NOTES TO FINANCIAL STATEMENTS
1.
|
DESCRIPTION OF THE PLAN
|
The following brief description of the Dell Inc. 401(k) Plan (the Plan) is provided for general information purposes only.
Participants should refer to the Plan document for a more complete description of the Plans provisions.
General
Dell Inc. (the Company or Employer) originally adopted the Plan on June 1, 1989, and subsequently amended and restated the Plan effective January 1, 2007, and January 1, 2009. The Benefits
Administration Committee of the Company (BAC) controls and manages the operation and administration of the Plan. The Bank of New York Mellon is the Plans Trustee (the Plan Trustee).
The Plan is a defined contribution plan covering all U.S. resident employees of the Company who are not covered by a collective bargaining
agreement. Participation in the Plan is at the election of the employee. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
Participant Contributions
Contributions are made to the Plan by the Company on behalf of each eligible participant based
upon the participants elected compensation deferral through payroll deductions. The deferrals are funded by the Company at the end of each payroll period. The amount eligible participants may elect to contribute to the Plan ranges from 1% to
50% of their eligible compensation, in whole percentages, up to the annual statutory limit of $17,000 as permitted by the Internal Revenue Code of 1986, as amended (IRC). Highly compensated employees, as defined by the IRC, may be
subject to more restrictive maximum annual contribution limits if the Plan fails to satisfy certain testing criteria set forth in the IRC. The Plan relies on the safe harbor rules of Section 401(k)(12) of the IRC in order to satisfy the
nondiscrimination testing requirements. Participants age 50 or over may elect to contribute an additional $5,500 (catch-up contributions) over the base statutory limit in accordance with the Economic Growth and Tax Relief Reconciliation
Act of 2001. Participants may also elect to make Roth contributions to the Plan.
The Plan also permits employees to contribute
balances from other qualified plans (rollover contributions). There is a 20% cap on the percentage of contributions a participant may invest in the Dell Stock Fund and Acadian Emerging Market Equity Fund investment options.
Employer Contributions
For 2012, the Company matched 100% of the first 5% of eligible compensation that each participant
contributed to the Plan. The Companys matching contributions were made at the end of each payroll period. The Company also makes a true-up matching contribution at the end of each Plan year. Additional discretionary Employer contributions may
be made upon the approval of the Companys Board of Directors. The Company made no additional discretionary contributions for the year ended December 31, 2012. All of the Companys contributions are invested at the participants
discretion among the fund elections. Neither participant nor Company matching or discretionary contributions, if any, are required to be invested in the Dell Stock Fund.
Participant Accounts
Each participants account is credited with the participants contributions, allocations of Company matching and discretionary contributions, and Plan earnings
or losses offset by withdrawals and Plan administrative expenses. The benefit to which a participant is entitled is the benefit that can be provided from the participants vested account.
- 4 -
DELL INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Effective January 1, 2012, the Plan added a managed account program, where
participants may elect additional services focused on investment, savings and retirement income. Fees for these services are paid by the participant, and are based on the participants account balance.
Vesting
Participants are immediately vested in their contributions and earnings thereon. All participants are also
immediately vested in all Employer contributions and earnings thereon.
Forfeitures
Company contributions
forfeited by participants may be used by the Company to satisfy Plan administrative expenses or to reduce future Company contributions. During 2012, there were no forfeitures used to reduce Company contributions. There was approximately $716,000 in
unallocated forfeited participant accounts at December 31, 2012. This forfeiture amount was a result of re-calculating the match true-up contributions during 2012, and will be used to reduce employer contributions. There were no unallocated
forfeited participant accounts at December 31, 2011.
Benefit Payments
Participants are
entitled to receive a distribution of the vested portion of their account upon reaching age 59
1
/
2
, termination of employment, disability, death, or in the event of financial hardship. A participant who has separated from
service may defer benefit payments until reaching age 65, provided his or her vested account balance is greater than $5,000; otherwise, in the event of a distribution greater than $1,000 but less than $5,000, the participant may elect either a
direct rollover to an individual retirement account (IRA) or another qualified plan or a lump-sum amount equal to the value of the vested portion of his or her account upon termination of service. If an employee fails to make an election
of one of these options within 90 days of the termination date, his or her vested account balance will automatically be directed to a rollover IRA. Similarly, participants with a vested account balance of less than $1,000 may elect either of the
options noted above. If an election is not made within 90 days of the termination date, the balance will be distributed to the participant in a lump sum. Payment of benefits prior to termination of service may be made under certain circumstances as
defined by the Plan.
Administration Expenses
Plan assets are held in trust by the Plan Trustee. The
Plans third-party recordkeeper is Aon Hewitt. Effective January 1, 2012, administrative expenses are paid by the Plan and participant accounts are allocated fees on a per capita basis, except for expenses related to distributions and
other participant-initiated transactions, which are charged to the account of the participant.
Investments
All
investments are participant directed. The participants invest in all investments on a unitized basis. The Plan is invested in mutual funds, common collective trust funds, separately managed funds, and the Dell Stock Fund.
The following investments represent separately managed funds which are comprised of investments in mutual funds and common stocks: Dell
Inc. Short Duration Bond Fund, Dell Inc. 401(k) Dodge & Cox Large Cap Value Fund, Dell Inc. 401(k) Dodge & Cox Balanced Fund and Dell Inc. 401(k) Times Square Small/Mid Cap Growth Fund. Effective September 2012, upon the
liquidation of the Plans investment in the American Growth Fund, the Dell Inc. 401(k) Large Cap Growth Fund was established. It is a separately managed fund that is comprised of two underlying separately managed funds and a mutual fund. The
Plans separately managed funds represent a portion of the Plans core funds.
In addition to the core funds,
participants may elect to contribute to a mix of the Plans separately managed funds, common collective trust funds, and mutual funds, based on target retirement dates. These investment options are called Pre-Mixed Portfolios. The Pre-Mixed
Portfolios provide for diversification of investments based on the participants expected retirement dates.
- 5 -
DELL INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Participants are not permitted to make an elective transfer that will increase their
position in the Dell Stock Fund or the Acadian Emerging Market Equity Fund above 20% of their total account balance. Effective October 19, 2012, the Plan was amended to require that if a participants holdings in the Dell Stock Fund
exceeded 20% of the participants total account balance, the Employer would sell shares of the Dell Stock Fund to reduce the participants holdings to less than 20% of the total account balance. Proceeds from the sale were allocated to a
pre-mixed portfolio based on the participants expected retirement date.
Notes Receivable from Participants
Participants may withdraw as loans a maximum loan amount equal to the lesser of (i) $50,000 less the highest outstanding loan balance during the past 12 months or (ii) 50% of the available vested portion of their account balance less any
current outstanding loan balance (minimum loan amount of $500). Each participants loan is collateralized by the participants vested account balance and is charged an interest rate equal to the prime rate on the date of loan origination
plus 1.0% and a one-time fee of $75. The loan repayment period may not exceed four and a half years except when the proceeds of the loan are used to acquire the participants primary residence, when the repayment period may not exceed 20 years.
At December 31, 2012, loans bore interest at rates ranging between 3.25% and 10.50% and are due at various dates through December 27, 2032.
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent participant loans are recorded as distributions based on the terms of the
Plan document.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of any Plan termination, Plan assets will be distributed in accordance with the Plan document.
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis of Accounting
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
Use of Estimates
The preparation of financial statements in conformity with GAAP requires the use of management
estimates. These estimates are subjective in nature and involve assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of investment income and deductions
during the Plan year. Actual results could differ from those estimates.
Risks and Uncertainties
The Plan
provides for various investments in the Dell Stock Fund, mutual funds, common collective trust funds, and separately managed funds. Investment securities are exposed to various risks, such as interest rate, market, and credit risks. Due to the level
of risk associated with certain investment securities, and the overall volatility in the financial markets, it is at least reasonably possible that changes will occur in the near term that could materially affect participants account balances
and the amounts reported in the statements of net assets available for benefits.
Contributions
Participant and
Employer contributions are recorded in the period the Employer makes the payroll deduction or upon approval by the Company for discretionary Employer contributions, if any.
- 6 -
DELL INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Investment Valuation and Income Recognition
The Plans investments are
stated at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Investments in registered investment companies, also called mutual funds, are valued at their net asset value and can be market
corroborated. The mutual funds held by the Plan are actively traded; however, participants do not directly own the shares of the funds, but own an interest in the funds and therefore participant transactions are on a unitized basis, as noted below.
The investments in the common collective trust funds and the separately managed funds are stated at estimated fair value based
on the fair value of the underlying investments and allocated to participant accounts based on the unit value of the fund. The net asset value (NAV), as provided by the Plan Trustee, is used as a practical expedient to estimate fair value. The NAV
is based on the fair value of the underlying investments held by the fund less its liabilities. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the
reported NAV. Participant transactions (purchases and sales) may occur daily.
The Plan presents, in the statement of changes
in net assets available for benefits, the net appreciation (depreciation) in the fair value of investments, which consist of realized gains and losses and the unrealized appreciation (depreciation) on investments held.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date.
Unit Values
Individual participant accounts invested in the common collective
trust funds, separately managed funds, and mutual funds are maintained for participant balances and activity on a unit value basis. Participants do not have beneficial ownership in specific underlying securities or other assets in the mutual funds,
common collective trust funds, or the separately managed funds, but have an interest therein represented by units valued as of the last business day of the period. The mutual funds, common collective trust funds, and the separately managed funds
earn dividends and interest, which are automatically reinvested in additional units. Generally, contributions to and withdrawal payments from the mutual funds, common collective trust funds, and the separately managed funds are converted to units by
dividing the amounts of such transactions by the unit values as last determined, and the participants accounts are charged or credited with the number of units properly attributable to each participant.
Payment of Benefits
Benefits are recorded when paid. There were approximately $557,000 in amounts allocated to participants
who had elected to withdraw their balances from the Plan, but who had not yet been paid, as of December 31, 2012. There were no benefits payable as of December 31, 2011.
Accounting Pronouncements
The Financial Accounting Standards Board (FASB) is the authoritative body for
financial accounting and reporting in the United States. The following is a list of recent pronouncements issued by the FASB:
In May 2011, the FASB issued guidance on fair value measurements, which clarifies how a principal market is determined, how and when the
valuation premise of highest and best use applies, and how premiums and discounts are applied, as well as requiring new disclosures. This new guidance is effective for reporting periods beginning after December 15, 2011. The Plan adopted these
disclosure requirements as of the beginning of the calendar year ended December 31, 2012, and its adoption did not have any effect on the Plans statement of net assets available for benefits and statement of changes in net assets
available for benefits.
- 7 -
DELL INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
3.
|
FAIR VALUE MEASUREMENTS
|
The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure
fair value as follows: Level 1, which refers to securities valued using unadjusted quoted prices from active markets for identical assets; Level 2, which refers to securities not traded on an active market but for which observable market inputs are
readily available; and Level 3, which refers to securities based on the lowest level of significant unobservable inputs.
The
assets or liabilitys fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques maximize the use of relevant observable
inputs and minimize the use of unobservable inputs.
The Plans policy is to recognize significant transfers between
levels at the Plans year-end.
- 8 -
DELL INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
The tables on the following pages set forth by level within the fair value hierarchy a
summary of the Plans investments measured at fair value on a recurring basis at December 31, 2012 and 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
Active
Markets for
Identical
Assets
|
|
|
Other
Observable
Inputs
|
|
|
Significant
Unobservable
Inputs
|
|
|
Total
|
|
|
|
(in thousands)
|
|
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investment fund
|
|
$
|
16,222
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
16,222
|
|
Domestic fixed income funds
|
|
|
|
|
|
|
622,840
|
|
|
|
|
|
|
|
622,840
|
|
Domestic equity funds
|
|
|
|
|
|
|
301,989
|
|
|
|
|
|
|
|
301,989
|
|
International equity funds
|
|
|
|
|
|
|
686,938
|
|
|
|
|
|
|
|
686,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mutual funds
|
|
|
16,222
|
|
|
|
1,611,767
|
|
|
|
|
|
|
|
1,627,989
|
|
Separately managed funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic equity fund
|
|
|
|
|
|
|
111,150
|
|
|
|
|
|
|
|
111,150
|
|
Fixed income funds
|
|
|
|
|
|
|
303,881
|
|
|
|
|
|
|
|
303,881
|
|
Short-term investment funds
|
|
|
19,025
|
|
|
|
|
|
|
|
|
|
|
|
19,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mutual funds
|
|
|
19,025
|
|
|
|
415,031
|
|
|
|
|
|
|
|
434,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer discretionary
|
|
|
132,507
|
|
|
|
|
|
|
|
|
|
|
|
132,507
|
|
Energy
|
|
|
54,031
|
|
|
|
|
|
|
|
|
|
|
|
54,031
|
|
Financial services
|
|
|
159,809
|
|
|
|
|
|
|
|
|
|
|
|
159,809
|
|
Health care
|
|
|
136,816
|
|
|
|
|
|
|
|
|
|
|
|
136,816
|
|
Materials & processing
|
|
|
36,957
|
|
|
|
|
|
|
|
|
|
|
|
36,957
|
|
Producer durables
|
|
|
104,226
|
|
|
|
|
|
|
|
|
|
|
|
104,226
|
|
Technology
|
|
|
227,818
|
|
|
|
|
|
|
|
|
|
|
|
227,818
|
|
Other
|
|
|
29,538
|
|
|
|
|
|
|
|
|
|
|
|
29,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common stock
|
|
|
881,702
|
|
|
|
|
|
|
|
|
|
|
|
881,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total separately managed funds
|
|
|
900,727
|
|
|
|
415,031
|
|
|
|
|
|
|
|
1,315,758
|
|
Common collective trust funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic equity fund
|
|
|
|
|
|
|
396,654
|
|
|
|
|
|
|
|
396,654
|
|
Balanced fund
|
|
|
|
|
|
|
92,884
|
|
|
|
|
|
|
|
92,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common collective trust funds
|
|
|
|
|
|
|
489,538
|
|
|
|
|
|
|
|
489,538
|
|
Dell Stock Fund
|
|
|
59,210
|
|
|
|
|
|
|
|
|
|
|
|
59,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets measured at fair value
|
|
$
|
976,159
|
|
|
$
|
2,516,336
|
|
|
$
|
|
|
|
$
|
3,492,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 9 -
DELL INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
Active
Markets for
Identical
Assets
|
|
|
Other
Observable
Inputs
|
|
|
Significant
Unobservable
Inputs
|
|
|
Total
|
|
|
|
(in thousands)
|
|
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investment fund
|
|
$
|
13,303
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
13,303
|
|
Domestic fixed income funds
|
|
|
|
|
|
|
509,791
|
|
|
|
|
|
|
|
509,791
|
|
Domestic equity funds
|
|
|
|
|
|
|
537,820
|
|
|
|
|
|
|
|
537,820
|
|
International equity funds
|
|
|
|
|
|
|
472,244
|
|
|
|
|
|
|
|
472,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mutual funds
|
|
|
13,303
|
|
|
|
1,519,855
|
|
|
|
|
|
|
|
1,533,158
|
|
|
|
|
|
|
Separately managed funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common collective trust fund
|
|
|
|
|
|
|
4,387
|
|
|
|
|
|
|
|
4,387
|
|
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed income funds
|
|
|
|
|
|
|
341,305
|
|
|
|
|
|
|
|
341,305
|
|
Short-term investment funds
|
|
|
16,644
|
|
|
|
|
|
|
|
|
|
|
|
16,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mutual funds
|
|
|
16,644
|
|
|
|
341,305
|
|
|
|
|
|
|
|
357,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer discretionary
|
|
|
104,039
|
|
|
|
|
|
|
|
|
|
|
|
104,039
|
|
Energy
|
|
|
53,248
|
|
|
|
|
|
|
|
|
|
|
|
53,248
|
|
Financial services
|
|
|
107,658
|
|
|
|
|
|
|
|
|
|
|
|
107,658
|
|
Health care
|
|
|
120,134
|
|
|
|
|
|
|
|
|
|
|
|
120,134
|
|
Materials & processing
|
|
|
18,905
|
|
|
|
|
|
|
|
|
|
|
|
18,905
|
|
Producer durables
|
|
|
76,893
|
|
|
|
|
|
|
|
|
|
|
|
76,893
|
|
Technology
|
|
|
120,936
|
|
|
|
|
|
|
|
|
|
|
|
120,936
|
|
Other
|
|
|
17,510
|
|
|
|
|
|
|
|
|
|
|
|
17,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common stock
|
|
|
619,323
|
|
|
|
|
|
|
|
|
|
|
|
619,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total separately managed funds
|
|
|
635,967
|
|
|
|
345,692
|
|
|
|
|
|
|
|
981,659
|
|
|
|
|
|
|
Common collective trust funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic equity fund
|
|
|
|
|
|
|
306,602
|
|
|
|
|
|
|
|
306,602
|
|
Balanced fund
|
|
|
|
|
|
|
26,074
|
|
|
|
|
|
|
|
26,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common collective trust funds
|
|
|
|
|
|
|
332,676
|
|
|
|
|
|
|
|
332,676
|
|
Dell Stock Fund
|
|
|
122,732
|
|
|
|
|
|
|
|
|
|
|
|
122,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets measured at fair value
|
|
$
|
772,002
|
|
|
$
|
2,198,223
|
|
|
$
|
|
|
|
$
|
2,970,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The valuation methods described on the following page may produce a fair value calculation that may not
be indicative of net realizable value or reflective of future values. Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to
determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
For the years ended December 31, 2012 and 2011, there were no significant transfers in or out of Level 1, 2 or 3.
- 10 -
DELL INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
On the following page is a description of the valuation methodologies, redemption, and
other restrictions for the Plans investments at December 31, 2012 and 2011:
|
|
|
Mutual funds
|
|
Consist of a Level 1 money market fund that is based on quoted prices in active markets for identical assets. The Level 2 mutual funds consist of investments in registered
investment companies, which are valued at their net asset value, and can be market corroborated.
|
|
|
|
|
The American Euro Pacific Growth Fund and, through September 2012, the American Growth Fund contain a trading restriction that requires shareholders who sell more than $5,000
from either fund to wait at least 30 days before repurchasing into the fund. The restriction applies to transfers and reallocations of current account balances. The restriction does not apply to sales/purchases of $5,000 or less, rollovers, and
retirement plan contributions and distributions. The restriction also excludes activity in any of the Pre-Mixed Portfolios that contain either the American Growth Fund or the American Euro Pacific Growth Fund.
|
Separately managed
funds
|
|
Consists of several separately managed funds, including (1) the Dell Inc. Short Duration Bond Fund, which invests primarily in bonds and other fixed income securities, including
government obligations, corporate bonds, mortgages and asset-backed securities, and seeks to preserve capital and generate moderate income; (2) the Dell Inc. 401(k) Dodge & Cox Balanced Fund, which seeks to provide regular income, conservation
of principal and an opportunity for long-term growth of principal and income, by investing in a diversified portfolio of stocks and bonds; and (3) the Dell Inc. 401(k) Dodge & Cox Large Cap Value Fund and Dell Inc. 401(k) Times Square Small/Mid
Cap Growth Fund, which invest in U.S. common stocks, and seek long-term capital appreciation, and (4) the Dell Inc. 401(k) Large Cap Growth Fund, which was added in 2012 and which consists of mutual funds holding investments in large capitalization
U.S. common stocks, and seeks to provide long-term capital appreciation by directly held U.S. common stocks with the same objective.
|
|
|
|
|
The values of the separately managed funds are determined based on underlying investments as follows: Level 1, common stocks, which are valued at the closing prices reported on
the active market on which the security is traded, and money market mutual funds, which are based on quoted prices in active markets for identical assets; and Level 2, mutual funds, which are valued at their net asset value, and the common
collective trust fund, which is stated at estimated fair value based on the fair value of its underlying investments.
|
|
|
Dell Stock Fund
|
|
Dell common stock is valued on a unitized basis using the closing price reported on the active market. There is a 14 day trading restriction that prevents participants from
reallocating or transferring money back into the Dell Stock Fund for 14 days from the date of the last transfer.
|
Common collective
trust funds
|
|
The Plans investments in the common collective trust funds consist of the BlackRock Equity Index Fund and the Wellington Balanced Real Assets Fund, which are stated at
estimated fair value as determined by the issuer, which is based on the value of the underlying investments, and can be market corroborated. The BlackRock Equity Index Fund seeks to match the performance of the S&P 500 Index. The Wellington
Balanced Real Assets Fund seeks to provide long-term returns consistent with inflation with strong relative performance in rising inflation environments.
|
There were no unfunded commitments or other redemption restrictions on the Plans investments
in these funds at December 31, 2012 or 2011.
- 11 -
DELL INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
The
following table presents investments that represent 5% or more of the Plans net assets as of December 31, 2012 and 2011:
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Mutual funds:
|
|
|
|
|
Neuberger Berman Genesis Fund
|
|
$
|
218,832
|
|
|
$
|
249,669
|
|
American Euro Pacific Growth Fund
|
|
|
370,129
|
|
|
|
322,425
|
|
PIMCO Total Return Fund
|
|
|
375,558
|
|
|
|
353,929
|
|
American Growth Fund
|
|
|
|
*
|
|
|
266,670
|
|
|
|
|
Separately managed funds:
|
|
|
|
|
|
|
|
|
Dell Inc. Short Duration Bond Fund
|
|
|
207,935
|
|
|
|
256,806
|
|
Dell Inc. 401(k) Dodge & Cox Balanced Fund
|
|
|
295,782
|
|
|
|
259,985
|
|
Dell Inc. 401(k) Dodge & Cox Large Cap Value Fund
|
|
|
315,368
|
|
|
|
264,142
|
|
Dell Inc. 401(k) Times Square Small/Mid Cap Growth Fund
|
|
|
220,166
|
|
|
|
200,726
|
|
Dell Inc. 401(k) Large Cap Growth Fund
|
|
|
276,507
|
|
|
|
|
*
|
|
|
|
Common collective trust fund -
|
|
|
|
|
|
|
|
|
BlackRock Equity Index Fund
|
|
|
396,654
|
|
|
|
306,602
|
|
*
|
Amount is less than 5% as of December 31 but is presented for comparative purposes
|
At December 31, 2012 and 2011, the Plan held 5,844,998 and 8,389,048 shares, respectively, of the Dell Stock Fund, valued at
approximately $59,210,000 and $122,732,000, respectively. This represented approximately 2% and 4%, respectively, of the Plans investments at December 31, 2012 and 2011.
The changes in fair value during 2012 for the Plans investments (including investments purchased, sold, and held during the year)
are as follows:
|
|
|
|
|
|
|
2012
|
|
|
|
(in thousands)
|
|
Mutual funds
|
|
$
|
179,558
|
|
Separately managed funds:
|
|
|
|
|
Common stocks
|
|
|
135,425
|
|
Mutual funds
|
|
|
2,707
|
|
Dell Stock Fund
|
|
|
(33,858
|
)
|
Common collective trust funds
|
|
|
54,422
|
|
|
|
|
|
|
Total net appreciation in fair value of investments
|
|
$
|
338,254
|
|
|
|
|
|
|
- 12 -
DELL INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
The Plan
obtained its latest determination letter dated April 15, 2011, from the Internal Revenue Service (IRS) informing the Company that the Plan and related trust are designed in compliance with Section 401(a) of the IRC. The Plan
has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC. The Company believes that the
related trust is exempt from federal income tax under Section 501(a) of the IRC. Therefore, the financial statements contain no provision for income taxes. GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize
a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as
of December 31, 2012 and 2011, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing
jurisdictions; however, there are currently no audits in progress for any tax periods. The Plan administrator believes the Plan is no longer subject to income tax examinations for years prior to 2009.
6.
|
EXEMPT PARTY-IN-INTEREST TRANSACTIONS
|
Administrative expenses on the statement of changes in net assets available for benefits include amounts paid to the Plan Trustee as well as to other exempt parties-in-interest. Plan investments in the
separately managed funds include shares of The Bank of New York Mellon, the trustee of the Plan; therefore, these transactions qualify as exempt party-in-interest transactions.
Transactions in shares of the Companys common stock qualify as party-in-interest transactions under the provisions of ERISA. During 2012, the Plan made purchases of approximately $8,115,000 and
sales of approximately $24,552,000 of the Companys common stock. During the year ended December 31, 2012, the Plan recorded dividend income on the Companys common stock of approximately $1,069,000.
The Plan is a claimant in a class action matter with the Company that was settled during 2010. The Plan hired an independent fiduciary to
approve the calculations that were performed to determine how many shares of Company common stock were held by the Plan at the measurement date. The number of shares determined the settlement amount that the Plan received. Proceeds from the
settlement of approximately $579,000 were received and distributed in 2013.
Effective January 1, 2013, the Plan changed its recordkeeper and trustee to Fidelity Management Trust Company. Also effective
January 1, 2013, the Plan was amended and restated.
On February 5, 2013, Dell announced that it had signed a definitive
agreement and plan of merger pursuant to which it will be acquired in a merger by Denali Holding Inc., a Delaware corporation owned by Michael S. Dell, the Chairman, Chief Executive Officer and founder of Dell, and investment funds affiliated with
Silver Lake Partners, a global private equity firm. At the effective time of the merger, each share of Dells common stock issued and outstanding immediately before the effective time, other than certain excluded shares, will be converted into
the right to receive $13.65 in cash, without interest. Subject to the satisfaction or permitted waiver of closing conditions set forth in the merger agreement, the merger is expected to be consummated before the end of the third quarter of the
Companys fiscal year ending January 31, 2014. The terms of the merger agreement did not impact the Plans financial statements as of and for the year ended December 31, 2012. Plan management is in the process of determining
the impact, if any, to the Plan or Plan participants.
* * * * * *
- 13 -
DELL INC. 401(k) PLAN
EIN 74-2487834, PLAN 001
FORM 5500, SCHEDULE H, PART IV, LINE 4i SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2012
(In thousands)