EMC 2011 Annual Report Download - page 43

Table of Contents
with banks outside the United States generally do not benefit from FDIC insurance. The majority of our day-to-day banking operations globally are
maintained with Citibank. We believe that Citibank's position as a primary clearing bank, coupled with the substantial monitoring of their daily liquidity, both
by their internal processes and by the Federal Reserve and the FDIC, mitigate some of our risk.
Our money market investments are placed with money market funds that are 2a-7 qualified. Rule 2a-7, adopted by the SEC under the Investment
Company Act of 1940, establishes strict standards for quality, diversity and maturity, the objective of which is to maintain a constant net asset value of a
dollar. We limit our investments in money market funds to those that are primarily associated with large, money center financial institutions. Our short- and
long-term investments are invested primarily in investment grade securities, and we limit the amount of our investment in any single issuer. Due to the
ongoing European Financial Crisis, in the fourth quarter of 2011, we took steps to limit certain exposure to investments in this region.
We provide credit to customers in the normal course of business. Credit is extended to new customers based upon checks of credit references, credit
scores and industry reputation. Credit is extended to existing customers based on prior payment history and demonstrated financial stability. The credit risk
associated with accounts and notes receivables is generally limited due to the large number of customers and their broad dispersion over many different
industries and geographic areas. We establish an allowance for the estimated uncollectible portion of our accounts and notes receivable. The allowance was
$64.7 and $60.5 at December 31, 2011 and 2010, respectively. We customarily sell the notes receivable we derive from our leasing activity. Generally, we do
not retain any recourse on the sale of these notes. Our sales are generally dispersed to a large number of customers, minimizing the reliance on any particular
customer or group of customers.
The counterparties to our foreign currency exchange contracts consist 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 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.
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