EMC 2009 Annual Report Download - page 34

Table of Contents
Off-Balance Sheet Arrangements, Contractual Obligations, Contingent Liabilities and Commitments
Contractual Obligations
We have various contractual obligations impacting our liquidity. The following represents our contractual obligations as of December 31, 2009:
Payments Due By Period
Total Less than 1 year 1-3 years* 3-5 years**
More than
5 years
Operating leases $1,352.4 $ 273.8 $ 520.4 $ 107.2 $ 451.0
Long-term convertible debt 3,450.0 — 1,725.0 1,725.0 —
Product warranty obligations 271.6 — — — —
Other long-term obligations, including notes payable and current portion of long-term obligations and
post retirement obligations 184.9 94.5 2.3 1.2 1.7
Purchase orders 1,577.9 1,531.4 46.5 — —
Uncertain tax positions 197.1 — — — —
Total $7,033.9 $ 1,899.7 $2,294.2 $ 1,833.4 $ 452.7
*Includes payments from January 1, 2011 through December 31, 2013.
**Includes payments from January 1, 2014 through December 31, 2015.
As of December 31, 2009, we had $271.6 of product warranty obligations, $85.2 of long-term post retirement obligations and $197.1 of liabilities for
uncertain tax positions. We are not able to provide a reasonably reliable estimate of the timing of future payments relating to these obligations.
Our operating leases are primarily for office space around the world. We believe leasing such space in most cases is more cost-effective than purchasing
real estate. The long-term convertible debt pertains to the $1.725 billion 1.75% convertible senior notes due 2011 and our $1.725 billion 1.75% convertible
senior notes due 2013. The purchase orders are for manufacturing and non-manufacturing related goods and services. While the purchase orders are generally
cancelable without penalty, certain vendor agreements provide for percentage-based cancellation fees or minimum restocking charges based on the nature of
the product or service.
We have no other off-balance sheet arrangements.
Guarantees and Indemnification Obligations
EMC's subsidiaries have entered into arrangements with financial institutions for such institutions to provide guarantees for rent, taxes, insurance,
leases, performance bonds, bid bonds and customs duties aggregating $70.0 as of December 31, 2009. The guarantees vary in length of time. In connection
with these arrangements, we have agreed to guarantee substantially all of the guarantees provided by these financial institutions.
We enter into agreements in the ordinary course of business with, among others, customers, resellers, OEMs, systems integrators and distributors. Most
of these agreements require us to indemnify the other party against third-party claims alleging that an EMC product infringes a patent and/or copyright.
Certain agreements in which we grant limited licenses to specific EMC-trademarks require us to indemnify the other party against third-party claims alleging
that the use of the licensed trademark infringes a third-party trademark. Certain of these agreements require us to indemnify the other party against certain
claims relating to property damage, personal injury or the acts or omissions of EMC, 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.
We have agreements with certain vendors, financial institutions, lessors and service providers pursuant to which we have agreed to indemnify the other
party for specified 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 some 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.
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