Fair Value Measurements (Notes)

9 Months Ended

Oct. 28, 2011

Fair Value Disclosures [Abstract]

Fair Value Measurements [Text Block]

NOTE 3 — FAIR VALUE MEASUREMENTS

The following table presents Dell's hierarchy for its assets and liabilities measured at fair value on a recurring basis as of October 28, 2011, and January 28, 2011:

	October 28, 2011								January 28, 2011
	Level 1(a)		Level 2 (a)		Level 3		Total		Level 1		Level 2		Level 3		Total
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
							(in millions)
Assets:
Cash equivalents:
Money market funds	$	8,881	$	—	$	—	$	8,881	$	6,261	$	—	$	—	$	6,261
Commercial paper	—		816		—		816		—		2,945		—		2,945
U.S. government and agencies	—		—		—		—		—		1,699		—		1,699
Debt Securities:
U.S. government and agencies	—		—		—		—		—		79		—		79
U.S. corporate	—		1,740		—		1,740		—		464		32		496
International corporate	—		806		—		806		—		457		—		457
Equity and other securities	63		106		—		169		—		109		—		109
Derivative instruments	—		157		—		157		—		27		—		27
Total assets	$	8,944	$	3,625	$	—	$	12,569	$	6,261	$	5,780	$	32	$	12,073
Liabilities:
Derivative instruments	$	—	$	15	$	—	$	15	$	—	$	28	$	—	$	28
Total liabilities	$	—	$	15	$	—	$	15	$	—	$	28	$	—	$	28

____________________

(a) Dell did not transfer any securities between levels during the nine months ended October 28, 2011.

The following section describes the valuation methodologies Dell uses to measure financial instruments at fair value:

Cash Equivalents - The majority of Dell's cash equivalents in the above table consists of money market funds, commercial paper, including corporate and asset-backed commercial paper, and U.S. government and agencies, all with original maturities of less than 90 days and valued at fair value, which approximates cost.  The valuations of these securities are based on quoted prices in active markets for identical assets, when available, or pricing models whereby all significant inputs are observable or can be derived from or corroborated by observable market data. When quoted prices are not available, Dell utilizes a pricing service to assist in obtaining fair value pricing. Dell conducts reviews on a quarterly basis to verify pricing, assess liquidity, and determine if significant inputs have changed that would impact the fair value hierarchy disclosure.

Debt Securities - The majority of Dell's debt securities consists of various fixed income securities such as U.S. government and agencies, and U.S. and international corporate. Dell utilizes a pricing service to assist management in measuring fair value pricing for the majority of this investment portfolio. Valuation is based on pricing models whereby all significant inputs, including benchmark yields, reported trades, broker-dealer quotes, issue spreads, benchmark securities, bids, offers and other market related data,are observable or can be derived from or corroborated by observable market data for substantially the full term of the asset. Inputs are documented in accordance with the fair value measurements hierarchy. Dell conducts reviews on a quarterly basis to verify pricing, assess liquidity, and determine if significant valuation inputs have changed that would impact the fair value hierarchy disclosure. The Level 3 position as of January 28, 2011, represented a convertible debt security that Dell was unable to corroborate with observable market data. The investment was valued at cost plus accrued interest as this was management's best estimate of fair value. As a result of events in the third quarter of Fiscal 2012, the investment was determined to be fully impaired and its cost basis was reduced to zero. See Note 4 of Notes to Condensed Consolidated Financial Statements for additional information about investments.

Equity and Other Securities - The majority of Dell's investments in equity and other securities consists of various mutual funds held in Dell's Deferred Compensation Plan. The valuation of these securities is based on pricing models whereby all significant inputs are observable or can be derived from or corroborated by observable market data. The Level 1 position consists of equity investments which began trading during the first nine months of Fiscal 2012.  The valuations are based on quoted prices in active markets.  These investments were previously accounted for under the cost method. 

Derivative Instruments - Dell's derivative financial instruments consist primarily of foreign currency forward and purchased option contracts and interest rate swaps. The fair value of the portfolio is determined using valuation models based on market observable inputs, including interest rate curves, forward and spot prices for currencies, and implied volatilities. Credit risk is factored into the fair value calculation of Dell's derivative instrument portfolio.  For interest rate derivative instruments, credit risk is determined at the contract levelwith the use of credit default spreads of either Dell, when in a net liability position, or the relevant counterparty, when in a net asset position.  For foreign exchange derivative instruments, credit risk is determined in a similar manner, except that the credit default spread is applied based on the net position of eachcounterparty with the use of the appropriate credit default spreads.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis - Certain assets are measured at fair value on a nonrecurring basis and therefore are not included in the recurring fair value table above. These assets consist primarily of investments accounted for under the cost method and non-financial assets such as goodwill and intangible assets. Investments accounted for under the cost method included in equity and other securities, approximated $13 million and $15 million, on October 28, 2011, and January 28, 2011, respectively. Goodwill and intangible assets are measured at fair value initially and subsequently when there is an indicator of impairment and the impairment is recognized. See Note 9 of Notes to Condensed Consolidated Financial Statements for additional information about goodwill and intangible assets.