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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On September 30, 2002, EMC filed a complaint against Hewlett-Packard Company ("HP") in the United States Federal District Court in Worcester,
Massachusetts alleging that certain HP products infringe six EMC patents. The suit seeks a permanent injunction as well as unspecified monetary damages for
patent infringement. On September 30, 2002, HP filed a complaint against EMC in the United States Federal District Court for the Northern District of
California alleging that certain EMC products infringe seven HP patents. The suit seeks a permanent injunction as well as unspecified monetary damages for
patent infringement. EMC believes that HP's claims are without merit, and on October 1, 2002, EMC filed an amended complaint asking the court to declare
that the seven HP patents referenced in HP's complaint are invalid and not infringed.
EMC is a party to other litigation that it considers routine and incidental to its business. Management does not expect the results of any of these actions
to have a material adverse effect on EMC's business, results of operations or financial condition.
M. Stockholders' Equity
Common Stock Repurchase Program
In May 2001, EMC's Board of Directors authorized the repurchase of up to 50.0 million shares of Common Stock. In October 2002, the Board of
Directors authorized the repurchase of an additional 250.0 million shares of Common Stock. The purchased shares will be available for various corporate
purposes, including for use in connection with stock option and employee stock purchase plans. EMC utilizes the cost method to account for the purchase of
treasury stock, which presents the aggregate cost of reacquired shares as a component of stockholder's equity. As of December 31, 2002, EMC had reacquired
50.6 million shares at a cost of $382.2 million.
Stock Split
On May 3, 2000, EMC announced a 2-for-1 stock split in the form of a 100% stock dividend with a record date of May 19, 2000 and a distribution date
of June 2, 2000. Share and per share amounts have been restated to reflect the stock split for all periods presented.
Net Income (Loss) Per Share
Calculation of diluted per share earnings (loss) is as follows (table in thousands, except per share amounts):
2002 2001 2000
Net income (loss) $ (118,706) $ (507,712) $ 1,782,075
Add back of interest expense on 3 1/4% convertible notes, net of tax — — 1,792
Net income (loss) for calculating diluted earnings (loss) per share $ (118,706) $ (507,712) $ 1,783,867
Weighted average common shares outstanding 2,206,294 2,211,273 2,164,180
Weighted common stock equivalents — — 81,023
Total weighted average shares 2,206,294 2,211,273 2,245,203
Net income (loss) per share, diluted $ (0.05) $ (0.23) $ 0.79
Options to acquire 177.6 million, 151.6 million and 7.2 million shares of Common Stock as of December 31, 2002, 2001 and 2000 respectively, were
excluded from the calculation of diluted earnings per share because of their antidilutive effect. The calculation of diluted earnings per share for 2000 excludes
the effects of the 6% Notes as these were also antidilutive.
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