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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
J. Accrued Expenses
Accrued expenses consist of (table in thousands):
December 31,
2005
December 31,
2004
Salaries and benefits $ 477,361 $ 426,408
Product warranties 206,608 180,758
Restructuring (See Note C) 154,613 115,262
Other 441,275 368,238
$ 1,279,857 $ 1,090,666
Product Warranties
Systems sales include a standard product warranty. At the time of the sale, we accrue for systems' warranty costs. The initial systems' warranty accrual
is based upon our historical experience and specific identification of systems' requirements. Upon expiration of the initial warranty, we may sell additional
maintenance contracts to our customers. Revenue from these additional maintenance contracts is deferred and recognized ratably over the service period. The
following represents the activity in our warranty accrual for our standard product warranty (table in thousands):
Year Ended December 31,
2005
2004
2003
Balance, beginning of the year $ 180,758 $ 118,816 $ 104,258
Current year accrual 127,388 146,526 90,444
Amounts charged to the accrual (101,538) (84,584) (75,886)
Balance, end of the year $ 206,608 $ 180,758 $ 118,816
The current year accrual includes amounts accrued for systems at the time of shipment, adjustments within the year for changes in estimated costs for
warranties on systems shipped in the year and changes in estimated costs for warranties on systems shipped in prior years. It is not practicable to determine
the amounts applicable to each of the components.
K. Income Taxes
Our provision for income taxes consists of (table in thousands):
2005
2004
2003
Federal
Current $ 511,173 $ 234 $ 21,550
Deferred (10,947) 236,167 20,432
500,226 236,401 41,982
State
Current 31,670 1,703 (19,343)
Deferred 3,549 9,208 (5,295)
35,219 10,911 (24,638)
Foreign
Current (20,592) 70,313 91,776
Deferred 4,225 (3,784) (34,205)
(16,367) 66,529 57,571
Total provision for income taxes $ 519,078 $ 313,841 $ 74,915