EMC 2003 Annual Report Download - page 62

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its employees, agents or representatives. In addition, from time to time we have made certain guarantees regarding the performance of our systems to our
customers.
90
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We have agreements with certain vendors, financial institutions, lessors and service providers pursuant to which we have agreed to indemnify the other
party for certain matters, such as acts and omissions of EMC, its employees, agents or representatives.
We have procurement or license agreements with respect to technology that is used in our products and agreements in which we obtain rights to a
product from an OEM. Under certain of these agreements, we have agreed to indemnify the supplier for certain claims that may be brought against such party
with respect to our acts or omissions relating to the supplied products or technologies.
We have agreed to indemnify the directors and executive officers of EMC Corporation and our subsidiaries, to the extent legally permissible, against all
liabilities reasonably incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a
director or officer.
In connection with certain acquisitions, we have agreed to indemnify the current and former directors, officers and employees of the acquired company
in accordance with the acquired company's by-laws and charter in effect immediately prior to the acquisition or in accordance with indemnification or similar
agreements entered into by the acquired company and such persons. In a substantial majority of instances, we have maintained the acquired company's
directors' and officers' insurance, which should enable us to recover a portion of any future amounts paid. In connection with certain dispositions, we have
agreed to indemnify the buyer for certain matters, such as breaches of representations and warranties. These indemnities vary in length of time.
Based upon our historical experience and information known as of December 31, 2003, we believe our liability on the above guarantees and indemnities
at December 31, 2003 is immaterial.
Litigation
On September 30, 2002, Hewlett-Packard Company ("HP") filed a complaint against us in the United States Federal District Court for the Northern
District of California alleging that certain of our products infringe seven HP patents. HP seeks a permanent injunction as well as unspecified monetary
damages for patent infringement. We believe that HP's claims are without merit. On July 21, 2003, we answered the complaint and filed counterclaims
alleging that certain HP products infringe six EMC patents. EMC seeks a permanent injunction as well as unspecified monetary damages for patent
infringement.
On September 30, 2002, EMC filed a complaint against HP in the United States Federal District Court in Worcester, Massachusetts. The complaint
alleged that certain HP products infringe six EMC patents. The suit sought a permanent injunction as well as unspecified monetary damages for patent
infringement. On June 20, 2003, the parties filed a joint motion to dismiss the suit without prejudice, and thereafter, the suit was dismissed by the court.
We are a party (either as plaintiff or defendant) to various other patent litigation matters, including certain matters which we assumed in connection with
our acquisitions of LEGATO and VMware.
We are a party to other litigation which we consider routine and incidental to our business. Management does not expect the results of any of these
actions to have a material adverse effect on our business, results of operations or financial condition.
91
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
N. Stockholders' Equity
Common Stock Repurchase Program
In May 2001, our Board of Directors authorized the repurchase of up to 50.0 million shares of Common Stock. In October 2002, our 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. We utilize the cost method to account for the purchase of treasury stock,
which presents the aggregate cost of reacquired shares as a component of stockholders' equity. As of December 31, 2003, we had reacquired 62.1 million
shares at a cost of $509.2 million.
Net Income (Loss) Per Share
Calculation of diluted per share earnings (loss) is as follows (table in thousands, except per share amounts):