EMC 2006 Annual Report Download - page 41

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Table of Contents
The average value represents an average of the quarter-end values. The high and low valuations represent the highest and lowest values of the quarterly
amounts.
Credit Risk
Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents, short and long-term
investments, accounts and notes receivable and foreign currency exchange contracts. Deposits held with banks may exceed the amount of insurance provided
on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and therefore
bear minimal credit risk. We place our cash and cash equivalents and short- and long-term investments primarily in investment grade instruments and limit the
amount of investment with any one issuer. We have entered into various agreements to loan fixed income securities generally on an overnight basis. Under
these securities lending agreements, the value of the collateral is equal to 102% of the fair market value of the loaned securities. The collateral is generally
cash, U.S. government-backed securities or letters of credit. At December 31, 2006, there were no outstanding securities lending transactions. The
counterparties to our foreign currency exchange contracts consist of a number of major financial institutions. In addition to limiting the amount of the
contracts we enter into with any one party, we monitor the credit quality of the counterparties.
The credit risk associated with accounts and notes receivables is low due to the large number of customers and their broad dispersion over many
different industries and geographic areas. We establish an allowance for the estimated uncollectible portion of our accounts and notes receivable. The
allowance was $41.5 million and $39.9 million at December 31, 2006 and 2005, respectively. We customarily sell the notes receivable we derive from our
leasing activity. Generally, we do not retain any recourse on the sale of these notes.
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