EMC 2011 Annual Report Download - page 73

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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
We maintain an allowance for credit losses on our accounts and notes receivable. The allowance is based on the credit worthiness of our customers,
including an assessment of the customer's financial position, operating performance and their ability to meet their contractual obligation. We assess the credit
scores for our customers each quarter. In addition, we consider our historical experience, the age of the receivable and current market and economic
conditions. Uncollectible amounts are charged against the allowance account.
In the event we determine that a lease may not be paid, we include in our allowance an amount for the outstanding balance related to the lease
receivable. As of December 31, 2011, amounts from lease receivables past due for more than 90 days were not significant.
The following table presents the activity of our allowance for credit losses related to lease receivables for the years ended December 31, 2011 and 2010
(table in thousands):
December 31,
2011
December 31,
2010
Balance, beginning of the year $ 44,661 $ 40,199
Recoveries (31,531) (25,171)
Provisions 11,117 29,633
Balance, end of the year $ 24,247 $ 44,661
Gross lease receivables totaled $335.5 million and $278.4 million in 2011 and 2010, respectively, before the allowance. The components of these
balances were individually evaluated for impairment by management.
I. Property, Plant and Equipment
Property, plant and equipment consist of (table in thousands):
December 31,
2011
December 31,
2010
Furniture and fixtures $ 180,800 $ 156,466
Equipment 4,680,118 4,117,984
Buildings and improvements 1,748,214 1,580,597
Land 117,513 115,899
Building construction in progress 146,650 100,865
6,873,295 6,071,811
Accumulated depreciation (4,040,146) (3,543,379)
$ 2,833,149 $ 2,528,432
Depreciation expense was $727.9 million, $595.3 million and $565.5 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 Intel are also investors in VCE. VCE, through Vblock infrastructure
platforms, delivers an integrated IT offering that combines network, computing, storage, management, security and virtualization technologies for converged
infrastructures and cloud based computing models. As of December 31, 2011, we have contributed $432.0 million in funding and $9.0 million in stock-based
compensation to VCE since inception and own approximately 58% of VCE's outstanding equity.
We consider VCE a variable interest entity. Authoritative guidance related to variable interest entities states that the primary beneficiary of a variable
interest entity must have both of the following characteristics: (a) the power to direct the activities of a variable interest entity that most significantly will
impact the entity's economic performance; and (b) the obligation to absorb
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