Dell Computer Corp., founded in 1984 by Michael Dell, is a well-known success story. The strategy of selling computers directly to customers in an efficient and economical fashion catapulted Dell into one of the largest PC makers in the United States. The company, which went public in 1988 for $8.50 a share, was worth over $70 billion at July 30, 2001, earning a stock return of over 1500% in the last 5 years alone (see Figure 1). During this time Dell split its stock 5 times and spent over $6 billion buying back its stock. Attached are excerpts from Dells 2001 Annual Report.

a. How many shares did Dell buy back during fiscal 2001 (ending February 2, 2001)?

b. What was the average price per share Dell paid to buy back these shares?

c. How many shares did Dell issue under their employee plan during fiscal year 2001?

d. What was the average amount per share Dell received from their employees on issuances under employee plans during fiscal year 2001?

e. How does the amount you calculated in part (d) compare with the average price Dell paid to buy back their shares during fiscal year 2001?

DELL COMPUTER CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (in millions) Fiscal Year Ended February 2, 2001 January 28, 2000 January 29, 1999 $ 2,177 S 1,666 $ 1,460 103 444 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Tax benefits of employee stock plans Special charges Gain on sale of investments Other Changes in: Operating working capital Non-current assets and liabilities 240 929 105 (307) 109 156 1,040 194 (80) 56 20 671 271 812 82 367 51 Net cash provided by operating activities 4,195 3,926 2,436 Cash flows from investing activities: Investments: Purchases Maturities and sales Capital expenditures (2,606) 2,331 (482) (3,101) 2,319 (401) (1,938) 1,304 (296) Net cash used in investing activities (757) (1,183) (930) Cash flows from financing activities: Purchase of common stock Issuance of common stock under employee plans Proceeds from issuance of long-term debt, net of issuance costs Other (2,700) 404 (1,061) 289 20 57 (1,518) 212 494 Net cash used in financing activities (2,305) (695) (812) Effect of exchange rate changes on cash (32) 35 (10) Net increase in cash Cash and cash equivalents at beginning of period 1,101 3,809 2,083 1,726 684 1,042 Cash and cash equivalents at end of period $ 4,910 $ 3,809 $ 1,726 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (in millions) Common Stock and Capital in Excess of Par Value Other Comprehensive Income Retained Earnings Shares Amount Other Total 2,575 S 747 $ 607 1,460 $ (35) $ (26) $ 1,293 1,460 Balances at February 1, 1998 Net income Change in unrealized gain on investments, net of taxes Foreign currency translation adjustments 3 3 (4) 1 1,459 Total comprehensive income Stock issuances under employee plans, including tax benefits Purchases and retirements Other 117 (149) 1,092 (60) (1.458) 1,085 (1,518) 2 3 2,543 1,781 (36) (30) 606 1,666 2,321 1,666 Balances at January 29, 1999 Net income Change in unrealized gain on investments, net of taxes Foreign currency translation adjustments I 559 10 559 10 2.235 Total comprehensive income Stock issuances under employee plans, including tax benefits Purchases and retirements Stock issued pursuant to acquisition Other (46) 82 (56) (1,013) 1,360 (1,061) 1,406 (48) 334 110 334 8 119 119 2,575 3,583 533 (68) 1,260 2,177 5,308 2,177 Balances at January 28, 2000 Net income Change in unrealized gain on investments, net of taxes Foreign currency translation adjustments (475) 4 (475) 4 | 1,706 Total comprehensive income Stock issuances under employee plans, including tax benefits Purchases and retirements Other 91 (65) 1,347 (102) (33) (2,598) 1,341 (2,700) (33) Balances at February 2, 2001 2,601 S 4,795 $ 839 $ 62 $ (74) $ 5622 $ 5,622 ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Other $ 4,910 528 2,895 400 758 $ 3,809 323 2,608 391 550 Total current assets Property, plant and equipment, net Investments Other non-current assets 9,491 996 2,418 530 7,681 765 2,721 304 Total assets $ 13,435 $ 11,471 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Accrued and other $ 4,286 2,257 $ 3,538 1,654 Total current liabilities Long-term debt Other Commitments and contingent liabilities (Note 7) 6,543 509 761 5,192 508 463 Total liabilities 7,813 6,163 - Stockholders' equity: Preferred stock and capital in excess of $.01 par value; shares issued and outstanding: none Common stock and capital in excess of $.01 par value; shares issued and outstanding: 2,601 and 2,575, respectively Retained earnings Other comprehensive income Other 4,795 839 62 (74) 3,583 1,260 533 (68) Total stockholders' equity 5,622 5,308 Total liabilities and stockholders' equity $ 13.435 S 11.471 DELL COMPUTER CORPORATION CONSOLIDATED STATEMENT OF INCOME (in millions, except per share amounts) Fiscal Year Ended February 2, 2001 January 28, 2000 January 29, 1999 Net revenue Cost of revenue $ 31,888 25,445 $ 25,265 20,047 $ 18,243 14,137 Gross margin 6,443 5,218 4,106 Operating expenses: Selling, general and administrative Research, development and engineering Special charges 3.193 482 105 2,387 374 194 1.788 272 3,780 2,955 2,060 Total operating expenses Operating income Investment and other income, net 2.663 531 2,263 188 2.046 38 Income before income taxes and cumulative effect of change in accounting principle Provision for income taxes 2,451 3,194 958 785 2.084 624 1.666 1.460 Income before cumulative effect of change in accounting principle Cumulative effect of change in accounting principle, net 2,236 59 Net Income $ 2.177 $ 1,666 1,460 Earnings per common share: Before cumulative of effect change in accounting principle: Basic $ 0.87 $ 0.66 s 0.58 Diluted $ 0.81 $ 0.61 S 0.53 After cumulative effect of change in accounting principle: Basic $ 0.84 $ 0.66 $ 0.58 Diluted $ 0.79 $ 0.61 s 0.53 Weighted average shares outstanding: Basic Diluted 2,582 2,746 2,536 2,728 2.531 2,772