EMC 2003 Annual Report Download - page 57

Other 2,863 17,312
Total current deferred tax assets $ 271,746 $ 250,197
Noncurrent deferred tax assets (liabilities):
Property, plant and equipment, net $ 10,561 $ 16,282
Intangible and other assets, net (163,069) (20,604)
Equity 13,334 18,063
Other noncurrent liabilities 8,380 (108,152)
Credit carryforwards 38,724 3,680
Net operating loss carryforwards 237,617 170,774
Valuation allowance (60,085) (64,148)
Other comprehensive loss (13,443) 28,031
Total noncurrent deferred tax assets $ 72,019 $ 43,926
We have federal and foreign net operating loss carryforwards of $647.4 million, portions of which are subject to annual limitations, including
Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), for U.S. tax purposes and similar provisions under other country's tax laws.
Certain net operating losses will begin to expire in 2004, while others have an unlimited carryforward period. The valuation allowance decreased from
$64.1 million at December 31, 2002 to $60.1 million at December 31, 2003. The decrease was attributable to net operating losses of foreign subsidiaries that
were eliminated as a result of liquidating these entities and realizing capital loss carryforwards. The decrease was partially offset by an increase in the
valuation allowance associated with acquired deferred tax assets. The valuation allowance at December 31, 2003 primarily relates to foreign subsidiaries'
deferred tax assets, capital loss carryforwards and domestic net operating loss and tax credit carryforwards. A valuation allowance of $14.9 million has been
established for certain deferred tax assets associated with acquisitions. Upon realization, the reduction in the valuation allowance will be recognized as a
reduction to goodwill.
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EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred income taxes have not been provided on basis differences related to investments in foreign subsidiaries. These basis differences were
approximately $3,188.8 million and $2,729.4 million at December 31, 2003 and 2002, respectively, and consisted of undistributed earnings permanently
invested in these entities. The unrecognized deferred tax liability associated with these unremitted earnings is approximately $840.4 million and
$729.7 million as of December 31, 2003 and 2002, respectively. Income before income taxes from foreign operations for 2003, 2002 and 2001 was
$343.9 million, $161.3 million and $79.3 million, respectively.
L. Retirement Plans and Retiree Medical Benefits
401(k) Plan
We have established a deferred compensation program for certain employees that is qualified under Section 401(k) of the Code. At the end of each
calendar quarter, we make a cash contribution that matches 100% of the employee's contribution up to 3% of the employee's quarterly compensation.
Additionally, provided that certain quarterly profit goals are attained, in succeeding quarters, we provide an additional matching contribution of 1% of the
employee's quarterly compensation up to a maximum quarterly matching contribution not to exceed 6% of compensation or $750 per person per quarter. Our
contribution amounted to $26.0 million in 2003, $26.5 million in 2002 and $28.4 million in 2001.
Employees may elect to invest their contributions in a variety of funds, including an EMC stock fund. The deferred compensation program limits an
employee's maximum investment allocation in the EMC stock fund to 30% of their total contribution. Our matching contribution mirrors the investment
allocation of the employee's contribution.
Defined Benefit Pension Plans
We have a noncontributory defined benefit pension plan which was assumed as part of the Data General acquisition, which covers substantially all
former Data General employees located in the U.S. In addition, certain of the former Data General foreign subsidiaries also have retirement plans covering
substantially all of their employees. All of these plans have been frozen; therefore, such employees no longer accrue pension benefits for future services.
Benefits under these plans are generally based on either career average or final average salaries and creditable years of service as defined in the plans.
The annual cost for these plans is determined using the projected unit credit actuarial cost method that includes actuarial assumptions and estimates which are
subject to change. Prior service cost is amortized over the average remaining service period of employees expected to receive benefits under the plan. Funds
contributed to the plans are invested primarily in common stock, bonds and cash equivalent securities. The measurement date for the plans is December 31.
Our investment policy provides that no security, except issues of the U.S. Government, shall comprise more than 5% of total plan assets, measured at
market. At December 31, 2003, the Data General U.S. pension plan held $0.6 million of our Common Stock.
The Data General U.S. pension plan, U.S. supplemental retirement benefit plan and certain foreign retirement plans (the "Pension Plans") are
summarized in the following tables.
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