##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
    Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    August 3, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to          .   Commission file
    number: 0-17017
  Dell Inc.
   Delaware

74-2487834(State or other jurisdiction
    of incorporation or organization)

(I.R.S. Employer Identification No.)   One Dell Way
 Round Rock, Texas 78682
   (512) 338-4400
    þ o
  Rule 12b-2
 Large accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o  Rule 12b-2 o þ




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##### 



INDEX
  PagePart I  FINANCIAL
    INFORMATIONItem 1.


Financial StatementsCondensed Consolidated Statements of Financial
    Position at August 3, 2007 (unaudited) and February 2,
    2007


1Condensed Consolidated Statements of Income for
    the three and six month periods ended August 3, 2007
    (unaudited) and August 4, 2006 (unaudited)


2Condensed Consolidated Statements of Cash Flows
    for the six month periods ended August 3, 2007 (unaudited)
    and August 4, 2006 (unaudited)


3Notes to Condensed Consolidated Financial
    Statements (unaudited)


4Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


21Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


32Item 4.


Controls and Procedures


32Part II  OTHER INFORMATIONItem 1.


Legal Proceedings


36Item 1A.


Risk Factors


36Item 2.


Unregistered Sales of Equity Securities and
    Use of Proceeds


36Item 6.


Exhibits


37Certification of President and CEO Pursuant to Section 302Certification of Vice Chairman and CFO Pursuant to Section 302Certifications Pursuant to Section 906      Special Note
  Form 10-Q/A Form 10-K




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##### Table of Contents



PART I 
    FINANCIAL INFORMATION
  ITEM 1.
    FINANCIAL
    STATEMENTS  DELL INC.
  CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 (in
    millions)
  August 3,


February 2,2007


2007(unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
11,204


$
9,546Short-term investments


658



752Accounts receivable, net


5,296



4,622Financing receivables, net


1,531



1,530Inventories


973



660Other


2,552



2,829Total current assets


22,214



19,939Property, plant, and equipment, net


2,608



2,409Investments


1,960



2,147Long-term financing receivables, net


375



323Other non-current assets


897



817Total assets

$
28,054


$
25,635LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term borrowings

$
328


$
188Accounts payable


10,578



10,430Accrued and other


6,160



7,173Total current liabilities


17,066



17,791Long-term debt


378



569Other non-current liabilities


4,566



2,836Total liabilities


22,010



21,196Commitments and contingencies (Note 8)Redeemable common stock and capital in excess of $.01 par
    value; shares issued and outstanding: 5 and 5, respectively
    (Note 12)


116



111Stockholders 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: 3,312 and 3,307,
    respectively; shares outstanding: 2,231 and 2,226, respectively


10,313



10,107Treasury stock at cost: 606 and 606 shares, respectively


(21,033
)


(21,033
)Retained earnings


16,754



15,282Accumulated other comprehensive loss


(106
)


(28
)Total stockholders equity


5,928



4,328Total liabilities and equity

$
28,054


$
25,635    1




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##### Table of Contents



DELL
    INC.
  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (in millions, except per share amounts; unaudited)
  Three Months
    Ended


Six Months
    EndedAugust 3,


August 4,


August 3,


August 4,2007


2006


2007


2006Net revenue

$
14,776


$
14,211


$
29,498


$
28,531Cost of net revenue


11,825



12,073



23,709



23,885Gross margin


2,951



2,138



5,789



4,646Operating expenses:Selling, general, and administrative


1,894



1,469



3,657



2,883Research, development, and engineering


155



125



297



254Total operating expenses


2,049



1,594



3,954



3,137Operating income


902



544



1,835



1,509Investment and other income, net


96



50



174



104Income before income taxes


998



594



2,009



1,613Income tax provision


252



114



507



357Net income

$
746


$
480


$
1,502


$
1,256Earnings per common share:Basic

$
0.33


$
0.21


$
0.67


$
0.55Diluted

$
0.33


$
0.21


$
0.66


$
0.55Weighted-average shares outstanding:Basic


2,237



2,264



2,236



2,280Diluted


2,264



2,278



2,259



2,298    2




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##### Table of Contents



DELL INC.
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in millions,
    unaudited)
  Six Months
    EndedAugust 3,


August 4,2007


2006Cash flows from operating activities:Net income

$
1,502


$
1,256Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


271



225Stock-based compensation


301



217Excess tax benefits from stock-based compensation


(12
)


(53
)Effects of exchange rate changes on monetary assets and
    liabilities denominated in foreign currencies


31



19Other


28



58Changes in:Operating working capital


(1,732
)


3Non-current assets and liabilities


1,365



87Net cash provided by operating activities


1,754



1,812Cash flows from investing activities:Investments:Purchases


(1,765
)


(5,917
)Maturities and sales


2,127



6,745Capital expenditures


(464
)


(386
)Acquisition of business, net of cash received


(19
)


(97
)Net cash (used in) provided by investing activities


(121
)


345Cash flows from financing activities:Repurchase of common stock






(2,691
)Issuance of common stock under benefit plans


21



188Excess tax benefits from stock-based compensation


12



53Issuance of commercial paper, net


(40
)


Other


(9
)


(20
)Net cash used in financing activities


(16
)


(2,470
)Effect of exchange rate changes on cash and cash equivalents


41



54Net increase (decrease) in cash and cash equivalents


1,658



(259
)Cash and cash equivalents at beginning of period


9,546



7,054Cash and cash equivalents at end of period

$
11,204


$
6,795    3




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##### Table of Contents



DELL INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
  NOTE 1 
    Basis of
    Presentation  Basis of Presentation Form 10-K
      Form 10-K Form 10-Q/A
  Recently Issued Accounting
    Pronouncements Accounting for Certain
    Hybrid Instruments Accounting for
    Derivative Instruments and Hedging Activities Accounting for Transfers and Servicing of Financial Assets
    and Extinguishments of Liabilities a
    replacement of FASB Statement No. 125
 4




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##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
  Accounting for Servicing of Financial Assets  an
    amendment of FASB Statement No. 140
  No. 06-3, Disclosure Requirements for Taxes Assessed by a Governmental
    Authority on Revenue-Producing Transactions (EITF 06-3). Disclosure of Accounting Policies
  Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement No. 109
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial Liabilities
 5




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##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
  Reclassifications
  NOTE 2 
    Inventories  August 3,


February 2,2007


2007(in
    millions)Inventories:Production materials

$
632


$
361Work-in-process


71



61Finished goods


270



238Inventories

$
973


$
660     NOTE 3 
    Earnings Per
    Common Share   6




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##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
    Three Months
    Ended


Six Months
    EndedAugust 3,


August 4,


August 3,


August 4,2007


2006


2007


2006(in millions,
    except per share amounts)Numerator:Net income

$
746


$
480


$
1,502


$
1,256Denominator:Weighted-average shares outstanding:Basic


2,237



2,264



2,236



2,280Effect of dilutive options, restricted stock units, restricted
    stock, and other


27



14



23



18Diluted


2,264



2,278



2,259



2,298Earnings per common share:Basic

$
0.33


$
0.21


$
0.67


$
0.55Diluted

$
0.33


$
0.21


$
0.66


$
0.55   NOTE 4 
    Comprehensive
    Income      Three Months
    Ended


Six Months
    EndedAugust 3,


August 4,


August 3,


August 4,2007


2006


2007


2006(in
    millions)Comprehensive income:Net income

$
746


$
480


$
1,502


$
1,256Unrealized gains (losses) on foreign currency hedging
    instruments, net


8



64



(74
)


(44
)Unrealized gains on marketable securities, net


3



16



15



1Valuation of retained interests in securitized
    assets(a)






4



(23
)


6Foreign currency translation adjustments


3



(2
)


4



(6
)Comprehensive income

$
760


$
562


$
1,424


$
1,213     (a)
    
    In the first quarter of Fiscal 2008
    Dell adopted SFAS 155 and, as a result, all gains and
    losses are recognized in the Statement of Income immediately and
    are no longer included in accumulated other comprehensive
    income. The impact to the first quarter of Fiscal 2008 is to
    recognize the unrealized amount as of February 2, 2007 as
    an adjustment to retained earnings at that date. 7




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##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
   NOTE 5 
    Benefit
    Plans  Description of
    the Plans
  Employee Stock Purchase Plan 
  Employee Stock Plans 
  
    The Dell Computer Corporation 1989 Stock Option Plan (the
    1989 Option Plan)
    The Dell Computer Corporation Incentive Plan (the 1994
    Incentive Plan)
    The Dell Computer Corporation 1998 Broad-Based Stock Option Plan
    (the 1998 Broad-Based Plan)
    The Dell Computer Corporation 2002 Long-Term Incentive Plan (the
    2002 Incentive Plan)      Stock-Based Compensation  Share-Based Payment Accounting for Stock-Based Compensation
  Temporary Suspension of Option Exercises, Vesting of
    Restricted Stock Units, and ESPP Purchases  Form 10-K
 8




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##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
  Form 10-K
  General
    Information
  Expense
    Information under SFAS 123(R)
    Three Months
    Ended


Six Months
    EndedAugust 3,


August 4,


August 3,


August 4,2007


2006


2007


2006(in
    millions)Stock-based compensation expense:Cost of net revenue

$
30


$
18


$
44


$
36Operating expenses


174



86



257



181Stock-based compensation expense before taxes


204



104



301



217Income tax benefit


(57
)


(31
)


(85
)


(65
)Stock-based compensation expense

$
147


$
73


$
216


$
152     Valuation
    Information
   9




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##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
    Three Months
    Ended


Six Months
    EndedAugust 3,


August 4,


August 3,


August 4,2007


2006


2007


2006Expected term


3.4 years



3.2 years



3.5 years



3.2 yearsRisk-free interest rate (U.S. Government Treasury  Note)


4.7
%


5.0
%


4.6
%


4.8
%Volatility


25
%


27
%


25
%


27
%Dividends


0
%


0
%


0
%


0
%   Stock Option Activity
  Weighted-Weighted-


AverageNumber


Average


Remaining


Aggregateof


Exercise


Contractual


IntrinsicOptions


Price


Term


Value(in
    millions)


(per
    share)


(in
    years)


(in
    millions)Options outstanding  February 2, 2007


314


$
32.16Granted


8



23.38Exercised (prior to April 4 suspension date)


(2
)


9.63Forfeited


(3
)


27.26Cancelled/expired


(33
)


30.80Options outstanding  August 3, 2007


284


$
32.28Vested and expected to vest (net of estimated
    forfeitures)  August 3,
    2007(a)


276


$
32.52



4.3


$
316Exercisable  August 3,
    2007(a)


259


$
32.95



4.6


$
281     (a)
    
    For options vested and expected to
    vest and options exercisable, the aggregate intrinsic value in
    the table above represents the total pre-tax intrinsic value
    (the difference between Dells closing stock price on
    August 3, 2007 and the exercise price, multiplied by the
    number of in-the-money options) that would have been received by
    the option holders had the holders exercised their options on
    August 3, 2007. The intrinsic value changes based on
    changes in the fair market value of Dells common stock.    Three Months
    Ended


Six Months
    EndedAugust 3,


August 4,


August 3,


August 4,2007


2006


2007


2006(in millions,
    except per option data)Weighted-average grant date fair value of stock options granted
    per option

$
6.64


$
6.46


$
6.02


$
7.24Total intrinsic value of options
    exercised(a)

$



$
61


$
27


$
134     (a)
    
    The total intrinsic value of
    options exercised represents the total pre-tax intrinsic value
    (the difference between the stock price at exercise and the
    exercise price, multiplied by the number of options exercised)
    that was received by the option holders who exercised their
    options during the six-month period ended August 3, 2007.   10




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##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
  Non-vested Restricted Stock Activity
  Weighted-Number


Averageof


Grant DateShares


Fair
    Value(in
    millions)


(per
    share)Non-vested restricted stock  February 2, 2007


17


$
28.76Granted


23



22.35Vested


(3
)


29.46Forfeited


(2
)


26.30Non-vested restricted stock  August 3, 2007


35


$
24.75     NOTE 6 
    Financial
    Services  Joint Venture
    Agreement
         11




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##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
    Financing
    Receivables
    August 3,


February 2,2007


2007(in
    millions)Financing receivables, net:Customer receivables:Revolving loans, net

$
787


$
771Leases and loans, net


654



627Customer receivables, net


1,441



1,398Residual interests


294



296Retained interest


171



159Financing receivables, net

$
1,906


$
1,853Short-term

$
1,531


$
1,530Long-term


375



323Financing receivables, net

$
1,906


$
1,853     
    Customer receivables are presented net of an allowance for
    uncollectible accounts. The allowance is based on factors
    including historical trends and the composition and credit
    quality of the customer receivables. The composition and credit
    quality varies from investment grade commercial customers to
    subprime consumers. Customer receivables are charged to the
    allowance at the earlier of when an account is deemed to be
    uncollectible or when the account is 180 days delinquent.
    Recoveries on customer receivables previously charged off as
    uncollectible are adjusted to the allowance for uncollectible
    accounts. The following is a description of the components of
    financing receivables:  -
    Revolving loans offered under private label credit financing
    programs provide qualified customers with a revolving credit
    line for the purchase of products and services offered by Dell.
    From time to time, account holders may have the opportunity to
    finance their Dell purchases with special programs during which,
    if the outstanding balance is paid in full, no interest is
    charged. These special programs generally range from 3 to
    18 months and have an average original term of
    approximately 13 months. Revolving loans bear interest at a
    variable annual percentage rate that is tied to the prime rate.-
    Leases with business customers generally have fixed terms of two
    to three years. Future maturities of minimum lease payments at
    August 3, 2007 are as follows: 2008: $68 million;
    2009: $83 million; 2010: $51 million; 2011:
    $12 million; and 2012: $2 million. Fixed-term loans
    are also offered to qualified small businesses for the purchase
    of products sold by Dell. 12




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##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
  
    Dell retains a residual interest in the leased equipment. The
    amount of the residual interest is established at the inception
    of the lease based upon estimates of the value of the equipment
    at the end of the lease term using historical studies, industry
    data, and future
    value-at-risk
    demand valuation methods. On a periodic basis, Dell assesses the
    carrying amount of its recorded residual values for impairment.
    Anticipated declines in specific future residual values that are
    considered to be other-than-temporary are recorded in current
    earnings.
    Retained interests represent the residual beneficial interest
    Dell retains in certain pools of securitized finance
    receivables. Retained interests are stated at the present value
    of the estimated net beneficial cash flows after payment of all
    senior interests. In estimating the value of retained interests,
    Dell makes a variety of financial assumptions, including pool
    credit losses, payment rates, and discount rates. These
    assumptions are supported by both Dells historical
    experience and anticipated trends relative to the particular
    receivable pool. Dell reviews its investments in retained
    interests periodically for impairment, based on estimated fair
    value. Any resulting losses representing the excess of carrying
    value over estimated fair value that are other-than-temporary
    are recorded in earnings. Upon the adoption of SFAS 155 in
    the first quarter of Fiscal 2008, Dell began recording
    unrealized gains or losses in its Condensed Consolidated
    Statements of Income.  Asset
    Securitization
       13




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##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
  NOTE 7 
    Warranty
    Liability and Related Deferred Revenue    Three Months
    Ended


Six Months
    EndedAugust 3,


August 4,


August 3,


August 4,2007


2006


2007


2006(in
    millions)Deferred revenue:Deferred revenue at beginning of period

$
4,408


$
3,907


$
4,221


$
3,707Revenue deferred for new extended warranty and service contracts
    sold(a)


923



814



1,747



1,573Revenue
    recognized(a)


(669
)


(697
)


(1,306
)


(1,256
)Deferred revenue at end of period

$
4,662


$
4,024


$
4,662


$
4,024Current portion

$
2,041


$
2,055


$
2,041


$
2,055Non-current portion


2,621



1,969



2,621



1,969Deferred revenue at end of period

$
4,662


$
4,024


$
4,662


$
4,024   Three Months
    Ended


Six Months
    EndedAugust 3,


August 4,


August 3,


August 4,2007


2006


2007


2006(in
    millions)Warranty liability:Warranty liability at beginning of period

$
889


$
909


$
958


$
951Costs accrued for new warranty contracts and changes in
    estimates for pre-existing
    warranties(b)


308



330



560



575Service obligations
    honored(a)


(283
)


(310
)


(604
)


(597
)Warranty liability at end of period

$
914


$
929


$
914


$
929Current portion

$
643


$
665


$
643


$
665Non-current portion


271



264



271



264Warranty liability at end of period

$
914


$
929


$
914


$
929     (a)
    
    Prior period amounts have been
    changed to reflect the current year presentation of service
    obligations honored. There is no impact to the Condensed
    Consolidated Statements of Financial Position or Condensed
    Consolidated Statements of Income as a result of this change.(b)
    
    Changes in cost estimates related
    to pre-existing warranties are aggregated with accruals for new
    warranty contracts. Dells warranty liability process does
    not differentiate between estimates made for pre-existing
    warranties and new warranty obligations.   14




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##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
  NOTE 8 
    Commitments and
    Contingencies  DFS Purchase Commitment
  Restricted Cash
  Legal Matters Accounting for
    Contingencies
  
    Investigations and Related Litigation In
    August 2005, the SEC initiated an inquiry into certain of
    Dells accounting and financial reporting matters and
    requested that Dell provide certain documents. The SEC expanded
    that inquiry in June 2006 and entered a formal order of
    investigation in October 2006. The SECs requests for
    information were joined by a similar request from the United
    States Attorney for the Southern District of New York
    (SDNY), who subpoenaed documents related to
    Dells financial reporting from and after Fiscal 2002. In
    August 2006, because of potential issues identified in the
    course of responding to the SECs requests for information,
    Dells Audit Committee, on the recommendation of management
    and in consultation with PricewaterhouseCoopers LLP, Dells
    independent registered public accounting firm, initiated an
    independent investigation, which was recently completed.
    Although the Audit Committee investigation has been completed,
    the investigations being conducted by the SEC and the SDNY are
    ongoing. Dell continues to cooperate with the SEC and the SDNY.  In re Dell Inc. Securities Litigation In re Dell Inc. ERISA Litigation In
    re Dell Inc. Derivative Litigation
 15




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##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
  Baltimore County Employees Retirement System v.
    Dell Inc.
  
    Copyright Levies Proceedings against the IT
    industry in Germany seek to impose levies on equipment, such as
    personal computers, multifunction devices, and printers that
    facilitate making private copies of copyrighted materials. The
    total levies due, if imposed, would be based on the number of
    products sold and the per-product amounts of the levies, which
    vary. Dell, along with other companies and various industry
    associations are opposing these levies and instead are
    advocating compensation to rights holders through digital rights
    management systems.    
    Lucent v. Dell In February 2003, Lucent
    Technologies, Inc. filed a lawsuit against Dell in the United
    States District Court for Delaware, and the lawsuit was
    subsequently transferred to the United States District Court for
    the Southern District of California. The lawsuit alleges that
    Dell infringed 12 patents owned by Lucent and seeks monetary
    damages and injunctive relief. In April 2003, Microsoft
    Corporation filed a declaratory judgment action against Lucent
    in the United States District Court for the Southern District of
    California, asserting that Microsoft products do not infringe
    patents held by Lucent, including 10 of the 12 patents at issue
    in the lawsuit involving Dell and Microsoft. These actions were
    consolidated for discovery purposes with a previous suit that
    Lucent filed against Gateway, Inc. In September 2005, the court
    granted a summary judgment of invalidity with respect to one of
    the Lucent patents asserted against Dell. In addition, in
    decisions made through May 2007, the court granted summary
    judgment of non-infringement with respect to five more of the
    Lucent patents asserted against Dell. The court has ordered
    invalidity briefing with regard to other patents at issue in
    view of the April 30, 2007, U.S. Supreme Court
    decision in KSR v. Teleflex. Fact and expert
    discovery has closed, and the three actions have been
    consolidated. Trial is scheduled to begin in February 2008. Dell
    is defending these claims vigorously. Separately, Dell has filed
    a lawsuit against Lucent in the United States District Court for
    the Eastern District of Texas, alleging that Lucent infringes
    two patents owned by Dell and seeking monetary damages and
    injunctive relief. That litigation is pending and discovery is
    proceeding. 16




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##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
   
    Sales Tax Claims Several state and local
    taxing jurisdictions have asserted claims against Dell Catalog
    Sales L.P. (DCSLP), an indirect wholly-owned
    subsidiary of Dell, alleging that DCSLP had an obligation to
    collect tax on sales made into those jurisdictions because of
    its alleged nexus, or physical presence, in those jurisdictions.
    During the first and second quarter of Fiscal 2008, Dell settled
    suits filed by the State of Louisiana and the Secretary of the
    Louisiana Department of Revenue and Taxation in the
    19th Judicial District Court of the State of Louisiana, and
    by two Louisiana parishes, Orleans Parish and Jefferson Parish,
    in the State of Louisiana 24th Judicial District Court.
    Dell also settled similar claims made by a number of other
    Louisiana parishes and by the State of Massachusetts. These
    settlement amounts did not have a material adverse effect on
    Dells financial condition, results of operations, or cash
    flows. While there are ongoing claims by certain other state and
    local taxing authorities, DCSLP disputes the allegation that it
    had nexus in any of these other jurisdictions during the periods
    in issue, and is defending the claims vigorously. Dell does not
    expect that the outcome of these other claims, individually or
    collectively, will have a material adverse effect on its
    financial condition, results of operations, or cash flows.
    Income Tax Dell is currently under audit in
    various jurisdictions, including the United States. The tax
    periods open to examination by the major taxing jurisdictions to
    which Dell is subject include Fiscal 1999 through Fiscal 2007.
    Dell does not anticipate a significant change to the total
    amount of unrecognized benefits within the next 12 months.    NOTE 9 
    Segment
    Information     17




---



##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
    Three Months
    Ended


Six Months
    EndedAugust 3,


August 4,


August 3,


August 4,2007


2006


2007


2006(in
    millions)Net revenue:Americas:Business

$
7,914


$
7,502


$
15,426


$
14,612U.S. Consumer


1,301



1,787



2,736



3,698Americas


9,215



9,289



18,162



18,310EMEA


3,488



3,049



7,253



6,451APJ


2,073



1,873



4,083



3,770Net revenue

$
14,776


$
14,211


$
29,498


$
28,531Consolidated operating income:Americas:Business

$
755


$
546


$
1,406


$
1,219U.S. Consumer


(9
)


15



2



68Americas


746



561



1,408



1,287EMEA


206



5



484



202APJ


154



82



244



237Consolidated segment operating income


1,106



648



2,136



1,726Stock-based compensation expense


(204
)


(104
)


(301
)


(217
)Consolidated operating income

$
902


$
544


$
1,835


$
1,509   NOTE 10 
    Debt  Commercial
    Paper
     18




---



##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
  DFS Credit
    Facilities
    Long-Term Debt
    and Interest Rate Risk Management
         19




---



##### Table of Contents



DELL INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (unaudited)
  NOTE 11 
    Income
    Taxes        NOTE 12 
    Redeemable Common
    Stock    NOTE 13 
    Subsequent
    Events     20




---



##### Table of Contents



ITEM 2.  MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS
  SPECIAL NOTE:  This section,
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations, contains
    forward-looking statements based on our 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 risk factors affecting our business and prospects, see
    Part I  Item 1A  Risk
    Factors in our Annual Report on
    Form 10-K
    for the fiscal year ended February 2, 2007.
  All percentage amounts and ratios were calculated using
    the underlying data in thousands. Unless otherwise noted, all
    references to industry share and total industry growth data are
    for personal computers (including desktops, notebooks, and x86
    servers), and are based on information provided by IDC Worldwide
    Quarterly PC Tracker, September 2007. Share data is for the
    calendar quarter and all our growth rates are on a fiscal
    year-over-year basis. Unless otherwise noted, all references to
    time periods refer to our fiscal periods.
    Special Note
  Form 10-Q/A Form 10-K
   Overview
  Our
    Company
      tm
 21




---



##### Table of Contents



tm
    Current Business
    Environment
    Second Quarter
    Performance
  Share position



We shipped almost 10 million units, resulting in a
    worldwide PC share position of 16.1%, a decline of
    3 percentage points year-over-year.Net revenue



Revenue increased 4% year-over-year to $14.8 billion, with
    unit shipments up 1% year-over-year.Operating income



Operating income was $902 million for the quarter, or 6.1%
    of revenue, as compared to $544 million or 3.8% of revenue
    for second quarter of Fiscal 2007.Earnings per share



Earnings per share increased 56% to $0.33 for the current
    quarter compared to $0.21 for the second quarter of Fiscal 2007.   Results of
    Operations
    Three Months
    Ended

Six Months
    EndedAugust 3,
    2007

August 4,
    2006

August 3,
    2007

August 4,
    2006% of



% of



% of



% ofDollars

Revenue

Dollars

Revenue

Dollars

Revenue

Dollars

Revenue(in millions,
    except share amounts and percentages)Net revenue

$
14,776



100.0
%

$
14,211



100.0
%

$
29,498



100.0
%

$
28,531



100.0
%Gross margin

$
2,951



19.9
%

$
2,138



15.0
%

$
5,789



19.6
%

$
4,646



16.3
%Operating expenses

$
2,049



13.8
%

$
1,594



11.2
%

$
3,954



13.4
%

$
3,137



11.0
%Operating income

$
902



6.1
%

$
544



3.8
%

$
1,835



6.2
%

$
1,509



5.3
%Net income

$
746



5.1
%

$
480



3.4
%

$
1,502



5.1
%

$
1,256



4.4
%Earnings per share diluted

$
0.33



N/A


$
0.21



N/A


$
0.66



N/A


$
0.55



N/A   Consolidated
    Revenue
   22




---



##### Table of Contents



Revenues by
    Segment
      Three Months
    Ended


Six Months
    EndedAugust 3,
    2007


August 4,
    2006


August 3,
    2007


August 4,
    2006% of





% of





% of





% ofDollars


Revenue


Dollars


Revenue


Dollars


Revenue


Dollars


Revenue(in millions,
    except percentages)Net revenueAmericas:Business

$
7,914



53.6
%

$
7,502



52.8
%

$
15,426



52.3
%

$
14,612



51.2
%U.S. Consumer


1,301



8.8
%


1,787



12.6
%


2,736



9.3
%


3,698



13.0
%Americas


9,215



62.4
%


9,289



65.4
%


18,162



61.6
%


18,310



64.2
%EMEA


3,488



23.6
%


3,049



21.4
%


7,253



24.6
%


6,451



22.6
%APJ


2,073



14.0
%


1,873



13.2
%


4,083



13.8
%


3,770



13.2
%Net revenue

$
14,776



100.0
%

$
14,211



100.0
%

$
29,498



100.0
%

$
28,531



100.0
%   
    Americas Americas revenues
    declined slightly for the second quarter and first six months of
    Fiscal 2008, while units decreased 6% and 10%, respectively, as
    compared to the second quarter and first six months of Fiscal
    2007. In the second quarter and first six months of Fiscal 2008,
    5% and 6% growth, respectively, in our Americas Business segment
    was offset by a 27% and 26% decrease in revenue in our
    U.S. Consumer segment during the same periods,
    respectively. Even though we experienced average selling prices
    that were 5% higher during the second quarter and 10% higher for
    the first six months of Fiscal 2008 as compared to the prior
    year periods, total revenue did not grow at the same rate due to
    significant declines in unit shipments in U.S. Consumer.
    For the second quarter and first six months of Fiscal 2008,
    strong revenue growth in servers and networking, storage, and
    software and peripherals sales were offset by declines in
    desktop, mobility, and enhanced services sales.  -
    Business Americas Business revenue
    increased 5% and 6% year-over-year for the second quarter and
    first six months of Fiscal 2008, respectively. Public and small
    and medium business growth and Americas International, which
    includes countries in North and South America other than the
    United States, drove the majority of the increase in revenue in
    Americas Business. Americas International produced strong
    revenue growth of 13% year-over-year for the second quarter and
    12% for first six months of Fiscal 2008. All products grew for
    the three and six month periods ended August 3, 2007.-
    U.S. Consumer U.S. Consumer
    revenue declined 27% and 26% year-over-year in the second
    quarter and first six months of Fiscal 2008, respectively. The
    significant decline in U.S. Consumer revenue is due to
    competitive pressure and continuing decline in desktop revenue.
    Desktop shipments 23




---



##### Table of Contents



decreased 36% in the second quarter of Fiscal 2008 and 47% for
    first six months of Fiscal 2008 as compared to the same periods
    in the prior year. Our U.S. Consumer business continues to
    face a competitive pricing environment. Mobility revenue
    declined 36% for the second quarter of Fiscal 2008 on a unit
    decline of 38% and declined 32% on a unit decline of 39% for the
    first six months of Fiscal 2008, while the industry-wide
    consumer mobility sales in the U.S. grew 26% and 24% during
    the second quarter and first six months of Fiscal 2008,
    respectively. The demand for our products deteriorated due to
    price competition and decreased product appeal. This environment
    has led the U.S. Consumer business to update its business
    model and enter into a limited number of retail distribution
    arrangements to complement and extend the existing direct
    business. We are also investing in initiatives that will align
    our new and existing products around customers needs and
    wants in order to drive long-term, sustainable performance. Our
    investments have resulted in better than expected demand for
    certain of our Inspiron and XPS notebooks.  
    EMEA  EMEA revenue grew 14% on unit
    growth of 9% for the second quarter of Fiscal 2008, and for the
    first six months of Fiscal 2008, EMEA revenue grew 12%
    year-over-year on unit growth of 1%. The revenue growth is
    attributed to higher average selling prices which increased 5%
    in the second quarter and 11% during the first six months of
    Fiscal 2008 due to changes in product mix. Year-over-year
    revenue growth for both the second quarter and first six months
    of Fiscal 2008 was led by Germany, France, and the United
    Kingdom, and Poland, Austria, and Greece produced significant
    year-over-year growth at rates well above the overall region for
    the second quarter and first six months of Fiscal 2008. The
    marginal overall unit increase in EMEA for the first six months
    of Fiscal 2008 was mainly due to a 6% decrease in desktop
    shipments during the period as compared to the same period in
    Fiscal 2007. This shipment decline led to a 1% reduction in
    desktop revenue. Revenue growth was driven primarily by
    increases in mobility products, enhanced services, and servers
    and networking.
    APJ  APJ revenue grew 11% on a unit
    increase of 13% for the second quarter of Fiscal 2008. During
    the first six months of Fiscal 2008, APJ revenue grew 8% on a
    unit increase of 6%. For the second quarter of Fiscal 2008,
    revenue growth in APJ was led by China with 17% growth,
    Australia-New Zealand with 10% growth, and India with 42%
    growth. These four countries led APJ revenue growth for the
    first six months of Fiscal 2008 as well. Additionally, Malaysia,
    Taiwan, and Thailand produced significant year-over-year growth
    at rates well above the overall region for the second quarter
    and first six months of Fiscal 2008. Excluding Japan, the APJ
    region experienced a 17% and 16% increase in revenue,
    year-over-year, for the second quarter and first six months of
    Fiscal 2008, respectively. During the same time periods,
    Japans revenue decreased 3% and 5%, respectively, under
    significant competitive pressure. For APJ overall, mobility,
    servers and networking, and storage experienced strong revenue
    growth for the three and six month periods ended August 3,
    2007. Enhanced services revenue declined significantly during
    the same periods, while desktop revenue increased 12%
    year-over-year for the second quarter of Fiscal 2008 and
    increased 6% for the first six months of Fiscal 2008.  Revenue by
    Product and Services Categories
     24




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##### Table of Contents



Three Months
    Ended


Six Months
    EndedAugust 3,
    2007


August 4,
    2006


August 3,
    2007


August 4,
    2006% of





% of





% of





% ofDollars


Revenue


Dollars


Revenue


Dollars


Revenue


Dollars


Revenue(in millions,
    except percentages)Net revenue:Desktop PCs

$
5,017



34
%

$
4,992



35
%

$
9,959



34
%

$
10,283



36
%Mobility


3,865



26
%


3,846



27
%


7,881



26
%


7,627



27
%Software & peripherals


2,380



16
%


2,219



16
%


4,721



16
%


4,401



15
%Servers & networking


1,618



11
%


1,348



9
%


3,211



11
%


2,699



9
%Enhanced services


1,283



9
%


1,258



9
%


2,564



9
%


2,483



9
%Storage


613



4
%


548



4
%


1,162



4
%


1,038



4
%Net revenue

$
14,776



100
%

$
14,211



100
%

$
29,498



100
%

$
28,531



100
%   
    Desktop PCs  Revenue from sales of
    desktop PCs consists of Dell
    XPStm,
    OptiPlextm,
    Dimensiontm,
    Inspirontm,
    Vostrotm,
    and Alienware
    Auroratm,
    Area-51®,
    and
    ALXtm
    desktop computer systems, and Dell
    Precisiontm
    and Alienware
    MJ-12®
    desktop workstations. During the second quarter of Fiscal 2008,
    we began selling our new
    Vostrotm
    desktops, specifically designed to meet the needs of small
    business customers. Revenue from desktop PCs remained flat
    during the second quarter of Fiscal 2008 as compared to the
    second quarter of the prior year, and it decreased 3% for the
    first half for Fiscal 2008 on a unit decline of 8%. This
    performance was driven by our U.S. Consumer business, where
    desktop revenue was down 26% year-over-year for the current
    quarter and down 30% for the first half of Fiscal 2008. Business
    and consumer demand continues to shift toward mobility products
    as notebook computers capabilities increase and they
    become more affordable. The decline in desktop revenue can also
    be attributed to overall competitive price pressures.
    Mobility  Revenue from mobility
    products consists of Dell
    XPStm,
    Dell
    Latitudetm,
    Dell
    Inspirontm,
    Dell
    Vostrotm,
    Alienware
    Area-51®,
    Alienware
    Sentiatm,
    and Alienware
    ALXtm
    notebook computer systems; Dell
    Precisiontm
    and Alienware
    MJ-12®
    mobile workstations; and non-Dell branded MP3 music players. To
    better meet the needs of small businesses, during the second
    quarter of Fiscal 2008 we began selling our new
    Vostrotm
    notebooks, specifically designed to meet the needs of small
    business customers. During the second quarter revenue from
    mobility grew 1% on unit growth of 2%. During the first six
    months of Fiscal 2008, revenue from mobility grew year-over-year
    by 3% on unit growth of 1%. For the second quarter, mobility
    revenue in EMEA, APJ, and Americas Business grew 16%, 24%, and
    2% respectively, on unit growth of 18%, 17%, and 7%
    respectively. This revenue growth was offset by a 36% and a 38%
    decline in U.S. Consumer revenue and units, respectively.
    For the six months ended August 3, 2007, mobility revenue
    in EMEA, APJ, and Americas Business grew 16%, 20%, and 6%
    respectively, on unit growth of 13%, 14%, and 9% respectively.
    This revenue growth was offset by a 32% and a 39% decline in
    U.S. Consumer revenue and units, respectively. We continue
    to capitalize on the growth of mobile computing outside of the
    U.S. Consumer segment with notebooks producing revenue and
    unit growth in APJ, EMEA, and Americas Business. As notebooks
    become more affordable and wireless products become
    standardized, demand for our mobility products continues to be
    strong.
    Software and Peripherals  Revenue from
    sales of software and peripherals consists of Dell-branded
    printers, monitors (not sold with systems), projectors, and a
    multitude of competitively priced third-party peripherals
    including plasma and LCD televisions, software, and other
    products. This revenue grew 7% year-over-year for the second
    quarter and first six months of Fiscal 2008. We experienced
    significant growth in digital displays, as well as imaging and
    printing products. 25




---



##### Table of Contents




    Servers and Networking  Revenue from
    sales of servers and networking products, consisting of our
    standards-based
    PowerEdgetm
    line of servers and
    PowerConnecttm
    networking products, grew 20% year-over-year for the second
    quarter of Fiscal 2008 on unit growth of 8%. For the first half
    of Fiscal 2008, servers and networking revenue increased 19% on
    unit growth of 4%. All regions contributed to the strong revenue
    growth, and for the second quarter, we were again ranked number
    one in the United States with a 33% share in units shipped.
    Servers and networking remains a strategic focus area. We
    competitively price our server products to facilitate additional
    sales of storage products and higher margin enhanced services.
    Enhanced Services  Enhanced services
    consists of a wide range of services including assessment,
    design and implementation, deployment, asset recovery and
    recycling, training, enterprise support, client support, and
    managed lifecycle. Enhanced services revenue increased 2%
    year-over-year for the three-month period ended August 3,
    2007 to $1.3 billion, and for the six-month period ended
    August 3, 2007, enhanced services revenue increased 3% to
    $2.6 billion. For the second quarter of Fiscal 2008,
    EMEAs enhanced services revenue increased 31%, while
    enhanced services revenue decreased 18% in APJ and 3% in the
    Americas. For the first half of Fiscal 2008, EMEAs
    enhanced services revenue increased 32%, while enhanced services
    revenue decreased 19% in APJ and 1% in the Americas.
    Storage  Revenue from sales of storage
    products, consisting of a comprehensive portfolio of storage
    solutions with services, including Dell | EMC and
    Dell
    PowerVaulttm
    storage devices, increased 12% for the second quarter and first
    six months of Fiscal 2008. All regions contributed to the strong
    revenue growth, led by EMEA, which experienced growth of 26% and
    23% for the second quarter and first six months of Fiscal 2008,
    respectively.  Gross
    Margin
    Three Months
    Ended

Six Months
    EndedAugust 3,
    2007

August 4,
    2006

August 3,
    2007

August 4,
    2006% of



% of



% of



% ofDollars

Revenue

Dollars

Revenue

Dollars

Revenue

Dollars

Revenue(in millions,
    except percentages)Net revenue

$
14,776



100.0
%

$
14,211



100.0
%

$
29,498



100.0
%

$
28,531



100.0
%Gross margin

$
2,951



19.9
%

$
2,138



15.0
%

$
5,789



19.6
%

$
4,646



16.3
%      26




---



##### Table of Contents



Operating
    Expenses
    Three Months
    Ended


Six Months
    EndedAugust 3,
    2007


August 4,
    2006


August 3,
    2007


August 4,
    2006% of





% of





% of





% ofDollars


Revenue


Dollars


Revenue


Dollars


Revenue


Dollars


Revenue(in millions,
    except percentages)Operating expenses:Selling, general, and administrative

$
1,894



12.8
%

$
1,469



10.3
%

$
3,657



12.4
%

$
2,883



10.1
%Research, development, and engineering


155



1.0
%


125



0.9
%


297



1.0
%


254



0.9
%Operating expenses

$
2,049



13.8
%

$
1,594



11.2
%

$
3,954



13.4
%

$
3,137



11.0
%   
    Selling, general, and administrative During the second quarter of Fiscal 2008, selling, general,
    and administrative expenses increased 29% to $1.9 billion
    compared to $1.5 billion in the same period of Fiscal 2007.
    For the six-month period ended August 3, 2007, selling,
    general, and administrative expenses were $3.7 billion
    compared to $2.9 billion during the same period in Fiscal
    2007, an increase of 27%. Costs primarily related to headcount
    growth and costs associated with the U.S. Securities and
    Exchange Commission (SEC) and internal
    investigations drove the increase in the second quarter and
    first six months of Fiscal 2008. Expenses related to SEC and
    internal investigations were $59 million and
    $106 million for the three and six months ending
    August 3, 2007, respectively. In addition, the second
    quarter of Fiscal 2008 includes $86 million of additional
    expense for expected cash payments for expiring stock options.
    Research, development, and engineering During the second quarter of Fiscal 2008, research,
    development, and engineering expenses increased 24% to
    $155 million, compared to $125 million in the same
    period of Fiscal 2007, and increased 17% from $254 million
    to $297 million for the first six months of Fiscal 2008.
    The increase is mainly due to higher compensation costs, which
    increased 36% year-over-year to $127 million for the second
    quarter and increased 25% year-over-year to $241 million
    for the first half of Fiscal 2008. The increased compensation
    costs are mainly due to headcount growth. We manage our
    research, development, and engineering spending by targeting
    those innovations and products most valuable to our customers
    and by relying upon the capabilities of our strategic partners.
    We will continue to invest in research, development, and
    engineering activities to support our growth and to provide for
    new, competitive products. We have obtained 1,847 patents
    worldwide and have applied for 1,977 additional patents
    worldwide at August 3, 2007.  Stock-based
    Compensation
  Form 10-K
 27




---



##### Table of Contents



Form 10-K
  Investment and
    Other Income, net
    Income
    Taxes
  Accounting for Uncertainty in
    Income Taxes  an interpretation of FASB Statement
    No. 109
  Off-Balance Sheet
    Arrangements
  Asset Securitization  Accounting for Transfers and
    Servicing of Financial Assets and Extinguishment of Liabilities
     28




---



##### Table of Contents



Liquidity and
    Capital Commitments
  Liquidity
      Six Months
    EndedAugust 3,


August 4,2007


2006(in
    millions)Net cash flow provided by (used in):Operating activities

$
1,754


$
1,812Investing activities


(121
)


345Financing activities


(16
)


(2,470
)Effect of exchange rate changes on cash and cash equivalents


41



54Net increase (decrease) in cash and cash equivalents

$
1,658


$
(259
)   Operating Activities
 29




---



##### Table of Contents



August 3,


February 2,2007


2007Days of sales
    outstanding(a)


35



31Days of supply in inventory


7



5Days in accounts payable


(80
)


(78
)Cash conversion cycle


(38
)


(42
)     (a)
    
    Days of sales outstanding
    (DSO) is based on the ending net trade receivables
    and most recent quarterly revenue for each period. DSO includes
    the effect of product costs related to customer shipments not
    yet recognized as revenue that are classified in other current
    assets. At August 3, 2007 and February 2, 2007, DSO
    and days of customer shipments not yet recognized were 32 and
    3 days and 28 and 3 days, respectively.      Investing Activities
  Financing Activities
   30




---



##### Table of Contents




  Capital
    Commitments
  Redeemable Common Stock and Other Rescissionary
    Rights
  Share Repurchase Program
    Capital Expenditures
  DFS Purchase Commitment
  Restricted Cash
 31




---



##### Table of Contents



Recently Issued
    Accounting Pronouncements
   
  ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   Form 10-K Form 10-K.
  ITEM 4.
    CONTROLS
    AND PROCEDURES  Rule 13a-14
  Background
    Form 10-K
  
    Control environment We did not maintain an
    effective control environment. Specifically:  -
    We did not maintain a tone and control consciousness that
    consistently emphasized strict adherence to GAAP. This control
    deficiency resulted in an environment in which accounting
    adjustments were viewed at times as an acceptable device to
    compensate for operational shortfalls, which in certain
    instances led to inappropriate accounting decisions and entries
    that appear to have been largely motivated to achieve desired
    accounting results and, in some instances, involved management
    override of controls. In a number of instances, information
    critical to an effective review of transactions and accounting
    entries was not disclosed to internal and external auditors.-
    We did not maintain a sufficient complement of personnel with an
    appropriate level of accounting knowledge, experience, and
    training in the application of GAAP commensurate with our
    financial reporting requirements and business environment.   32




---



##### Table of Contents




    Period-end financial reporting process We did
    not maintain effective controls over the period-end reporting
    process, including controls with respect to the review,
    supervision, and monitoring of accounting operations.
    Specifically:  -
    Journal entries, both recurring and nonrecurring, were not
    always accompanied by sufficient supporting documentation and
    were not always adequately reviewed and approved for validity,
    completeness, and accuracy;-
    Account reconciliations over balance sheet accounts were not
    always properly and timely performed, and the reconciliations
    and their supporting documentation were not consistently
    reviewed for completeness, accuracy, and timely resolution of
    reconciling items; and-
    We did not design and maintain effective controls to ensure the
    completeness, accuracy, and timeliness of the recording of
    accrued liabilities, reserves, and operating expenses, primarily
    related to our accrued warranty obligations, goods and services
    received but not invoiced, customer rebates, and nonproduction
    operating expenses.      
    Our new leadership team, together with other senior executives,
    is committed to achieving and maintaining a strong control
    environment, high ethical standards, and financial reporting
    integrity. This commitment will be communicated to and
    reinforced with every Dell employee and to external
    stakeholders. This commitment is accompanied by a renewed
    management focus on decision-making and processes that are
    intended to achieve maximum shareholder value over the long-term
    and a decreased focus on short-term,
    quarter-by-quarter
    operating results.
    As a result of the initiatives already underway to address the
    control deficiencies described above, we have effected personnel
    changes in our accounting and financial reporting functions.
    Consequently, many of the employees involved in the accounting
    processes in which errors and irregularities were made are no
    longer involved in the accounting or financial reporting
    function. In addition, we have taken, or will take, appropriate
    remedial actions with respect to certain employees, including
    terminations, reassignments, reprimands, increased supervision,
    training, and imposition of financial penalties in the form of
    compensation adjustments.
    We are in the process of reorganizing the Finance Department,
    segregating accounting and financial reporting responsibility
    from planning and forecasting responsibility, with a renewed
    commitment to accounting and financial reporting integrity. We
    have appointed a new Chief Accounting Officer and have
    strengthened that position, making it directly responsible for
    all accounting and financial reporting functions worldwide. In
    addition, we are implementing personnel resource plans, and
    training and retention programs, that are designed to ensure
    that we have sufficient personnel with knowledge, experience,
    and training in the application of GAAP commensurate with our
    financial reporting requirements. 33




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
    We will continue our efforts to establish or modify specific
    processes and controls to provide reasonable assurance with
    respect to the accuracy and integrity of accounting entries and
    the appropriate documentation, review and approval of those
    entries. These efforts include:  -
    Centralization of the development, oversight, and monitoring of
    accounting policies and standardized processes in all critical
    accounting areas, including areas involving management judgment
    and discretion;-
    Implementation and clarification of specific accounting and
    finance policies, applicable worldwide, regarding the
    establishment, increase, and release of accrued liability and
    other balance sheet reserve accounts;-
    Creation of a revenue recognition accounting resource function
    to coordinate complex revenue recognition matters and to provide
    oversight and guidance on the design of controls and processes
    to enhance and standardize revenue recognition accounting
    procedures;-
    Improving the processes and procedures around the completion and
    review of quarterly management representation letters, in which
    our various business and finance leaders make full and complete
    representations concerning, and assume accountability for, the
    accuracy and integrity of their submitted financial results;-
    Extending the time between the end of a financial reporting
    period and the public release of financial and operating data
    with respect to that period, giving our accounting organization
    more time to appropriately process the close of the accounting
    records and analyze the reported results prior to public
    announcement;-
    Enhancing the development, communication, and monitoring of
    processes and controls to ensure that appropriate account
    reconciliations are performed, documented, and reviewed as part
    of standardized procedures; and-
    Increasing the focus by the internal audit function and the
    Chief Accounting Officer on the review and monitoring of key
    accounting processes, including journal entries and supporting
    documentation, revenue recognition processes, account
    reconciliations, and management representation letter controls
    and processes.  
    We will implement company-wide training (led by the Chief
    Accounting Officer and other finance executives with appropriate
    accounting expertise) to enhance awareness and understanding of
    standards and principles for accounting and financial reporting.
    This training will include:  -
    Development and communication of an accounting code of conduct
    that will serve as a set of guiding principles emphasizing our
    commitment to accounting and financial reporting integrity, as
    well as transparency and robust and complete communications
    with, and disclosures to, internal and external auditors;-
    Comprehensive programs for all finance personnel globally (with
    initial focus on personnel directly responsible for accounting
    and financial reporting) covering all fundamental accounting and
    financial reporting matters, including accounting policies,
    financial reporting requirements, income statement
    classification, revenue recognition, vendor funding, accounting
    for reserves and accrued liabilities, and account reconciliation
    and documentation requirements; and-
    Appropriate programs for other company personnel, including
    senior management, to emphasize the importance of accounting and
    financial reporting integrity.  
    We will invest in the design and implementation of additional
    and enhanced information technology systems and user
    applications commensurate with the complexity of our business
    and our financial reporting requirements. It is expected that
    these investments will improve the reliability of our financial
    reporting by reducing the need for manual processes, subjective
    assumptions, and management discretion; by reducing the
    opportunities for errors and omissions; and by decreasing our
    reliance on manual controls to detect and correct accounting and
    financial reporting inaccuracies. 34




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
    We will reemphasize and invigorate our communications to all
    Dell employees regarding the availability of our Ethics Hotline,
    through which employees at all levels can anonymously submit
    information or express concerns regarding accounting, financial
    reporting, or other irregularities they have become aware of or
    have observed. In addition, these communications will emphasize
    the existence and availability of other reporting avenues or
    forums for all employees, such as their management chain, their
    Human Resources representatives, the Ethics Office, the
    Ombudsmans Office, the Legal Department, and direct
    contact with the Chief Financial Officer or the Audit Committee.      Evaluation of
    Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
    Changes in
    Internal Control Over Financial Reporting
   35




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PART II 
    OTHER INFORMATION
  ITEM 1.  LEGAL
    PROCEEDINGS
    Form 10-K
  ITEM 1A.  RISK
    FACTORS
    Form 10-K
  ITEM 2.  UNREGISTERED
    SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  Issuance of
    Unregistered Securities
   Form 10-K
  Purchases of
    Common Stock
  Cash Payments for
    Certain Employee Stock Options
  Form 10-K
  Share Repurchase
    Program
   36




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ITEM 6.
    EXHIBITS  (a)
    Exhibits See Index to Exhibits below. 37




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SIGNATURE
    DELL INC./s/  THOMAS
    W. SWEETDate: October 30, 2007Thomas W. SweetVice President, Corporate Finance and
    Chief Accounting Officer(On behalf of the registrant and as
    principal accounting officer)  38




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INDEX TO
    EXHIBITS
  ExhibitNo.



Description of
    Exhibit3
.1



Restated Certificate of Incorporation, filed February 1,
    2006 (incorporated by reference to Exhibit 3.3 of
    Dells Current Report on
    Form 8-K
    filed on February 2, 2006, Commission File
    No. 0-17017)3
.2



Restated Bylaws, as amended and effective March 8, 2007
    (incorporated by reference to Exhibit 3.1 of Dells
    Current Report on
    Form 8-K
    filed on March 13, 2007, Commission File
    No. 0-17017)4
.1



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
.2



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
.3



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 99.4 of Dells Current Report on
    Form 8-K
    filed April 28, 1998, Commission File
    No. 0-17017)4
.4



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
.5



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*



Form of Protection of Sensitive Information, Noncompetition and
    Nonsolicitation Agreement for Executive Officers (incorporated
    by reference to Exhibit 10.1 of Dells Current Report
    on
    Form 8-K
    filed on July 16, 2007, Commission file
    No. 0-17017)10
.2*



Form of Release Agreement between Dell and Current and Former
    Executive Officers with respect to Expired Stock Options
    (incorporated by reference to Exhibit 10.1 of Dells
    Current Report on
    Form 8-K
    file July 16, 2007, Commission file
    No. 0-17017)31
.1



Certification of Michael S. Dell, President and Chief Executive
    Officer, pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as adopted pursuant
    to Section 302 of the Sarbanes-Oxley Act of 200231
.2



Certification of Donald J. Carty, Vice Chairman and Chief
    Financial Officer, pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as adopted pursuant
    to Section 302 of the Sarbanes-Oxley Act of 200232
.1



Certifications of Michael S. Dell, Chairman and Chief Executive
    Officer, and Donald J. Carty, Vice Chairman and Chief Financial
    Officer, pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002     *
    
    Identifies an Exhibit that consists of or includes a management
    contract or compensatory plan or arrangement.
    
    Filed herewith.
    
    Furnished herewith. 39