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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2004 as a result of our ability to realize a portion of these deferred tax assets. The realization has been reflected as a reduction to goodwill.
Deferred income taxes have not been provided on basis differences related to investments in foreign subsidiaries. These basis differences were
approximately $3.2 billion and $2.8 billion at December 31, 2004 and 2003, respectively, and consisted of undistributed earnings permanently invested in
these entities. The unrecognized deferred tax liability associated with these unremitted earnings is approximately $780 million and $700 million as of
December 31, 2004 and 2003, respectively. Income before income taxes from foreign operations for 2004, 2003 and 2002 was $632.0 million, $343.9 million
and $161.3 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 $30.5 million in 2004, $26.0 million in 2003 and $26.5 million in 2002.
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. 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, 2004, the Data General U.S. pension plan held $0.4 million of our common stock.
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