EMC 2006 Annual Report Download - page 36

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Table of Contents
Off-Balance Sheet Arrangements, Contractual Obligations, Contingent Liabilities and Commitments
Contractual Obligations
We have various contractual obligations impacting our liquidity. The following represents our contractual obligations as of December 31, 2006:
Payments Due by Period
Total
Less than 1 year
1-3 years*
3-5 years**
More than
5 years
Operating leases $ 752.1 $ 193.4 $ 270.4 $ 127.7 $ 160.6
Long-term convertible debt 3,450.0 — — 1,725.0 1,725.0
Other long-term obligations, including notes payable and current portion of long-term obligations 129.3 77.7 6.0 2.3 43.3
Purchase orders 1,478.2 882.7 595.5 — —
Total $5,809.6 $ 1,153.8 $ 871.9 $ 1,855.0 $ 1,928.9
*Includes payments from January 1, 2008 through December 31, 2009.
**Includes payments from January 1, 2010 through December 31, 2011.
Our operating leases are primarily for office space around the world. We believe leasing such space in most cases is more cost-effective than purchasing
real estate. The long-term convertible debt pertains to the 2011 Notes and the 2013 Notes. 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.
Guarantees and Indemnification Obligations
EMC's subsidiaries have entered into arrangements with financial institutions for such institutions to provide guarantees for rent, taxes, insurance,
leases, performance bonds, bid bonds and customs duties aggregating $57.7 as of December 31, 2006. 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 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 and/or copyright. Most
of these agreements in which we license our trademarks to another party require us to indemnify the other party against third-party claims alleging that an
EMC product infringes a trademark. 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.
We have agreements with certain vendors, financial institutions, lessors and service providers pursuant to which we have agreed to indemnify the other
party for specified 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 some 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.
We have agreed to indemnify the directors and executive officers of EMC and our subsidiaries to the extent legally permissible, against all liabilities
reasonably incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a director or
executive officer.
In connection with certain acquisitions, we have agreed to indemnify the current and former directors, officers and employees of the acquired company
in accordance with the acquired company's by-laws and charter in effect immediately prior to the acquisition or in accordance with indemnification or similar
agreements entered into by the acquired company and such persons. In a substantial majority of instances, we have maintained the acquired company's
directors' and officers' insurance, which should enable us to recover a portion of any future amounts paid. These indemnities vary in length of time.
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