EMC 2003 Annual Report Download - page 25

software development costs were $126.7 and $120.7 in 2002 and 2001, respectively. Net purchases and maturities of investments, consisting of debt
securities, were $1,011.6 and $409.4 in 2002 and 2001, respectively.
Cash used for financing activities was $311.2 in 2002 compared to cash provided by financing activities of $33.4 in 2001. In 2002, we repurchased
49.5 million shares of our Common Stock a cost of $363.9. As of December 31, 2002, we had repurchased 50.6 million shares of the 300.0 million shares of
Common Stock authorized for repurchase by our Board of Directors. In 2001, we distributed our ownership interest in McDATA Corporation. As a result of
the distribution, McDATA's net assets are
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no longer consolidated with our assets, which resulted in a $142.0 reduction in cash. The majority of the remaining cash generated in 2002 and 2001 was from
the exercise of stock options.
Off-Balance Sheet Arrangements, Contractual Obligations and Contingent Liabilities and Commitments
• Contractual Obligations
We have various contractual obligations impacting our liquidity. The following represents our contractual obligations as of December 31, 2003:
Payments Due by Period
Total Less than 1 year 1-3 years* 3-5 years**
More than
5 years
Capital leases $ 1.0 $ 1.0 $ – $ – $ –
Operating leases 589.1 176.0 205.4 101.9 105.8
Long-term convertible debt 130.0 – – 130.0 –
Other long-term obligations, including notes payable and current portion of long-term
obligations 86.5 6.1 31.8 10.4 38.2
Purchase orders 880.6 846.8 33.8 – –
Total $1,687.2 $ 1,029.9 $ 271.0 $ 242.3 $ 144.0
Includes payments from January 1, 2005 through December 31, 2006.
Includes payments from January 1, 2007 through December 31, 2008.
Our operating leases are primarily for office space around the world. We believe leasing such space is more cost-effective than purchasing real estate.
The long-term convertible debt pertains to debt issued by Documentum. The other long-term obligations, including notes payable and the current portion of
long-term obligations, consist primarily of $34.7 of obligations associated with the Data General pension and post-retirement medical plans and $27.9 of long
term lease obligations for excess facilities. The purchase orders are for manufacturing and non-manufacturing related goods and services. While the purchase
orders are generally cancelable without penalty, certain vendor agreements provide for percentage-based cancellation fees or minimum restocking charges
based on the nature of the product or service.
• Off-Balance Sheet Arrangements, Contingent Liabilities and Commitments
• Guarantees and Indemnification Obligations
EMC's subsidiaries have entered into arrangements with financial institutions to provide guarantees for rent, taxes, insurance, leases, performance bonds,
bid bonds and customs duties aggregating $32.7 as of December 31, 2003. The guarantees vary in length of time. In connection with these arrangements, we
have agreed to guarantee substantially all of the guarantees provided by these financial institutions. We have also agreed to guarantee our Brazilian
subsidiary's $50.0 line of credit. As of December 31, 2003, we had $1.2 outstanding on this line of credit.
We enter into agreements in the ordinary course of business with, among others, customers, resellers, OEMs, systems integrators and distributors. Most
of these agreements require us to indemnify the other party against third party claims alleging that an EMC product infringes a patent or copyright. Certain of
these agreements require us to indemnify the other party against certain claims relating to property damage, personal injury or the acts or omissions of EMC,
its employees, agents or representatives. In addition, from time to time we have made certain guarantees regarding the performance of our systems to our
customers.
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We have agreements with certain vendors, financial institutions, lessors and service providers pursuant to which we have agreed to indemnify the other
party for certain matters, such as acts and omissions of EMC, its employees, agents or representatives.
We have procurement or license agreements with respect to technology that is used in our products and agreements in which we obtain rights to a
product from an OEM. Under certain of these agreements, we have agreed to indemnify the supplier for certain claims that may be brought against such party
with respect to our acts or omissions relating to the supplied products or technologies.
*
**