EMC 2002 Annual Report Download - page 48

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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies
Company
EMC Corporation and its subsidiaries ("EMC") design, manufacture, market and support a wide range of networked storage platforms, software and
related services. EMC products and services are designed to enable organizations of all types and sizes to manage, protect and share their information in the
most efficient and cost-effective manner possible.
Principles of Consolidation
The consolidated financial statements include the accounts of EMC and its subsidiaries. All significant intercompany transactions and balances have
been eliminated.
Basis of Presentation
Certain prior year amounts have been reclassified to conform to the 2002 presentation.
Use of Accounting Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses during the reporting period and the
disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Revenue Recognition
EMC derives revenue from sales of information storage systems, software and services. EMC recognizes revenue when persuasive evidence of an
arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. This policy is applicable to all sales,
including sales to resellers and end users. The following summarizes the major terms of EMC's contractual relationships with its customers and the manner in
which EMC accounts for sales transactions.
• Systems sales
Systems sales consist of the sale of hardware, including Symmetrix systems, CLARiiON systems, Celerra systems, Centera systems and Connectrix
systems. Revenue for hardware is generally recognized upon shipment.
• Software sales
Software sales consist of the sale of software application programs that provide customers with information management, sharing or protection
capabilities. Revenue for software is generally recognized upon shipment.
• Services revenue
Services revenue consists of the sale of installation services, software warranty and maintenance, hardware maintenance, training and professional
services.
Installation is not considered essential to the functionality of EMC's products as these services do not alter the product capabilities, do not require
specialized skills and may be performed by the customers or other vendors. Installation services revenues are recognized upon completion of installation.
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