EMC 2007 Annual Report Download - page 82
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EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Building construction in progress and land owned at December 31, 2007 include $62.5 million and $4.0 million, respectively, of facilities not yet placed
in service that we are holding for future use. Depreciation expense was $530.3 million, $455.4 million and $402.7 million in 2007, 2006 and 2005,
respectively.
K. Accrued Expenses
Accrued expenses consist of (table in thousands):
December 31, 2007 December 31, 2006
Salaries and benefits $ 672,715 $ 595,691
Product warranties 263,561 242,744
Restructuring (See Note D) 125,924 199,538
Other 634,109 554,049
$ 1,696,309 $ 1,592,022
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, expected future costs 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,
2007 2006 2005
Balance, beginning of the year $ 242,744 $ 206,608 $ 180,758
Provision 151,367 158,799 127,388
Amounts charged to the accrual (130,550) (122,663) (101,538)
Balance, end of the year $ 263,561 $ 242,744 $ 206,608
The provision includes amounts accrued for systems at the time of shipment, adjustments 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. The 2006 provision includes $34.4 million as a result of the adoption of FAS No. 123R.
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