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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
     
þ   Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2005
OR
     
o   Transition report pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the transition period from       to      
Commission file number 333-111214
  A.   Full title of the plan and the address of the plan, if different from that of the issuer named below:
DELL FINANCIAL SERVICES L.P. 401(k) PLAN
  B.   Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
DELL INC.
ONE DELL WAY
ROUND ROCK, TEXAS 78682
 
 

 

 

Dell Financial Services L.P. 401(k) Plan
Contents
         
    Page
    1  
 
        
Financial Statements
        
 
        
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    4  
 
        
Supplemental Schedule
        
 
        
    9  
 
        
    10  
 
        
Exhibit 23.1 – Consent of Independent Registered Public Accounting Firm
     12  
 Consent of Independent Registered Public Accounting Firm
     
Note:
  Other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

 

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Report of Independent Registered Public Accounting Firm
To the Participants and Benefits Administration Committee of the Dell Financial Services L.P. 401(k) Plan:
In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Dell Financial Services L.P. 401(k) Plan (the “Plan”) at December 31, 2005 and 2004, and the changes in net assets available for benefits for the year ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule H, line 4i – Schedule of Assets (Held at End of Year) at December 31, 2005, is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
Austin, Texas
June 23, 2006

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Dell Financial Services L.P. 401(k) Plan
Statements of Net Assets Available for Benefits
December 31, 2005 and 2004
                 
    2005     2004  
Assets
                
Investments
                
Common stocks
   $ 4,296,059     $ 6,413,502  
Registered investment funds
     17,783,132       13,591,555  
Value of interest in common/collective trust
     1,695,199       1,722,990  
Loans receivable from participants
     424,950       463,772  
 
            
Total Investments
     24,199,340       22,191,819  
Cash and cash equivalents, non-interest bearing
     117,994       11,081  
Receivables
                
Due from broker — unsettled trades
     11,708       —  
Employee contributions
     —       68,522  
Employer contributions
     58,009       21,702  
 
            
Total Assets
     24,387,051       22,293,124  
Liabilities
                
Excess contributions refundable to participants
     28,407       —  
Due to broker — unsettled trades
     113,147       —  
Other Payables
     1,041          
 
            
Total Liabilities
     142,595       —  
 
            
Net Assets Available for Benefits
   $ 24,244,456     $ 22,293,124  
 
            
The accompanying notes are an integral part of these financial statements.

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Dell Financial Services L.P. 401(k) Plan
Statements of Changes in Net Assets Available For Benefits
For the Year Ended December 31, 2005
         
Contributions
        
Employee contributions
   $ 2,580,434  
Employee rollovers
     488,332  
Employer contributions
     699,618  
 
      
Total Contributions
     3,768,384  
 
      
Net Investment Income
        
Interest and dividends
     658,936  
Interest on loans to participants
     28,135  
Net depreciation in fair value of investments
     (390,945 )
 
      
Total Net Investment Income
     296,126  
 
      
Deductions
        
Withdrawals and distributions
     (2,104,535 )
Administrative expenses
     (8,643 )
 
      
Total Deductions
     (2,113,178 )
 
      
Net Increase
     1,951,332  
Net Assets Available for Benefits
        
Beginning of Year
     22,293,124  
 
      
End of Year
   $ 24,244,456  
 
      
The accompanying notes are an integral part of these financial statements.

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Dell Financial Services L.P. 401(k) Plan
Notes to Financial Statements
December 31, 2005 and 2004
1.   Description of Plan
 
    General
 
    Dell Financial Services L.P. (the “Partnership” or “Employer”) is a joint venture of Dell Inc. (“Dell”) and The CIT Group Inc. (“CIT”).
 
    The following brief description of the Plan provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.
 
    The Plan, which was implemented effective August 1, 1997, is a defined contribution plan covering all U.S. resident employees of the Partnership who are not covered by a collective bargaining agreement. Participation in the Plan is at the election of the employee. As of December 31, 2005 and 2004, there were 910 and 801 active employees participating in the Plan, respectively. 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 Partnership on behalf of each eligible participant based upon the participant’s elected compensation deferral through payroll deductions. The deferrals are funded by the Partnership at the end of each payroll period. Eligible participants may elect to contribute up to 25% of their eligible compensation, in whole percentages, to the Plan up to the statutory limit of $14,000 and $13,000 for 2005 and 2004, respectively, as permitted by the Internal Revenue Code of 1986, as amended (“IRC”). Highly compensated participants, 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. For the 2005 and 2004 plan years, participants age 50 or over may contribute an additional $4,000 and $3,000, respectively, over the base statutory limit in accordance with the Economic Growth and Tax Relief Reconciliation Act of 2001.
 
 
    The Plan also permits employees to contribute balances from another qualified plan (“rollover contributions”).
 
    Employer contributions
 
    The Partnership has elected to match 50% of each dollar contributed by Participants up to 6% of the Participant’s eligible compensation. The Partnership may also elect to make discretionary contributions. Discretionary contributions are allocated to eligible Participants with at least one year of service, and who were employed on the last day of the Plan year. There were no discretionary contributions made for the year ended December 31, 2005. Partnership contributions are invested in the individual funds according to the current investment allocations of the Participant.
 
    Participant Accounts
 
    Each participant account is credited with the participant’s contributions, allocations of Partnership matching and discretionary contributions and Plan earnings offset by Plan administrative expenses. Each day, the Plan Trustee calculates earnings and allocates gains and losses to each participant’s account. The benefit to which a participant is entitled is limited to the participant’s vested account balance.
 
    Vesting
 
    Participants are immediately vested in their contributions and earnings. Partnership contributions are vested 20% for each year of service and are fully vested after five years of service. Participants earn a year of service if the Participant is credited with at least 1,000 hours of service during the Plan year.
 
    Benefit payments
 
    Participants are entitled to receive a distribution of the vested portion of their account upon reaching age 591/2, termination of employment, disability, death or in the event of financial hardship. A Participant may defer benefit payments until reaching

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Dell Financial Services L.P. 401(k) Plan
Notes to Financial Statements
December 31, 2005 and 2004
    the age of 65, provided his or her account balance is greater than $5,000; otherwise, the Plan has been amended such that there will be no distribution of benefits where the vested account balance is in excess of $1,000 without the consent of the participant. In the event of a distribution less than $1,000 made on or after March 28, 2005, the Plan Administrator shall direct the Trustee to cause the entire vested benefit to be paid to such participant in a single lump sum. Payment of benefits prior to termination of service may be made under certain circumstances as defined by the Plan.
 
    Forfeitures
 
    Forfeitures by participants of unvested Partnership contributions are first used to restore amounts previously forfeited by Participants qualified for such restoration upon re-employment, then used to satisfy Plan administrative expenses and lastly, used to reduce future employer contributions. Unallocated forfeited nonvested accounts were $21,091 and $266,624 at December 31, 2005 and 2004, respectively.
 
    Administration and Plan Expenses
 
    Plan assets are held in trust by The Nationwide Trust Company (the “Plan Trustee”). The Plan’s third party recordkeeper is The 401(k) Company. Substantially all administrative expenses of the Plan, which approximated $82,000 for the year ended December 31, 2005, are paid by the Partnership. Loan origination fees, loan maintenance fees and distribution fees are paid by Participants through deductions from the Participant’s account balance.
 
    Investments
 
    The following table sets forth information specific to each investment option under the Plan at December 31, 2005 and 2004:
                     
Investment Option   Description   Number of Participants
        2005   2004
Dell Inc. Stock
  Company Stock     357       407  
Tyco International Ltd. Stock
  Common Stock     41       47  
Davis New York Venture Fund
  Large-Cap Value Equity Fund     608       532  
Growth Fund of America
  Large-Cap Growth Equity Fund     643       555  
Franklin Balance Sheet Investment Fund
  Small-Cap Value Equity Fund     553       482  
Franklin Small Mid-Cap Growth Fund
  Small-Cap Growth Equity Fund     472       422  
EuroPacific Growth Fund
  International Developed Equity Fund     563       479  
Bond Fund of America
  Domestic Bond Fund     536       459  
Franklin Real Estate Securities Fund
  Real Estate Equity Fund     533       449  
Laudus Rosenburg International Small Cap Fund
 
International Developed Small Cap Equity Fund
     502     —
Putnam International Capital Opps Fund
 
International Developed and Emerging Small Cap Fund
     —       414  
Templeton Developing Markets Trust Fund
  Emerging Markets Equity Fund     387       306  
INVESCAP Stable Value Fund
  Common/Collective Trust     440       378  
    Previously, CIT was a wholly owned subsidiary of Tyco International LTD (“Tyco”). The Plan had previously made available to participants as investment options the common stock of Dell and Tyco. As CIT is no longer a wholly owned subsidiary of Tyco, Tyco common stock is no longer an investment option for participants’ new contributions. Further, in 2005, the Plan discontinued the Putnam International Capital Opps Fund as an investment option for participants and its balance of approximately $871 thousand was transferred to the Laudus Rosenburg International Small Cap Fund.

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Dell Financial Services L.P. 401(k) Plan
Notes to Financial Statements
December 31, 2005 and 2004
    The INVESCAP Stable Value Fund is a common/collective trust. The Plan holds units in the fund, which are priced at market value.
 
    Participant loans
 
    Participants may take out a maximum loan amount equal to the lesser of (i) $50,000 or (ii) 50% of the available vested portion of their account balance less any current outstanding loan balance (minimum loan amount of $1,000). Each participant’s loan is charged a reasonable rate of interest and a one-time fee of $50. Further there is a monthly maintenance fee ($2) charged for each month the participant has a loan balance. Loan balances must be paid by direct payroll deduction and the repayment period cannot exceed five years. Repayments are reinvested in the individual funds according to the current investment allocations of the Participant. If the Participant is terminated or if the Plan terminates, the loan must be repaid or the outstanding balance will be considered in default and reported as a distribution. At December 31, 2005, loans bore interest at rates ranging between 5.52% and 8.58% and are due at various dates through January 7, 2011.
 
    Plan termination
 
    Although it has not expressed any intent to do so, the Partnership has the right under the Plan to discontinue its contributions at any time and to terminate the Plan. In the event of Plan termination, contributions would cease and participants will become 100% vested in their accounts. The money in the account would be distributed to the participants as soon as administratively feasible.
 
    Reclassifications
 
    Certain prior year amounts have been reclassified to conform to the current year presentation.
 
2.   Summary of Significant Accounting Policies
 
    Basis of presentation
 
    The financial statements of the Plan are prepared under the accrual method of accounting, 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 management to make certain estimates and assumptions. These assumptions may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
 
    Risks and Uncertainties
 
    The Plan provides for various investments in common stock, short-term investments, mutual funds, common/collective trusts and other investments. 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, it is at least reasonably possible that changes in the near term could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits.
 
    Contributions
 
    Contributions are recorded in the period the Employer makes the payroll deduction or upon approval by the Partnership for discretionary Employer contributions, if any.
 
    Investments and Investment Income
 
    The Plan’s investments are designed to offer the Participants a wide range of investment risks and opportunities. With the exception of the common/collective trust, the Plan’s investments are initially recorded at acquisition cost on a trade-date basis,

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Dell Financial Services L.P. 401(k) Plan
Notes to Financial Statements
December 31, 2005 and 2004
    which includes brokerage commissions, and are revalued to fair value each business day based upon quoted market prices.
 
    The Plan’s interest in the common collective trust is recorded at fair value as determined periodically by the trustee, based on the current market values of the underlying assets of the fund.
 
    Participant loans receivable are valued at estimated fair value consisting of outstanding principal and any related interest. Participant loans are funded from the participant’s vested account balance.
 
    The Plan presents, in the Statement of Changes in Net Assets Available for Benefits, the net appreciation or depreciation in the fair value of investments which consists of realized gains and losses and the unrealized appreciation or depreciation on those investments.
 
    Interest is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Purchases and sales are recorded on a trade date basis.
 
    Distributions
 
    Plan distributions are recorded when paid.
 
3.   Investments
 
    The following table presents investments that represent 5% or more of the Plan’s net assets at December 31, 2005 and 2004:
                 
    2005     2004  
Common Stock
                
Dell Inc.
   $ 4,262,783     $ 6,369,756  
Total common stock, individually less than 5%
     33,276       43,746  
 
            
Total Common Stock
     4,296,059       6,413,502  
Registered Investment Funds
                
Davis New York Venture Fund
     3,504,649       2,682,591  
Growth Fund of America
     3,131,594       2,352,157  
Franklin Balance Sheet Investment Fund
     2,357,946       1,946,465  
Franklin Small Mid Cap Growth Fund
     1,707,032       1,441,271  
EuroPacific Growth Fund
     2,103,979       1,400,810  
Bond Fund of America
     1,637,402       1,370,742  
Franklin Real Estate Securities Fund
     1,278,566       1,049,015  
All other registered investment funds, individually less than 5%
     2,061,964       1,348,504  
 
            
Total Registered Investment Funds
     17,783,132       13,591,555  
Common/Collective Trust
                
INVESCAP Stable Value Fund
     1,695,199       1,722,990  
Loans Receivable, individually all less than 5%
     424,950       463,772  
 
            
 
   $ 24,199,340     $ 22,191,819  
 
            
    At December 31, 2005 and 2004, the Plan owns approximately 142 thousand and 151 thousand shares of Dell Inc. common stock, respectively. This represents approximately 18% and 29% of the Plan’s investments as of December 31, 2005 and 2004, respectively. The underlying value of net assets invested in Dell Inc. common stock is entirely dependent upon the performance of Dell Inc. and the market’s evaluation of such performance. It is at least reasonably possible that changes in the fair value of Dell Inc. common stock in the near term could materially affect participants’ account balances and the amounts

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Dell Financial Services L.P. 401(k) Plan
Notes to Financial Statements
December 31, 2005 and 2004
    reported in the Statements of Net Assets Available for Benefits and the Statements of Changes in Net Assets Available for Benefits.
 
    During 2005 and 2004, the Plan’s investments (including investments purchased, sold, as well as held during the year) appreciated/(depreciated) in fair value as follows:
         
Net Appreciation/(Depreciation) in Fair Value of Investments   2005  
Common Stocks
   $ (1,769,247 )
Registered Investment Funds
     1,378,302  
 
      
Total
   $ (390,945 )
 
      
4.   Tax Status
 
    The Partnership received a determination letter dated May 2, 2002, from the Internal Revenue Service informing the Partnership 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 Partnership 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.
 
5.   Related Parties
 
    The Plan is authorized under contract provisions and by ERISA regulations to invest in Dell’s securities. During the year ended December 31, 2005, the Plan purchased approximately 21 thousand shares of Dell stock for $783 thousand and sold approximately 30 thousand shares of the Dell stock for $1.1 million.

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Dell Financial Services L.P. 401(k) Plan
Schedule H, Line 4i — Schedule of Assets (Held at End of Year)
December 31, 2005
                     
    Identity of Issue   Description   Cost**   Current Value  
*  
Dell Inc. Stock
   Common Stock       $ 4,262,783  
   
Tyco International Ltd. Stock
   Common Stock         33,276  
   
Davis New York Venture Fund
   Registered Investment Fund         3,504,649  
   
Growth Fund of America
   Registered Investment Fund         3,131,594  
   
Franklin Balance Sheet Investment Fund
   Registered Investment Fund         2,357,946  
   
Franklin Small Mid Cap Growth Fund
   Registered Investment Fund         1,707,032  
   
EuroPacific Growth Fund
   Registered Investment Fund         2,103,979  
   
Bond Fund of America
   Registered Investment Fund         1,637,402  
   
Franklin Real Estate Securities Fund
   Registered Investment Fund         1,278,566  
   
Laudus Rosenberg International Small Cap Fund
   Registered Investment Fund         1,099,455  
   
Templeton Developing Markets Trust
   Registered Investment Fund         962,509  
   
INVESCAP Stable Value Fund
   Common/Collective Trust         1,695,199  
*   Participant loans   Loans bearing interest rates ranging from 5.52% to 8.58% due at various dates through January 7, 2011         424,950  
   
 
              
   
Total:
           $ 24,199,340  
   
 
              
 
*   Party-in-Interest
 
**   Cost information is not required for participant directed investments

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the Plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
         
    DELL FINANCIAL SERVICES L.P. 401(K) PLAN
 
        
 
  By:   Benefits Administration Committee of the Dell Financial Services L.P. 401(k) Plan
 
        
Date: June 27, 2006
  By:   /s/ Gavan Goss 
 
       
 
      Gavan Goss
 
      On Behalf of the Benefits Administration Committee

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INDEX TO EXHIBITS
     
Exhibit    
Number   Description
 
23.1
  Consent of Independent Registered Public Accounting Firm

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