EMC 2009 Annual Report Download - page 56

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
We purchase or license many sophisticated components and products from one or a limited number of qualified suppliers. If any of our suppliers were
to cancel or materially change contracts or commitments with us or fail to meet the quality or delivery requirements needed to satisfy customer orders for our
products, we could lose customer orders. We attempt to minimize this risk by finding alternative suppliers or maintaining adequate inventory levels to meet
our forecasted needs.
Accounting for Stock-Based Compensation
We have selected the Black-Scholes option-pricing model to determine the fair value of our stock option awards. For stock options, restricted stock and
restricted stock units, we recognize compensation cost on a straight-line basis over the awards' vesting periods for those awards which contain only a service
vesting feature. For awards with a performance condition vesting feature, when achievement of the performance condition is deemed probable, we recognize
compensation cost on a graded-vesting basis over the awards' expected vesting periods.
New Accounting Pronouncements
In June 2009, the FASB issued the FASB Accounting Standards Codification ("Codification"). The Codification is the single source for all authoritative
GAAP recognized by the FASB to be applied for financial statements issued for periods ending after September 15, 2009. The Codification does not change
GAAP and did not have an effect on our financial position, results of operations or liquidity.
In June 2009, the FASB issued authoritative guidance for the transfer of assets, which clarifies whether a transferor and all of the entities included in the
transferor's financial statements being presented have surrendered control over transferred financial assets. The pronouncement is effective for us beginning in
2010. Early adoption is prohibited. We do not expect this guidance to have a material impact on our financial position or results of operations.
In June 2009, the FASB issued authoritative guidance to replace the quantitative-based risks and rewards calculation for determining which enterprise,
if any, has a controlling financial interest in a variable interest entity. The new approach focused on identifying which enterprise has the power to direct the
activities of the variable interest entity that most significantly impacts the entity's economic performance. The pronouncement is effective for us beginning in
2010. Early adoption is prohibited. We do not expect this guidance to have a material impact on our financial position or results of operations.
In September 2009, the FASB issued authoritative guidance on revenue arrangements with multiple deliverables. This guidance provides another
alternative for establishing fair value for a non-software deliverable. When vendor specific objective evidence or third-party evidence of fair value for non-
software deliverables in an arrangement cannot be determined, companies will be required to develop a best estimate of the selling price for separate
deliverables and to allocate the total arrangement consideration using the relative selling price method. This guidance is effective January 1, 2011, and early
adoption is permitted. We are currently evaluating the potential impact of the guidance on our financial statements.
In September 2009, the FASB issued authoritative guidance on revenue arrangements that include software-enabled products. Under this guidance,
tangible products that have software components that are essential to the functionality of the tangible product will be excluded from the software revenue
recognition guidance. The new guidance includes factors to help companies determine what is essential to the functionality. Software-enabled products will
now be subject to other revenue guidance and will follow the above new guidance for multiple deliverable arrangements. This guidance is effective in 2011,
and early adoption is permitted. We are currently evaluating the potential impact of the guidance on our financial statements.
In January 2010, the FASB issued authoritative guidance related to additional requirements and guidance regarding disclosures of fair value
measurements. The guidance requires the gross presentation of activity within the Level 3 fair value measurement roll forward and details of transfers in and
out of Level 1 and 2 fair value measurements. It also clarifies two existing disclosure requirements on the level of disaggregation of fair value measurements
and disclosures on inputs and valuation techniques. The new requirements and guidance are effective for interim and annual periods beginning after
December 15, 2009, except for the Level 3 roll forward which is effective for fiscal years beginning after December 15, 2010 (including interim periods
within those fiscal years). We do not expect this guidance to have any impact on our financial position or results of operations.
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