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EMC CORP (EMC)
10-K
Annual report pursuant to section 13 and 15(d)
Filed on 02/24/2012
Filed Period 12/31/2011

Table of contents

  • Page 1
    EMC CORP (EMC) 10-K Annual report pursuant to section 13 and 15(d) Filed on 02/24/2012 Filed Period 12/31/2011

  • Page 2
    ... EMC CORPORATION (Exact name of registrant as specified in its charter) Massachusetts 04-2680009 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 176 South Street Hopkinton, Massachusetts 01748 (Address of principal executive offices) (Zip Code...

  • Page 3
    ... Data Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 4
    ... ("VMware"), is the leading provider of virtualization and virtualization-based cloud infrastructure software solutions. EMC was incorporated in Massachusetts in 1979. Our corporate headquarters are located at 176 South Street, Hopkinton, Massachusetts. EMC's Strategy, Products and Services Industry...

  • Page 5
    ... portfolio of enterprise storage systems and software - including high-end EMC VMAX and mid-tier EMC VNX primary storage and a portfolio of backup products that support a wide range of enterprise application workloads. EMC's two additional storage families, EMC Isilon and EMC Atmos, are specifically...

  • Page 6
    ... manage Big Data storage environments. In 2011, EMC introduced new Isilon products with improved capacity and performance. Isilon solutions accelerate Big Data access in areas such as design and simulation, digital media, financial analysis, and enterprise file-based workflows, among other use cases...

  • Page 7
    ... key business processes; and finally, providing pervasive governance solutions to help customers understand and secure their information. The IIG product portfolio is comprised of EMC Captiva for intelligent enterprise capture, EMC Document Sciences for customer communications management, EMC...

  • Page 8
    ... a part of the EMC Velocity Solution Provider Program, which enables partners of any size to easily add the VNXe series into their product portfolio. In 2011, EMC also announced a revised deal registration program giving partners the opportunity to better plan their business and realize sales sooner...

  • Page 9
    ... trust or control. EMC's commitment to choice in cloud services is evidenced in the new Velocity Service Provider Partner Program it announced in May 2011. The program provides increasing sales, marketing, planning and education benefits to partners as they invest in EMC solutions with the...

  • Page 10
    ...primary customer support centers. These internationally-recognized endorsements of ongoing quality and environmental management are among the highest levels of certifications available. We maintain a robust Supplier Code of Conduct, actively manage recycling processes for our returned products, have...

  • Page 11
    ... emissions through the application of IT, and through our Design for Environment program, we have incorporated energy efficiency as a key objective in our engineering process. In 2011, we introduced a new generation of storage products with industry-leading power supply efficiency and are delivering...

  • Page 12
    ...we minimize water use and control wastewater streams, and our manufacturing facilities produce no industrial wastewater. In 2011, we conducted our first water footprint analysis and opened a new data center that receives 40% of its water from rainwater capture. We are advancing social sustainability...

  • Page 13
    ...; • the sale of VMware's products in the timeframes anticipated, including the number and size of orders in each quarter; • VMware's ability to develop, introduce and ship in a timely manner new products and product enhancements that meet customer demand, certification requirements and technical...

  • Page 14
    ...of future actions we might take in connection with our VMware stock ownership. Our stock price, like that of other technology companies, is subject to significant volatility because of factors such as the announcement of acquisitions, new products, services or technological innovations by us or our...

  • Page 15
    ... software and services; • successfully integrating new acquisitions; • managing inventory levels, including minimizing excess and obsolete inventory, while maintaining sufficient inventory to meet customer demands; • controlling expenses; • managing our manufacturing capacity, real estate...

  • Page 16
    ... sell products or services in competition with us in the future. In addition, as we focus on new market opportunities and additional customers through our various distribution channels, including small-to-medium sized businesses, we may be required to provide different levels of service and support...

  • Page 17
    ... our financial results. We retain sensitive data, including intellectual property, proprietary business information and personally identifiable information, in our secure data centers and on our networks. We face a number of threats to our data centers and networks of unauthorized access, security...

  • Page 18
    ...costs, disruption of internal operations, increased cybersecurity protection costs, lost revenues or litigation. Undetected problems in our products could directly impair our financial results. If flaws in design, production, assembly or testing of our products (by us or our suppliers) were to occur...

  • Page 19
    ... could increase. In December 2010, the President signed into law H.R. 4853, Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which included an extension of a number of expired tax provisions retroactively to 2010 and prospectively through 2011. Among the extended tax...

  • Page 20
    ... to market volatility. We have a noncontributory defined benefit pension plan assumed as part of our Data General acquisition. The plan's assets are invested in common stocks, bonds and cash. The expected long-term rate of return on the plan's assets was 6.75%. This rate represents the average of...

  • Page 21
    ...data center, Europe, Middle East and Africa (excluding Cork, Ireland) owned: leased: 1,573,000 marketing and administrative offices Latin America 139,000 sales, customer service and marketing leased: Franklin, MA owned: leased: Information Storage RSA Information Security Information Storage VMware...

  • Page 22
    ... the Board and Chief Executive Officer of Wang Global, an information technology services company, from December 1993 to June 1999. Mr. Tucci is the Chairman of the Board of Directors of VMware and a director of Paychex, Inc., a provider of payroll, human resources and benefits outsourcing solutions...

  • Page 23
    ... the Chief Financial Officer of Accenture Ltd, a global management consulting, technology services and outsourcing company. Mr. You is a director of Korn/Ferry International, a global executive recruiting company. EMC, EMC Proven, Atmos, Avamar, Captiva, Data Domain, Document Sciences, Documentum...

  • Page 24
    ... AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock, par value $.01 per share, trades on the New York Stock Exchange under the symbol EMC. The following table sets forth the range of high and low sales prices of our common stock on the New York Stock Exchange for the past two years during...

  • Page 25
    ...outstanding shares of 5 companies (see Note C to the consolidated financial statements). In 2008, EMC acquired all of the outstanding shares of 12 companies. In 2007, EMC acquired all of the outstanding shares of 14 companies. In 2007, EMC recognized a $148.6 million gain on the sale of VMware stock...

  • Page 26
    ... to the large repositories of corporate and external data, including unstructured information created by new applications (e.g. medical, entertainment, energy and geophysical), social media and other web repositories. With the investments we made in 2010 by acquiring Isilon and Greenplum, as well as...

  • Page 27
    ...,090.3 in 2011. Within the high-end of the Information Storage segment, our Symmetrix product revenues increased 14.5%, primarily due to VMAX system sales and upgrades as customers continue to purchase VMAX for mission critical data sets and business applications as well as for new use cases. Within...

  • Page 28
    ... VMware's software maintenance revenues. In 2011, services revenues benefited from strong renewals, multi-year software maintenance contracts sold in previous periods and additional maintenance contracts sold in conjunction with new software license sales. Additionally, VMware experienced increased...

  • Page 29
    ... to EMC Corporation. Percentage Change 2011 2010 2009 2011 vs 2010 2010 vs 2009 Cost of revenue: Information Storage Information Intelligence Group RSA Information Security VMware Virtual Infrastructure Corporate reconciling items Total cost of revenue Gross margins: Information Storage Information...

  • Page 30
    ...2010. Intangible asset amortization increased in 2010 primarily due to VMware acquisitions and to the Data Domain acquisition, which was consummated in the third quarter of 2009. The increase in stock-based compensation expense in 2011 was primarily due to options exchanged in the Isilon acquisition...

  • Page 31
    ... to the Data Domain acquisition, which was consummated in the third quarter of 2009. Stock-based compensation expense increased in 2010 due to the incremental expense associated with VMware's equity grants and the full year impact of options exchanged in the acquisition of Data Domain. SG&A expenses...

  • Page 32
    ...and benefits costs resulting from incremental headcount from strategic hiring and acquisitions as well as commission expense on higher sales volumes. Also contributing to the change was increased spending on marketing programs. Restructuring and Acquisition-Related Charges In 2011, 2010 and 2009, we...

  • Page 33
    ... from customers from 2009 to 2010 and from 2010 to 2011 was attributable to an increase in sales volume and higher cash proceeds from the sale of multi-year maintenance contracts, which are typically billed and paid in advance of services being rendered. Cash paid to suppliers and employees was...

  • Page 34
    ....0 and $594.0 in 2011, 2010 and 2009, respectively, from the exercise of stock options and the purchase of shares within the employee stock plans. We generated $361.6, $281.9 and $46.1 in 2011, 2010 and 2009, respectively, of excess tax benefits from stock-based compensation. In 2011, we spent $141...

  • Page 35
    ... assets, restructuring and acquisition-related charges, infrequently occurring gains, losses and charges, and special tax items to measure its gross margin, operating margin, net income and diluted earnings per share for purposes of managing our business. EMC also assesses its financial performance...

  • Page 36
    ... than capital expenditures and capitalized software development costs. Management believes that information regarding free cash flow provides investors with an important perspective on the cash available to make strategic acquisitions and investments, repurchase shares, service debt and fund ongoing...

  • Page 37
    ... for the years ended December 31, 2011 and 2010, respectively. All of the foregoing non-GAAP financial measures have limitations. Specifically, the non-GAAP financial measures that exclude the items noted above do not include all items of income and expense that affect EMC's operations or cash flows...

  • Page 38
    ... and payable Convertible debt Product warranty obligations Other long-term obligations, including notes payable and current portion of long-term obligations and post retirement obligations Purchase orders Uncertain tax positions Total *Includes payments from January 1, 2013 through December 31, 2015...

  • Page 39
    ... accruing pension benefits for future services. The assets for these defined benefit plans are invested in common stocks and bonds. The market related value of the plan's assets is based upon the assets' fair value. The expected long-term rate of return on assets for the year ended December 31, 2011...

  • Page 40
    ... upon the specific transaction and whether the sale or lease includes information systems, including hardware storage and hardware-related devices, software, including required storage operating systems and optional value-added software application programs, and services, including installation...

  • Page 41
    ... third parties and finalization of severance agreements with employees. Should the actual amounts differ from our estimates, the amount of the restructuring charges could be materially impacted. Accounting for Income Taxes As part of the process of preparing our financial statements, we are required...

  • Page 42
    ... Exchange Risk Management As a multinational corporation, we are exposed to changes in foreign exchange rates. Any foreign currency transaction, defined as a transaction denominated in a currency other than the U.S. dollar, will be reported in U.S. dollars at the applicable exchange rate. Assets...

  • Page 43
    ... of a number of major financial institutions. In addition to limiting the amount of contracts we enter into with any one party, we monitor the credit quality of the counterparties on an ongoing basis. We purchase or license many sophisticated components and products from one or a limited number of...

  • Page 44
    ...SUPPLEMENTARY DATA EMC CORPORATION AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE Management's Report on Internal Control Over Financial Reporting Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets at December 31, 2011 and 2010 Consolidated...

  • Page 45
    ... financial officers and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting...

  • Page 46
    ... and their cash flows for each of the three years in the period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in...

  • Page 47
    ... EMC CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) December 31, 2011 2010 ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts and notes receivable, less allowance for doubtful accounts of $61,804 and $57,385 Inventories Deferred...

  • Page 48
    ... Contents EMC CORPORATION CONSOLIDATED INCOME STATEMENTS (in thousands, except per share amounts) For the Year Ended December 31, 2011 2010 2009 Revenues: Product sales Services Costs and expenses: Cost of product sales Cost of services Research and development Selling, general and administrative...

  • Page 49
    ... Contents EMC CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) For the Year Ended December 31, 2011 2010 2009 Net income Other comprehensive income (loss), net of taxes (benefits): Foreign currency translation adjustments Changes in market value of investments: Unrealized...

  • Page 50
    ... EMC CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the Year Ended December 31, 2011 2010 2009 Cash flows from operating activities: Cash received from customers Cash paid to suppliers and employees Dividends and interest received Interest paid Income taxes paid Net cash...

  • Page 51
    Issuance of common stock and stock options exchanged in business acquisitions $ 3,224 $ 28,668 $ 83,780 The accompanying notes are an integral part of the consolidated financial statements. 49

  • Page 52
    ...net Repurchase of common stock EMC purchase of VMware stock Stock options issued in business acquisitions Stock-based compensation Impact from equity transactions of VMware, Inc. Actuarial loss on pension plan, net of tax benefit of $1,392 Change in market value of investments Change in market value...

  • Page 53
    ... 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...

  • Page 54
    ... EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) • Software sales Software sales consist of the sale of stand-alone value-added software application programs. Our software application programs provide customers with resource management, backup and archiving, information...

  • Page 55
    ... partners. • Shipping terms Our sales contracts generally provide for the customer to accept risk of loss when the product leaves our facilities. When shipping terms or local laws do not allow for passage of risk of loss at shipping point, we defer recognizing revenue until risk of loss transfers...

  • Page 56
    ... the life of the new debt issued under the related interest rate swap contracts and recognized as a component of interest expense in the consolidated income statements. For the purposes of presentation in the consolidated statement of cash flows, the interest rate swap contracts are presented within...

  • Page 57
    ....5 million and $329.1 million in 2011, 2010 and 2009, respectively. The amounts capitalized include stock-based compensation which is not reflected in the consolidated statements of cash flows as it is a non-cash item. Long-lived Assets Purchased intangible assets, other than goodwill, are amortized...

  • Page 58
    .... In 2009, Cisco and EMC formed VCE Company LLC ("VCE"). VMware and Intel are also investors in VCE. We account for our investment in VCE under the equity method and our portion of the gains and losses are recognized in other income (expense), net line in the consolidated income statements. We...

  • Page 59
    ... of shares of VMware held by EMC. Retirement Benefits Pension cost for our domestic defined benefit pension plan is funded to the extent that current pension cost is deductible for U.S. Federal tax purposes and to comply with the Employee Retirement Income Security Act and the General Agreement on...

  • Page 60
    ... 2011, we acquired all of the capital stock of NetWitness Corporation, a privately-held provider of network security analysis solutions. This acquisition complements and expands our RSA Information Security segment. Additionally, during the year ended December 31, 2011, VMware acquired six companies...

  • Page 61
    ... of 2010, we acquired all of the outstanding capital stock of Isilon Systems, Inc. ("Isilon"), a "scale-out NAS" (network attached storage) systems company. This acquisition further complemented and expanded our Information Storage business. The purchase price for Isilon, net of cash and investments...

  • Page 62
    ... the year ended December 31, 2010, VMware acquired six companies. The aggregate purchase price, net of cash acquired for all 2010 acquisitions, excluding Isilon, was $895.4 million, which consisted of $893.5 million of cash and $1.9 million in fair value of our stock options issued in exchange for...

  • Page 63
    ... of our stock options issued to employees of Data Domain was estimated using a Black-Scholes option pricing model. The consolidated financial statements include the results of Data Domain from the date of acquisition. The purchase price has been allocated to the assets acquired and the liabilities...

  • Page 64
    ... Contents EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) enterprise and web application development and management. Through the acquisition of SpringSource, VMware planned to deliver new solutions that enable companies to more efficiently build, run and manage applications...

  • Page 65
    Table of Contents EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) In the year ended December 31, 2011, VMware entered into an agreement to purchase all of the right, title and interest in a ground lease covering the property and improvements located on property adjacent to ...

  • Page 66
    ...): Year Ended December 31, 2011 Information Storage Information Intelligence Group RSA Information Security VMware Virtual Infrastructure Total Balance, beginning of the year Goodwill acquired Tax deduction from exercise of stock options Finalization of purchase price allocations Balance, end of...

  • Page 67
    Table of Contents EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) As of December 31, 2011, the 2011 Notes had matured and a majority of the note holders exercised their rights to convert the outstanding Notes. Due to the settlement terms, the majority of the converted Notes...

  • Page 68
    ... on the closing price of $12.61 per share of our common stock on November 13, 2006, which was the issuance date of the Notes. In 2010, EMC entered into interest rate swap contracts with an aggregate notional amount of approximately $900 million. These swaps were designated as cash flow hedges of...

  • Page 69
    ... Contents EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) lack of liquidity for auction rate securities, we have classified these as long-term investments as of December 31, 2011 and 2010. At December 31, 2011 and 2010, all of our short- and long-term investments, excluding...

  • Page 70
    ... a financier to these lenders. The liquidity discount margin represents an estimate of the additional return an investor would require for the lack of liquidity of these securities over an estimated five-year holding period. The rate used for the discount margin was 2% at December 31, 2011 compared...

  • Page 71
    ... EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The following table provides a summary of changes in fair value of our Level 3 financial assets for the years ended December 31, 2011 and 2010 (table in thousands): 2011 2010 Balance, beginning of the year Sales Calls...

  • Page 72
    ...(table in thousands): Year Contractual amounts due under leases 2012 2013 2014 Thereafter Total Less amounts representing interest Present value Current portion (included in accounts and notes receivable) Long-term portion (included in other assets, net) Subsequent to December 31, 2011, we sold $92...

  • Page 73
    ...million in 2011, 2010 and 2009, respectively. Building construction in progress at December 31, 2011 includes $65.8 million for facilities not yet placed in service that we are holding for future use. J. Joint Ventures VCE Company LLC In 2009, Cisco and EMC formed VCE Company LLC ("VCE"). VMware and...

  • Page 74
    ... $133.9 million in revenue from sales of product and services to VCE during the year ended December 31, 2011. We did not recognize any revenue related to VCE in 2010 or 2009. We perform certain administrative services, pursuant to an administrative services agreement, on behalf of VCE and we...

  • Page 75
    ... 2009, we effected a plan to reorganize our international operations by transferring certain assets of our RSA and Data Domain entities and legacy foreign corporations owned directly by EMC into a single EMC international holding company. As a result of this reorganization, we incurred income taxes...

  • Page 76
    ..., 2010 to $5.3 million at December 31, 2011. The increase was attributable to a certain subsidiary's foreign tax credit carryforward. The valuation allowance relates to foreign net operating loss carryforwards. Deferred income taxes have not been provided on basis differences related to investments...

  • Page 77
    ...December 31, 2011, 2010 and 2009, respectively. M. Retirement Plan Benefits 401(k) Plan EMC's Information Infrastructure business has established a deferred compensation program for certain employees that is qualified under Section 401(k) of the Code. EMC will match pre-tax employee contributions up...

  • Page 78
    Table of Contents EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Benefits under these plans are generally based on either career average or final average salaries and creditable years of service as defined in the plans. The annual cost for these plans is determined using ...

  • Page 79
    ... ended December 31 are as follows: December 31, 2011 December 31, 2010 December 31, 2009 Discount rate Expected long-term rate of return on plan assets Rate of compensation increase The benefit payments are expected to be paid in the following years (table in thousands): 2012 2013 2014 2015 2016...

  • Page 80
    ...EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Dividends, accrued interest and net plan payables are not material to the plan assets. Accordingly, we have not classified these into the fair value hierarchy above at December 31, 2011 and 2010. Concentration of Risks Pension...

  • Page 81
    ... thousands): 2012 2013 2014 2015 2016 Thereafter Total sublease proceeds Outstanding Purchase Orders At December 31, 2011, we had outstanding purchase orders aggregating approximately $2.3 billion. The purchase orders are for manufacturing and non-manufacturing related goods and services. While the...

  • Page 82
    ... licensed trademark infringes a third-party trademark. Certain of these agreements require us to indemnify the other party against certain claims relating to the loss or processing of data, to real or tangible personal property damage, personal injury or the acts or omissions of EMC, its employees...

  • Page 83
    ... and for our 2013 Notes when the average stock price exceeds the exercise price. Restricted stock awards, restricted stock units and options to acquire 13.3 million, 54.5 million and 162.0 million shares of our common stock for the years ended December 31, 2011, 2010 and 2009, respectively, were...

  • Page 84
    .... P. Stock-Based Compensation EMC Information Infrastructure Equity Plans The EMC Corporation Amended and Restated 2003 Stock Plan (the "2003 Plan") provides for the grant of stock options, stock appreciation rights, restricted stock and restricted stock units. The exercise price for a stock option...

  • Page 85
    ... in the years ended December 31, 2011, 2010 and 2009 (table in thousands, except per share amounts): For the Year Ended December 31, 2011 December 31, 2010 December 31, 2009 Cash Proceeds Common shares purchased Weighted-average price per share EMC Information Infrastructure Stock Options $ $ 141...

  • Page 86
    ... was purchased pursuant to these programs in the open market or through private transactions as permitted by securities laws and other legal requirements. In the year ended December 31, 2011, VMware repurchased and retired 6.0 million shares of its Class A common stock at a weighted-average price of...

  • Page 87
    ... sheet for the purchase in January 2011. VMware Stock Options The following table summarizes activity since January 1, 2009 for VMware employees in VMware stock options (shares in thousands): Number of Shares Weighted Average Exercise Price (per share) Outstanding, January 1, 2009 Granted Forfeited...

  • Page 88
    ...based on VMware's closing stock price of $83.19 as of December 31, 2011, which would have been received by the option holders had all in-the-money options been exercised as of that date. Cash proceeds from the exercise of VMware stock options for the years ended December 31, 2011, 2010 and 2009 were...

  • Page 89
    ... statements in 2011, 2010 and 2009 (in thousands): Year Ended December 31, 2011 Stock Options Restricted Stock Total Stock-Based Compensation Cost of product sales Cost of services Research and development Selling, general and administrative Stock-based compensation expense before income taxes...

  • Page 90
    ...Year Ended December 31, EMC Employee Stock Purchase Plan 2011 2010 2009 Dividend yield Expected volatility Risk-free interest rate Expected term (in years) Weighted-average fair value at grant date $ - - - - - $ - - - - - $ None 58.1% 0.4% 0.5 3.16 For all equity awards granted in 2011, 2010...

  • Page 91
    ... of VMware's stock on the date of grant. For all equity awards granted in 2011, 2010 and 2009, volatility was based on an analysis of historical stock prices and implied volatilities of publiclytraded companies with similar characteristics, including industry, stage of life cycle, size, financial...

  • Page 92
    ... R. Related Party Transactions $ $ 200,599 - 24,105 224,704 $ $ 55,090 $ 6,203 27,131 88,424 $ (168,451) $ (6,203) (32,714) (207,368) $ 87,238 - 18,522 105,760 In 2011, 2010 and 2009, we leased certain real estate from a company owned by a member of our Board of Directors and such Director...

  • Page 93
    Table of Contents EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) During 2010, VMware acquired certain software product technology and expertise from the EMC Information Infrastructure segment's Ionix IT management business for cash consideration of $175.0 million. The ...

  • Page 94
    ... FINANCIAL STATEMENTS - (Continued) EMC Information Infrastructure Information Intelligence Group RSA Information Security EMC Information Infrastructure VMware Virtual Infrastructure within EMC Corp Reconciling Items 2010: Information Storage Consolidated Revenues: Product revenues Services...

  • Page 95
    ... FINANCIAL STATEMENTS - (Continued) Our revenues are attributed to the geographic areas according to the location of the customers. Revenues by geographic area are included in the following table (table in thousands): 2011 2010 2009 United States Europe, Middle East and Africa Asia Pacific...

  • Page 96
    ... the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of such date, our disclosure controls and procedures were effective. Management's Annual Report on Internal Control Over...

  • Page 97
    Table of Contents PART III STOCK PRICE PERFORMANCE GRAPH 2006 2007 2008 2009 2010 2011 EMC S&P 500 Index S&P 500 Information Technology Sector Index Source: Returns were generated from Thomson ONE $ $ $ 100.00 100.00 100.00 $ $ $ 140.38 103.53 115.53 $ $ $ 79.32 63.69 65.06 $ $ $ 132...

  • Page 98
    Table of Contents ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE We will furnish to the SEC a definitive Proxy Statement not later than 120 days after the close of the fiscal year ended December 31, 2011. Certain information required by this item is incorporated herein by ...

  • Page 99
    ... IV ITEM 15. (a) 1. Financial Statements EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The financial statements listed in the Index to consolidated financial statements are filed as part of this report. 2. Schedule The Schedule on page S-1 is filed as part of this report. 3. Exhibits See Index to...

  • Page 100
    ..., thereunto duly authorized on February 24, 2012. EMC CORPORATION By: JOSEPH M. TUCCI Joseph M. Tucci Chairman, President and Chief Executive Officer /S/ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of...

  • Page 101
    ... 2003 Stock Plan, as amended and restated as of May 4, 2011. EMC Corporation Deferred Compensation Retirement Plan, as amended and restated as of January 1, 2011. (filed herewith) (6) EMC Corporation Executive Incentive Bonus Plan. Form of Change in Control Severance Agreement for Executive Officers...

  • Page 102
    ... Corporation's Annual Report on Form 10-K filed February 26, 2010 (No. 1-9853). Incorporated by reference to EMC Corporation's Quarterly Report on Form 10-Q filed May 7, 2010 (No. 1-9853). Incorporated by reference to EMC Corporation's Definitive Proxy Statement on Schedule 14A filed March 24, 2011...

  • Page 103
    ... in Revenue Charged to Other Accounts Description Sales Returns Balance at End of Period Year ended December 31, 2011 allowance for sales returns Year ended December 31, 2010 allowance for sales returns Year ended December 31, 2009 allowance for sales returns Tax Valuation Allowance $ 157,830...

  • Page 104
    Exhibit 10.6 EMC CORPORATION DEFERRED COMPENSATION RETIREMENT PLAN as amended and restated effective as of January 1, 2011 effective for amounts earned and vested after December 31, 2004

  • Page 105
    ... from the EMC Corporation Executive Deferred Compensation Retirement Plan to the EMC Corporation Deferred Compensation Retirement Plan on May 22, 2008. 1.2. Purpose of Plan. The Company has adopted the Plan to provide a competitive level of retirement benefits to certain designated employees of the...

  • Page 106
    ... employees of the Company or any of its Subsidiaries. 2.10. "Company Stock" means the Company's common stock, par value $.01 per share. 2.11. "Compensation" means base salary, any cash bonuses (including Performance-Based Bonuses), cash commissions and restricted stock units ("RSUs") payable...

  • Page 107
    ...of the date the employee is provided with the opportunity to defer Compensation under the Plan. If the Company or one its Subsidiaries transfers an Eligible Employee's employment such that the employee continues to work for the Company or any of its Subsidiaries but is providing services outside the...

  • Page 108
    ...an 80% ownership test. Article 3. PARTICIPATION 3.1. Commencement of Participation. Any individual who is an Eligible Employee and who has elected to defer part of his or her Compensation for the Plan Year in accordance with Section 4.1, or who has been selected by the Company in its sole discretion...

  • Page 109
    ... on or after the first day of any Plan Year may elect to defer a designated portion of his or her Compensation to be earned during the Plan Year by filing an election with the Administrator within thirty (30) days after becoming an Elective Deferral Eligible Employee. This election will be effective...

  • Page 110
    ... deferred for the applicable Plan Year is to be paid or, in the case of installments, is to commence being paid (e.g., upon Retirement, upon a fixed distribution date under Section 6.2, or upon a Change of Control) and the method of payment (e.g., in a single lump sum payment, in a number of annual...

  • Page 111
    ... Credit Subaccount at a time the Company determines in its sole discretion. The Administrator will provide each Participant with a statement of his or her Account as soon as reasonably practicable after the end of each Plan Year. 5.2. Earnings Measurement. The Administrator will identify one or more...

  • Page 112
    ... any term of the Company's Key Employee Agreement (irrespective of whether the Participant is a party to the Key Employee Agreement), (f) engaged in any activity that results in termination of the Participant's employment for Cause (as defined in the Company's Amended and Restated 2003 Stock Plan...

  • Page 113
    ... generally be made in cash, except that Compensation payable in Company Stock may be paid in Company Stock. (a) Default Distribution Method. Except as provided in (b) below, a Participant's vested Account balance will be payable in a single lump sum within ninety (90) days following the Participant...

  • Page 114
    ... the day before the installment is paid) by the number of installments remaining. Any lump sum or installment distributions will generally be paid in cash, except that Compensation payable in Company Stock may be paid in Company Stock. (b) Payment Events Occurring Before Scheduled Commencement Date...

  • Page 115
    ... balance of the Participant's Account that is attributable to Compensation earned by the Participant as an employee of the Company or any of its Subsidiaries will be paid in accordance with the provisions of this Article 6 applicable to Participants who are not Eligible Directors. The portion of the...

  • Page 116
    ... after Separation from Service; all other installment payments will be paid as scheduled. Article 7. ADMINISTRATOR 7.1 Plan Administration and Interpretation. The Administrator shall oversee the administration of the Plan. The Administrator shall have complete discretionary control and authority to...

  • Page 117
    .... If any person believes he or she has been denied any rights or benefits due on Disability under the Plan, such person may file a claim in writing with the Administrator. If any such claim is wholly or partially denied, the Administrator will notify such person of its decision in writing. Such...

  • Page 118
    ...in the Plan and appeal denials of such claims, as amended or changed, shall meet the minimum standards of Section 503 of ERISA. 7.4. Indemnification of Administrator. The Company shall indemnify and defend to the fullest extent permitted by law any director, officer or employee of the Company or its...

  • Page 119
    ... entity to segregate a fund, purchase an insurance contract, or in any other way currently to fund the future payment of any distributions or payments hereunder, nor will anything herein be construed to give any employee or any other person any right to any specific assets of the Company, any of its...

  • Page 120
    ... in the Plan nor any action of the Company, any Subsidiary or the Administrator, shall be held or construed to confer upon any employee or director of the Company or any of its Subsidiaries any right to continued employment or service with the Company or any of its Subsidiaries, as the case may be...

  • Page 121
    ... with the administration or operation of the Plan shall be paid by the Company from its general assets unless, in the sole discretion of the Administrator, the Administrator elects to charge such expenses against the appropriate Participant's Account or Participants' Accounts. Any taxes allocable to...

  • Page 122
    ... 10.8 CHANGE IN CONTROL SEVERANCE AGREEMENT THIS AGREEMENT, dated [DATE], is made by and between EMC Corporation (the "Company"), and [NAME] (the "Executive") residing at [ADDRESS]. WHEREAS, the Company considers the establishment and maintenance of a sound and vital management to be essential to...

  • Page 123
    ...and paid in accordance with, the Company's retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the first event or...

  • Page 124
    ...fiscal year. (B) For the thirty-six (36) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and the Executive's dependents life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and...

  • Page 125
    ... to receive comparable benefits from a new employer or pursuant to a government-sponsored health insurance or health care program. Unless the Executive agrees to another method, the coverage described in this Section 6.1(B) will be provided through a third party insurer. (C) The Company shall pay to...

  • Page 126
    ... that complies with Section 409A of the Code; and (C) reduction of any payment or benefit with respect to the acceleration of equity awards that is otherwise payable to the Executive (on a pro-rata basis as between equity awards that are covered by Section 409A of the Code and those that are not (or...

  • Page 127
    ... issue hereunder relating to the termination of the Executive's employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Code to any...

  • Page 128
    ...of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise. Successors...

  • Page 129
    ... party (including, without limitation, the Change in Control Severance Agreement by and between the Company and the Executive, dated [DATE]; provided, however, that this Agreement shall not supersede any agreement setting forth the terms and conditions of the Executive's employment with the Company...

  • Page 130
    ...or benefits) otherwise payable to or in respect of the Executive under this Agreement pursuant to the Executive's termination of employment with the Company shall be delayed, to the extent required so that taxes are not imposed on the Executive pursuant to Section 409A of the Code, and shall be paid...

  • Page 131
    ... avoidance of doubt, with respect to any equity or equity-based awards which are subject to Section 409A of the Code and which comply with the permissible payment requirements of such section by providing for payments pursuant to a fixed schedule, the application of Section 5.4, as modified (to the...

  • Page 132
    ... hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or...

  • Page 133
    ... either the then outstanding shares of common stock of the Company or the combined voting power of the Company's then outstanding securities. 16.9 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. 16.10 "Company" shall mean EMC Corporation and, except in determining...

  • Page 134
    ...under any of such Plans or deprive the Executive of any material benefit enjoyed by the Executive at the time of the Change in Control; (D) the Company requiring the Executive to be based at an office that is greater than 50 miles from where the Executive's office is located immediately prior to the...

  • Page 135
    ... of the Company. 16.19 "Plan" shall mean any compensation plan such as an incentive plan, or any employee benefit plan such as a thrift, pension, profit sharing, medical, disability, accident, life insurance plan or a relocation or vacation plan or policy or any other plan, program or policy of the...

  • Page 136
    ... the Executive of the Executive's employment if such employment is terminated in accordance with the Company's retirement policy, including early retirement, generally applicable to its salaried employees. 16.24 "Severance Payments" shall have the meaning set forth in Section 6.1. 16.25 "Tax Counsel...

  • Page 137
    IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. EMC CORPORATION By: Name: Title: [EXECUTIVE] 16

  • Page 138
    Schedule of Change in Control Severance Agreements Name Effective Date of Agreement 1 Burton, Jeremy Coviello, Arthur Dacier, Paul Elias, Howard Gelsinger, Patrick Goulden, David Mollen, John T. Teuber, William J., Jr. Tucci, Joseph M. You, Harry 1 31-Dec-2011 31-Dec-2011 31-Dec-2011 31-Dec-2011 ...

  • Page 139
    Exhibit 12.1 EMC CORPORATION STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Year Ended December 31, 2011 2010 2009 2008 2007 Computation of Earnings: Income before provision for taxes and cumulative effect of a change in accounting principle $3,249,270 $2,607,983 Fixed ...

  • Page 140
    Exhibit 21.1 Significant Subsidiaries Name State of Jurisdiction of Organization EMC (Benelux) B.V. EMC International Company EMC Information Systems International EMC International US Holdings VMware, Inc. Netherlands Ireland Ireland Delaware Delaware

  • Page 141
    ... Registration Statements ...EMC Corporation of our report dated February 24, 2012 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts...

  • Page 142
    ... and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. /s/ JOSEPH M. TUCCI Joseph M. Tucci Chairman, President and Chief Executive Officer Date...

  • Page 143
    ... and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. /s/ DAVID I. GOULDEN David I. Goulden Executive Vice President and Chief Financial Officer...

  • Page 144
    ...-Oxley Act of 2002, that, to my knowledge: (1) The Annual Report on Form 10-K of EMC Corporation for the fiscal year ended December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), fully complies with the requirements of Section 13(a) or 15(d) of the...

  • Page 145
    ...-Oxley Act of 2002, that, to my knowledge: (1) The Annual Report on Form 10-K of EMC Corporation for the fiscal year ended December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), fully complies with the requirements of Section 13(a) or 15(d) of the...