EMC 2009 Annual Report Download - page 50

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies
Company
EMC Corporation ("EMC") and its subsidiaries develop, deliver and support the Information Technology ("IT") industry's broadest range of
information infrastructure and virtual infrastructure technologies and solutions.
EMC's Information Infrastructure business provides a foundation for customers to manage and secure their vast and ever-increasing quantities of
information, automate their data center operations, reduce power and cooling costs, and leverage critical information for business agility and competitive
advantage. EMC's Information Infrastructure business comprises three segments – Information Storage, Content Management and Archiving and RSA
Information Security.
EMC's VMware Virtual Infrastructure business, which is represented by EMC's majority equity stake in VMware, Inc. ("VMware"), is the leading
provider of virtual infrastructure software solutions from the desktop to the data center and to the cloud. VMware's virtual infrastructure software solutions
run on industry-standard desktop computers and servers and support a wide range of operating system and application environments, as well as networking
and storage infrastructures.
Accounting Principles
The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of
America ("GAAP").
The financial statements for 2008 and 2007 are labeled "as adjusted" as they reflect the Company's adoption of new accounting guidance as described in
Note B.
Principles of Consolidation
These consolidated financial statements include the accounts of EMC, its wholly-owned subsidiaries and VMware, a company that is majority-owned
by EMC. All intercompany transactions have been eliminated.
As described in Note C, in August 2007, EMC and VMware completed transactions involving the sale of VMware common stock which reduced
EMC's interest in VMware from 100% to approximately 84% and 81% as of December 31, 2008 and 2009, respectively. VMware's financial results have been
consolidated with that of EMC for all periods presented as EMC is VMware's controlling stockholder. The portion of the results of operations of VMware
allocable to its other owners is shown as net income attributable to the non-controlling interest in VMware, Inc. on EMC's consolidated income statements.
Additionally, the cumulative portion of the results of operations of VMware allocable to its other owners, along with the interest in the net assets of VMware
attributable to those other owners, is shown as non-controlling interest in VMware, Inc. on EMC's consolidated balance sheets.
Use of Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the reported amounts of revenues and expenses during the reporting period and the disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results could differ from those estimates.
Revenue Recognition
We derive revenue from sales of information systems, software and services. We recognize revenue when persuasive evidence of an arrangement exists,
delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. This policy is applicable to all sales, including sales to
resellers and end users. The following summarizes the major terms of our contractual relationships with our customers and the manner in which we account
for sales transactions.
48