EMC 2002 Annual Report Download - page 51

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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Investments
EMC's investments are comprised primarily of debt securities that are classified as available-for-sale and recorded at their fair market value.
Investments with remaining maturities of less than twelve months from the balance sheet date are classified as short-term investments. Investments with
remaining maturities of more than twelve months from the balance sheet date are classified as long-term investments.
EMC also holds strategic equity investments. Strategic equity investments in publicly traded companies are classified as available-for-sale when there
are no restrictions on EMC's ability to liquidate such securities. These investments are also carried at their market value. Strategic equity investments in
privately-held companies are carried at the lower of cost or net realizable value due to their illiquid nature. EMC reviews these investments to ascertain
whether unrealized losses are other than temporary.
Unrealized gains and temporary losses on investments classified as available-for-sale are included as a separate component of stockholders' equity, net
of any related tax effect. Realized gains and losses on non-strategic investments are reflected in the statement of operations in investment income. Realized
gains and losses and other-than-temporary impairments on strategic investments are reflected in the statement of operations in other expense, net. Investment
activity is accounted for using the average cost method.
Securities Lending
EMC lends fixed income securities generally on an overnight basis to generate investment income. Under its securities lending agreements, EMC
receives collateral 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, 2002 and 2001, there were no outstanding securities lending transactions.
Statement of Cash Flows Supplemental Information (table in thousands):
2002 2001 2000
Cash paid (received) for:
Income taxes $ (119,713) $ 175,541 $ 189,140
Interest 11,797 10,978 13,835
Inventories
Inventories are stated at the lower of cost (first in, first out) or market, not in excess of net realizable value.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Assets under development are included in construction in progress. Depreciation commences upon
placing the asset in service on a straight-line basis over the estimated useful lives of the assets, as follows:
Furniture and fixtures 5–7 years
Equipment 1–10 years
Improvements 5–25 years
Buildings 25–31 1/2 years
When assets are retired or disposed of, the cost and accumulated depreciation thereon are removed from the accounts and the related gains or losses are
included in other expense, net, within the statement of operations.
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