EMC 2007 Annual Report Download - page 59

EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with a maturity of ninety days or less at the time of purchase. Cash equivalents consist
primarily of money market securities, U.S. treasury bills, U.S. agency discount notes and commercial paper. Cash equivalents are stated at amortized cost plus
accrued interest, which approximates market. Total cash equivalents were $2,290.6 million and $775.9 million at December 31, 2007 and 2006, respectively.
Allowance for Doubtful Accounts
We maintain an allowance for doubtful accounts for the estimated probable losses on uncollectible accounts and notes receivable. The allowance is based
upon the creditworthiness of our customers, our historical experience, the age of the receivable and current market and economic conditions. Uncollectible
amounts are charged against the allowance account. The allowance for doubtful accounts is maintained against both our current and non-current accounts and
notes receivable balances. The balances in the allowance accounts at December 31, 2007 and 2006 were as follows (table in thousands):
December 31,
2007 2006
Current $34,389 $39,509
Non-current (included in other assets, net) 1,500 2,000
$35,889 $41,509
Investments
Our investments are comprised primarily of debt securities that are classified as available for sale and recorded at their fair market values. Investments
with remaining effective maturities of twelve months or less from the balance sheet date are classified as short-term investments. Investments with remaining
effective maturities of more than twelve months from the balance sheet date are classified as long-term investments.
Our portfolio of auction rate securities, which we classify as short-term investments, is generally made up of municipal debt obligations. The volatility of
the credit markets may impact the liquidity of these securities, which could affect our ability to liquidate these investments prior to their maturity.
We also hold strategic equity investments. Strategic equity investments in publicly traded companies are classified as available for sale when there are no
restrictions on our ability to liquidate such securities. These investments are also carried at their market values. Strategic equity investments in privately-held
companies are carried at the lower of cost or net realizable value due to their illiquid nature. We review these investments to ascertain whether unrealized
losses are other than temporary by considering factors such as operating performance relative to plan, status of meeting product development milestones and
implied valuations based upon amounts raised in subsequent financing rounds.
Unrealized gains and temporary losses on investments classified as available for sale are included within accumulated other comprehensive loss, net of
any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive loss to investment income. Realized gains and
losses and other than temporary impairments on non-strategic investments are reflected in the income statement in investment income. Gains or losses are
calculated primarily using the first-in, first-out method.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market, not in excess of net realizable value.
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