EMC 2002 Annual Report Download - page 54

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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Weighted average fair value of options granted at fair market value during:
2002 $ 3.69
2001 $11.91
2000 $42.28
Weighted average fair value of options granted below fair market value during:
2002 N/A
2001 $31.43
2000 $58.33
The effects of applying FAS No. 123 in this pro forma disclosure are not necessarily indicative of future amounts. FAS No. 123 does not apply to grants
made prior to 1995.
Concentrations of Credit Risk
Financial instruments which potentially subject EMC to concentrations of credit risk consist principally of temporary cash investments, short and long-
term investments and accounts and notes receivable. EMC places its temporary cash investments and short and long-term investments in investment grade
instruments and limits the amount of investment with any one issuer. The credit risk associated with accounts and notes receivables is limited due to the large
number of customers and their broad dispersion over many different industries and geographic areas.
New Accounting Pronouncements
In June 2002, the Financial Accounting Standards Board (the "FASB") issued FAS No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities." FAS No. 146 provides guidance on the accounting for recognizing, measuring and reporting of costs associated with exit and disposal activities,
including restructuring activities. The pronouncement nullifies Emerging Issues Task Force ("EITF") No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity." Under EITF 94-3, a liability is recognized solely upon an entity's commitment to a plan. FAS No.
146 adjusts the timing of when a liability for termination benefits is to be recognized based upon whether the employee is required to render future service. A
liability for costs to terminate an operating lease or other contract before the end of its term is to be recognized when the entity terminates the contract or
ceases using the rights conveyed by the contract. All other costs associated with an exit or disposal activity are to be expensed as incurred. FAS No. 146
requires the liability to be measured at its fair value with subsequent changes in fair value to be recognized each reporting period utilizing an interest
allocation approach. The pronouncement is effective for exit or disposal activities initiated after December 31, 2002, with earlier application encouraged.
EMC adopted FAS No. 146 effective January 1, 2003, and EMC does not expect that the pronouncement will have a material impact on EMC's financial
statements or results of operations.
In November 2002, the EITF reached a consensus on issue 00-21, "Revenue Arrangements with Multiple Deliverables." EITF 00-21 addresses revenue
recognition on arrangements encompassing multiple elements that are delivered at different points in time, defining criteria that must be met for elements to
be considered to be a separate unit of accounting. If an element is determined to be a separate unit of accounting, the revenue for the element is recognized at
the time of delivery. EMC does not expect that the pronouncement will have a material impact on EMC's financial position or results of operations.
In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others" (the "Interpretation"). This Interpretation elaborates on the disclosures to be made by a guarantor in its interim
and annual financial
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