the voting of the number of whole shares of Company Stock attributable to his Accounts as of the Valuation Date coinciding with or, if none, next preceding the record date for such meeting. The Committee shall forward or cause to be forwarded to each such Participant copies of pertinent proxy solicitation materials provided by the Company together with a request for such Participant’s confidential instructions as to the manner in which such             shares are to be voted. The Committee shall direct the Trustee to vote such shares in accordance with such instructions and, to the extent permitted by section 404(a) of ERISA, shall also direct the Trustee as to the manner in which to vote any shares of Company Stock at any such meeting for which the Committee has not received, or is not subject to receiving, such voting instructions.

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5.4

Stock Rights, Stock Splits, and Stock Dividends. No Participant shall have any right to request, direct, or demand that the Committee or the Trustee exercise on his behalf rights or privileges to acquire, convert, or exchange Company Stock or other securities. The Trustee shall exercise or sell any such rights or privileges as directed by the Committee. Company Stock received by the Trustee by reason of a stock split, stock dividend, or recapitalization shall be appropriately allocated to the Accounts of each affected Participant.

5.5

Participant Rights. For purposes of Article V only, the beneficiary of a deceased Participant and any alternate payee under a qualified domestic relations order (as defined in Section 17.2) shall have the rights of a Participant.

* * * * *

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VI.
IN-SERVICE WITHDRAWALS

6.1 Age 591/2 Withdrawals. A Participant who has attained age fifty-nine and one-half may withdraw from his Accounts an amount not exceeding the then value of his Vested Interest in such Accounts. Such withdrawal shall come, first, from such Participant’s Rollover Contribution Account, second, from his Vested Interest in his Employer Contribution Account, and, finally, from his Salary Reduction Contribution Account.

6.2 Financial Hardship Withdrawals.

(a)

A Participant who has a “financial hardship,” as determined by the Committee, and who has made all available withdrawals pursuant to Section 6.1 and pursuant to the provisions of any other plans of the Employer and any Controlled Entities of which he is a member and who has obtained all available loans pursuant to Article IX and pursuant to the provisions of any other plans of the Employer and any Controlled Entities of which he is a member may withdraw from his Employer Contribution Account, his Rollover Contribution Account, and his Salary Reduction Contribution Account amounts not to exceed the lesser of (i) such Participant’s Vested Interest in such Accounts or (ii) the amount determined by the Committee as being available for withdrawal pursuant to this Subsection. Such withdrawal shall come, first, from the Participant’s Rollover Contribution Account, second, from his Vested Interest in his Employer Contribution Account, and, finally, from his Salary Reduction Contribution Account.

(b)

For purposes of this Section, “financial hardship” shall mean the immediate and heavy financial needs of the Participant. A withdrawal based upon financial hardship pursuant to this Section shall not exceed the amount that is both required to meet the immediate financial needs created by the hardship and not reasonably available from other resources of the Participant. The amount required to meet the Participant’s immediate financial needs may include any amounts necessary to pay any federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution. The determination of the existence of a Participant’s financial hardship and the amount required to be distributed to meet the needs created by the hardship shall be made by the Committee. The decision of the Committee shall be final and binding, provided that all Participants similarly situated shall be treated in a uniform and nondiscriminatory manner. A withdrawal shall be deemed to be made on account of the immediate and heavy financial needs of a Participant if the withdrawal is for:

(1) Expenses for medical care described in Code Section 213(d) previously incurred by the Participant, the Participant’s spouse, or any dependents of the Participant (as defined in Code Section 152) or necessary for those persons to obtain medical care described in Code Section 213(d) and not reimbursed or reimbursable by insurance;

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(2)	Costs directly related to the purchase of a principal residence of the Participant (excluding mortgage payments);
(3)	Payment of tuition and related educational fees, and room and board expenses, for the next twelve months of post-secondary education for the Participant or the Participant’s spouse, children, or dependents (as defined in Code Section 152);
(4)	Payments necessary to prevent the eviction of the Participant from his principal residence or the foreclosure on the mortgage of the Participant’s principal residence; or
(5)	Such other financial needs that the Commissioner of Internal Revenue may deem to be immediate and heavy financial needs through the publication of revenue rulings, notices, and other documents of general applicability.

(c) The above Subsections of this Section notwithstanding, in addition to the restrictions on all in-service withdrawals set forth in Section 6.3, the following restrictions on financial hardship withdrawals under this Section shall apply:

(1)	Withdrawals under this Section from a Participant’s Salary Reduction Contribution Account shall be limited to the sum of the Participant’s Salary Reduction Contributions to the Plan, plus income allocable thereto and credited to the Participant’s Salary Reduction Account as of December 31, 1988, less any previous withdrawals of such amounts;
(2)	Employer Contributions used to satisfy the restrictions set forth in Subsection 3.1(f), and income allocable thereto, shall not be subject to withdrawal under this Section; and
(3)	A Participant who makes a withdrawal from his Salary Reduction Contribution Account under this Section may not make elective contributions or employee contributions to the Plan or any other qualified or nonqualified plan of the Employer or any Controlled Entity for a period of six months following the date of such withdrawal.

6.3 Restrictions on In-Service Withdrawals.

(a)	All withdrawals pursuant to this Article shall be made only in the manner and within the time prior to the proposed date of withdrawal prescribed by the Committee.
(b)	No withdrawal shall be made from an Account to the extent such Account has been pledged to secure a loan from the Plan.

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(c)	If a Participant’s Account from which a withdrawal is made is invested in more than one Investment Fund, the withdrawal shall be made pro rata from each Investment Fund in which such Account is invested.
(d)	All withdrawals under this Article shall be paid in cash.
(e)	Any withdrawal hereunder that constitutes an Eligible Rollover Distribution shall be subject to the Direct Rollover election described in Article VII.
(f)	This Article shall not be applicable to a Participant following termination of employment with the Employer, and the amounts in such Participant’s Accounts shall be distributable only in accordance with the provisions of Article VII.

* * * * *

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VII.
DISTRIBUTIONS AFTER SEPARATION FROM SERVICE

7.1 Retirement Benefits. A Participant who terminates his employment with the Employer and all Controlled Entities on or after his Normal Retirement Date shall be entitled to a “retirement benefit,” payable at the time and in the form provided in Article VIII. A Participant’s retirement benefit shall be equal to the value of his Accounts on his Benefit Commencement Date.

7.2 Disability Benefits. In the event a Participant becomes totally and permanently disabled, as determined pursuant to this subsection, such Participant shall be entitled to a “disability benefit,” payable at the time and in the form provided in Article VIII. A Participant’s disability benefit shall be equal to the value of his Accounts on his Benefit Commencement Date. A Participant shall be considered totally and permanently disabled if the Committee determines, based on a written medical opinion (unless waived by the Committee as unnecessary), that such Participant is permanently incapable of performing his job for physical or mental reasons and has incurred a “disability” within the meaning of Code Section 401(k)(2)(B)(i)(I).

7.3 Death Benefits. Upon the death of a Participant while an Employee or an employee of a Controlled Entity, the Participant’s designated beneficiary shall be entitled to a “death benefit,” payable at the time and in the form provided in Article VIII. A Participant’s death benefit shall be equal to the value of his Accounts on his Benefit Commencement Date.

(a)

Each Participant shall have the right to designate the beneficiary or beneficiaries to receive payment of his benefit in the event of his death. Each such designation shall be made by executing the beneficiary designation form prescribed by the Committee and filing such form with the Committee. Any such designation may be changed at any time by such Participant by execution and filing of a new designation in accordance with this Section. Notwithstanding the foregoing, if a Participant who is married on the date of his death has designated an individual or entity other than his surviving spouse as his beneficiary, such designation shall not be effective unless (i) such surviving spouse has consented thereto in writing and such consent (A) acknowledges the effect of such specific designation, (B) either consents to the specific designated beneficiary (which designation may not subsequently be changed by the Participant without spousal consent) or expressly permits such designation by the Participant without the requirement of further consent by such spouse, and (C) is witnessed by a Plan representative (other than the Participant) or a notary public or (ii) the consent of such spouse cannot be obtained because such spouse cannot be located or because of other circumstances described by applicable Treasury Regulations. Any such consent by such surviving spouse shall be irrevocable.

(b)

If no beneficiary designation is on file with the Committee at the time of the death of the Participant or if such designation is not effective for any reason as

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determined by the Committee, the designated beneficiary or beneficiaries to receive such death benefit shall be as follows:

(1)	If a Participant leaves a surviving spouse, his designated beneficiary shall be such surviving spouse; and
(2)	If a Participant leaves no surviving spouse, his designated beneficiary shall be (i) such Participant’s executor or administrator or (ii) his heirs at law if there is no administration of such Participant’s estate.

(c) Notwithstanding the preceding provisions of this Section and to the extent not prohibited by state or federal law, if a Participant is divorced from his spouse and at the time of his death is not remarried to the person from whom he was divorced, any designation of such divorced spouse as his beneficiary under the Plan filed prior to the divorce shall be null and void unless the contrary is expressly stated in writing filed with the Committee by the Participant. The interest of such divorced spouse failing hereunder shall vest in the persons specified in Subsection 7.3(b) as if such divorced spouse did not survive the Participant.

7.4 Separation From Service Prior to Retirement. Each Participant whose employment with the Employer and all Controlled Entities is terminated prior to his Normal Retirement Date for any reason other than total and permanent disability or death shall be entitled to a “termination benefit,” payable at the time and in the form provided in Article VIII. A Participant’s termination benefit shall be equal to his Vested Interest in the value of his Accounts on his Benefit Commencement Date.

(a) Determination of Vested Interest.

(1)	A Participant shall have a 100% Vested Interest in his Salary Reduction Contribution Account and his Rollover Contribution Account at all times.
(2)	A Participant’s Vested Interest in his Employer Contribution Account shall be determined by such Participant’s years of Vesting Service in accordance with the following schedule:

Years of Vesting Service		Vested Interest
Less than	1 year		0	%
	1 year		20	%
	2 years		40	%
	3 years		60	%
	4 years		80	%
	5 years or more		100	%

(3) Notwithstanding Subsection 7.4(a)(2), with respect to any Participant who was a Participant in the Plan on the day prior to the Effective Date, in no event shall such Participant’s Vested Interest in his Employer Contribution

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Account after the Effective Date be less than such Vested Interest would have been had the Plan provisions prior to such date been in effect.

(4)

Notwithstanding Subsection 7.4(a)(2), a Participant shall have a 100% Vested Interest in his Employer Contribution Account upon the earliest to occur of (i) the attainment of his Normal Retirement Date while employed by the Employer or a Controlled Entity, (ii) the date such Participant is determined by the Committee to be “totally and permanently disabled” (as later defined in this Subsection), (iii) the death of such Participant while an Employee or an employee of a Controlled Entity, or (iv) if such Participant is an affected Participant, the occurrence of an event described in, and under the conditions set forth in, Article XIV. For purposes of Clause (ii) of the preceding sentence, “totally and permanently disabled” shall mean either “totally and permanently disabled” as defined in Section 7.2 or a determination by the Committee that, because of physical or mental reasons, the Participant is permanently incapable of performing any duties for the Employer or a Controlled Entity.

(b) Crediting of Vesting Service.

(1)	For the period preceding the Effective Date, subject to the provisions of Section 7.4(c), an individual shall be credited with Vesting Service in an amount equal to all service credited to him for vesting purposes under the Plan as it existed on the day prior to the Effective Date.
(2)	On and after the Effective Date, subject to the remaining Subsections of this Section and to the provisions of Section 7.4(c), an individual shall be credited with Vesting Service in an amount equal to his aggregate Periods of Service whether or not such Periods of Service are completed consecutively. The completion of 365 days of Periods of Service shall constitute one year of Vesting Service.

(c) Forfeiture of Vesting Service.

(1)

In the case of an individual who terminates employment with the Employer and all Controlled Entities at a time when he has a 0% Vested Interest in his Employer Contribution Account and who then incurs a Period of Severance that equals or exceeds the greater of five years or his aggregate Periods of Service completed before such Period of Severance, such individual’s Periods of Service completed before such Period of Severance shall be forfeited and completely disregarded in determining his years of Vesting Service.

(2)

In the case of a Participant who terminates employment with the Employer and all Controlled Entities at a time when he has a Vested Interest in his Employer Contribution Account of more than 0% but less than 100% and then incurs a Period of Severance of five consecutive years, such

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Participant’s Periods of Service completed after such Period of Severance shall be disregarded for purposes of determining such Participant’s Vested Interest in any Plan benefits derived from Employer Contributions made on his behalf before such Period of Severance, but such Participant’s Periods of Service completed before such Period of Severance shall not be disregarded in determining his Vested Interest in any Plan benefits derived from Employer Contributions made on his behalf after such Period of Severance.

(3)

A Participant who terminates employment with the Employer and all Controlled Entities at a time when he has a 100% Vested Interest in his Employer Contribution Account shall not forfeit any of his Vesting Service for purposes of determining such Participant’s Vested Interest in any Plan benefits derived from Employer Contributions made on his behalf.

(d) Forfeitures of Nonvested Account Balance.

(1)

With respect to a Participant who terminates employment with the Employer and all Controlled Entities with a Vested Interest in his Employer Contribution Account that is less than 100% and receives a distribution from the Plan of the balance of his Vested Interest in his Accounts in the form of a lump sum distribution by the close of the second Plan Year following the Plan Year in which his employment is terminated, the nonvested portion of such terminated Participant’s Employer Contribution Account as of the Valuation Date next preceding his Benefit Commencement Date shall become a forfeiture as of his Benefit Commencement Date (or as of his date of termination of employment with the Employer and all Controlled Entities if no amount is payable from the Trust Fund on behalf of such Participant with such Participant being considered to have received a distribution of zero dollars on his date of termination of employment).

(2)

With respect to a Participant who terminates employment with the Employer and all Controlled Entities with a Vested Interest in his Employer Contribution Account less than 100% and who is not otherwise subject to the forfeiture provisions of Subsection 7.4(d)(1), the nonvested portion of his Employer Contribution Account shall be forfeited as of the earlier of (i) the date the Participant completes a Period of Severance of five consecutive years or (ii) the date of the terminated Participant’s death.

(e) Restoration of Forfeited Account Balance. In the event that the nonvested portion of a terminated Participant’s Employer Contribution Account becomes a forfeiture, the terminated Participant shall, upon subsequent reemployment with the Employer or a Controlled Entity prior to incurring a Period of Severance of five consecutive years, have the forfeited amount restored to such Participant’s Employer Contribution Account, unadjusted by any subsequent gains or losses of

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the Trust Fund; provided, however, that such restoration shall be made only if, within five (5) years after the date the Participant is reemployed, such Participant repays in cash all amounts previously distributed to him from his or her (i) Salary Reduction Contribution Account (not including earnings on the Participant’s Salary Reduction Contributions), and (ii) Employer Contribution Account. A reemployed Participant who was not entitled to a distribution from the Plan on his date of termination of employment shall be considered to have repaid a distribution of zero dollars on the date of his reemployment. Any such restoration shall be made as of the Valuation Date coincident with or next succeeding the date of repayment. Notwithstanding anything to the contrary in the Plan, forfeited amounts to be restored by the Employer pursuant to this Section shall be charged against and deducted from forfeitures for the Plan Year in which such amounts are restored. If such forfeitures otherwise available are not sufficient to provide such restoration, the portion of such restoration not provided by forfeitures shall be charged against and deducted from Employer Retirement Savings Contributions otherwise available for allocation to other Participants, and any additional amount needed to restore such forfeited amounts shall be a minimum required Employer Retirement Savings Contribution (which shall be made without regard to current or accumulated earnings and profits).

(f)

Special Formula for Determining Vested Interest for Partial Accounts. With respect to a Participant whose Vested Interest in his Employer Contribution Account is less than 100% and who makes a withdrawal from or receives a termination distribution from his Employer Contribution Account other than a lump sum distribution by the close of the second Plan Year following the Plan Year in which his employment is terminated, any amount remaining in his Employer Contribution Account shall continue to be maintained as a separate account. At any relevant time, such Participant’s nonforfeitable portion of his separate account shall be determined in accordance with the following formula:

X=P(AB + (R x D)) - (R x D)

For purposes of applying the formula: X is the amount of such separate account in which the Participant has a Vested Interest at the relevant time; P is the Participant’s Vested Interest in his Employer Contribution Account at the relevant time; AB is the balance of such separate account at the relevant time; R is the ratio of the balance of such separate account at the relevant time to the balance of such separate account after the withdrawal or distribution; and D is the amount of the withdrawal or distribution. For all other purposes of the Plan, a Participant’s separate account shall be treated as an Employer Contribution Account. Upon his incurring a Period of Severance of five consecutive years, the forfeitable portion of a Participant’s separate account and Employer Contribution Account shall be forfeited as of the end of the Plan Year during which the Participant completes such Period of Severance if not forfeited earlier pursuant to the provisions of Section 6.4(d)(1).

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(g)

Special Rules for DFS Employees. Notwithstanding the preceding, any Participant who terminates his or her employment with the Employer pursuant to a written agreement which provides that he or she shall accept employment with Dell Financial Services, L.P., which is an affiliate of the Employer, shall be 100% vested in his or her account balance as of December 31, 2001. This Subsection shall not apply to individuals who terminate employment after December 31, 2001.

(h)

Special Rules for Alternate Payees. The Committee may direct the Trustee under the nondiscriminatory policy adopted by the Committee to immediately pay benefits to an alternate payee designated under a Qualified Domestic Relations Order as defined in Code Section 414(p). To the extent provided under a Qualified Domestic Relations Order, a former spouse of a Participant shall be treated as the spouse or surviving spouse for all purposes of the Plan.

* * * * *

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VIII.
TIME AND FORM OF PAYMENT OF BENEFITS

8.1	Time of Payment. A Participant’s benefit shall be paid or commence, as applicable, on his Benefit Commencement Date. Any amount allocable to a Participant’s Accounts after his Benefit Commencement Date shall be distributed, as soon as administratively feasible after the date that such amount is paid to the Trust Fund and allocated to his Accounts.
8.2	Determination of Benefit Commencement Date.

(a)	Subject to the provisions of the remaining Subsections of this Section, a Participant’s Benefit Commencement Date shall be the date that is as soon as administratively feasible after the date the Participant or his beneficiary becomes entitled to a benefit pursuant to Article VII.
(b)	As provided in Subsection 8.2(g) and in Section 8.4 unless a terminated Participant consents to a distribution pursuant to Subsection 8.2(a), his Benefit Commencement Date shall be deferred beyond the date specified in Subsection 8.2(a) to the date that is as soon as administratively feasible after the earliest of (i) the date the Participant attains age sixty-five, (ii) the Participant’s date of death, or (iii) the date the Participant (or, if applicable, his beneficiary) elects by written notice to the Committee prior to such date. The Committee shall furnish information to each Participant or beneficiary pertinent to such Participant’s or beneficiary’s consent no less than thirty days (unless such thirty-day period is waived by an affirmative election in accordance with applicable Treasury regulations) and no more than ninety days before such Participant’s Benefit Commencement Date, and the furnished information shall include a general description of the material features of, and an explanation of the relative values of, the alternative forms of benefit available under the Plan and must inform the Participant (or, if applicable, his beneficiary) of his right to defer his Benefit Commencement Date and of his Direct Rollover right pursuant to Section 8.5 below, if applicable.
(c)	Except as otherwise specifically provided in this Section 8.2, a Participant’s Benefit Commencement Date shall in no event be later than the sixtieth day following the close of the Plan Year during which such Participant attains, or would have attained, his Normal Retirement Date or, if later, terminates his employment with the Employer and all Controlled Entities.
(d)	A Participant’s Benefit Commencement Date shall be in compliance with the provisions of Code Section 401(a)(9) and applicable Treasury regulations thereunder and shall in no event be later than:

(1) April 1 of the calendar year following the later of (i) the calendar year in which such Participant attains the age of seventy and one-half or (ii) the calendar year in which such Participant terminates his employment with

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	the Employer and all Controlled Entities (provided, however, that clause (ii) of this sentence shall not apply in the case of a Participant who is a “five-percent owner” (as defined in Code Section 416) with respect to the Plan Year ending in the calendar year in which such Participant attains the age of seventy and one-half); and
(2)	In the case of a benefit payable pursuant to Section 7.3, (i) if payable to other than the Participant’s spouse, the last day of the one-year period following the death of such Participant or (ii) if payable to the Participant’s spouse, after the date upon which such Participant would have attained the age of seventy and one-half, unless such surviving spouse dies before payments commence, in which case the Benefit Commencement Date may not be deferred beyond the last day of the one-year period following the death of such surviving spouse.
	The provisions of this Section notwithstanding, a Participant may not elect to defer the receipt of his benefit hereunder to the extent that such deferral creates a death benefit that is more than incidental within the meaning of Code Section 401(a)(9)(G) and applicable Treasury regulations thereunder.

(e)	If (i) a Participant attained age seventy and one-half, but did not terminate employment with the Employer and all Controlled Entities prior to 1997, (ii) such Participant’s Benefit Commencement Date occurred prior to his termination of employment pursuant to the provisions of Subsection 8.2(d) as in effect prior to the Effective Date, (iii) such Participant is an Employee, and (iv) such Participant was not a “five-percent owner” (as defined in Code Section 416) with respect to the Plan Year ending in the calendar year in which such Participant attained the age of seventy and one-half, such Participant may affirmatively elect to cease the distribution of his Accounts hereunder until the time described in Subsection 8.2(d)(1).
(f)	Subject to the provisions of Subsection 8.2(d), a Participant’s Benefit Commencement Date shall not occur unless the Article VI event entitling the Participant to a benefit constitutes a distributable event described in Code Section 401(k)(2)(B) and, in the case of an event described in Section 7.1, 7.3 or 7.4, shall not occur while the Participant is employed by the Employer or any Controlled Entity.
(g)	Subject to the provisions of Subsection 8.2(d), a Participant (other than a Participant who dies or whose Vested Interest in his Accounts is not in excess of $5,000) must request and file a claim for benefits in the manner prescribed by the Committee before payment of his benefit will commence.

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(h) Model Amendment for Compliance with Final Treasury Regulations Under Code Section 401(a)(9).

(1)

General Rules. The provisions of this Subsection shall apply for purposes of determining required minimum distributions for calendar years beginning on or after January 1, 2003. The requirements of this Subsection shall take precedence over any inconsistent provisions of the Plan. All distributions required under this Subsection shall be determined and made in accordance with the Treasury regulations under Code Section 401(a)(9). Notwithstanding the other provisions of the Plan, distributions may be made under a designation made before January 1, 1984, in accordance with section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (“TEFRA”) and the provisions of the plan that relate to section 242(b)(2) of TEFRA.

(2)

Time and Manner of Distribution.

(A)	Required Beginning Date. The Participant’s entire interest will be distributed, or begin to be distributed, to the Participant no later than the participant’s required beginning date.
(B)	Death of Participant Before Distributions Begin. If the participant dies before distributions begin, the participant’s entire interest will be distributed, and begin to be distributed, no later than as follows:

(I)

If the participant dies before distributions begin and there is a designated beneficiary, the participant’s entire interest will be distributed to the designated beneficiary by December 31 of the calendar year containing the fifth anniversary of the Participant’s death. If the Participant’s surviving spouse is the Participant’s sole designated beneficiary and the surviving spouse dies after the participant but before distributions to either the Participant or the surviving spouse begin, this paragraph will apply as if the surviving spouse were the participant.

(II)

If there is no designated beneficiary as of September 30 of the year following the year of the Participant’s death, the participant’s entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

For purposes of this Subsection 8.2(h)(2) and Subsection 8.2(h)(4), unless the second sentence of Subsection 8.2(h)(2)(B)(I) applies, distributions are considered to begin on the Participant’s required beginning date. If the second sentence of Subsection 8.2(h)(2)(B)(I) applies, distributions are considered to begin on the

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date distributions are required to begin to the surviving spouse. If distributions under an annuity purchased from an insurance company irrevocably commence to the participant before the participant’s required beginning date (or to the Participant’s surviving spouse before the date distributions are required to begin to the surviving spouse), the date distributions are considered to begin is the date distributions actually commence.

(C)

Forms of Distribution. Unless the Participant’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the required beginning date, as of the first distribution calendar year distributions will be made in accordance with Subsections 8.2(h)(3) and (4) below. If the Participant’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Code Section 401(a)(9) and the Treasury regulations.

(3) Required Minimum Distributions During a Participant’s Lifetime.

(A) Amount of Required Minimum Distribution For Each Distribution Calendar Year. During a Participant’s lifetime, the minimum amount that will be distributed for each distribution calendar year is the lesser of:

(I)

The quotient obtained by dividing the Participant’s account balance by the distribution period in the Uniform Lifetime Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the Participant’s age as of the Participant’s birthday in the distribution calendar year; or

(II)

If the Participant’s sole designated beneficiary for the distribution calendar year is the Participant’s spouse, the quotient obtained by dividing the Participant’s account balance by the number in the Joint and Last Survivor Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the Participant’s and spouse’s attained ages as of the Participant’s and spouse’s birthdays in the distribution calendar year.

(B) Lifetime Required Minimum Distributions Continue Through Year of Participant’s Death. Required minimum distributions will be determined under this Subsection 8.2(h)(3) beginning with the first distribution calendar year and up to and including the distribution calendar year that includes the Participant’s date of death.

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(4) Required Minimum Distributions After a Participant’s Death.

(A) Death On or After Date Distributions Begin.

(I) Participant Survived by Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s account balance by the longer of the remaining life expectancy of the Participant or the remaining life expectancy of the Participant’s designated beneficiary, determined as follows:

(a) The Participant’s remaining life expectancy is calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

(b) If the Participant’s surviving spouse is the Participant’s sole designated beneficiary, the remaining life expectancy of the surviving spouse is calculated for each distribution calendar year after the year of the Participant’s death using the surviving spouse’s age as of the spouse’s birthday in that year. For distribution calendar years after the year of the surviving spouse’s death, the remaining life expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse’s birthday in the calendar year of the spouse’s death, reduced by one for each subsequent calendar year.

(c) If the Participant’s surviving spouse is not the Participant’s sole designated beneficiary, the designated beneficiary’s remaining life expectancy is calculated using the age of the beneficiary in the year following the year of the Participant’s death, reduced by one for each subsequent year.

(II) No Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is no designated beneficiary as of September 30 of the year after the year of the Participant’s death, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s account balance by the Participant’s remaining life expectancy calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

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(B) Death Before Date Distributions Begin.

(I)	Participant Survived by Designated Beneficiary. If the Participant dies before distributions begin and there is a designated beneficiary, the Participant’s entire interest will be distributed, and begin to be distributed, to the designated beneficiary by December 31 of the calendar year containing the fifth anniversary of the Participant’s death. If the participant’s surviving spouse is the Participant’s sole designated beneficiary and the surviving spouse dies after the Participant but before distributions to either the participant or the surviving spouse begin, this paragraph will apply as if the surviving spouse were the Participant.
(II)	No Designated Beneficiary. If the Participant dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the Participant’s death, distribution of the participant’s entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.
(III)	Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Begin. If the Participant dies before the date distributions begin, the Participant’s surviving spouse is the Participant’s sole designated beneficiary, and the surviving spouse dies before distributions are required to begin to the surviving spouse, this Subsection 8.2(h)(4)(B) will apply as if the surviving spouse were the Participant.

(5) Definitions.

(A)

Designated beneficiary. The individual who is designated as the beneficiary under Section 7.3 of the Plan and is the designated beneficiary under Code Section 401(a)(9) and section 1.401(a)(9)-1, Q&A-4, of the Treasury regulations.

(B)

Distribution calendar year. A calendar year for which a minimum distribution is required. For distributions beginning before the Participant’s death, the first distribution calendar year is the calendar year immediately preceding the calendar year that contains the Participant’s required beginning date. For distributions beginning after the Participant’s death, the first distribution calendar year is the calendar year in which distributions are required to begin under Subsection 8.2(h)(2)(B). The required minimum distribution for the Participant’s first distribution

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	calendar year will be made on or before the Participant’s required beginning date. The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the Participant’s required beginning date occurs, will be made on or before December 31 of that distribution calendar year.
(C)	Life expectancy. Life expectancy as computed by use of the Single Life Table in section 1.401(a)(9)-9 of the Treasury regulations.
(D)	Participant’s account balance. The account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. The account balance for the valuation calendar year includes any amounts rolled over or transferred to the Plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year.
(E)	Required beginning date. The date specified in Section 8.2(d)(1) of the Plan.

8.3 Forms of Benefits. A Participant’s benefit shall be paid (or transferred pursuant to Section 8.5, if applicable) in a single lump sum payment. Benefits shall be paid or transferred in cash.

8.4 Cash-Out of Benefit. Not in Excess of $5,000. Notwithstanding any provision of the Plan to the contrary, if a Participant terminates his employment with the Employer and all Controlled Entities and his Vested Interest in his Accounts is not in excess of $5,000, such Participant’s benefit shall be paid in one lump sum cash payment in lieu of any other form of benefit herein provided. Any such payment shall be made at the time specified in Subsection 8.2(a) without regard to the consent restrictions of Subsection 8.2(b). The provisions of this Section shall not be applicable to a Participant following his Benefit Commencement Date.

8.5 Direct Rollover Election. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee’s election under this Section, a Distributee may elect, at the time and in the manner prescribed by the Committee, to have all or any portion of an Eligible Rollover Distribution (other than any portion attributable to the offset of an outstanding loan balance of such Participant pursuant to the Plan’s loan procedure) paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover. The preceding sentence notwithstanding, a Distributee may elect a Direct Rollover pursuant to this Section only if such Distributee’s Eligible Rollover Distributions during the Plan Year are reasonably expected to total $200 or more. Furthermore, if less than

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100% of the Participant’s Eligible Rollover Distribution is to be a Direct Rollover, the amount of the Direct Rollover must be $500 or more. Prior to any Direct Rollover pursuant to this Section, the Committee may require the Distributee to furnish the Committee with a statement from the plan, account, or annuity to which the benefit is to be transferred verifying that such plan, account, or annuity is, or is intended to be, an Eligible Retirement Plan. Notwithstanding the above, any financial hardship withdrawal made to a Participant pursuant to Article VI shall not qualify as an Eligible Rollover Distribution and the Participant shall not be entitled to make a direct rollover election with respect to such distribution.

8.6

Payee of Benefits. Unless otherwise provided in the Plan, a Participant’s benefit shall be paid to such Participant unless the Participant has died, in which case such Participant’s benefit shall be paid to his beneficiary designated in Section 7.3.

8.7 Benefits from Account Balances. With respect to any benefit payable in any form pursuant to the Plan, such benefit shall be provided from the Account balance(s) to which the particular Participant or beneficiary is entitled.

8.8 Unclaimed Benefits. In the case of a benefit payable on behalf of a Participant, if the Committee is unable to locate the Participant or beneficiary to whom such benefit is payable, upon the Committee’s determination thereof, such benefit shall be forfeited. Notwithstanding the foregoing, if subsequent to any such forfeiture the Participant or beneficiary to whom such benefit is payable makes a valid claim for such benefit, such forfeited benefit shall be restored to the Plan in the manner provided in Section 7.4(e).

8.9 Claims Review.

(a) In any case in which a claim for Plan benefits of a Participant or beneficiary is denied or modified, the Committee shall furnish written notice to the claimant within ninety days of the date such claim is received by the Committee (or within 180 days if additional information requested by the Committee necessitates an extension of the ninety-day period and the claimant is informed of such extension in writing within the original ninety-day period), which notice shall:

(1)	State the specific reason or reasons for the denial or modification;
(2)	Provide specific reference to pertinent Plan provisions on which the denial or modification is based;
(3)	Provide a description of any additional material or information necessary for the Participant, his beneficiary, or representative to perfect the claim and an explanation of why such material or information is necessary; and
(4)	Explain the Plan’s claim review procedure described in Subsection 8.9(b).

(b) In the event a claim for Plan benefits is denied or modified, if the Participant, his beneficiary, or a representative of such Participant or beneficiary desires to have such denial or modification reviewed, he must, within sixty days following receipt

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	of the notice of such denial or modification, submit a written request for review by the Committee of its initial decision. In connection with such request, the Participant, his beneficiary, or the representative of such Participant or beneficiary may review any pertinent documents upon which such denial or modification was based and may submit issues and comments in writing. Within sixty days following such request for review the Committee shall, after providing a full and fair review, render its final decision in writing to the Participant, his beneficiary, or the representative of such Participant or beneficiary stating specific reasons for such decision and making specific references to pertinent Plan provisions upon which the decision is based. If special circumstances require an extension of such sixty-day period, the Committee’s decision shall be rendered as soon as possible, but not later than 120 days after receipt of the request for review. If an extension of time for review is required, written notice of the extension shall be furnished to the Participant, his beneficiary, or the representative of such Participant or beneficiary prior to the commencement of the extension period.
(c)	Timely completion of the claims procedures described in this Section shall be a condition precedent to the commencement of any legal or equitable action in connection with a claim for benefits under the Plan by a Participant or by any other person or entity claiming rights through such Participant; provided, however, that the Committee in its discretion may waive compliance with such claims procedures as a condition precedent to any such action.
(d)	Any legal action with respect to a claim for Plan benefits must be filed no later than one year after the later of (i) the date the claim is denied by the Committee or (ii) if a review of such denial is requested, the date of the final decision by the Committee with respect to such request.

* * * * *

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IX.
LOANS

9.1 Eligibility for Loan.

(a)	Subject to the provisions of this Article, the following individuals shall be eligible for loans under the Plan: (i) each Participant who is an Employee. (An individual who is eligible to apply for a loan under the Plan as described in the preceding sentence shall hereinafter be referred to as a “Participant” for purposes of this Article.)
(b)	Notwithstanding the above, a Participant may not have more than two (2) loan outstanding at any time.
(c)	Upon application by a Participant and subject to such uniform and nondiscriminatory rules and regulations as the Committee may establish, the Committee may in its discretion direct the Trustee to make a loan or loans to such Participant.

9.2 Minimum Loan. A loan to a Participant may not be for an amount less than $500.00.

9.3 Maximum Loan.

(a)	A loan to a Participant may not exceed 50% of the then value of such Participant’s Vested Interest in his Accounts.
(b)	Notwithstanding anything to the contrary, no loan shall be made from the Plan to a Participant to the extent such loan would cause the total of all loans made to the Participant from all qualified plans of the Employer and Controlled Entities (“Outstanding Loans”) to exceed the lesser of:

(1)	$50,000 (reduced by the excess, if any, of (i) the highest outstanding balance of Outstanding Loans during the one-year period ending on the day before the date on which the loan is to be made, over (ii) the outstanding balance of Outstanding Loans on the date on which the loan is to be made); or
(2)	One-half of the present value of the Participant’s nonforfeitable accrued benefit under all qualified plans of the Employer and Controlled Entities.

9.4 Interest, Security, and Fees.

(a) Any loan made pursuant to this Article shall bear interest at a rate established by the Committee from time to time and communicated to the Participants, which rate shall provide the Plan with a return commensurate with the interest rates charged by persons in the business of lending money for loans which would be made under similar circumstances.

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(b)	Any loan shall be made as an investment of a segregated loan fund to be established in the Trust Fund for the Participant to whom the loan is made. Any loan shall be considered to come, first, from the Participant’s Rollover Contribution Account, second, from the Participant’s Vested Interest in his Employer Contribution Account, and, finally, from the Participant’s Salary Reduction Contribution Account. The Trustee shall fund a Participant’s segregated loan fund by liquidating such portion of the assets of the Accounts from which the Participant’s loan is to be made as is necessary to fund the loan and transferring the proceeds to such segregated loan fund. If a Participant’s Accounts are invested in more than one Investment Fund, the transfer shall be made pro rata from each such Investment Fund.
(c)	The loan shall be secured by a pledge of the Participant’s segregated loan fund. By agreeing to the pledge of the segregated loan fund as security for the loan, a Participant shall be deemed to have consented to the distribution of such segregated loan fund prior to the time specified in Code Section 411(a)(11) and the applicable Treasury regulations thereunder.
(d)	The Committee in its discretion may impose a reasonable fee on the issuance of each loan.

9.5 Repayment Terms of Loan.

(a)

A Participant who is an Employee receiving compensation from the Employer at the time of receipt of a loan shall be required, as a condition to receiving a loan, to enter into an irrevocable agreement authorizing the Employer to make payroll deductions from his compensation so long as the Participant is such an Employee and to transfer such payroll deduction amounts to the Trustee in payment of such loan plus interest. In the case of a Participant who (i) is not at the time of commencement of his loan an Employee, or (ii) is not at the commencement of his loan receiving compensation from the Employer (or is receiving insufficient compensation to cover his scheduled loan repayments), or (iii) was an Employee receiving compensation from the Employer at the time of commencement of his loan and either (A) continues to be an Employee but ceases to receive compensation from the Employer (or is receiving insufficient compensation to cover his scheduled loan repayments), (B) ceases to be an Employee and is not entitled to a distribution of his Accounts under the terms of the Plan, or (C) ceases to be an Employee and immediately commences employment with a Controlled Entity or Dell Financial Services L.P., except as otherwise permitted in Subsection 9.5(c), each such Participant shall make or continue to make his loan repayments (or portion of his loan repayments not covered by his compensation) in the manner prescribed by the Committee.

(b)

The terms of the loan shall (i) require level amortization with payments not less frequently than quarterly, (ii) require that the loan be repaid over an amortization period of one to four and one-half years (unless the Participant certifies in writing to the Committee that the loan is to be used to acquire any dwelling unit which

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	within a reasonable time is to be used (determined at the time the loan is made) as a principal residence of the Participant, in which case the loan must be repaid over an amortization period of five to twenty years), (iii) allow prepayment without penalty at any time, provided that any prepayment must be for the full outstanding loan balance (including interest), (iv) require that the balance of the loan (including interest) shall become due and payable (to the extent not otherwise due and payable) within ninety days of the date the Participant or, if applicable, the Participant’s beneficiary, is first entitled to a distribution from the Plan (other than a distribution pursuant to Article VIII) irrespective of whether such Participant or beneficiary elects or consents to such distribution, and (v) provide that such Participant’s outstanding loan balance (including interest), if not paid in accordance with the repayment provisions of the loan, shall be treated as a deemed distribution upon the end of the “cure period” permitted by applicable Treasury Regulations and repaid by offsetting such balance against the amount in the Participant’s segregated loan fund pledged as security for the loan. With respect to the correction of a loan pursuant to the “cure period” provisions of Treas. Reg. Section 1.72(p)-1, Q&A-10, the Employer may adopt a nondiscriminatory policy which permits Participants who have failed to make one or more loan payments to make addition payments to the Plan’s Trust prior to the end of the applicable “cure period” in the amount necessary to permit such Participant’s loan not to be treated as a deemed distribution.
(c)	The above notwithstanding, a Participant who is on an unpaid leave of absence from the Employer may elect to suspend payments on his loan during such leave of absence for a period of up to one year. Upon such Participant’s return to active employment with the Employer at the conclusion of such leave of absence, or upon the expiration of such one-year period, if earlier, such Participant shall be permitted to refinance his loan, including all accrued and unpaid interest, over a term that does not extend beyond the expiration of the original term of the loan.
(d)	Amounts tendered to the Trustee by a Participant in repayment of a loan made pursuant to this Article (i) shall initially be credited to the Participant’s segregated loan fund, (ii) then shall be transferred as soon as practicable following receipt thereof to the Account or Accounts from which the Participant’s loan was made, and (iii) finally, shall be invested in accordance with the current designation in effect as to the investment of contributions being allocated to such Accounts pursuant to Article V.

9.6 Default and Offset.

(a) If the Participant fails in any way to comply with the repayment terms of a loan, such loan shall be repaid by offsetting the Participant’s outstanding loan balance (including interest) against the amount in the Participant’s segregated loan fund pledged as security for the loan. Except as provided in Subsection 9.6(b), any such outstanding loan balance (including interest) shall be so offset and repaid as soon as administratively feasible after such failure to comply, and such repayment

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shall be prior to any withdrawal or distribution of benefits from the pledged portion of the Participant’s Accounts pursuant to the provisions of the Plan.

(b)

Notwithstanding Subsection 9.6(a), amounts in a Participant’s Accounts may not be offset and used to satisfy the payment of a defaulted outstanding loan (including interest) prior to the earliest time the amounts in any such Account are otherwise permitted to be distributed under applicable law. In the event an offset of a defaulted loan is not permitted pursuant to the preceding sentence, such outstanding loan balance (including interest) shall be deemed distributed to such Participant on the last day of the calendar quarter (effective January 1, 2001, on the ninetieth day) following the calendar quarter in which the first unpaid installment on such loan was due and unpaid.

* * * * *

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X.
ADMINISTRATION OF THE PLAN

10.1 Appointment of Committee. The general administration of the Plan shall be vested in the Company. The Company may delegate certain duties to the Committee that shall be appointed by the Directors and shall consist of one or more persons. Any individual, whether or not an Employee, is eligible to become a member of the Committee. Each member of the Committee shall, before entering upon the performance of his duties, qualify by signing a consent to serve as a member of the Committee under and pursuant to the Plan and by filing such consent with the records of the Committee. For purposes of ERISA, the Company shall be the Plan “administrator” and the Committee shall be the “named fiduciary” with respect to the general administration of the Plan (except as to the investment of the assets of the Trust Fund).

10.2 Term, Vacancies, Resignation, and Removal. Each member of the Committee shall serve until he resigns, dies, or is removed by the Directors. At any time during his term of office, a member of the Committee may resign by giving written notice to the Directors and the Committee, such resignation to become effective upon the appointment of a substitute member or, if earlier, the lapse of thirty days after such notice is given as herein provided. At any time during his term of office, and for any reason, the Directors may remove a member of the Committee with or without cause, and the Directors may in their discretion fill any vacancy that may result therefrom. Any member of the Committee who is an Employee shall automatically cease to be a member of the Committee as of the date he ceases to be employed by the Employer and all Controlled Entities.

10.3 Officers, Records, and Procedures. The Committee may select officers and may appoint a secretary who need not be a member of the Committee. The Committee shall keep appropriate records of its proceedings and the administration of the Plan and shall make available for examination during business hours to any Participant or beneficiary such records as pertain to that individual’s interest in the Plan. The Committee shall designate the person or persons who shall be authorized to sign for the Committee and, upon such designation, the signature of such person or persons shall bind the Committee.

10.4 Meetings. The Committee shall hold meetings upon such notice and at such time and place as it may from time to time determine. Notice to a member shall not be required if waived in writing by that member. A majority of the members of the Committee duly appointed shall constitute a quorum for the transaction of business. All resolutions or other actions taken by the Committee at any meeting where a quorum is present shall be by vote of a majority of those present at such meeting and entitled to vote. Resolutions may be adopted or other action taken without a meeting upon written consent signed by all of the members of the Committee.

10.5 Self-Interest of Members. No member of the Committee shall have any right to vote or decide upon any matter relating solely to himself under the Plan or to vote in any case in which his individual right to claim any benefit under the Plan is particularly involved. In any case in which a Committee member is so disqualified to act and the remaining

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	members cannot agree, the Directors shall appoint a temporary substitute member to exercise all the powers of the disqualified member concerning the matter in which he is disqualified.
10.6	Compensation and Bonding. The members of the Committee shall not receive compensation with respect to their services for the Committee. To the extent required by ERISA or other applicable law, or required by the Company, members of the Committee shall furnish bond or security for the performance of their duties hereunder.

10.7 Committee Powers and Duties. The Committee shall supervise the administration and enforcement of the Plan according to the terms and provisions hereof and shall have all powers necessary to accomplish these purposes, including, but not by way of limitation, the right, power, authority, and duty:

(a)	To make rules, regulations, and bylaws for the administration of the Plan that are not inconsistent with the terms and provisions hereof, provided such rules, regulations, and bylaws are evidenced in writing and copies thereof are delivered to the Trustee and to the Company, and to enforce the terms of the Plan and the rules and regulations promulgated thereunder by the Committee;
(b)	To construe in its discretion all terms, provisions, conditions, and limitations of the Plan, and, in all cases, the construction necessary for the Plan to qualify under the applicable provisions of the Code shall control;
(c)	To correct any defect or to supply any omission or to reconcile any inconsistency that may appear in the Plan in such manner and to such extent as it shall deem expedient in its discretion to effectuate the purposes of the Plan;
(d)	To employ and compensate such accountants, attorneys, investment advisors, and other agents, employees, and independent contractors as the Committee may deem necessary or advisable for the proper and efficient administration of the Plan;
(e)	To determine in its discretion all questions relating to eligibility;
(f)	To make a determination in its discretion as to the right of any person to a benefit under the Plan and to prescribe procedures to be followed by distributees in obtaining benefits hereunder;
(g)	To prepare, file, and distribute, in such manner as the Committee determines to be appropriate, such information and material as is required by the reporting and disclosure requirements of ERISA;
(h)	To furnish the Employer any information necessary for the preparation of such Employer’s tax return or other information that the Committee determines in its discretion is necessary for a legitimate purpose;

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(i)	To require and obtain from the Employer and the Participants and their beneficiaries any information or data that the Committee determines is necessary for the proper administration of the Plan;
(j)	To instruct the Trustee as to the loans to Participants pursuant to the provisions of Article XII;
(k)	To instruct the Trustee as to the management, investment, and reinvestment of the Trust Fund as provided in the Trust Agreement;
(l)	To appoint investment managers;
(m)	To receive and review reports from the Trustee and from investment managers as to the financial condition of the Trust Fund, including its receipts and disbursements;
(n)	To review periodically the Plan’s short-term and long-term investment needs and goals and to communicate such needs and goals to the Trustee and any investment manager as frequently as the Committee, in its discretion, deems necessary for the proper administration of the Plan and Trust;
(o)	To establish or designate Investment Funds as investment options under the Plan as provided in Article V;
(p)	To determine in its discretion administrative expenses properly payable from the Plan and allocate the payment of such expenses from Participants’ Accounts or forfeitures.
(q)	To direct the Trustee as to the exercise of rights or privileges to acquire, convert, or exchange Company Stock pursuant to Article V; and
(r)	To amend the Plan in accordance with and to the extent provided in Article XIII.

10.8 Employer to Supply Information. The Employer shall supply full and timely information to the Committee, including, but not limited to, information relating to each Participant’s compensation, age, retirement, death, or other cause of termination of employment and such other pertinent facts as the Committee may require. The Employer shall advise the Trustee of such of the foregoing facts as are deemed necessary for the Trustee to carry out the Trustee’s duties under the Plan. When making a determination in connection with the Plan, the Committee shall be entitled to rely upon the aforesaid information furnished by the Employer.

10.9 Indemnification. The Company shall, to the extent permitted by law, indemnify and hold harmless each member of the Committee and each Employee who is a fiduciary or a delegate of the Committee against any and all expenses and liabilities arising out of his administrative functions or fiduciary responsibilities, including any expenses and liabilities that are caused by or result from an act or omission constituting the negligence of such individual in the performance of such functions or responsibilities, but excluding

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expenses and liabilities that are caused by or result from such individual’s own gross negligence or willful misconduct. Expenses against which such individual shall be indemnified hereunder shall include, without limitation, the amounts of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted or a proceeding brought or settlement thereof.

10.10

Temporary Restrictions. In order to ensure an orderly transition in the transfer of assets to or from the Trust Fund associated with a merger or spin-off of the Plan, a merger of another qualified plan into the Plan, a transfer of assets from another qualified plan to the Plan, a change in Trustee or record keeper, or other similar activity, the Committee in its discretion may temporarily prohibit or restrict withdrawals, loans, changes to contribution elections, changes of investment designation, or such other activity as the Committee deems appropriate; provided, however, that any such temporary prohibition or restriction shall be in compliance with all applicable law.

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XI.
TRUSTEE AND ADMINISTRATION OF TRUST FUND

11.1	Appointment, Resignation, Removal, and Replacement of Trustee. The Trustee shall be appointed, removed, and replaced by and in the sole discretion of the Directors. The Trustee shall be the “named fiduciary” with respect to investment of the Trust Fund’s assets.
11.2	Trust Agreement. As a means of administering the assets of the Plan, the Company has entered into a Trust Agreement with the Trustee. The Trust Agreement shall govern the administration of the assets of the Plan and the duties, obligations, and responsibilities of the Trustee. The Trust Agreement may be amended from time to time as the Company deems advisable in order to effectuate the purposes of the Plan. The Trust Agreement is incorporated herein by reference and thereby made a part of the Plan.
11.3	Payment of Expenses. All expenses incident to the administration of the Plan and Trust, including but not limited to, legal, accounting, Trustee fees, direct expenses of the Employer and the Committee incurred in the administration of the Plan, and the cost of furnishing any bond or security required of the Committee, shall be paid by the Trustee from the Trust Fund, and, until paid, shall constitute a claim against the Trust Fund that is paramount to the claims of Participants and beneficiaries; provided, however, that (i) the obligation of the Trustee to pay such expenses from the Trust Fund shall cease to exist to the extent such expenses are paid by the Employer and (ii) in the event the Trustee’s compensation is to be paid, pursuant to this Section, from the Trust Fund, any individual serving as Trustee who already receives full-time pay from an Employer or an association of Employers whose employees are Participants, or from an employee organization whose members are Participants, shall not receive any additional compensation for serving as Trustee. This Section shall be deemed to be a part of any contract to provide for expenses of Plan and Trust administration, whether or not the signatory to such contract is, as a matter of convenience, the Employer.
11.4	Trust Fund Property. All income, profits, recoveries, contributions, forfeitures, and any and all moneys, securities, and properties of any kind at any time received or held by the Trustee hereunder shall be held for investment purposes as a commingled Trust Fund. The Committee shall maintain Accounts in the name of each Participant, but the maintenance of an Account designated as the Account of a Participant shall not mean that such Participant shall have a greater or lesser interest than that due him by operation of the Plan and shall not be considered as segregating any funds or property from any other funds or property contained in the commingled fund. No Participant shall have any title to any specific asset in the Trust Fund.
11.5	Distributions from Participants’ Accounts. Distributions from a Participant’s Accounts shall be made by the Trustee only if, when, and in the amount and manner directed in writing by the Committee. Any distribution made to a Participant or for his benefit shall be debited to such Participant’s Account or Accounts. All distributions hereunder shall be made in cash except as otherwise specifically provided herein.

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11.6

Payments Solely from Trust Fund. All benefits payable under the Plan shall be paid or provided for solely from the Trust Fund, and neither the Employer nor the Trustee assumes any liability or responsibility for the adequacy thereof. The Committee or the Trustee may require execution and delivery of such instruments as are deemed necessary to ensure proper payment of any benefits.

11.7

No Benefits to the Employer. No part of the corpus or income of the Trust Fund shall be used for any purpose other than the exclusive purpose of providing benefits for the Participants and their beneficiaries and of defraying reasonable expenses of administering the Plan and Trust. Anything to the contrary herein notwithstanding, the Plan shall not be construed to vest any rights in the Employer other than those specifically given hereunder.

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XII.
FIDUCIARY PROVISIONS

12.1	Article Controls. This Article shall control over any contrary, inconsistent or ambiguous provisions contained in the Plan.
12.2	General Allocation of Fiduciary Duties. Each fiduciary with respect to the Plan shall have only those specific powers, duties, responsibilities and obligations as are specifically given him under the Plan. The Directors shall have the sole authority to appoint and remove the Trustee and members of the Committee. Except as otherwise specifically provided herein, the Committee shall have the sole responsibility for the administration of the Plan, which responsibility is specifically described herein. Except as otherwise specifically provided herein and in the Trust Agreement, the Trustee shall have the sole responsibility for the administration, investment, and management of the assets held under the Plan. It is intended under the Plan that each fiduciary shall be responsible for the proper exercise of his or its own powers, duties, responsibilities, and obligations hereunder and shall not be responsible for any act or failure to act of another fiduciary except to the extent provided by law or as specifically provided herein.
12.3	Fiduciary Duty. Each fiduciary under the Plan, including, but not limited to, the Committee and the Trustee as “named fiduciaries,” shall discharge his duties and responsibilities with respect to the Plan:

(a)	Solely in the interest of the Participants, for the exclusive purpose of providing benefits to Participants and their beneficiaries and of defraying reasonable expenses of administering the Plan and Trust;
(b)	With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;
(c)	By diversifying the investments of the Plan so as to minimize the risk of large losses, unless under the circumstances it is prudent not to do so; and
(d)	In accordance with the documents and instruments governing the Plan insofar as such documents and instruments are consistent with applicable law.

No fiduciary shall cause the Plan or Trust Fund to enter into a “prohibited transaction” as provided in Code Section 4975 or section 406 of ERISA.

12.4 Delegation of Fiduciary Duties. The Committee may appoint subcommittees, individuals, or any other agents as it deems advisable and may delegate to any of such appointees any or all of the powers and duties of the Committee. Such appointment and delegation must specify in writing the powers or duties being delegated, and must be accepted in writing by the delegatee. Upon such appointment, delegation, and acceptance, the delegating Committee members shall have no liability for the acts or

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	omissions of any such delegatee, as long as the delegating Committee members do not violate any fiduciary responsibility in making or continuing such delegation.
12.5	Investment Manager.

(a) The Committee may, in its sole discretion, appoint an “investment manager” with power to manage, acquire or dispose of any asset of the Plan and to direct the Trustee in this regard, so long as:

(1)

The investment manager is (i) registered as an investment adviser under the Investment Advisers Act of 1940; (ii) not registered as an investment adviser under such Act by reason of paragraph (i) of section 203A(a) of such Act but is registered as an investment adviser under the laws of the state (referred to in such section 203A(a) in which it maintains its principal office and place of business, and, at the time it last filed the registration form most recently filed by it with such state in order to maintain its registration under the laws of such state, also filed a copy of such form with the Secretary of Labor; (iii) a bank, as defined in Act; or (iv) an insurance company qualified to do business under the laws of more than one state; and

(2)

Such investment manager acknowledges in writing that he or it is a fiduciary with respect to the Plan.

(b) Upon the appointment of an investment manager pursuant to Subsection 12.5(a), the Committee shall not be liable for the acts of the investment manager, as long as the Committee members do not violate any fiduciary responsibility in making or continuing such appointment. The Trustee shall follow the directions of such investment manager and shall not be liable for the acts or omissions of such investment manager. The Committee may, in its sole discretion, remove an investment manager at any time.

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XIII.
AMENDMENTS

13.1 Right to Amend. Subject to Section 13.2 and any other limitations contained in ERISA or the Code, the Directors may from time to time amend, in whole or in part, any or all of the provisions of the Plan on behalf of the Company and all Employers. Specifically, but not by way of limitation, the Directors may make any amendment necessary to acquire or maintain the Plan’s qualified status under the Code, whether or not retroactive.

13.2 Limitation on Amendments. No amendment of the Plan shall be made that would vest in the Employer, directly or indirectly, any interest in or control of the Trust Fund. No amendment shall be made that would vary the Plan’s exclusive purpose of providing benefits to Participants and their beneficiaries and of defraying reasonable expenses of administering the Plan or that would permit the diversion of any part of the Trust Fund from that exclusive purpose. No amendment shall be made that would reduce any then nonforfeitable interest of a Participant. No amendment shall increase the duties or responsibilities of the Trustee unless the Trustee consents thereto in writing.

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XIV.
DISCONTINUANCE OF CONTRIBUTIONS, TERMINATION, PARTIAL
TERMINATION, AND MERGER OR CONSOLIDATION

14.1

Right to Discontinue Contributions, Terminate, or Partially Terminate. The Employer has established the Plan with the bona fide intention and expectation that from year to year it will be able to, and will deem it advisable to, make its contributions as herein provided. However, the Directors realize that circumstances not now foreseen, or circumstances beyond its control, may make it either impossible or inadvisable for the Employer to continue to make its contributions to the Plan. Therefore, the Directors shall have the right and the power to discontinue contributions to the Plan, terminate the Plan, or partially terminate the Plan at any time hereafter. Each member of the Committee and the Trustee shall be notified of such discontinuance, termination, or partial termination.

14.2

Procedure in the Event of Discontinuance of Contributions, Termination, or Partial Termination.

(a)	If the Plan is amended so as to permanently discontinue Employer Contributions, or if Employer Contributions are in fact permanently discontinued, the Vested Interest of each affected Participant shall be 100%, effective as required by the Code and applicable Treasury Regulations. In case of such discontinuance, the Committee shall remain in existence and all other provisions of the Plan that are necessary, in the opinion of the Committee, for equitable operation of the Plan shall remain in force.
(b)	If the Plan is terminated or partially terminated, the Vested Interest of each affected Participant shall be 100%, effective as of the termination date or partial termination date, as applicable. Unless the Plan is otherwise amended prior to dissolution of the Company, the Plan shall terminate as of the date of dissolution of the Company.
(c)	Upon discontinuance of contributions, termination, or partial termination, any previously unallocated contributions, forfeitures, and net income (or net loss) shall be allocated among the Accounts of the Participants on such date of discontinuance, termination, or partial termination according to the provisions of Article IV. Thereafter, the net income (or net loss) shall continue to be allocated to the Accounts of the Participants until the balances of the Accounts are distributed.
(d)	In the case of a termination or partial termination of the Plan, and in the absence of a Plan amendment to the contrary, the Trustee shall pay the balance of the Accounts of a Participant for whom the Plan is so terminated, or who is affected by such partial termination, to such Participant, subject to the time of payment, form of payment, and consent provisions of Article VIII.

14.3 Merger, Consolidation, or Transfer. This Plan and Trust Fund may not merge or consolidate with, or transfer its assets or liabilities to, any other plan, unless immediately

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thereafter each Participant would, in the event such other plan terminated, be entitled to a benefit equal to or greater than the benefit to which he would have been entitled if the Plan were terminated immediately before the merger, consolidation, or transfer.

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XV.
PARTICIPATING EMPLOYERS

15.1 Designation of Other Employers.

(a)	The Committee may designate any entity or organization eligible by law to participate in the Plan and the Trust as an Employer by written instrument delivered to the Secretary of the Company, the Trustee, and the designated Employer. Such written instrument (i) shall specify the effective date of such designated participation, (ii) may incorporate specific provisions relating to the operation of the Plan that apply to the designated Employer only, (iii) may designate that certain Employees are Eligible Employees, and (iv) shall become, as to such designated Employer and its Employees, a part of the Plan and the Trust Agreement.
(b)	Each designated Employer shall be conclusively presumed to have consented to its designation and to have agreed to be bound by the terms of the Plan and Trust Agreement and any and all amendments thereto upon its submission of information to the Committee required by the terms of or with respect to the Plan or upon making a contribution to the Trust Fund pursuant to the terms of the Plan; provided, however, that the terms of the Plan may be modified so as to increase the obligations of an Employer only with the consent of such Employer, which consent shall be conclusively presumed to have been given by such Employer upon its submission of any information to the Committee required by the terms of or with respect to the Plan or upon making a contribution to the Trust Fund pursuant to the terms of the Plan following notice of such modification.
(c)	The provisions of the Plan and the Trust Agreement shall apply separately and equally to each Employer and its Employees in the same manner as is expressly provided for the Company and its Employees, except that the power to appoint or otherwise affect the Committee or the Trustee and the power to amend or terminate the Plan and Trust Agreement shall be exercised by the Directors, or by the Committee, if applicable, and, in the case of Employers that are Controlled Entities, Employer Retirement Savings Contributions to be allocated pursuant to Subsection 4.2(d) shall be allocated on an aggregate basis among the Participants employed by all Employers; provided, however, that each Employer shall contribute to the Trust Fund its share of the Employer Retirement Savings Contribution for a Plan Year based on the Participants in its employ during such Plan Year who will receive such contribution for such Plan Year.
(d)	Transfer of employment among Employers shall not be considered a termination of employment hereunder, and Service with one shall be considered as Service with all others.
(e)	Any Employer may, by appropriate action of its board of directors or noncorporate counterpart communicated in writing to the Secretary of the Company, the Trustee, and the Committee, terminate its participation in the Plan

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and the Trust. Moreover, the Committee may, in its discretion, terminate an Employer’s Plan and Trust participation at any time by written instrument delivered to the Secretary of the Company and the designated Employer.

15.2 Single Plan. For purposes of the Code and ERISA, the Plan as adopted by the Employers shall constitute a single plan rather than a separate plan of each Employer. All assets in the Trust Fund shall be available to pay benefits to all Participants and their beneficiaries.

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XVI.
MISCELLANEOUS PROVISIONS

16.1	Not Contract of Employment. The adoption and maintenance of the Plan shall not be deemed to be either a contract between the Employer and any person or consideration for the employment of any person. Nothing herein contained shall be deemed to give any person the right to be retained in the employ of the Employer or to restrict the right of the Employer to discharge any person at any time, nor shall the Plan be deemed to give the Employer the right to require any person to remain in the employ of the Employer or to restrict any person’s right to terminate his employment at any time.
16.2	Alienation of Interest Forbidden. Except as otherwise provided with respect to “qualified domestic relations orders” and certain judgments and settlements pursuant to section 206(d) of ERISA and Code Sections 401(a)(13) and 414(p), and except as otherwise provided under other applicable law, no right or interest of any kind in any benefit shall be transferable or assignable by any Participant or any beneficiary or be subject to anticipation, adjustment, alienation, encumbrance, garnishment, attachment, execution, or levy of any kind. Plan provisions to the contrary notwithstanding, the Committee shall comply with the terms and provisions of any “qualified domestic relations order,” including an order that requires distributions to an alternate payee prior to a Participant’s “earliest retirement age” as such term is defined in section 206(d)(3)(E)(ii) of ERISA and Code Section 414(p)(4)(B), and shall establish an appropriate procedure to effect the same, which procedure shall be incorporated herein by reference.
16.3	Uniformed Services Employment and Reemployment Rights Act Requirements. Notwithstanding any provision of the Plan to the contrary, contributions, benefits, and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u).
16.4	Payments to Minors and Incompetents. If a Participant or beneficiary entitled to receive a benefit under the Plan is a minor, or is determined by the Committee in its discretion to be incompetent, or is adjudged by a court of competent jurisdiction to be legally incapable of giving valid receipt and discharge for a benefit provided under the Plan, the Committee may pay such benefit to the duly appointed guardian or conservator of such Participant or beneficiary for the account of such Participant or beneficiary. If no guardian or conservator has been appointed for such Participant or beneficiary, the Committee may pay such benefit to any third party who is determined by the Committee, in its sole discretion, to be authorized to receive such benefit for the account of such Participant or beneficiary. Such payment shall operate as a full discharge of all liabilities and obligations of the Committee, the Trustee, the Employer, and any fiduciary of the Plan with respect to such benefit.
16.5	Acquisition and Holding of Company Stock. The Plan is specifically authorized to acquire and hold up to 100% of its assets in Company Stock so long as Company Stock is a “qualifying employer security,” as such term is defined in section 407(d)(e) of ERISA.

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16.6	Participant’s and Beneficiary’s Addresses. It shall be the affirmative duty of each Participant to inform the Committee of, and to keep on file with the Committee, his current mailing address and the current mailing address of his designated beneficiary. If a Participant fails to keep the Committee informed of his current mailing address and the current mailing address of his designated beneficiary, neither the Committee, the Trustee, the Employer, nor any fiduciary under the Plan shall be responsible for any late or lost payment of a benefit or for failure of any notice to be provided timely under the terms of the Plan.
16.7	Severability. If any provision of the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions hereof. In such case, each provision shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provision had never been included herein.
16.8	Jurisdiction. The situs of the Plan and the Trust hereby created is Texas. All provisions of the Plan shall be construed in accordance with the laws of Texas except to the extent preempted by federal law.
16.9	Incorrect Information or Error. Any contrary provisions of the Plan notwithstanding, if, because of a human or systems error, or because of incorrect information provided by or correct information failed to be provided by, fraud, misrepresentation, or concealment of any relevant fact (as determined by the Committee) by any person, the Plan enrolls any individual, pays any benefit, incurs a liability, or makes any overpayment or erroneous payment, the Plan shall be entitled to recover from such person the benefit paid or the liability incurred, together with all expenses incidental to or necessary for such recovery.
16.10	Merged Plans. Notwithstanding any provision of the Plan to the contrary, the Plan shall comply with the terms of each amendment and merger document, which is listed on Appendix A and attached thereto, providing for the merger of another plan with and into the Plan, the provisions of which shall include, without limitation, the preservation of all optional forms of benefits and other rights and features under such other plan, as required to be preserved pursuant to Code Section 411(d)(6) and applicable Treasury regulations issued thereunder, and the preservation of certain vesting rights under such other plan, but only to the extent that, when the terms of such amendment conflict with the terms of the Plan as amended after the adoption of such amendment and merger document, such compliance is required by law.

* * * * *

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XVII.
TOP-HEAVY STATUS

17.1 Article Controls. Any Plan provisions to the contrary notwithstanding, the provisions of this Article shall control to the extent required to cause the Plan to comply with the requirements imposed under Code Section 416.

17.2 Definitions. For purposes of this Article, the following terms and phrases when capitalized shall have these respective meanings notwithstanding that any such term or phrase may have a different meaning ascribed to it elsewhere in the Plan:

(a)	Account Balance: As of any Valuation Date, the aggregate amount credited to an individual’s account or accounts under a qualified defined contribution plan maintained by the Employer or a Controlled Entity (excluding employee contributions that were deductible within the meaning of Code Section 219 and rollover or transfer contributions made after December 31, 1983, by or on behalf of such individual to such plan from another qualified plan sponsored by an entity other than the Employer or a Controlled Entity), increased by (i) the aggregate distributions made to such individual from such plan during a five-year period ending on the Determination Date and (ii) the amount of any contributions due as of the Determination Date immediately following such Valuation Date.
(b)	Accrued Benefit: As of any Valuation Date, the present value (computed on the basis of the Assumptions) of the cumulative accrued benefit (excluding the portion thereof that is attributable to employee contributions that were deductible pursuant to Code Section 219, to rollover or transfer contributions made after December 31, 1983, by or on behalf of such individual to such plan from another qualified plan sponsored by an entity other than the Employer or a Controlled Entity, to proportional subsidies or to ancillary benefits) of an individual under a qualified defined benefit plan maintained by the Employer or a Controlled Entity, increased by (i) the aggregate distributions made to such individual from such plan during a five-year period ending on the Determination Date and (ii) the estimated benefit accrued by such individual between such Valuation Date and the Determination Date immediately following such Valuation Date. Solely for the purpose of determining top-heavy status, the Accrued Benefit of an individual shall be determined under (A) the method, if any, that uniformly applies for accrual purposes under all qualified defined benefit plans maintained by the Employer and the Controlled Entities or (B) if there is no such method, as if such benefit accrued not more rapidly than under the slowest accrual rate permitted under Code Section 411(b)(1)(C).
(c)	Aggregation Group: The group of qualified plans maintained by the Employer and each Controlled Entity consisting of (i) each plan in which a Key Employee participates and each other plan that enables a plan in which a Key Employee participates to meet the requirements of Code Section 401(a)(4) or 410 or (ii) each plan in which a Key Employee participates, each other plan that enables a plan in which a Key Employee participates to meet the requirements of Code

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	Section 401(a)(4) or 410, and any other plan that the Employer elects to include as a part of such group; provided, however, that the Employer may elect to include a plan in such group only if the group will continue to meet the requirements of Code Sections 401(a)(4) and 410 with such plan being taken into account.
(d)	Assumptions: The interest rate and mortality assumptions specified for top-heavy status determination purposes in any defined benefit plan included in the Aggregation Group that includes the Plan.
(e)	Determination Date: For the first Plan Year of any plan, the last day of such Plan Year and for each subsequent Plan Year of such plan, the last day of the preceding Plan Year.
(f)	Key Employee: A “key employee” as defined in Code Section 416(i) and the Treasury regulations thereunder.
(g)	Plan Year: With respect to any plan, the annual accounting period used by such plan for annual reporting purposes.
(h)	Remuneration: Compensation as defined in Article I.
(i)	Valuation Date: With respect to any Plan Year of any defined contribution plan, the most recent date within the twelve-month period ending on a Determination Date as of which the trust fund established under such plan was valued and the net income (or loss) thereof allocated to participants’ accounts. With respect to any Plan Year of any defined benefit plan, the most recent date within a twelve-month period ending on a Determination Date as of which the plan assets were valued for purposes of computing plan costs for purposes of the requirements imposed under Code Section 412.

17.3 Top-Heavy Status. The Plan shall be deemed to be top-heavy for a Plan Year if, as of the Determination Date for such Plan Year, (i) the sum of Account Balances of Participants who are Key Employees exceeds 60% of the sum of Account Balances of all Participants unless an Aggregation Group including the Plan is not top-heavy or (ii) an Aggregation Group including the Plan is top-heavy. An Aggregation Group shall be deemed to be top-heavy as of a Determination Date if the sum (computed in accordance with Code Section 416(g)(2)(B) and the Treasury regulations promulgated thereunder) of (i) the Account Balances of Key Employees under all defined contribution plans included in the Aggregation Group and (ii) the Accrued Benefits of Key Employees under all defined benefit plans included in the Aggregation Group exceeds 60% of the sum of the Account Balances and the Accrued Benefits of all individuals under such plans. Notwithstanding the foregoing, the Account Balances and Accrued Benefits of individuals who are not Key Employees in any Plan Year but who were Key Employees in any prior Plan Year shall not be considered in determining the top-heavy status of the Plan for such Plan Year. Further, notwithstanding the foregoing, the Account Balances and Accrued Benefits of individuals who have not performed services for the Employer

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	or any Controlled Entity at any time during the five-year period ending on the applicable Determination Date shall not be considered.
17.4	Top-Heavy Vesting Schedule. If the Plan is determined to be top-heavy for a Plan Year, the Vested Interest in the Employer Contribution Account of each Participant who is credited with an Hour of Service during such Plan Year shall be determined in accordance with the following schedule:

Years of Vesting Service		Vested Interest
Less than	1 year		0	%
	1 year		20	%
	2 years		40	%
	3 years		60	%
	4 years		80	%
	5 years or more		100	%

17.5 Top-Heavy Contribution.

(a)	If the Plan is determined to be top-heavy for a Plan Year, the Employer shall contribute to the Plan for such Plan Year on behalf of each Participant who is not a Key Employee and who has not terminated his employment as of the last day of such Plan Year an amount equal to:
(b)	The lesser of (i) 3% of such Participant’s Remuneration for such Plan Year or (ii) a percent of such Participant’s Remuneration for such Plan Year equal to the greatest percent determined by dividing for each Key Employee the amounts allocated to such Key Employee’s Salary Reduction Contribution Account and Employer Contribution Account for such Plan Year by such Key Employee’s Remuneration; reduced by
(c)	The amount of Employer Retirement Savings Contributions allocated to such Participant’s Employer Contribution Account for such Plan Year.

(1)	The minimum contribution required to be made for a Plan Year pursuant to this Section for a Participant employed on the last day of such Plan Year shall be made regardless of whether such Participant is otherwise ineligible to receive an allocation of the Employer’s contributions for such Plan Year.
(2)	Notwithstanding the foregoing, if the Plan is deemed to be top-heavy for a Plan Year, the Employer’s contribution for such Plan Year pursuant to this Section shall be increased by substituting “4%” in lieu of “3%” in Clause (i) hereof to the extent that the Directors determine to so increase such contribution to comply with the provisions of Code Section 416(h)(2).

(d) Notwithstanding the foregoing, no contribution shall be made pursuant to this Section for a Plan Year with respect to a Participant who is a participant in another defined contribution plan sponsored by the Employer or a Controlled

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Entity if such Participant receives under such other defined contribution plan (for the plan year of such plan ending with or within the Plan Year of the Plan) a contribution that is equal to or greater than the minimum contribution required by Code Section 416(c)(2).

(e)

Notwithstanding the foregoing, no contribution shall be made pursuant to this Section for a Plan Year with respect to a Participant who is a participant in a defined benefit plan sponsored by the Employer or a Controlled Entity if such Participant accrues under such defined benefit plan (for the plan year of such plan ending with or within the Plan Year of this Plan) a benefit that is at least equal to the benefit described in Code Section 416(c)(1). If the preceding sentence is not applicable, the requirements of this Section shall be met by providing a minimum benefit under such defined benefit plan which, when considered with the benefit provided under the Plan as an offset, is at least equal to the benefit described in Code Section 416(c)(1).

17.6 Termination of Top-Heavy Status. If the Plan has been deemed to be top-heavy for one or more Plan Years and thereafter ceases to be top-heavy, the provisions of this Article shall cease to apply to the Plan effective as of the Determination Date on which it is determined no longer to be top-heavy. Notwithstanding the foregoing, the Vested Interest of each Participant as of such Determination Date shall not be reduced and, with respect to each Participant who has three or more years of Vesting Service on such Determination Date, the Vested Interest of each such Participant shall continue to be determined in accordance with the schedule Article VII.

17.7 Effect of Article. Notwithstanding anything contained herein to the contrary, the provisions of this Article shall automatically become inoperative and of no effect to the extent not required by the Code or ERISA.

* * * * *

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XVIII.
EGTRRA PROVISIONS

18.1 General. This Article reflects certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). This Article is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and the guidance issued thereunder. This Article shall, to the extent not otherwise consistent, supercede the foregoing provisions of the Plan to the extent those provisions are inconsistent with the provisions of this Article.

18.2 Amendment to Provisions Governing Code Section 415 Limitation. Except to the extent permitted under Section 18.8 below and Code Section 414(v), if applicable, the annual addition that may be contributed or allocated to a participant’s account under the Plan for any limitation year shall not exceed the lesser of:

(a)	$40,000, as adjusted for increases in the cost-of-living under Code Section 415(d), or
(b)	100 percent of the participant’s compensation, within the meaning of Code Section 415(c)(3), for the limitation year.

The compensation limit referred to in (b) above shall not apply to any contribution for medical benefits after separation from service (within the meaning of Code Section 401(h) or 419A(f)(2)), which is otherwise treated as an annual addition. This Section shall be effective for limitation years beginning after December 31, 2001. (For clarity, the language of this provision also is incorporated in Section 4.6(c) above.)

18.3 Increase in Compensation Limit. The annual compensation of each Participant taken into account in determining allocations for any Plan Year beginning after December 31, 2001, shall not exceed $200,000, as adjusted for cost-of-living increases in accordance with Code Section 401(a)(17)(B). Annual compensation means compensation during the Plan Year or such other consecutive 12-month period over which compensation is otherwise determined under the Plan (the determination period). The cost-of-living adjustment in effect for a calendar year applies to annual compensation for the determination period that begins with or within such calendar year. (For clarity, the language of this provision is incorporated in Section 1.1(g) above.)

18.4 Modification Of Top-Heavy Rules. This Section shall apply for purposes of determining whether the Plan is a top-heavy plan under Code Section 416(g) for plan years beginning after December 31, 2001, and whether the Plan satisfies the minimum benefits requirements of Code Section 416(c) for such years. This Section amends the top-heavy provisions of the Plan.

(a) “Key employee” shall mean any employee or former employee (including any deceased employee) who at any time during the Plan Year that includes the determination date was an officer of the Employer having annual compensation greater than $130,000 (as adjusted under Code Section 416(i)(1) for Plan Years

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beginning after December 31, 2002), a 5-percent owner of the Employer, or a 1-percent owner of the Employer having annual compensation of more than $150,000. For this purpose, annual compensation means compensation within the meaning of Code Section 415(c)(3). The determination of who is a key employee will be made in accordance with Code Section 416(i)(1) and the applicable regulations and other guidance of general applicability issued thereunder.

(b)

The following provisions shall apply for purposes of determining the present values of accrued benefits and the amounts of account balances of employees as of the determination date.

(1)

The present values of accrued benefits and the amounts of account balances of an employee as of the determination date shall be increased by the distributions made with respect to the employee under the Plan and any plan aggregated with the Plan under Code Section 416(g)(2) during the 1-year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Code Section 416(g)(2)(A)(i). In the case of a distribution made for a reason other than separation from service, death, or disability, this provision shall be applied by substituting “5-year period” for “1-year period.”

(2)

The accrued benefits and accounts of any individual who has not performed services for the employer during the 1-year period ending on the determination date shall not be taken into account.

(c) Matching contributions. Employer matching contributions shall be taken into account for purposes of satisfying the minimum contribution requirements of Code Section 416(c)(2) and the Plan. The preceding sentence shall apply with respect to matching contributions under the Plan or, if the Plan provides that the minimum contribution requirement shall be met in another plan, such other plan. Employer matching contributions that are used to satisfy the minimum contribution requirements shall be treated as matching contributions for purposes of the actual contribution percentage test and other requirements of Code Section 401(m).

18.5 Amendment to Direct Rollover Rules.

(a) For purposes of the direct rollover provisions of the Plan, an eligible retirement plan shall also mean an annuity contract described in Code Section 403(b) and an eligible plan under Code Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this plan. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a

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	spouse or former spouse who is the alternate payee under a qualified domestic relation order, as defined in Code Section 414(p).
(b)	For purposes of the direct rollover provisions of the Plan, any amount that is distributed on account of hardship shall not be an eligible rollover distribution and the distributee may not elect to have any portion of such a distribution paid directly to an eligible retirement plan.
(c)	For purposes of the direct rollover provisions in the Plan, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions that are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in Code Section 408(a) or (b), or to a qualified defined contribution plan described in Code Sections 401(a) or 403(a) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

18.6 Rollovers from Other Plans. The Employer, operationally and on a nondiscriminatory basis, may limit the source of rollover contributions that may be accepted by this Plan.

18.7 Rollovers Disregarded in Involuntary Distributions. This Section shall be effective for distributions made after December 31, 2001, and shall apply to all participants. For purposes of the Sections of the Plan that provide for the involuntary distribution of vested accrued benefits of $5,000 or less, the value of a Participant’s nonforfeitable account balance shall be determined without regard to that portion of the account balance that is attributable to rollover contributions (and earnings allocable thereto) within the meaning of Code Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16). If the value of the participant’s nonforfeitable account balance as so determined is $5,000 or less, then the Plan shall immediately distribute the participant’s entire nonforfeitable account balance.

18.8 Amendment to the Contribution Provisions of the Plan

(a)

Effective January 1, 2002, all employees who are eligible to make elective deferrals under this Plan and who have attained age 50 before the close of the Plan Year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, Code Section 414(v). Such catch-up contributions shall not be taken into account for purposes of the provisions of the Plan implementing the required limitations of Code Sections 402(g) and 415. The Plan shall not be treated as failing to satisfy the provisions of the Plan implementing the requirements of Code Sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of the making of such catch-up contributions.

(b)

The multiple use test described in Treasury Regulation Section 1.401(m)-2 and the Plan shall not apply for plan years beginning after December 31, 2001.

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(c)	No participant shall be permitted to have elective deferrals made under this Plan, or any other qualified plan maintained by the Employer during any taxable year, in excess of the dollar limitation contained in Code Section 402(g) in effect for such taxable year, except to the extent permitted under Subsection (a) above and Code Section 414(v), if applicable.
(d)	The election made pursuant to this Section shall be submitted as a separate election from a Participant’s deferral election for Salary Reduction Contributions under Section 3.1 above.

18.9	Suspension Period Following Hardship Distribution. A participant who receives a distribution of elective deferrals after December 31, 2001, on account of hardship shall be prohibited from making elective deferrals and employee contributions under this and all other plans of the employer for 6 months after receipt of the distribution. A participant who receives a distribution of elective deferrals in calendar year 2001 on account of hardship shall be prohibited from making elective deferrals and employee contributions under this and all other plans of the employer for the period specified in Section 6.2 above. (For clarity, the language of this provision is incorporated in Section 6.2(c) above.)
18.10	Distributions following a Severance from Employment. A participant’s elective deferrals, qualified nonelective contributions, qualified matching contributions, and earnings attributable to these contributions shall be distributed on account of the participant’s severance from employment. However, such a distribution shall be subject to the other provisions of the Plan regarding distributions, other than provisions that require a separation from service before such amounts may be distributed.
	Executed this 19th day of December, 2003.

Dell Inc.
By:	/s/ KATHLEEN ANGEL
	Kathleen Angel, Director of Global Benefits & International Compensation

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EX-10.5

exv10w5

EX-10.6

Exhibit 10.6

DELL COMPUTER CORPORATION
DEFERRED COMPENSATION PLAN

AMENDED AND RESTATED

EFFECTIVE AS OF JANUARY 1, 2002

TABLE OF CONTENTS

		PAGE
Article I.	DEFINITIONS AND CONSTRUCTION		1
	1.1 Definitions		1
	1.2 Number and Gender		7
	1.3 Headings		7
Article II.	PARTICIPATION		7
	2.1 Participation		7
	2.2 Termination of Participation		8
	2.3 Reemployment of a Participant		8
Article III.	CONTRIBUTIONS		8
	3.1 Participant Compensation Deferrals		8
	3.2 Company Credits		10
Article IV.	ALLOCATIONS TO PARTICIPANT ACCOUNTS		11
	4.1 Individual Accounts		11
	4.2 Investment of Accounts		11
	4.3 Allocation of Net Income or Loss and Changes in Value		11
Article V.	HYPOTHETICAL INVESTMENT OF ACCOUNTS		11
	5.1 Hypothetical Investment of Accounts		11
	5.2 Designation of Investment Funds		12
Article VI.	VESTED INTEREST		12
	6.1 Vesting of Compensation Deferrals Account		12
	6.2 Vesting of Company Credits Account		12
	6.3 Forfeitures		13
Article VII.	IN-SERVICE WITHDRAWALS AND LOANS		13
	7.1 In-Service Withdrawals		13
	7.2 Involuntary Distributions		14
	7.3 No Loans		14
Article VIII.	PLAN BENEFITS		14
	8.1 Plan Benefit		14
	8.2 Events Entitling Payment of Benefit		14
	8.3 Payee and Time of Payment		15
	8.4 Alternative Forms of Benefit Payments		15

i

TABLE OF CONTENTS
(CONTINUED)

		PAGE
	8.5 Designation of Beneficiaries		16
	8.6 Payments Pursuant to a QDRO		17
	8.7 Payer of Benefits		17
	8.8 Unclaimed Benefits		17
Article IX.	ADMINISTRATION OF PLAN		17
	9.1 Appointment of Committee		17
	9.2 Term, Vacancies, Resignation, and Removal		18
	9.3 Self-Interest of Committee Members		18
	9.4 Committee Powers and Duties		18
	9.5 Claims Review		19
	9.6 Company to Supply Information		20
	9.7 Indemnity		20
Article X.	PURPOSE AND UNFUNDED NATURE OF THE PLAN		20
	10.1 Purpose of Plan		20
	10.2 Unfunded Nature of Plan		20
	10.3 Funding of Obligation		20
Article XI.	PARTICIPATING ENTITIES		22
	11.1 Designation of Participating Entities		22
Article XII.	MISCELLANEOUS		22
	12.1 Not Contract of Employment		22
	12.2 Alienation of Interest Forbidden		22
	12.3 Withholding		23
	12.4 Amendment and Termination		23
	12.5 Severability		23
	12.6 Governing Laws		23

ii

DELL COMPUTER CORPORATION
DEFERRED COMPENSATION PLAN

     Dell Computer Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Company”), hereby restates the Dell Computer Corporation Deferred Compensation Plan (the “Plan”), such restatement to be effective as of January 1, 2002, except as otherwise provided herein;

W I T N E S S E T H:

     WHEREAS, the Company wishes to promote in certain of its highly compensated employees, and those of its affiliates, the strongest interest in the successful operation of the business and increased efficiency in their work, to align the financial interests of such employees with those of Company shareholders and to provide an opportunity for accumulation of funds for their retirement; and

     WHEREAS, the Plan was initially adopted effective May 1, 1991, and previously has been amended and restated effective as of April 1, 1996, January 1, 1999 and January 1, 2001; and

     WHEREAS, it is intended that the Plan be “unfunded” for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and not be construed to provide income to any participant or beneficiary under the Internal Revenue Code of 1986, as amended (the “Code”) prior to actual receipt of benefits hereunder;

     NOW THEREFORE, the Plan is hereby restated in its entirety as follows with no interruption in time, effective as of January 1, 2002, except as otherwise indicated herein:

ARTICLE I.
DEFINITIONS AND CONSTRUCTION

1.1 Definitions. Where the following words and phrases appear in the Plan, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary.

(1)	Account(s): A Participant’s Compensation Deferrals Account and Company Credits Account, if any.
(2)	Affiliate: Each trade or business (whether or not incorporated), which together with Dell Computer Corporation would be deemed to be a “single employer” within the meaning of Code Section 414(b), (c), (m), or (o).

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(3)	Base Salary: A Participant’s gross base salary payable in the ordinary course of business under the Company’s payroll system and not any periodic bonuses.
(4)	Base Salary Deferrals: Base Salary deferred by a Participant pursuant to Section 3.1.
(5)	Bonus: The Annual Incentive Compensation Bonus, if any, paid in cash by the Company to or for the benefit of a Participant for services rendered or labor performed while a Participant. For purposes of this Plan, the term Bonus expressly excludes any bonuses received under any other compensation or bonus plan sponsored by the Company.
(6)	Bonus Deferrals: Bonus deferred by a Participant pursuant to Section 3.1.
(7)	Bonus Year: The period ending on the last day of each fiscal year; provided, however, that the Bonus Year may be changed by the Committee to reflect the twelve month period used by the Company under the Annual Incentive Compensation Bonus program for each group of Eligible Employees hereunder, if any.
(8)	Change of Control: The earliest to occur of any of the following:

(a)	The acquisition by any person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934 (“Exchange Act”)) of 20% or more of either (i) the then outstanding shares of stock or (ii) the combined voting power of the then outstanding voting securities of Dell Computer Corporation; provided, however, that for purposes of this Paragraph (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from Dell Computer Corporation, (ii) any acquisition by Dell Computer Corporation, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Dell Computer Corporation or any corporation controlled by Dell Computer Corporation, (iv) any acquisition by Mr. Michael S. Dell, his “affiliates” (as defined in Rule 12b-2 promulgated under the Exchange Act) or “associates” (as defined in Rule 12b-2 promulgated under the Exchange Act), his heirs, or any trust or foundation to which he has transferred or may transfer stock (collectively, “Michael Dell”), or (v) any acquisition by any corporation pursuant to a transaction which complies with clauses (1), (2), and (3) of Paragraph (c) of this Section 1.1(6); or
(b)	Individuals who constitute the Incumbent Board (as later defined) cease for any reason to constitute at least a majority of the Directors; or
(c)	Approval by the stockholders of Dell Computer Corporation of a reorganization, merger, or consolidation, or sale or other disposition of all or substantially all of the assets of Dell Computer Corporation, or the acquisition of assets of another corporation (a “Business Combination”), unless following such Business Combination (i) all or substantially all of the persons who were the beneficial owners, respectively, of the outstanding

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stock and outstanding voting securities of Dell Computer Corporation immediately prior to such Business Combination beneficially own, directly or indirectly, immediately following such Business Combination more than 60% of the then outstanding shares of common stock and more than 60% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns Dell Computer Corporation or all or substantially all of Dell Computer Corporation’s assets either directly or through one or more subsidiaries), (ii) no person (excluding any employee benefit plan (or related trust) of Dell Computer Corporation, such corporation resulting from such Business Combination, and Michael Dell) beneficially owns, directly or indirectly, 20% or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or 20% or more of the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board (as later defined) at the time of the execution of the initial agreement, or of the action of the Directors, providing for such Business Combination; or

(d)

Approval by the stockholders of Dell Computer Corporation of a complete liquidation or dissolution of Dell Computer Corporation.

For purposes of this Section, “Incumbent Board” shall mean the individuals who, as of the Effective Date, constitute the Directors; provided, however, that any individual becoming a Director, subsequent to such date whose election, or nomination for election by Dell Computer Corporation’s stockholders, was approved by a vote of at least a majority of the Directors then comprising the Incumbent Board shall be considered a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Directors.

(9)	Code: The Internal Revenue Code of 1986, as amended from time to time.
(10)	Committee: The administrative committee appointed by the Directors to administer the Plan.
(11)	Company: Dell Computer Corporation, a corporation organized and existing under the laws of the State of Delaware, or its successor or successors
(12)	Company Credits: The amount, if any, credited to a Participant’s Company Credits Account pursuant to Section 3.2.

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(13)	Company Credits Account: A hypothetical account for each Participant to which is credited his Company Credits pursuant to Section 3.2, and which is credited with (or debited for) such account’s allocation of net income (or net loss) as provided in Section 4.3.
(14)	Compensation: A Participant’s Compensation shall include all the items in Section 14(a) below and exclude all the items in Section 14(b) below:

(a) All of the following items shall be included:

• The total of all wages, salaries, fees for professional services, and other amounts received by a Participant in cash or in kind for services actually rendered in the course of employment with the Employer while a Participant and an Employee to the extent such amounts are includable in gross income (but determined without regard to the exclusions from gross income under sections 931 and 933 of the Code);

• In the case of a Participant who is an employee within the meaning of section 401(c)(1) of the Code and the Treasury regulations thereunder, the Employee’s earned income (as described in section 401(c)(2) of the Code and the Treasury regulations thereunder) determined without regard to the exclusions from gross income under sections 931 and 933 of the Code;

• Foreign earned income (as defined in section 911(b) of the Code) whether or not excludable from gross income;

• Amounts described in sections 104(a)(3), 105(a), and 105(h) of the Code, but only to the extent these amounts are includable in the gross income of the Participant;

• The value of a non-qualified stock option granted to the Participant by the Employer, but only to the extent that the value of the option is includable in the gross income of the Participant for the taxable year in which it is granted;

• The amount includable in the gross income of the Participant upon making an election described in section 83(b);

• Elective contributions made on a Participant’s behalf by the Employer that are not includable in income under section 125, section 402(e)(3), section 402(h), section 403(b), or 457 of the Code; and

• Any amounts that are not includable in the gross income of a Participant under a salary reduction agreement by reason of the application of section 132(f) of the Code.

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(b) All of the following items shall be excluded to the extent they would otherwise be included:

• Reimbursements and other expense allowances;

• Cash and noncash fringe benefits;

• Moving expenses;

• Deferred compensation under any plan or program other than as specifically included in Section 1.1(i)(1)(vii);

• Welfare benefits;

• Employer contributions to or payments from this or any other deferred compensation program, whether such program is qualified under section 401(a) of the Code or nonqualified;

• Amounts realized from the exercise of a stock option that is not an incentive stock option within the meaning of section 422 of the Code;

• Amounts realized at the time restricted stock or property is freely transferable or no longer subject to a substantial risk of forfeiture in accordance with section 83 of the Code;

• Amounts realized from the sale, exchange, disqualifying disposition or other disposition of stock acquired under an incentive stock option; and

• Any other amounts that receive special tax benefits under the Code, such as premiums for group life insurance (but only to the extent such premiums are not includable in the gross income of the Participant).

(15)	Compensation Deferrals: Base Salary Deferrals and Bonus Deferrals.
(16)	Compensation Deferrals Account: A hypothetical account for each Participant to which is credited his Compensation Deferrals pursuant to Section 3.1, and which is credited with (or debited for) such account’s allocation of net income (or net loss) as provided in Section 4.3.
(17)	Directors: The Board of Directors of Dell Computer Corporation.
(18)	Disability: A physical or mental condition which, as determined in the sole discretion of the Committee, totally and presumably permanently prevents a Participant from engaging in any substantial or gainful employment; provided, however, that an individual shall be deemed to be disabled if he is determined to be disabled under the terms of the Dell Computer Corporation 401(k) Plan.
(19)	Effective Date: January 1, 2001, except as otherwise provided herein.

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(20)	Election Date: (i) With respect to Base Salary, January 1st of each Plan Year, or such earlier date as may be designated by the Committee, and (ii) with respect to Bonuses, two weeks prior to the last day of the Company’s third fiscal quarter, or such earlier date as may be designated by the Committee.
(21)	Employee: Any individual on the payroll of an Employer (i) whose wages from the Employer are subject to withholding for purposes of Federal income taxes and for purposes of the Federal Insurance Contributions Act, (ii) who is included within a “select group of management or highly compensated employees,” as such term is used in ERISA Section 401(a)(1), and (iii) who is designated by the Committee as eligible to participate in this Plan.
(22)	Employer or Participating Employer: The Company and any Affiliate of the Company to the extent that (i) an Employee of such Affiliate is a Participant hereunder and (ii) the Affiliate has adopted the Plan in accordance with the provisions of Article XI.
(23)	ERISA: Public Law No. 93-406, the Employee Retirement Income Security Act of 1974, as amended from time to time.
(24)	Investment Fund(s): The investment fund(s) designated by the Committee from time to time for the hypothetical investment of a Participant’s Accounts pursuant to Article V.
(25)	Participant: An Employee participating in the Plan in accordance with the provisions of Section 2.1.
(26)	Plan: The Dell Computer Corporation Deferred Compensation Plan, as amended from time to time.
(27)	Plan Year: The twelve-consecutive month period commencing January 1 of each year.
(28)	Retirement Date: The date upon which a Participant attains sixty-five years of age.
(29)	Trust or Trust Fund: The fund consisting of funds, investments and properties, if any, held pursuant to the provisions of the Trust Agreement, together with all income, profit, and increments thereto.
(30)	Trust Agreement: The Dell Computer Corporation Deferred Compensation Trust, entered into between the Company and the Trustee pursuant to Section 10.3, as such agreement may be amended from time to time.
(31)	Trustee: The corporation, individual or individuals appointed by the Directors to administer the Trust Fund in accordance with the terms of the Trust Agreement.
(32)	Unforeseeable Financial Emergency: An unexpected need of the Participant for cash, which (i) arises from an illness, casualty loss, sudden financial reversal, or such other unforeseeable occurrence that is caused by an event beyond the control of the

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	Participant, (ii) would result in severe financial hardship to the Participant if his Compensation Deferral election was not canceled pursuant to Section 3.1(c) or if a withdrawal pursuant to Section 7.1 was not permitted, and (iii) is not reasonably satisfiable from other resources of the Participant. Cash needs arising from foreseeable events, such as the purchase of a house or education expenses for children, shall not be considered to be the result of an Unforeseeable Financial Emergency.
(33)	Valuation Dates: Each day the New York Stock Exchange is open for business.
(34)	Vested Interest: The percentage of a Participant’s Accounts that, pursuant to Article VI, is vested.
(35)	Vesting Service: With respect to each Participant, “Vesting Service” as defined and credited under the Dell Computer Corporation 401(k) Plan.

1.2	Number and Gender. Wherever appropriate herein, words used in the singular shall be considered to include the plural, and words used in the plural shall be considered to include the singular. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender.
1.3	Headings. The headings of Articles and Sections herein are included solely for convenience, and if there is any conflict between such headings and the text of the Plan, the text shall control.

ARTICLE II.
PARTICIPATION

2.1 Participation.

(a)

Prior to the first day of each Plan Year, the Committee, in its sole discretion, shall select and notify those Employees who are newly eligible to become Participants as of such date. Any such eligible Employee may become a Participant on such date or on the first day of any subsequent Plan Year (with respect to Base Salary deferrals) or as of the first day of any Bonus Year (with respect to Bonus deferrals) by executing and filing with the Committee, prior to the applicable Election Date, the enrollment form prescribed by the Committee.

(b)

Notwithstanding Subsection (a) above, if an individual is designated by the Committee as an Employee following the first day of a Plan Year (with respect to Base Salary deferrals) or prior to the Election Date for a Bonus Year (with respect to Bonus deferrals), such eligible Employee may elect to become a Participant as follows:

(1) with respect to Base Salary deferrals, by filing an election with the Committee during the thirty (30)-day period commencing on the date of such selection or prior to the Election Date for any subsequent Plan Year; and

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	(2)	with respect to Bonus deferrals, by filing an election with the Committee during the thirty (30)-day period commencing on the date of such selection or prior to the Election Date for any subsequent Bonus Year, provided, however, that an individual designated as an Employee after the first day of the fourth fiscal quarter of the Company shall not be permitted to file an election for such Bonus Year.
(c)	Once an individual has been designated as an Employee and commences Plan participation, he shall remain a Participant eligible to participate in the Plan each Plan Year or Bonus Year until his participation is terminated in accordance with Section 2.2 or the Committee terminates his designation as an Employee under this Plan.

2.2

Termination of Participation. Notwithstanding any provision herein to the contrary, an individual who has become or is entitled to become a Participant of the Plan shall cease to be or be entitled to be a Participant effective as of the earliest to occur of (1) the date the Participant is no longer employed by the Company or (2) any earlier date designated by the Committee and communicated to the affected individual prior to the effective date of such action.

2.3

Reemployment of a Participant. A Participant who terminates employment with the Company and is subsequently rehired by the Company shall not be entitled to commence or continue participation in the Plan unless and until he is again eligible to become a Participant in accordance with Section 2.1. In the case of such a rehired Participant, his recommencement of Plan participation, if any, shall be considered as his initial commencement of participation for purposes of the Plan.

ARTICLE III.
CONTRIBUTIONS

3.1 Participant Compensation Deferrals. Each Participant may elect to defer a portion of his Compensation in accordance with this Section. Compensation not deferred by a Participant pursuant to this Section shall, for purposes of this Plan, be received by such Participant in cash.

(a) Base Salary Deferrals.

(1)	Each Participant may elect to defer receipt of an integral percentage of from 1% to 50% of his Base Salary for any Plan Year under the Plan as Base Salary deferrals. Notwithstanding the preceding, the Committee may, by resolution, provide that the maximum deferral limit for certain groups of Participants shall be less than fifty percent (50%). Such election must be made in the form and within the time period required by the Committee.
(2)	A Participant’s election to defer Base Salary for any Plan Year under the Plan must be made on or prior to the Election Date for Base Salary deferrals.
(3)	If an Employee becomes initially eligible under the Plan following an Election Date, he may make an election to defer Base Salary for the

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	remaining portion of the Plan Year by filing an election within the thirty (30) day period following the date of his initial eligibility.
(4)	A Participant’s election to make Base Salary deferrals shall become effective as of the Election Date coincident with or next following the date such Participant executes and files with the Committee the form described in Paragraph (1) above. Notwithstanding the foregoing, if a Participant is selected as initially eligible under the Plan following an Election Date, such Participant’s election to make Base Salary deferrals shall become effective as soon as administratively feasible following the date such election is received by the Committee; provided, however, that such election shall apply no earlier than the first day of the payroll period coincident with or next such date.
(5)	The reduction of a Participant’s Base Salary pursuant to this election shall be effected by Base Salary reductions as of each payroll period within the election period.
(6)	A Participant shall be deemed to have elected the same Base Salary deferral percentage pursuant to this Subsection for a Plan Year that was in effect for the immediately preceding Plan Year unless such Participant elects a new deferral percentage for the Plan Year in accordance with Paragraph (1) or cancels his Base Salary deferrals for the Plan Year in accordance with Subsection (c) below.

(b) Bonus Deferrals.

(1)	Effective as of January 1, 2000, each Participant may elect to defer receipt of an integral percentage of from 1% to 100% of his Bonus for any Bonus Year under the Plan as Bonus deferrals. Such election must be made in the form and within the time period required by the Committee. Notwithstanding any provision hereof, the portion of a Participant’s Bonus which is deferred pursuant to this Subsection shall be subject to withholding for applicable payroll taxes (i.e., amounts required to be withheld under Code Section 3121(v)) and such taxes shall be netted from the portion of his Bonus deferred hereunder.
(2)	A Participant’s election to defer Bonus under the Plan must be made on or prior to the Election Date for Bonus deferrals, and such election shall be irrevocable for such Bonus Year.
(3)	If an Employee becomes initially eligible under the Plan following an Election Date, he may make an election to defer a designated portion of his Bonus for the entire Bonus Year by filing an election within the thirty (30)-day period following the date of his initial eligibility, and such election shall be irrevocable for such Bonus Year. Notwithstanding the preceding, an Employee who becomes initially eligible to participate in the Plan after the first day of the fourth quarter of the Company’s fiscal year shall not be

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	permitted to make a deferral election with respect to any portion of the Bonus received during such Bonus Year.
(4)	The reduction of a Participant’s Bonus pursuant to this election shall be effected at the time such Bonus is paid to such Participant in one lump sum deferral.
(5)	A Participant’s election to defer a Bonus during a Bonus Year shall not apply to a Bonus paid during any subsequent Bonus Year.

(b) Cancellation of Base Salary Deferral Election.

(1)

A Participant may cancel his Base Salary Deferral election effective as of the first day of any subsequent payroll period by executing and filing with the Committee the form prescribed by the Committee within the minimum time period prescribed by the Committee. Notwithstanding the preceding, the Committee shall have the right, in its sole discretion, to decline to accept the termination of a Participant’s Base Salary Deferral election. An individual described in the preceding sentence may again elect to make Base Salary Deferrals hereunder in accordance with Subsection (a)(1) above.

(2)

Upon application by the Participant, in the event that the Committee determines that the Participant has suffered an Unforeseeable Financial Emergency, all the Participant’s Compensation Deferral election(s) then in effect shall be canceled as soon as administratively practicable after such determination. If the Participant’s Compensation Deferral election is so canceled, the Participant may again elect to defer a percentage of his Compensation effective as of any subsequent Election Date that is at least twelve (12) months after the effective date of such cancellation by complying with the procedural requirements set forth in Subsection (a)(1) or (b)(1), as applicable.

(c)	Ongoing Election. A Participant’s election to make Base Salary Deferrals shall remain in force and effect while he is a Participant unless and until such deferrals cease in accordance with the provisions of Subsection (c) above or such Participant terminates participation in the Plan pursuant to Section 2.2.
(d)	Crediting of Deferrals. Compensation Deferrals made by a Participant shall be credited to such Participant’s Compensation Deferrals Account as of a date determined in accordance with procedures established from time to time by the Committee.
(e)	Committee Limitation on Compensation Deferrals. Notwithstanding the preceding, the Committee may, in its sole discretion, limit (i.e., reduce or terminate) the Compensation Deferral election or Bonus Deferral election for any Participant or group of Participants.

3.2 Company Credits. As of any date or dates selected by the Company, the Company may credit a Participant’s Company Credits Account with an amount, if any, as the Company in

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its sole discretion shall determine. Such credits may be made on behalf of some Participants but not others, and such credits may vary in amount among individual Participants.

ARTICLE IV.
ALLOCATIONS TO PARTICIPANT ACCOUNTS

4.1	Individual Accounts. The Committee shall create and maintain adequate records to disclose the interest hereunder of each Participant, former Participant and Beneficiary. Such records shall be in the form of individual accounts and credits and debits shall be made to such accounts in the manner herein described.
4.2	Investment of Accounts. The Committee shall allocate earnings and losses to each Participant’s Accounts according to the hypothetical investments made by a Participant pursuant to the terms of Article V.
4.3	Allocation of Net Income or Loss and Changes in Value.

(a)	As of each Valuation Date, the Committee shall determine the fair market value and the net income (or net loss) of each Investment Fund for the period elapsed since the next preceding Valuation Date. The net income (or net loss) of each Investment Fund since the next preceding Valuation Date shall be ascertained by the Committee in such manner as it deems appropriate, which may include expenses, if any, of administering the Investment Fund, the Trust, and the Plan.
(b)	For purposes of allocations of net income (or net loss), each Participant’s Accounts shall be divided into subaccounts to reflect the hypothetical investment of such Participant’s Accounts in a particular Investment Fund or Investment Funds pursuant to Article V. As of each Valuation Date, the net income (or net loss) of each Investment Fund, separately and respectively, shall be allocated among the corresponding subaccounts of the Participants who had such corresponding subaccounts invested in such Investment Fund since the next preceding Valuation Date, and each such corresponding subaccount shall be credited with (or debited for) that portion of such net income (or net loss) that the value of each such corresponding subaccount on such next preceding Valuation Date was of the value of all such corresponding subaccounts on such date; provided, however, that the value of such subaccounts as of the next preceding Valuation Date shall be reduced by the amount of any distributions made therefrom since the next preceding Valuation Date.
(c)	So long as there is any balance in any Account, such Account shall continue to receive allocations pursuant to this Section.

ARTICLE V.
HYPOTHETICAL INVESTMENT OF ACCOUNTS

5.1 Hypothetical Investment of Accounts. The Committee shall from time to time select, add, and/or delete Investment Funds for purposes of the hypothetical investment of Participants’ Accounts. For purposes of allocating earnings and losses and valuation of each Participant’s Accounts, each Participant’s Accounts shall be deemed to be invested in the Investment Funds. The Committee shall designate which Investment Fund or Funds the Participant’s

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	Accounts shall be deemed to be invested. The preceding notwithstanding, the Committee may, in its discretion, permit one or more Participants, or any group of Participants, to direct the hypothetical investment of all or any portion of their Accounts in accordance with Section 5.2.
5.2	Designation of Investment Funds.

(a)	Each Participant shall designate, in accordance with the procedures established from time to time by the Committee, the manner in which the amounts credited to his Accounts over which he has been given investment discretion by the Committee shall be deemed to be invested from among the Investment Funds. Such Participant may designate one of such Investment Funds for the hypothetical investment of all the amounts credited to such Accounts, or he may split the hypothetical investment of the amounts credited to such Accounts between such Investment Funds in such increments as the Committee may prescribe. If a Participant fails to make a proper designation, then his Accounts shall be deemed to be invested in the Investment Fund or Investment Funds designated by the Committee from time to time.
(b)	A Participant may change his hypothetical investment designation for future amounts to be credited to the portion of his Accounts over which he has been given investment discretion by the Committee. Any such change shall be made in accordance with the procedures established by the Committee, and the frequency of such changes may be limited by the Committee.
(c)	If the Committee elects to establish a hypothetical investment fund that holds shares of the Company’s common stock, a Participant may elect to invest his Accounts in such fund. The Committee may in its sole discretion refuse to recognize Participant elections that it determines may cause the Participant’s Accounts to become subject to the short-swing profit provisions of Section 16b of the Securities Exchange Act of 1934 and establish special election procedures for Participants subject to Section 16 of such Act.
(d)	A Participant’s hypothetical investment selections pursuant to the immediately preceding paragraph shall be made solely for purposes of crediting earnings and/or losses to his Accounts under Section 4.3 of this Plan. The Committee shall not, in any way, be bound to actually invest any amounts set aside pursuant to Article X below to satisfy its obligations under this Plan in accordance with such selections.

ARTICLE VI.
VESTED INTEREST

6.1	Vesting of Compensation Deferrals Account. A Participant shall have a 100% Vested Interest in his Compensation Deferrals Account at all times.
6.2	Vesting of Company Credits Account.

(a) A Participant shall acquire a Vested Interest in his Company Credits Account as such Participant completes years of Vesting Service in accordance with the following schedule:

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YEARS OF VESTING SERVICE	VESTED INTEREST
Less than 1 year		0	%
1 year		20	%
2 years		40	%
3 years		60	%
4 years		80	%
5 years or more		100	%

(b) Notwithstanding Subsection (a) above, a Participant shall have a 100% Vested Interest in his Company Credits Account upon the earliest to occur of (i) the attainment of such Participant’s Retirement Date while employed by the Company, (ii) the death of such Participant while employed by the Company, (iii) the date such Participant becomes Disabled, or (iv) any earlier date designated by the Committee in its sole discretion.

6.3 Forfeitures. A Participant who terminates employment with the Company and its Affiliates with a Vested Interest in his Company Credits Account that is less than 100% shall forfeit to the Company the nonvested portion of such Account as of the date of such termination.

ARTICLE VII.
IN-SERVICE WITHDRAWALS AND LOANS

7.1 In-Service Withdrawals.

(a)	Except as provided in Subsections (b) through (d) below, no in-service withdrawals shall be permitted under the Plan, and Participants shall not be permitted to make withdrawals from the Plan prior to a termination of employment with the Company and its Affiliates.
(b)	In the event that the Committee, upon written petition of the Participant, determines in its sole discretion that the Participant has suffered an Unforeseeable Financial Emergency, the Participant shall be entitled to withdrawal from his Compensation Deferrals Account an amount not to exceed the lesser of (i) the amount determined by the Committee as necessary to meet the Participant’s needs created by the Unforeseeable Financial Emergency or (ii) the Vested Interest in the Participant’s Accounts. Such benefit shall be paid in a single lump sum payment as soon as administratively practicable after the Committee has made its determination with respect to the availability and amount of such withdrawal. If the Participant’s Accounts are deemed to be invested in more than one Investment Fund, such withdrawal shall be made pro rata from each Investment Fund in which such Accounts are deemed to be invested. This Subsection shall not be applicable to the Participant following his termination of employment with the Company and its Affiliates, and in the event of such termination the amounts credited to the Participant’s Accounts shall be payable to him only in accordance with Article VIII.
(c)	A Participant may at any time make an irrevocable election, effective as of the first day of the next Plan Year, to have all or a portion of the Vested Interest in his

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Accounts, determined as of the date his election is made, paid to him on a fixed date specified in such election, which shall be at least two (2) years following the date that such election is submitted to the Committee in writing. The amount of the payment pursuant to this irrevocable election shall be stated in the election and shall be a fixed dollar amount, and shall not be adjusted for earnings or losses following such election date. Once an in-service distribution election has been filed with the Committee, it may be extended to provide that the distribution shall be made on a date which is subsequent to the original distribution date; provided, however, that a Participant may not elect to extend his distribution date during the two (2) year period immediately preceding the designated distribution date. A Participant may have only one election hereunder outstanding at any time. Notwithstanding the preceding, if the Participant terminates employment prior to the designated payment date, his election shall be terminated and his Accounts shall be distributed as provided in Section 8.4 below.

(d)

In the event that the Committee, upon written petition of the Participant, determines in its sole discretion that the Participant has a Disability, the Participant shall be entitled to a distribution in accordance with Article VIII.

7.2 Involuntary Distributions. Notwithstanding anything contained in the Plan to the contrary, if at any time any Participant is finally determined by the Internal Revenue Service or the U.S. Department of Labor not to qualify as a member of a select group of “management or highly compensated employees” as such term is used in ERISA Section 401(a)(1), the Committee may, in its sole discretion, immediately distribute in one lump sum to such Participant his vested account under the Plan. A final determination of the Internal Revenue Service or the U.S. Department of Labor shall be a decision rendered by the Internal Revenue Service or the U.S. Department of Labor which is no longer subject to administrative appeal within such agency. In addition, the Committee may, in its exclusive and sole discretion, cause the Plan to make a distribution to a Participant during a Plan Year in order to cause the Participant to have sufficient taxable compensation to satisfy the annual addition requirements of Code Section 415 with respect to any qualified retirement plans maintained by the Company during such Plan Year.

7.3 No Loans. Participants shall not, at any time, be permitted to borrow from the Plan or Trust Fund.

ARTICLE VIII.
PLAN BENEFITS

8.1	Plan Benefit. A Participant’s Plan benefit shall be the value of his Accounts determined as of the Valuation Date immediately preceding the time of payment of such Accounts in accordance with Section 8.3.
8.2	Events Entitling Payment of Benefit. A Participant’s benefit shall become payable upon the earliest to occur of the following events:

(a) A termination of the Participant’s employment with the Company and its Affiliates for any reason;

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(b)	The death of the Participant;
(c)	A determination by the Committee that the Participant has a Disability; or
(d)	A Change of Control.

A Participant’s benefit shall equal the Participant’s Vested Interest in his Accounts as of the Valuation Date next preceding the date the payment of such benefit is to be paid or commence pursuant to Section 8.3.

8.3

Payee and Time of Payment. Payment of a Participant’s benefit shall be paid or commence as soon as administratively practicable following the Section 8.2 event triggering payment. The Participant’s benefit shall be paid to the Participant, unless the Section 8.2 triggering event is the death of the Participant, in which case the Participant’s benefit shall be paid to the Participant’s designated beneficiary as provided in Section 8.5.

8.4

Alternative Forms of Benefit Payments.

(a) A Participant’s benefit under the Plan shall be paid in cash in one of the following forms:

(1)	A single lump sum payment; or
(2)	Monthly, quarterly or annual installment payments for a term certain not to exceed ten years payable to such Participant or, in the event of such Participant’s death prior to the end of such term certain, to his designated beneficiary as provided in Section 8.5.

(b)

A Participant must elect one of the forms of payment listed in Subsection 8.4(a) above on or before the date he first becomes a Participant of the Plan pursuant to Article II. Except as provided in Subsection 8.4(c) below, such election shall be irrevocable by the Participant and shall remain in effect for all periods of a Participant’s participation in the Plan. In the event a Participant fails to elect timely the form in which his benefit payments are to be made, such benefit payments shall be deemed to have been elected by such Participant to be in the form of a single lump sum payment.

(c)

A Participant may shall be entitled to change his elected form of benefit payment under Subsection 8.4(a) above with respect to all amounts allocated to his Accounts (i.e., both existing and future allocations) as of each January 1st. Such change shall be made prior to each such January 1st and shall be effective as of the subsequent January 1st. If a triggering event described in Section 8.2 occurs during the Plan Year following the Committee’s receipt of an election to change distribution forms, such election shall be deemed to be null and void and the immediately preceding election shall apply to the Participant’s distribution. A Participant who does not elect to change his current elected (or deemed elected) form of benefit payment with respect to future allocations to such Participant’s Accounts as of any such January 1 shall not be entitled to change his elected form of benefit until the subsequent January 1st. If a Participant elected to receive his benefit payment in one or more

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	different forms of payment prior to January 1, 2000, such Participant shall receive his distribution pursuant to the most recent form of distribution elected by the Participant; provided, however, if no such election is on file with the Committee, his distribution shall be made in the form elected of a single lump sum payment, unless such Participant elects to file a new election under Subsection (a) above.
(d)	If a Participant dies prior to the date the payment of his benefit begins or is completed, such benefit shall be paid to such Participant’s beneficiary designated in accordance with Section 8.5 in a single lump payment, notwithstanding any other form of payment elected by such Participant.
(e)	The preceding Subsections notwithstanding, if the Section 8.2 event triggering payment of a Participant’s benefit is a Change of Control, such benefit shall be paid to such Participant in a single lump sum cash payment as soon as administratively practicable after such Change of Control.
(f)	Notwithstanding any provision of the Plan to the contrary, the Committee may, in its sole and absolute discretion, distribute a Participant’s benefit in the form of a single lump sum payment notwithstanding any other form of distribution elected by the Participant.

8.5 Designation of Beneficiaries.

(a)

Each Participant shall have the right to designate the beneficiary or beneficiaries to receive payment of his benefit in the event of his death. Each such designation shall be made by executing the beneficiary designation form prescribed by the Committee and filing such form with the Committee during the life of such Participant. Any such beneficiary designation may be changed at any time by execution and filing of a new designation in accordance with this Subsection. The preceding notwithstanding, (i) if a Participant has designated his spouse as his beneficiary, such designation shall be void and of no effect upon the divorce of the Participant and such spouse, unless the Participant notifies the Committee to the contrary in writing after the date of such divorce, and (ii) if a Participant who is married on the date of his death has designated an individual or entity other than his surviving spouse as his beneficiary, such designation shall not be valid unless (a) such surviving spouse has consented thereto in writing, and such consent (1) acknowledges the effect of such specific designation, (2) either consents to the specific designated beneficiary (which designation may not subsequently be changed by the Participant without spousal consent) or expressly permits such designation by the Participant without the requirement of further consent by such spouse, and (3) is witnessed by a Plan representative (other than the Participant) or a notary public or (b) the consent of such spouse cannot be obtained because such spouse cannot be located or because of other circumstances that the Committee in its discretion determines warrants a waiver of such consent. Any such consent by such surviving spouse shall be irrevocable.

(b)

If at the time of the death of the Participant no designated beneficiary is on file with the Committee, or such beneficiary designation is not valid or effective for any

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reason as determined by the Committee, then the designated beneficiary or beneficiaries to receive such benefit shall be as follows:

(1)	If a Participant has a surviving spouse at the time of such Participant’s death, his designated beneficiary shall be such surviving spouse;
(2)	If a Participant has no surviving spouse at the time of such Participant’s death, his designated beneficiary shall be such Participant’s executor or administrator or, if there is no administration of such Participant’s estate, his heirs at law.

8.6	Payments Pursuant to a QDRO. To the extent that a Participant’s benefits are divided pursuant to Section 12.2 hereof, the “alternate payee’s” benefits shall be paid in a single lump sum as soon as administratively practicable following the later of (i) the date the qualified domestic relations order is approved by the Committee, or (ii) the date the alternate payee’s right to receive a distribution of his or her Company Credits Account is fully vested as provided in Section 7.2 above. In the event that an alternate payee dies prior to the date that his or her benefits are eligible for distribution hereunder, his or her benefits shall be fully vested and shall be paid to the alternate payee’s designated beneficiary as soon as administratively feasible following his or her date of death. Payments made to an alternate payee shall not be eligible for distribution as installment payments.
8.7	Payer of Benefits. To the extent the Trust Fund has sufficient assets, the Trustee shall pay benefits to Participants or their beneficiaries, except to the extent the Company pays the benefits directly. To the extent the Trustee does not or cannot pay benefits out of the Trust Fund, the benefits shall be paid by the Company. Any benefit payments made to a Participant or for his benefit pursuant to any provision of the Plan shall be debited to such Participant’s Accounts. All benefit payments shall be made in cash.
8.8	Unclaimed Benefits. In the case of a benefit payable to or on behalf of a Participant, if the Committee after a reasonable search is unable to locate the Participant or beneficiary to whom such benefit is payable, upon the Committee’s determination thereof, such benefit shall be forfeited to the Company. The Committee shall adopt procedures concerning the process that will be followed to locate a Participant or beneficiary under this Section. Notwithstanding the foregoing, if subsequent to any such forfeiture the Participant or beneficiary to whom such benefit is payable makes a valid claim for such benefit within a reasonable (as determined by and in the discretion of the Committee) period of time following the date such benefit became payable, such forfeited benefit shall be payable pursuant to the Plan provisions.

ARTICLE IX.
ADMINISTRATION OF PLAN

9.1 Appointment of Committee. The general administration of the Plan shall be vested in the Committee, which shall be appointed by the Directors and shall consist of one or more persons. Any individual, whether or not an employee of the Company, is eligible to become a member of the Committee.

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9.2 Term, Vacancies, Resignation, and Removal. Each member of the Committee shall serve until he resigns, dies, or is removed by the Directors. At any time during his term of office, a member of the Committee may resign by giving written notice to the Directors and the Committee, such resignation to become effective upon the appointment of a substitute member or, if earlier, the lapse of thirty days after such notice is given as herein provided. At any time during his term of office, and for any reason, a member of the Committee may be removed by the Directors with or without cause, and the Directors may in their discretion fill any vacancy that may result therefrom. Any member of the Committee who is an employee of the Company shall automatically cease to be a member of the Committee as of the date he ceases to be employed by the Company and its Affiliates.

9.3

Self-Interest of Committee Members. No member of the Committee shall have any right to vote or decide upon any matter relating solely to himself under the Plan (including, without limitation, Committee decisions under Article II) or to vote in any case in which his individual right to claim any benefit under the Plan is particularly involved. In any case in which a Committee member is so disqualified to act and the remaining members cannot agree, the Directors shall appoint a temporary substitute member to exercise all the powers of the disqualified member concerning the matter in which he is disqualified.

9.4

Committee Powers and Duties. The Committee shall administer and enforce the Plan according to the terms and provisions hereof and shall have all powers necessary to accomplish these purposes, including, but not by way of limitation, the complete and absolute discretion to construe all provisions of the Plan and make all factual determinations and the right, power, authority, and duty:

(a)	To make rules, regulations, and bylaws for the administration of the Plan that are not inconsistent with the terms and provisions hereof, and to enforce the terms of the Plan and the rules and regulations promulgated thereunder by the Committee;
(b)	To construe in its sole discretion all terms, provisions, conditions, and limitations of the Plan;
(c)	To correct any defect or to supply any omission or to reconcile any inconsistency that may appear in the Plan in such manner and to such extent as it shall deem in its discretion expedient to effectuate the purposes of the Plan;
(d)	To employ and compensate such accountants, attorneys, investment advisors, and other agents, employees, and independent contractors as the Committee may deem necessary or advisable for the proper and efficient administration of the Plan;
(e)	To determine in its sole discretion all questions relating to eligibility;
(f)	To establish or designate Investment Funds as provided in Article V;
(g)	To determine whether and when there has been a termination of a Participant’s employment with the Company and its Affiliates, and the reason for such termination;

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(h)	To make a determination in its sole discretion as to the right of any person to a benefit under the Plan and to prescribe procedures to be followed by distributees in obtaining benefits hereunder; and
(i)	To receive and review reports from the Trustee as to the financial condition of the Trust Fund, including its receipts and disbursements.

9.5 Claims Review.

(a) In any case in which a claim for Plan benefits of a Participant or beneficiary is denied or modified, the Committee shall furnish written notice to the claimant within ninety days (or within 180 days if additional information requested by the Committee necessitates an extension of the ninety-day period and, in which case, the claimant shall be informed of such extension prior to the end of the initial ninety-day period), which notice shall:

(1)	State the specific reason or reasons for the denial or modification;
(2)	Provide specific reference to pertinent Plan provisions on which the denial or modification is based;
(3)	Provide a description of any additional material or information necessary for the Participant, his beneficiary, or representative to perfect the claim and an explanation of why such material or information is necessary; and
(4)	Explain the Plan’s claim review procedure as contained herein.

(b)

In the event a claim for Plan benefits is denied or modified, if the Participant, his beneficiary, or a representative of such Participant or beneficiary desires to have such denial or modification reviewed, he must, within sixty days following receipt of the notice of such denial or modification, submit a written request for review by the Committee of its initial decision. In connection with such request, the Participant, his beneficiary, or the representative of such Participant or beneficiary may review any pertinent documents upon which such denial or modification was based and may submit issues and comments in writing. Within sixty days following such request for review the Committee shall, after providing a full and fair review, render its final decision in writing to the Participant, his beneficiary, or the representative of such Participant or beneficiary stating specific reasons for such decision and making specific references to pertinent Plan provisions upon which the decision is based. If special circumstances require an extension of such sixty-day period, the Committee’s decision shall be rendered as soon as possible, but not later than 120 days after receipt of the request for review. If an extension of time for review is required, written notice of the extension shall be furnished to the Participant, beneficiary, or the representative of such Participant or beneficiary prior to the commencement of the extension period.

(c)

Compliance with the claims review procedures set forth in this Section shall be a condition precedent to the filing of a lawsuit by a Participant, his beneficiary, or any person claiming through a participant or beneficiary in connection with a Plan

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benefit, and a failure to timely exhaust the administrative remedies set forth herein shall bar any such proceeding in federal or state court.

9.6

Company to Supply Information. The Company shall supply full and timely information to the Committee, including, but not limited to, information relating to each Participant’s Compensation, age, retirement, death, or other cause of termination of employment and such other pertinent facts as the Committee may require. When making a determination in connection with the Plan, the Committee shall be entitled to rely upon the aforesaid information furnished by the Company or any Affiliate.

9.7

Indemnity. To the extent permitted by applicable law, the Company shall indemnify and hold harmless each member of the Committee and other employee of the Company or an Affiliate to whom Plan administrative functions have been delegated by the Committee against any and all expenses and liabilities arising out of such individual’s administrative functions or fiduciary responsibilities under or incident to the Plan, including any expenses and liabilities that are caused by or result from an act or omission constituting the negligence of such individual in the performance of such functions or responsibilities, but excluding expenses and liabilities that are caused by or result from such individual’s own gross negligence or willful misconduct. Expenses against which such individual shall be indemnified hereunder shall include, without limitation, the amounts of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted or a proceeding brought or settlement thereof.

ARTICLE X.
PURPOSE AND UNFUNDED NATURE OF THE PLAN

10.1	Purpose of Plan. The Company intends and desires by the adoption and maintenance of the Plan to recognize the value to the Company of the past and present services of employees covered by the Plan and to encourage and ensure their continued service with the Company by making more adequate provision for their future retirement security.
10.2	Unfunded Nature of Plan. The Plan is intended to constitute an unfunded, unsecured plan of deferred compensation for a select group of management or highly compensated employees of the Company. Further, it is the intention of the Company that the Plan be “unfunded” for purposes of the Code and Title I of ERISA. The Plan constitutes a mere promise by the Company to make benefit payments in the future. Plan benefits herein provided are to be paid out of the Company’s general assets, and Participants shall have the status of general unsecured creditors of the Company.
10.3	Funding of Obligation.

(a) The adoption of this Plan and any setting aside of amounts by the Employers with which to discharge their obligations hereunder shall not be deemed to create a trust; legal and equitable title to any funds so set aside shall remain with the Employers, and any recipient of benefits hereunder shall have no security or other interest in such funds. Any and all funds so set aside shall remain subject to the claims of the general creditors of the Employers, present and future. This provision shall not require the

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	Employers to set aside any funds, but the Employers may set aside funds if they choose to do so.
(b)	The Company, in its sole discretion, may establish the Trust and enter into the Trust Agreement. Any such Trust, and any assets held by such Trust, to assist the Employers in meeting its obligations under the Plan shall be a “rabbi trust.” The Employers may transfer money or other property to the Trustee, and the Trustee shall pay Plan benefits to Participants and their beneficiaries out of the Trust Fund unless otherwise paid by the Company. In such event, the Company shall remain the owner of all assets in the Trust Fund, and the assets held in the Trust Fund shall be subject to the claims of Company creditors if the Company becomes “insolvent” as described in Subsection (c) below. No Participant or beneficiary shall have any preferred claim to, or any beneficial ownership interest in, any assets of the Trust Fund.
(c)	The Company shall be considered “insolvent” if (i) the Company is unable to pay its debts as they become due or (ii) the Company is subject to a pending proceeding as a debtor under the United Sates Bankruptcy Code (or any successor federal statute).
(d)	The chief executive officer of the Company and the Directors shall each have the duty to inform the Trustee in writing if the Company becomes insolvent. Such notice given under the preceding sentence by any one party shall satisfy each party’s duty to give notice. When so informed, the Trustee shall suspend payments to the Participants and beneficiaries and hold the assets for the benefit of the Company’s general creditors. If the Trustee receives a written allegation that the Company is insolvent, the Trustee shall suspend payments to the Participants and beneficiaries and hold the Trust Fund for the benefit of the Company’s general creditors and shall determine within the period specified in the Trust Agreement, or, in the absence of a specified period, within a reasonable period of time, whether the Company is insolvent. If the Trustee determines that the Company is not insolvent, the Trustee shall resume payments to the Participants and beneficiaries. In the case of insolvency of the Company or any Affiliate designated to participate in the Plan pursuant to Section 11.1, only the assets contributed to the Trust, if any, by the Company or such Affiliate, whichever is insolvent, shall be subject to the claims of such insolvent entity.
(e)	All expenses incident to the administration of the Plan and Trust, including but not limited to, legal, accounting, Trustee fees, and expenses of the Committee, may be paid by the Company and, if not so paid, shall be paid by the Trustee from the Trust Fund, if any.
(f)	All income, profits, recoveries, contributions, forfeitures and any and all moneys, securities, and properties of any kind at any time received or held by the Trustee, if any, shall be held for investment purposes as a commingled Trust Fund pursuant to the terms of the Trust Agreement. The Committee shall maintain Accounts in the name of each Participant, but the maintenance of Accounts designated as Accounts of a Participant shall not mean that such Participant shall have a greater or lesser interest than that due him under the terms of the Plan and shall not be considered as

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segregating any funds or property from any other funds or property contained in the commingled fund.

ARTICLE XI.
PARTICIPATING ENTITIES

11.1 Designation of Participating Entities.

(a)	The Committee may designate any Employer as eligible to participate in the Plan by written instrument delivered to the Company and the designated entity. Such written instrument shall specify the effective date of such designated participation, may incorporate specific provisions relating to the operation of the Plan that apply to the designated entity only, and shall become, as to such designated entity and its employees, a part of the Plan. Each designated Employer shall be conclusively presumed to have consented to its designation and to have agreed to be bound by the terms of the Plan and any and all amendments thereto upon its submission of information to the Committee required by the terms of or with respect to the Plan; provided, however, that the terms of the Plan may be amended so as to increase the obligations of an entity only with the consent of such entity, which consent shall be conclusively presumed to have been given by such entity upon its submission, after receipt of notice of any such amendment, of any information to the Committee required by the terms of or with respect to the Plan.
(b)	Except as modified by the Committee in the written instrument described in Subsection (a) above, the provisions of this Plan shall be applicable with respect to each participating entity separately, and amounts payable hereunder for or on behalf of a Participant shall be paid by the participating entity that employs such Participant.
(c)	Any participating entity may, by appropriate action of its officers without the need for approval of its board of directors or noncorporate counterpart or the Committee, the Company, or the Directors, terminate its participation in the Plan. Moreover, the Committee may, in its discretion, terminate a participating entity’s Plan participation at any time by giving written notice to such participating entity and the Company.

ARTICLE XII.
MISCELLANEOUS

12.1

Not Contract of Employment. The adoption and maintenance of the Plan shall not be deemed to be a contract between the Company and any person or to be consideration for the employment of any person. Nothing herein contained shall be deemed to give any person the right to be retained in the employ of the Company or to restrict the right of the Company to discharge any person at any time, nor shall the Plan be deemed to give the Company the right to require any person to remain in the employ of the Company or to restrict any person’s right to terminate his employment at any time.

12.2

Alienation of Interest Forbidden. The interest of a Participant or his beneficiary or beneficiaries hereunder may not be sold, transferred, assigned, or encumbered in any manner, either voluntarily or involuntarily, and any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be null and void, nor shall the

-22-

	benefits hereunder be liable for or subject to the debts, contracts, liabilities, engagements, or torts of any person to whom such benefits or funds are payable, nor shall they be an asset in bankruptcy or subject to garnishment, attachment, or other legal or equitable proceedings. The preceding notwithstanding, the Committee shall comply with the terms and provisions of a “qualified domestic relations order” as defined in ERISA Section 206(d).
12.3	Withholding. All Compensation Deferrals, Company Credits, and benefit payments provided for hereunder shall be subject to applicable withholding and other deductions as shall be required of the Company under any applicable local, state, or federal law as such laws are interpreted by the Company.
12.4	Amendment and Termination. The Directors have the absolute and unconditional right to amend the Plan at any time and may from time to time, in their discretion, amend, in whole or in part, any or all of the provisions of the Plan; provided, however, that any amendments to the Plan that do not have a significant cost impact on the Company, whether or not retroactive, may be made by the Committee; and provided, further, that no amendment may be made that would reduce a Participant’s Vested Interest in the amounts credited to his Accounts as of the date of adoption of such amendment. The Directors have the absolute and unconditional right to terminate the Plan at any time on behalf of the Company and each participating entity. In the event that the Plan is terminated, notwithstanding any other form of benefit elected by the Participant, the balance of each Participant’s Accounts shall be paid to such Participant or his designated beneficiary in the manner selected by the Committee in its discretion (notwithstanding any other form of benefit elected by such Participant), which may include the payment of a single lump sum cash payment, in full satisfaction of all of such Participant’s or beneficiary’s benefits hereunder.
12.5	Severability. If any provision of the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions hereof; instead, each provision shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provision had never been included herein.
12.6	Governing Laws. All provisions of the Plan shall be construed in accordance with the laws of the State of Texas except to the extent preempted by federal law.

Executed this 10th day of December, 2002.

DELL COMPUTER CORPORATION
By:	/s/ KATHLEEN O. ANGEL
Name:		Kathleen O. Angel
Title:		Director Of Global Benfits

-23-

EX-21

EXHIBIT 21

DELL INC. SUBSIDIARY LIST

International Americas —	Jurisdiction
Dell Export Sales Corporation	Barbados
Dell Comercial do Brasil Ltda.	Brazil
Dell Computadores do Brasil Ltda.	Brazil
Dell Procurement International	Cayman Islands
Dell Computer de Chile Ltda	Chile
Dell Computer de Mexico, S.A. de C.V.	Mexico
Dell Computer Services de Mexico de C.V.	Mexico
Dell Mexicana Servicios, S. de R.L. de C.V.	Mexico
Dell Mexicana, S. de R.L. de C.V.	Mexico
Dell Canada Inc.	Ontario, Canada
Dell Panama S. de R.L.	Panama
Dell Puerto Rico Corp.	Puerto Rico
Dell Quebec Inc.	Quebec
Europe, Middle East and Africa
Dell Computer International (II) — Comercio de Computadores Sociedade Unipessoal Lda	Madeira, Portugal
Dell Computer Ges.m.b.H	Austria
Dell N.V.	Belgium
Dell Computer spol. sro	Czech Republic
Dell A/S	Denmark
Oy Dell A.B.	Finland
Dell S.A.	France
Dell GmbH	Germany
Dell Computer Trading S.A	Greece
Dell Distribution (EMEA) Limited Magyarorszagi Kereskedelmi Kepviselet — Rep. Office	Hungary
Dell Computer Limited	Ireland
Dell Direct	Ireland
Dell Financial Services International Limited	Ireland
Dell Products	Ireland
Dell Research	Ireland
Dell S.p.A.	Italy
Dell Computer Holding I, SGPS, Unipessoal Lda	Madeira
Dell Computer Holding II, SGPS, Unipessoal Lda	Madeira
Dell Computer N.V. — Madeira Branch	Madeira
Dell Computer Portugal — Comerçio de Computadores e Serviços, Unipessoal, Lda	Madeira
Dell B.V.	Netherlands
Dell Holdings (Europe) B.V.	Netherlands
Dell Products (Asia) B.V.	Netherlands
Dell (Taiwan) B.V.	Netherlands
Dell Products (Europe) B.V.	Netherlands & resident in Ireland
Dell A.S.	Norway
Dell Sp.z.o.o.	Poland

Dell s.r.o.	Slovakia
Dell Computer (Proprietary) Ltd	South Africa
Dell Computer S.A.	Spain
Dell A.B.	Sweden
Dell S.A.	Switzerland
Dell Computer FZ — LLC	U.A.E.
Bracknell Boulevard Management Company Limited	United Kingdom
Dell Corporation Limited	United Kingdom
Dell Computer EEIG	United Kingdom
Dell Distribution (EMEA) Limited	United Kingdom
Dell SAS	Morocco
Dell Computer (III) — Comercio de Computadores, Unipessoal LDA	Portugal
DIH IV C.V.
DIH V C.V.
Dell International Holdings VI	Ireland
Dell International Holdings VII	Ireland
Noordwal Investments B.V. (Dell International Holdings VII B.V.)	Netherlands
Hallar Investments B.V. (Dell International Holdings IX B.V.)	Netherlands
Dell International Holdings X B.V.	Netherlands
Dell International Holdings XI Ltd.	Ireland
Asia-Pacific/Japan
Dell Asia Pacific Sdn.	Malaysia
Dell Asia Pacific Sdn. Philippines Representative Office	Philippines
Dell Asia Pacific Sdn. India Liaison Office	India
Dell Asia Pacific Sdn. Vietnam Representative Office
Dell Computer (China) Co. Ltd.	China
Dell Computer (China) Co., Ltd., Beijing Liaison Office	China
Dell Computer (China) Co., Ltd., Chengdu Liaison Office	China
Dell Computer (China) Co., Ltd., Guangzhou Liaison Office	China
Dell Computer (China) Co., Ltd., Hangzhou Liaison Office	China
Dell Computer (China) Co., Ltd., Nanjing Liaison Office	China
Dell Computer (China) Co., Ltd., Shanghai Liaison Office	China
Dell Computer (China) Co., Ltd., Shenzhen Liaison Office	China
Dell Products L.P. Beijing Representative Office	China
Dell Products L.P. Shanghai Representative Office	China
Dell Products L.P. Shenzhen Representative Office	China
Dell Computer (China) Co., Ltd. Beijing Branch	China
Dell Computer (China) Co., Ltd. Shanghai Branch	China
Dell (Thailand) Co., Ltd.	Thailand
Dell Computer Asia Pte. Ltd.	Singapore
Dell Computer Asia, Limited	Hong Kong
Dell Computer Corporation	Korea
Dell Computer Kabushiki Kaisha” and designated in English as “Dell Computer Corporation”.	Japan
Dell Computer India Private Limited	India
Dell Computer Limited	New Zealand
Dell PTY. Limited	Australia
Dell Products (Asia) B.V., Taiwan Branch	Taiwan
Dell Computer Corporation, Taiwan Representative Office	Taiwan

Dell Global Procurement Malaysia Sdn. Bhd.	Malaysia
Other U.S. Entities
Dell International Incorporated	Delaware
Dell Catalog Sales Corporation	Delaware
Dell Gen. P. Corp.	Delaware
Dell Services Corporation	Delaware
Dell Marketing Corporation	Delaware
Dell USA Corporation	Delaware
Dell Ventures Corporation	Delaware
Dell Professional Services, Inc.	Delaware
Plural Acquisition I, Inc.	Delaware
Dell Products Corporation	Delaware
Dell Auction Corporation	Delaware
Dell World Trade Corporation	Delaware
Dell Receivables Corporation	Delaware
Dell Products GP L.L.C.	Delaware
Dell Products LP L.L.C.	Delaware
Dell Services GP L.L.C.	Delaware
Dell Services LP L.L.C.	Delaware
Dell Auction GP L.L.C.	Delaware
Dell Auction LP L.L.C.	Delaware
Dell World Trade GP L.L.C.	Delaware
Dell World Trade LP L.L.C.	Delaware
Dell Catalog Sales GP L.L.C.	Delaware
Dell Catalog Sales LP L.L.C.	Delaware
Dell Marketing GP L.L.C.	Delaware
Dell Marketing LP L.L.C.	Delaware
Dell USA GP L.L.C.	Delaware
Dell USA LP L.L.C.	Delaware
Dell Receivables GP L.L.C.	Delaware
Dell Receivables LP L.L.C.	Delaware
Dell Products L.P.	Texas
Dell Services L.P.	Texas
Dell Auction L.P.	Texas
Dell World Trade L.P.	Texas
Dell Catalog Sales L.P.	Texas
Dell Marketing L.P.	Texas
Dell USA L.P.	Texas
Dell Receivables L.P.	Texas
CPS Channel Partner Solutions L.P.	Texas
Dell Computer Holdings Corporation	Delaware
Dell Computer Holdings L.P.	Texas
Dell Ventures L.P.	Texas
DCC Executive Security Inc.	Delaware
Dell Eastern Europe Corporation	Delaware
Dell Computer India Corp.	Delaware
Dell Computer de Chile Corp.	Delaware
Dell America Latina Corp.	Delaware
Dell Computer de Colombia	Delaware

Dell Products (Mexico) L.L.C.	Delaware
Dell International Holdings I L.L.C.	Delaware
Dell International Holdings II L.L.C.	Delaware
Dell International Holdings III L.L.C.	Delaware

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33-24621, 33-54577, 33-31812, 33-63273, 33-54583, 333-58039, 333-69726, 333-100342, 333-111214 and 333-111215) of Dell Inc. (formerly Dell Computer Corporation) of our report dated February 12, 2004, relating to the consolidated financial statements and financial statement schedule which appears in this Form 10-K.

PRICEWATERHOUSECOOPERS LLP

Austin, Texas
April 12, 2004

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF MICHAEL S. DELL, CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER, PURSUANT TO RULE 13a-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934

I, Michael S. Dell, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Dell Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	Disclosed in this report any change in the registrant’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

April 12, 2004

/s/ MICHAEL S. DELL

Michael S. Dell

Chairman of the Board and Chief

Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF JAMES M. SCHNEIDER, SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER, PURSUANT TO RULE 13a-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934

I, James M. Schneider, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Dell Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	Disclosed in this report any change in the registrant’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

April 12, 2004

/s/ JAMES M. SCHNEIDER

James M. Schneider

Senior Vice President and Chief

Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATIONS OF MICHAEL S. DELL, CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER, AND JAMES M. SCHNEIDER, SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER, PURSUANT TO 18 U.S.C. SECTION 1350

The undersigned officers of Dell Inc. (“Dell”) hereby certify that (a) Dell’s Annual Report on Form 10-K for the fiscal year ended January 30, 2004, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and (b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Dell.

	/s/ MICHAEL S. DELL
Date: April 12, 2004	Michael S. Dell
	Chairman of the Board and Chief
	Executive Officer,
	Dell Inc.
	/s/ JAMES M. SCHNEIDER
Date: April 12, 2004	James M. Schneider
	Senior Vice President and Chief
	Financial Officer,
	Dell Inc.

A signed original of this written statement has been provided to Dell and will be retained by Dell and furnished to the Securities and Exchange Commission or its staff upon request.