EMC 10-Q 5 Aug 09 2009 Q2 Quarterly report Financial data

Statement Of Financial Position

Statement Of Financial Position Classified (USD $)
In Thousands	Jun. 30, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$6,422,760	$5,843,685
Short-term investments	835,490	963,292
Accounts and notes receivable, less allowance for doubtful accounts of $52,761 and $48,080	1,855,986	2,252,640
Inventories	773,528	842,803
Deferred income taxes	457,193	477,101
Other current assets	341,305	285,508
Total current assets	10,686,262	10,665,029
Long-term investments	2,765,946	2,370,493
Property, plant and equipment, net	2,229,053	2,223,007
Intangible assets, net	698,180	795,616
Other assets, net	998,326	773,631
Goodwill	7,109,565	7,046,799
Total assets	24,487,332	23,874,575
Current liabilities:
Accounts payable	697,389	757,405
Accrued expenses	1,812,674	1,901,884
Securities lending payable	260,125	412,321
Income taxes payable	0	136,802
Deferred revenue	2,137,173	2,010,024
Total current liabilities	4,907,361	5,218,436
Income taxes payable	226,517	255,182
Deferred revenue	1,208,825	1,182,360
Deferred income taxes	454,516	389,787
Long-term convertible debt	3,045,022	2,991,943
Other liabilities	196,730	180,917
Total liabilities	10,038,971	10,218,625
Commitments and contingencies (see Note 12)	0	0
EMC Corporation's shareholders' equity:
Preferred stock, par value $0.01; authorized 25,000 shares; none outstanding	0	0
Common stock, par value $0.01; authorized 6,000,000 shares; issued and outstanding 2,022,048 and 2,012,938 shares	20,220	20,129
Additional paid-in capital	3,105,717	2,817,054
Retained earnings	11,070,513	10,671,212
Accumulated other comprehensive loss, net	(141,487)	(179,952)
Total EMC Corporation's shareholders' equity	14,054,963	13,328,443
Non-controlling interest in VMware, Inc.	393,398	327,507
Total shareholders' equity	14,448,361	13,655,950
Total liabilities and shareholders' equity	$24,487,332	$23,874,575

1_Statement Of Financial Positi

Statement Of Financial Position Classified (Parenthetical) (USD $)
In Thousands, except Per Share data	Jun. 30, 2009	Dec. 31, 2008
Accounts and notes receivable, allowance for doubtful accounts	$52,761	$48,080
Preferred stock, par value	0.01	0.01
Preferred stock, authorized	25,000	25,000
Preferred stock, outstanding	0	0
Common stock, par value	0.01	0.01
Common stock, authorized	6,000,000	6,000,000
Common stock, issued	2,022,048	2,012,938
Common stock, outstanding	2,022,048	2,012,938

Statement Of Income Alternative

Statement Of Income Alternative (USD $)
In Thousands, except Per Share data	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Revenues:
Product sales	$2,005,270	$2,461,651	$3,974,390	$4,802,081
Services	1,252,082	1,212,223	2,433,724	2,341,852
Revenues, Total	3,257,352	3,673,874	6,408,114	7,143,933
Costs and expenses:
Cost of product sales	1,057,205	1,119,553	2,070,535	2,194,136
Cost of services	456,369	525,751	910,546	1,011,832
Research and development	397,881	442,502	781,174	876,016
Selling, general and administrative	1,051,204	1,135,674	2,075,977	2,217,889
In-process research and development	0	0	0	79,204
Restructuring and other special charges (credit)	33,234	0	48,806	(357)
Operating income	261,459	450,394	521,076	765,213
Investment income	31,343	58,730	71,187	135,870
Interest expense	(44,158)	(44,044)	(89,701)	(87,113)
Other income (expense), net	17	(2,811)	(10,741)	(7,574)
Income before provision for income taxes	248,661	462,269	491,821	806,396
Income tax provision	38,045	94,432	75,860	180,751
Net income	210,616	367,837	415,961	625,645
Less: Net income attributable to the non-controlling interest in VMware, Inc.	(5,384)	(7,713)	(16,660)	(13,874)
Net income attributable to EMC Corporation	$205,232	$360,124	$399,301	$611,771
Net income per weighted average share, basic attributable to EMC Corporation common shareholders	0.1	0.18	0.2	0.3
Net income per weighted average share, diluted attributable to EMC Corporation common shareholders	0.1	0.17	0.2	0.29
Weighted average shares, basic	2,011,508	2,057,766	2,010,147	2,066,470
Weighted average shares, diluted	2,030,048	2,094,795	2,025,433	2,102,184

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect (USD $)
In Thousands	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Cash flows from operating activities:
Cash received from customers	$6,951,380	$7,585,822
Cash paid to suppliers and employees	(5,348,576)	(5,947,544)
Dividends and interest received	73,448	135,058
Interest paid	(35,900)	(36,778)
Income taxes paid	(202,273)	(199,689)
Net cash provided by operating activities	1,438,079	1,536,869
Cash flows from investing activities:
Additions to property, plant and equipment	(205,512)	(326,449)
Capitalized software development costs	(151,774)	(118,848)
Purchases of short and long-term available for sale securities	(3,315,606)	(1,005,655)
Sales and maturities of short and long-term available for sale securities	3,078,580	1,572,954
Purchase of Data Domain common stock	(65,000)	0
Acquisitions, net of cash acquired	(98,860)	(604,788)
Increase in strategic and other related investments	(107,055)	(3,060)
Net cash used in investing activities	(865,227)	(485,846)
Cash flows from financing activities:
Issuance of EMC's common stock from the exercise of stock options	84,028	156,220
Issuance of VMware's common stock from the exercise of stock options	81,606	133,327
Repayments on securities lending	(152,196)	0
Repurchase of EMC's common stock	0	(686,950)
Excess tax benefits from stock-based compensation	6,715	88,613
Payment of short and long-term obligations	(19,364)	(5,279)
Proceeds from short and long-term obligations	1,116	1,820
Net cash provided by (used in) financing activities	1,905	(312,249)
Effect of exchange rate changes on cash and cash equivalents	4,318	(1,638)
Net increase in cash and cash equivalents	579,075	737,136
Cash and cash equivalents at beginning of period	5,843,685	4,482,211
Cash and cash equivalents at end of period	6,422,760	5,219,347
Reconciliation of net income to net cash provided by operating activities:
Net income	415,961	625,645
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	509,066	517,692
Non-cash interest expense on convertible debt	53,079	50,277
Non-cash restructuring and in-process research and development	9,300	80,970
Stock-based compensation expense	234,531	239,405
Increase in provision for doubtful accounts	7,219	8,576
Deferred income taxes, net	60,067	10,431
Excess tax benefits from stock-based compensation	(6,715)	(88,613)
Other, net	450	(5,123)
Changes in assets and liabilities, net of acquisitions:
Accounts and notes receivable	391,899	160,492
Inventories	(9,910)	12,668
Other assets	(37,540)	(35,719)
Accounts payable	(27,915)	(61,343)
Accrued expenses	(134,894)	(248,139)
Income taxes payable	(186,480)	(32,677)
Deferred revenue	144,148	272,821
Other liabilities	15,813	29,506
Net cash provided by operating activities	$1,438,079	$1,536,869

Statement Of Other Comprehensiv

Statement Of Other Comprehensive Income (USD $)
In Thousands	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Net income	$210,616	$367,837	$415,961	$625,645
Other comprehensive income (loss), net of taxes (benefits):
Foreign currency translation adjustments	37,483	(10,599)	10,748	887
Changes in market value of investments, including unrealized gains and losses and reclassification adjustment to net income, net of taxes (benefits) of $15,182, $(12,598), $21,085 and $(11,537)	26,185	(12,419)	30,611	(17,657)
Other-than-temporary investment losses, excluding credit losses recognized in the Consolidated Income Statements, net of tax benefits of $(1,384), $0, $(1,384) and $0	(2,571)	0	(2,571)	0
Changes in market value of derivatives, net of tax (benefits) of $(1,121), $(8), $(442) and $(26)	(2,125)	525	(323)	(238)
Other comprehensive income (loss)	58,972	(22,493)	38,465	(17,008)
Comprehensive income	269,588	345,344	454,426	608,637
Less: Net income attributable to the non-controlling interest in VMware, Inc.	(5,384)	(7,713)	(16,660)	(13,874)
Less: Other comprehensive income attributable to the non-controlling interest in VMware, Inc.	(324)	0	(324)	0
Comprehensive income attributable to EMC Corporation	$263,880	$337,631	$437,442	$594,763

2_Statement Of Other Comprehens

Statement Of Other Comprehensive Income (Parenthetical) (USD $)
In Thousands	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Changes in market value of investments, including unrealized gains and losses and reclassification adjustment to net income, taxes (benefits)	$15,182	($12,598)	$21,085	($11,537)
Other-than-temporary investment losses, excluding credit losses recognized in the Consolidated Income Statements, tax benefits	(1,384)	0	(1,384)	0
Changes in market value of derivatives, tax (benefits)	($1,121)	($8)	($442)	($26)

Statement Of Shareholders Equit

Statement Of Shareholders Equity And Other Comprehensive Income (USD $)
In Thousands		Common Stock Par Value	Additional Paid-in Capital [Member]	Retained Earnings	Other Comprehensive Loss	Non-controlling Interest in VMware	Total
Beginning Balance at Dec. 31, 2007		$21,022	$3,462,673	$9,396,108	($8,449)	$188,988	$13,060,342
Beginning Balance at Dec. 31, 2007	2,102,187
Stock issued through stock option and stock purchase plans	13,888
Stock issued through stock option and stock purchase plans		137	156,083				156,220
Tax benefit from stock options exercised			101,371				101,371
Restricted stock grants, cancellations and withholdings, net	(1,103)
Restricted stock grants, cancellations and withholdings, net		(11)	(45,597)				(45,608)
Repurchase of common stock	(44,433)
Repurchase of common stock		(443)	(686,505)				(686,948)
Stock options issued in business acquisitions			1,669				1,669
Stock-based compensation			247,963				247,963
Impact from equity transactions of VMware, Inc.			18,945			60,704	79,649
Change in market value of investments					(17,657)		(17,657)
Change in market value of derivatives					(238)		(238)
Translation adjustment					887		887
Net income				611,771		13,874	625,645
Ending Balance at Jun. 30, 2008	2,070,539
Ending Balance at Jun. 30, 2008		20,705	3,256,602	10,007,879	(25,457)	263,566	13,523,295
Beginning Balance at Dec. 31, 2008		20,129	2,817,054	10,671,212	(179,952)	327,507	13,655,950
Beginning Balance at Dec. 31, 2008	2,012,938
Stock issued through stock option and stock purchase plans	10,357
Stock issued through stock option and stock purchase plans		104	83,924				84,028
Tax benefit from stock options exercised			(8,477)				(8,477)
Restricted stock grants, cancellations and withholdings, net	(1,247)
Restricted stock grants, cancellations and withholdings, net		(13)	(35,866)				(35,879)
Stock options issued in business acquisitions			1,454				1,454
Stock-based compensation			242,828				242,828
Impact from equity transactions of VMware, Inc.			4,800			48,907	53,707
Change in market value of investments					30,611	324	30,935
Change in market value of derivatives					(323)		(323)
Non-credit other-than-temporary losses on investments					(2,571)		(2,571)
Translation adjustment					10,748		10,748
Net income				399,301		16,660	415,961
Ending Balance at Jun. 30, 2009	2,022,048
Ending Balance at Jun. 30, 2009		$20,220	$3,105,717	$11,070,513	($141,487)	$393,398	$14,448,361

Notes to Financial Statements

Notes to Financial Statements
	6 Months Ended Jun. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
1. Basis of Presentation	1.Basis of Presentation Company EMC Corporation (EMC) and its subsidiaries develop, deliver and support the Information Technology (IT) industrys broadest range of information infrastructure technologies and solutions. EMCs Information Infrastructure business supports customers information lifecycle management (ILM) strategies and helps them build information infrastructures that store, protect, optimize and leverage their vast and growing quantities of information. EMCs Information Infrastructure business consists of three segments Information Storage, Content Management and Archiving, and RSA Information Security. EMCs VMware Virtual Infrastructure business, which is comprised of a majority equity stake in VMware, Inc. (VMware), is the leading provider of virtualization infrastructure solutions from the desktop to the data center. VMwares virtual infrastructure software solutions run on industry-standard desktops and servers and support a wide range of operating system and application environments, as well as networking and storage infrastructures. General The accompanying interim consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. These consolidated financial statements include the accounts of EMC, its wholly owned subsidiaries and VMware, a company majority-owned by EMC. All intercompany transactions have been eliminated. Certain information and footnote disclosures normally included in our annual consolidated financial statements have been condensed or omitted. Accordingly, these interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December31, 2008 which are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February27, 2009. Effective January1, 2009, we adopted FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP APB 14-1). FSP APB 14-1 changed the accounting treatment for certain convertible securities including our convertible debt. Under FSP APB 14-1, issuers are required to allocate the bond proceeds into a debt portion and a conversion option. The allocation of the bond portion is based upon the fair value of the debt without the equity conversion option. The residual value is allocated to the conversion option which is accounted for as additional paid-in capital. As a result of this change, the bonds are recorded at a discount which is amortized over the instruments expected life using the effective interest method, resulting in additional non-cash interest expense. We revised prior period financial statements by reclassifying $669.1 million of our convertible debt associated with our $1.725 billion 1.75% convertible senior notes due 2011 (the 2011 Notes), our $1.725 billion 1.75% convertible senior notes due 2013 (the 2013 Notes and, together with the 2011 Notes, the Notes) to additional paid-in capital and increased interest expense by
2. Acquisitions	2.Acquisitions In the second quarter of 2009, we acquired all of the outstanding capital stock of Configuresoft, Inc., (Configuresoft), a provider of server configuration, change and compliance management software for net consideration of $86.8 million. The acquisition complements and extends our server configuration management solutions within the Information Storage segment. The results of Configuresofts operations have been included in our consolidated financial statements since the date of acquisition. Pro forma results of operations have not been presented for the acquisition as the results were not material to our consolidated results of operations.
3. Convertible Debt	3.Convertible Debt In November 2006, we issued our Notes for total gross proceeds of $3.45 billion. The Notes are senior unsecured obligations and rank equally with all other existing and future senior unsecured debt. Holders may convert their Notes at their option on any day prior to the close of business on the scheduled trading day immediately preceding (i)September1, 2011, with respect to the 2011 Notes, and (ii)September1, 2013, with respect to the 2013 Notes, in each case only under the following circumstances: (1)during the five business-day period after any five consecutive trading-day period (the measurement period) in which the price per Note of the applicable series for each day of that measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such day; (2)during any calendar quarter, if the last reported sale price of our common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; or (3)upon the occurrence of certain events specified in the Notes. Additionally, the Notes will become convertible during the last three months prior to the respective maturities of the 2011 Notes and the 2013 Notes. Upon conversion, we will pay cash up to the principal amount of the debt converted. With respect to any conversion value in excess of the principal amount of the Notes converted, we have the option to settle the excess with cash, shares of our common stock, or a combination of cash and shares of our common stock based on a daily conversion value, determined in accordance with the indenture, calculated on a proportionate basis for each day of the relevant 20-day observation period. The initial conversion rate for the Notes will be 62.1978 shares of our common stock per one thousand dollars of principal amount of Notes, which represents a 27.5% conversion premium from the date the Notes were issued and is equivalent to a conversion price of approximately $16.08 per share of our common stock. The conversion price is subject to adjustment in some events as set forth in the indenture. In addition, if a fundamental change (as defined in the indenture) occurs prior to the maturity date, we will in some cases increase the conversion rate for a holder of Notes that elects to convert its Notes in connection with such fundamental change. The Notes pay interest in cash at a rate of 1.75% semi-annually in arrears on December1 and June1 of each year. In connection with the sale of the Notes, we entered into separate convertible note hedge transactions with respect to our common stock (the Purchased Options). The Purchased Options allow us to receive shares of our common stock and/or cash related to the excess conversion value that we would pay to the holders of the Notes upon conversion. The Purchased Options will cover, subject to customary anti-dilution adjustments, approximately 215million shares of our common stock. Half of the Purch
4. Non-controlling Interest in VMware, Inc.	4.Non-controlling Interest in VMware, Inc. The effects of changes in our ownership interest in VMware on our equity were as follows (table in thousands): FortheSixMonthsEnded June30, 2009 June30, 2008 Net income attributable to EMC Corporation $ 399,301 $ 611,771 Transfers (to) from the non-controlling interest in VMware: Increase in EMC Corporations additional paid-in-capital for VMwares equity issuances 31,474 43,343 Decrease in EMC Corporations additional paid-in-capital for VMwares other equity activity (26,674 ) (24,398 ) Net transfers from non-controlling interest 4,800 18,945 Change from net income attributable to EMC Corporation and transfers from the non-controlling interest in VMware, Inc. $ 404,101 $ 630,716
5. Derivatives	5.Derivatives We hedge our exposure in foreign currency-denominated monetary assets and liabilities with foreign currency forward and option contracts. Since these derivatives hedge existing exposures that are denominated in foreign currencies, the contracts do not qualify for hedge accounting. Accordingly, these outstanding non-designated derivatives are recognized on the consolidated balance sheet at fair value and the changes in fair value from these contracts are recorded in other expense, net, in the consolidated income statement. These derivative contracts mature in less than one year. We also use foreign currency forward and option contracts to hedge our exposure on a portion of our forecasted revenue and expense transactions and commodity option contracts to hedge our exposure on a portion of our forecasted energy expense transactions. The following table provides the major types of derivative instruments outstanding as of June30, 2009 and December31, 2008 (table in thousands): Fair Values of Derivative Instruments Asset Derivatives June30, 2009 December31, 2008 BalanceSheet Location FairValue BalanceSheet Location FairValue Derivatives designated as hedging instruments: Foreign exchange contracts Otherassets $ 1,835 Otherassets $ 4,977 Total derivatives designated as hedging instruments: $ 1,835 $ 4,977 Derivatives not designated as hedging instruments: Foreign exchange contracts Other assets $ 43,834 Other assets $ 39,065 Total derivatives not designated as hedging instruments: $ 43,834 $ 39,065 Total asset derivatives $ 45,669 $ 44,042 Liability Derivatives June 30, 2009 December 31, 2008 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Foreign exchange contracts Accruedexpenses $ 2,109 Accruedexpenses $ 5,603 Commodity derivatives Accrued expenses 1,232 Total derivatives designated as hedging instruments: $ 3,341 $ 5,603 Derivatives not designated as hedging instruments: Foreign exchange contracts Accrued expenses $ 39,710 Accrued expenses $ 34,347 Embedded derivatives with foreign exchange provisions Accrued expenses 144 Total derivatives not designated as hedging instruments: $ 39,854 $ 34,347 Total liability derivatives $ 43,195 $ 39,950 The following tables provide the effect derivative instruments had on other comprehensive loss (OCI) and results of operations (tables in thousands): The Effect of Derivative Instruments on the Consolidated Income Statements For the Three Months Ended June30, 2009 and 2008 DerivativesDesignated as HedgingInstruments under Sta
6. Investments and Fair Value	6.Investments and Fair Value We account for financial assets and liabilities in accordance with FAS No.157, Fair Value Measurements (FAS No.157). FAS No.157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under FAS No.157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under FAS No.157 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. In the second quarter of 2009, we adopted FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That are Not Orderly (FSP 157-4). The pronouncement clarifies how companies should determine fair value measurements when the level of market activity for an asset or liability has significantly decreased. The pronouncement did not have a material impact on our assessment of fair value. In the second quarter of 2009, we adopted FASB Staff Position No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (FAS 115-2). The pronouncement requires an entity to recognize the credit component of an other-than-temporary impairment of a debt security in earnings and the non-credit component in other comprehensive loss when the entity does not intend to sell the security and it is more likely than not that the entity will not be required to sell the security prior to recovery. FAS 115-2 applies to existing and new investments held by us as of April1, 2009. The adoption of the pronouncement requires the recording of a cumulative effect adjustment to retained earnings with a corresponding adjustment to other comprehensive loss equal to the present value of the cash flows expected to be collected less the amortized cost basis of the debt securities held at March31, 2009 for which an other-than-temporary impairment was previously recognized for securities that we do not intend to sell nor is it more likely than not that we will be required to s
7. Inventories	7. Inventories Inventories consist of (table in thousands): June30, 2009 December31, 2008 Purchased parts $ 25,534 $ 62,866 Work-in-process 441,744 488,286 Finished goods 306,250 291,651 $ 773,528 $ 842,803
8. Property, Plant and Equipment	8. Property, Plant and Equipment Property, plant and equipment consist of (table in thousands): June30, 2009 December31, 2008 Furniture and fixtures $ 223,371 $ 224,736 Equipment 3,445,834 3,387,498 Buildings and improvements 1,361,235 1,280,580 Land 116,734 115,873 Building construction in progress 104,457 95,219 5,251,631 5,103,906 Accumulated depreciation and amortization (3,022,578 ) (2,880,899 ) $ 2,229,053 $ 2,223,007 Building construction in progress at June30, 2009 includes $62.6 million for facilities not yet placed in service that we are holding for future use.
9. Accrued Expenses	9. Accrued Expenses Accrued expenses consist of (table in thousands): June30, 2009 December31, 2008 Salaries and benefits $ 671,054 $ 712,237 Product warranties 267,246 269,218 Restructuring (see Note 11) 148,937 224,702 Other 725,437 695,727 $ 1,812,674 $ 1,901,884 Product Warranties Systems sales include a standard product warranty. At the time of the sale, we accrue for the systems warranty costs. The initial systems warranty accrual is based upon our historical experience, expected future costs and specific identification of the systems requirements. Upon expiration of the initial warranty, we may sell additional maintenance contracts to our customers. Revenue from these additional maintenance contracts is deferred and recognized ratably over the service period. The following represents the activity in our warranty accrual for our standard product warranty (table in thousands): FortheThreeMonthsEnded FortheSixMonthsEnded June30, 2009 June30, 2008 June30, 2009 June30, 2008 Balance, beginning of the period $ 262,255 $ 267,296 $ 269,218 $ 263,561 Current period accrual 39,307 48,866 64,742 89,448 Amounts charged to the accrual (34,316 ) (41,421 ) (66,714 ) (78,268 ) Balance, end of the period $ 267,246 $ 274,741 $ 267,246 $ 274,741 The provision includes amounts accrued for systems at the time of shipment, adjustments for changes in estimated costs for warranties on systems shipped in the period and changes in estimated costs for warranties on systems shipped in prior periods. It is not practicable to determine the amounts applicable to each of the components. Additionally, the accruals for 2008 include $6.3 million assumed in the acquisition of Iomega Corporation.
10. Shareholders' Equity	10. Shareholders Equity Net Income Per Share The reconciliation from basic to diluted earnings per share for both the numerators and denominators is as follows (table in thousands): For the Three Months Ended For the Six Months Ended June30, 2009 June30, 2008 June30, 2009 June30, 2008 Numerator: Net income, as reported, basic $ 205,232 $ 360,124 $ 399,301 $ 611,771 Incremental dilution from VMware (273 ) (1,795 ) (507 ) (3,511 ) Net income, diluted $ 204,959 $ 358,329 $ 398,794 $ 608,260 Denominator: Basic weighted average common shares outstanding 2,011,508 2,057,766 2,010,147 2,066,470 Weighted average common stock equivalents 18,540 37,029 15,286 35,714 Diluted weighted average shares outstanding 2,030,048 2,094,795 2,025,433 2,102,184 Options to acquire 187.7million and 201.3million shares of our common stock for the three and six months ended June30, 2009, respectively, and options to acquire 95.0million and 97.8million shares of our common stock for the three and six months ended June30, 2008, respectively, were excluded from the calculation of diluted earnings per share attributable to EMC Corporation shareholders because of their antidilutive effect due to their exercise prices being greater than the average market price of common stock for the period. For the three and six months ended June30, 2009, there were no shares potentially issuable under our Notes and the Sold Warrants because these instruments were not in-the-money. As a result, the Notes and the Sold Warrants were excluded from the calculation of diluted net income per weighted average share attributable to EMC Corporation shareholders for the three and six months ended June30, 2009. For the three and six months ended June30, 2008, there were 0.2million and 0.1million shares, respectively, potentially issuable under our Notes. For the three and six months ended June30, 2008, there were no shares potentially issuable under the Sold Warrants because these instruments were not in-the-money. As a result, the Sold Warrants were excluded from the calculation of diluted net income per weighted average share for the three and six months ended June30, 2008. The incremental dilution from VMware represents the impact of VMwares dilutive securities on EMCs diluted net income per share and is calculated by multiplying the difference between VMwares basic and diluted earnings per share by the number of VMware shares owned by EMC. Accumulated Other Comprehensive Loss, Net Accumulated other comprehensive loss, net, which is presented net of tax, consists of the following (table in thousands): June30, 2009 December31, 2008 Foreign currency translation adjustments, net of tax benefits of $0 and $0 $ (6,551 ) $ (17,299 ) Unrealized losses on temporarily impaired in
11. Restructuring and Other Special Charges	11. Restructuring and Other Special Charges For the three and six months ended June30, 2009, we incurred restructuring and other special charges of $33.2 million and $48.8 million, respectively. During the three months ended June30, 2008, we recognized restructuring credits of $1.3 million which is included in selling, general and administrative expenses (SGA). For the six months ended June30, 2008, we recognized restructuring credits of $1.7 million, of which $1.3 million is included in SGA. In the fourth quarter of 2008, we implemented a restructuring program to further streamline the costs related to our Information Infrastructure business. The plan includes the following components: A reduction in force resulting in the elimination of approximately 2,400 positions which will be substantially completed by the end of 2009 and fully completed by the third quarter of 2010. The consolidation of facilities and the termination of contracts. These actions are expected to be completed by 2015. The write-off of certain assets for which EMC has determined it will no longer derive any benefit. These actions were completed in the fourth quarter of 2008. In addition to this plan, we also recognized an asset impairment charge for certain assets for which the forecasted cash flows from the assets are less than the assets net book value. The total charge resulting from these actions is expected to be between $362.0 million and $387.0 million, with $247.9 million recognized in 2008, $100.0 million to $125.0 million to be recognized in 2009 and 2010 and the remainder to be recognized through 2015. Total cash expenditures associated with the plan are expected to be in the range of $310.7 million to $335.7 million. Additionally, in the third quarter of 2008 we implemented a restructuring program resulting in a reduction in force of approximately 75 employees and the consolidation of excess facilities. The charge for the three and six months ended June30, 2009 was primarily attributable to recognizing additional expense related to the restructuring program implemented in the fourth quarter of 2008. The credits for the three and six months ended June30, 2008 were primarily attributable to lower than expected severance payments to our 2006 restructuring programs, partially offset by higher than expected severance payments to our 2007 and prior restructuring programs. The activity for each charge is explained in the following sections. 2008 Restructuring Programs The activity for the 2008 restructuring programs for the three and six months ended June30, 2009 is presented below (tables in thousands): Three Months Ended June30, 2009 Category Balanceasof March31, 2009 2009Charges Relating to the 2008 Plan Utilization Balanceasof June30, 2009 Workforce reductions $ 140,993 $ 15,918 $ (42,153 ) $ 114,758 Consolidation of excess facilities and other contractual obligations 4,166 6,628 (1,765 ) 9,029 Abandoned assets 6,105 (6,105 ) Total $ 145,159 $ 28,651 $ (
12. Commitments and Contingencies	12. Commitments and Contingencies Line of Credit We have available for use a credit line of $50.0 million in the United States. As of June30, 2009, we had no borrowings outstanding on the line of credit. The credit line bears interest at the banks base rate and requires us, upon utilization of the credit line, to meet certain financial covenants with respect to limitations on losses. In the event the covenants are not met, the lender may require us to provide collateral to secure the outstanding balance, if any. At June30, 2009, we were in compliance with the covenants. Litigation We are involved in a variety of claims, demands, suits, investigations, and proceedings, including those identified below, that arise from time to time relating to matters incidental to the ordinary course of our business, including actions with respect to contracts, intellectual property, product liability, employment, benefits and securities matters. As required by Statement of Financial Accounting Standards No.5, we have estimated the amount of probable losses that may result from any such pending matters, and such amounts are reflected in our consolidated financial statements. These recorded amounts are not material to our consolidated financial position or results of operations. While it is not possible to predict the outcome of these matters with certainty, we do not expect the results of any of these actions to have a material adverse effect on our business, results of operations or financial condition. Because litigation is inherently unpredictable, however, the actual amounts of loss may prove to be larger or smaller than the amounts reflected in our consolidated financial statements, and we could incur judgments or enter into settlements of claims that could adversely affect our operating results or cash flows in a particular period. United States ex rel. Rille and Roberts v. EMC Corporation. On February27, 2009, the U.S. District Court for the Eastern District of Arkansas entered an order unsealing a civil False Claims Act qui tam action by two individuals (the relators) that named EMC as a defendant in December 2006. This action relates to the previously disclosed investigation being conducted by the Civil Division of the United States Department of Justice (the DoJ) regarding (i)EMCs fee arrangements with systems integrators and other partners in federal government transactions, and (ii)EMCs compliance with the terms and conditions of certain agreements pursuant to which we sold products and services to the federal government. By the same order of February27, 2009, the U.S. District Court for the Eastern District of Arkansas also unsealed a complaint in intervention filed by the DoJ in June 2008 in this matter and directed that EMC be served with both complaints. The DoJ complaint, which adopts the claims advanced by the relators, asserts claims under the Anti-Kickback Act and False Claims Act in addition to breach of contract and other claims. The DoJ and the relators seek various remedies, including treble damages and statutory penalties. By order dated June3, 2009, the Arkansas Court granted a motion by EMC to transfer the action to
13. Segment Information	13.Segment Information We manage our business in two broad categories: EMC Information Infrastructure and VMware Virtual Infrastructure. EMC Information Infrastructure operates in three segments: Information Storage, Content Management and Archiving and RSA Information Security, while VMware Virtual Infrastructure operates in a single segment. Our management measures are designed to assess performance of these operating segments excluding certain items. As a result, corporate reconciling items are used to capture the items excluded from segment operating performance measures, including stock-based compensation expense and acquisition-related intangible asset amortization expense. Additionally, in certain instances, IPRD charges, restructuring charges and infrequently occurring gains or losses are also excluded from the measures used by management in assessing segment performance. The VMware Virtual Infrastructure amounts represent the revenues and expenses of VMware as reflected within EMCs consolidated financial statements. Research and development expenses, SGA and other income associated with the EMC Information Infrastructure business are not allocated to the segments within the EMC Information Infrastructure business, as they are managed centrally at the business unit level. For the three segments within the EMC Information Infrastructure business, gross profit is the segment operating performance measure. Our segment information for the three and six months ended June30, 2009 and 2008 is as follows (tables in thousands, except percentages): EMC Information Infrastructure Information Storage Content Management and Archiving RSA Information Security EMC Information Infrastructure VMware Virtual Infrastructure within EMC Corp Reconciling Items Consolidated Three Months Ended: June30, 2009 Revenues: Product revenues $ 1,632,309 $ 60,792 $ 84,080 $ 1,777,181 $ 228,089 $ $ 2,005,270 Services revenues 842,558 119,445 63,055 1,025,058 227,024 1,252,082 Total consolidated revenues 2,474,867 180,237 147,135 2,802,239 455,113 3,257,352 Cost of sales 1,274,341 68,461 45,417 1,388,219 71,221 54,134 1,513,574 Gross profit $ 1,200,526 $ 111,776 $ 101,718 1,414,020 383,892 (54,134 ) 1,743,778 Gross profit percentage 48.5 % 62.0 % 69.1 % 50.5 % 84.4 % 53.5 % Research and development 255,652 93,677 48,552 397,881 Selling, general and administrative 772,381 191,304 87,519 1,051,204 Restructuring charges 33,234 33,234
14. Income Taxes	14.Income Taxes Our effective income tax rates were 15.3% and 15.4% for the three and six months ended June30, 2009, respectively. Our effective income tax rates were 20.4% and 22.4% for the three and six months ended June30, 2008, respectively. The effective income tax rate is based upon the estimated income for the year, the composition of the income in different countries, and adjustments, if any, in the applicable quarterly periods for the potential tax consequences, benefits or resolutions of tax audits or other tax contingencies. For the three and six months ended June30, 2008 and 2009, the effective tax rate varied from the statutory tax rate principally as a result of the mix of income attributable to foreign versus domestic jurisdictions. Our aggregate income tax rate in foreign jurisdictions is lower than our income tax rate in the United States. Our effective income tax rate decreased from the three months ended June30, 2008 to the three months ended June30, 2009 due to the recognition of discrete tax benefits during the second quarter of 2009, principally from the favorable resolution of uncertain tax positions related to transfer pricing and a U.S. federal income tax audit. Additionally, in 2009 our tax rate was favorably impacted by an increase in tax credits. These benefits were substantially offset by income tax charges relating to recent acquisitions and an increase in our permanent book-tax differences. Our effective income tax rate decreased from the six months ended June30, 2008 to the six months ended June30, 2009 due to the recognition of discrete tax benefits during the second quarter of 2009, principally from the favorable resolution of uncertain tax positions related to transfer pricing and a U.S. federal income tax audit. Additionally, the decrease in our effective tax rate was due to an increase in tax credits, as well as non-deductible IPRD charges during the quarter ended March31, 2008 which increased the 2008 effective tax rate. These benefits were partially offset by certain income tax charges relating to recent acquisitions and an increase in our permanent book-tax differences. As of December31, 2008, we had $218.5 million of unrecognized tax benefits and as of June30, 2009, we had $175.1 million of unrecognized tax benefits. During the six months ended June30, 2009, the balance decreased by $39.0 million as a result of the favorable resolution of certain ruling requests from taxing authorities and the outcome of2005 and 2006 U.S. federal income tax audits. We have substantially concluded all U.S. federal income tax matters for years through 2006, with the completion of the 2005 and 2006 federal income tax audits during the quarter ended June30, 2009. We have income tax audits in process in numerous state, local and international jurisdictions. Based on the timing and outcome of examinations of EMC, the result of the expiration of statutes of limitations for specific jurisdictions or the timing and result of ruling requests from taxing authorities, it is reasonably possible that the related unrecognized tax benefits could change from those recorded in our statement of financial position. We ant
15. Subsequent Events	15.Subsequent Events In July 2009, we completed the acquisition of all of the capital stock of Data Domain for approximately $1,882.1 million, which was net of their cash and investment balances of $240.5 million. Data Domain is a provider of storage solutions for backup and archive applications based on deduplication technology. Data Domain deduplication storage systems are designed to deliver reliable, efficient and cost-effective solutions that enable enterprises of all sizes to manage, retain and protect their data. The acquisition of Data Domain complements and expands our Information Storage business. Because the acquisition just recently closed, we have not yet completed the initial purchase price allocation. Management has updated the financial statements for events through August5, 2009.

Document Information

Document Information
	6 Months Ended Jun. 30, 2009 USD / shares
Document Information [Text Block]
Document Type	10-Q
Amendment Flag	false
Amendment Description	N.A.
Document Period End Date	2009-06-30

Entity Information

Entity Information (USD $)
	6 Months Ended Jun. 30, 2009	Jun. 30, 2008
Entity [Text Block]
Trading Symbol	EMC
Entity Registrant Name	EMC CORP
Entity Central Index Key	0000790070
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	2,022,047,556
Entity Public Float		$30,309,822,720