10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 1-9853

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)

Registrant’s telephone number, including area code: (508) 435-1000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The aggregate market value of voting stock held by non-affiliates of the registrant was $37,468,687,129 based upon the closing price on the New York Stock Exchange on the last business day of the registrant’s most recently completed second fiscal quarter (June 30, 2010).

The number of shares of the registrant’s Common Stock, par value $.01 per share, outstanding as of January 31, 2011 was 2,068,593,886.

DOCUMENTS INCORPORATED BY REFERENCE

Information required in response to Part III of Form 10-K (Items 10, 11, 12, 13 and 14) is hereby incorporated by reference to the specified portions of the registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 4, 2011.

EMC CORPORATION

		Page No.
	PART I
ITEM 1.	Business	3
ITEM 1A.	Risk Factors	10
ITEM 1B.	Unresolved Staff Comments	18
ITEM 2.	Properties	19
ITEM 3.	Legal Proceedings	19
ITEM 4.	Reserved	19
	PART II
ITEM 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
ITEM 6.	Selected Consolidated Financial Data	23
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	39
ITEM 8.	Financial Statements and Supplementary Data	41
ITEM 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	91
ITEM 9A.	Controls and Procedures	91
ITEM 9B.	Other Information	92
	PART III
ITEM 10.	Directors, Executive Officers and Corporate Governance	94
ITEM 11.	Executive Compensation	94
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	94
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	94
ITEM 14.	Principal Accountant Fees and Services	94
	PART IV
ITEM 15.	Exhibits and Financial Statement Schedules	95
Signatures		96

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FACTORS THAT MAY AFFECT FUTURE RESULTS

This Annual Report on Form 10-K contains forward-looking statements, within the meaning of the Federal securities laws, about our business and prospects. The forward-looking statements do not include the potential impact of any mergers, acquisitions, divestitures, securities offerings or business combinations that may be announced or closed after the date hereof. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “plans,” “intends,” “expects,” “goals” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Our future results may differ materially from our past results and from those projected in the forward-looking statements due to various uncertainties and risks, including, but not limited to, those described in Item 1A of Part I (Risk Factors). The forward-looking statements speak only as of the date of this Annual Report and undue reliance should not be placed on these statements. We disclaim any obligation to update any forward-looking statements contained herein after the date of this Annual Report.

PART I

ITEM 1. BUSINESS

General

Throughout this report, we refer to EMC Corporation, together with its subsidiaries, as “EMC”, “we”, “us”, or “the Company.”

EMC develops, delivers and supports the Information Technology (“IT”) industry’s broadest range of information infrastructure and virtual infrastructure technologies, solutions and services. The combination of our products and services is the foundation that enables the information and applications all organizations depend on to be effective, agile and successful. EMC’s mission is to lead people and organizations on a safe and swift journey from traditional data center infrastructure to the next generation of IT: cloud computing, also known as IT-as-a-Service. Cloud computing offers a dramatically more efficient and effective computing model that helps transform IT from a cost center to a value driver. We support a broad range of customers around the world, in every major industry, in the public and private sectors, and of every size ranging from the Fortune Global 500 to small- and medium-sized businesses and individual consumers.

We conduct our business globally and manage it in two broad categories. EMC Information Infrastructure provides a foundation for organizations to store, manage, protect, analyze and secure their vast and ever-increasing quantities of information, improve business agility, lower cost of ownership and enhance their competitive advantage within traditional data centers, virtual data centers and cloud-based IT infrastructures. VMware Virtual Infrastructure, which is represented by EMC’s majority equity stake in VMware, Inc. (“VMware”), is the leading provider of virtualization and cloud infrastructure software solutions.

EMC was incorporated in Massachusetts in 1979. Our corporate headquarters are located at 176 South Street, Hopkinton, Massachusetts.

EMC’s Cloud Computing Strategy and Offerings

The platform for change in the IT industry has arrived with the biggest opportunity residing at the intersection of trusted cloud computing, enterprise data and “Big Data.” Equipped with the strongest, most distinctive product and services portfolio and strategic partners in company history, EMC is well positioned to lead this transformational shift. Our cloud computing strategy supports all types of customers including global businesses, governments, large enterprise customers, commercial businesses and individual consumers. Facing excessive IT complexity and relentlessly-growing information, many organizations have had to spend roughly two-thirds of their IT budgets on maintaining their infrastructure and applications, and only about one-third of their IT budgets on advances that can make them more competitive. By enabling IT to be delivered as a cost-effective service, cloud computing helps organizations alter this ratio, allowing more of an enterprise’s focus and investment to be directed toward innovation. CIO surveys consistently show more and more companies want to gain the economics, flexibility, security and compliance that a cloud infrastructure can provide.

Cloud architectures break the ties between the user’s applications and the need for the user’s organizations to maintain physical servers and storage systems on which they run. Instead, applications tap into aggregated resources – from server to network to storage – when needed and, thus, achieve shared efficiency and agility. This cloud model is made possible by the advent of server virtualization and sophisticated automation technologies. Cloud infrastructure can be implemented as a private cloud (internal IT resources controlled and managed by the IT organization), public cloud (IT resources shared by multiple clients) or hybrid cloud (a combination of private cloud and public cloud where resources move between the IT-owned data center and a trusted service provider). EMC’s vision is to be the undisputed leader in enabling hybrid cloud computing through infrastructure and application transformation.

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Organizations’ cloud infrastructure requirements are as varied as the companies themselves. This is why it is so important for their cloud infrastructure vendor to have a broad and deep range of products and services. As each organization determines the benefit of migrating to a cloud infrastructure, EMC can meet their needs through every phase from initial assessment to design, delivery and implementation. We are well positioned to provide fully-virtualized, next-generation architectures enabling complete control over data and applications and faster and higher return on investment – from strategy to technology and a complete ecosystem of partners, systems integrators and service providers.

Products and Offerings

Whether organizations are expanding their traditional data centers, embracing a virtual data center or broader cloud computing and IT-as-a-Service models, EMC’s extensive portfolio of information infrastructure and virtual infrastructure technologies, products and services provide the highest levels of efficiency, choice and control.

EMC Information Infrastructure Products and Offerings

EMC’s Information Infrastructure products, solutions and services help organizations store, manage, protect, analyze, secure and maximize the value of their vast and ever-increasing quantities of information in a more agile, trusted and cost-efficient way. EMC’s technology expertise and broad set of high-performance and high-availability data storage, protection, security, information management and intelligence, and data computing systems, software and services help organizations capture and manage information to improve business agility, lower cost of ownership and enhance their competitive advantage within traditional data centers, virtual data centers and cloud-based IT infrastructures. Our Information Infrastructure portfolio comprises three segments – Information Storage, RSA Information Security and Information Intelligence Group.

Information Storage Segment

EMC offers the industry’s most comprehensive portfolio of enterprise storage systems and software – scaling from entry-level to datacenter-class systems – supporting organizations’ information storage, back-up and recovery, and management strategies. As the foundation of an information infrastructure within traditional data centers, virtual data centers and cloud-based IT infrastructures, EMC storage systems can be deployed in storage area networks (SAN), networked attached storage (NAS), unified storage combining NAS and SAN, object storage, content addressed storage and/or direct attached storage environments.

In 2010, EMC introduced groundbreaking enterprise storage innovations, features and capabilities that help customers build and optimize virtualized data centers that deliver new levels of efficiency, control and choice for customers. All of EMC storage arrays are standardized on the latest Intel processor technology, designed to consume less energy than alternative solutions and optimized for virtual environments. Through deep knowledge of VMware technology, EMC now has more than 70 different integration points between EMC and VMware products. This is a key competitive differentiator for EMC in helping customers realize the full potential of cloud computing and IT-as-a-Service.

EMC entered 2011 with a brand new unified storage platform – the EMC VNX family – offering breakthrough simplicity, efficiency, affordability and power. The VNX family consolidates the industry-leading features and functionality of EMC CLARiiON and EMC Celerra into a single, powerful family of unified storage arrays that scale from entry-level to datacenter-class systems. The VNXe series is designed specifically for small- and medium-sized businesses, department level storage solutions for enterprise, and remote or branch offices, combining breakthrough simplicity with advanced performance, availability and efficiency benefits. EMC continues to lead the market with new technologies that simplify and efficiently manage enterprise storage arrays, helping customers exploit the benefits of solid state disk (SSD) technology.

2010 was a year of innovation for EMC leading up to the introduction of the VNX family. During that time, EMC made significant advancements to the EMC Fully Automated Storage Tiering (FAST) suite and EMC Fast Cache software, which collectively offer the most powerful automated storage tiering for performance optimization and dramatic cost efficiencies to customers of all sizes. EMC also introduced new levels of midrange storage efficiency and simplicity with EMC Unisphere, a new management interface for EMC CLARiiON, EMC Celerra and the new EMC VNX family.

In 2010, EMC also introduced EMC VPLEX, a new storage platform that will enable organizations to move thousands of virtual machines and petabytes of information non-disruptively over thousands of miles, schedule daily batch processes in locations with lower energy costs, easily shift IT operations away from regional disasters and dynamically balance workloads as the business day progresses around the globe.

Central to its mission to help organizations migrate to next-generation disk-based backup and recovery systems, in 2010, EMC further strengthened its fast-growing Backup Recovery Systems Division, which houses its EMC NetWorker and EMC Disk

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Library products, as well as its two industry-leading data deduplication product lines: EMC Avamar deduplication backup software and EMC Data Domain deduplication storage systems. During 2010, EMC’s focus was on both the integration of the company’s backup and recovery products with each other and massively scaling these solutions to help organizations stay ahead of explosive data growth levels. In addition, to further enhance its deduplication storage system offerings for the mainframe backup market, in 2010, EMC acquired Bus-Tech, Inc., a leading provider of mainframe virtual tape libraries and connectivity solutions. By introducing high levels of automation, advanced replication capabilities and the ability to protect virtual machines and virtualized server environments, EMC’s disk-based backup and recovery products provide a critical function for both existing IT environments and cloud-based computing initiatives.

In 2010, EMC positioned itself as a leading player in “big data” clouds and self-service analytics. The company completed its acquisition of data warehousing and business analytics pioneer Greenplum, Inc., formed the new EMC Data Computing Products Division and introduced the new EMC Greenplum Data Computing Appliance (DCA). Additionally in 2010, EMC completed the acquisition of Isilon Systems, Inc., a leader in the fast-growing “scale-out” network attached storage market segment.

“Big Data” refers to data that due to its scale, distribution or location in separate silos, or need for timely access requires organizations to employ new IT architectures to capture, store, integrate and rapidly analyze it in order to realize business value. Big Data differs from the transactional and small file data and applications that have traditionally characterized organization’s data centers. It tends to be more sequential, less transactional and bigger, generally measured in petabytes versus terabytes. The new architectures it necessitates are supported by new tools, processes and procedures that enable organizations to create, manipulate and manage these very large data sets and the storage environments that house them.

With investments that EMC has made through the acquisitions of Greenplum and Isilon, as well as the EMC Atmos cloud infrastructure platform, the company is squarely positioned to help organizations meet petabyte-scale big data and self-service analytics requirements in their traditional data centers and cloud infrastructure environments – and unlock the value inherent in massive amounts of data.

EMC Global Services

EMC Global Services provides the strategic guidance and technology expertise organizations need to address their business and information infrastructure challenges, derive maximum value from their information assets and investments and help speed their transition to cloud computing. With more than 14,000 professional- and support-service experts worldwide, plus a global network of alliances and partners, EMC Global Services leverages proven methodologies, industry best practices, experience and a knowledge base derived from EMC’s broad practices to help organizations reduce risk, lower costs and speed time-to-value. End-to-end services capabilities address the full spectrum of customer needs across the information lifecycle: strategize, advise, design, implement, manage and support in physical, virtual and cloud computing environments. Among the offerings provided by EMC Global Services are consulting services, technology deployment, managed services, customer support services and training and certification.

In 2010, EMC introduced a number of new services that aid and speed organizations’ transition to virtual infrastructure and cloud infrastructures, including data center optimization, virtual desktop deployment, converged networks and cloud and virtualization training and certification. The comprehensive approach EMC takes to address the application, infrastructure and IT governance issues that impact execution of a cloud strategy is reflected in the broad portfolio of end-to-end services that enable organizations to accelerate enterprise-scale virtualization. The new services, encompassing consulting, technology integration, resident and education services offerings, are critical to helping organizations address the challenges they face when planning, implementing and scaling their cloud environment, including challenges related to backup and recovery, business continuity, disaster recovery, management and the transition of tier 1 applications to the virtual infrastructure.

RSA Information Security Segment

RSA, The Security Division of EMC, delivers products, packaged solutions and services designed to safeguard the integrity and confidentiality of information throughout its lifecycle, no matter where it moves, who accesses it or how it is used. RSA offers solutions in identity assurance and access control, data loss prevention, encryption and key management, enterprise governance, risk and compliance, security information management and fraud protection. These technologies enable organizations to discover, classify and place appropriate controls around their data, secure access to the data both inside and outside the network as well as across physical, virtual or cloud infrastructures, and monitor and enforce these measures to prove compliance with security policies and regulations.

In 2010, RSA expanded its capabilities and solution offerings through the acquisition of Archer Technologies, LLC, a provider of the Archer enterprise governance, risk and compliance (eGRC) software platform. RSA also introduced new versions

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of many of its products, including the RSA Data Loss Prevention (DLP) 8.0 Suite, while also combining the Archer eGRC platform with the RSA security portfolio to bring new solutions to market including the RSA Solution for Cloud Security and Compliance and the RSA CyberCrime Intelligence Service. RSA also expanded its professional service capabilities as the RSA Security Practice of EMC Consulting, delivering design expertise and implementation services in the areas of compliance, virtualization and private cloud, fraud mitigation, identity assurance and security operations. Additionally, RSA announced expanded development, technology integration and interoperability with VMware vShield, VMware View, VMware vCloud Director and VMware vCenter Configuration Manager. RSA also integrated its RSA BSAFE encryption technology with smart grid energy metering devices from integrated energy management solutions provider Landis&Gyr and announced a strategic partnership with VeriFone, a global leader in secure electronic payment solutions, to market their end-to-end encryption and RSA tokenization solutions as an integrated payment security offering.

Information Intelligence Group Segment

EMC’s Information Intelligence Group provides software and services for enterprise capture, information access, customer communications, case management and governance to help organizations get maximum leverage from their information. This segment consists of three key product areas: Information Governance, Documentum xCP and Information Access. Information Governance products help organizations reduce operational costs, simplify e-discovery and mitigate risks. This includes EMC SourceOne for archiving, e-discovery and visibility across multiple content types such as e-mail, SharePoint and files; and Documentum Records Management for record retention and management of physical, e-mail and electronic documents across multiple systems. Documentum xCP is a platform for case management solutions that provides fully-integrated technologies, development and deployment tools as well as application accelerators enabling organizations to build intelligent case-based applications substantially faster, at a much lower cost and with fewer resources. xCP can be used across industries such as in insurance for claims management and policy management; in healthcare for virtual patient records and claims processing; in financial services for loan operations, dispute resolution and wealth management; and in the public sector for grants management, unemployment benefits and welfare services. Information Access products, which consists of EMC Captiva, EMC Document Sciences, EMC My Documentum, EMC Documentum CenterStage, ApplicationXtender and EMC Documentum Web Experience Management, deliver intuitive methods of locating, sharing and managing all types of information so they are available to the right people according to their preferred user experience.

VMware Virtual and Cloud Infrastructure Products and Offerings

VMware is the leading provider of virtualization and cloud infrastructure solutions. Its virtualization solutions represent a pioneering approach to computing that separates application software from the underlying hardware to achieve significant improvements in efficiency, availability, flexibility and manageability. VMware’s broad and proven suite of virtualization solutions provides cloud infrastructure designed to optimize data centers; a cloud application platform that provides scalable application development for efficient use of hybrid (public and private) cloud-based resources; end-user computing solutions designed to provide consistent user interface across a variety of desktop and mobile computing platforms; and IT business management products designed to automate management of virtual, physical and cloud environments.

VMware’s solutions enable organizations to aggregate multiple servers, storage infrastructure and networks together into shared pools of capacity that can be allocated dynamically, securely and reliably to applications as needed, increasing hardware utilization and reducing spending per unit of information processed. Since introducing its first virtualization platform, VMware has expanded its product offerings to address distributed and heterogeneous infrastructure challenges such as planned and unplanned downtime management, system recoverability and reliability, backup and recovery, resource provisioning and management, capacity and performance management, security, and virtual desktop management.

In 2010, VMware released updates to several of its products, including its flagship cloud infrastructure product – vSphere 4.1, and its desktop virtualization product, VMware View 4.5. VMware also released new management products, such as vCloud Director, which provides self-service access to logical pools of compute, network and storage resources with policy driven controls and its vFabric Cloud Application Platform which includes open source application frameworks, application run-time and data management solutions, and monitoring solutions for enterprise applications and infrastructure. In 2010, VMware acquired Zimbra, an enterprise-class, open source e-mail, calendar and collaboration platform designed to simplify IT with more efficient administration and flexible deployment options while boosting end-user productivity on any device or desktop. VMware also acquired products and expertise from EMC’s Ionix IT management business.

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Markets and Distribution Channels

Markets

EMC provides information storage, back-up and protection, management, security, information intelligence, data computing and virtualization technologies, services and solutions to support customers’ traditional data centers, virtual data centers and cloud-based IT infrastructures. We target organizations around the world, in every industry, in the public and private sectors, and of every size ranging from the Fortune Global 500 to small- and medium-sized businesses and individual consumers.

Distribution Channels

We market our products through direct sales and through multiple distribution channels. We have a direct sales presence throughout North America, Latin America, Europe, the Middle East, South Africa and the Asia Pacific region. We also have agreements in place with many distributors, systems integrators, resellers and original equipment manufacturers (“OEMs”). These agreements, subject to certain terms and conditions, enable these companies to market and resell certain EMC systems, software and related services.

Additionally, VMware has developed a multi-channel distribution model to expand its presence and reach various segments of the industry. VMware derives a significant majority of its revenues from its large indirect sales channel that includes distributors, resellers, x86 system vendors and systems integrators.

Technology Alliances

We have technology alliances with leading software, networking and services companies and service providers. We intend to continue to form additional alliances. Our strategy is to work closely with these and other companies to provide added value to our customers by integrating our solutions with software and networking applications that customers rely on to manage their day-to-day business operations.

In 2010, Cisco and EMC further expanded and strengthened VCE Company LLC (“VCE”). VCE, or the virtual computing environment company, formed by Cisco and EMC with investments from VMware and Intel, represents an unprecedented level of collaboration in development, services and partner enablement by four established market and technology leaders. VCE accelerates the adoption of converged infrastructure and cloud-based computing models that significantly reduce the cost of IT while improving time to market for our customers. VCE, through Vblock platforms, delivers the industry’s first completely integrated IT offering that combines best-of-breed network, compute, storage, management, security and virtualization technologies with end-to-end vendor accountability. VCE’s prepackaged solutions cover horizontal applications, such as unified communications and analytics; vertical industry offerings, such as electronic health record management and HIPAA compliance; and application development environments for deployments, such as virtual desktop infrastructure (VDI) and SAP, allowing organizations to focus on business innovation instead of integrating, validating and managing IT infrastructure.

VCE provides the fastest, most efficient and effective path to pervasive virtualization and cloud computing, available to organizations through a large and growing network of value added resellers, systems integrators and service provider partners. To date, more than 100 partners in 29 countries are selling Vblock to a growing, diverse global customer base. VCE continues to innovate with the goal of providing market-leading simplicity, flexibility and efficiency.

VCE made several announcements in 2010 with key partners, including ACS, CSC, Lockheed Martin, SingTel and SunGard, that demonstrate global market momentum. VCE, through solution partners, also demonstrated Vblock value beyond infrastructure to include support for mission critical applications such as SAP and Microsoft Exchange. In 2010, VCE demonstrated significant momentum for the Vblock platform with its GA announcement of Vblock Powered Solutions for VMware View and Vblock Powered Solutions for SAP as well as fully supported and certified end-to-end Fibre Channel over Ethernet capabilities for Vblock.

In addition, in 2010, EMC also expanded its partner ecosystem in international markets, strengthening existing relationships and forging new ones with global and regional technology and solutions providers. EMC delivered significant technology integration and new EMC Proven solutions and best practices for Brocade, Microsoft, Oracle and VMware to help accelerate customers’ journey to the private, public or hybrid cloud. Additionally, EMC made a significant announcement with Orange Business Services to provide technology for its new cloud computing services offering.

Finally, VMware works closely with more than 1,700 technology partners, including leading server, microprocessor, storage, networking and software vendors as well as service providers.

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Manufacturing and Quality

We conduct operations utilizing a formal, documented quality management system to ensure that our products as well as services satisfy customer needs and expectations. The quality management system also provides the framework for continual improvement of our processes and products. This system is certified to the ISO 9001 International Standard. Several additional ISO 9001 certifications are maintained for sales and service operations worldwide. We have also implemented Lean Six Sigma methodologies to ensure that the quality of our designs, manufacturing, test processes and supplier relationships are continually improved. Our storage systems’ manufacturing and test facilities in Massachusetts, North Carolina and Ireland are certified to the ISO 14001 International Standard for environmental management systems. EMC’s Franklin, Massachusetts, Apex, North Carolina and Cork, Ireland manufacturing facilities have achieved OHSAS 18001 certification, an international standard for facilities with world-class safety and health management systems. We also maintain Support Center Practices certification for our 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 won an Environmental Steward Award and are also certified by the Environmental Protection Agency as a Smartway Transport Partner.

Our products are assembled and tested primarily at our facilities in the United States and Ireland or at global manufacturing service suppliers. We work closely with our suppliers to design, assemble and test product components in accordance with production standards and quality controls established by us. Our software products are designed, developed and tested primarily at our facilities in the United States and abroad. The products are tested to meet our quality standards.

Raw Materials

We purchase many sophisticated components and products from one or a limited number of qualified suppliers, including some of our competitors. Our products utilize industry-standard and semi-custom components and subsystems. Among the most important components that we use are disk drives, high density memory components, microcontrollers and power supplies. While such components are generally available, we have experienced delivery delays from time to time because of high industry demand or the inability of some vendors to consistently meet our quality or delivery requirements.

Research and Development

We continually enhance our existing products and develop new products to meet changing customer requirements. In 2010, 2009 and 2008, our research and development (“R&D”) expenses totaled $1,888.0 million, $1,627.5 million and $1,721.3 million, respectively. We support our R&D efforts through state-of-the-art development labs worldwide. See Item 2, Properties.

Backlog

We produce our products on the basis of our forecast of near-term demand and maintain inventory in advance of receipt of firm orders from customers. We configure to customer specifications and generally deliver products shortly after receipt of the order. Service engagements are also included in certain orders. Customers generally may reschedule or cancel orders with little or no penalty. We believe that our backlog at any particular time is not meaningful because it is not necessarily indicative of future sales levels.

Competition

We compete with many companies in the markets we serve, including companies that offer a broad spectrum of IT products and services and others that offer specific information storage, protection, security, management and intelligence or server virtualization products or services. We believe that most of these companies compete based on their market presence, products, service or price. Some of these companies also compete by offering information storage, information governance, security or virtualization-related products or services, together with other IT products or services, at minimal or no additional cost in order to preserve or gain market share.

We believe that we have a number of competitive advantages over these companies, including product, distribution and service. We believe the advantages in our products include quality, breadth of offerings, performance, functionality, scalability, availability, interoperability, connectivity, time-to-market enhancements and total value of ownership. We believe our advantages in distribution include the world’s largest information infrastructure-focused direct sales force and a broad network of channel partners. We believe our advantages in service include our ability to provide our customers with a full range of expertise before, during and after their purchase of solutions from us or other vendors.

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Seasonality

We generally experience the lowest demand for our products and services in the first quarter of the year and the greatest demand for our products and services in the last quarter of the year, which is consistent with the seasonality of the IT industry as a whole.

Intellectual Property

We generally rely on patent, copyright, trademark and trade secret laws and contract rights to establish and maintain our proprietary rights in our technology and products. While our intellectual property rights are important to our success, we believe that our business as a whole is not materially dependent on any particular patent, trademark, license or other intellectual property right.

We have been granted or own by assignment approximately 2,600 patents issued by, and have approximately 1,350 patent applications pending with, the U.S. Patent and Trademark Office, as well as a corresponding number of international patents and patent applications. While the durations of our patents vary, we believe that the durations of our patents are adequate relative to the expected lives of our products.

We have used, registered or applied to register certain trademarks and copyrights in the United States and in other countries. We also license certain technology from third parties for use in our products and processes and license some of our technologies to third parties.

Employees

As of December 31, 2010, we had approximately 48,500 employees worldwide, of which approximately 9,000 were employed by or working on behalf of VMware. None of our domestic employees is represented by a labor union, and we have never suffered an interruption of business as a result of a labor dispute. We consider our relations with our employees to be good.

Financial Information About Segments, Foreign and Domestic Operations and Export Sales

EMC operates its business in two broad categories: EMC Information Infrastructure and VMware Virtual Infrastructure.

Sales and marketing operations outside the United States are conducted through sales subsidiaries and branches located principally in Europe, Latin America and the Asia Pacific region. We have five manufacturing facilities: two in Massachusetts, which manufacture storage products and security products for the North American markets, two in Ireland, which manufacture storage products and security products for markets outside of North America, and one in North Carolina, which manufactures storage products for worldwide markets. We also utilize contract manufacturers throughout the world to manufacture or assemble our Data Domain, Iomega and, in limited amounts, other information infrastructure products. See Note R to the Consolidated Financial Statements for information about revenues by segment and geographic area.

Sustainability

We recognize that the long-term success of our business depends on an economically vital, inclusive and educated society as well as on a healthy environment. Therefore, we strive to make decisions and operate our business in a sustainable way. Our priorities include improving our performance and collaborating with industry peers, governments, and non-governmental organizations to advance energy, climate change and material use and waste priorities; providing technologies and services to address some of the world’s challenges, such as energy, healthcare and delivery of government services; upholding the protection of human rights and investing in furthering education, innovation and inclusion for our employees and in communities around the world; and supporting EMC’s continued financial success and increasing shareholder value through our approach to corporate sustainability, commitment to good corporate governance and by maintaining customer and community trust.

We focus our environmental sustainability efforts on optimizing our operations and supply chain, transforming our customers’ information infrastructures to be more efficient, leveraging a culture of innovation and accountability, and collaborating with our peers to drive standards and metrics. Our top environmental priorities are energy and climate change, material and waste, and water. We have set global targets to reduce our greenhouse gas (GHG) emissions and are collaborating with our suppliers to find opportunities for efficiencies in their operations. We recognize the opportunity through the application of IT to reduce global GHG emissions and are designing all future enterprise and midrange storage systems with highly efficient power supplies and delivering capabilities to our customers that enable them to run their IT infrastructures more efficiently. In 2010, we conducted our first multi-stakeholder forum to broaden and deepen our dialogue with external stakeholders with interests in EMC’s environmental performance.

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We are continuously striving to reduce material use in our products and operations, recycle what cannot be reused, and handle any waste with integrity and responsibility for the environment and human health. We are working with our suppliers and industry peers to identify substitutes for materials that can damage ecological and human health. We have eliminated the use of leaded solder in our products and we are actively working to reduce the use of hazardous substances such as brominated flame retardants and polyvinyl chlorides in our products.

Although we have a relatively small water footprint, with our primary usage in general building operations such as drinking, cooling, and sanitation, we have taken a conscientious approach to conserving this important resource. In our owned and operated facilities, we minimize water use and control wastewater streams, and our manufacturing facilities produce no industrial wastewater.

Available Information

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are made available free of charge on or through our website at www.emc.com as soon as reasonably practicable after such reports are filed with, or furnished to, the Securities and Exchange Commission (the SEC). The SEC also maintains a website, www.sec.gov, that contains reports and other information regarding issuers that file electronically with the SEC. Copies of our (i) Corporate Governance Guidelines, (ii) charters for the Audit Committee, Leadership and Compensation Committee, Corporate Governance and Nominating Committee, Mergers and Acquisitions Committee and Finance Committee and (iii) Business Conduct Guidelines (code of business conduct and ethics) are available at www.emc.com/about/governance. Copies will be provided to any shareholder upon request. Please go to www.emc.com/ir to submit an electronic request, or send a written request to EMC Investor Relations, 176 South Street, Hopkinton, MA 01748. None of the information posted on our website is incorporated by reference into this Annual Report.

ITEM 1A. RISK FACTORS

The risk factors that appear below could materially affect our business, financial condition and results of operations. The risks and uncertainties described below are not the only risks and uncertainties facing us. Our business is also subject to general risks and uncertainties that affect many other companies.

Our business could be materially adversely affected as a result of general economic and market conditions.

We are subject to the effects of general global economic and market conditions. If these conditions remain challenging or deteriorate, our business, results of operations or financial condition could be materially adversely affected. Possible consequences from uncertainty or further deterioration due to the recent global macroeconomic downturn on our business, including insolvency of key suppliers resulting in product delays, inability of customers to obtain credit to finance purchases of our products, customer insolvencies, increased risk that customers may delay payments, fail to pay or default on credit extended to them, and counterparty failures negatively impacting our treasury operations, could have a material adverse effect on our results of operations or financial condition.

Our business could be materially adversely affected as a result of a lessening demand in the information technology market.

Our revenue and profitability depend on the overall demand for our products and services. Delays or reductions in IT spending, domestically or internationally, could materially adversely affect demand for our products and services which could result in decreased revenues or earnings.

Our customers operate in a variety of markets. Any adverse effects to such markets could materially adversely affect demand for our products and services which could result in decreased revenues or earnings.

Competitive pricing, sales volume, mix and component costs could materially adversely affect our revenues, gross margins and earnings.

Our gross margins are impacted by a variety of factors, including competitive pricing, component and product design costs as well as the volume and relative mixture of product and services revenues. Increased component costs, increased pricing pressures, the relative and varying rates of increases or decreases in component costs and product price, changes in product and services revenue mixture or decreased volume could have a material adverse effect on our revenues, gross margins or earnings.

The costs of third-party components comprise a significant portion of our product costs. While we generally have been able to manage our component and product design costs, we may have difficulty managing such costs if supplies of certain components

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become limited or component prices increase. Any such limitation could result in an increase in our component costs. An increase in component or design costs relative to our product prices could have a material adverse effect on our gross margins and earnings. Moreover, certain competitors may have advantages due to vertical integration of their supply chain, which may include disk drives, microprocessors, memory components and servers.

The markets in which we do business are highly competitive, and we may encounter aggressive price competition for all of our products and services from numerous companies globally. There also has been and may continue to be a willingness on the part of certain competitors to reduce prices or provide information infrastructure and virtual infrastructure products or services, together with other IT products or services, at minimal or no additional cost in order to preserve or gain market share. Such price competition may result in pressure on our product and service prices, and reductions in product and service prices may have a material adverse effect on our revenues, gross margins and earnings.

If our suppliers are not able to meet our requirements, we could have decreased revenues and earnings.

We purchase or license many sophisticated components and products from one or a limited number of qualified suppliers, including some of our competitors. These components and products include disk drives, high density memory components, power supplies and software developed and maintained by third parties. We have experienced delivery delays from time to time because of high industry demand or the inability of some vendors to consistently meet our quality or delivery requirements. Current or future social and environmental regulations or critical issues, such as those relating to the sourcing of conflict minerals from the Democratic Republic of the Congo or the need to eliminate environmentally sensitive materials from our products, could restrict the supply of resources used in production or increase our costs. 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 time-sensitive customer orders, be unable to develop or sell certain products cost-effectively or on a timely basis, if at all, and have significantly decreased quarterly revenues and earnings, which would have a material adverse effect on our business, results of operations and financial condition. Additionally, we periodically transition our product line to incorporate new technologies. The importance of transitioning our customers smoothly to new technologies, along with our historically uneven pattern of quarterly sales, intensifies the risk that the failure of a supplier to meet our quality or delivery requirements will have a material adverse impact on our revenues and earnings. An economic crisis may also negatively affect our suppliers’ solvency, which could, in turn, result in product delays or otherwise materially adversely affect our business, results of operations or financial condition.

Our financial performance may be impacted by the financial performance of VMware.

Because we consolidate VMware’s financial results in our results of operations, our financial performance will be impacted by the financial performance of VMware. VMware’s financial performance may be affected by a number of factors, including, but not limited to:

• general economic conditions in their domestic and international markets and the effect that these conditions have on VMware’s customers’ capital budgets and the availability of funding for software purchases;

• fluctuations in demand, adoption rates, sales cycles and pricing levels for VMware’s products and services;

• fluctuations in foreign currency exchange rates;

• changes in customers’ budgets for information technology purchases and in the timing of their purchasing decisions;

• VMware’s ability to compete with existing or increased competition;

• the timing of recognizing revenues in any given quarter, which, as a result of software revenue recognition policies, can be affected by a number of factors, including product announcements and beta programs;

• 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 requirements;

• the timing of the announcement or release of upgrades or new products by VMware or by its competitors;

• VMware’s ability to maintain scalable internal systems for reporting, order processing, license fulfillment, product delivery, purchasing, billing and general accounting, among other functions;

• VMware’s ability to control costs, including its operating expenses;

• changes to VMware’s effective tax rate;

• the increasing scale of VMware’s business and its effect on VMware’s ability to maintain historical rates of growth;

• VMware’s ability to attract and retain highly skilled employees, particularly those with relevant experience in software development and sales;

• VMware’s ability to conform to emerging industry standards and to technological developments by its competitors and customers;

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• renewal rates for enterprise license agreements, or ELA’s, as original ELA terms expire;

• the timing and amount of capitalized software development costs beginning when technological feasibility has been established and ending when the product is available for general release;

• unplanned events that could affect market perception of the quality or cost-effectiveness of VMware’s products and solutions; and

• the recoverability of benefits from goodwill and intangible assets and the potential impairment of these assets.

Our stock price is volatile and may be affected by the trading price of VMware Class A common stock and/or speculation about the possibility 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 competitors;

• quarterly variations in our operating results;

• changes in revenue or earnings estimates by the investment community; and

• speculation in the press or investment community.

The trading price of our common stock has been and likely will continue to be affected by various factors related to VMware, including:

• the trading price for VMware Class A common stock;

• actions taken or statements made by us, VMware, or others concerning the potential separation of VMware from us, including by spin-off, split-off or sale; and

• factors impacting the financial performance of VMware, including those discussed in the prior risk factor.

In addition, although we own a majority of VMware and consolidate their results, our stock price may not reflect our pro rata ownership interest of VMware.

We may be unable to keep pace with rapid industry, technological and market changes.

The markets in which we compete are characterized by rapid technological change, frequent new product introductions, evolving industry standards and changing needs of customers. There can be no assurance that our existing products will be properly positioned in the market or that we will be able to introduce new or enhanced products into the market on a timely basis, or at all. We spend a considerable amount of money on research and development and introduce new products from time to time. There can be no assurance that enhancements to existing products and solutions or new products and solutions will receive customer acceptance. As competition in the IT industry increases, it may become increasingly difficult for us to maintain a technological advantage and to leverage that advantage toward increased revenues and profits. In addition, there can be no assurance that our vision of enabling hybrid cloud computing through infrastructure and application transformation will be accepted or validated in the marketplace.

Risks associated with the development and introduction of new products include delays in development and changes in data storage, networking virtualization, infrastructure management, information security and operating system technologies which could require us to modify existing products. Risks inherent in the transition to new products include:

• the difficulty in forecasting customer preferences or demand accurately;

• the inability to expand production capacity to meet demand for new products;

• the impact of customers’ demand for new products on the products being replaced, thereby causing a decline in sales of existing products and an excessive, obsolete supply of inventory; and

• delays in initial shipments of new products.

Further risks inherent in new product introductions include the uncertainty of price-performance relative to products of competitors, competitors’ responses to the introductions and the desire by customers to evaluate new products for extended periods of time. Our failure to introduce new or enhanced products on a timely basis, keep pace with rapid industry, technological or market changes or effectively manage the transitions to new products or new technologies could have a material adverse effect on our business, results of operations or financial condition.

The markets we serve are highly competitive and we may be unable to compete effectively.

We compete with many companies in the markets we serve, certain of which offer a broad spectrum of IT products and services and others which offer specific information storage, protection, security, management, virtualization and intelligence

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products or services. Some of these companies (whether independently or by establishing alliances) may have substantially greater financial, marketing and technological resources, larger distribution capabilities, earlier access to customers and greater opportunity to address customers’ various IT requirements than us. In addition, as the IT industry consolidates, companies may improve their competitive position and ability to compete against us. We compete on the basis of our products’ features, performance and price as well as our services. Our failure to compete on any of these bases could affect demand for our products or services, which could have a material adverse effect on our business, results of operations or financial condition.

Companies may develop new technologies or products in advance of us or establish business models or technologies disruptive to us. Our business may be materially adversely affected by the announcement or introduction of new products, including hardware and software products and services by our competitors, and the implementation of effective marketing or sales strategies by our competitors. The material adverse effect to our business could include a decrease in demand for our products and services and an increase in the length of our sales cycle due to customers taking longer to compare products and services and to complete their purchases.

We may have difficulty managing operations.

Our future operating results will depend on our overall ability to manage operations, which includes, among other things:

• retaining and hiring, as required, the appropriate number of qualified employees;

• managing, protecting and enhancing, as appropriate, our infrastructure, including but not limited to, our information systems (and such systems’ ability to protect confidential information residing on the systems) and internal controls;

• accurately forecasting revenues;

• training our sales force to sell more 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 facilities and other assets; and

• executing on our plans.

An unexpected decline in revenues without a corresponding and timely reduction in expenses or a failure to manage other aspects of our operations could have a material adverse effect on our business, results of operations or financial condition.

Our investment portfolio could experience a decline in market value which could adversely affect our financial results.

We held $5.4 billion in short- and long-term investments as of December 31, 2010. The investments are invested primarily in investment grade debt securities, and we limit the amount of investment with any one issuer. A further deterioration in the economy, including a tightening of credit markets, increased defaults by issuers, or significant volatility in interest rates, could cause the investments to decline in value or could impact the liquidity of the portfolio. If market conditions deteriorate significantly, our results of operations or financial condition could be materially adversely affected.

Our business may suffer if we are unable to retain or attract key personnel.

Our business depends to a significant extent on the continued service of senior management and other key employees, the development of additional management personnel and the hiring of new qualified employees. There can be no assurance that we will be successful in retaining existing personnel or recruiting new personnel. The loss of one or more key or other employees, our inability to attract additional qualified employees or the delay in hiring key personnel could have a material adverse effect on our business, results of operations or financial condition.

Our quarterly revenues and earnings could be materially adversely affected by uneven sales patterns and changing purchasing behaviors.

Our quarterly sales have historically reflected an uneven pattern in which a disproportionate percentage of a quarter’s total sales occur in the last month and weeks and days of each quarter. This pattern makes prediction of revenues, earnings and working capital for each financial period especially difficult and uncertain and increases the risk of unanticipated variations in quarterly results and financial condition. We believe this uneven sales pattern is a result of many factors including:

• the relative dollar amount of our product and services offerings in relation to many of our customers’ budgets, resulting in long lead times for customers’ budgetary approval, which tends to be given late in a quarter;

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• the tendency of customers to wait until late in a quarter to commit to purchase in the hope of obtaining more favorable pricing from one or more competitors seeking their business;

• the fourth quarter influence of customers’ spending their remaining capital budget authorization prior to new budget constraints in the first nine months of the following year; and

• seasonal influences.

Our uneven sales pattern also makes it extremely difficult to predict near-term demand and adjust manufacturing capacity or our supply chain accordingly. If predicted demand is substantially greater than orders, there will be excess inventory. Alternatively, if orders substantially exceed predicted demand, the ability to assemble, test and ship orders received in the last weeks and days of each quarter may be limited, which could materially adversely affect quarterly revenues and earnings.

In addition, our revenues in any quarter are substantially dependent on orders booked and shipped in that quarter and our backlog at any particular time is not necessarily indicative of future sales levels. This is because:

• we assemble our products on the basis of our forecast of near-term demand and maintain inventory in advance of receipt of firm orders from customers;

• we generally ship products shortly after receipt of the order; and

• customers may generally reschedule or cancel orders with little or no penalty.

Loss of infrastructure, due to factors such as an information systems failure, loss of public utilities, natural disasters or extreme weather conditions, could impact our ability to ship products in a timely manner. Delays in product shipping or an unexpected decline in revenues without a corresponding and timely slowdown in expenses, could intensify the impact of these factors on our business, results of operations and financial condition.

In addition, unanticipated changes in our customers’ purchasing behaviors such as customers taking longer to negotiate and complete their purchases or making smaller, incremental purchases based on their current needs, also make the prediction of revenues, earnings and working capital for each financial period difficult and uncertain and increase the risk of unanticipated variations in our quarterly results and financial condition.

Risks associated with our distribution channels may materially adversely affect our financial results.

In addition to our direct sales force, we have agreements in place with many distributors, systems integrators, resellers and original equipment manufacturers to market and sell our products and services. We may, from time to time, derive a significant percentage of our revenues from such distribution channels. Our financial results could be materially adversely affected if our contracts with channel partners were terminated, if our relationship with channel partners were to deteriorate, if the financial condition of our channel partners were to weaken, if our channel partners were not able to timely and effectively implement their planned actions or if the level of demand for our channel partners’ products and services were to decrease. In addition, as our market opportunities change, we may have an increased reliance on channel partners, which may negatively impact our gross margins. There can be no assurance that we will be successful in maintaining or expanding these channels. If we are not successful, we may lose sales opportunities, customers and market share. Furthermore, the partial reliance on channel partners may materially reduce the visibility to our management of potential customers and demand for products and services, thereby making it more difficult to accurately forecast such demand. In addition, there can be no assurance that our channel partners will not develop, market or sell products or services or acquire other companies that develop, market or 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 than we typically provided in the past. We may have difficulty managing directly or indirectly through our channels these different service and support requirements and may be required to incur substantial costs to provide such services which may adversely affect our business, results of operations or financial condition.

Due to the global nature of our business, political, economic or regulatory changes or other factors in a specific country or region could impair our international operations, future revenue or financial condition.

A substantial portion of our revenues is derived from sales outside the United States including, increasingly, in rapid growth markets such as Brazil, Russia, India and China. In addition, a substantial portion of our products is manufactured outside of the United States. Accordingly, our future results could be materially adversely affected by a variety of factors relating to our operations outside the United States, including, among others, the following:

• changes in foreign currency exchange rates;

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• changes in a specific country’s or region’s economic conditions;

• political or social unrest, such as recent developments in Egypt, where we have a research and development facility;

• trade restrictions;

• import or export licensing requirements;

• the overlap of different tax structures or changes in international tax laws;

• changes in regulatory requirements;

• difficulties in staffing and managing international operations;

• stringent privacy policies in some foreign countries;

• compliance with a variety of foreign laws and regulations; and

• longer payment cycles in certain countries.

Foreign operations, particularly in those countries with developing economies, are also subject to risks of violations of laws prohibiting improper payments and bribery, including the U.S. Foreign Corrupt Practices Act and similar regulations in foreign jurisdictions. Although we implement policies and procedures designed to ensure compliance with these laws, our employees, contractors and agents may take actions in violation of our policies. Any such violations, even if prohibited by our policies, could subject us to civil or criminal penalties or otherwise have an adverse effect on our business and reputation.

In addition, we hold a significant portion of our cash and investments in our international subsidiaries. Potential regulations could impact our ability to transfer the cash and investments to the United States. Should we desire to repatriate cash, we may incur a significant tax obligation.

We operate a Venezuelan sales subsidiary in which the Bolivar is the functional currency. Due to limitations in accessing the dollar at the official exchange rate, we have utilized the “System for Transactions in Foreign Currency Securities” or SITME rate, which is the available market rate in the country to translate the foreign currency denominated balance sheet. Our operations in Venezuela include U.S. dollar-denominated assets and liabilities which we remeasure to Bolivars. The remeasurement may result in transaction gains or losses. We have used either the official exchange rate or the parallel exchange rate to remeasure these balances based upon the expected rate at which we believe the items will be settled. As a result of continued hyper-inflation in Venezuela, effective in 2010, we have modified the functional currency to be the U.S. dollar. As a result of this change, Bolivar-denominated transactions will be subject to exchange gains and losses that may impact our earnings. While we do not believe this change will have a material impact on our financial position, results of operations or cash flows, these items could be adversely affected if there is a significant change in exchange rates.

Security breaches could expose us to liability and our reputation and business could suffer.

We retain sensitive data, including intellectual property, books of record and personally identifiable information, in our secure data centers and on our networks. It is critical to our business strategy that our infrastructure remains secure and is perceived by customers and partners to be secure. Despite our security measures, our infrastructure may be vulnerable to attacks by hackers or other disruptive problems. Any such security breach may compromise information stored on our networks. Such an occurrence could negatively affect our reputation as a trusted provider of information infrastructure by adversely affecting the market’s perception of the security or reliability of our products or services.

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, we could experience a rate of failure in our products that would result in substantial repair, replacement or service costs and potential damage to our reputation. Continued improvement in manufacturing capabilities, control of material and manufacturing quality and costs and product testing are critical factors in our future growth. There can be no assurance that our efforts to monitor, develop, modify and implement appropriate test and manufacturing processes for our products will be sufficient to permit us to avoid a rate of failure in our products that results in substantial delays in shipment, significant repair or replacement costs or potential damage to our reputation, any of which could have a material adverse effect on our business, results of operations or financial condition.

Our business could be materially adversely affected as a result of the risks associated with alliances.

We have alliances with leading information technology companies and we plan to continue our strategy of developing key alliances in order to expand our reach into markets. There can be no assurance that we will be successful in our ongoing strategic alliances or that we will be able to find further suitable business relationships as we develop new products and strategies. Any failure to continue or expand such relationships could have a material adverse effect on our business, results of operations or financial condition.

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There can be no assurance that companies with which we have strategic alliances, certain of which have substantially greater financial, marketing or technological resources than us, will not develop or market products in competition with us in the future, discontinue their alliances with us or form alliances with our competitors.

Our business may suffer if we cannot protect our intellectual property.

We generally rely upon patent, copyright, trademark and trade secret laws and contract rights in the United States and in other countries to establish and maintain our proprietary rights in our technology and products. However, there can be no assurance that any of our proprietary rights will not be challenged, invalidated or circumvented. In addition, the laws of certain countries do not protect our proprietary rights to the same extent as do the laws of the United States. Therefore, there can be no assurance that we will be able to adequately protect our proprietary technology against unauthorized third-party copying or use, which could adversely affect our competitive position. Further, there can be no assurance that we will be able to obtain licenses to any technology that we may require to conduct our business or that, if obtainable, such technology can be licensed at a reasonable cost.

From time to time, we receive notices from third parties claiming infringement by our products of third-party patent or other intellectual property rights. Responding to any such claim, regardless of its merit, could be time-consuming, result in costly litigation, divert management’s attention and resources and cause us to incur significant expenses. In the event there is a temporary or permanent injunction entered prohibiting us from marketing or selling certain of our products or a successful claim of infringement against us requiring us to pay royalties to a third party, and we fail to develop or license a substitute technology, our business, results of operations or financial condition could be materially adversely affected.

In addition, although we believe we have adequate security measures, if our network security is penetrated and our intellectual property or other sensitive data is misappropriated, we could suffer monetary and other losses and reputational harm, which could materially adversely affect our business, results of operations or financial condition.

We may become involved in litigation that may materially adversely affect us.

From time to time, we may become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, including patent, commercial, product liability, employment, class action, whistleblower and other litigation and claims, and governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert management’s attention and resources and cause us to incur significant expenses. Furthermore, because litigation is inherently unpredictable, there can be no assurance that the results of any of these actions will not have a material adverse effect on our business, results of operations or financial condition.

Issues arising during the upgrade of our enterprise resource planning system could affect our operating results and ability to manage our business effectively.

We are in the process of upgrading our enterprise resource planning, or ERP, computer system to enhance operating efficiencies and provide more effective management of our business operations. The upgrade, or our failure to implement the upgrade, could cause substantial business interruption that could adversely impact our operating results. We are investing significant financial and personnel resources into this project. However, there is no assurance that the design will meet our current and future business needs or that it will operate as designed. We are heavily dependent on such computer systems, and any significant failure or delay in the system upgrade, if encountered, could cause a substantial interruption to our business and additional expense which could result in an adverse impact on our operating results, cash flows and financial condition.

We may have exposure to additional income tax liabilities.

As a multinational corporation, we are subject to income taxes in both the United States and various foreign jurisdictions. Our domestic and international tax liabilities are subject to the allocation of revenues and expenses in different jurisdictions and the timing of recognizing revenues and expenses. Additionally, the amount of income taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we file and changes to tax laws. From time to time, we are subject to income tax audits. While we believe we have complied with all applicable income tax laws, there can be no assurance that a governing tax authority will not have a different interpretation of the law and assess us with additional taxes. Should we be assessed with additional taxes, there could be a material adverse effect on our results of operations or financial condition.

In February 2010, President Obama, as part of the Administration’s FY 2011 budget, proposed changing certain of the U.S. tax rules for U.S. corporations doing business outside the United States. The proposed changes include limiting the ability of U.S. corporations to deduct certain expenses attributable to offshore earnings, modifying the foreign tax credit rules and taxing currently certain transfers of intangibles offshore. In August 2010, President Obama signed into law H.R. 1586 (commonly known as the

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Education Jobs and Medicaid Assistance Act), which included several international tax provisions with minimal impact on the Company’s effective tax rate. Although the scope of future changes is unclear, revisions to the taxation of international income continue to be a topic of conversation for the Obama Administration and the U.S. Congress. As the enactment of some or all of these proposals could increase the Company’s effective tax rate and adversely affect our profitability, we will continue to monitor them.

During 2010, the IRS announced and finalized Schedule UTP, Uncertain Tax Positions Statement. This schedule is an annual disclosure of certain federal UTPs, ranked in order of magnitude. According to the IRS, the disclosure is to include “a concise description of the tax position, including a description of the relevant facts affecting the tax treatment of the position and information that reasonably can be expected to apprise the Service of the identity of the tax position.” As a result of this disclosure, the amount of taxes we would have to pay in the future 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 provisions was the research and development tax credit, which provides a significant reduction in our effective tax rate. The renewal of this credit beyond 2011 is uncertain.

Changes in regulations could materially adversely affect us.

Our business, results of operations or financial condition could be materially adversely affected if laws, regulations or standards relating to us or our products are newly implemented or changed. In addition, our compliance with existing regulations may have a material adverse impact on us. Under applicable federal securities laws, including the Sarbanes-Oxley Act of 2002, we are required to evaluate and determine the effectiveness of our internal control structure and procedures for financial reporting. Should we or our independent auditors determine that we have material weaknesses in our internal controls, our results of operations or financial condition may be materially adversely affected or our stock price may decline. In March 2010, President Obama signed into law a comprehensive health care reform package. We cannot currently determine the impact that such legislation could have on our business, results of operations or financial condition.

Changes in generally accepted accounting principles may adversely affect us.

From time to time, the Financial Accounting Standards Board (“FASB”) promulgates new accounting principles that could have a material adverse impact on our results of operations or financial condition. The FASB is currently contemplating a number of new accounting pronouncements which, if approved, could materially change our reported results. Such changes could have a material adverse impact on our results of operations and financial position.

Our business could be materially adversely affected as a result of the risks associated with acquisitions and investments.

As part of our business strategy, we seek to acquire businesses that offer complementary products, services or technologies. These acquisitions are accompanied by the risks commonly encountered in an acquisition of a business, which may include, among other things:

• the effect of the acquisition on our financial and strategic position and reputation;

• the failure of an acquired business to further our strategies;

• the failure of the acquisition to result in expected benefits, which may include benefits relating to enhanced revenues, technology, human resources, cost savings, operating efficiencies and other synergies;

• the difficulty and cost of integrating the acquired business, including costs and delays in implementing common systems and procedures and costs and delays caused by communication difficulties or geographic distances between the two companies’ sites;

• the assumption of liabilities of the acquired business, including litigation-related liability;

• the potential impairment of acquired assets;

• the lack of experience in new markets, products or technologies or the initial dependence on unfamiliar supply or distribution partners;

• the diversion of our management’s attention from other business concerns;

• the impairment of relationships with customers or suppliers of the acquired business or our customers or suppliers;

• the potential loss of key employees of the acquired company; and

• the potential incompatibility of business cultures.

These factors could have a material adverse effect on our business, results of operations or financial condition. To the extent that we issue shares of our common stock or other rights to purchase our common stock in connection with any future acquisition, existing shareholders may experience dilution. Additionally, regardless of the form of consideration issued, acquisitions could negatively impact our net income and our earnings per share.

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In addition to the risks commonly encountered in the acquisition of a business as described above, we may also experience risks relating to the challenges and costs of closing a transaction. Further, the risks described above may be exacerbated as a result of managing multiple acquisitions at the same time.

We also seek to invest in businesses that offer complementary products, services or technologies. These investments are accompanied by risks similar to those encountered in an acquisition of a business.

Our pension plan assets are subject 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 is 6.75%. This rate represents the average of the expected long-term rates of return weighted by the plan’s assets as of December 31, 2010. We have begun to shift, and may continue to shift in the future, its asset allocation to lower the percentage of investment in equity securities and increase the percentage of investments in fixed-income securities. The effect of such change could result in a reduction in the long-term rate on plan assets and an increase in future pension expense. As of December 31, 2010, the ten-year historical rate of return on plan assets was 4.1%, and the inception to date return on plan assets was 9.8%. In 2010, we experienced a 12.6% gain on plan assets. Should we not achieve the expected rate of return on the plan’s assets or if the plan experiences a decline in the fair value of its assets, we may be required to contribute assets to the plan which could materially adversely affect our results of operations or financial condition.

Our business could be materially adversely affected by changes in regulations or standards regarding energy use of our products.

We continually seek ways to increase the energy efficiency of our products. Recent analyses have estimated the amount of global carbon emissions that are due to information technology products. As a result, governmental and non-governmental organizations have turned their attention to development of regulations and standards to drive technological improvements and reduce such amount of carbon emissions. There is a risk that the development of these standards will not fully address the complexity of the technology developed by the IT industry or will favor certain technological approaches. Depending on the regulations or standards that are ultimately adopted, compliance could adversely affect our business, results of operations or financial condition.

Our business could be materially adversely affected as a result of war, acts of terrorism or natural disasters.

Terrorist acts, acts of war, natural disasters or other indirect effects of climate change may cause damage or disruption to our employees, facilities, customers, partners, suppliers, distributors and resellers, which could have a material adverse effect on our business, results of operations or financial condition. Such events may also cause damage or disruption to transportation and communication systems and to our ability to manage logistics in such an environment, including receipt of components and distribution of products.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIES

As of December 31, 2010, we owned or leased the facilities described below:

Location	Approximate Sq. Ft.*		Principal Use(s)	Principal Segment(s)
Hopkinton, MA	owned:	1,681,000	executive and administrative offices, R&D, customer service and sales	Information Storage, Information Intelligence Group
Franklin, MA	owned: leased:	922,000 240,000	manufacturing	Information Storage
Bedford, MA	leased:	328,000	R&D, customer service, sales and administrative offices	RSA Information Security
Apex, NC	owned:	390,000	manufacturing	Information Storage
Palo Alto, CA	owned: leased:	462,000 654,000	executive and administrative offices, R&D, sales, marketing and data center	VMware Virtual Infrastructure
Other North American Locations	owned: leased:	955,000 3,072,000	executive and administrative offices, sales, customer service, R&D and data center	**
Asia Pacific	leased:	1,836,000	sales, customer service, R&D and data center	**
Cork, Ireland	owned: leased:	575,000 56,000	manufacturing, customer service, R&D, administrative offices and sales	**
Europe, Middle East and Africa (excluding Cork, Ireland)	owned: leased:	35,000 1,509,000	sales, manufacturing, customer service, R&D and data center	**
Latin America	leased:	93,000	sales and customer service	**

* Of the total square feet owned and leased, approximately 922,000 square feet was vacant and 441,000 square feet was leased or subleased to non-EMC businesses.

** All segments of our business generally utilize these facilities.

We also own land in Massachusetts and Ireland for possible future expansion purposes. We believe our existing facilities are suitable and adequate for our present purposes. For further information regarding our lease obligations, see Note M to the Consolidated Financial Statements.

ITEM 3. LEGAL PROCEEDINGS

See Note M to the Consolidated Financial Statements.

ITEM 4. RESERVED

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EXECUTIVE OFFICERS OF THE REGISTRANT

Our executive officers are as follows:

Name	Age	Position
Joseph M. Tucci	63	Chairman, President and Chief Executive Officer
William J. Teuber, Jr.	59	Vice Chairman
Jeremy Burton	43	Executive Vice President and Chief Marketing Officer
Arthur W. Coviello, Jr.	57	Executive Chairman, RSA, the Security Division of EMC
Paul T. Dacier	53	Executive Vice President and General Counsel
Richard R. Devenuti	52	President, Information Intelligence Group
Howard D. Elias	53	President and Chief Operating Officer, EMC Information Infrastructure and Cloud Services
Patrick P. Gelsinger	49	President and Chief Operating Officer, EMC Information Infrastructure Products
David I. Goulden	51	Executive Vice President and Chief Financial Officer
Frank M. Hauck	51	Executive Vice President, Customer Experience
John T. Mollen	60	Executive Vice President, Human Resources
Harry L. You	51	Executive Vice President, Office of the Chairman

Joseph M. Tucci has been the Chairman of the Board of Directors since January 2006 and has been Chief Executive Officer and a Director since January 2001. He has served as President since January 2000. He also served as Chief Operating Officer from January 2000 to January 2001. Prior to joining EMC, Mr. Tucci served as Deputy Chief Executive Officer of Getronics N.V., an information technology services company, from June 1999 through December 1999 and as Chairman of 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.

William J. Teuber, Jr. has been our Vice Chairman since May 2006. In this role, Mr. Teuber assists the Chairman, President and Chief Executive Officer in the day-to-day management of EMC and leads EMC Customer Operations, our worldwide sales and distribution organization. Mr. Teuber served as our Vice Chairman and Chief Financial Officer from May 2006 to August 2006 and as Executive Vice President and Chief Financial Officer from November 2001 to May 2006. Mr. Teuber joined EMC in 1995. Prior to serving as our Chief Financial Officer, he served as our Controller. Mr. Teuber is a director of Popular, Inc., a diversified financial services company.

Jeremy Burton has been our Executive Vice President and Chief Marketing Officer since March 2010. Prior to joining EMC, Mr. Burton was President and Chief Executive Officer of Serena Software, Inc., a global independent software company. Previously, Mr. Burton was Group President of the Security and Data Management Business Unit of Symantec Corporation, a provider of security, storage and systems management solutions, where he was responsible for the company’s $2 billion Enterprise Security product line. Prior to that role, he served as Executive Vice President of the Data Management Group at VERITAS Software Corporation (now a part of Symantec) where he was responsible for the company’s backup and archiving products. He also served as VERITAS’ Chief Marketing Officer. Earlier in his career, Mr. Burton spent nearly a decade at Oracle Corporation, a large enterprise software company, ultimately in the role of Senior Vice President of Product and Services Marketing.

Arthur W. Coviello, Jr. has been our Executive Chairman, RSA, the Security Division of EMC, since February 2011. Mr. Coviello served as our Executive Vice President and President of RSA from September 2006 to February 2011. Prior to joining EMC, Mr. Coviello served as Chief Executive Officer of RSA Security Inc. from January 2000 to September 2006 and as acting Chief Financial Officer of RSA Security from December 2005 to May 2006. He served as President of RSA Security from March 1999 to September 2006. Mr. Coviello joined RSA in 1995. Mr. Coviello is a director of EnerNOC, Inc., a provider of demand response and energy management solutions to commercial, institutional and industrial customers, as well as electric power grid operators and utilities in the United States.

Paul T. Dacier has been our Executive Vice President and General Counsel since May 2006. Mr. Dacier served as Senior Vice President and General Counsel from February 2000 to May 2006 and joined EMC in 1990 as Corporate Counsel. Mr. Dacier is a director of AerCap Holdings N.V., a global aviation company.

Richard R. Devenuti has been our President, Information Intelligence Group, since October 2010. Mr. Devenuti served as chief operating officer of the Information Intelligence Group division from July 2008 to October 2010. Prior to joining EMC,

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Mr. Devenuti spent 19 years at Microsoft Corporation, a manufacturer of software products for computing devices, most recently as its Senior Vice President of Microsoft Services and IT. Prior to joining Microsoft, Mr. Devenuti spent four years at Deloitte Touche as a senior accountant. Mr. Devenuti is a director of St. Jude Medical, Inc., a global cardiovascular medical devices company, and Convergys Corporation, a global leader in relationship management.

Howard D. Elias has been our President and Chief Operating Officer, EMC Information Infrastructure and Cloud Services since September 2009. Previously, Mr. Elias served as President, EMC Global Services and EMC Ionix from September 2007 to September 2009. Mr. Elias served as our Executive Vice President, Global Services and Resource Management Software Group from May 2006 to September 2007 and served as our Executive Vice President, Global Marketing and Corporate Development from January 2006 to May 2006. He served as Executive Vice President, Corporate Marketing, Office of Technology and New Business Development from January 2004 to January 2006. Prior to joining EMC, Mr. Elias served in various capacities at Hewlett-Packard Company, a provider of information technology products, services and solutions for enterprise customers, most recently as Senior Vice President of Business Management and Operations in the Enterprise Systems Group. Mr. Elias is a director of Gannett Company, Inc., a leading international news and information company.

Patrick P. Gelsinger has been our President and Chief Operating Officer, EMC Information Infrastructure Products since September 2009. Prior to joining EMC, Mr. Gelsinger was Senior Vice President and Co-General Manager of Intel Corporation’s Digital Enterprise Group from 2005 to September 2009 and was Intel’s Senior Vice President, Chief Technology Officer from 2002 to 2005. Prior to this, Mr. Gelsinger led Intel’s Desktop Products Group. Intel Corporation designs and builds the essential technologies that serve as the foundation for the world’s computing devices.

David I. Goulden has been our Executive Vice President and Chief Financial Officer since August 2006. Mr. Goulden served as our Executive Vice President, Customer Operations from April 2004 to August 2006. He served as Executive Vice President, Customer Solutions and Marketing and New Business Development from November 2003 to April 2004. Prior to joining EMC in 2002, Mr. Goulden served in various capacities at Getronics N.V., an information technology services company, most recently as a member of the Board of Management, President and Chief Operating Officer for the Americas and Asia Pacific. Mr. Goulden is a director of VMware.

Frank M. Hauck has been an Executive Vice President since July 2000 and in October 2010, he was appointed Executive Vice President, Customer Experience. In his current role, Mr. Hauck leads a number of key EMC functions, including EMC’s Solutions, Technology Alliances, Executive Briefing Center customer programs, Customer Quality, Total Customer Experience, Business Operations and Common Hardware Products and oversees Worldwide Manufacturing and Global Supply Chain Operations, Advanced Development and Partner Engineering. From April 2009 until September 2009, Mr. Hauck served as the interim leader of the EMC Storage Division. Mr. Hauck served as Executive Vice President, Customer Quality and Services from April 2005 to May 2006. He served as Executive Vice President, Customer Operations from November 2001 to April 2005. Mr. Hauck has also held a number of other executive positions since he joined EMC in 1990, including Executive Vice President, Global Sales and Services, Chief Information Officer, Executive Vice President, Products and Offerings, Senior Vice President, Business Integration, and Senior Vice President, Customer Service.

John T. Mollen has been our Executive Vice President, Human Resources since May 2006. Mr. Mollen joined EMC as Senior Vice President, Human Resources in September 1999. Prior to joining EMC, he was Vice President of Human Resources with Citigroup Inc., a financial services company.

Harry L. You has been our Executive Vice President, Office of the Chairman since February 2008. In this role, Mr. You oversees EMC’s corporate strategy and new business development. Prior to joining EMC, Mr. You served as Chief Executive Officer of BearingPoint, Inc., a management and technology consulting firm, from March 2005 to December 2007 and as BearingPoint’s Interim Chief Financial Officer from July 2005 to October 2006. From 2004 to 2005, Mr. You was Executive Vice President and Chief Financial Officer of Oracle Corporation, a large enterprise software company, and from 2001 to 2004, he was 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, EMC SourceOne, ApplicationXtender, Atmos, Avamar, BSAFE, Captiva, Celerra, CenterStage, CLARiiON, Data Domain, Document Sciences, Documentum, Greenplum, Ionix, Isilon, NetWorker, RSA, Symmetrix, Unisphere, Vblock, VNX, VNXe and VPLEX are either registered trademarks or trademarks of EMC Corporation in the United States and/or other countries. VMware, VMware vShield, VMware View, VMware vCenter, VMware vSphere, VMware vCloud, SpringSource and Zimbra are registered trademark or trademarks of VMware, Inc. in the United States and/or other countries. Bus-Tech is a registered trademark of Bus-Tech, Inc. Iomega is a registered trademark of Iomega Corporation. Other trademarks are either registered trademarks or trademarks of their respective owners.

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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS 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 the fiscal periods shown.

Fiscal 2010	High		Low
First Quarter	$	19.03	$	16.45
Second Quarter		20.00		17.10
Third Quarter		21.83		17.87
Fourth Quarter		23.20		19.40
Fiscal 2009	High		Low
First Quarter	$	12.59	$	9.61
Second Quarter		13.73		10.91
Third Quarter		17.48		12.31
Fourth Quarter		18.44		16.12

We had 11,857 holders of record of our common stock as of February 25, 2011.

We have never paid cash dividends on our common stock. While subject to periodic review, the current policy of our Board of Directors is to retain cash and investments primarily to provide funds for our future growth. Additionally, we use cash to repurchase our common stock.

ISSUER PURCHASES OF EQUITY SECURITIES IN THE FOURTH QUARTER OF 2010

Period	Total Number of Shares Purchased(1)			Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
October 1, 2010 – October 31, 2010		179,551		$	21.50		—		144,859,364
November 1, 2010 – November 30, 2010		1,993,821			21.00		1,787,604		143,071,760
December 1, 2010 – December 31, 2010		7,128,134			22.91		7,089,386		135,982,374
Total		9,301,506	(2)	$	22.47		8,876,990		135,982,374

(1) Except as noted in note (2), all shares were purchased in open-market transactions pursuant to our previously announced authorization by our Board of Directors in April 2008 to repurchase 250.0 million shares of our common stock. This repurchase authorization does not have a fixed termination date.

(2) Includes an aggregate of 424,516 shares withheld from employees for the payment of taxes.

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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

FIVE YEAR SELECTED CONSOLIDATED FINANCIAL DATA

(in thousands, except per share amounts)

	Year Ended December 31,
	2010(1)		2009(3)		2008(4)		2007(5)		2006(6)
Summary of Operations:
Revenues	$	17,015,126	$	14,025,910	$	14,876,163	$	13,230,205	$	11,155,090
Operating income		2,683,286		1,414,275		1,568,936		1,739,252		1,207,758
Net income attributable to EMC Corporation		1,899,995		1,088,077		1,275,104		1,598,965		1,220,123
Net income attributable to EMC Corporation per weighted average share, basic	$	0.92	$	0.54	$	0.62	$	0.77	$	0.54
Net income attributable to EMC Corporation per weighted average share, diluted	$	0.88	$	0.53	$	0.61	$	0.74	$	0.53
Weighted average shares, basic		2,055,959		2,022,371		2,048,506		2,079,542		2,248,431
Weighted average shares, diluted		2,147,931		2,055,146		2,079,853		2,157,873		2,286,304
Balance Sheet Data:
Working capital	$	405,308	$	5,390,135	$	5,446,593	$	5,644,894	$	2,858,825
Total assets		30,833,284		26,812,003		23,874,575		22,284,654		18,566,247
Current obligations(2)		3,214,771		—		—		—		—
Long-term obligations		—		3,100,290		2,991,943		2,889,362		2,792,424
Total shareholders’ equity		18,166,776		16,060,474		13,655,950		13,060,342		10,736,402

(1) In 2010, EMC acquired all of the outstanding shares of 10 companies (see Note C to the Consolidated Financial Statements).

(2) Current obligations relate to the convertible debt, which was classified as current at December 31, 2010 (see Note E to the Consolidated Financial Statements).

(3) In 2009, EMC acquired all of the outstanding shares of 5 companies (see Note C to the Consolidated Financial Statements).

(4) In 2008, EMC acquired all of the outstanding shares of 12 companies (see Note C to the Consolidated Financial Statements).

(5) 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 to Cisco.

(6) In 2006, EMC acquired all of the outstanding shares of 8 companies.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis (“MD&A”) of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and notes thereto which appear elsewhere in this Annual Report on Form 10-K.

All dollar amounts expressed numerically in this MD&A are in millions.

Certain tables may not add due to rounding.

INTRODUCTION

We manage our business in two broad categories: EMC Information Infrastructure and VMware Virtual Infrastructure.

EMC Information Infrastructure

Our EMC Information Infrastructure business consists of three of our segments: Information Storage, Information Intelligence Group and RSA Information Security. The objective for our EMC Information Infrastructure business is to simultaneously invest in the business, increase our market share and improve our profitability. During 2010, we continued to invest in expanding our total addressable market opportunity through internal research and development (“R&D”) efforts and acquisitions to capitalize on the continued growth of enterprise data. Additionally, because of these investments, we believe we are well positioned at the intersection of two trends in Information Technology (“IT”) – Cloud Computing and Big Data. Cloud Computing leverages an on-demand, self-managed, virtualized infrastructure to deliver IT-as-a-Service in a more efficient, flexible and cost-effective manner. While the fundamental transition to Cloud Computing architectures is only in the early stages, we believe our offerings are well suited to capitalize on this trend as it unfolds over the next several years. Big Data, which is a primary contributor to the staggering pace of data growth, refers to the large repositories of corporate and external data, including unstructured information created by social media and other web repositories. The tools and platforms surrounding Big Data require new approaches and capabilities to handle these data sets, particularly in managing the associated analytics that unlock the value contained within the massive amount of data. With the investments we made by acquiring Isilon and Greenplum, as well as our internally developed Atmos offering, we believe we are well positioned in this market.

Through a combination of reinvesting for growth and growing faster than the markets we serve, we believe we will be able to increase our 2011 earnings at a rate faster than the rate at which we will grow our revenue and reinforce our position as the provider for enterprise data, cloud infrastructures and Big Data solutions.

VMware Virtual Infrastructure

VMware’s current financial focus is on long-term revenue growth to generate cash flows to fund its expansion of industry segment share and evolve its virtualization-based products for data centers, desktop computers and cloud computing through a combination of internal development and acquisitions. VMware expects to grow its business by broadening its virtualization infrastructure software solutions technology and product portfolio, increasing product awareness, promoting the adoption of virtualization and building long-term relationships with its customers through the adoption of enterprise license agreements. Since the introduction in 2009 of VMware vSphere and VMware View 4, which is compatible with VMware vSphere, VMware has introduced more products that build on the vSphere foundation. In the third quarter of 2010, VMware released updated versions of VMware vSphere and VMware View, and VMware plans to continue to introduce additional products in the future. Additionally, VMware has made, and expects to continue to make, acquisitions designed to strengthen its product offerings and/or extend its strategy to deliver solutions that can be hosted at customer data centers or at service providers.

RESULTS OF OPERATIONS

Revenues

The following table presents revenue by our segments:

							Percentage Change
	2010		2009		2008		2010 vs 2009			2009 vs 2008
Information Storage	$	12,699.1	$	10,659.4	$	11,632.3		19.1	%		(8.4	)%
Information Intelligence Group		735.9		739.6		785.6		(0.5	)		(5.9	)
RSA Information Security		729.4		606.0		581.3		20.4			4.2
VMware Virtual Infrastructure		2,850.7		2,021.0		1,876.9		41.1			7.7
Total revenues	$	17,015.1	$	14,025.9	$	14,876.2		21.3	%		(5.7	)%

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Consolidated product revenues increased 23.4% to $10,892.9 in 2010. The consolidated product revenues increases were primarily driven by the Information Storage and the VMware Virtual Infrastructure segments’ product revenues. The Information Storage segment’s product revenues increased 22.6% to $8,824.3 in 2010. Within the high-end of the Information Storage segment, our Symmetrix product revenues increased 24.9%. Within the mid-tier platform products of the Information Storage segment, product revenues increased 26.8% in 2010, partly due to the annual impact of the addition of the Data Domain products in the third quarter of 2009. The overall growth in product revenues in 2010 reflects a continued higher demand for our IT infrastructure offerings to address the storage needs for continued information growth, particularly as customers continue to build out their own data centers to develop and support their private or public cloud infrastructures.

The VMware Virtual Infrastructure segment’s product revenues increased 36.0% to $1,399.3 in 2010. VMware’s license revenues continue to benefit from strong customer demand for the vSphere platform, a foundation to cloud computing and an increase in customer spending as the economic conditions of the industry improved.

The Information Intelligence Group segment’s product revenues increased 3.2% to $269.1 in 2010. The RSA Information Security segment’s product revenues increased 17.6% to $400.2 in 2010. Increases in both segments were attributable to increased demand for software licenses.

Consolidated product revenues declined 12.3% to $8,828.1 in 2009. The Information Storage segment’s product revenues decreased 12.9% to $7,198.1, the Information Intelligence Group segment’s product revenues declined 6.2% to $260.8 and the RSA Information Security segment’s product revenues declined 4.2% to $340.3 in 2009. The VMware Virtual Infrastructure segment’s product revenues declined 12.4% to $1,029.0 in 2009. The decline in product revenues across all segments in 2009 was primarily attributable to lower demand resulting from the challenging global economic environment and resulting negative impact in our customers’ IT purchases.

Consolidated services revenues increased 17.8% to $6,122.3 in 2010. The consolidated services revenues increase were primarily driven by the Information Storage and the VMware Virtual Infrastructure segments’ services revenues.

The Information Storage segment’s services revenues increased 11.9% to $3,874.8 in 2010. The increases in services revenues were primarily attributable to higher demand for systems maintenance-related services, which correlates to the increased sales in storage products. In addition, a growing demand for professional services and software maintenance also contributed to the increases in services revenues in 2010.

The VMware Virtual Infrastructure segment’s services revenues increased 46.3% to $1,451.5 in 2010. The increases in services revenues were primarily attributable to growth in VMware’s software maintenance revenues. In 2010, services revenues benefited from strong renewals, multi-year software maintenance contracts sold in previous periods and additional maintenance contracts sold in conjunction with software licenses.

The Information Intelligence Group segment’s services revenues declined 2.5% to $466.8 in 2010. The decline in services revenues was primarily attributable to lower demand for professional services as customers transition from enterprise-wide to application-centric deployments. The RSA Information Security segment’s services revenues increased 23.9% to $329.2 in 2010. Services revenues increased due to an increase in professional services and maintenance revenues resulting from continued demand for support from our installed base.

Consolidated services revenues increased 8.2% to $5,197.8 in 2009. The Information Storage segment’s services revenues increased 2.7% to $3,461.4 and the RSA Information Security segment’s services revenues increased 17.5% to $265.7 in 2009. The VMware Virtual Infrastructure segment’s services revenues increased 41.3% to $992.0 in 2009. The Information Intelligence Group segment’s services revenues declined 5.7% to $478.8 in 2009. Services revenues increased across all segments, excluding the Information Intelligence Group segment, in 2009 due to an increase in maintenance revenues resulting from continued demand for support from our installed base. The increased demand was partially offset by a decline in professional services revenue which was associated with the decline in product revenues.

Consolidated revenues by geography were as follows:

							Percentage Change
	2010		2009		2008		2010 vs 2009			2009 vs 2008
United States	$	9,152.4	$	7,384.3	$	7,990.8		23.9	%		(7.6	)%
Europe, Middle East and Africa		4,942.1		4,290.3		4,555.0		15.2			(5.8	)
Asia Pacific		1,965.2		1,603.1		1,640.1		22.6			(2.3	)
Latin America, Mexico and Canada		955.5		748.2		690.3		27.7			8.4

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Revenues increased in 2010 compared to 2009 in all of our markets due to greater demand for our products and services offerings. Revenues decreased in 2009 in all of our markets, with the exception of Latin America, Mexico and Canada, due to the challenging global economic environment and resulting negative impact in customers’ IT purchases. Revenues increased in Latin America, Mexico and Canada primarily due to increased demand for our offerings.

Changes in exchange rates contributed 0.2% to the overall revenue increase in 2010 compared to 2009. The impact of the change in rates was most significant in the Asia Pacific markets, primarily Australia and Japan, Canada and Brazil, partially offset by the Euro and the pound sterling. Changes in exchange rates negatively impacted revenue growth by 1.4% in 2009. The impact of the change in rates in 2009 was most significant in the European market, primarily Germany, France, Italy and the United Kingdom.

Costs and Expenses

The following table presents our costs and expenses, other income and net income attributable to EMC Corporation.

										Percentage Change
	2010			2009			2008			2010 vs 2009			2009 vs 2008
Cost of revenue:
Information Storage	$	5,836.4		$	5,256.7		$	5,670.1			11.0	%		(7.3	)%
Information Intelligence Group		258.2			274.8			305.6			(6.0	)		(10.1	)
RSA Information Security		221.6			186.5			170.6			18.8			9.3
VMware Virtual Infrastructure		425.3			316.3			268.7			34.5			17.7
Corporate reconciling items		242.7			246.8			238.7			(1.7	)		3.4
Total cost of revenue		6,984.1			6,281.0			6,653.8			11.2			(5.6	)
Gross margins:
Information Storage		6,862.7			5,402.7			5,962.2			27.0			(9.4	)
Information Intelligence Group		477.7			464.8			480.0			2.8			(3.2	)
RSA Information Security		507.8			419.5			410.7			21.0			2.1
VMware Virtual Infrastructure		2,425.5			1,704.7			1,608.2			42.3			6.0
Corporate reconciling items		(242.7	)		(246.8	)		(238.7	)		(1.7	)		3.4
Total gross margin		10,031.0			7,744.9			8,222.4			29.5			(5.8	)
Operating expenses:
Research and development(1)		1,888.0			1,627.5			1,721.3			16.0			(5.4	)
Selling, general and administrative(2)		5,375.3			4,595.6			4,601.6			17.0			(0.1	)
In-process research and development		—			—			85.8			—			(100.0	)
Restructuring and acquisition-related charges		84.4			107.5			244.7			(21.5	)		(56.1	)
Total operating expenses		7,347.7			6,330.6			6,653.4			16.1			(4.9	)
Operating income		2,683.3			1,414.3			1,568.9			89.7			(9.9	)
Investment income, interest expense and other expenses		(75.3	)		(39.7	)		31.3			89.7			(226.8	)
Income before income taxes		2,608.0			1,374.6			1,600.2			89.7			(14.1	)
Income tax provision		638.3			252.8			280.4			152.5			(9.8	)
Net income		1,969.7			1,121.8			1,319.8			75.6			(15.0	)
Less: Net income attributable to the non-controlling interest in VMware, Inc.		(69.7	)		(33.7	)		(44.7	)		106.8			(24.6	)
Net income attributable to EMC Corporation	$	1,900.0		$	1,088.1		$	1,275.1			74.6	%		(14.7	)%

(1) Amount includes corporate reconciling items of $287.4, $235.8 and $175.4 for the years ended December 31, 2010, 2009 and 2008, respectively.

(2) Amount includes corporate reconciling items of $477.5, $495.5 and $367.2 for the years ended December 31, 2010, 2009 and 2008, respectively.

Gross Margins

Our gross margin percentages were 59.0%, 55.2% and 55.3% in 2010, 2009 and 2008, respectively. The increase in the gross margin percentage in 2010 compared to 2009 was attributable to the Information Storage segment, which increased overall gross margins by 189 basis points, the VMware Virtual Infrastructure segment, which increased overall gross margins by 161 basis points, the RSA Information Security segment, which increased overall gross margins by 11 basis points and the Information Intelligence Group segment, which increased overall gross margins by 10 basis points. Also contributing to the increased overall

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gross margin percentage was the decrease of corporate reconciling items, consisting of stock-based compensation, acquisition-related intangible asset amortization, restructuring charges and transition costs, which increased the consolidated gross margin percentage by 3 basis points. The decline in the gross margin percentage in 2009 compared to 2008 was primarily attributable to the Information Storage segment, which decreased overall gross margins by 17 basis points and the RSA Information Security segment, which decreased overall gross margins by 5 basis points. These declines were partially offset by the VMware Virtual Infrastructure segment which improved overall gross margins by 11 basis points, and the Information Intelligence Group segment which improved overall gross margins by 7 basis points. The increase in corporate reconciling items, consisting of stock-based compensation, acquisition-related intangible asset amortization, restructuring charges and transition costs, decreased the consolidated gross margin percentage by 6 basis points. The transition costs represent the incremental costs incurred to transform our current cost structure to a more streamlined cost structure.

For segment reporting purposes, stock-based compensation, restructuring and acquisition-related charges, acquisition-related intangible asset amortization and transition costs are recognized as corporate expenses and are not allocated among our various operating segments. The decrease of $4.1 in the corporate reconciling items in 2010 was attributable to a $12.5 decrease in restructuring charges and a $0.9 decrease in transition costs, partially offset by a $9.3 increase in stock-based compensation expense. Acquisition-related intangible asset amortization expense remained flat. The $9.3 increase in stock-based compensation expense was primarily attributable to the incremental expense associated with VMware’s equity grants and the full-year impact of options exchanged in the acquisition of Data Domain, which was acquired in the third quarter of 2009. The increase of $8.1 in the corporate reconciling items in 2009 was attributable to a $12.5 increase in restructuring charges, a $19.3 increase in stock-based compensation expense and a $3.1 increase in transition costs, partially offset by a $26.8 decrease in acquisition-related intangible asset amortization expense. The $19.3 increase in stock-based compensation expense was primarily attributable to incremental expense associated with options exchanged in the acquisition of Data Domain and expense associated with VMware’s equity grants. The decrease in intangible asset amortization expense in 2009 was attributable to acquisition-related intangible assets acquired in acquisitions becoming fully amortized.

The gross margin percentages for the Information Storage segment were 54.0%, 50.7% and 51.3% in 2010, 2009 and 2008, respectively. The increase in gross margin percentage in 2010 compared to 2009 was primarily attributable to improved product gross margins, driven by an improved product mix attributable to higher margin product offerings, higher sales volume and an improved cost structure. The decrease in the gross margin percentage in 2009 compared to 2008 was primarily attributable to lower sales volume and a greater mix of lower margin Iomega revenue. Iomega, acquired in June 2008, operates within the consumer and small business marketplace which historically has had lower gross margins than marketplaces typically served by our Information Storage segment. Partially offsetting these declines was an improvement in the gross margin attributable to a greater mix of higher margin services revenues as a percentage of total segment revenues. Services revenues as a percentage of total Information Storage segment revenues increased to 32.5% in 2009 from 29.0% in 2008.

The gross margin percentages for Information Intelligence Group segment were 64.9%, 62.8% and 61.1% in 2010, 2009 and 2008, respectively. The increase in gross margin percentage in 2010 compared to 2009 related to an increase in the product margins due to a decrease in the royalties paid for third party software embedded into the products in 2010 compared to 2009. The increase in the gross margin percentage in 2009 compared to 2008 was primarily attributable to a change in the mix of services revenues with a higher proportion of maintenance revenues and a lower proportion of professional services revenues to total services revenues. Maintenance revenues generally provide a higher margin percentage than professional services revenues.

The gross margin percentages for the RSA Information Security segment were 69.6%, 69.2% and 70.6% in 2010, 2009 and 2008, respectively. The slight increase in the gross margin percentage in 2010 compared to 2009 was due to an increase in product margins partially offset by a decrease in services margins. The decrease in the gross margin percentage in 2009 compared to 2008 was primarily due to a decrease in product revenues as a percentage of total segment revenues. Product revenues as a percentage of total revenues decreased to 61.1% in 2008 and to 56.2% in 2009.

The gross margin percentages for the VMware Virtual Infrastructure segment were 85.1% in 2010, 84.4% in 2009 and 85.7% in 2008. The increase in gross margin percentage in 2010 compared to 2009 was primarily attributable to improved services margins. The decrease in the gross margin percentage in 2009 compared to 2008 was primarily attributable to an increase in the amortization of software development costs as a percentage of total segment revenues. The amortization of software development costs as a percentage of total segment revenues increased to 3.3% in 2009, compared to 2.3% in 2008.

Research and Development

As a percentage of revenues, R&D expenses were 11.1%, 11.6% and 11.6% in 2010, 2009 and 2008, respectively. R&D expenses increased $260.5 in 2010 primarily due to an increase in personnel-related costs, including stock-based compensation, depreciation expense, cost of facilities and travel costs, partially offset by greater levels of software capitalization. Personnel-related costs increased by $250.6, depreciation expense increased by $23.4, cost of facilities increased by $19.4 and travel costs

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increased by $9.4. Capitalized software development costs, which reduce R&D expense, increased by $66.3. R&D expenses decreased by $93.8 in 2009 primarily due to a decrease in personnel-related costs, depreciation expense, materials costs and facilities costs. Personnel-related costs decreased by $19.9, depreciation expense decreased by $19.1, the cost of materials to support new product development decreased by $14.0 and the cost of facilities decreased by $11.9. Capitalized software development costs, which reduce R&D expense, increased by $9.5.

Corporate reconciling items within R&D, which consist of stock-based compensation, acquisition-related intangible asset amortization and transition costs increased $51.6 and $60.4 to $287.4 and $235.8 in 2010 and 2009, respectively. Stock-based compensation expense increased $44.2 and $52.2 in 2010 and 2009, respectively. Acquisition-related intangible asset amortization increased $10.7 in 2010 and decreased $0.2 in 2009 and transition costs decreased $3.3 and increased $8.4 in 2010 and 2009, respectively. Intangible asset amortization increased 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 2010 was attributable to the incremental expense associated with VMware’s equity grants and the full year impact of options exchanged in the acquisition of Data Domain. The increase in stock-based compensation expense in 2009 was primarily attributable to expense associated with options exchanged in the acquisition of Data Domain.

R&D expenses within EMC’s Information Infrastructure business, as a percentage of EMC’s Information Infrastructure business revenues, were 7.9%, 8.5% and 9.3% in 2010, 2009 and 2008, respectively. R&D expenses increased $100.7 in 2010 primarily due to increases in personnel-related costs, depreciation expense, cost of facilities and travel costs. Personnel-related costs increased by $122.4, depreciation expense increased by $14.7, cost of facilities increased by $14.3 and travel costs increased $6.1. Partially offsetting these increased costs was an increase in capitalized software development costs of $74.2. R&D expenses decreased $181.6 in 2009 primarily due to a reduction in personnel-related costs, facilities costs, materials costs and depreciation expense. Personnel-related costs decreased by $99.0, the cost of facilities decreased by $18.2, the cost of materials to support new product development decreased by $14.0 and depreciation expense decreased by $13.4. In 2009, the cost reductions were primarily due to savings achieved as a result of our 2008 restructuring programs, our cost savings initiatives and greater levels of capitalized software development. Capitalized software development costs, which reduce R&D expense, increased by $31.8. The increase in capitalized software development costs is attributable to the timing of efforts associated with new product development.

R&D expenses within the VMware Virtual Infrastructure business, as a percentage of VMware’s revenues, were 16.8%, 18.3% and 18.2% in 2010, 2009 and 2008, respectively. R&D expenses increased $108.3 in 2010 largely due to increases in personnel-related costs of $87.3, primarily due to increased salaries and benefits expenses resulting from incremental headcount from strategic hiring and acquisitions. Additionally, capitalized software development costs decreased $7.9 in 2010 primarily due to lower costs capitalized on products that build on the VMware vSphere foundation in 2010. R&D expenses increased $27.3 in 2009 primarily due to an increase in personnel-related costs, including salaries and benefits which increased $18.4 due to incremental headcount from strategic hiring and a decrease in capitalized software development costs, partially offset by decreased costs resulting from the austerity measures implemented in the fourth quarter of 2008. Capitalized software development costs, which reduce R&D expense, decreased by $22.3 in 2009 when compared to 2008 as VMware vSphere became generally available in 2009.

Selling, General and Administrative

As a percentage of revenues, selling, general and administrative (“SG&A”) expenses were 31.6%, 32.8% and 30.9% in 2010, 2009 and 2008, respectively. SG&A expenses increased by $779.7 in 2010 primarily due to increases in personnel-related costs, commissions, travel costs, business development costs, cost of facilities and depreciation expense. Personnel-related costs increased by $439.4, commissions increased by $168.1, travel costs increased by $73.3, business development costs increased by $43.7, cost of facilities increased by $35.6 and depreciation expense increased by $28.5 in 2010. SG&A expenses decreased by $6.0 in 2009 driven by the cost reduction efforts implemented in the fourth quarter of 2008. Personnel-related costs, travel, supplies and other administrative costs declined by $103.3. Additionally, our provisions for bad debts decreased by $20.3. Partially offsetting these decreased costs were $57.5 for a provision for litigation, increased commissions of $53.3 and increased depreciation of $26.6.

Corporate reconciling items within SG&A, which consist of stock-based compensation, acquisition-related intangible asset amortization, provision for litigation and transition costs decreased $18.0 to $477.5 in 2010 and increased $128.3 to $495.5 in 2009. Intangible asset amortization increased $26.8, stock-based compensation expense increased $25.9 and transition costs decreased $13.2 in 2010. Additionally, the provision for litigation of $57.5 in 2009 did not recur in 2010. Intangible asset amortization increased primarily due to VMware acquisitions and 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. In 2009, we incurred $57.5 for a provision for litigation, stock-based compensation expense increased $32.8 and transition costs increased $43.1.

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Partially offsetting these increases was a decrease in acquisition-related intangible asset amortization expense of $5.1. The increase in stock-based compensation expense in 2009 was primarily attributable to incremental expense associated with VMware’s equity grants and expense associated with options exchanged in the acquisition of Data Domain.

SG&A expenses within EMC’s Information Infrastructure business, as a percentage of EMC’s Information Infrastructure business revenues, were 26.4%, 27.1% and 26.8% in 2010, 2009 and 2008, respectively. SG&A expenses increased $479.0 in 2010 primarily due to increases in personnel-related costs, commissions, travel costs, business development costs, cost of facilities and depreciation. Personnel-related costs increased by $258.8, commissions increased by $108.4, travel costs increased by $52.0, business development costs increased by $35.3, cost of facilities increased by $21.1 and depreciation expense increased by $14.9. Partially offsetting these increases was a decrease in professional services costs of $12.3. SG&A expenses decreased by $228.8 in 2009 driven by the cost reduction efforts implemented in the fourth quarter of 2008. Personnel-related costs, travel, supplies and other administrative costs declined by $228.0. Additionally, our provisions for bad debts decreased by $21.2. Partially offsetting these decreased costs was an increase in depreciation expense of $15.8.

SG&A expenses within the VMware Virtual Infrastructure business, as a percentage of VMware’s revenues, were 40.7%, 41.7% and 39.8% in 2010, 2009 and 2008, respectively. SG&A expenses increased $318.7 in 2010. The increase in SG&A expenses in 2010 was primarily the result of higher salaries 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. SG&A expenses increased $94.5 in 2009. The increase in SG&A expenses in 2009 consisted primarily of higher commissions, increased salaries and benefits resulting from increased sales volume and incremental headcount added in conjunction with VMware’s international expansion, as well as increased spending to enhance the sales and marketing systems infrastructure of its business. These cost increases were partially offset by decreased travel and entertainment costs resulting from the austerity measures implemented in the fourth quarter of 2008 and decreased marketing program expenses as compared with VMware’s branding initiative in 2008. These austerity measures included, but were not limited to, reduced travel and entertainment costs, decreased contractor costs and hiring limited to roles that fit VMware strategic initiatives.

In-Process Research and Development

In connection with acquisitions in 2010 and 2009, we acquired and capitalized $43.9 and $175.0 of in-process research and development (“IPR&D”), respectively. Projects acquired in 2010 are expected to be completed in 2012. Projects related to the IPR&D acquired in 2009 were completed in 2010. As a result of accounting rule changes which were effective at the beginning of 2009, IPR&D resulting from business combinations was capitalized as an asset with amortization commencing upon completion of the project. It was expensed at the time of acquisition prior to 2009. IPR&D expense was $85.8 in 2008.

The value assigned to the IPR&D was determined utilizing the income approach by determining cash flow projections relating to the identified IPR&D projects. The stage of completion of each in-process project was estimated to determine the discount rates to be applied to the valuation of the in-process technology. Based upon the level of completion and the risk associated with the in-process technology, we applied discount rates ranging from 19% to 22% to value the IPR&D projects acquired in 2010, 17% to 21% to the value of projects acquired in 2009 and 20% to 60% for amounts expensed related to IPR&D projects in 2008.

Restructuring and Acquisition-Related Charges

In 2010, 2009 and 2008, we incurred restructuring and acquisition-related charges of $84.4, $107.5 and $250.3, respectively. In 2010, we incurred $76.7 of restructuring charges, of which $37.8 related to our fourth quarter 2010 program. The remainder was primarily related to our 2008 restructuring program and $7.7 of costs in connection with acquisitions for financial advisory, legal and accounting services. Our 2008 restructuring program includes the consolidation of facilities. We will incur restructuring charges of $29.2 through 2015 as we vacate these facilities.

In the fourth quarter of 2010, we implemented a restructuring program to create further operational efficiencies which will result in a workforce reduction of approximately 400 positions. The program resulted in a charge of $37.8. The action will impact positions around the globe covering our Information Storage, RSA Information Security and Information Intelligence Group segments. The actions are expected to be completed by the end of 2011.

In 2009, we incurred $88.4 of restructuring charges and $19.1 of costs in connection with acquisitions for financial advisory, legal and accounting services. In 2008, all charges only relate to restructuring activities. (See Note P to the Consolidated Financial Statements).

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Investment Income

Investment income was $142.5, $140.4 and $247.0 in 2010, 2009 and 2008, respectively. Investment income increased slightly in 2010 primarily due to increased interest income on our sales-type leases. The weighted-average return on investments, excluding realized gains, was 1.2%, 1.3% and 3.1% in 2010, 2009 and 2008, respectively. Net realized gains were $15.8, $20.8 and $6.6 in 2010, 2009 and 2008, respectively.

Interest Expense

Interest expense was $178.3, $182.5 and $176.4 in 2010, 2009 and 2008, respectively. Interest expense consists primarily of interest on our convertible debt. Included in interest expense are non-cash interest charges related to amortization of the debt discount attributable to the conversion feature of $114.5, $108.3 and $102.6 in 2010, 2009 and 2008, respectively. We are accreting our convertible debt to their stated values over their term. (See Note E to the Consolidated Financial Statements).

Other Income (Expense), Net

Other income (expense), net was $(39.5), $2.4 and $(39.4) in 2010, 2009 and 2008, respectively. Other expense in 2010 was primarily attributable to our consolidated share of the losses from our cloud infrastructure joint venture, VCE Company LLC, of $42.8. This joint venture is accounted for under the equity method. Other income in 2009 was primarily attributable to gains on strategic investments. The increase in 2008 was primarily attributable to an increase in foreign currency transaction losses.

Provision for Income Taxes

Our effective income tax rate was 24.5%, 18.4% and 17.5% in 2010, 2009 and 2008, respectively. The effective income tax rate is based upon the income for the year, the composition of the income in different countries, and adjustments, if any, for the potential tax consequences, benefits or resolutions of audits or other tax contingencies. Our aggregate income tax rate in foreign jurisdictions is substantially lower than our income tax rate in the United States.

In 2010, the lower aggregate income tax rate in foreign jurisdictions reduced our effective rate by 12.2 percentage points compared to our statutory federal tax rate of 35.0%. In 2010, we effected a plan to reorganize our international operations by transferring certain assets of Isilon, Archer Technologies and Bus-Tech entities into a single EMC international holding company. As a result of this reorganization, we incurred an income tax charge which negatively impacted the rate by 3.2 percentage points. We had a reduction in our valuation allowance which arose from the utilization of a certain subsidiary’s foreign net operating loss carryforwards resulting in a benefit to our effective tax rate of 0.6 percentage points. The net effect of tax credits, state taxes, non-deductible permanent differences, resolution of income tax audits and elimination of reserves associated with the expiration of statutes of limitations and other items collectively decreased the rate by 0.9 percentage points.

In 2009, the lower aggregate income tax rate in foreign jurisdictions reduced our effective rate by 17.5 percentage points compared to our statutory federal tax rate of 35.0%. The resolution of income tax audits and elimination of reserves associated with the expiration of statutes of limitations for which we believe we had certain tax exposure favorably reduced our effective tax rate by an additional 4.5 percentage points. In 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 which negatively impacted the rate by 4.4 percentage points. The net effect of tax credits, state taxes, non-deductible permanent differences and changes in valuation allowances and other items collectively increased the rate by 1.0 percentage point, driven principally by non-deductible permanent differences.

In 2008, the lower aggregate income tax rate in foreign jurisdictions reduced our effective rate by 15.9 percentage points compared to our statutory federal tax rate of 35.0%. The resolution of income tax audits and elimination of reserves associated with the expiration of statutes of limitations for which we believe we had certain tax exposure favorably reduced our effective tax rate by an additional 2.9 percentage points. The net effect of non-deductible permanent differences, state taxes, tax credits and other items was an increase to the rate of 1.3 percentage points.

The effective tax rate increased from 2009 to 2010 by 6.1%, from 18.4% to 24.5%. This increase was principally attributable to differences in the composition of the income in different countries and the favorable resolution of income tax audits in 2009, which was partially offset by reductions in our non-deductible permanent differences and the reorganization of our international operations. The effective tax rate increased from 2008 to 2009 by 0.9%, from 17.5% to 18.4%. This increase was principally attributable to the reorganization of RSA and Data Domain in 2009, which was partially offset by incremental benefits from the favorable resolution of uncertain tax positions inclusive of the expiration of statutes of limitation.

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Non-controlling Interest in VMware, Inc.

The net income attributable to the non-controlling interest in VMware was $69.7, $33.7 and $44.7 in 2010, 2009 and 2008, respectively. VMware’s reported net income was $357.4, $197.1 and $290.1 in 2010, 2009 and 2008, respectively. The weighted-average non-controlling interest in VMware was approximately 19.5%, 17.0% and 15.0% in 2010, 2009 and 2008, respectively. In the first quarter of 2010, we announced a stock purchase program of VMware’s Class A common stock to maintain an approximately 80% majority ownership in VMware over the long term. We have purchased approximately 6.0 million shares as of December 31, 2010 for $399.2.

Financial Condition

Cash provided by operating activities was $4,548.8, $3,334.4 and $3,565.1 for 2010, 2009 and 2008, respectively. Cash received from customers was $17,585.4, $14,647.7 and $15,378.1 in 2010, 2009 and 2008, respectively. In 2010, the increase was attributable to an increase in sales volume and higher cash proceeds from the sale of maintenance contracts, which are typically billed and paid in advance of services being rendered. In 2009, the decrease was attributable to a reduction in sales volume. Cash paid to suppliers and employees was $12,830.7, $11,032.9 and $11,747.0 in 2010, 2009 and 2008, respectively. In 2010, the increase was primarily attributable to an increase in headcount and related employee expenses, material costs correlated to higher sales volume and other operating expenses. In 2009, the decrease was attributable to a reduction in purchases associated with a reduction in sales volume and a decrease in compensation costs. Cash received from dividends and interest was $102.9, $109.5 and $240.0 in 2010, 2009 and 2008, respectively. In 2010, 2009 and 2008, we paid $232.1, $316.5 and $232.3, respectively, in income taxes. These payments are comprised of estimated taxes for the current year, extension payments for the prior year and refunds or payments associated with income tax filings and tax audits.

Cash used in investing activities was $6,476.0, $3,095.5 and $1,614.9 in 2010, 2009 and 2008, respectively. Cash paid for acquisitions, strategic investments and other related investments was $3,108.7, $2,847.1 and $731.0 in 2010, 2009 and 2008, respectively. In 2010, we acquired Isilon for $2,301.1, net of cash acquired, and in 2009, we acquired Data Domain for $1,933.9, net of cash acquired. Capital additions were $745.4, $411.6 and $695.9 in 2010, 2009 and 2008, respectively. The higher level of capital additions in 2010 was primarily due to an increase in spending on facility expansion and information technology infrastructure for 2010. In 2009, the lower level of capital additions was due to lower spending on infrastructure as part of our 2009 cost savings initiatives. Capitalized software development costs were $363.0, $304.5 and $295.0 in 2010, 2009 and 2008, respectively. The increase in 2010 was primarily attributable to EMC Information Infrastructure’s efforts on its software development activities. Net purchases of investments were $2,259.0 in 2010 compared to net sales and maturities of $466.6 and $75.1 in 2009 and 2008, respectively. This activity varies from period to period based upon our cash collections, cash requirements and maturity dates of our investments.

Cash (used in) provided by financing activities was $(243.8), $211.9 and $(534.0) in 2010, 2009 and 2008, respectively. In 2010 and 2008, we spent $999.9 and $1,489.5 to repurchase 52.7 million and 112.2 million shares of EMC common stock, respectively. We additionally spent $399.2 to purchase 6.0 million shares of VMware common stock and VMware spent $338.5 to repurchase 4.9 million shares of its common stock in 2010. We made no share repurchases in 2009. We generated $1,212.0, $594.0 and $431.2 in 2010, 2009 and 2008, respectively, from the exercise of stock options and the purchase of shares within the employee stock plans.

Based upon the closing price of our common stock for the prescribed measurement period during the three months ended December 31, 2010, the convertible senior debt of $1,725, 1.75% convertible senior notes due 2011 (the “2011 Notes”) and our $1,725, 1.75% convertible senior notes due 2013 (the “2013 Notes” and, together with the 2011 Notes, the “Notes”) are convertible at the option of the holder through March 31, 2011. Upon conversion, we are obligated to pay cash up to the principal amount of the debt converted. We have the option to settle any conversion value in excess of the principal amount with cash, shares of our common stock, or a combination thereof.

Additionally, $1,725 of the Notes are due in November 2011. The remaining $1,725 of the Notes is due in November 2013. At maturity, we are obligated to pay cash up to the principal amount of the debt. We have the option to settle any conversion value in excess of the principal amount with cash, shares of our common stock, or a combination thereof.

In connection with the issuance of the Notes, we entered into separate convertible note hedge transactions with respect to our common stock. These will generally have the effect of offsetting the cash outlay which may be paid by EMC for the conversion value in excess of the principal amount.

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See Note E to the consolidated financial statements.

We have available for use a credit line of $50.0 in the United States. As of December 31, 2010, we had no borrowings outstanding on the line of credit. The credit line bears interest at the bank’s base rate and requires us, upon utilization of the credit line, to meet certain financial covenants with respect to limitations on losses. In the event the covenants are not met, the lender may require us to provide collateral to secure the outstanding balance. At December 31, 2010, we were in compliance with the covenants. As of December 31, 2010, the aggregate amount of liabilities of our subsidiaries was approximately $4,891.1.

At December 31, 2010, our total cash, cash equivalents, and short-term and long-term investments were $9,491.2. This balance includes approximately $3,323.6 held by VMware and $1,549.4 held by EMC in overseas entities.

Use of Non-GAAP Financial Measures and Reconciliations to GAAP Results

EMC uses certain non-GAAP financial measures, which exclude stock-based compensation, amortization of intangible assets, restructuring and acquisition-related charges, infrequently occurring gains and losses, special tax items and provision for litigation to measure its gross margin, operating margin, net income and diluted earnings per share. EMC also assesses its financial performance by measuring its free cash flow which is also a non-GAAP financial measure. These non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of EMC’s financial performance or liquidity prepared in accordance with GAAP. EMC’s non-GAAP financial measures may be defined differently from time to time and may be defined differently than similar terms used by other companies, and accordingly, care should be exercised in understanding how EMC defines its non-GAAP financial measures.

EMC’s management uses the non-GAAP financial measures to gain an understanding of EMC’s comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects and excludes these items from its internal financial statements for purposes of its internal budgets and each reporting segment’s financial goals. Free cash flow is defined as net cash provided by operating activities, less additions to property, plant and equipment and capitalized software development costs. These non-GAAP financial measures are used by EMC’s management in their financial and operating decision-making because management believes they reflect EMC’s ongoing business in a manner that allows meaningful period-to-period comparisons. EMC’s management believes that these non-GAAP financial measures provide useful information to investors and others (a) in understanding and evaluating EMC’s current operating performance and future prospects in the same manner as management does, if they so choose, and (b) in comparing in a consistent manner EMC’s current financial results with EMC’s past financial results.

Our non-GAAP operating results for the three months and year ended December 31, 2010 and 2009 were as follows:

	For the Three Months Ended						For the Year Ended
	December 31, 2010			December 31, 2009			December 31, 2010			December 31, 2009
Gross margin	$	3,028.4		$	2,444.3		$	10,271.4		$	7,988.5
Gross margin percentage		61.9	%		59.6	%		60.4	%		57.0	%
Operating income		1,243.0			916.5			3,738.0			2,445.2
Operating income percentage		25.4	%		22.4	%		22.0	%		17.4	%
Income tax provision		249.8			168.2			824.0			452.1
Net income attributable to EMC		920.1			695.5			2,715.3			1,858.4
Diluted earnings per share attributable to EMC	$	0.42		$	0.33		$	1.26		$	0.90

The improvements in the non-GAAP gross margin and non-GAAP gross margin percentage were attributable to higher sales volume, a change in mix attributable to higher margin product offerings and improved cost control. The improvements in the non-GAAP operating income and non-GAAP operating income percentage were attributable to an improved gross margin percentage and growing revenues faster than both our R&D and SG&A expenses. Non-GAAP R&D expenses, as a percentage of revenues, were 8.5% and 8.6% for the three months ended December 31, 2010 and 2009, respectively, and 9.4% and 10.0% for the year ended December 31, 2010 and 2009, respectively. Non-GAAP SG&A expenses, as a percentage of revenues, were 28.0% and 28.6% for the three months ended December 31, 2010 and 2009, respectively, and 29.0% and 29.5% for the year ended December 31, 2010 and 2009, respectively.

We also monitor our ability to generate free cash flow in relationship to our non-GAAP net income attributable to EMC. For the year ended December 31, 2010, our free cash flow was $3,440.5, an increase of 31.4% compared to the free cash flow generated for the year ended December 31, 2009. The free cash flow for the twelve months ended December 31, 2010 exceeded our non-GAAP net income attributable to EMC by $725.2.

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The reconciliation of the above financial measures from GAAP to non-GAAP is as follows:

	For the Three Months Ended December 31, 2010
	GAAP		Provision for litigation		Gain on strategic investments			Restructuring and acquisition- related charges		Special tax charge			Stock-based compensation		Intangible asset amortization		Non-GAAP
Gross margin	$	2,966.3	$	—	$	—		$	—	$	—		$	28.9	$	33.2	$	3,028.4
Operating income		943.7		—		—			43.5		—			185.4		70.4		1,243.0
Income tax provision		257.0		—		—			6.8		(83.3	)		45.2		24.1		249.8
Net income attributable to EMC		628.6		—		—			36.7		83.3			126.9		44.6		920.1
Diluted earnings per share attributable to EMC	$	0.29	$	—	$	—		$	0.02	$	0.04		$	0.06	$	0.02	$	0.42
	For the Three Months Ended December 31, 2009
	GAAP		Provision for litigation		Gain on strategic investments			Restructuring and acquisition- related charges		Special tax charge			Stock-based compensation		Intangible asset amortization		Non-GAAP
Gross margin	$	2,377.6	$	—	$	—		$	—	$	—		$	30.1	$	36.5	$	2,444.3
Operating income		587.6		57.5		—			23.9		—			181.6		65.9		916.5
Income tax provision		156.3		5.2		—			9.1		(60.7	)		36.8		21.4		168.2
Net income attributable to EMC		390.6		52.3		—			14.6		60.7			133.2		44.0		695.5
Diluted earnings per share attributable to EMC	$	0.19	$	0.03	$	—		$	0.01	$	0.03		$	0.06	$	0.02	$	0.33
	For the Year Ended December 31, 2010
	GAAP		Provision for litigation		Gain on strategic investments			Restructuring and acquisition- related charges		Special tax charge			Stock-based compensation		Intangible asset amortization		Non-GAAP
Gross margin	$	10,031.0	$	—	$	—		$	—	$	—		$	108.7	$	131.8	$	10,271.4
Operating income		2,683.3		—		—			84.4		—			685.1		285.3		3,738.0
Income tax provision		638.3		—		—			10.7		(83.3	)		165.7		92.7		824.0
Net income attributable to EMC		1,900.0		—		—			72.0		83.3			472.7		187.3		2,715.3
Diluted earnings per share attributable to EMC	$	0.88	$	—	$	—		$	0.03	$	0.04		$	0.22	$	0.09	$	1.26
	For the Year Ended December 31, 2009
	GAAP		Provision for litigation		Gain on strategic investments			Restructuring and acquisition- related charges		Special tax charge			Stock-based compensation		Intangible asset amortization		Non-GAAP
Gross margin	$	7,744.9	$	—	$	—		$	12.5	$	—		$	99.4	$	131.8	$	7,988.5
Operating income		1,414.3		57.5		—			120.0		—			605.7		247.8		2,445.2
Income tax provision		252.8		5.2		—			35.9		(60.7	)		135.1		83.8		452.1
Net income attributable to EMC		1,088.1		52.3		(24.8	)		83.8		60.7			435.8		162.4		1,858.4
Diluted earnings per share attributable to EMC	$	0.53	$	0.03	$	(0.01	)	$	0.04	$	0.03		$	0.21	$	0.08	$	0.90

Free cash flow is defined as net cash provided by operating activities, less additions to property, plant and equipment and capitalized software development costs. EMC uses free cash flow, among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other 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 operations. As free cash flow is not a measure of liquidity calculated in accordance with GAAP, free cash flow should be considered in addition to, but not as a substitute for, the analysis provided in the statements of cash flows.

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The reconciliation of the above free cash flow from GAAP to non-GAAP is as follows:

	For the Three Months Ended						For the Year Ended
	December 31, 2010			December 31, 2009			December 31, 2010			December 31, 2009
Cash Flow from Operations	$	1,512.2		$	1,008.7		$	4,548.8		$	3,334.4
Capital Expenditures		(203.5	)		(134.0	)		(745.4	)		(411.6	)
Capitalized Software Development Costs		(90.5	)		(82.1	)		(363.0	)		(304.5	)
Free Cash Flow	$	1,218.2		$	792.6		$	3,440.5		$	2,618.3

Free cash flow represents a non-GAAP measure related to operating cash flows. In contrast, our GAAP measures of cash flow consist of three components. These are cash flows provided by operating activities of $4,548.8 and $3,334.4 for the year ended December 31, 2010 and 2009, respectively, cash used in investing activities of $6,476.0 and $3,095.5 for the year ended December 31, 2010 and 2009, respectively, net cash used in financing activities of $243.8 for the year ended December 31, 2010 and net cash provided by financing activities of $211.9 for the year ended December 31, 2009.

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. Further, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and do not reflect any benefit that such items may confer on EMC. Management compensates for these limitations by also considering EMC’s financial results as determined in accordance with GAAP.

Investments

The following table summarizes the composition of our investments at December 31, 2010:

	Amortized Cost		Unrealized Gains		Unrealized (Losses)			Aggregate Fair Value
U.S. government and agency obligations	$	1,737.8	$	11.3	$	(2.7	)	$	1,746.4
U.S. corporate debt securities		1,239.3		13.6		(1.3	)		1,251.6
High yield corporate debt securities		421.5		18.3		(1.9	)		437.8
Asset-backed securities		34.7		0.2		—			34.9
Municipal obligations		1,095.3		3.8		(3.3	)		1,095.9
Auction rate securities		156.0		—		(9.9	)		146.0
Foreign debt securities		653.3		6.9		(0.7	)		659.4
Total	$	5,337.8	$	54.1	$	(19.8	)	$	5,372.1

Our investments are comprised primarily of debt securities that are classified as available for sale and recorded at their fair market values. At December 31, 2010, with the exception of our auction rate securities, the vast majority of our investments were priced by third-party pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs. In the event observable inputs are not available, we assess other factors to determine the security’s market value, including broker quotes or model valuations. Each month, we perform independent price verifications of all of our holdings. In the event a price fails a pre-established tolerance check, it is researched so that we can assess the cause of the variance to determine what we believe is the appropriate fair market value.

For all of our securities where the amortized cost basis was greater than the fair value at December 31, 2010, we have concluded that currently we neither plan to sell the security nor is it more likely than not that we would be required to sell the security before its anticipated recovery. In making the determination as to whether the unrealized loss is other-than-temporary, we considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating, third party guarantees and the time to maturity.

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Off-Balance Sheet Arrangements, Contractual Obligations, Contingent Liabilities and Commitments

Contractual Obligations

We have various contractual obligations impacting our liquidity. The following represents our contractual obligations as of December 31, 2010:

	Payments Due By Period
	Total		Less than 1 year		1-3 years*		3-5 years**		More than 5 years
Operating leases	$	1,291.9	$	267.1	$	544.7	$	104.2	$	375.9
Convertible debt		3,450.0		3,450.0		—		—		—
Product warranty obligations		236.1		—		—		—		—
Other long-term obligations, including notes payable and current portion of long-term obligations and post retirement obligations		217.4		120.9		1.8		0.6		1.8
Purchase orders		1,236.6		1,189.0		47.6		—		—
Uncertain tax positions		230.3		—		—		—		—
Total	$	6,662.3	$	5,027.0	$	594.1	$	104.8	$	377.7

*Includes payments from January 1, 2012 through December 31, 2014.

**Includes payments from January 1, 2015 through December 31, 2016.

As of December 31, 2010, we had $236.1 of product warranty obligations, $92.3 of long-term post retirement obligations and $230.3 of liabilities for uncertain tax positions. We are not able to provide a reasonably reliable estimate of the timing of future payments relating to these obligations. The purchase orders are for manufacturing and non-manufacturing related goods and services. While the purchase orders are generally cancellable without penalty, certain vendor agreements provide for percentage-based cancellation fees or minimum restocking charges based on the nature of the product or service. Our operating leases are primarily for office space around the world. We believe leasing such space in most cases is more cost-effective than purchasing real estate.

The convertible debt pertains to the 2011 Notes and the 2013 Notes. Holders may convert their Notes at their option on any day prior to the close of business on the scheduled trading day immediately preceding (i) September 1, 2011, with respect to the 2011 Notes, and (ii) September 1, 2013, with respect to the 2013 Notes, in each case only under the following circumstances: (1) during the five business-day period after any five consecutive trading-day period (the “measurement period”) in which the price per Note of the applicable series for each day of that measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such day; (2) during any calendar quarter, if the last reported sale price of our common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; or (3) upon the occurrence of certain events specified in the Notes. Additionally, the Notes will become convertible during the last three months prior to the respective maturities of the 2011 Notes and the 2013 Notes.

Based upon the closing price of our common stock for the prescribed measurement period during the three months ended December 31, 2010, the contingent conversion threshold on the Notes was exceeded. As a result, the Notes are convertible at the option of the holder through March 31, 2011. Accordingly, since the terms of the Notes require the principal to be settled in cash, we reclassified from equity the portion of the Notes attributable to the conversion feature which had not yet been accreted to its face value and the Notes have been classified as a current liability. For the holders to be able to continue to convert the 2013 Notes, our closing stock price must exceed $20.90 for 20 out of the last 30 trading days of each future quarter. If this threshold is not met, the 2013 Notes will be reclassified to long-term debt.

We have no other off-balance sheet arrangements.

Guarantees and Indemnification Obligations

EMC’s subsidiaries have entered into arrangements with financial institutions for such institutions to provide guarantees for rent, taxes, insurance, leases, performance bonds, bid bonds and customs duties aggregating $106.0 as of December 31, 2010. The

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guarantees vary in length of time. In connection with these arrangements, we have agreed to guarantee substantially all of the guarantees provided by these financial institutions. EMC and certain of its subsidiaries have also entered into arrangements with financial institutions in order to facilitate the management of currency risk. EMC has agreed to guarantee the obligations of its subsidiaries under these arrangements.

We enter into agreements in the ordinary course of business with, among others, customers, resellers, OEMs, systems integrators and distributors. Most of these agreements require us to indemnify the other party against third-party claims alleging that an EMC product infringes a patent and/or copyright. Certain agreements in which we grant limited licenses to specific EMC-trademarks require us to indemnify the other party against third-party claims alleging that the use of the licensed trademark infringes a third-party trademark. Certain of these agreements require us to indemnify the other party against certain claims relating to real or tangible personal property damage, personal injury or the acts or omissions of EMC, its employees, agents or representatives. In addition, from time to time, we have made certain guarantees regarding the performance of our systems to our customers. We have also made certain guarantees for the lease obligations of affiliated third parties.

We have agreements with certain vendors, financial institutions, lessors and service providers pursuant to which we have agreed to indemnify the other party for specified matters, such as acts and omissions of EMC, its employees, agents or representatives.

We have procurement or license agreements with respect to technology that is used in our products and agreements in which we obtain rights to a product from an OEM. Under some of these agreements, we have agreed to indemnify the supplier for certain claims that may be brought against such party with respect to our acts or omissions relating to the supplied products or technologies.

We have agreed to indemnify the directors, executive officers and certain other officers of EMC and our subsidiaries, to the extent legally permissible, against all liabilities reasonably incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a director or officer.

In connection with certain acquisitions, we have agreed to indemnify the current and former directors, officers and employees of the acquired company in accordance with the acquired company’s by-laws and charter in effect immediately prior to the acquisition or in accordance with indemnification or similar agreements entered into by the acquired company and such persons. In a substantial majority of instances, we have maintained the acquired company’s directors’ and officers’ insurance, which should enable us to recover a portion of any future amounts paid. These indemnities vary in length of time.

Based upon our historical experience and information known as of December 31, 2010, we believe our liability on the above guarantees and indemnities at December 31, 2010 is not material.

Pension

We have a noncontributory defined benefit pension plan that was assumed as part of the Data General acquisition, which covers substantially all former Data General employees located in the United States. Certain of the former Data General foreign subsidiaries also have foreign retirement plans covering substantially all of their employees. All of these plans have been frozen resulting in employees no longer 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 plans’ assets is based upon the assets’ fair value. The expected long-term rate of return on assets for the year ended December 31, 2010 was lowered from 8.25% to 6.75%. This rate represents the average of the expected long-term rates of return weighted by the plan’s assets as of December 31, 2010. The Company has begun to shift, and may continue to shift in the future, its asset allocation to lower the percentage of investments in equity securities and increase the percentage of investments in fixed-income securities. The effect of such a change results in a reduction to the long-term rate of return on plan assets and an increase in future pension expense consistent with the sensitivity described below. As of December 31, 2010, the ten-year historical rate of return on plan assets was 4.1% and the inception to date return on plan assets was 9.8%. In 2010 and 2009, we experienced a 12.6% and 25.1% gain on plan assets, respectively. Based upon current market conditions and the target allocation of the plan’s assets, the expected long-term rate of return for 2011 is 6.75%. A 25 basis point change in the expected long-term rate of return on the plan’s assets would have approximately a $0.9 impact on the 2011 pension expense. As of December 31, 2010, the pension plan had a $187.7 unrecognized actuarial loss that will be expensed over the average future working lifetime of active participants of 11.6 years. For the year ended December 31, 2010, the discount rate to determine the benefit obligation was 5.4%. This rate represents the average of the discount rate weighted by the plan’s liabilities as of December 31, 2010. The discount rate selected was based on highly rated long-term bond indices and yield curves that match the duration of the plan’s benefit obligations. The bond indices and yield curve analyses include only bonds rated AA or higher from a reputable rating agency. The discount rate reflects the rate at which the pension benefits could be effectively

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settled. A 25 basis point change in the discount rate would have approximately a $0.8 impact on the 2011 pension expense for all plans. Additionally, certain foreign subsidiaries have defined benefit pension plans. These foreign pension plans are excluded from this discussion because they do not have a material impact on our consolidated financial position or results of operations.

Critical Accounting Policies

Our consolidated financial statements are based on the selection and application of generally accepted accounting principles which require us to make estimates and assumptions about future events that affect the amounts reported in our financial statements and the accompanying notes. Future events and their effects cannot be determined with certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and any such differences may be material to our financial statements. We believe that the areas set forth below may involve a higher degree of judgment and complexity in their application than our other accounting policies and represent the critical accounting policies used in the preparation of our financial statements. If different assumptions or conditions were to prevail, the results could be materially different from our reported results. Our significant accounting policies are presented within Note A to the Consolidated Financial Statements.

Revenue Recognition

The application of the appropriate guidance within the Accounting Standards Codification to our revenue is dependent 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, professional, software and hardware maintenance and training, or a combination of these items. As our business evolves, the mix of products and services sold will impact the timing of when revenue and related costs are recognized. Additionally, revenue recognition involves judgments, including estimates of fair value and selling price in arrangements with multiples deliverables, assessments of expected returns and the likelihood of nonpayment. We analyze various factors, including a review of specific transactions, the credit-worthiness of our customers, our historical experience and market and economic conditions. Changes in judgments on these factors could materially impact the timing and amount of revenue and costs recognized. Should market or economic conditions deteriorate, our actual return experience could exceed our estimate.

Warranty Costs

We accrue for systems warranty costs at the time of shipment. We estimate systems warranty costs based upon historical experience, specific identification of system requirements and projected costs to service items under warranty. While we engage in extensive product quality programs and processes, our warranty obligation is affected by product failure rates, material usage and service delivery costs. To the extent that our actual systems warranty costs differed from our estimates by 5 percent, consolidated pre-tax income would have increased/decreased by approximately $11.8 and $13.6 in 2010 and 2009, respectively.

Asset Valuation

Asset valuation includes assessing the recorded value of certain assets, including accounts and notes receivable, investments, inventories, goodwill and other intangible assets. We use a variety of factors to assess valuation, depending upon the asset.

Accounts and notes receivable are evaluated based upon the credit-worthiness of our customers, our historical experience, the age of the receivable and current market and economic conditions. Should current market and economic conditions deteriorate, our actual bad debt experience could exceed our estimate.

The market value of our short- and long-term investments is based primarily upon the listed price of the security. At December 31, 2010, with the exception of our auction rate securities, the vast majority of our investments were priced by pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs. In the event observable inputs are not available, we assess other factors to determine the security’s market value, including broker quotes or model valuations. Each month, we perform independent price verifications of all of our holdings. In the event a price fails a pre-established tolerance check, it is researched so that we can assess the cause of the variance to determine what we believe is the appropriate fair market value. In the event the fair market values that we determine are not accurate or we are unable to liquidate our investments in a timely manner, we may not realize the recorded value of our investments. We hold investments whose market value is below our cost. The determination of whether unrealized losses on investments are other-than-temporary is based upon the type of investments held, market conditions, financial condition and near-term prospects of the issuers, the time to maturity, length of the impairment, magnitude of the

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impairment and ability and intent to hold the investment to maturity. Should current market and economic conditions deteriorate, our ability to recover the cost of our investments may be impaired.

The recoverability of inventories is based upon the types and our levels of inventory held, forecasted demand, pricing, competition and changes in technology. Should current market and economic conditions deteriorate, our actual recovery could be less than our estimate.

Other intangible assets are evaluated based upon the expected period the asset will be utilized, forecasted cash flows, changes in technology and customer demand. Changes in judgments on any of these factors could materially impact the value of the asset. We perform an assessment of the recoverability of goodwill, at least annually, in the fourth quarter of each year. Our assessment is performed at the reporting unit level which, for certain of our operating segments, is one step below our segment level. For each assessment, we compare the market value of the reporting unit to its carrying value. We estimate fair value by employing different methodologies, including a comparison to comparable industry companies and several different discounted cash flow methodologies. At December 31, 2010, there was sufficient cushion between the market value of the reporting units compared to their carrying value so that we do not expect any near term change in the operating results that would cause an impairment. The determination of relevant comparable industry companies impacts our assessment of fair value. Should the operating performance of our reporting units change in comparison to these companies or should the valuation of these companies change, this could impact our assessment of the fair value of the reporting units. Our discounted cash flow analyses factor in assumptions on revenue and expense growth rates. These estimates are based upon our historical experience and projections of future activity, factoring in customer demand, changes in technology and a cost structure necessary to achieve the related revenues. Additionally, these discounted cash flow analyses factor in expected amounts of working capital and weighted average cost of capital. Changes in judgments on any of these factors could materially impact the value of the reporting unit.

Restructuring Charges

We recognized restructuring charges in 2010, 2009, 2008 and prior years. The restructuring charges include, among other items, estimated employee termination benefit costs, subletting of facilities and termination of various contracts. The amount of the actual obligations may be different than our estimates due to various factors, including market conditions, negotiations with 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 to estimate our provision for income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax exposure, including assessing the risks associated with tax audits, together with assessing temporary differences resulting from the different treatment of items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is more likely than not, do not establish a valuation allowance. In the event that actual results differ from these estimates, our provision for income taxes could be materially impacted.

Accounting for Stock-based Compensation

For our share-based payment awards, we make estimates and assumptions to determine the underlying value of stock options, including volatility, expected life and forfeiture rates. Additionally, for awards which are performance-based, we make estimates as to the probability of the underlying performance being achieved. Changes to these estimates and assumptions may have a significant impact on the value and timing of stock-based compensation expense recognized, which could have a material impact on our financial statements.

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ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

We are exposed to market risk, primarily from changes in foreign exchange rates, interest rates and credit risk. To manage the volatility relating to foreign exchange risk, we enter into various derivative transactions pursuant to our policies to hedge against known or forecasted market exposures.

Foreign 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 and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date and income and expense items are translated at average rates for the period. The primary foreign currency denominated transactions include revenue and expenses and the resultant accounts receivable and accounts payable balances are reflected on our balance sheet. Therefore, the change in the value of the U.S. dollar as compared to foreign currencies will have either a positive or negative effect on our financial position and results of operations. We enter into derivative contracts with the sole objective of decreasing the volatility of the impact of currency fluctuations. These exposures may change over time and could have a material adverse impact on our financial results. Historically, our primary exposure has related to sales denominated in the Euro, the Japanese yen and the pound sterling. Additionally, we have exposure to emerging market economies, particularly in Latin America and Southeast Asia. We use foreign currency forward and option contracts to manage the risk of exchange rate fluctuations. In all cases, we use these derivative instruments to reduce our foreign exchange risk by essentially creating offsetting market exposures. The success of the hedging program depends on our forecasts of transaction activity in the various currencies. To the extent that these forecasts are overstated or understated during periods of currency volatility, we could experience unanticipated currency gains or losses. The instruments we hold are not leveraged and are not held for trading or speculative purposes.

We have performed sensitivity analyses as of December 31, 2010, 2009 and 2008 based on scenarios in which market spot rates are hypothetically changed in order to produce a potential net exposure loss. The hypothetical change is based on a 10 percent strengthening or weakening in the U.S. dollar, whereby all other variables are held constant. The analyses include all of our foreign currency contracts outstanding as of December 31 for each year, as well as the offsetting underlying exposures. The sensitivity analyses indicated that a hypothetical 10% adverse movement in foreign currency exchange rates would result in a foreign exchange loss of $3.6, $1.2 and $2.2 at December 31, 2010, 2009 and 2008, respectively.

Interest Rate Risk

We maintain an investment portfolio consisting of debt securities of various types and maturities. The investments are classified as available for sale and are all denominated in U.S. dollars. These securities are recorded on the balance sheet at market value, with any unrealized gain or temporary non-credit related loss recorded in other comprehensive loss. These instruments are not leveraged and are not held for trading purposes.

We employ a Historical Value-At-Risk calculation to calculate value-at-risk for changes in interest rates for our combined investment portfolios. This model assumes that the relationships among market rates and prices that have been observed daily over the last 180 days are valid for estimating risk over the next trading day. This model measures the potential loss in fair value that could arise from changes in interest rates, using a 95% confidence level and assuming a one-day holding period. The value-at-risk on the investment portfolios was $4.4 as of December 31, 2010 and $3.9 as of December 31, 2009. The average, high and low value-at-risk amounts for 2010 and 2009 were as follows:

	Average		High		Low
2010	$	4.4	$	6.7	$	3.0
2009	$	4.5	$	5.2	$	3.9

The average value represents an average of the quarter-end values. The high and low valuations represent the highest and lowest values of the quarterly amounts.

Credit Risk

Financial instruments that potentially subject us to concentration of credit risk consist principally of bank deposits, money market investments, short- and long-term investments, accounts and notes receivable, and foreign currency exchange contracts. Deposits held with banks in the United States may exceed the amount of FDIC insurance provided on such deposits. Deposits held

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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.

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 $60.5 and $51.1 at December 31, 2010 and 2009, 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. Dell Inc., one of our channel partners, accounted for 11.5% of our revenues in 2008.

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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ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

EMC CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

Management’s Report on Internal Control Over Financial Reporting	42
Report of Independent Registered Public Accounting Firm	43
Consolidated Balance Sheets at December 31, 2010 and 2009	44
Consolidated Income Statements for the years ended December 31, 2010, 2009 and 2008	45
Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008	46
Consolidated Statements of Shareholders’ Equity for the years ended December  31, 2010, 2009 and 2008	47
Consolidated Statements of Comprehensive Income for the years ended December 31, 2010, 2009 and 2008	48
Notes to Consolidated Financial Statements	49
Schedule:
Schedule II–Valuation and Qualifying Accounts	S-1

Note: All other financial statement schedules are omitted because they are not applicable or the required information is included in the consolidated financial statements or notes thereto.

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of EMC is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the company’s principal executive and principal 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 principles and includes those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

EMC’s management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2010. In making this assessment, EMC’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework.

Based on our assessment, EMC’s management determined that, as of December 31, 2010, EMC’s internal control over financial reporting is effective and operating at the reasonable assurance level based on those criteria.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as stated in their report which appears on page 43 of this Annual Report on Form 10-K.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of EMC Corporation:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of EMC Corporation and its subsidiaries at December 31, 2010 and December 31, 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010 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 all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note A to the consolidated financial statements, in 2010 the Company changed the manner in which it recognizes revenue with relation to multiple-element arrangements associated with tangible products containing software and non-software components that function together to deliver the product’s essential functionality.

As discussed in Note B to the consolidated financial statements, in 2009 the Company changed the manner in which it accounts for non-controlling interests. As discussed in Note E to the consolidated financials statements, in 2009 the Company changed the manner in which it accounts for convertible debt instruments. Also, as discussed in Note C to the consolidated financial statements, in 2009 the Company changed the manner in which it accounts for business combinations.

A company’s internal control over financial reporting is a process designed 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 principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

February 28, 2011

43

EMC CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	December 31,
	2010			2009
ASSETS
Current assets:
Cash and cash equivalents	$	4,119,138		$	6,302,499
Short-term investments		1,256,175			392,839
Accounts and notes receivable, less allowance for doubtful accounts of $57,385 and $47,414		2,569,523			2,108,575
Inventories		856,405			886,289
Deferred income taxes		609,832			564,174
Other current assets		372,249			283,926
Total current assets		9,783,322			10,538,302
Long-term investments		4,115,918			2,692,323
Property, plant and equipment, net		2,528,432			2,224,346
Intangible assets, net		1,624,267			1,185,632
Goodwill		11,772,650			9,210,376
Other assets, net		1,008,695			961,024
Total assets	$	30,833,284		$	26,812,003
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,062,600		$	899,298
Accrued expenses		2,090,035			1,944,210
Income taxes payable		199,735			41,691
Convertible debt		3,214,771			—
Deferred revenue		2,810,873			2,262,968
Total current liabilities		9,378,014			5,148,167
Income taxes payable		265,549			235,976
Deferred revenue		1,853,263			1,373,798
Deferred income taxes		717,004			708,378
Long-term convertible debt		—			3,100,290
Other liabilities		217,449			184,920
Total liabilities		12,431,279			10,751,529
Convertible debt (See Note E)		235,229			—
Commitments and contingencies (See Note M)
Shareholders’ equity:
Preferred stock, par value $0.01; authorized 25,000 shares; none outstanding		—			—
Common stock, par value $0.01; authorized 6,000,000 shares; issued and outstanding 2,069,246 and 2,052,441 shares		20,692			20,524
Additional paid-in capital		3,816,681			3,875,791
Retained earnings		13,659,284			11,759,289
Accumulated other comprehensive loss, net		(92,617	)		(105,722	)
Total EMC Corporation’s shareholders’ equity		17,404,040			15,549,882
Non-controlling interest in VMware, Inc.		762,736			510,592
Total shareholders’ equity		18,166,776			16,060,474
Total liabilities and shareholders’ equity	$	30,833,284		$	26,812,003

The accompanying notes are an integral part of the consolidated financial statements.

44

EMC CORPORATION

CONSOLIDATED INCOME STATEMENTS

(in thousands, except per share amounts)

	For the Year Ended December 31,
	2010			2009			2008
Revenues:
Product sales	$	10,892,857		$	8,828,145		$	10,071,816
Services		6,122,269			5,197,765			4,804,347
		17,015,126			14,025,910			14,876,163
Costs and expenses:
Cost of product sales		4,882,031			4,406,187			4,663,667
Cost of services		2,102,114			1,874,824			1,990,127
Research and development		1,888,015			1,627,509			1,721,330
Selling, general and administrative		5,375,305			4,595,625			4,601,588
Restructuring and acquisition-related charges		84,375			107,490			244,735
In-process research and development		—			—			85,780
Operating income		2,683,286			1,414,275			1,568,936
Non-operating income (expense):
Investment income		142,536			140,430			247,049
Interest expense		(178,345	)		(182,499	)		(176,355	)
Other income (expense), net		(39,494	)		2,370			(39,405	)
Total non-operating income (expense)		(75,303	)		(39,699	)		31,289
Income before provision for income taxes		2,607,983			1,374,576			1,600,225
Income tax provision		638,297			252,775			280,396
Net income		1,969,686			1,121,801			1,319,829
Less: Net income attributable to the non-controlling interest in VMware, Inc.		(69,691	)		(33,724	)		(44,725	)
Net income attributable to EMC Corporation	$	1,899,995		$	1,088,077		$	1,275,104
Net income per weighted average share, basic attributable to EMC Corporation common shareholders	$	0.92		$	0.54		$	0.62
Net income per weighted average share, diluted attributable to EMC Corporation common shareholders	$	0.88		$	0.53		$	0.61
Weighted average shares, basic		2,055,959			2,022,371			2,048,506
Weighted average shares, diluted		2,147,931			2,055,146			2,079,853

The accompanying notes are an integral part of the consolidated financial statements.

45

EMC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	For the Year Ended December 31,
	2010			2009			2008
Cash flows from operating activities:
Cash received from customers	$	17,585,447		$	14,647,691		$	15,378,081
Cash paid to suppliers and employees		(12,830,684	)		(11,032,859	)		(11,747,031	)
Dividends and interest received		102,912			109,525			240,031
Interest paid		(76,711	)		(73,430	)		(73,695	)
Income taxes paid		(232,121	)		(316,542	)		(232,298	)
Net cash provided by operating activities		4,548,843			3,334,385			3,565,088
Cash flows from investing activities:
Additions to property, plant and equipment		(745,412	)		(411,579	)		(695,899	)
Capitalized software development costs		(362,956	)		(304,520	)		(294,973	)
Purchases of short- and long-term available-for-sale securities		(6,321,535	)		(5,409,540	)		(3,318,545	)
Sales of short- and long-term available-for-sale securities		3,625,260			5,171,449			3,189,547
Maturities of short- and long-term available-for-sale securities		437,297			704,653			204,091
Business acquisitions, net of cash acquired		(3,194,611	)		(2,664,141	)		(725,521	)
Decrease (increase) in strategic and other related investments		85,908			(182,994	)		(5,510	)
Other		—			1,184			31,878
Net cash used in investing activities		(6,476,049	)		(3,095,488	)		(1,614,932	)
Cash flows from financing activities:
Issuance of EMC’s common stock		780,732			366,361			241,060
Issuance of VMware’s common stock from the exercise of stock options		431,306			227,666			190,107
Repurchase of EMC’s common stock		(999,924	)		—			(1,489,501	)
Purchase of VMware’s common stock		(399,224	)		—			(13,259	)
VMware repurchase of VMware’s common stock		(338,527	)		—			—
Proceeds from securities lending		—			—			412,321
Repayments of proceeds from securities lending		—			(412,321	)		—
Excess tax benefits from stock-based compensation		281,872			46,082			97,705
Payment of long-term and short-term obligations		(4,128	)		(20,835	)		(6,151	)
Proceeds from long-term and short-term obligations		4,066			4,969			33,707
Net cash (used in) provided by financing activities		(243,827	)		211,922			(534,011	)
Effect of exchange rate changes on cash		(12,328	)		7,995			(54,671	)
Net (decrease) increase in cash and cash equivalents		(2,183,361	)		458,814			1,361,474
Cash and cash equivalents at beginning of year		6,302,499			5,843,685			4,482,211
Cash and cash equivalents at end of year	$	4,119,138		$	6,302,499		$	5,843,685
Reconciliation of net income to net cash provided by operating activities:
Net income	$	1,969,686		$	1,121,801		$	1,319,829
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,167,550			1,073,135			1,057,511
Non-cash interest expense on convertible debt		105,649			108,347			102,581
Non-cash restructuring and other special charges		6,861			25,050			139,193
Stock-based compensation expense		667,728			600,537			501,439
Provision for doubtful accounts		18,965			14,351			34,667
Deferred income taxes, net		(49,787	)		27,198			4,629
Excess tax benefits from stock-based compensation		(281,872	)		(46,082	)		(97,705	)
Gain on Data Domain and SpringSource common stock		—			(25,822	)		—
Other		(21,250	)		(13,906	)		(13,471	)
Changes in assets and liabilities, net of acquisitions:
Accounts and notes receivable		(405,758	)		241,069			73,184
Inventories		(114,111	)		(158,482	)		165,813
Other assets		(54,469	)		3,600			(16,178	)
Accounts payable		154,496			140,376			(148,821	)
Accrued expenses		4,162			(80,642	)		8,688
Income taxes payable		455,964			(91,142	)		44,821
Deferred revenue		957,114			366,361			394,067
Other liabilities		(32,085	)		28,636			(5,159	)
Net cash provided by operating activities	$	4,548,843		$	3,334,385		$	3,565,088
Non-cash investing and financing activity:
Issuance of common stock and stock options exchanged in business acquisitions	$	28,668		$	83,780		$	4,057

The accompanying notes are an integral part of the consolidated financial statements.

46

EMC CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

	Common Stock						Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Loss			Non- controlling Interest in VMware			Shareholders’ Equity
Shares			Par Value
Balance, January 1, 2008		2,102,187		$	21,022		$	3,462,673		$	9,396,108	$	(8,449	)	$	188,988		$	13,060,342
Stock issued through stock option and stock purchase plans		23,538			234			240,826			—		—			—			241,060
Tax benefit from stock options exercised		—			—			109,236			—		—			—			109,236
Restricted stock grants, cancellations and withholdings, net		(633	)		(6	)		(56,035	)		—		—			—			(56,041	)
Repurchase of common stock		(112,154	)		(1,121	)		(1,488,380	)		—		—			—			(1,489,501	)
Repurchase of VMware common stock from Cisco		—			—			(13,259	)		—		—			—			(13,259	)
Stock options issued in business acquisitions		—			—			4,057			—		—			—			4,057
Stock-based compensation		—			—			531,086			—		—			—			531,086
Impact from equity transactions of VMware, Inc.		—			—			26,850			—		—			93,794			120,644
Actuarial loss on pension plan, net of tax benefit of $55,680		—			—			—			—		(94,563	)		—			(94,563	)
Change in market value of investments		—			—			—			—		(37,715	)		—			(37,715	)
Change in market value of derivatives		—			—			—			—		(1,145	)		—			(1,145	)
Translation adjustment		—			—			—			—		(38,080	)		—			(38,080	)
Net income		—			—			—			1,275,104		—			44,725			1,319,829
Balance, December 31, 2008		2,012,938			20,129			2,817,054			10,671,212		(179,952	)		327,507			13,655,950
Stock issued through stock option and stock purchase plans		38,729			387			365,974			—		—			—			366,361
Tax benefit from stock options exercised		—			—			33,967			—		—			—			33,967
Restricted stock grants, cancellations and withholdings, net		774			8			(55,310	)		—		—			—			(55,302	)
Stock options issued in business acquisitions		—			—			83,780			—		—			—			83,780
Stock-based compensation		—			—			604,757			—		—			—			604,757
Impact from equity transactions of VMware, Inc.		—			—			25,569			—		—			148,522			174,091
Actuarial gain on pension plan, net of tax of $13,092		—			—			—			—		21,877			—			21,877
Change in market value of investments		—			—			—			—		34,216			839			35,055
Change in market value of derivatives		—			—			—			—		3,187			—			3,187
Translation adjustment		—			—			—			—		14,950			—			14,950
Net income		—			—			—			1,088,077		—			33,724			1,121,801
Balance, December 31, 2009		2,052,441			20,524			3,875,791			11,759,289		(105,722	)		510,592			16,060,474
Stock issued through stock option and stock purchase plans		63,710			637			780,095			—		—			—			780,732
Tax benefit from stock options exercised		—			—			288,749			—		—			—			288,749
Restricted stock grants, cancellations and withholdings, net		5,762			58			(66,180	)		—		—			—			(66,122	)
Repurchase of common stock		(52,667	)		(527	)		(999,397	)		—		—			—			(999,924	)
EMC purchase of VMware stock		—			—			(353,915	)		—		—			(45,309	)		(399,224	)
Stock options issued in business acquisitions		—			—			28,668			—		—			—			28,668
Stock-based compensation		—			—			684,276			—		—			—			684,276
Impact from equity transactions of VMware, Inc.		—			—			(186,177	)		—		—			224,669			38,492
Actuarial loss on pension plan, net of tax benefit of $1,392		—			—			—			—		(4,057	)		—			(4,057	)
Change in market value of investments		—			—			—			—		29,941			3,093			33,034
Change in market value of derivatives		—			—			—			—		(8,145	)		—			(8,145	)
Translation adjustment		—			—			—			—		(4,634	)		—			(4,634	)
Reclassification of convertible debt to mezzanine (Note E)		—			—			(235,229	)		—		—			—			(235,229	)
Net income		—			—			—			1,899,995		—			69,691			1,969,686
Balance, December 31, 2010		2,069,246		$	20,692		$	3,816,681		$	13,659,284	$	(92,617	)	$	762,736		$	18,166,776

The accompanying notes are an integral part of the consolidated financial statements.

47

EMC CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	For the Year Ended December 31,
	2010			2009			2008
Net income	$	1,969,686		$	1,121,801		$	1,319,829
Other comprehensive income (loss), net of taxes (benefits):
Recognition of actuarial net gain (loss) from pension and other postretirement plans, net of taxes (benefits) of $(1,392), $13,092 and $(55,680)		(4,057	)		21,877			(94,563	)
Foreign currency translation adjustments		(4,634	)		14,950			(38,080	)
Changes in market value of investments, including unrealized gains (losses) and reclassification adjustments to net income, net of taxes (benefits) of $19,756, $23,381 and $(25,025)		33,034			35,055			(37,715	)
Changes in market value of derivatives, net of taxes (benefits) of $(4,002), $707 and $(127)		(8,145	)		3,187			(1,145	)
Other comprehensive income (loss)		16,198			75,069			(171,503	)
Comprehensive income		1,985,884			1,196,870			1,148,326
Less: Net income attributable to the non-controlling interest in VMware, Inc.		(69,691	)		(33,724	)		(44,725	)
Less: Other comprehensive income attributable to the non-controlling interest in VMware, Inc.		(3,093	)		(839	)		—
Comprehensive income attributable to EMC Corporation	$	1,913,100		$	1,162,307		$	1,103,601

The accompanying notes are an integral part of the consolidated financial statements.

48

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, solutions and services.

EMC’s Information Infrastructure business provides a foundation for organizations to store, manage, protect and secure their vast and ever-increasing quantities of information, improve business agility, lower cost of ownership and enhance their competitive advantage within traditional data centers, virtual data centers and cloud-based IT infrastructures. EMC’s Information Infrastructure business comprises three segments – Information Storage, RSA Information Security and Information Intelligence Group.

EMC’s VMware Virtual Infrastructure business, which is represented by EMC’s majority equity stake in VMware, Inc. (“VMware”), is the leading provider of virtualization and cloud infrastructure software solutions.

Accounting Principles

The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

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.

EMC’s interest in VMware was approximately 80% and 81% as of December 31, 2010 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 collectability is reasonably assured. This policy is applicable to all sales, including sales to resellers and end users. Product is considered delivered to the customer once it has been shipped or electronically delivered and risk of loss has been transferred. For most of our product sales, these criteria are met at the time the product is shipped. The following summarizes the major terms of our contractual relationships with our customers and the manner in which we account for sales transactions.

• Systems sales

Systems sales consist of the sale of hardware storage, required storage operating systems and hardware-related devices. Revenue for hardware is generally recognized upon shipment.

49

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

• Software sales

Software sales consist of the sale of optional value-added software application programs. Our software application programs provide customers with resource management, backup and archiving, information security, information management and intelligence and server virtualization capabilities. Revenue for software is generally recognized upon shipment or electronic delivery. License revenue from royalty payments is recognized upon either receipt of final royalty reports or payments from third parties.

• Services revenue

Services revenue consists of installation services, professional services, software maintenance, hardware maintenance and training.

EMC recognizes revenue from fixed-price support or maintenance contracts sold for both hardware and software, including extended warranty contracts, ratably over the contract period and recognizes the costs associated with these contracts as incurred. Generally, installation and professional services are not considered essential to the functionality of our products as these services do not alter the product capabilities and may be performed by our customers or other vendors. Installation services revenues are recognized as the services are being performed. Professional services revenues on engagements for which reasonably dependable estimates of progress toward completion are capable of being made are recognized as earned based upon the hours incurred. Where services are considered essential to the functionality of our products, revenue for the products and services is recorded over the service period. Professional services engagements that are on a time and materials basis are recognized based upon hours incurred. Revenues on all other professional services engagements are recognized upon completion.

• Multiple element arrangements

When more than one element, such as hardware, software and services are contained in a single arrangement, we first allocate revenue based upon the relative selling price into two categories: (1) non-software components, such as hardware and any hardware-related items, such as required software that functions with the hardware to deliver the essential functionality of the hardware and related post-contract customer support and other services and (2) software components, such as optional software application programs and related items, such as post-contract customer support and other services. We then allocate revenue within the non-software category to each element based upon their relative selling price using estimated selling prices (“ESP”) if vendor-specific objective evidence (“VSOE”) or third-party evidence of selling price (“TPE”) does not exist. We allocate revenue within the software category to the undelivered elements based upon their fair value using VSOE with the residual revenue allocated to the delivered elements. If we cannot objectively determine the fair value of any undelivered element, we defer revenue until all elements are delivered and services have been performed, or until fair value can objectively be determined for any remaining undelivered elements.

We limit the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services.

Customers under software maintenance agreements are entitled to receive updates and upgrades on a when-and-if-available basis, and various types of technical support based on the level of support purchased. In the event specific features or functionality, entitlements, or the release number of an upgrade or new product have been announced but not delivered, and customers will receive that upgrade or new product as part of a current software maintenance contract, a specified upgrade is deemed created and product revenues are deferred on purchases made after the announcement date until delivery of the upgrade or new product. The amount and elements to be deferred are dependent on whether we have established VSOE of fair value for the upgrade or new product. On occasion, VSOE of fair value of these upgrades or new products is established based upon the price set by management. We have a history of selling such upgrades or new products on a stand-alone basis.

• 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 to the customer.

50

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

• Leases

Revenue from sales-type leases is recognized at the net present value of future lease payments. Revenue from operating leases is recognized over the lease period.

• Other

We accrue for the estimated costs of systems’ warranty at the time of sale. We reduce revenue for estimated sales returns at the time of sale. Systems’ warranty costs are estimated based upon our historical experience and specific identification of systems’ requirements. Sales returns are estimated based upon our historical experience and specific identification of probable returns. For our Iomega business, we defer revenue and cost of sales for inventory sold through the channel that exceeds the channel’s requirements.

Deferred Revenue

Our deferred revenue consists primarily of deferred hardware and software maintenance, recognized ratably over the contract term and deferred professional services, including education and training, which are recognized as delivered.

Shipping and Handling Costs

Shipping and handling costs are classified in cost of product sales.

Foreign Currency Translation

The local currency is the functional currency of the majority of our subsidiaries. Assets and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Income and expense items are translated at average rates for the period.

Gains and losses from foreign currency transactions are included in other expense, net, and consist of net losses of $4.5 million in 2010, $21.2 million in 2009 and $28.4 million in 2008. Foreign currency translation adjustments are included in other comprehensive income (loss).

Derivatives

We use derivatives to hedge foreign currency exposures related to foreign currency denominated assets and liabilities and forecasted revenue and expense transactions.

We hedge our exposure in foreign currency denominated monetary assets and liabilities with foreign currency forward and option contracts. Since these derivatives hedge existing exposures that are denominated in foreign currencies, the contracts do not qualify for hedge accounting. Accordingly, these outstanding non-designated derivatives are recognized on the balance sheet at fair value and the changes in fair value from these contracts are recorded in other expense, net, in the consolidated income statement. These derivative contracts mature in less than one year.

We also use foreign currency forward and option contracts to hedge our exposure on a portion of our forecasted revenue and expense transactions. These derivatives are designated as cash flow hedges and we did not have any derivatives designated as fair value hedges as of December 31, 2010. All outstanding derivatives are recognized on the balance sheet at fair value and changes in their fair value are recorded in accumulated other comprehensive loss until the underlying forecasted transactions occur. To achieve hedge accounting, certain criteria must be met, which includes (i) ensuring at the inception of the hedge that formal documentation exists for both the hedging relationship and the entity’s risk management objective and strategy for undertaking the hedge and (ii) at the inception of the hedge and on an ongoing basis, the hedging relationship is expected to be highly effective in achieving offsetting changes in fair value attributed to the hedged risk during the period that the hedge is designated. Further, an assessment of effectiveness is required at a minimum on a quarterly basis. Absent meeting these criteria, changes in fair value are recognized currently in other expense, net, in the consolidated income statement. Once the underlying forecasted transaction is realized, the gain or loss from the derivative designated as a hedge of the transaction is reclassified from accumulated other comprehensive loss to the consolidated income statement, in the related revenue or expense caption, as appropriate. In the event the underlying forecasted transaction does not occur, the amount recorded in accumulated other comprehensive loss will be reclassified to other expense, net, in the consolidated income statement in the then-current period. Any ineffective portion of the derivatives

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designated as cash flow hedges is recognized in current earnings. The ineffective portion of the derivatives includes gains or losses associated with differences between actual and forecasted amounts. Our cash flow hedges generally mature within six months or less. The notional amount of cash flow hedges outstanding as of December 31, 2010, 2009 and 2008 were $152 million, $108 million and $149 million, respectively.

We do not engage in currency speculation. For purposes of presentation within the consolidated statement of cash flows, derivative gains and losses are presented within net cash provided by operating activities.

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 the forecasted issuance of debt in 2011 when our $1.725 billion 1.75% convertible senior notes become due. As such, the gain or loss on these hedges will be recognized in other comprehensive loss until the underlying exposure is realized.

Our derivatives and their related activities are not material to our Consolidated Balance Sheet or Consolidated Income Statement.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with a maturity of ninety days or less at the time of purchase. Cash equivalents consist primarily of money market securities, U.S. treasury bills, U.S. agency discount notes and short-term commercial paper. Cash equivalents are stated at fair value. Total cash equivalents were $2,584.4 million and $5,101.5 million at December 31, 2010 and 2009, respectively. See Note F.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for the estimated probable losses on uncollectible accounts and notes receivable. The allowance is based upon the creditworthiness of our customers, our historical experience, the age of the receivable and current market and economic conditions. Uncollectible amounts are charged against the allowance account. The allowance for doubtful accounts is maintained against both our current and non-current accounts and notes receivable balances. The balances in the allowance accounts at December 31, 2010 and 2009 were as follows (table in thousands):

	December 31,
	2010		2009
Current	$	57,385	$	47,414
Non-current (included in other assets, net)		3,150		3,700
	$	60,535	$	51,114

Investments

Unrealized gains and temporary loss positions on investments classified as available-for-sale are included within accumulated other comprehensive income (loss), net of any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive income (loss) to investment income. Realized gains and losses and other-than-temporary impairments are reflected in the consolidated income statement in investment income.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market, not in excess of net realizable value.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Buildings under development are included in building construction in progress. Depreciation commences upon placing the asset in service and is recognized on a straight-line basis over the estimated useful lives of the assets, as follows:

Furniture and fixtures	5-7 years
Equipment and software	2-5 years
Improvements	5-15 years
Buildings	10-51 years

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Upon retirement or disposition, the asset cost and related accumulated depreciation are removed with any gain or loss recognized in the income statement. Repair and maintenance costs, including planned maintenance, are expensed as incurred.

Research and Development and Capitalized Software Development Costs

Research and development (“R&D”) costs are expensed as incurred. R&D costs include salaries and benefits, consultants, facilities related costs, material costs, depreciation and travel. Software development costs incurred subsequent to establishing technological feasibility through the general release of the software products are capitalized. Technological feasibility is demonstrated by the completion of a detailed program design or working model, if no program design is completed. GAAP requires that annual amortization expense of the capitalized software development costs be the greater of the amounts computed using the ratio of gross revenue to a products’ total current and anticipated revenues, or the straight-line method over the products’ remaining estimated economic life. Capitalized costs are amortized over periods ranging from eighteen months to two years which represents the products’ estimated economic life. Unamortized software development costs were $566.0 million and $481.1 million at December 31, 2010 and 2009, respectively, and are included in other assets, net. Amortization expense was $314.6 million, $283.0 million and $230.3 million in 2010, 2009 and 2008, respectively. Amounts capitalized were $399.5 million, $329.1 million and $326.5 million in 2010, 2009 and 2008, respectively. The amounts capitalized include stock-based compensation which is not reflected in the consolidated statement of cash flow as it is a non-cash item.

Long-lived Assets

Purchased intangible assets, other than goodwill, are amortized over their estimated useful lives which range from one to seventeen years. Intangible assets include goodwill, developed technology, trademarks and tradenames, customer relationships and customer lists, software licenses, patents, in-process research and development (“IPR&D”) and other intangible assets, which include backlog, non-competition agreements and non-solicitation agreements. The intangible assets are amortized based on the pattern in which the economic benefits of the intangible assets are estimated to be realized. Goodwill is not amortized and is carried at its historical cost.

We periodically review our long-lived assets for impairment. We initiate reviews for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test, other than goodwill, is based on a comparison of the undiscounted cash flows to the recorded value of the asset. If an impairment is indicated, the asset is written down to its estimated fair value.

We test goodwill for impairment in the fourth quarter of each year or more frequently if events or changes in circumstances indicate that the asset might be impaired. The test is based on a comparison of the reporting unit’s book value to its estimated fair market value.

Investments in Joint Ventures

Investments in joint ventures are accounted for under the equity method. Our portion of the gains and losses are recognized in the Other Income (Expense) line in the Consolidated Income Statements.

Advertising

Advertising costs are expensed as incurred. Advertising expense was $40.1 million, $23.5 million and $19.2 million in 2010, 2009 and 2008, respectively.

Legal Costs

Legal costs incurred in connection with loss contingencies are recognized when the costs are probable of occurrence and can be reasonably estimated.

Income Taxes

Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the tax basis of assets and liabilities and their reported amounts using enacted tax rates in effect for the year in which the differences are

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expected to reverse. Tax credits are generally recognized as reductions of income tax provisions in the year in which the credits arise. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Accounting for uncertainty in income taxes recognized in the financial statements is in accordance with Financial Accounting Standards Board (“FASB”) authoritative guidance, which prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement.

We do not provide for a U.S. income tax liability on undistributed earnings of our foreign subsidiaries. The earnings of non-U.S. subsidiaries, which reflect full provision for non-U.S. income taxes, are currently indefinitely reinvested in non-U.S. operations or are expected to be remitted substantially free of additional tax.

Sales Taxes

Sales and other taxes collected from customers and subsequently remitted to government authorities are recorded as cash or accounts receivable with a corresponding offset recorded to sales taxes payable. These balances are removed from the consolidated balance sheet as cash is collected from the customers and remitted to the tax authority.

Earnings Per Share

Basic net income per share is computed using the weighted average number of shares of our common stock outstanding during the period. Diluted net income per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares consist of stock options, unvested restricted stock and restricted stock units, the shares issuable under our $1.725 billion 1.75% convertible senior notes due 2011 (the “2011 Notes”), our $1.725 billion 1.75% convertible senior notes due 2013 (the “2013 Notes” and, together with the 2011 Notes, the “Notes”), and the associated warrants. See Note E for further information regarding the Notes and the associated warrants and Note N for further information regarding the calculation of diluted net income per weighted average share. Additionally, for purposes of calculating diluted net income per common share, net income is adjusted for the difference between VMware’s reported diluted and basic earnings per share, if any, multiplied by the number 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 Tariff and Trade Bureau additional minimum funding requirements. Net pension cost for our international defined benefit pension plans are generally funded as accrued.

Concentrations of Risks

Financial instruments that potentially subject us to concentration of credit risk consist principally of bank deposits, money market investments, short- and long-term investments, accounts and notes receivable, and foreign currency exchange contracts. Deposits held with banks in the United States may exceed the amount of FDIC insurance provided on such deposits. Deposits held 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.

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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 $60.5 million and $51.1 million at December 31, 2010 and 2009, 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 among a large number of customers, minimizing the reliance on any particular customer or group of customers. Dell Inc., one of our channel partners, accounted for 11.5% of our revenues in 2008.

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.

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 Guidance Recently Adopted

In September 2009, the FASB amended the accounting standards for revenue recognition to exclude tangible products containing software components and non-software components that function together to deliver the product’s essential functionality from the scope of industry specific software revenue recognition guidance. Additionally, the FASB also amended the accounting standards for multiple deliverable revenue arrangements to provide for how the deliverables in an arrangement should be separated and how the consideration should be allocated using the relative selling price method. This guidance requires an entity to allocate revenue in an arrangement using ESP of deliverables if a vendor does not have VSOE or TPE and effectively eliminates use of the residual method in such cases.

We elected to early adopt this accounting guidance at the beginning of our first quarter of 2010 on a prospective basis for applicable transactions originating or materially modified after January 1, 2010.

For the year ended December 31, 2009, pursuant to the previous guidance of revenue arrangements with multiple deliverables, we allocated revenue to each undelivered element based upon their fair values and then allocated the residual revenue to the delivered elements. Where the fair value for an undelivered element could not be determined, we deferred revenue for the delivered elements until the undelivered elements were delivered or the fair value was determinable for the remaining undelivered elements. We limited the amount of revenue recognition for delivered elements to the amount that was not contingent on the future delivery of products or services.

The new accounting guidance did not have a material impact on our financial position or results of operations for the year ended December 31, 2010 and did not change the units of accounting for our revenue transactions. Specifically, for our product sales that contain software components and non-software components that function together to deliver the product’s essential functionality, the difference of applying the relative selling price method to such transactions under the new guidance, as compared to the residual method under the previous guidance, was insignificant. Our undelivered elements are typically software-related services which we account for utilizing VSOE to determine fair value. Our assessment considered that the amounts recorded as revenue for delivered elements are limited to the amounts not contingent on the future delivery of products or services.

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The new accounting guidance for revenue recognition is not expected to have a significant effect on revenue when applied to our multiple element arrangements based on our current go-to-market strategies due to the existence of VSOE of fair value for the typical undelivered elements in most of our product and service offerings in the future.

The new accounting standards, if applied to the year ended December 31, 2009, would not have had a material impact on our revenue for that year.

B. Non-controlling Interest in VMware, Inc.

The non-controlling interests’ share of equity in VMware is reflected as Non-controlling interest in VMware, Inc. in the accompanying consolidated balance sheets and was $762.7 million and $510.6 million as of December 31, 2010 and 2009, respectively. At December 31, 2010, EMC held approximately 97% of the combined voting power of VMware’s outstanding common stock and approximately 80% of the economic interest in VMware.

The effects of changes in our ownership interest in VMware on our equity were as follows (table in thousands):

	For the Twelve Months Ended
	December 31, 2010			December 31, 2009
Net income attributable to EMC Corporation	$	1,899,995		$	1,088,077
Transfers (to) from the non-controlling interest in VMware, Inc.:
Increase in EMC Corporation’s additional paid-in-capital for VMware’s equity issuances		151,274			85,226
Decrease in EMC Corporation’s additional paid-in-capital for VMware’s other equity activity		(337,451	)		(59,657	)
Net transfers (to) from non-controlling interest		(186,177	)		25,569
Change from net income attributable to EMC Corporation and transfers from the non-controlling interest in VMware, Inc.	$	1,713,818		$	1,113,646

C. Acquisitions

2010 Acquisitions

Acquisition of Isilon Systems, Inc.

In the fourth quarter 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 complements and expands our Information Storage business.

The purchase price for Isilon, net of cash and investments, was $2,327.9 million, which consisted of $2,301.1 million of cash consideration and $26.8 million for the fair value of our stock options granted in exchange for existing Isilon options. We incurred $0.6 million of transaction costs for legal and accounting services, which are included in restructuring and acquisition-related charges in our Consolidated Income Statements. The fair value of our stock options issued to employees of Isilon was estimated using a Black-Scholes option pricing model.

The purchase price has been allocated to the assets acquired and the liabilities assumed based on estimated fair values as of the acquisition date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following represents the allocation of the Isilon purchase price (table in thousands):

Trade accounts receivable (approximates contractual value)	$	38,565
Other current assets		17,448
Property and equipment		8,678
Intangible assets:
Developed technology (weighted-average useful life of 3.1 years)		115,300
Customer maintenance relationships (weighted-average useful life of 6.6 years)		142,900
Customer product relationships (weighted-average useful life of 4.3 years)		159,600
Tradename (weighted-average useful life of 2.4 years)		7,700
IPR&D		43,900
Total intangible assets		469,400
Goodwill		1,974,536
Current liabilities		(51,910	)
Income tax payable		(272	)
Deferred revenue		(37,800	)
Deferred income taxes		(90,758	)
Total purchase price	$	2,327,887

The total weighted-average amortization period for intangible assets is 4.6 years. The intangible assets are being amortized over the pattern in which the economic benefits of the intangible assets are being utilized, which in general reflects the cash flows generated from such assets. The goodwill associated with this acquisition is reported within our Information Storage segment. None of the goodwill is deductible for tax purposes. The goodwill results from expected synergies from the transaction, including complementary products that will enhance our overall product portfolio, which we believe will result in incremental revenue and profitability.

Other 2010 Acquisitions

In the first quarter of 2010, we acquired all of the outstanding capital stock of Archer Technologies, LLC, a provider of governance, risk and compliance software. This acquisition complements and expands our RSA Information Security segment. Additionally, VMware acquired two businesses, Zimbra and RTO Software, Inc.

In the second quarter of 2010, VMware acquired two businesses, Rabbit Technologies, Ltd. and GemStone Systems, Inc.

In the third quarter of 2010, we acquired all of the outstanding capital stock of Greenplum, Inc., a provider of disruptive data warehousing technology. This acquisition complements and expands our Information Storage segment. Additionally, VMware acquired two businesses, Integrien and Tricipher.

In the fourth quarter of 2010, we acquired all of the capital stock of Bus-Tech, Inc., a provider of information infrastructure solutions. This acquisition complements and expands our Information Storage segment.

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 the acquirees’ stock options and resulted in goodwill of $631.4 million.

The fair value of our stock options for all acquisitions in 2010 was estimated assuming no expected dividends and the following weighted-average assumptions:

Expected term (in years)	2.0
Expected volatility	29.0	%
Risk-free interest rate	0.7	%

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following represents the aggregate allocation of the purchase price for all the aforementioned acquisitions, excluding Isilon, to intangible assets (table in thousands):

Developed technology (weighted-average useful life of 4.7 years)	$	158,860
Customer relationships (weighted-average useful life of 6.4 years)		74,280
Tradename and trademark (weighted-average useful life of 2.5 years)		12,620
Other (weighted-average useful life of 2.1 years)		3,379
Total intangible assets	$	249,139

The total weighted-average amortization period for the intangible assets is 4.6 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized. The total goodwill recognized from the aforementioned acquisitions, including Isilon, was $2,605.9 million.

In-process Research and Development

We acquired two IPR&D projects in 2010 as part of the Isilon acquisition. Both projects, totaling $43.9 million, are expected to be completed in 2012.

The value assigned to the IPR&D projects was determined utilizing the income approach by determining cash flow projections relating to the projects. We applied discount rates ranging from 19% to 22% to determine the value of the IPR&D projects. Under new business combination guidance effective in 2009, each IPR&D project is capitalized and will be assessed for impairment until completed. Upon completion, the project will be amortized over its estimated useful life over the pattern in which the economic benefits of the intangible assets are being utilized.

2009 Acquisitions

Acquisition of Data Domain, Inc.

In the third quarter of 2009, we acquired all of the outstanding capital stock of Data Domain, Inc. (“Data Domain”), a provider of storage solutions for backup and archive applications based on deduplication technology. Data Domain deduplication storage systems are designed to deliver reliable, efficient and cost-effective solutions that enable enterprises of all sizes to manage, retain and protect their data. This acquisition further complements and expands our Information Storage business.

The purchase price for Data Domain, net of cash and investments, was $2,017.3 million, which consisted of $1,933.9 million of cash consideration and $83.4 million for the fair value of our stock options granted in exchange for existing Data Domain options. We incurred $12.0 million of transaction costs for financial advisory, legal and accounting services, which are included in restructuring and acquisition-related charges in our Consolidated Income Statements. The fair value 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 assumed based on estimated fair values as of the acquisition date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following represents the allocation of the Data Domain purchase price (table in thousands):

Trade accounts receivable (approximates contractual value)	$	72,455
Other current assets		9,275
Property and equipment		40,403
Intangible assets:
Developed technology (weighted-average useful life of 2.6 years)		106,300
Customer maintenance relationships (weighted-average useful life of 5.8 years)		133,700
Customer product relationships (weighted-average useful life of 4.2 years)		111,500
Tradename (weighted-average useful life of 2.0 years)		6,400
IPR&D		174,600
Total intangible assets		532,500
Other long-term assets		60
Goodwill		1,658,321
Current liabilities		(67,212	)
Income tax payable		(4,671	)
Deferred revenue		(60,800	)
Deferred income taxes		(152,818	)
Long-term liabilities		(10,243	)
Total purchase price	$	2,017,270

The total weighted-average amortization period for intangible assets is 4.3 years. The intangible assets are being amortized over the pattern in which the economic benefits of the intangible assets are being utilized, which in general reflects the cash flows generated from such assets. The goodwill associated with this acquisition is reported within our Information Storage segment. None of the goodwill is deductible for tax purposes. The goodwill results from expected synergies from the transaction, including complementary products that will enhance our overall product portfolio, which we believe will result in incremental revenue and profitability.

Other 2009 Acquisitions

In the second quarter of 2009, we acquired all of the outstanding capital stock of Configuresoft, Inc. (“Configuresoft”), a provider of server configuration, change and compliance management software. The acquisition complements and expands our server configuration management solutions within the Information Storage segment.

In the third quarter of 2009, we acquired all of the capital stock of FastScale Technology, Inc., a provider of software platforms and solutions that optimize deployments for physical, virtual and cloud infrastructures. This acquisition complements and expands our Information Storage segment.

Additionally, we acquired all of the capital stock of Kazeon Systems, Inc., a provider of eDiscovery products and solutions which allow corporations, legal service providers and law firms to efficiently search, classify and analyze the growing volumes of information dispersed through their networks. This acquisition complements and expands our Information Intelligence Group segment. VMware acquired the remaining outstanding capital stock of SpringSource Global, Inc. (“SpringSource”), a leader in enterprise and web application development and management. Through the acquisition of SpringSource, VMware plans to deliver new solutions that enable companies to more efficiently build, run and manage applications within both internal and external cloud architectures that can host both existing and new applications. These solutions will extend VMware’s strategy to deliver solutions that can be hosted at customer data centers or at service providers. This acquisition will also support VMware’s mission to simplify enterprise information technology and make customer environments more efficient, scalable and easier to manage. The purchase price for SpringSource, net of cash acquired, was approximately $372.5 million, which consisted of $356.3 million of cash consideration and $16.2 million for the fair value of VMware stock options granted in exchange for existing SpringSource options.

In connection with our acquisitions, we had adjustments to the fair value of previously held interests in Data Domain and SpringSource of $25.8 million which were recognized in other income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The aggregate purchase price, net of cash acquired for all 2009 acquisitions, excluding Data Domain, was $730.6 million, which consisted of $730.2 million of cash and $0.4 million in fair value of our stock options issued in exchange for the acquirees’ stock options.

The fair value of our stock options for all acquisitions in 2009 was estimated assuming no expected dividends and the following weighted-average assumptions:

Expected term (in years)	2.3
Expected volatility	37.2	%
Risk-free interest rate	1.2	%

The following represents the aggregate allocation of the purchase price for all the aforementioned acquisitions to intangible assets (table in thousands):

Developed technology (weighted-average useful life of 3.5 years)	$	141,000
Customer relationships (weighted-average useful life of 6.1 years)		291,800
Tradename and trademark (weighted-average useful life of 5.6 years)		13,770
Non-competition agreements (weighted-average useful life of 2.5 years)		1,200
IPR&D		174,600
Total intangible assets	$	622,370

The total weighted-average amortization period for the intangible assets is 4.9 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized. The total goodwill recognized from the aforementioned acquisitions was $2,189.2 million.

In-process Research and Development

We acquired four IPR&D projects in 2009 as part of the Configuresoft and Data Domain acquisitions. One of the products valued at $58.1 million was completed in the fourth quarter of 2009. The three remaining projects were completed in 2010.

The value assigned to the IPR&D projects was determined utilizing the income approach by determining cash flow projections relating to the projects. We applied discount rates ranging from 17% to 21% to determine the value of the IPR&D projects. Each IPR&D project is capitalized and will be assessed for impairment until completed. Upon completion, each project will be amortized over its estimated useful life over the pattern in which the economic benefits of the intangible assets are being utilized.

2008 Acquisitions

During 2008, we acquired twelve companies. EMC acquired six of the companies for its Information Infrastructure business. These acquisitions have helped us further enhance and expand our Information Storage and Information Intelligence Group segments. VMware acquired six of the companies. In connection with these acquisitions, VMware acquired technologies that are complementary to VMware’s core virtualization technology.

The aggregate purchase price, net of cash acquired for all 2008 acquisitions was $759.6 million, which consisted of $743.5 million of cash, $4.1 million in fair value of our stock options issued in exchange for the acquirees’ stock options and $12.0 million of transaction costs, which primarily consisted of fees incurred by us for financial advisory, legal and accounting services. None of these acquisitions were individually material to EMC. The fair value of our stock options was estimated assuming no expected dividends and the following weighted-average assumptions:

Expected term (in years)	2.2
Expected volatility	38.2	%
Risk-free interest rate	2.4	%

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following represents the aggregate allocation of the purchase price for all the aforementioned acquisitions to intangible assets (table in thousands):

Developed technology (weighted-average useful life of 5.5 years)	$	65,335
Customer relationships (weighted-average useful life of 6.8 years)		53,224
Tradename and trademark (weighted-average useful life of 8.8 years)		27,270
Non-competition agreement (weighted-average useful life of 2.5 years)		2,463
Backlog (weighted-average useful life of 1.0 year)		800
Assembled workforce (weighted-average useful life of 4.9 years)		5,455
IPR&D		85,780
Total intangible assets	$	240,327

The total weighted-average amortization period for the intangible assets is 6.4 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized. The total goodwill recognized from the aforementioned acquisitions was $485.6 million.

The IPR&D was written off at the respective dates of each acquisition because the IPR&D had no alternative uses and had not reached technological feasibility. The value assigned to IPR&D was determined utilizing the income approach by determining cash flow projections relating to identified IPR&D projects. The stage of completion of each in-process project was estimated to determine the discount rates to be applied to the valuation of the in-process technology. Based upon the level of completion and the risk associated with in-process technology, we applied discount rates that ranged from 20% to 60% to value the IPR&D projects acquired.

Pro forma Effects of the Acquisitions

The following gives pro forma effect as if the 2010 acquisitions, 2009 acquisitions and the 2008 acquisitions had been consummated as of the beginning of the prior fiscal year. The unaudited pro forma results are not necessarily indicative of what actually would have occurred had the acquisitions been in effect for the periods presented (table in thousands, except per share data):

	(unaudited) For the Year Ended December 31,
	2010		2009		2008
Revenue	$	17,081,006	$	14,413,370	$	15,202,624
Net income attributable to EMC Corporation	$	1,826,452	$	998,963	$	1,162,891
Net income per weighted average share, basic attributable to EMC Corporation common shareholders	$	0.89	$	0.49	$	0.56
Net income per weighted average share, diluted attributable to EMC Corporation common shareholders	$	0.85	$	0.49	$	0.56

The pro forma impact on reported net income per weighted average share was primarily attributable to amortization of acquired intangible assets, foregone interest income on cash paid for the acquisitions and expensing of IPR&D for transactions consummated in 2008.

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D. Intangibles and Goodwill

Intangible Assets

Intangible assets, excluding goodwill, as of December 31, 2010 and 2009 consist of (tables in thousands):

	December 31, 2010
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Purchased technology	$	1,509,616	$	(873,095	)	$	636,521
Patents		62,170		(62,134	)		36
Software licenses		84,583		(72,115	)		12,468
Trademarks and tradenames		171,651		(74,725	)		96,926
Customer relationships and customer lists		1,275,908		(447,411	)		828,497
IPR&D		43,900		—			43,900
Other		25,632		(19,713	)		5,919
Total intangible assets, excluding goodwill	$	3,173,460	$	(1,549,193	)	$	1,624,267
	December 31, 2009
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Purchased technology	$	1,121,385	$	(743,938	)	$	377,447
Patents		62,170		(62,130	)		40
Software licenses		78,873		(59,040	)		19,833
Trademarks and tradenames		153,331		(57,339	)		95,992
Customer relationships and customer lists		899,128		(329,518	)		569,610
IPR&D		116,930		—			116,930
Other		22,303		(16,523	)		5,780
Total intangible assets, excluding goodwill	$	2,454,120	$	(1,268,488	)	$	1,185,632

Amortization expense on intangibles was $285.3 million, $247.8 million and $280.9 million in 2010, 2009 and 2008, respectively. As of December 31, 2010, amortization expense on intangible assets for the next five years is expected to be as follows (table in thousands):

2011	$	315,078
2012		298,145
2013		273,808
2014		228,498
2015		181,467
Total	$	1,296,996

Changes in the carrying amount of goodwill, net, on a consolidated basis and by segment for the years ended December 31, 2010 and 2009 consist of the following (tables in thousands):

	Year Ended December 31, 2010
	Information Storage			Information Intelligence Group			RSA Information Security			VMware Virtual Infrastructure			Total
Balance, beginning of the year	$	5,045,086		$	1,476,520		$	1,529,408		$	1,159,362		$	9,210,376
Goodwill acquired		2,287,712			—			140,013			178,201			2,605,926
Tax deduction from exercise of stock options		(548	)		(2,424	)		(1,103	)		—			(4,075	)
Other adjustments		(275,405	)		—			—			275,405			—
Finalization of purchase price allocations		(27,504	)		(6,193	)		(5,105	)		(775	)		(39,577	)
Balance, end of the year	$	7,029,341		$	1,467,903		$	1,663,213		$	1,612,193		$	11,772,650

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Other adjustments to goodwill include the transfer of the goodwill related to the Ionix information technology management business from the Information Storage segment to the VMware Virtual Infrastructure segment. The goodwill transfer related to the common control acquisition of certain software product technology and related capabilities of our Ionix business by VMware. See Note R for additional details.

	Year Ended December 31, 2009
	Information Storage			Information Intelligence Group			RSA Information Security			VMware Virtual Infrastructure			Total
Balance, beginning of the year	$	3,253,966		$	1,442,281		$	1,535,872		$	814,680		$	7,046,799
Goodwill acquired		1,804,873			38,245			—			346,083			2,189,201
Tax deduction from exercise of stock options		(101	)		(2,022	)		(834	)		—			(2,957	)
Finalization of purchase price allocations		(13,652	)		(1,984	)		(5,630	)		(1,401	)		(22,667	)
Balance, end of the year	$	5,045,086		$	1,476,520		$	1,529,408		$	1,159,362		$	9,210,376

Valuation of Goodwill and Intangibles

We perform an assessment of the recoverability of goodwill, at least annually, in the fourth quarter of each year. Our assessment is performed at the reporting unit level which, for certain of our segments, is one step below our reporting segment level. For each assessment, we compare the market value of the reporting unit to its carrying value. We estimate fair value by employing various methodologies, including comparisons to similar industry companies as well as discounted cash flow estimates. The determination of relevant comparable industry companies impacts our assessment of fair value. Should the operating performance of our reporting units change in comparison to these companies or should the valuation of these companies change, this could impact our assessment of the fair value of the reporting units. Our discounted cash flow analyses factor in assumptions on revenue and expense growth rates. These estimates are based upon our historical experience and projections of future activity, factoring in customer demand, changes in technology and a cost structure necessary to achieve the related revenues. Additionally, these discounted cash flow analyses factor in expected amounts of working capital and weighted average cost of capital. Changes in judgments on any of these factors could materially impact the value of the reporting unit. All of these estimates were based on information used by the business for planning purposes. There was no impairment in 2010, 2009 or 2008.

Other intangible assets are evaluated based upon the expected period the asset will be utilized, forecasted cash flows, changes in technology and customer demand. Changes in judgments on any of these factors could materially impact the value of the asset.

E. Convertible Debt

In November 2006, we issued our Notes for total gross proceeds of $3.45 billion. The Notes are senior unsecured obligations and rank equally with all other existing and future senior unsecured debt. Holders may convert their Notes at their option on any day prior to the close of business on the scheduled trading day immediately preceding (i) September 1, 2011, with respect to the 2011 Notes, and (ii) September 1, 2013, with respect to the 2013 Notes, in each case only under the following circumstances: (1) during the five business-day period after any five consecutive trading-day period (the “measurement period”) in which the price per Note of the applicable series for each day of that measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such day; (2) during any calendar quarter, if the last reported sale price of our common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; or (3) upon the occurrence of certain events specified in the Notes. Additionally, the Notes will become convertible during the last three months prior to the respective maturities of the 2011 Notes and the 2013 Notes.

Upon conversion, we will pay cash up to the principal amount of the debt converted. With respect to any conversion value in excess of the principal amount of the Notes converted, we have the option to settle the excess with cash, shares of our common stock, or a combination of cash and shares of our common stock based on a daily conversion value, determined in accordance with the indenture, calculated on a proportionate basis for each day of the relevant 20-day observation period. The initial conversion rate for the Notes will be 62.1978 shares of our common stock per one thousand dollars of principal amount of Notes, which represents a 27.5% conversion premium from the date the Notes were issued and is equivalent to a conversion price of approximately $16.08 per share of our common stock. The conversion price is subject to adjustment in some events as set forth in the indenture. In addition, if a “fundamental change” (as defined in the indenture) occurs prior to the maturity date, we will in some cases increase the conversion rate for a holder of Notes that elects to convert its Notes in connection with such fundamental change.

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Based upon the closing price of our common stock for the prescribed measurement period during the three months ended December 31, 2010, the contingent conversion thresholds on the Notes were exceeded. As a result, the Notes are convertible at the option of the holder through March 31, 2011. Accordingly, since the terms of the Notes require the principal to be settled in cash, we reclassified from equity the portion of the Notes attributable to the conversion feature which had not yet been accreted to its face value and the Notes have been classified as a current liability. Contingencies continue to exist regarding the holders’ ability to convert such Notes in future quarters. The determination of whether the Notes are convertible will be performed on a quarterly basis. Consequently, the Notes might not be convertible in future quarters and therefore the 2013 Notes may be reclassified as long-term debt, if the contingent conversion thresholds are not met.

The carrying amount reported in the consolidated balance sheet as of December 31, 2010 for our convertible debt was $3,450.0 million and the fair value was $5,102.8 million. The carrying amount of the equity component was $433.9 million at December 31, 2010.

The Notes pay interest in cash at a rate of 1.75% semi-annually in arrears on December 1 and June 1 of each year.

The following table represents the key components of our convertible debt (table in thousands):

	For the Twelve Months Ended
	2010		2009		2008
Contractual interest expense on the coupon	$	60,375	$	60,375	$	60,375
Amortization of the discount component recognized as interest expense		114,481		108,347		102,581
Total interest expense on the convertible debt	$	174,856	$	168,722	$	162,956

As of December 31, 2010, the unamortized discount consists of $58.4 million which will be amortized over 2011 and an unamortized discount of $176.8 million which will be amortized over 3 years. The effective interest rate on the Notes was 5.6% for the years ended December 31, 2010, 2009 and 2008.

In connection with the sale of the Notes, we entered into separate convertible note hedge transactions with respect to our common stock (the “Purchased Options”). The Purchased Options allow us to receive shares of our common stock and/or cash related to the excess conversion value that we would pay to the holders of the Notes upon conversion. The Purchased Options will cover, subject to customary anti-dilution adjustments, approximately 215 million shares of our common stock. Half of the Purchased Options expire on December 1, 2011 and the remaining half of the Purchased Options expire on December 1, 2013. We paid an aggregate amount of $669.1 million of the proceeds from the sale of the Notes for the Purchased Options that was recorded as additional paid-in-capital in Shareholders’ Equity.

We also entered into separate transactions in which we sold warrants to acquire, subject to customary anti-dilution adjustments, approximately 215 million shares of our common stock at an exercise price of approximately $19.55 per share of our common stock. Half of the associated warrants have expiration dates between February 15, 2012 and March 15, 2012 and the remaining half of the associated warrants have expiration dates between February 18, 2014 and March 18, 2014. We received aggregate proceeds of $391.1 million from the sale of the associated warrants. Upon exercise, the value of the warrants is required to be settled in shares.

The Purchased Options and associated warrants will generally have the effect of increasing the conversion price of the Notes to approximately $19.55 per share of our common stock, representing an approximate 55% conversion premium based on the closing price of $12.61 per share of our common stock on November 13, 2006.

F. Fair Value of Financial Assets and Liabilities

Our investments are comprised primarily of debt securities that are classified as available for sale and recorded at their fair market values. We determine fair value using the following hierarchy:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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Most of our debt securities are classified as Level 2 securities, with the exception of some of our U.S. government and agency obligations, which are classified as Level 1 securities and all of our auction rate securities, which are classified as Level 3. At December 31, 2010, the vast majority of our Level 2 investments were priced by pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs like market transactions involving identical or comparable securities. In the event observable inputs are not available, we assess other factors to determine the security’s market value, including broker quotes or model valuations. Each month, we perform independent price verifications of all of our holdings. In the event a price fails a pre-established tolerance check, it is researched so that we can assess the cause of the variance to determine what we believe is the appropriate fair market value.

In general, investments with remaining effective maturities of 12 months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than 12 months from the balance sheet date are classified as long-term investments. As a result of the lack of liquidity for auction rate securities, we have classified these as long-term investments as of December 31, 2010. At December 31, 2010, all of our available for sale, short- and long-term investments, excluding auction rate securities, were recognized at fair value, which was determined based upon observable inputs from our pricing vendors for identical or similar assets. At December 31, 2010 and December 31, 2009, auction rate securities were valued using a discounted cash flow model.

The following tables summarize the composition of our investments at December 31, 2010 and 2009 (tables in thousands):

	December 31, 2010
	Amortized Cost		Unrealized Gains		Unrealized (Losses)			Aggregate Fair Value
U.S. government and agency obligations	$	1,737,782	$	11,286	$	(2,674	)	$	1,746,394
U.S. corporate debt securities		1,239,325		13,608		(1,307	)		1,251,626
High yield corporate debt securities		421,469		18,306		(1,943	)		437,832
Asset-backed securities		34,730		152		(1	)		34,881
Municipal obligations		1,095,338		3,829		(3,266	)		1,095,901
Auction rate securities		155,950		—		(9,906	)		146,044
Foreign debt securities		653,251		6,878		(714	)		659,415
Total	$	5,337,845	$	54,059	$	(19,811	)	$	5,372,093
	December 31, 2009
	Amortized Cost		Unrealized Gains		Unrealized (Losses)			Aggregate Fair Value
U.S. government and agency obligations	$	1,086,773	$	8,021	$	(2,982	)	$	1,091,812
U.S. corporate debt securities		631,810		8,716		(512	)		640,014
High yield corporate debt securities		234,543		4,412		(724	)		238,231
Asset-backed securities		14,119		356		(1	)		14,474
Municipal obligations		583,690		6,902		(118	)		590,474
Auction rate securities		253,617		—		(19,165	)		234,452
Foreign debt securities		274,312		1,931		(538	)		275,705
Total	$	3,078,864	$	30,338	$	(24,040	)	$	3,085,162

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The following tables represent our fair value hierarchy for our financial assets and liabilities measured at fair value as of December 31, 2010 and 2009 (in thousands):

	December 31, 2010
	Level 1		Level 2			Level 3		Total
Cash	$	1,534,786	$	—		$	—	$	1,534,786
Cash equivalents		2,522,172		62,180			—		2,584,352
U.S. government and agency obligations		993,165		753,229			—		1,746,394
U.S. corporate debt securities		—		1,251,626			—		1,251,626
High yield corporate debt securities		—		437,832			—		437,832
Asset-backed securities		—		34,881			—		34,881
Municipal obligations		—		1,095,901			—		1,095,901
Auction rate securities		—		—			146,044		146,044
Foreign debt securities		—		659,415			—		659,415
Total cash and investments	$	5,050,123	$	4,295,064		$	146,044	$	9,491,231
Other items:
Foreign exchange derivative assets	$	—	$	19,655		$	—	$	19,655
Foreign exchange derivative liabilities		—		(21,975	)		—		(21,975	)
Commodity derivative liabilities		—		(647	)		—		(647	)
Interest rate swap contracts		—		(7,762	)		—		(7,762	)
	December 31, 2009
	Level 1		Level 2			Level 3		Total
Cash	$	1,201,026	$	—		$	—	$	1,201,026
Cash equivalents		5,101,473		—			—		5,101,473
U.S. government and agency obligations		621,726		470,086			—		1,091,812
U.S. corporate debt securities		—		640,014			—		640,014
High yield corporate debt securities		—		238,231			—		238,231
Asset-backed securities		—		14,474			—		14,474
Municipal obligations		—		590,474			—		590,474
Auction rate securities		—		—			234,452		234,452
Foreign debt securities		—		275,705			—		275,705
Total cash and investments	$	6,924,225	$	2,228,984		$	234,452	$	9,387,661
Other items:
Foreign exchange derivative assets	$	—	$	15,136		$	—	$	15,136
Foreign exchange derivative liabilities		—		(23,275	)		—		(23,275	)

Our auction rate securities are predominantly rated AAA and are primarily collateralized by student loans. The underlying loans of all but two of our auction rate securities, with a market value of $19.1 million, have partial guarantees by the U.S. government as part of the Federal Family Education Loan Program (“FFELP”) through the U.S. Department of Education. FFELP guarantees at least 95% of the loans which collateralize the auction rate securities. The two securities whose underlying loans are not guaranteed by the U.S. government have credit enhancements and are insured by third party agencies. We believe the quality of the collateral underlying all of our auction rate securities will enable us to recover our principal balance in full.

To determine the estimated fair value of our investment in auction rate securities, we used a discounted cash flow model. The assumptions used in preparing the discounted cash flow model include an incremental discount rate for the lack of liquidity in the market (“liquidity discount margin”) for an estimated period of time. The discount rate we selected was based on AA-rated banks as the majority of our portfolio is invested in student loans where EMC acts as 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 1% at both December 31, 2010 and December 31, 2009 as credit spreads on AA-rated banks remained constant.

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The following table provides a summary of changes in fair value of our Level 3 financial assets for the years ended December 31, 2010 and 2009 (table in thousands):

	2010			2009
Balance, beginning of the year	$	234,452		$	199,169
Transfers in from acquisitions		—			30,648
Sales		(56,755	)		(7,248	)
Calls		(40,912	)		—
Decrease in previously recognized unrealized losses included in other comprehensive income (loss)		9,259			11,883
Balance, end of the year	$	146,044		$	234,452

During 2010, we had $97.6 million of sales and calls of our auction rate securities. They were all at par value.

Unrealized losses on investments at December 31, 2010 and 2009 by investment category and length of time the investment has been in a continuous unrealized loss position are as follows (tables in thousands):

December 31, 2010	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government and agency obligations	$	491,897	$	(2,569	)	$	5,474	$	(105	)	$	497,371	$	(2,674	)
U.S. corporate debt securities		291,157		(1,307	)		—		—			291,157		(1,307	)
High yield corporate debt securities		66,537		(1,943	)		—		—			66,537		(1,943	)
Asset-backed securities		6,998		—			5		(1	)		7,003		(1	)
Municipal obligations		599,814		(3,266	)		—		—			599,814		(3,266	)
Auction rate securities		—		—			146,044		(9,906	)		146,044		(9,906	)
Foreign debt securities		104,934		(714	)		—		—			104,934		(714	)
Total	$	1,561,337	$	(9,799	)	$	151,523	$	(10,012	)	$	1,712,860	$	(19,811	)
December 31, 2009	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government and agency obligations	$	490,483	$	(2,938	)	$	1,363	$	(44	)	$	491,846	$	(2,982	)
U.S. corporate debt securities		78,706		(351	)		3,012		(161	)		81,718		(512	)
High yield corporate debt securities		60,865		(724	)		—		—			60,865		(724	)
Asset-backed securities		5		(1	)		—		—			5		(1	)
Municipal obligations		46,618		(118	)		—		—			46,618		(118	)
Auction rate securities		—		—			234,452		(19,165	)		234,452		(19,165	)
Foreign debt securities		144,761		(538	)		—		—			144,761		(538	)
Total	$	821,438	$	(4,670	)	$	238,827	$	(19,370	)	$	1,060,265	$	(24,040	)

Investment Losses

For all of our securities where the amortized cost basis was greater than the fair value at December 31, 2010, we have concluded that currently we neither plan to sell the security nor is it more likely than not that we would be required to sell the security before its anticipated recovery. In making the determination as to whether the unrealized loss is other-than-temporary, we considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating, third party guarantees and the time to maturity.

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Contractual Maturities

The contractual maturities of investments held at December 31, 2010 are as follows (table in thousands):

	December 31, 2010
	Amortized Cost Basis		Aggregate Fair Value
Due within one year	$	1,137,549	$	1,139,830
Due after 1 year through 5 years		3,423,745		3,450,916
Due after 5 years through 10 years		385,612		398,005
Due after 10 years		390,939		383,342
Total	$	5,337,845	$	5,372,093

Short-term investments in the balance sheet include $118.7 million of variable rate demand notes, which have contractual maturities ranging from 2011 through 2048, are not classified within investments due within one year above.

G. Inventories

Inventories consist of (table in thousands):

	December 31, 2010		December 31, 2009
Purchased parts	$	11,833	$	73,612
Work-in-process		544,889		469,901
Finished goods		299,683		342,776
	$	856,405	$	886,289

H. Accounts and Notes Receivable and Allowance for Credit Losses

Accounts and Notes Receivable

Our accounts and notes receivable are recorded at cost. The portion of our notes receivable due in one year or less are included in accounts and notes receivable and the long-term portion is included in other assets, net. Lease receivables arise from sales-type leases of products. We typically sell, without recourse, the contractual right to the lease payment stream and assets under lease to third parties. For certain customers we retain the lease.

The contractual amounts due under our leases as of December 31, 2010 were as follows (table in thousands):

Year	Contractual amounts due under leases
2011	$	115,477
2012		87,584
2013		73,277
Thereafter		2,071
Total		278,409
Less amounts representing interest		9,608
Present value		268,801
Current portion (included in accounts and notes receivable)		99,520
Long-term portion (included in other assets, net)	$	169,281

Subsequent to December 31, 2010, we sold $31.0 million of these notes to third parties without recourse.

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

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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, 2010, amounts from lease receivables past due for more than 90 days was not material to notes receivable.

The following table presents the activity of our allowance for credit losses related to lease receivables for the years ended December 31, 2010 and 2009 (table in thousands):

	December 31, 2010			December 31, 2009
Beginning Balance	$	40,199		$	28,269
Recoveries		(25,171	)		(9,801	)
Provisions		29,633			21,731
Ending Balance	$	44,661		$	40,199

Gross lease receivables totaled $278.4 million and $182.5 million in 2010 and 2009, respectively, before the allowance. The components of these balances were individually evaluated for impairment by management.

In 2009, we entered into term loan agreements with Quantum Corporation (“Quantum”), pursuant to which Quantum borrowed $121.7 million from us. The agreements required quarterly interest payments at a rate of 12% per annum. The scheduled maturity date of the loans was September 30, 2014, with the exception of $21.7 million which was to be due December 31, 2011. These notes were paid in full by Quantum in the fourth quarter of 2010.

I. Property, Plant and Equipment

Property, plant and equipment consist of (table in thousands):

	December 31, 2010			December 31, 2009
Furniture and fixtures	$	251,159		$	229,006
Equipment		4,025,813			3,447,209
Buildings and improvements		1,580,595			1,427,656
Land		115,899			122,260
Building construction in progress		98,345			91,501
		6,071,811			5,317,632
Accumulated depreciation		(3,543,379	)		(3,093,286	)
	$	2,528,432		$	2,224,346

Depreciation expense was $595.3 million, $565.5 million and $561.1 million in 2010, 2009 and 2008, respectively.

J. Accrued Expenses

Accrued expenses consist of (table in thousands):

	December 31, 2010		December 31, 2009
Salaries and benefits	$	861,434	$	742,748
Standard product warranties		236,131		271,594
Restructuring (See Note P)		81,764		105,760
Other		910,706		824,108
	$	2,090,035	$	1,944,210

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Product Warranties

Systems sales include a standard product warranty. At the time of the sale, we accrue for systems’ warranty costs. The initial systems’ warranty accrual is based upon our historical experience, expected future costs and specific identification of systems’ requirements. Upon expiration of the initial warranty, we may sell additional maintenance contracts to our customers. Revenue from these additional maintenance contracts is included in deferred revenue and recognized ratably over the service period. The following represents the activity in our warranty accrual for our standard product warranty (table in thousands):

	Year Ended December 31,
	2010			2009			2008
Balance, beginning of the year	$	271,594		$	269,218		$	263,561
Provision		120,296			145,517			160,556
Amounts charged to the accrual		(155,759	)		(143,141	)		(154,899	)
Balance, end of the year	$	236,131		$	271,594		$	269,218

The provision includes amounts accrued for systems at the time of shipment, adjustments for changes in estimated costs for warranties on systems shipped in the period and changes in estimated costs for warranties on systems shipped in prior periods. It is not practicable to determine the amounts applicable to each of the components.

K. Income Taxes

Our provision (benefit) for income taxes consists of (table in thousands):

	2010			2009		2008
Federal:
Current	$	518,309		$	181,578	$	156,501
Deferred		4,170			7,977		9,681
		522,479			189,555		166,182
State:
Current		49,488			13,114		18,387
Deferred		(20,419	)		13,419		1,128
		29,069			26,533		19,515
Foreign:
Current		120,287			30,885		100,879
Deferred		(33,538	)		5,802		(6,180	)
		86,749			36,687		94,699
Total provision for income taxes	$	638,297		$	252,775	$	280,396

In 2010, 2009 and 2008, we were able to utilize $46.9 million, $68.9 million and $52.6 million, respectively, of net operating loss carryforwards and tax credits to reduce the current portion of our tax provision.

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The effective income tax rate is based upon the income for the year, the composition of the income in different countries, and adjustments, if any, for the potential tax consequences, benefits or resolutions of tax audits. A reconciliation of our income tax provision to the statutory federal tax rate is as follows:

	2010			2009			2008
Statutory federal tax rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal taxes		1.0			1.0			1.2
Resolution of uncertain tax positions		(0.6	)		(4.5	)		(2.9	)
Tax rate differential for international jurisdictions and other international related tax items		(12.2	)		(17.5	)		(15.9	)
U.S. tax credits		(3.3	)		(3.1	)		(5.2	)
Changes in valuation allowance		(0.6	)		—			—
International reorganization of acquired companies		3.2			4.4			—
Permanent items		2.5			4.2			5.3
Other		(0.5	)		(1.1	)		—
		24.5	%		18.4	%		17.5	%

In 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 which negatively impacted the rate by 4.4 percentage points.

In 2010, a continuation of the reorganization of international operations was effected which included the transfer of certain assets of Isilon, Archer Technologies and Bus-Tech into the single EMC international holding company, which negatively impacted the rate by 3.2 percentage points.

The components of the current and noncurrent deferred tax assets and liabilities are as follows (table in thousands):

	December 31, 2010						December 31, 2009
	Deferred Tax Asset			Deferred Tax Liability			Deferred Tax Asset			Deferred Tax Liability
Current:
Accounts and notes receivable	$	49,636		$	—		$	77,052		$	—
Inventory		80,500			—			62,840			—
Accrued expenses		254,775			—			253,803			—
Deferred revenue		224,921			—			170,479			—
Total current		609,832			—			564,174			—
Noncurrent:
Property, plant and equipment, net		—			(102,962	)		—			(129,381	)
Intangible and other assets, net		—			(633,225	)		—			(504,140	)
Equity		—			(156,802	)		—			(199,490	)
Deferred revenue		—			(22,313	)		—			(29,045	)
Other noncurrent liabilities		—			(47,526	)		—			(56,827	)
Credit carryforwards		44,248			—			30,481			—
Net operating losses		157,541			—			139,092			—
Other comprehensive loss		48,385			—			62,747			—
Total noncurrent		250,174			(962,828	)		232,320			(918,883	)
Gross deferred tax assets and liabilities		860,006			(962,828	)		796,494			(918,883	)
Valuation allowance		(4,350	)		—			(21,815	)		—
Total deferred tax assets and liabilities	$	855,656		$	(962,828	)	$	774,679		$	(918,883	)

We have gross federal and foreign net operating loss carryforwards of $288.3 million and $80.3 million, respectively. Portions of these carryforwards are subject to annual limitations, including Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended, for U.S. tax purposes and similar provisions under other countries’ tax laws. Certain of these net operating losses will begin to expire in 2014, while others have an unlimited carryforward period.

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We have federal and state credit carryforwards of $20.6 million and $23.6 million, respectively. Portions of these carryforwards are subject to annual limitations, including Section 382 of the Code, as amended, for U.S. tax purposes and similar provisions under other countries’ tax laws. Certain of these credits will begin to expire in 2011, while others have an unlimited carryforward period.

The valuation allowance decreased from $21.8 million at December 31, 2009 to $4.4 million at December 31, 2010. The decrease was attributable to a reduction for a certain subsidiary’s foreign net operating loss carryforward. The valuation allowance relates to foreign net operating loss carryforwards.

Deferred income taxes have not been provided on basis differences related to investments in foreign subsidiaries. These basis differences were approximately $5.1 billion and $4.3 billion at December 31, 2010 and 2009, respectively, and consisted primarily of undistributed earnings permanently invested in these entities. The change in the basis difference in 2010 was mainly attributable to income earned in the current year. If these earnings were distributed to the United States in the form of dividends or otherwise, we would be subject to additional U.S. income taxes. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable. Income before income taxes from foreign operations for 2010, 2009 and 2008 was $1.2 billion, $0.9 billion and $1.1 billion, respectively.

The following is a rollforward of our gross consolidated liability for unrecognized income tax benefits for the three years ended December 31:

	2010			2009			2008
Unrecognized tax benefits, beginning of year	$	197.1		$	218.5		$	206.7
Tax positions related to current year:
Additions		47.6			52.1			62.4
Reductions		—			—			—
Tax positions related to prior years:
Additions		23.7			4.6			5.1
Reductions		(20.2	)		(66.7	)		(40.2	)
Settlements		(5.0	)		(2.9	)		(0.3	)
Lapses in statutes of limitations		(12.9	)		(8.5	)		(15.2	)
Unrecognized tax benefits, end of year	$	230.3		$	197.1		$	218.5

As of December 31, 2010, 2009 and 2008, $221.8 million, $195.1 million and $213.0 million, respectively, of the unrecognized tax benefits, if recognized, would have been recorded as a reduction to income tax expense. The remainder would be an adjustment to shareholders’ equity.

We have substantially concluded all U.S. federal income tax matters for years through 2006 and are currently under audit for U.S. federal income taxes for 2007 and 2008. We also have income tax audits in process in numerous state, local and international jurisdictions. In our international jurisdictions that comprise a significant portion of our operations, the years that may be examined vary, with the earliest year being 2004. Based on the timing and outcome of examinations of EMC, the result of the expiration of statutes of limitations for specific jurisdictions or the timing and result of ruling requests from taxing authorities, it is reasonably possible that up to $41.4 million of unrecognized tax positions may be recognized within one year.

The $66.7 million reduction during 2009 for tax positions related to prior years is principally due to the resolution of certain transfer pricing matters and the completion of the 2005 and 2006 U.S. federal income tax audits.

We recognize interest expense and penalties related to income tax matters in income tax expense. For 2010, $1.1 million in interest expense was recognized, whereas for 2009 and 2008, $4.3 million and $1.3 million, respectively, in net interest expense was reversed. In addition to the unrecognized tax benefits noted above, we had accrued interest and penalties of $30.5 million, $29.9 million and $34.2 million as of December 31, 2010, 2009 and 2008, respectively.

L. 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 to 6% of eligible compensation

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during each pay period (subject to a $750 maximum match each quarter). Matching contributions are immediately 100% vested. Our contributions amounted to $34.3 million, $27.1 million and $60.4 million in 2010, 2009 and 2008, respectively. We only matched employees’ contributions in the second half of 2010.

Employees may elect to invest their contributions in a variety of funds, including an EMC stock fund. The deferred compensation program limits an employee’s maximum investment allocation in the EMC stock fund to 30% of their total contribution. Our matching contribution mirrors the investment allocation of the employee’s contribution.

Defined Benefit Pension Plan

We have noncontributory defined benefit pension plans which were assumed as part of the Data General acquisition, which cover substantially all former Data General employees located in the U.S. In addition, certain of the former Data General foreign subsidiaries also have retirement plans covering substantially all of their employees. All of these plans were frozen in 1999 resulting in employees no longer accruing pension benefits for future services. Certain of our foreign subsidiaries also have a defined benefit pension plan.

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 the projected unit credit actuarial cost method that includes actuarial assumptions and estimates which are subject to change. The measurement date for the plans is December 31.

Our investment policy provides that no security, except issues of the U.S. Government, shall comprise more than 5% of total plan assets, measured at market. At December 31, 2010, the Data General U.S. pension plan held $0.5 million of our common stock.

The Data General U.S. pension plan (the “Pension Plan”) is summarized in the following tables. The other pension plans are not presented because they do not have a material impact on our consolidated financial position or results of operations.

The components of the change in benefit obligation of the Pension Plan is as follows (table in thousands):

	December 31, 2010			December 31, 2009
Benefit obligation, at beginning of year	$	386,316		$	351,074
Interest cost		22,685			22,027
Benefits paid		(15,516	)		(13,635	)
Settlement payments		—			(1	)
Actuarial loss		33,728			26,851
Benefit obligation, at end of year	$	427,213		$	386,316

The reconciliation of the beginning and ending balances of the fair value of the assets of the Pension Plan is as follows (table in thousands):

	December 31, 2010			December 31, 2009
Fair value of plan assets, at beginning of year	$	353,562		$	296,698
Actual return on plan assets		41,571			70,500
Benefits paid		(15,516	)		(13,635	)
Settlement payments		—			(1	)
Fair value of plan assets, at end of year	$	379,617		$	353,562

We did not make any contributions to the Pension Plan in 2010 or 2009 and we do not expect to make a contribution to the Pension Plan in 2011. The under-funded status of the Pension Plan at December 31, 2010 and 2009 was $47.6 million and $32.8 million, respectively. This amount is classified as a component of other long-term liabilities on the balance sheet.

In 2010, $12.6 million of the accumulated actuarial loss and prior services cost associated with the Pension Plan were reclassified from accumulated comprehensive loss to a component of net periodic benefit cost. Additionally, the Pension Plan had

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net losses of $16.5 million that arose during 2010 primarily as a result of increases in the fair value of the plan assets. We expect that $12.5 million of the total balance included in accumulated other comprehensive loss at December 31, 2010 will be recognized as a component of net periodic benefit costs in 2011. We do not expect to receive any refunds from the Pension Plan in 2011.

The components of net periodic expense (benefit) of the Pension Plan are as follows (table in thousands):

	2010			2009			2008
Interest cost	$	22,685		$	22,027		$	21,876
Expected return on plan assets		(23,304	)		(23,832	)		(34,142	)
Recognized actuarial loss		12,616			14,584			2,683
Net periodic expense (benefit)	$	11,997		$	12,779		$	(9,583	)

The weighted-average assumptions used in the Pension Plan to determine benefit obligations at December 31 are as follows:

	December 31, 2010			December 31, 2009			December 31, 2008
Discount rate		5.4	%		6.0	%		6.6	%
Rate of compensation increase		N/A			N/A			N/A

The weighted-average assumptions used in the Pension Plan to determine periodic benefit cost for the years ended December 31 are as follows:

	December 31, 2010			December 31, 2009			December 31, 2008
Discount rate		6.0	%		6.6	%		6.6	%
Expected long-term rate of return on plan assets		6.75	%		8.25	%		8.25	%
Rate of compensation increase		N/A			N/A			N/A

The benefit payments are expected to be paid in the following years (table in thousands):

2011	$	18,264
2012		19,427
2013		20,443
2014		21,510
2015		22,811
2016 – 2020		138,031

Fair Value of Plan Assets

Following is a description of the valuation methodologies used for assets measured at fair value at December 31, 2010:

Common Collective Trusts – valued at the net asset value calculated by the fund manager based on the underlying investments. These are all classified within Level 2 of the valuation hierarchy. These include: Collective Trust High Yield Fund, EB Daily Valued Large Cap Growth Stock Index Fund, EB Daily Valued Large Cap Value Stock Index Fund, EB Daily Valued Small Cap Stock Index Fund, EB Daily Valued Stock Index Fund, EB Daily Valued International Stock Index Fund, EB Daily Valued Emerging Markets Index Fund, EB Long Term Credit Bond Index and EB Long Term Government Bond Index Fund.

U.S. Agency Securities – valued daily at the closing price reported in active U.S. financial markets and are classified within Level 2 of the valuation hierarchy.

U.S. Treasury Securities – valued daily at the closing price reported in active U.S. financial markets and are classified within Level 1 of the valuation hierarchy.

Corporate Debt Securities – valued daily at the closing price reported in active U.S. financial markets and are classified within Level 2 of the valuation hierarchy.

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The following table sets forth, by level within the fair value hierarchy, the Pension Plan’s assets at fair value as of December 31, 2010 and 2009 (tables in thousands):

	December 31, 2010
	Level 1		Level 2		Level 3		Total
Common collective trusts	$	—	$	278,447	$	—	$	278,447
Mutual funds		—		3,656		—		3,656
U.S. Agency Securities		—		20,700		—		20,700
U.S. Treasury Securities		11,799		—		—		11,799
Corporate Debt Securities		—		57,067		—		57,067
Municipal Obligations		—		980		—		980
Asset-backed Securities		—		2,602		—		2,602
Mortgaged-backed Securities		—		3,837		—		3,837
Total	$	11,799	$	367,289	$	—	$	379,088
Plan payables, net of accrued interest and dividends								529
Total							$	379,617
	December 31, 2009
	Level 1		Level 2		Level 3		Total
Common collective trusts	$	—	$	275,984	$	—	$	275,984
Mutual funds		—		2,843		—		2,843
U.S. Agency Securities		—		29,119		—		29,119
U.S. Treasury Securities		18,821		—		—		18,821
Corporate Debt Securities		—		21,728		—		21,728
Municipal Obligations		—		392		—		392
Asset-backed Securities		—		669		—		669
Mortgaged-backed Securities		—		5,195		—		5,195
Total	$	18,821	$	335,930	$	—	$	354,751
Plan payables, net of accrued interest and dividends								(1,189	)
Total							$	353,562

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, 2010 and 2009.

Concentration of Risks

Pension Plan’s investments at fair value as of December 31, 2010 and 2009 which represented 5% or more of the Pension Plan’s net assets were as follows:

	2010		2009
Collective Trust High Yield Fund	$	21,956	$	23,420
EB Daily Valued Large Cap Growth Stock Index Fund		18,497		21,174
EB Daily Valued Large Cap Value Stock Index Fund		19,605		19,428
EB Daily Valued Small Cap Stock Index Fund		34,069		34,885
EB Daily Valued Stock Index Fund		110,030		129,947
EB Daily Valued International Stock Index Fund		33,967		34,892
EB Long Term Credit Bond Index		21,765		—
U.S. Treasury Securities		11,799		18,821
U.S. Agency Securities		20,700		29,119
Corporate Debt Securities		57,067		21,728
	$	349,455	$	333,414

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Investment Strategy

Our Pension Plan’s assets are managed by outside investment managers. Our investment strategy with respect to pension assets is to maximize returns while preserving principal.

The expected long-term rate of return on plan assets considers the current level of expected returns on risk free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class was weighted based on the target asset allocation to develop the expected long-term rate of return on assets. The weighted average target asset allocations are as follows:

	December 31, 2010
U.S. Large Capitalization Equities		40	%
U.S. Small Capitalization Equities		9
International Equities		11
U.S. Core Fixed Income		34
High Yield Fixed Income		6
Total		100	%

The actual allocation of the assets in the Pension Plan at December 31, 2010 and 2009 were as follows:

	December 31, 2010			December 31, 2009
U.S. Large Capitalization Equities		39	%		48	%
U.S. Small Capitalization Equities		9			10
International Equities		11			13
U.S. Core Fixed Income		35			22
High Yield Fixed Income		6			7
Total		100	%		100	%

M. Commitments and Contingencies

Operating Lease Commitments

We lease office and warehouse facilities and equipment under various operating leases. Facility leases generally include renewal options. Rent expense was as follows (table in thousands):

	2010			2009			2008
Rent expense	$	276,030		$	300,609		$	299,481
Sublease proceeds		(7,090	)		(6,114	)		(10,740	)
Net rent expense	$	268,940		$	294,495		$	288,741

Our future operating lease commitments as of December 31, 2010 are as follows (table in thousands):

2011	$	267,089
2012		223,914
2013		178,264
2014		142,507
2015		104,155
Thereafter		375,975
Total minimum lease payments	$	1,291,904

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We sublet certain of our office facilities. Expected future non-cancelable sublease proceeds as of December 31, 2010 are as follows (table in thousands):

2011	$	5,788
2012		2,653
2013		403
2014		412
2015		422
Thereafter		159
Total sublease proceeds	$	9,837

Outstanding Purchase Orders

At December 31, 2010, we had outstanding purchase orders aggregating approximately $1.2 billion. The purchase orders are for manufacturing and non-manufacturing related goods and services. While the purchase orders are generally cancelable without penalty, certain vendor agreements provide for percentage-based cancellation fees or minimum restocking charges based on the nature of the product or service.

Line of Credit

We have available for use a credit line of $50.0 million. As of December 31, 2010, we had no borrowings outstanding on the line of credit. The credit line bears interest at the bank’s base rate and requires us, upon utilization of the credit line, to meet certain financial covenants with respect to limitations on losses. In the event the covenants are not met, the lender may require us to provide collateral to secure the outstanding balance. At December 31, 2010, we were in compliance with the covenants.

Guarantees and Indemnification Obligations

EMC’s subsidiaries have entered into arrangements with financial institutions for such institutions to provide guarantees for rent, taxes, insurance, leases, performance bonds, bid bonds and customs duties aggregating $106 million as of December 31, 2010. The guarantees vary in length of time. In connection with these arrangements, we have agreed to guarantee substantially all of the guarantees provided by these financial institutions. EMC and certain of its subsidiaries have also entered into arrangements with financial institutions in order to facilitate the management of currency risk. EMC has agreed to guarantee the obligations of its subsidiaries under these arrangements.

We enter into agreements in the ordinary course of business with, among others, customers, resellers, OEMs, systems integrators and distributors. Most of these agreements require us to indemnify the other party against third-party claims alleging that an EMC product infringes a patent and/or copyright. Certain agreements in which we grant limited licenses to specific EMC-trademarks require us to indemnify the other party against third-party claims alleging that the use of the licensed trademark infringes a third-party trademark. Certain of these agreements require us to indemnify the other party against certain claims relating to real or tangible personal property damage, personal injury or the acts or omissions of EMC, its employees, agents or representatives. In addition, from time to time, we have made certain guarantees regarding the performance of our systems to our customers. We have also made certain guarantees for the lease obligations of affiliated third parties.

We have agreements with certain vendors, financial institutions, lessors and service providers pursuant to which we have agreed to indemnify the other party for specified matters, such as acts and omissions of EMC, its employees, agents or representatives.

We have procurement or license agreements with respect to technology that is used in our products and agreements in which we obtain rights to a product from an OEM. Under some of these agreements, we have agreed to indemnify the supplier for certain claims that may be brought against such party with respect to our acts or omissions relating to the supplied products or technologies.

We have agreed to indemnify the directors, executive officers and certain other officers of EMC and our subsidiaries, to the extent legally permissible, against all liabilities reasonably incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a director or officer.

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In connection with certain acquisitions, we have agreed to indemnify the current and former directors, officers and employees of the acquired company in accordance with the acquired company’s by-laws and charter in effect immediately prior to the acquisition or in accordance with indemnification or similar agreements entered into by the acquired company and such persons. In a substantial majority of instances, we have maintained the acquired company’s directors’ and officers’ insurance, which should enable us to recover a portion of any future amounts paid. These indemnities vary in length of time.

Based upon our historical experience and information known as of December 31, 2010, we believe our liability on the above guarantees and indemnities at December 31, 2010 is not material.

Litigation

We are involved in a variety of claims, demands, suits, investigations, and proceedings, including those identified below, that arise from time to time relating to matters incidental to the ordinary course of our business, including actions with respect to contracts, intellectual property, product liability, employment, benefits and securities matters. As required by authoritative guidance, we have estimated the amount of probable losses that may result from any such pending matters, and such amounts are reflected in our consolidated financial statements. These recorded amounts are not material to our consolidated financial position or results of operations. While it is not possible to predict the outcome of these matters with certainty, we do not expect the results of any of these actions to have a material adverse effect on our business, results of operations or financial condition. Because litigation is inherently unpredictable, however, the actual amounts of loss may prove to be larger or smaller than the amounts reflected in our consolidated financial statements, and we could incur judgments or enter into settlements of claims that could adversely affect our operating results or cash flows in a particular period.

We have received three derivative demand letters sent on behalf of purported EMC shareholders. The letters refer to a now-settled civil action in which EMC was named as a defendant and in which the United States (acting through the Civil Division of the Department of Justice (DoJ)) intervened. The civil action involved allegations concerning EMC’s compliance with the terms and conditions of certain agreements pursuant to which we sold products and services to the federal government and EMC’s fee arrangements with partners and systems integrators in federal government transactions. EMC reached a settlement of all claims asserted in this action effective as of May 4, 2010, without any admission of liability or wrongdoing. The derivative demand letters contend that the existence of the civil action serves as evidence that certain EMC officers and directors failed to exercise due care and/or failed to oversee compliance with certain federal laws.

The matters relating to the demand letters were referred to a Special Committee of independent directors of the Board of Directors, which investigated and made a determination regarding such allegations. At the conclusion of their investigation, the Special Committee determined in good faith that commencing or maintaining derivative proceedings based on the allegations would not be in the best interests of EMC. In October 2009, one of the purported shareholders filed a complaint in the Superior Court for Middlesex County in Massachusetts alleging claims for breach of fiduciary duty against EMC directors and certain officers based on the same allegations set forth in the demand letter. In May 2010, another purported shareholder filed a complaint in the same court making virtually identical allegations. We are defending these matters vigorously.

N. Stockholders’ Equity

Net Income Per Share

The reconciliation from basic to diluted earnings per share for both the numerators and denominators is as follows (table in thousands):

	2010			2009			2008
Numerator:
Net income attributable to EMC Corporation	$	1,899,995		$	1,088,077		$	1,275,104
Incremental dilution from VMware		(9,267	)		(2,252	)		(7,516	)
Net income – diluted attributable to EMC Corporation	$	1,890,728		$	1,085,825		$	1,267,588
Denominator:
Weighted average shares, basic		2,055,959			2,022,371			2,048,506
Weighted common stock equivalents		49,616			29,393			31,287
Assumed conversion of the Notes and associated warrants		42,356			3,382			60
Weighted average shares, diluted		2,147,931			2,055,146			2,079,853

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Due to the cash settlement feature of the principal amount of the Notes, we only include the impact of the premium feature in our diluted earnings per share calculation when the average stock price exceeds the conversion price of the Notes.

Concurrent with the issuance of the Notes, we also entered into separate transactions in which we sold warrants to acquire, subject to customary anti-dilution adjustments, approximately 215 million shares of our common stock at an exercise price of approximately $19.55 per share of our common stock. We also include the impact of the sold warrants in our diluted earnings per share calculation when the average stock price exceeds the exercise price.

Options to acquire 50.6 million, 152.4 million and 144.2 million shares of our common stock for the years ended December 31, 2010, 2009 and 2008, respectively, were excluded from the calculation of diluted earnings per share because they were antidilutive. The incremental dilution from VMware represents the impact of VMware’s dilutive securities on EMC’s consolidated diluted net income per share and is calculated by multiplying the difference between VMware’s basic and diluted earnings per share by the number of VMware shares owned by EMC.

Repurchases of Common Stock

We utilize both authorized and unissued shares (including repurchased shares) for all issuances under our equity plans. In 2008, our Board of Directors authorized the repurchase of 250.0 million shares of our common stock. For the year ended December 31, 2010, we spent $1.0 billion to repurchase 52.7 million shares of our common stock. We plan to increase our repurchase of common stock from $1.0 billion in 2010 to $1.5 billion in 2011. Of the 250.0 million shares authorized for repurchase, we have repurchased 114.0 million shares at a total cost of $1.7 billion, leaving a remaining balance of 136.0 million shares authorized for future repurchases.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, which is presented net of tax, consists of the following (table in thousands):

	December 31, 2010			December 31, 2009
Foreign currency translation adjustments, net of tax benefits of $0 and $0	$	(6,983	)	$	(2,349	)
Unrealized losses on temporarily impaired investments, net of tax benefits of $(7,278) and $(8,679)		(12,533	)		(15,361	)
Unrealized gains on investments, net of taxes of $32,684 and $14,329		53,823			23,617
Unrealized gains (losses) on derivatives, net of taxes (benefits) of $(3,403) and $599		(5,934	)		2,211
Recognition of actuarial net loss from pension and other postretirement plans, net of tax benefits of $(70,388) and $(68,996)		(117,058	)		(113,001	)
		(88,685	)		(104,883	)
Less: Accumulated Other Comprehensive Income attributable to the non-controlling interest in VMware, Inc.		(3,932	)		(839	)
	$	(92,617	)	$	(105,722	)

Reclassification adjustments between other comprehensive loss and the income statement consist of the following (table in thousands):

	Year Ended December 31,
	2010			2009			2008
Realized gains on investments, net of taxes of $4,178, $7,911 and $2,347	$	11,792		$	12,897		$	4,212
Realized gains (losses) on derivatives, net of taxes (benefit) of $(745), $(736) and $93		(6,708	)		(6,626	)		834

EMC Preferred Stock

Our preferred stock may be issued from time to time in one or more series, with such terms as our Board of Directors may determine, without further action by our shareholders.

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O. 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 shall not be less than 100% of the fair market value of our common stock on the date of grant. Options generally become exercisable in annual installments over a period of three to five years after the date of grant and expire ten years after the date of grant. Incentive stock options will expire no later than ten years after the date of grant. Restricted stock is common stock that is subject to a risk of forfeiture or other restrictions that will lapse upon satisfaction of specified conditions. Restricted stock units represent the right to receive shares of common stock in the future, with the right to future delivery of the shares subject to a risk of forfeiture or other restrictions that will lapse upon satisfaction of specified conditions. Grants of restricted stock awards or restricted stock units that vest only by the passage of time will not vest fully in less than three years after the date of grant, except for grants to non-employee Directors that are not subject to this minimum three-year vesting requirement. The 2003 Plan allows us to grant up to 300.0 million shares of common stock. We recognize restricted stock awards and restricted stock units against the 2003 Plan share reserve as two shares for every one share issued in connection with such awards.

In addition to the 2003 Plan, we have four other stock option plans (the “1985 Plan,” the “1993 Plan,” the “2001 Plan” and the “1992 Directors Plan”). In May 2007, these four plans were consolidated into the 2003 Plan such that all future grants will be granted under the 2003 Plan and shares that are not issued as a result of cancellations, expirations or forfeitures, will become available for grant under the 2003 Plan.

A total of 862.4 million shares of common stock have been reserved for issuance under the above five plans. At December 31, 2010, there were an aggregate of 43.4 million shares of common stock available for issuance pursuant to future grants under the 2003 Plan.

We have, in connection with the acquisition of various companies, assumed the stock option plans of these companies. We do not intend to make future grants under any of such plans.

EMC Information Infrastructure Employee Stock Purchase Plan

Under our Amended and Restated 1989 Employee Stock Purchase Plan (the “1989 Plan”), eligible employees may purchase shares of common stock through payroll deductions at 85% of the fair market value at the time of exercise. Options to purchase shares are granted twice yearly, on January 1 and July 1, and are exercisable on the succeeding June 30 or December 31. A total of 153.0 million shares of common stock have been reserved for issuance under the 1989 Plan. In 2010, 2009 and 2008, 6.9 million shares, 10.3 million shares and 11.7 million shares, respectively, were purchased under the 1989 Plan at a weighted-average purchase price per share of $17.37, $11.17 and $10.49, respectively. Total cash proceeds from the purchase of shares under the 1989 Plan in 2010, 2009 and 2008 were $120.7 million, $115.3 million and $122.4 million, respectively. At December 31, 2010, there was an aggregate of 21.7 million shares of common stock available for issuance pursuant to future grants under the 1989 Plan.

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EMC Information Infrastructure Stock Options

The following table summarizes our option activity under all equity plans in 2010, 2009 and 2008 (shares in thousands):

	Number of Shares			Weighted Average Exercise Price (per share)
Outstanding, January 1, 2008		239,372		$	19.60
Options granted relating to business acquisitions		1,200			12.43
Granted		36,208			14.95
Forfeited		(6,852	)		14.43
Expired		(7,096	)		33.98
Exercised		(12,713	)		9.34
Outstanding, December 31, 2008		250,119			19.14
Options granted relating to business acquisitions		24,089			5.68
Granted		14,243			15.20
Forfeited		(10,178	)		14.64
Expired		(14,953	)		29.35
Exercised		(28,402	)		8.85
Outstanding, December 31, 2009		234,918			18.31
Options granted relating to business acquisitions		12,595			5.57
Granted		3,286			20.07
Forfeited		(6,632	)		14.36
Expired		(14,970	)		70.59
Exercised		(56,781	)		11.63
Outstanding, December 31, 2010		172,416			15.23
Exercisable, December 31, 2010		112,727			16.37
Vested and expected to vest		166,520		$	15.37

At December 31, 2010, the weighted-average remaining contractual term was 3.9 years and the aggregate intrinsic value was $979.2 million for the 112.7 million exercisable shares. For the 166.5 million shares vested and expected to vest at December 31, 2010, the weighted-average remaining contractual term was 5.2 years and the aggregate intrinsic value was $1,498.1 million. The intrinsic value is based on our closing stock price of $22.90 as of December 31, 2010, which would have been received by the option holders had all in-the-money options been exercised as of that date. The total pre-tax intrinsic values of options exercised in 2010, 2009 and 2008 were $470.2 million, $191.6 million and $77.2 million, respectively. Cash proceeds from the exercise of stock options were $660.0 million, $251.1 million and $118.7 million in 2010, 2009 and 2008, respectively. Income tax benefits realized from the exercise of stock options in 2010, 2009 and 2008 were $75.3 million, $30.9 million and $20.5 million, respectively.

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EMC Information Infrastructure Restricted Stock and Restricted Stock Units

The following table summarizes our restricted stock and restricted stock unit activity in 2010, 2009 and 2008 (shares in thousands):

	Number of Shares			Weighted Average Grant Date Fair Value
Restricted stock and restricted stock units at January 1, 2008		24,167		$	15.30
Granted		12,865			15.07
Vested		(7,113	)		14.05
Forfeited		(1,017	)		16.12
Outstanding, December 31, 2008		28,902			15.49
Granted		21,431			14.58
Vested		(10,951	)		14.83
Forfeited		(2,019	)		15.56
Outstanding, December 31, 2009		37,363			15.01
Granted		19,261			20.31
Vested		(11,062	)		15.09
Forfeited		(2,185	)		15.82
Restricted stock and restricted stock units at December 31, 2010		43,377		$	17.20

The total fair values of restricted stock and restricted stock units that vested in 2010, 2009 and 2008 were $203.7 million, $138.4 million and $105.7 million, respectively.

Our restricted stock awards are valued based on our stock price on the grant date. Our restricted stock awards have various vesting terms from the date of grant, including pro rata vesting over three or four years, cliff vesting at the end of three or five years with acceleration for achieving specified performance criteria and vesting on various dates contingent on achieving specified performance criteria. For awards with performance conditions, management evaluates the criteria in each grant to determine the probability that the performance condition will be achieved.

As of December 31, 2010, 43.4 million shares of restricted stock and restricted stock units were outstanding and unvested, with an aggregate intrinsic value of $993.3 million. These shares and units are scheduled to vest through 2015. Of the total shares of restricted stock and restricted stock units outstanding, 38.8 million shares and units will vest upon fulfilling service conditions, of which vesting for 11.8 million shares and units will accelerate upon achieving performance conditions. The remaining 4.6 million shares and units will vest only if certain performance conditions are achieved.

VMware Equity Plans

In June 2007, VMware adopted its 2007 Equity and Incentive Plan (the “2007 Plan”). In May 2009, VMware amended its 2007 Plan to increase the number of shares available for issuance by 20.0 million shares for total shares available for issuance of 100.0 million. Awards under the 2007 Plan may be in the form of stock options or other stock-based awards, including awards of restricted stock units. The exercise price for a stock option awarded under the 2007 Plan shall not be less than 100% of the fair market value of VMware Class A common stock on the date of grant. Most options granted under the 2007 Plan vest 25% after the first year and then monthly thereafter over the following three years. All options granted pursuant to the 2007 Plan expire between six and seven years from the date of grant. Most restricted stock unit awards granted under the 2007 Plan have a three-year to four-year period over which they vest. VMware’s Compensation and Corporate Governance Committee determines the vesting schedule for all equity awards. VMware utilizes both authorized and unissued shares to satisfy all shares issued under the 2007 Plan.

2008 VMware Exchange Offer

In September 2008, VMware completed an offer to exchange certain employee stock options issued under VMware’s 2007 Equity and Incentive Plan (“2008 Exchange Offer”). Certain previously granted options were exchanged for new, lower-priced stock options granted on a one-for-one basis. Executive officers and members of the Company’s Board of Directors were excluded

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from participating in the 2008 Exchange Offer. Options for an aggregate of 4.1 million shares of VMware’s Class A common stock were exchanged with a weighted-average exercise price per share of $71.60. Options granted pursuant to the 2008 Exchange Offer have an exercise price of $33.95 per share, vest pro rata over four years beginning September 10, 2008 with no credit for past vesting and have a new six-year option term. The 2008 Exchange Offer resulted in incremental stock-based compensation expense of $18.0 million to be recognized over the four-year vesting term.

VMware Employee Stock Purchase Plan

In June 2007, VMware adopted its 2007 Employee Stock Purchase Plan (the “ESPP”), which is intended to be qualified under Section 423 of the Code. A total of 6.4 million shares of VMware Class A common stock were reserved for future issuance. Under the ESPP, eligible VMware employees are granted options to purchase shares at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value at the time of exercise. Options to purchase shares were generally granted twice yearly on January 1 and July 1 and exercisable on the succeeding June 30 and December 31 of each year until the timing of the purchase plan was amended in 2009; as a result since then, options to purchase shares are generally granted on February 1 and August 1 and exercisable on the succeeding July 31 and January 31, respectively, of each year.

In 2010, 1.5 million shares of Class A common stock were purchased under the ESPP at a weighted-average purchase price per share of $29.90. The total cash proceeds from the purchase of these shares under the ESPP were $45.2 million. As of December 31, 2010, $24.8 million of ESPP withholdings were recorded as a liability on the consolidated balance sheet for the next purchase in January 2011.

In 2009, 0.9 million shares of Class A common stock were purchased under the ESPP at a weighted-average purchase price per share of $20.14. The total cash proceeds from the purchase of these shares under the ESPP were $18.3 million. As of December 31, 2009, $21.6 million of ESPP withholdings were recorded as a liability on the consolidated balance sheet for the subsequent purchase in January 2010. In 2008, 1.7 million shares of Class A common stock were purchased under the ESPP at a weighted-average purchase price per share of $28.05. The total cash proceeds from the purchase of these shares under the ESPP were $46.9 million. As part of the 1.7 million shares purchased in 2008, employees purchased 0.6 million shares under the ESPP at a weighted-average purchase price per share of $24.65 related to the December 31, 2007 purchase, which was completed in January 2008.

VMware Stock Options

The following table summarizes activity since January 1, 2008 for VMware employees in VMware stock options (shares in thousands):

	Number of Shares			Weighted Average Exercise Price (per share)
Outstanding, January 1, 2008		45,339		$	26.76
Granted(1)		11,741			40.48
Forfeited(1)		(8,033	)		51.74
Expired		(37	)		24.26
Exercised		(6,574	)		21.64
Outstanding, December 31, 2008		42,436			26.54
Granted		12,500			29.86
Forfeited		(3,736	)		28.11
Expired		(177	)		45.24
Exercised		(9,516	)		22.01
Outstanding, December 31, 2009		41,507			28.34
Granted		3,362			57.60
Forfeited		(2,220	)		30.78
Expired		(151	)		83.86
Exercised		(15,574	)		24.79
Outstanding, December 31, 2010		26,924			33.54
Exercisable, December 31, 2010		10,706			29.75
Vested and expected to vest		25,639		$	33.27

(1) Includes options for 4,017 shares exchanged in the 2008 VMware Exchange Offer

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As of December 31, 2010, for the VMware stock options, the weighted-average remaining contractual term was 3.2 years and the aggregate intrinsic value was $642.5 million for the 10.7 million exercisable shares. For the 25.6 million shares vested and expected to vest at December 31, 2010, the weighted-average remaining contractual term was 3.8 years and the aggregate intrinsic value was $1,438.3 million. These aggregate intrinsic values represent the total pre-tax intrinsic values based on VMware’s closing stock price of $88.91 as of December 31, 2010, 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, 2010, 2009 and 2008 were $386.1 million, $209.4 million and $143.2 million, respectively. The options exercised in 2010, 2009 and 2008 had a pre-tax intrinsic value of $678.8 million, $132.6 million and $219.6 million, respectively, and income tax benefits realized from the exercise of stock options of $171.2 million, $47.1 million and $71.4 million, respectively.

VMware Restricted Stock

VMware restricted stock primarily consists of restricted stock units granted to employees and also includes restricted stock awards and other restricted stock. Other restricted stock includes shares issued in 2009 to certain employees of SpringSource who agreed to accept shares of VMware Class A common stock subject to vesting restrictions in lieu of a portion of their cash merger proceeds. In addition, other restricted stock includes options exercised prior to vesting by VMware’s non-employee directors. The exercise of those options prior to vesting resulted in the outstanding shares being subject to repurchase and hence restricted until such time as the respective options vest. These options completed vesting in 2010.

The following table summarizes restricted stock activity since January 1, 2008 for VMware restricted stock (shares in thousands):

	Number of Shares			Weighted Average Grant Date Fair Value
Restricted stock at January 1, 2008		3,565		$	24.64
Granted		6,619			35.14
Vested		(2,153	)		22.58
Forfeited		(405	)		61.90
Outstanding, December 31, 2008		7,626			32.35
Granted		5,200			33.63
Vested		(2,881	)		31.31
Forfeited		(734	)		34.81
Outstanding, December 31, 2009		9,211			33.21
Granted		4,933			74.87
Vested		(3,688	)		32.38
Forfeited		(704	)		39.05
Outstanding, December 31, 2010		9,752		$	54.17

The total fair value of VMware restricted stock-based awards that vested in the years ended December 31, 2010, 2009 and 2008 was $258.0 million, $88.8 million and $116.3 million, respectively. As of December 31, 2010, restricted stock unit awards and other restricted stock representing 9.8 million shares of VMware were outstanding, with an aggregate intrinsic value of $867.1 million based on the closing share price as of December 31, 2010. These shares are scheduled to vest through 2014.

The VMware restricted stock unit awards are valued based on the VMware stock price on the date of grant. Shares underlying restricted stock unit awards are not issued until the restricted stock units vest. The majority of VMware’s restricted stock unit awards have pro rata vesting over three or four years.

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Stock-Based Compensation Expense

The following tables summarize the components of total stock-based compensation expense included in our consolidated income statement in 2010, 2009 and 2008 (in thousands):

	Year Ended December 31, 2010
	Stock Options			Restricted Stock			Total Stock-Based Compensation
Cost of product sales	$	29,586		$	20,646		$	50,232
Cost of services		29,493			28,928			58,421
Research and development		112,484			146,262			258,746
Selling, general and administrative		156,059			161,595			317,654
Stock-based compensation expense before income taxes		327,622			357,431			685,053
Income tax benefit		75,771			89,902			165,673
Total stock-based compensation, net of tax	$	251,851		$	267,529		$	519,380
	Year Ended December 31, 2009
	Stock Options			Restricted Stock			Total Stock-Based Compensation
Cost of product sales	$	33,423		$	15,836		$	49,259
Cost of services		35,004			15,130			50,134
Research and development		118,875			95,679			214,554
Selling, general and administrative		189,154			102,605			291,759
Restructuring charges		(1,015	)		(306	)		(1,321	)
Stock-based compensation expense before income taxes		375,441			228,944			604,385
Income tax benefit		78,517			56,326			134,843
Total stock-based compensation, net of tax	$	296,924		$	172,618		$	469,542
	Year Ended December 31, 2008
	Stock Options			Restricted Stock			Total Stock-Based Compensation
Cost of product sales	$	23,092		$	9,638		$	32,730
Cost of services		35,350			12,046			47,396
Research and development		102,865			59,512			162,377
Selling, general and administrative		161,715			97,223			258,938
Restructuring charges		5,164			(1,740	)		3,424
Stock-based compensation expense before income taxes		328,186			176,679			504,865
Income tax benefit		61,321			47,738			109,059
Total stock-based compensation, net of tax	$	266,865		$	128,941		$	395,806

Stock-based compensation expense includes $34.9 million, $46.9 million and $50.7 million of expense associated with our employee stock purchase plans for 2010, 2009 and 2008, respectively.

The table below presents the net change in amounts capitalized or accrued in 2010 and 2009 for the following items (in thousands):

	Increased (decreased) during the year ended December 31, 2010			Increased (decreased) during the year ended December 31, 2009
Inventory	$	(850	)	$	1,254
Accrued expenses (accrued warranty expenses)		553			(1,835	)
Other assets		11			1,435

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As of December 31, 2010, the total unrecognized after-tax compensation cost for stock options, restricted stock and restricted stock units was $948.8 million. This non-cash expense will be recognized through 2015 with a weighted-average remaining period of 1.4 years.

Fair Value of EMC Information Infrastructure Options

The fair value of each option granted during 2010, 2009 and 2008 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	For the Year Ended December 31,
EMC Stock Options	2010			2009			2008
Dividend yield		None			None			None
Expected volatility		32.9	%		35.4	%		34.4	%
Risk-free interest rate		1.8	%		2.4	%		2.8	%
Expected term (in years)		4.8			4.5			4.4
Weighted-average fair value at grant date	$	6.25		$	5.04		$	4.82
	For the Year Ended December 31,
EMC Employee Stock Purchase Plan	2010			2009			2008
Dividend yield		—			None			None
Expected volatility		—			58.1	%		40.0	%
Risk-free interest rate		—			0.4	%		2.6	%
Expected term (in years)		—			0.5			0.5
Weighted-average fair value at grant date	$	—		$	3.16		$	4.32

Expected volatilities are based on our historical stock prices and implied volatilities from traded options in our stock. We use EMC historical data to estimate the expected term of options granted within the valuation model. The risk-free interest rate was based on a treasury instrument whose term is consistent with the expected life of the stock options. The assumptions for 2009 for the EMC Employee Stock Purchase Plan include only the January 1, 2009 grant due to the elimination of the look-back feature as of July 1, 2009. Accordingly, there are no assumptions for the ESPP for 2010.

Fair Value of VMware Options

The fair value of each option to acquire VMware Class A common stock granted during the years ended December 31, 2010, 2009 and 2008 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	For the Year Ended December 31,
VMware Stock Options	2010			2009			2008
Dividend yield		None			None			None
Expected volatility		38.0	%		36.1	%		39.4	%
Risk-free interest rate		1.5	%		1.9	%		2.5	%
Expected term (in years)		3.5			3.7			3.4
Weighted-average fair value at grant date	$	18.05		$	12.18		$	17.88
	For the Year Ended December 31,
VMware Employee Stock Purchase Plan	2010			2009			2008
Dividend yield		None			None			None
Expected volatility		33.1	%		50.9	%		39.3	%
Risk-free interest rate		0.2	%		0.3	%		2.7	%
Expected term (in years)		0.5			0.5			0.5
Weighted-average fair value at grant date	$	15.18		$	7.79		$	18.06

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For all equity awards granted in 2010 and 2009, volatility was based on an analysis of historical stock prices and implied volatilities of publicly-traded companies with similar characteristics, including industry, stage of life cycle, size, financial leverage, as well as the implied volatilities of VMware’s Class A common stock. The expected term was calculated based upon an analysis of the expected term of similar grants of comparable publicly-traded companies.

For all equity awards granted in 2008, volatility was based on an analysis of historical stock prices and implied volatility of publicly-traded companies with similar characteristics, including industry, stage of life cycle, size and financial leverage. The expected term was calculated based on the historical experience that VMware employees have had with EMC stock option grants as well as the expected term of similar grants of comparable companies.

For all periods presented, VMware’s expected dividend yield input was zero as it has not historically paid, nor expects in the future to pay, cash dividends on its common stock. The risk-free interest rate was based on U.S. Treasury instrument whose term is consistent with the expected term of the stock options.

P. Restructuring and Acquisition-Related Charges

In 2010, 2009 and 2008, we incurred restructuring and acquisition-related charges of $84.4 million, $107.5 million and $250.3 million, respectively. In 2010, we incurred $76.7 million of restructuring charges, of which $37.8 million related to our fourth quarter 2010 program. The remainder was primarily related to our 2008 restructuring program and $7.7 million of costs in connection with acquisitions for financial advisory, legal and accounting services.

In the fourth quarter of 2010, we implemented a restructuring program to create further operational efficiencies which will result in a workforce reduction of approximately 400 positions. The action will impact positions around the globe covering our Information Storage, RSA Information Security and Information Intelligence Group segments. The actions are expected to be completed by the end of 2011.

In 2009, we incurred $88.4 million of restructuring charges, primarily related to our 2008 restructuring program and $19.1 million of costs in connection with acquisitions for financial advisory, legal and accounting services. The restructuring charges included a provision for $55.1 million of workforce reduction costs. Additionally, in 2009, we recognized charges for $27.1 million of lease termination costs for facilities vacated in the year in accordance with our restructuring programs. We recognized a $6.2 million charge for abandoned assets which represent identified infrastructure determined to no longer have benefit that were abandoned in 2009. We also recognized a $12.5 million charge to write-off a prepaid royalty associated with a contractual obligation that included a minimum purchase commitment since we do not anticipate achieving the minimum purchase level. The charge was classified within cost of product sales on the accompanying Consolidated Income Statements.

The 2008 charge consisted of the aforementioned fourth quarter 2008 restructuring program which aggregated $250.3 million. For purposes of presentation, $244.7 million of the 2008 charge was presented as a restructuring charge, $1.3 million was presented as a reduction of SG&A and $6.9 million, related to the impairment of strategic investments, was presented within other expense, net on the Consolidated Income Statements. In 2008, all charges are only related to restructuring activities as acquisition costs were generally capitalized under prior business combination accounting rules.

The fourth quarter 2008 charge consisted of $195.5 million for employee termination benefits associated with a reduction in workforce, a $28.0 million charge for impaired long-lived assets, a $21.8 million charge associated with abandoned assets for which we will no longer derive a benefit and a $2.6 million charge for contract terminations. The asset impairment charge of $28.0 million consists of $21.1 million of capitalized technology costs for which the forecasted cash flows from the assets are less than the assets’ net book value. The impairment charge was equal to the amount by which the assets’ carrying amount exceeded its fair value, measured as the present value of their estimated discounted cash flows. The impairment charge also included a $6.9 million charge for strategic investments for which the decline in their fair market value below their book value was considered other than temporary. The fair market value relating to $4.8 million of the $6.9 million charged for strategic investments was based upon Level 2 inputs and the fair market value relating to $2.1 million of the $6.9 million charge was based upon Level 3 inputs.

87

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The activity for each charge is as follows:

Restructuring Programs

The activity for the restructuring programs is presented below (table in thousands):

2010
Fourth Quarter 2010 Program	Beginning Balance		2010 Charges		Utilization			Ending Balance
Category
Workforce reductions	$	—	$	37,848	$	(1,903	)	$	35,945
Total	$	—	$	37,848	$	(1,903	)	$	35,945
Other Programs	Beginning Balance		2010 Charges		Utilization			Ending Balance
Category
Workforce reductions	$	87,238	$	7,207	$	(76,444	)	$	18,001
Consolidation of excess facilities and other contractual obligations		18,522		31,607		(22,311	)		27,818
Total	$	105,760	$	38,814	$	(98,755	)	$	45,819
2009	Beginning Balance		2009 Charges		Utilization			Ending Balance
Category
Workforce reductions	$	200,599	$	55,090	$	(168,451	)	$	87,238
Abandoned and impaired assets		—		6,203		(6,203	)		—
Consolidation of excess facilities and other contractual obligations		24,105		27,131		(32,714	)		18,522
Total	$	224,704	$	88,424	$	(207,368	)	$	105,760

The remaining cash portion owed for these programs in 2011 is approximately $62.9 million, plus an additional $34.9 million over the period from 2012 and beyond. In connection with our restructuring program approved in the fourth quarter of 2008, we established a plan to exit facilities in future years. As we exit the facilities, we will recognize the related restructuring cost which will be $21.2 million in 2011 and $8.0 million over the period from 2012 to 2015.

Q. Related Party Transactions

In 2010, 2009 and 2008, we leased certain real estate from a company owned by a member of our Board of Directors and such Director’s siblings, for which payments aggregated approximately $4.8 million, $4.8 million and $4.1 million, respectively. Such lease was initially assumed by us as a result of our acquisition of Data General in 1999 and renewed in 2003 for a ten-year term. We are currently in the process of vacating the facility and do not intend to renew the lease upon its expiration.

In accordance with its written policy and procedures relating to related person transactions, EMC’s Audit Committee has approved each of the above transactions occurring since the policy’s adoption.

EMC is a large global organization which engages in thousands of purchase, sales and other transactions annually. We enter into purchase and sales transactions with other publicly- and privately-held companies, universities, hospitals and not-for-profit organizations with which members of our Board of Directors or executive officers are affiliated. We enter into these arrangements in the ordinary course of our business.

From time to time, we make strategic investments in privately-held companies that develop software, hardware and other technologies or provide services supporting our technologies. We may purchase from or make sales to these organizations.

We believe that the terms of each of these arrangements described above were fair and not less favorable to us than could have been obtained from unaffiliated parties.

88

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

R. Segment Information

We manage our business in two broad categories: EMC Information Infrastructure and VMware Virtual Infrastructure. EMC Information Infrastructure operates in three segments: Information Storage, Information Intelligence Group and RSA Information Security, while VMware Virtual Infrastructure operates in a single segment. Our management measures are designed to assess performance of these operating segments excluding certain items. As a result, the corporate reconciling items are used to capture the items excluded from the segment operating performance measures, including stock-based compensation expense and acquisition-related intangible asset amortization expense. Additionally, in certain instances, IPR&D charges, restructuring and acquisition-related charges, transition costs and infrequently occurring gains or losses are also excluded from the measures used by management in assessing segment performance. The VMware Virtual Infrastructure amounts represent the revenues and expenses of VMware as reflected within EMC’s consolidated financial statements. Research and development expenses, SG&A, and other income associated with the EMC Information Infrastructure business are not allocated to the segments within the EMC Information Infrastructure business, as they are managed centrally at the business unit level. For the three segments within the EMC Information Infrastructure business, gross profit is the segment operating performance measure.

During 2010, VMware acquired certain software product technology and related capabilities from the EMC Information Infrastructure segment’s Ionix information technology management business for cash consideration of $175.0 million. The acquisition of the Ionix net assets and related capabilities was accounted for as a business combination between entities under common control. In the fourth quarter of 2010, VMware paid $10.6 million of contingent amounts to EMC in accordance with the asset purchase agreement. We did not revise our segment presentation for prior periods, as the historical impact of the acquired business was not material to the VMware Virtual Infrastructure segment.

Our segment information for the years ended 2010, 2009 and 2008 are as follows (tables in thousands, except percentages):

	EMC Information Infrastructure
2010:	Information Storage			Information Intelligence Group			RSA Information Security			EMC Information Infrastructure			VMware Virtual Infrastructure within EMC			Corp Reconciling Items			Consolidated
Revenues:
Product revenues	$	8,824,287		$	269,138		$	400,151		$	9,493,576		$	1,399,281		$	—		$	10,892,857
Services revenues		3,874,825			466,759			329,233			4,670,817			1,451,452			—			6,122,269
Total consolidated revenues		12,699,112			735,897			729,384			14,164,393			2,850,733			—			17,015,126
Cost of sales		5,836,382			258,239			221,579			6,316,200			425,257			242,688			6,984,145
Gross profit	$	6,862,730		$	477,658		$	507,805			7,848,193			2,425,476			(242,688	)		10,030,981
Gross profit percentage		54.0	%		64.9	%		69.6	%		55.4	%		85.1	%		—			59.0	%
Research and development											1,122,835			477,799			287,381			1,888,015
Selling, general and administrative											3,737,081			1,160,768			477,456			5,375,305
Restructuring and acquisition-related charges											—			—			84,375			84,375
Total costs and expenses											4,859,916			1,638,567			849,212			7,347,695
Operating income											2,988,277			786,909			(1,091,900	)		2,683,286
Other income (expense), net											48,214			(16,458	)		(107,059	)		(75,303	)
Income before tax											3,036,491			770,451			(1,198,959	)		2,607,983
Income tax provision											742,736			128,233			(232,672	)		638,297
Net income											2,293,755			642,218			(966,287	)		1,969,686
Net income attributable to the non-controlling interest in VMware, Inc.											—			(124,728	)		55,037			(69,691	)
Net income attributable to EMC Corporation										$	2,293,755		$	517,490		$	(911,250	)	$	1,899,995

89

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	EMC Information Infrastructure
2009:	Information Storage			Information Intelligence Group			RSA Information Security			EMC Information Infrastructure			VMware Virtual Infrastructure within EMC			Corp Reconciling Items			Consolidated
Revenues:
Product revenues	$	7,198,051		$	260,836		$	340,272		$	7,799,159		$	1,028,986		$	—		$	8,828,145
Services revenues		3,461,358			478,753			265,678			4,205,789			991,976			—			5,197,765
Total consolidated revenues		10,659,409			739,589			605,950			12,004,948			2,020,962			—			14,025,910
Cost of sales		5,256,682			274,763			186,462			5,717,907			316,278			246,826			6,281,011
Gross profit	$	5,402,727		$	464,826		$	419,488			6,287,041			1,704,684			(246,826	)		7,744,899
Gross profit percentage		50.7	%		62.8	%		69.2	%		52.4	%		84.4	%		—			55.2	%
Research and development											1,022,147			369,514			235,848			1,627,509
Selling, general and administrative											3,258,055			842,097			495,473			4,595,625
Restructuring and acquisition-related charges											—			—			107,490			107,490
Total costs and expenses											4,280,202			1,211,611			838,811			6,330,624
Operating income											2,006,839			493,073			(1,085,637	)		1,414,275
Other income (expense), net											52,325			(9,499	)		(82,525	)		(39,699	)
Income before tax											2,059,164			483,574			(1,168,162	)		1,374,576
Income tax provision											424,708			78,069			(250,002	)		252,775
Net income											1,634,456			405,505			(918,160	)		1,121,801
Net income attributable to the non-controlling interest in VMware, Inc.											—			(69,285	)		35,561			(33,724	)
Net income attributable to EMC Corporation										$	1,634,456		$	336,220		$	(882,599	)	$	1,088,077

	EMC Information Infrastructure
2008:	Information Storage			Information Intelligence Group			RSA Information Security			EMC Information Infrastructure			VMware Virtual Infrastructure within EMC			Corp Reconciling Items			Consolidated
Revenues:
Product revenues	$	8,263,529		$	278,173		$	355,063		$	8,896,765		$	1,175,051		$	—		$	10,071,816
Services revenues		3,368,775			507,475			226,212			4,102,462			701,885			—			4,804,347
Total consolidated revenues		11,632,304			785,648			581,275			12,999,227			1,876,936			—			14,876,163
Cost of sales		5,670,103			305,627			170,622			6,146,352			268,716			238,726			6,653,794
Gross profit	$	5,962,201		$	480,021		$	410,653			6,852,875			1,608,220			(238,726	)		8,222,369
Gross profit percentage		51.3	%		61.1	%		70.6	%		52.7	%		85.7	%		—			55.3	%
Research and development											1,203,728			342,239			175,363			1,721,330
Selling, general and administrative											3,486,847			747,583			367,158			4,601,588
In-process research and development											—			—			85,780			85,780
Restructuring and acquisition-related charges											(357	)		—			245,092			244,735
Total costs and expenses											4,690,218			1,089,822			873,393			6,653,433
Operating income											2,162,657			518,398			(1,112,119	)		1,568,936
Other income (expense), net											136,395			4,352			(109,458	)		31,289
Income before tax											2,299,052			522,750			(1,221,577	)		1,600,225
Income tax provision											510,873			78,744			(309,221	)		280,396
Net income											1,788,179			444,006			(912,356	)		1,319,829
Net income attributable to the non-controlling interest in VMware, Inc.											—			(68,532	)		23,807			(44,725	)
Net income attributable to EMC Corporation										$	1,788,179		$	375,474		$	(888,549	)	$	1,275,104

90

EMC CORPORATION

NOTES TO CONSOLIDATED 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):

	2010		2009		2008
United States	$	9,152,363	$	7,384,308	$	7,990,762
Europe, Middle East and Africa		4,942,104		4,290,274		4,555,004
Asia Pacific		1,965,154		1,603,107		1,640,065
Latin America, Mexico and Canada		955,505		748,221		690,332
Total	$	17,015,126	$	14,025,910	$	14,876,163

No country other than the United States accounted for 10% or more of revenues in 2010, 2009 or 2008.

Long-lived assets, excluding financial instruments, deferred tax assets, goodwill and intangible assets, in the United States were $2,936.8 million at December 31, 2010 and $2,549.8 million at December 31, 2009. Internationally, long-lived assets, excluding financial instruments and deferred tax assets, were $600.3 million at December 31, 2010 and $635.6 million at December 31, 2009. No country other than the United States and Ireland accounted for 10% or more of total long-lived assets, excluding financial instruments and deferred tax assets, at December 31, 2010 or 2009.

Dell Inc., one of our channel partners, accounted for 11.5% of our revenues in 2008.

S. Selected Quarterly Financial Data (unaudited)

Quarterly financial data for 2010 and 2009 is as follows (tables in thousands, except per share amounts):

2010	Q1 2010		Q2 2010		Q3 2010		Q4 2010
Revenues	$	3,890,692	$	4,023,497	$	4,212,271	$	4,888,666
Gross profit		2,218,519		2,359,199		2,486,974		2,966,289
Net income attributable to EMC Corporation		372,704		426,216		472,516		628,559
Net income per weighted average share, diluted: common shareholders	$	0.17	$	0.20	$	0.22	$	0.29
2009	Q1 2009		Q2 2009		Q3 2009		Q4 2009
Revenues	$	3,150,762	$	3,257,352	$	3,517,630	$	4,100,166
Gross profit		1,683,255		1,743,778		1,940,217		2,377,649
Net income attributable to EMC Corporation		194,069		205,232		298,180		390,596
Net income per weighted average share, diluted: common shareholders	$	0.10	$	0.10	$	0.14	$	0.19

Quarterly financial data for the fourth quarter of 2009 includes an after-tax charge for provision for litigation of $52.3 million or $0.02 per diluted share. Additionally, the fourth quarter of 2010 and 2009 both include a special tax charge related to our tax-related reorganizations of $83.3 million or $0.04 per diluted share for 2010 and $60.7 million or $0.03 per diluted share for 2009.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of 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 Financial Reporting. Management’s Report on Internal Control Over Financial Reporting on page 42 is incorporated herein by reference.

91

Report of the Independent Registered Public Accounting Firm. The Report of Independent Registered Public Accounting Firm on page 43 is incorporated herein by reference.

Changes in Internal Control Over Financial Reporting. There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

In making its assessment of the changes in internal control over financial reporting as of December 31, 2010, our management excluded the evaluation of the disclosure controls and procedures of Isilon Systems, Inc., which was acquired by EMC on December 20, 2010. See Note C to the Consolidated Financial Statements for a discussion of the acquisition.

ITEM 9B. OTHER INFORMATION

None.

92

PART III

STOCK PRICE PERFORMANCE GRAPH

	2005		2006		2007		2008		2009		2010
EMC	$	100.00	$	96.92	$	136.05	$	76.87	$	128.27	$	168.14
S&P 500 Index	$	100.00	$	113.62	$	117.63	$	72.36	$	89.33	$	100.75
S&P 500 Information Technology Sector Index	$	100.00	$	107.70	$	124.43	$	70.07	$	112.06	$	122.29

Source: Returns were generated from Thomson ONE

* $100 invested on December 31, 2005 in EMC Common Stock, S&P 500 Index and S&P 500 Information Technology Sector Index, including reinvestment of dividends, if any.

Note: The stock price performance shown on the graph above is not necessarily indicative of future price performance. This graph shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

93

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, 2010. Certain information required by this item is incorporated herein by reference to the Proxy Statement under the headings “Proposal 1 Election of Directors,” “Board Independence and Committees,” “Certain Transactions” and “Section 16(a) Beneficial Ownership Reporting Compliance.” Also see “Executive Officers of the Registrant” in Part I of this Annual Report on Form 10-K.

We have Business Conduct Guidelines that apply to all of our employees and non-employee directors. Our Business Conduct Guidelines (available on our website) satisfy the requirements set forth in Item 406 of Regulation S-K and apply to all relevant persons set forth therein. We intend to disclose on our website at www.emc.com amendments to, and, if applicable, waivers of, our Business Conduct Guidelines.

ITEM 11. EXECUTIVE COMPENSATION

Certain information required by this item is incorporated herein by reference to the Proxy Statement under the headings “Leadership and Compensation Committee Interlocks and Insider Participation,” “Leadership and Compensation Committee Report,” “Compensation Discussion and Analysis,” “Compensation of Executive Officers” and “Director Compensation.”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is incorporated herein by reference to the Proxy Statement under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated herein by reference to the Proxy Statement under the headings “Board Independence and Committees,” “Review and Approval of Transactions with Related Persons” and “Certain Transactions” and included in Note Q to the Consolidated Financial Statements.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated herein by reference to the Proxy Statement under the heading “Pre-Approval of Audit and Non-Audit Services.”

94

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

1. Financial Statements

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 Exhibits on page 97 of this report.

The exhibits are filed with or incorporated by reference in this report.

95

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, EMC Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on February 28, 2011.

EMC CORPORATION
By:	/S/    JOSEPH M. TUCCI
	Joseph M. Tucci Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of EMC Corporation and in the capacities indicated as of February 28, 2011.

Signature	Title
/S/    JOSEPH M. TUCCI         Joseph M. Tucci	Chairman, President and Chief Executive Officer (Principal Executive Officer)
/S/    DAVID I. GOULDEN         David I. Goulden	Executive Vice President and Chief Financial Officer (Principal Financial Officer)
/S/    DENIS CASHMAN         Denis Cashman	Chief Accounting Officer and Chief Operating Officer, Finance (Principal Accounting Officer)
/S/    MICHAEL W. BROWN         Michael W. Brown	Director
/S/    RANDOLPH L. COWEN         Randolph L. Cowen	Director
/S/    MICHAEL J. CRONIN         Michael J. Cronin	Director
/S/    GAIL DEEGAN         Gail Deegan	Director
/S/    JAMES S. DISTASIO         James S. DiStasio	Director
/S/    JOHN R. EGAN         John R. Egan	Director
/S/    EDMUND F. KELLY         Edmund F. Kelly	Director
/S/    WINDLE B. PRIEM         Windle B. Priem	Director
/S/    PAUL SAGAN         Paul Sagan	Director
/S/    DAVID N. STROHM         David N. Strohm	Director

96

Exhibit Index

The exhibits listed below are filed with or incorporated by reference in this Annual Report on Form 10-K.

3.1	Restated Articles of Organization of EMC Corporation.(1)
3.2	Amended and Restated Bylaws of EMC Corporation.(2)
4.1	Form of Stock Certificate.(3)
4.2	Indenture with Wells Fargo Bank, N.A., as trustee, dated as of November 17, 2006.(14)
4.3	Registration Rights Agreement with Goldman, Sachs & Co., Lehman Brothers Inc. and Citigroup Global Markets Inc., dated as of November 17, 2006.(14)
10.1*	EMC Corporation 1985 Stock Option Plan, as amended.(4)
10.2*	EMC Corporation 1992 Stock Option Plan for Directors, as amended.(5)
10.3*	EMC Corporation 1993 Stock Option Plan, as amended.(4)
10.4*	EMC Corporation 2001 Stock Option Plan, as amended April 29, 2010.(12)
10.5*	EMC Corporation Amended and Restated 2003 Stock Plan, as amended and restated as of April 29, 2010.(12)
10.6*	EMC Corporation Deferred Compensation Retirement Plan, as amended and restated as of November 3, 2010. (filed herewith)
10.7*	EMC Corporation Executive Incentive Bonus Plan.(6)
10.8*	Form of Change in Control Severance Agreement for Executive Officers. (filed herewith)
10.9*	Form of EMC Corporation Amended and Restated 2003 Stock Plan Stock Option Agreement.(3)
10.10*	Form of Restricted Stock Agreement under the EMC Corporation 2003 Stock Plan.(7)
10.11*	Form of EMC Corporation Amended and Restated 2003 Stock Plan Performance Stock Option Agreement.(3)
10.12*	Form of EMC Corporation Amended and Restated 2003 Stock Plan Performance Restricted Stock Unit Agreement.(3)
10.13*	Form of EMC Corporation Amended and Restated 2003 Stock Plan Restricted Stock Unit Agreement.(3)
10.14*	Form of Amended and Restated Indemnification Agreement.(3)
10.15	EMC Corporation Amended and Restated 1989 Employee Stock Purchase Plan, as amended and restated as of August 5, 2009.(11)
10.16*	Employment Arrangement with Joseph M. Tucci dated November 28, 2007.(8)
10.17*	Amendment to Employment Arrangement with Joseph M. Tucci dated December 4, 2008.(1)
10.18*	Amendment No. 2 to Employment Arrangement with Joseph M. Tucci dated May 7, 2009.(9)
10.19*	Amendment No. 3 to Employment Arrangement with Joseph M. Tucci dated October 30, 2009.(10)
10.20	Agreement and Plan of Merger by and among EMC Corporation, Electron Merger Corporation and Isilon Systems, Inc., dated as of November 14, 2010.(13)
10.21	Isilon Systems, Inc. 2006 Equity Incentive Plan. (filed herewith)
10.22	Isilon Systems, Inc. Amended and Restated 2001 Stock Plan. (filed herewith)
12.1	Statement regarding Computation of Ratio of Earnings to Fixed Charges. (filed herewith)
21.1	Subsidiaries of Registrant. (filed herewith)
23.1	Consent of Independent Registered Public Accounting Firm. (filed herewith)
31.1	Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
31.2	Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith)
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith)
101.INS**	XBRL Instance Document. (filed herewith)
101.SCH**	XBRL Taxonomy Extension Schema. (filed herewith)
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase. (filed herewith)
101.DEF**	XBRL Taxonomy Extension Definition Linkbase. (filed herewith)
101.LAB**	XBRL Taxonomy Extension Label Linkbase. (filed herewith)
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase. (filed herewith)

97

* This exhibit is a management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(a) of Form 10-K.

** Pursuant to Rule 406T of Regulation S-T, these interactive data files shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

(1) Incorporated by reference to EMC Corporation’s Annual Report on Form 10-K filed February 27, 2009 (No. 1-9853).

(2) Incorporated by reference to EMC Corporation’s Quarterly Report on Form 10-Q filed August 5, 2009 (No. 1-9853).

(3) Incorporated by reference to EMC Corporation’s Annual Report on Form 10-K filed February 29, 2008 (No. 1-9853).

(4) Incorporated by reference to EMC Corporation’s Quarterly Report on Form 10-Q filed July 30, 2002 (No. 1-9853).

(5) Incorporated by reference to EMC Corporation’s Quarterly Report on Form 10-Q filed April 27, 2005 (No. 1-9853).

(6) Incorporated by reference to EMC Corporation’s Current Report on Form 8-K filed February 2, 2005 (No. 1-9853).

(7) Incorporated by reference to EMC Corporation’s Quarterly Report on Form 10-Q filed November 3, 2004 (No. 1-9853).

(8) Incorporated by reference to EMC Corporation’s Current Report on Form 8-K filed November 30, 2007 (No. 1-9853).

(9) Incorporated by reference to EMC Corporation’s Quarterly Report on Form 10-Q filed May 8, 2009 (No. 1-9853).

(10) Incorporated by reference to EMC Corporation’s Quarterly Report on Form 10-Q filed November 6, 2009 (No. 1-9853).

(11) Incorporated by reference to EMC Corporation’s Annual Report on Form 10-K filed February 26, 2010 (No. 1-9853).

(12) Incorporated by reference to EMC Corporation’s Quarterly Report on Form 10-Q filed May 7, 2010 (No. 1-9853).

(13) Incorporated by reference to EMC Corporation’s Current Report on Form 8-K filed November 16, 2010 (No. 1-9853).

(14) Incorporated by reference to EMC Corporation’s Current Report on Form 8-K filed November 17, 2006 (No. 1-9853).

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EMC CORPORATION AND SUBSIDIARIES

SCHEDULE II–VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

Allowance for Bad Debts	Balance at Beginning of Period		Allowance for Bad Debts Charged to Selling, General and Administrative Expenses		Charged to Other Accounts		Bad Debts Write-Offs			Balance at End of Period
Description
Year ended December 31, 2010 allowance for doubtful accounts	$	51,114	$	18,965	$	—	$	(9,544	)	$	60,535
Year ended December 31, 2009 allowance for doubtful accounts		50,580		14,351		—		(13,817	)		51,114
Year ended December 31, 2008 allowance for doubtful accounts		35,889		34,667		—		(19,976	)		50,580

Note: The allowance for doubtful accounts includes both current and non-current portions.

Allowance for Sales Returns	Balance at Beginning of Period		Allowance for Sales Returns Accounted for as a Reduction in Revenue		Charged to Other Accounts			Sales Returns			Balance at End of Period
Description
Year ended December 31, 2010 allowance for sales returns	$	129,205	$	47,229	$	—		$	(18,604	)	$	157,830
Year ended December 31, 2009 allowance for sales returns		89,433		69,346		—			(29,574	)		129,205
Year ended December 31, 2008 allowance for sales returns		49,217		73,856		—			(33,640	)		89,433
Tax Valuation Allowance	Balance at Beginning of Period		Tax Valuation Allowance Charged to Income Tax Provision		Charged (credited) to Other Accounts*			Tax Valuation Allowance Credited to Income Tax Provision			Balance at End of Period
Description
Year ended December 31, 2010 income tax valuation allowance	$	21,815	$	—	$	(662	)	$	(16,803	)	$	4,350
Year ended December 31, 2009 income tax valuation allowance		15,993		—		5,822			—			21,815
Year ended December 31, 2008 income tax valuation allowance		28,019		—		(12,026	)		—			15,993

* Amount represents valuation allowances recognized in connection with business combinations and equity.

S-1

EX-10.6

Exhibit 10.6

EMC CORPORATION

DEFERRED COMPENSATION RETIREMENT PLAN,

as amended and restated as of November 3, 2010

effective for amounts earned and vested after December 31, 2004

Exhibit 10.6

EMC CORPORATION

DEFERRED COMPENSATION RETIREMENT PLAN,

as amended and restated as of November 3, 2010

effective for amounts earned and vested after December 31, 2004

Article 1. INTRODUCTION

1.1. Adoption of Plan. The EMC Corporation Executive Deferred Compensation Retirement Plan was adopted effective as of January 1, 2001. The Plan was amended and restated on December 5, 2005, May 22, 2008 and November 3, 2010, and is effective, as so amended, for amounts that are subject to Code section 409A by reason of having been earned and vested after December 31, 2004. The name of the Plan was changed 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 Company or any of its Subsidiaries by allowing them to defer receipt of designated percentages of their Compensation and to provide, in the sole discretion of the Company, Company Credits.

1.3. Status of Plan. The Plan is intended to be “a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and will be interpreted and administered to the fullest extent possible in a manner consistent with that intent.

Article 2. DEFINITIONS

Wherever capitalized in this Plan, the following terms are defined as provided below, unless a different meaning is clearly required by the context:

2.1. “Account” means, for each Participant, the account established for his or her benefit under Section 5.1.

2.2. “Administrator” means the Leadership and Compensation Committee of the Board as it may be constituted from time to time, or otherwise means a committee composed of members of the Board or officers of the Company as may be appointed by the Board or the Compensation Committee of the Board from time to time.

2.3. “Board” means the Board of Directors of the Company, as it may be constituted from time to time.

2.4. “Change of Control” means any of the following: (a) a change in the ownership of the Company, (b) a change in the effective control of the Company, or (c) a change in the ownership of a substantial portion of the assets of the Company, each as defined under Code section 409A(a)(2)(A)(v).

2.5. “Code” means the Internal Revenue Code of 1986, as amended from time to time. Reference to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces the section or subsection.

2.6. “Company” means EMC Corporation, a corporation formed under the laws of The Commonwealth of Massachusetts.

2.7. “Company Credit” means any amount credited by the Company to a Participant under Section 4.2.

2.8. “Company Credit Subaccount” means the subaccount within a Participant’s Account to which Company Credits and allocable earnings credits, if any, are credited.

2.9. “Company Credit Eligible Employee” means an employee of the Company or any of its Subsidiaries selected by the Administrator as eligible for Company Credits under Section 4.2 from among the group of highly compensated or managerial 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 from time to time by the Company or any of its Subsidiaries to a Participant. For each Participant, however, the Administrator in its sole discretion may: (1) determine which specific types of Compensation may be deferred under the Plan by the Participant; or (2) amend this Section 2.11 to cover other types of compensation payable from time to time by the Company or any of its Subsidiaries to a Participant. Compensation does not include amounts paid to Participants for services performed outside the United States from a non-U.S. payroll due to a transfer of the Participant for business reasons.

2.12. “Disabled” or “Disability” means any condition or conditions that (i) meet the definition of those terms under the EMC Corporation Long-Term Disability Basic Plan, and (ii) render a Participant unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or to last for a continuous period of not less than twelve (12) months.

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2.13. “Elective Deferral” means the portion of Compensation deferred by a Participant under Section 4.1.

2.14. “Elective Deferral Subaccount” means the subaccount within the Participant’s Account to which Elective Deferrals and allocable earnings credits are credited.

2.15. “Elective Deferral Eligible Employee” means an employee of the Company or any of its Subsidiaries selected by the Administrator as eligible to make Elective Deferrals under Section 4.1 from among the group of highly compensated or managerial employees of the Company or any of its Subsidiaries.

2.16. “Eligible Employee” means an employee of the Company or any of its Subsidiaries who is a Company Credit Eligible Employee, an Elective Deferral Eligible Employee, or both and who is on a U.S. payroll. An employee is treated as an Eligible Employee as 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 United States and is no longer on a U.S. payroll, then the Participant shall no longer be an Eligible Employee.

2.17. “Eligible Director” means any member of the Board.

2.18. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time. Reference to any section or subsection of ERISA includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces the section or subsection.

2.19. “Identification Date” means each December 31^st.

2.20. “Participant” means any individual who participates in the Plan in accordance with Article 3.

2.21 “Performance-Based Bonus” means performance-based compensation, as defined in the Treasury regulations under Code section 409A(a)(4)(B)(iii).

2.22. “Plan” means the EMC Corporation Deferred Compensation Retirement Plan as set forth herein and all subsequent amendments hereto.

2.23. “Plan Year” means in the case of the first Plan Year, the period beginning January 1, 2005 and ending on December 31, 2005, and thereafter, the twelve (12)-month period ending each December 31.

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2.24. “Retirement” means a Participant’s Separation from Service resulting from retirement after the Participant has (a) attained fifty-five (55) years of age and completed five (5) years of service with the Company and its Subsidiaries or (b) completed twenty (20) years of service with the Company and its Subsidiaries.

2.25. “Separation from Service” means a Participant’s death, Retirement, or other “separation from service” as defined under Code section 409A(a)(2)(A)(i). A Separation from Service will not occur when a Participant reduces his hours of employment so long as the reasonably anticipated level of bona fide services performed is greater than or equal to 21% of the average level of bona fide services provided in the immediately preceding thirty-six (36) months (or such shorter period as the Participant shall have performed services).

2.26. “Specified Employee” means any Participant who the Company has determined to be a specified employee under Code section 409A(a)(2)(B) for the year in which the Participant experiences a Separation from Service.

2.27. “Subsidiary” or “Subsidiaries” means a corporation or corporations in which the Company owns stock, directly or indirectly, and that are in the same “controlled group” of corporations as the Company. “Controlled group” is defined in Code section 414(b), except that a 50 % ownership test applies rather than an 80 % percent 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 to receive a Company Credit in accordance with Section 4.2, will become a Participant on the date the election or credit is made. As of November 3, 2010, members of the Board will no longer be eligible to defer amounts under the Plan, but shall continue as Participants with respect to previously deferred amounts in accordance with Section 3.2.

3.2. Continued Participation. An individual who has become a Participant in the Plan will continue to be a Participant so long as any amount remains credited to his or her Account.

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Article 4. DEFERRALS AND CREDITS

4.1. Elective Deferrals.

(a) Election to Defer.

(1) General. An Elective Deferral Eligible Employee may elect to defer a designated portion of his or her Compensation to be earned during a Plan Year by filing an election with the Administrator before the first day of the Plan Year in which the Compensation is to be earned. This election will become effective as of the first day of the Plan Year to which it applies. The Administrator has the sole discretion (subject to compliance with the requirements of Code section 409A and the regulations and guidance thereunder) to determine which specific types of Compensation each Participant may defer under the Plan and to set election deadlines, rules for irrevocability of elections, and effective dates for such elections.

(2) First Year of Eligibility. An individual who first becomes an Elective Deferral Eligible Employee 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 as of the thirtieth day after the individual becomes an Elective Deferral Eligible Employee and will apply only to the extent the Compensation is earned after the initial thirty (30) days of eligibility. Where a Participant ceases to be an Elective Deferral Eligible Employee and again becomes an Elective Deferral Eligible Employee, that Participant will be treated as newly eligible and may make the election described in the first sentence of this paragraph (2) if either of the following applies: (i) the Participant was not an Elective Deferral Eligible Employee for at least twenty-four (24) consecutive months; or (ii) the Participant has been paid all amounts deferred under the Plan and, as of the date of the last payment, was not an Elective Deferral Eligible Employee.

(3) Performance-Based Bonuses. Notwithstanding the foregoing, the Administrator, in its discretion, may permit a separate election to defer a Performance-Based Bonus, and such election may be made no later than six (6) months prior to the end of the applicable performance period; provided, however, that such election must be made before the date that the Performance-Based Bonus is readily ascertainable.

(b) Nature of Election.

(1) General. Each election under this Section 4.1 for a Plan Year or the balance of a Plan Year must be made on a form (whether written, electronic, or otherwise) prescribed or approved by the Administrator and must be completed and filed with the Administrator. The election form will specify the whole percentage or flat dollar amount of each type of Compensation that is to be deferred for the applicable Plan Year; provided, however, that the Administrator may require that a single percentage apply to certain types of Compensation. The election will generally be effective as of the first day of the Plan Year to which it applies. Elections for initial years of eligibility under Section 4.1(a)(2) are effective as of the thirtieth (30^th) day after initial eligibility. Elections for Performance-Based Bonuses will be effective no later than six (6) months prior to the end of the applicable performance period.

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(2) Time and Form of Distribution. Each Participant must indicate on the election form when the amount to be 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 installments, or in any other method approved by the Administrator).

(3) Irrevocability. Except as provided in Section 4.1(c), an election under Section 4.1(a) will become irrevocable for the applicable Plan Year as of a date set by the Administrator that is no later than the close of business on the date immediately before the date the election becomes effective under (1) above.

(c) Election to Change Time of Distribution. Any Participant who has made an irrevocable election to defer Compensation under Section 4.1(a) may make an additional election to change the time of distribution and, in the Administrator’s sole discretion, may also make an additional election to change the form of distribution. Any election to change the time or form of distribution cannot take effect until at least twelve (12) months after the date of the election and must defer payment not less than five (5) years from the date payment would otherwise be made. If a Participant changes his or her election with respect to amounts that would be paid in installments, the additional election must apply to all installments associated with the Plan Year (i.e., each installment must be delayed for at least five (5) years from its originally scheduled commencement date). Where a Participant initially elects a fixed distribution date under Section 6.2, an election to change the timing of the payment must be made no less than twelve (12) months before the originally scheduled fixed distribution date.

4.2. Company Credits. Notwithstanding any other provisions of the Plan, the Company is not obligated to credit a Company Credit to the Company Credit Subaccount of a Company Credit Eligible Employee. However, the Company may make a Company Credit to the Company Credit Subaccount of a Company Credit Eligible Employee in an amount the Company determines in its sole discretion.

Article 5. ACCOUNTS; INTEREST

5.1. Accounts. The Administrator will establish an Account for each Participant consisting of an Elective Deferral Subaccount and Company Credit Subaccount, reflecting Elective Deferrals and Company Credits, respectively, and any adjustments. Elective Deferrals will be credited to each Participant’s Elective Deferral Subaccount as soon as administratively practicable after the Compensation would otherwise have been paid to the Participant. A Participant’s Elective Deferrals may be taken from the Participant’s Compensation and credited to the Participant’s Elective Deferral Subaccount ratably during the applicable Plan Year or in

6

any other manner determined by the Company; provided that such Elective Deferrals during the Plan Year, in the aggregate, reflect the Participant’s Elective Deferrals in accordance with Code section 409A. Company Credits will be credited to each Participant’s Company 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 funds (such as mutual funds or bank collective funds) from time to time for the purpose of measuring earnings credits to Participants’ Accounts. Each Participant may specify—in a form and manner and with notice as the Administrator may prescribe—which fund or funds he or she wishes to be used to measure earnings for designated percentages of his or her Account. A deferral of RSUs will be treated as invested in Company Stock. The Participant’s directions may be given on a prospective basis only, and the Participant may change those directions with the frequency, and subject to such procedures or restrictions, as the Administrator may prescribe from time to time. Each Participant’s Account will be adjusted from time to time (at least quarterly) to reflect the fair market value that would be ascribed to the Account if the amounts credited to the Account were actually invested in the funds as directed by the Participant. Any earnings credits on Company Credits will begin to accrue as of the date the Company designates.

5.3. Payments. Each Participant’s Account will be reduced by the amount of any payment made to or on behalf of the Participant under Article 6 as of the date the payment is made.

5.4. Vesting. A Participant will at all times be 100% vested in amounts credited to his or her Elective Deferral Subaccount. A Participant will earn a vested interest in amounts credited to his or her Company Credit Subaccount according to any vesting schedule that the Company adopts in its sole discretion. However, if a Participant becomes Disabled or a Change of Control occurs, the Participant will become 100% vested in his or her Company Credit Subaccount.

5.5. Detrimental Activity.

(a) Notwithstanding any other provisions of the Plan, if a Participant engages in “Detrimental Activity” (as defined below) at any time, the Administrator may in its sole discretion cancel or rescind at any time all amounts, if any, credited to the Participant’s Company Credit subaccount, whether or not fully vested. Furthermore, if a Participant engages in Detrimental Activity at any time during the twelve (12) months after the termination of his or her employment with the Company or any of its Subsidiaries for any reason or termination of service as a member of the Board for any reason, as the case may be, the Company may require the Participant at any time until the later of (A) two (2) years after the Participant’s termination of employment for any reason or termination of service as a member of the Board for any reason,

7

as the case may be, or (B) two (2) years after the Participant engaged in Detrimental Activity to pay to the Company (1) an amount equal to any distributions previously made by the Company to the Participant from his or her Company Credit Account and (2) if the Company commences an action against the Participant (by way of a claim or counterclaim and including declaratory claims) in which it is preliminarily or finally determined that the Participant engaged in Detrimental Activity or otherwise violated this Section 5.5, an amount equal to the Company’s costs and fees incurred in the action, including but not limited to, the Company’s reasonable attorneys’ fees. The Company will be entitled to set off any amounts the Participant owes to the Company against any amounts the Company owes the Participant, including without limitation, any amounts to be distributed from the Participant’s Elective Deferral Subaccount. This offset may be applied only at the time amounts are distributable in accordance with the Plan’s terms, except that offset for any debt incurred in the ordinary course of the relationship between the Company or Subsidiary and the Participant may occur on an accelerated basis as to a maximum of $5,000 in any year.

(b) “Detrimental Activity” means, in the Company’s sole determination, that the Participant has, directly or indirectly, (a) become associated in any capacity with any enterprise that is, or may be deemed to be, in competition with any business of the Company or any of its Subsidiaries, (b) solicited, induced or attempted to induce, in any enterprise that is competitive with the Company or any of its Subsidiaries, any customers or employees of the Company to curtail or discontinue their relationship with the Company or any of its Subsidiaries, (c) disclosed, communicated or misused, to the detriment of the Company or any of its Subsidiaries, any confidential or proprietary information relating to the Company or any of its Subsidiaries to any person or entity not associated with the Company or any of its Subsidiaries, (d) failed to comply with the terms of the Plan, (e) failed to comply with 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), (g) violated any rule, policy, procedure or guideline of the Company or any of its Subsidiaries, or (h) been convicted of, or has entered a guilty plea with respect to, a crime whether or not connected with the Company or any of its Subsidiaries.

(c) Notwithstanding anything herein to the contrary, this Section 5.5 does not in any way amend, modify or affect any other plan, agreement, instrument or understanding, including without limitation, any of the Company’s equity plans, or any of the rights of the Company or any of its Subsidiaries thereunder with respect to any Detrimental Activity or similar activity committed by a Participant. The Company expressly reserves all of its rights under any such other plan, agreement, instrument or understanding, and this Section 5.5 does not constitute a waiver of any such rights.

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Article 6. PAYMENTS

6.1. Payment Upon Separation from Service. Subject to Sections 6.3 and 6.4 (concerning death and Disability), a Participant who has a Separation from Service will receive his or her vested Account balance in the manner described in (a) below unless he or she elects, in accordance with Section 4.1, a distribution method described in (b). A Participant may have different distribution forms for the Elective Deferral Subaccount and the Company Credit Subaccount. Distributions will 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’s Separation from Service.

(b) Distribution Methods Available for Participants’ (Other than Directors) on Retirement. Participants, other than a Participant who is a member of the Board, whose Separation from Service results from Retirement may elect to receive their vested Account balances under this subsection (b).

(1) Installments. A Participant may elect, in accordance with Section 4.1, to receive the vested balance of his or her Account in five (5), ten (10), or fifteen (15) annual installments, commencing in January of the year elected and continuing in each succeeding January until fully paid. If a Participant fails to elect a commencement date, payments will commence in January of the year following the Participant’s Separation from Service. The amount of each installment payment is determined by dividing the Participant’s applicable Account balance (adjusted through the day before the installment is paid) by the number of installments remaining.

(2) Other Methods. The Administrator, in its sole discretion, shall have discretion to provide that a Participant may elect under Section 4.1 to receive the balance of his or her Account at times or forms other than those specified in this section 6.1.

6.2. In–Service Distribution - Payment on a Fixed Date or Schedule. This Section 6.2 applies only to a Participant’s Elective Deferral Subaccount. Company Credit Subaccounts are subject to the other sections of this Article 6.

(a) General. A Participant may elect, in accordance with Section 4.1, a year as the fixed distribution date or for the commencement of payment. Amounts subject to this election are payable in a single lump sum in January of the year elected or in five (5), ten (10) or fifteen (15) annual installments commencing in January of the year elected. The fixed distribution date cannot be earlier than the day after the third anniversary of the last day of the Plan Year in which the Compensation was deferred. For distributions payable in annual

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installments, the first installment will be paid in January of the year elected, and succeeding installments will be paid in January of the years following the year elected. The amount of each installment is determined by dividing the Participant’s applicable Account balance (adjusted through 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. If a Participant’s Separation from Service or Disability occurs before the fixed distribution date, no payments will be made under this Section 6.2. The balance of the Participant’s Elective Deferral Subaccount will be paid in accordance with the other sections of this Article 6.

(c) Payment Events Occurring After Installments Commence.

(1) If a Participant’s Separation from Service occurs by reason of Retirement after the fixed distribution date has occurred and the Participant had elected to receive distributions under this Section 6.2 in installments, then payments will continue be made in accordance with that election.

(2) If a Participant’s Separation from Service occurs for any reason other than Retirement after the fixed distribution date has occurred, and the Participant had elected to receive distributions under this Section 6.2 in installments, the remaining portion of the distribution will be made in a single lump sum payment to the Participant within ninety (90) days after the Participant’s Separation from Service.

6.3. Payment Upon Death. If a Participant’s Separation from Service occurs because of his or her death, both the Elective Deferral Subaccount and the Company Credit Subaccount will be paid to the Participant’s beneficiary or estate in a single lump sum within ninety (90) days following the Participant’s death. Payments will generally be made in cash, except that Compensation payable in Company Stock may be paid in Company Stock. A Participant may designate a beneficiary or beneficiaries who will be entitled to receive the balance of the Participant’s Account upon his or her death. This designation must be made on a form (whether written, electronic, or otherwise) prescribed or approved by the Administrator and may be revoked on a form (whether written, electronic, or otherwise) prescribed or approved by the Administrator at any time before the Participant dies. If a Participant fails to designate a beneficiary or no designated beneficiary survives the Participant, then payments under this Section will be made to the Participant’s estate.

6.4. Payment Upon Disability. Upon the determination of a Participant’s Disability, both the Elective Deferral Subaccount and the Company Credit Subaccount will be paid to the Participant in a single lump sum within ninety (90) days following the Participant’s Disability. Payments will generally be made in cash, except that Compensation payable in Company Stock may be paid in Company Stock.

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6.5. Payment Upon a Change of Control. A Participant may elect, in accordance with Section 4.1, to receive the balance of his or her Account in a single lump sum thirty (30) days following the Change of Control. Payments will generally be made in cash, except that Compensation payable in Company Stock may be paid in Company Stock.

6.6. Payment or Cessation of Deferrals Upon Unforeseeable Emergency.

(a) General. A Participant is not generally entitled to a distribution of any portion of his or her Account before payments are otherwise due in accordance with the Plan and any timely election made under the Plan. However, if a Participant has an unforeseeable emergency that results in a severe financial hardship, the Administrator may authorize, on a nondiscriminatory basis, a cessation of deferrals under this Plan and/or a distribution from the Participant’s Elective Deferral Subaccount in the minimum amount required to meet the need created by the unforeseeable emergency (including any taxes or penalties due as a result of the distribution). The distribution will be paid within seven (7) days after the Administrator determines that the unforeseeable emergency exists under (b) below.

(b) Unforeseeable Emergency. An “unforeseeable emergency” is a severe financial hardship to the Participant resulting: (1) from an illness or accident of the Participant or of the Participant’s spouse, beneficiary, or dependent (as defined in Code section 152, without regard to section 152(b)(1), (b)(2), and (d)(1)(B)); (2) from the loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to the home not otherwise covered by insurance); or (3) from other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the Participant’s control (e.g., the imminent foreclosure of or eviction from the Participant’s primary residence, the need to pay for medical expenses and prescription drugs or funeral expenses of a spouse, beneficiary or dependent).

The Participant must supply written evidence of the financial hardship and must declare, under penalties of perjury, that the Participant has no other resources available to meet the emergency. The Participant must also declare that the need cannot be met by any of the following: (1) reimbursement or compensation by insurance or otherwise; (2) reasonable liquidation of the Participant’s assets to the extent the liquidation will not itself cause severe financial hardship; or (3) ceasing the Participant’s deferrals under this Plan.

(c) Hardship Distribution Under 401(k) Plan. In the event a Participant receives a hardship distribution pursuant to the regulations under section 401(k) of the Code, from the Company’s 401(k) Plan, deferrals under this Plan shall cease for a period of six months.

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6.7. Payments to a Participant Who is or was an Eligible Director and an Eligible Employee. Notwithstanding anything in this Article 6 to the contrary, if payments are to be made from a Participant’s Account and the Participant is or was both an Eligible Director and an Eligible Employee, then the payments will be treated separately. Any payments attributable to the portion of the 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 balance of the Participant’s Account attributable to Compensation earned by the Participant for his or her service as an Eligible Director will be paid in accordance with the provisions of this Article 6 applicable to Participants who are Eligible Directors.

6.8. Payments to Specified Employees. Amounts payable under this Article 6 upon a Specified Employee’s Separation from Service, other than death, will be paid six (6) months after Separation from Service. If the Participant elected to receive installments upon Separation from Service, this Section will affect only the first payment if that payment is scheduled to occur earlier than six (6) months 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 administer all aspects of the Plan and to determine the rights and benefits and all claims, demands and actions arising out of the provisions of the Plan of any Participant, beneficiary, deceased Participant, or any other person having or claiming to have any interest under the Plan. The Administrator shall have the exclusive discretionary power to interpret the Plan and to decide all matters under the Plan. The Administrator also shall have the exclusive discretionary power to adopt, amend and rescind rules and guidelines for the administration of the Plan and for its own acts and proceedings. Such interpretation and decision shall be final, conclusive and binding on all Participants and any person claiming under or through any Participant, in the absence of clear and convincing evidence that the Administrator acted arbitrarily and capriciously. Any individual serving as Administrator, or on a committee acting as Administrator, who is a Participant, shall not vote or act on any matter relating solely to himself or herself. When making a determination or calculation, the Administrator shall be entitled to conclusively rely on information furnished by a Participant, a beneficiary, or any other person or entity. The Administrator shall be deemed to be the Plan administrator with responsibility for complying with any reporting and disclosure requirements of ERISA.

The Administrator may employ such counsel, agents and advisers, and obtain such administrative, clerical and other services, as it may deem necessary or appropriate in carrying out the provisions of the Plan and its duties hereunder.

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7.2. Claims Procedure.

(a) In general. If any person believes he or she has been denied any rights or benefits 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 notification will be given within ninety (90) days after the claim is received by the Administrator (or within one hundred eighty (180) days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial ninety (90) day period). Notwithstanding the foregoing, if such notification is not given within such ninety (90) or one hundred eighty (180) day period, the claim will be considered denied as of the last day of such period and such person may request a review of his or her claim in accordance with Section 7.2(b).

(b) Appeals. Within sixty (60) days after the date on which a person receives a written notice of a denied claim (or, if applicable, within sixty (60) days after the date on which such denial is considered to have occurred) such person (or his or her duly authorized representative) may file a written request with the Administrator for a review of his or her denied claim. The Administrator will notify such person of its decision on review in writing. The decision on review will be made within sixty (60) days after the request for review is received by the Administrator (or within one hundred twenty (120) days, if special circumstances require an extension of time for processing the request, such as an election by the Administrator to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial sixty (60) day period). Notwithstanding the foregoing, if the decision on review is not made within such sixty (60) or one hundred twenty (120) day period, the claim will be considered denied.

The Administrator may, in its sole discretion amend or revise this Section 7.2, provided, that the claims procedure for the Plan pursuant to which persons may claim an interest in the Plan and appeal denials of such claims, as amended or changed, shall meet the minimum standards of Section 503 of ERISA.

7.3. Claims and Review Procedure for Disability Claims.

(a) In general. 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 notification will be given within forty-five (45) days after the claim is received by the Administrator. This time period may be extended twice by thirty (30) days if the Administrator both determines that such an extension is necessary due to matters beyond the control of the Plan and notifies such person of the circumstances requiring the extension of time and the date by which the Administrator expects to render a decision. If such

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an extension is necessary due to such person’s failure to submit the information necessary to decide the claim, the notice of extension will specifically describe the required information and such person will be afforded at least forty-five (45) days within which to provide the specified information. If such person delivers the requested information within the time specified, any thirty (30) day extension period will begin after such person has provided that information. If such person fails to deliver the requested information within the time specified, the Administrator may decide such person’s claim without that information. Notwithstanding the foregoing, if such notification is not given within such forty-five (45) or an extended period, the claim will be considered denied as of the last day of such period and such person may request a review of his or her claim in accordance with Section 7.3(b).

(b) Appeals. Within one hundred eighty (180) days after the date on which a person receives a written notice of a denied claim (or, if applicable, within one hundred eighty (180) days after the date on which such denial is considered to have occurred) such person (or his or her duly authorized representative) may file a written request with the Administrator for a review of his or her denied claim. The Administrator will notify such person of its decision on review in writing. The decision on review will be made within forty-five (45) days after the request for review is received by the Administrator (or within ninety (90) days, if special circumstances require an extension of time for processing the request, such as an election by the Administrator to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial forty-five (45) day period). If an extension is necessary due to such person’s failure to submit the information necessary to decide the appeal, the notice of extension will specifically describe the required information and such person will be afforded at least forty-five (45) days to provide the specified information. If such person delivers the requested information within the time specified, the forty-five (45) day extension of the appeal period will begin after such person has provided that information. If such person fails to deliver the requested information within the time specified, the Administrator may decide such person’s appeal without that information. Notwithstanding the foregoing, if the decision on review is not made within such forty-five (45) or ninety (90) day period, the claim will be considered denied.

The Administrator may, in its sole discretion amend or revise this Section 7.3, provided, that the claims procedure for the Plan pursuant to which persons may claim an interest 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 Subsidiaries who serves as the Administrator or as a member of a committee appointed to serve as Administrator, or who assists the Administrator in carrying out its duties (including any such individual who formerly served in any such capacity) against any and all liabilities, damages, costs and expenses (including attorneys’ fees and amounts paid in settlement of any claims approved in writing by the Company) arising out of or relating to any act or omission to act in connection with the Plan, if such act or omission is in good faith.

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Article 8. AMENDMENT, TERMINATION AND ASSIGNMENT

8.1. Amendments. Prior to a Change of Control, the Company shall have the right to amend the Plan from time to time, subject to Section 8.3, by an instrument in writing which has been executed on its behalf by the Administrator or by vote of the Board. No amendment to the Plan with respect to any Participant may be made after a Change of Control without the written consent of such Participant (or beneficiary, if applicable).

8.2. Termination of Plan. The Company currently intends to continue the Plan indefinitely. However, the Plan is voluntary on the part of the Company and the Company expressly reserves the right to terminate the Plan at any time, subject to Section 8.3, for any reason whatsoever. Subject to Section 8.1, the Company from time to time may, by amendment to the Plan, suspend the Plan or discontinue provisions thereof. The Company may terminate the Plan at any time by an instrument in writing which has been executed on its behalf by the Administrator or by vote of the Board. No distributions will be made solely because the Company terminates the Plan. Payments will continue to be made after the Plan’s termination in accordance with Article 6.

8.3 Existing Rights. No amendment or termination of the Plan shall adversely affect the rights of any Participant with respect to amounts credited to his or her Account as of the date of such amendment or termination (subject to future adjustments as a result of investment measurements).

8.4. Assignment. The rights and obligations of the Company shall inure to the benefit of and shall be binding upon its successors and assigns.

Article 9. MISCELLANEOUS

9.1. Grantor Trust. The Company may establish a trust of which the Company is treated as the owner under Subpart E of Subchapter J, Chapter 1 of the Code (a “grantor trust”), and may deposit with the trustee of the grantor trust an amount of cash or marketable securities sufficient to cause the fair market value of the assets held in the grantor trust to be not less than the sum of the Account balances under the Plan. Notwithstanding the foregoing, nothing in this Plan will be construed to create a trust or to obligate the Company, any of its Subsidiaries or any other person or 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 Subsidiaries or of any other person or entity. Any distributions or payments which become payable hereunder that are not paid out of the grantor trust shall be paid from the general assets of the Company.

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9.2. Nature of Claim for Payment. Each Participant and beneficiary will be an unsecured general creditor of the Company with respect to any distributions or payments to be made under the Plan. Nothing in the Plan will be construed to give any person any right to any specific assets of the Company, any of its Subsidiaries or any other person or entity.

9.3. Non-alienation of Benefits. No Participant, beneficiary or any other person having any interest under the Plan shall alienate, anticipate, commute, pledge, encumber, assign or otherwise transfer (“Alienate”) any right or interest under the Plan, including, without limitation, with respect to rights to or interests in any payments, distributions, claims or other benefits which he or she may expect to receive, contingently or otherwise, under this Plan (“Rights”). Any attempt to Alienate any Right shall be ineffective. No Right shall be subject to any claim of, subject to attachment, execution, garnishment or other legal process by, any creditor of such Participant, beneficiary or other person, except pursuant to a qualified domestic relations order that meets the requirements of Code section 414(p) and Section 206(d)(3) of ERISA.

9.4. No Employment or Service Continuation Rights. Neither the adoption nor the establishment and maintenance of the Plan, the participation 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, nor does it interfere in any way with the right of the Company or any of its Subsidiaries to terminate the services of any of its employees or directors at any time. Each of the Company and its Subsidiaries expressly reserves the right to terminate or discharge any of its employees or directors at any time.

9.5. Receipt and Release. Any payment or distribution to any Participant or beneficiary in accordance with the provisions of the Plan shall be, to the extent thereof, in full satisfaction of all claims against the Company, its Subsidiaries and the Administrator under the Plan, and the Administrator may require such Participant or beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect. If any Participant or beneficiary is determined by the Administrator to be incompetent by reason of physical or mental disability (including minority) to give a valid receipt and release, the Administrator may cause the payment or payments becoming due to such person to be made to another person for his or her benefit without responsibility on the part of the Administrator or the Company to follow the application of such funds.

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9.6. Severability of Provision. If any provision of the Plan shall be held by a court of competent jurisdiction to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and enforced to the fullest extent possible as if such provision had not been included.

9.7. Government Regulations. It is intended that the Plan comply with all applicable laws and government regulations, including Code section 409A, and the Plan shall be construed and administered, where possible, to comply with such laws and regulations. Neither the Company, any of its Subsidiaries, nor the Administrator shall not be obligated to perform any obligation hereunder in any case where, in the opinion of the Company’s counsel, such performance would result in the violation of any law or regulation or failure to comply with Code section 409A. Should it be determined that any provision or feature of the Plan is not in compliance with Code section 409A, that provision or feature shall be null and void to the extent required to avoid the noncompliance with Code section 409A.

9.8. Governing Law; Jurisdiction. This Plan shall be construed, administered, and governed in all respects under and by the laws of The Commonwealth of Massachusetts without regard to the conflict of law provisions thereof. The Company, the Administrator, the Participants and their beneficiaries, and any persons having or claiming to have any interest under the Plan submit to the exclusive jurisdiction and venue of the federal or state courts of The Commonwealth of Massachusetts to resolve any and all issues that may arise out of or relate to the Plan or the same subject matter.

9.9. Headings and Subheadings. Headings and subheadings in this Plan are inserted for convenience only and are not to be considered in the construction of the provisions hereof.

9.10. Expenses and Taxes. Expenses, including fees and expenses associated with the grantor trust, associated 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 an Account (or subaccount or portion thereof) maintained under the Plan which are payable prior to the distribution of the Account (or subaccount or portion thereof), as determined by the Administrator in its sole discretion, shall be charged against the appropriate Participant’s Account or Participants’ Accounts.

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EX-10.8

Exhibit 10.8

FORM OF CHANGE IN CONTROL SEVERANCE AGREEMENT

THIS AGREEMENT, dated [            ], is made by and between EMC Corporation (the “Company”), and [            ] (the “Executive”) residing at [Address].

WHEREAS, the Company considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its stockholders; and

WHEREAS, the Executive has made and is expected to make, due to the Executive’s intimate knowledge of the business and affairs of the Company, its policies, methods, personnel, and problems, a significant contribution to the profitability, growth, and financial strength of the Company; and

WHEREAS, the Company, as a publicly held corporation, recognizes that the possibility of a Change in Control may exist, and that such possibility and the uncertainty and questions which it may raise among management may result in the departure or distraction of the Executive in the performance of the Executive’s duties, to the detriment of the Company and its stockholders; and

WHEREAS, it is in the best interests of the Company and its stockholders to reinforce and encourage the continued attention and dedication of management personnel, including the Executive, to their assigned duties without distraction and to ensure the continued availability to the Company of the Executive in the event of a Change in Control;

THEREFORE, in consideration of the foregoing and other respective covenants and agreements of the parties herein contained, the parties hereto agree as follows:

1. Defined Terms. The definitions of capitalized terms used in this Agreement are provided in Section 16.

2. Term of Agreement. The term of this Agreement (the “Term”) shall commence on December 31, 2009 and shall continue in effect through January 1, 2011; provided, however, that commencing on January 1, 2011 and each January 1st thereafter, the Term shall automatically be extended for one additional year unless, not later than April 1 of the preceding year, the Company or the Executive shall have given notice not to extend the Term; and further provided, however, that if a Change in Control shall have occurred during the Term, the Term shall expire on the last day of the twenty-fourth (24^th) month following the month in which such Change in Control occurred.

3. Company’s Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive’s covenants in Section 4, the Company, under the conditions described herein, shall pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Sections 5.4 or 9.1, no Severance Payments shall be payable under this Agreement unless there shall have been (or, pursuant to the second sentence of

Section 6.1, there shall be deemed to have been) a termination of the Executive’s employment with the Company following a Change in Control and during the Term. This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company.

4. The Executive’s Covenants. Subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control, the Executive shall remain in the employ of the Company until the earliest of (i) a date which is six (6) months from the date of the first occurrence of a Potential Change in Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive’s employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive’s employment for any reason.

5. Compensation Other Than Severance Payments; Equity Awards.

5.1 If the Executive fails to perform the Executive’s full-time duties with the Company following a Change in Control as a result of incapacity due to physical or mental illness, during any period when the Executive so fails to perform the Company shall pay the Base Salary to the Executive, together with all compensation and benefits payable to the Executive under the terms of any compensation or benefit plan, program or arrangement (other than the Company’s short- or long-term disability plan, as applicable, but including any bonus or incentive plan) maintained by the Company during such period, until the Executive resumes the full time performance of such duties or the Executive’s employment is terminated by the Company for Disability.

5.2 If the Executive’s employment shall be terminated for any reason following a Change in Control, the Company shall pay the Base Salary to the Executive through the Date of Termination, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s compensation and benefit plans, programs or 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 first occurrence of an event or circumstance constituting Good Reason.

5.3 Except as expressly provided herein, if the Executive’s employment shall be terminated for any reason following a Change in Control, the Company shall pay to the Executive the Executive’s normal post-termination compensation and benefits as such payments become due. Such post-termination compensation and benefits shall be determined under, 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 circumstance constituting Good Reason.

5.4 Notwithstanding anything to the contrary contained in any equity plan or arrangement of the Company or any agreement between the Company and the Executive (but subject to the provisions of Section 14.3(D)), upon the occurrence of a Change in Control, any

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outstanding stock option, restricted stock or other equity or equity-based award granted to the Executive shall become immediately vested and exercisable if the Executive becomes entitled to the Severance Payments described in Section 6.1. From and after the occurrence of a Change in Control, the “detrimental activity” provisions in the Company’s equity plans shall no longer apply to any award issued to the Executive under such plans.

6. Severance Payments.

6.1 If the Executive’s employment is terminated within twenty-four (24) months following a Change in Control, other than (a) by the Company for Cause, (b) by reason of death or Disability, or (c) by the Executive without Good Reason, then the Company shall, subject to Section 15 hereof, pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”) and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5. For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated within twenty-four (24) months following a Change in Control and during the Term by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s employment is terminated by the Company without Cause during a Potential Change in Control Period, or (ii) the Executive terminates Executive’s employment for Good Reason during a Potential Change in Control Period. In the event that the Executive’s employment is terminated in the manner described in the preceding sentence during a Potential Change in Control Period, a Change in Control shall be deemed to have occurred immediately preceding such termination for purposes of Section 5.4 hereof, except with respect to equity awards held by the Executive which are intended to constitute qualified performance based compensation for purposes of Section 162(m) of the Code and regulations promulgated thereunder (other than stock options and stock appreciation rights). Except as described above or in Section 9.1, the Executive shall not be entitled to benefits pursuant to this Section 6.1 unless a Change in Control shall have occurred during the Term.

(A) The Company shall pay to the Executive a lump sum severance payment, in cash, equal to 2.99 times the sum of (a) the Base Salary, and (b) the sum of the target annual bonus available to the Executive pursuant to each of the Company’s annual bonus plans or any successor plans (but excluding any special performance or incentive plan) in which the Executive participates in respect of the fiscal year in which the Date of Termination occurs (without giving effect to any event or circumstance constituting Good Reason), assuming for this purpose attainment of 100% of any applicable target; provided, however, that if the applicable target bonus would have been pro-rated for a partial fiscal year, such target bonus shall be recalculated for purposes of this Section 6.1(A) to equal the amount that for which the Executive would have been eligible for the entire 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 Executive’s dependents life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and Executive’s dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and Executive’s dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater after-tax

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cost to the Executive than the cost to the Executive immediately prior to such date or occurrence. If, at the end of the thirty-six (36) month period following the Date of Termination, the Executive has not previously become eligible to receive comparable benefits from a new employer or pursuant to a government-sponsored health insurance or health care program, then the Company shall arrange, at its sole cost and expense, to enable the Executive to convert coverage for the Executive and the Executive’s dependents being provided hereunder to individual policies or program, if applicable, upon the same terms as other former employees of the Company may apply for such conversion. The cost of providing the benefits set forth in this Section 6.1(B) shall be in addition to (and shall not reduce) the Severance Payments. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent the Executive becomes eligible 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 the Executive a prorated portion of the Executive’s bonus compensation for the fiscal year in which the Date of Termination occurs (assuming that any applicable performance objectives were achieved at the target level of performance and without giving effect to any event or circumstance constituting Good Reason) calculated by multiplying (A) the target amount of such bonus compensation by (B) a fraction, the numerator of which is the number of days in the applicable fiscal year through the Date of Termination and the denominator of which is 365. The foregoing payment shall be reduced by the sum of any quarterly, semi-annual and other partial year bonus payments previously paid to the Executive in respect of the fiscal year in which the Date of Termination occurs.

6.2 (A) Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit received or to be received by the Executive (including any payment or benefit received in connection with a Change in Control or the termination of the Executive’s employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (all such payments and benefits, including the Severance Payments, being hereinafter referred to as the “Total Payments”) would be subject (in whole or part), to the Excise Tax, then, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement, the cash Severance Payments shall first be reduced, and the noncash Severance Payments shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (A) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments) is greater than or equal to (B) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments); provided, however, that the Executive may elect to have the noncash Severance Payments reduced (or eliminated) prior to any reduction of the cash Severance Payments.

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(B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm (the “Auditor”) which was, immediately prior to the Change in Control, the Company’s independent auditor, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

(C) At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). If the Executive objects to the Company’s calculations, the Company shall pay to the Executive such portion of the Severance Payments (up to 100% thereof) as the Executive determines is necessary to result in the proper application of subsection (A) of this Section 6.2.

6.3 Subject to Section 14.3(A), the payments provided in subsection (A) and (C) of Section 6.1 shall be made not later than the eighth day following the Release Deadline; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company, the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than the thirtieth (30th) day after the Release Deadline (also subject to Section 14.3(A)). In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code). At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).

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6.4 The Company shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any 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 payment or benefit provided hereunder. Such payments shall be made within five (5) business days after delivery of the Executive’s written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. The Executive’s reimbursement rights described in this Section 6.4 shall remain in effect for the life of the Executive, provided, that, in order for the Executive to be entitled to reimbursement hereunder, the Executive must submit the written reimbursement request described above within 180 days following the date upon which the applicable fee or expense is incurred.

7. Termination Procedures and Compensation During Dispute.

7.1 Notice of Termination. After a Change in Control, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail any facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds (2/3) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i), (ii) or (iii) of the definition of Cause herein, and specifying the particulars thereof in detail.

7.2 Date of Termination. “Date of Termination,” with respect to any purported termination of the Executive’s employment after a Change in Control, shall mean (i) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than ninety (90) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given).

7.3 Dispute Concerning Termination. If within ten (10) days after any Notice of Termination is given, or, if later, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or

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decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided, however, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence.

7.4 Compensation During Dispute. If the Date of Termination is extended in accordance with Section 7.3, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, the Base Salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in accordance with Section 7.3. Amounts paid under this Section 7.4 are in addition to all other amounts due under this Agreement (other than those due under Section 5.2) and shall not be offset against or reduce any other amounts due under this Agreement.

8. No Mitigation. If the Executive’s employment with the Company terminates following a Change in Control, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 or Section 7.4. Except as set forth in Section 6.1(B), the amount 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.

9. Successors; Binding Agreement.

9.1 In addition to any obligations imposed by law upon any successor to the Company, the Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive’s employment for Good Reason after a Change in Control and during the Term, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination.

9.2 This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

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10. Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the last known residence address of the Executive or in the case of the Company, to its principal office to the attention of the Chief Executive Officer of the Company with a copy to its clerk or Secretary, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

11. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes, effective as of [                    ], any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall not supersede any agreement setting forth the terms and conditions of the Executive’s employment with the Company or any subsidiary of the Company. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7) shall survive such expiration.

12. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

13. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

14. Settlement of Disputes; Arbitration; 409A Compliance; Release.

14.1 All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that the Executive’s claim has been denied.

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14.2 Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Boston, Massachusetts in accordance with the rules of the American Arbitration Association then in effect; provided, however, that the evidentiary standards set forth in this Agreement shall apply. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive’s right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

14.3 It is the intention of the Company and the Executive that this Agreement not result in taxation of the Executive under Section 409A of the Code and the regulations and guidance promulgated thereunder and that the Agreement shall be construed in accordance with such intention. Without limiting the generality of the foregoing, the Company and the Executive agree as follows:

(A) Notwithstanding anything to the contrary herein, if the Executive is a “specified employee” (within the meaning of Section 409A(a)(2)(B)(i) of the Code) with respect to the Company, any amounts (or benefits) otherwise payable to or in respect of him 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 upon the earliest date permitted by Section 409A(a)(2) of the Code;

(B) For purposes of this Agreement, the Executive’s employment with the Company will not be treated as terminated unless and until such termination of employment constitutes a “separation from service” for purposes of Section 409A of the Code;

(C) To the extent necessary to comply with the provisions of Section 409A of the Code and the guidance issued thereunder (1) reimbursements to the Executive as a result of the operation of Section 6.1(B), or Section 6.4 hereof shall be made not later than the end of the calendar year following the year in which the reimbursable expense is incurred and shall otherwise be made in a manner that complies with the requirements of Treasury Regulation Section 1.409A-3(i)(l)(iv), (2) if Executive is a “specified employee” (within the meaning of Section 409A(a)(2)(B)(i) of the Code), any reimbursements to the Executive as a result of the operation of such sections with respect to a reimbursable event within the first six months following the Date of Termination which are required to be delayed pursuant to Section 14.1(A) shall be made as soon as practicable following the date which is six months and one day following the Date of Termination (subject to clause (1) of this sentence); and

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(D) If the provisions of Section 5.4 are applicable to an equity or equity-based award subject to the provisions of Section 409A of the Code and the immediate payment of the award contemplated by Section 5.4 would result in taxation under Section 409A, payment of such awards shall be made upon the earliest date upon which such payment may be made without resulting in taxation under Section 409A of the Code. For the 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 extent required) by this Section 14.3(D) shall require that the payment of such awards continue upon such fixed schedule following the Date of Termination until the award is fully vested.

15. Release. Notwithstanding anything to the contrary herein, the payment to the Executive of the benefits provided in Section 6 upon the Executive’s termination of employment shall be subject to the execution and non-revocation by the Executive of the Company’s standard form of release in favor of the Company and its Affiliates, as in effect immediately prior to the Change in Control. Such release must be executed by the Executive within 45 days following the Date of Termination (the “Release Deadline”).

16. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below:

16.1 “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

16.2 “Auditor” shall have the meaning set forth in Section 6.2.

16.3 “Base Amount” shall have the meaning set forth in Section 280G(b)(3) of the Code.

16.4 “Base Salary” shall mean the annual base salary in effect for the Executive immediately prior to a Change in Control, as such salary may be increased from time to time during the Term (in which case such increased amount shall be the Base Salary for purposes hereof), but without giving effect to any reduction thereto.

16.5 “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

16.6 “Board” shall mean the Board of Directors of the Company.

16.7 “Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful and continued failure by the Executive (other than any such failure resulting from (A) the Executive’s incapacity due to physical or mental illness, (B) any such actual or anticipated failure after the issuance of a Notice of Termination by the Executive for Good Reason or (C) the Company’s active or passive obstruction of the performance of the Executive’s duties and responsibilities) to perform substantially the duties and responsibilities of the Executive’s position with the Company after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed such duties or responsibilities; (ii) the conviction of the Executive by a court of competent jurisdiction for felony criminal conduct; or (iii) the willful engaging by the Executive in fraud or dishonesty

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which is demonstrably and materially injurious to the Company or its reputation, monetarily or otherwise. No act, or failure to act, on the Executive’s part shall be deemed “willful” unless committed, or omitted by the Executive in bad faith and without reasonable belief that the Executive’s act or failure to act was in, or not opposed to, the best interest of the Company. It is also expressly understood that the Executive’s attention to matters not directly related to the business of the Company shall not provide a basis for termination for Cause so long as the Board has approved the Executive’s engagement in such activities.

16.8 A “Change in Control” shall be deemed to have occurred if any of the events set forth in any one of the following paragraphs shall have occurred:

(A) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 25% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in Section 16.8(C)(i);

(B) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date 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 election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended;

(C) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities; or

(D) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.

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Notwithstanding anything in the foregoing to the contrary, no Change in Control shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in the Executive, or a group of Persons which includes the Executive, acquiring, directly or indirectly, 25% or more of 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 under Section 16.8 whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

16.11 “Date of Termination” shall have the meaning set forth in Section 7.2.

16.12 “Disability” shall be deemed the reason for the termination by the Company of the Executive’s employment, if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for a period of one hundred twenty (120) days, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive’s duties. Any question as to the existence of the Executive’s Disability upon which the Executive and the Company cannot agree shall be determined by a qualified independent physician selected by the Executive (or, if the Executive is unable to make such selection, it shall be made by any adult member of the Executive’s immediate family), and approved by the Company. The determination of such physician made in writing to the Company and to the Executive shall be final and conclusive for all purposes of this Agreement, absent fraud.

16.13 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

16.14 “Excise Tax” shall mean any excise tax imposed under Section 4999 of the Code.

16.15 “Executive” shall mean the individual named in the first paragraph of this Agreement.

16.16 “Good Reason” for termination by the Executive of the Executive’s employment shall mean the occurrence (without the Executive’s express written consent) after any Change in Control, or prior to a Change in Control under the circumstances described in the second sentence of Section 6.1 (treating all references in subsections (A) through (F) below to a “Change in Control” as references to a “Potential Change in Control”), of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in subsection (A), (B), (C), (D), or (E) below, such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof:

(A) an adverse change in the Executive’s role or position(s) as an officer of the Company as in effect immediately prior to the Change in Control, including, without limitation, any adverse change in the Executive’s role or position as a result of a diminution of the Executive’s duties or responsibilities (other than, if applicable, any such change directly and solely attributable to the fact that the Company is no longer publicly owned) or the assignment to the Executive of any duties or responsibilities which are inconsistent with such role or position(s), or any removal of the Executive from, or any failure to reappoint or reelect the Executive to, such position(s);

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(B) a reduction in the Executive’s Base Salary;

(C) the failure by the Company or any subsidiary of the Company to continue in effect any Plan in which the Executive is participating at the time of the Change in Control (or Plans providing the Executive with at least substantially similar benefits) other than as a result of the normal expiration of any such Plan in accordance with its terms as in effect at the time of the Change in Control, or the taking of any action, or the failure to act, by the Company which would adversely affect the Executive’s continued participation in any of such Plans on at least as favorable a basis to the Executive as is the case on the date of the Change in Control or which would materially reduce the Executive’s benefits in the future 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 Change in Control except for required travel on the Company’s business to an extent substantially consistent with the business travel obligations which the Executive undertook on behalf of the Company prior to the Change in Control;

(E) any unreasonable refusal by the Company to continue to allow the Executive to attend to matters or engage in activities not directly related to the business of the Company which, prior to the Change in Control, the Executive was permitted by the Board to attend to or engage in; or

(F) any purported termination of the Executive’s employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 7.1; for purposes of this Agreement, no such purported termination shall be effective.

The Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. In order for Good Reason to exist hereunder, the Executive must provide notice to the Company of the existence of the condition or circumstance described above within 90 days of the initial existence

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of the condition or circumstance (or, if later, within 90 days of the Executive’s becoming aware of such condition or circumstance), and the Company must have failed to cure such condition within 30 days of the receipt of such notice. Subject to the preceding sentence, the Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

For purposes of any determination regarding the existence of Good Reason, any good faith claim by the Executive that Good Reason exists shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that Good Reason does not exist.

16.17 “Notice of Termination” shall have the meaning set forth in Section 7.1.

16.18 “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock 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 Company or its subsidiaries intended to benefit employees, but excluding following a Change in Control (but not during a Potential Change in Control Period) any stock option, restricted stock or other stock-based plan or benefit except with respect to any awards outstanding under any such plan as of the date of the Change in Control.

16.20 “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following subsections shall have occurred:

(A) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(B) the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(C) any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or

(D) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

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16.21 “Potential Change in Control Period” shall commence upon the occurrence of a Potential Change in Control and shall lapse upon the occurrence of a Change in Control or, if earlier (i) with respect to a Potential Change in Control occurring pursuant to Section 16.20(A), immediately upon the abandonment or termination of the applicable agreement, (ii) with respect to a Potential Change in Control occurring pursuant to Section 16.20(B), immediately upon a public announcement by the applicable party that such party has abandoned its intention to take or consider taking actions which if consummated would result in a Change in Control or (iii) with respect to a Potential Change in Control occurring pursuant to Section 16.20(C) or (D), upon the one year anniversary of the occurrence of a Potential Change in Control (or such earlier date as may be determined by the Board).

16.22 “Release Deadline” shall have the meaning set forth in Section 15.

16.23 “Retirement” shall be deemed the reason for the termination by 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” shall have the meaning set forth in Section 6.2.

16.26 “Term” shall mean the period of time described in Section 2 (including any extension, continuation or termination described therein).

16.27 “Total Payments” shall mean those payments so described in Section 6.2.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

EMC CORPORATION
By:
	Name:
	Title:
	EXECUTIVE

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Schedule of Change in Control Severance Agreements

Name	Effective Date of Agreement1
Burton, Jeremy	15-March-2010
Coviello, Arthur	31-Dec-2009
Dacier, Paul	31-Dec-2009
Elias, Howard	31-Dec-2009
Gelsinger, Patrick	31-Dec-2009
Goulden, David	31-Dec-2009
Hauck, Frank	31-Dec-2009
Mollen, John T.	31-Dec-2009
Teuber, William J., Jr.	31-Dec-2009
Tucci, Joseph M.	31-Dec-2009
You, Harry	31-Dec-2009

¹ Refers to the date of the most recently executed change in control severance agreement.

EX-10.21

Exhibit 10.21

ISILON SYSTEMS, INC.

2006 EQUITY INCENTIVE PLAN

(As Amended and Restated April 12, 2010)

(Approved by Stockholders on May 19, 2010)

(Scheduled Termination Date: November 22, 2016)

1. Purposes of the Plan. The purposes of this Plan are:

• to attract and retain the best available personnel for positions of substantial responsibility,

• to provide additional incentive to Employees, Directors and Consultants, and

• to promote the success of the Company’s business.

The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares.

2. Definitions. As used herein, the following definitions will apply:

(a) “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.

(b) “Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.

(c) “Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares.

(d) “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.

(e) “Board” means the Board of Directors of the Company.

(f) “Change in Control” means the occurrence of any of the following events:

(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities;

(ii) The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets;

(iii) A change in the composition of the Board occurring within a two (2)-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” means directors who either (A) are Directors as of the effective date of the Plan, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); or

(iv) The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

(g) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code.

(h) “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof.

(i) “Common Stock” means the common stock of the Company.

(j) “Company” means Isilon Systems, Inc., a Delaware corporation, or any successor thereto.

(k) “Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

(l) “Determination Date” means the latest possible date that will not jeopardize the qualification of an Award granted under the Plan as “performance-based compensation” under Section 162(m) of the Code.

(m) “Director” means a member of the Board.

(n) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.

(o) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

(p) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(q) “Exchange Program” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for Awards of the same type (which may have lower exercise prices and different terms), Awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is reduced. The Administrator will determine the terms and conditions of any Exchange Program in its sole discretion. Notwithstanding the previous sentence, the Administrator may not institute an Exchange Program without stockholder approval.

-2-

(r) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(iii) For purposes of any Awards granted on the Registration Date, the Fair Market Value will be the initial price to the public as set forth in the final prospectus included within the registration statement in Form S-1 filed with the Securities and Exchange Commission for the initial public offering of the Company’s Common Stock; or

(iv) In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator.

(s) “Fiscal Year” means the fiscal year of the Company.

(t) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

(u) “Inside Director” means a Director who is an Employee.

(v) “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.

(w) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(x) “Option” means a stock option granted pursuant to the Plan.

(y) “Outside Director” means a Director who is not an Employee.

(z) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(aa) “Participant” means the holder of an outstanding Award.

(bb) “Performance Goals” will have the meaning set forth in Section 12 of the Plan.

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(cc) “Performance Period” means any Fiscal Year or such other period as determined by the Administrator in its sole discretion.

(dd) “Performance Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Administrator may determine pursuant to Section 10.

(ee) “Performance Unit” means an Award which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 10.

(ff) “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.

(gg) “Plan” means this 2006 Equity Incentive Plan.

(hh) “Registration Date” means the effective date of the first registration statement that is filed by the Company and declared effective pursuant to Section 12(g) of the Exchange Act, with respect to any class of the Company’s securities.

(ii) “Restricted Stock” means Shares issued pursuant to a Restricted Stock award under Section 7 of the Plan, or issued pursuant to the early exercise of an Option.

(jj) “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 8. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.

(kk) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

(ll) “Section 16(b)” means Section 16(b) of the Exchange Act.

(mm) “Service Provider” means an Employee, Director or Consultant.

(nn) “Share” means a share of the Common Stock, as adjusted in accordance with Section 15 of the Plan.

(oo) “Stock Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 9 is designated as a Stock Appreciation Right.

(pp) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan.

(a) Stock Subject to the Plan. Subject to the provisions of Section 15 of the Plan, the maximum aggregate number of Shares that may be issued under the Plan as of January 1, 2010 is (i) 20,986,344 Shares, which includes Shares returned to the Plan prior to January 1, 2010 under the prior version of clause (ii) and increases under Section 3(b) below for years prior to the 2011 Fiscal Year, plus

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(ii) any Shares subject to stock options granted under the Company’s Amended and Restated 2001 Stock Plan (the “2001 Plan”) that expire or otherwise terminate on or after January 1, 2010 without having been exercised in full up to a maximum of 1,411,562 Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.

(b) Automatic Share Reserve Increase. The number of Shares available for issuance under the Plan shall be increased on the first day of each Fiscal Year beginning with the 2011 Fiscal Year, in an amount equal to the least of (A) 3,500,000 Shares, (B) five percent (5%) of the outstanding Shares on the last day of the immediately preceding Fiscal Year or (C) such number of Shares determined by the Board.

(c) Lapsed Awards. If an Award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an Exchange Program, or, with respect to Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares, is forfeited to or repurchased by the Company due to failure to vest, the unpurchased Shares (or for Awards other than Options or Stock Appreciation Rights the forfeited or repurchased Shares) which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to Stock Appreciation Rights, only Shares actually issued pursuant to a Stock Appreciation Right will cease to be available under the Plan; all remaining Shares under Stock Appreciation Rights will remain available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the Company or are forfeited to the Company, such Shares will become available for future grant under the Plan. Shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Notwithstanding the foregoing and, subject to adjustment as provided in Section 15, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options shall equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to Section 3(c).

(d) Share Reserve. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan.

4. Administration of the Plan.

(a) Procedure.

(i) Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.

(ii) Section 162(m). To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two (2) or more “outside directors” within the meaning of Section 162(m) of the Code.

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(iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.

(iv) Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws.

(b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:

(i) to determine the Fair Market Value;

(ii) to select the Service Providers to whom Awards may be granted hereunder;

(iii) to determine the number of Shares to be covered by each Award granted hereunder;

(iv) to approve forms of Award Agreements for use under the Plan;

(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine;

(vi) to determine the terms and conditions of any, and to institute any Exchange Program. Notwithstanding the foregoing sentence, the Administrator may not institute an Exchange Program without stockholder approval;

(vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;

(viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws or for qualifying for favorable tax treatment under applicable foreign laws;

(ix) to modify or amend each Award (subject to Section 20(c) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Awards;

(x) to allow Participants to satisfy withholding tax obligations in such manner as prescribed in Section 16;

(xi) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;

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(xii) to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award pursuant to such procedures as the Administrator may determine; and

(xiii) to make all other determinations deemed necessary or advisable for administering the Plan.

(c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards.

5. Eligibility. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

6. Stock Options.

(a) Limitations.

(i) Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a)(i), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.

(ii) The Administrator will have complete discretion to determine the number of Shares subject to an Option granted to any Participant, provided that during any Fiscal Year, no Participant will be granted an Option covering more than 3,500,000 Shares.

(b) Term of Option. The term of each Option will be stated in the Award Agreement. In the case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.

(c) Option Exercise Price and Consideration.

(i) Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following:

(1) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant.

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(B) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

(2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

(3) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.

(ii) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.

(iii) Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of: (1) cash; (2) check; (3) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option will be exercised and provided that accepting such Shares will not result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion; (4) consideration received by the Company under a broker-assisted (or other) cashless exercise program implemented by the Company in connection with the Plan; (5) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (6) any combination of the foregoing methods of payment.

(d) Exercise of Option.

(i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.

An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 15 of the Plan.

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Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(ii) Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s termination as the result of the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

(iii) Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

(iv) Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the Option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s death. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

7. Restricted Stock.

(a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.

(b) Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

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Notwithstanding the foregoing sentence, for Restricted Stock intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, during any Fiscal Year, no Participant will receive more than an aggregate of 1,200,000 Shares of Restricted Stock. Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such Shares have lapsed.

(c) Transferability. Except as provided in this Section 7, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.

(d) Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.

(e) Removal of Restrictions. Except as otherwise provided in this Section 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction or at such other time as the Administrator may determine. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed.

(f) Voting Rights. During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise.

(g) Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares, unless the Administrator provides otherwise. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.

(h) Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan.

(i) Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Restricted Stock which is intended to qualify under Section 162(m) of the Code, the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in determining the Performance Goals).

8. Restricted Stock Units.

(a) Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. After the Administrator determines that it will grant Restricted Stock Units under the Plan, it shall advise the Participant in an Award Agreement of the terms, conditions, and restrictions related to the grant, including the number of Restricted Stock Units and the form of payout, which, subject to Section 8(d), may be left to the discretion of the Administrator. Notwithstanding anything to the contrary in this subsection (a), for Restricted Stock Units intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, during any Fiscal Year of the Company, no Participant will receive more than an aggregate of 1,200,000 Restricted Stock Units.

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(b) Vesting Criteria and Other Terms. The Administrator shall set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment), or any other basis determined by the Administrator in its discretion.

(c) Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant shall be entitled to receive a payout as determined by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.

(d) Form and Timing of Payment. Payment of earned Restricted Stock Units shall be made as soon as practicable after the date(s) determined by the Administrator and set forth in the Award Agreement. The Administrator, in its sole discretion, may only settle earned Restricted Stock Units in cash, Shares, or a combination of both.

(e) Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Stock Units shall be forfeited to the Company.

(f) Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock Units as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Restricted Stock Units which are intended to qualify under Section 162(m) of the Code, the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in determining the Performance Goals).

9. Stock Appreciation Rights.

(a) Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.

(b) Number of Shares. The Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to any Participant; provided, however, that no Participant will be granted, in any Fiscal Year, Stock Appreciation Rights covering more than 1,200,000 Shares.

(c) Exercise Price and Other Terms. The per share exercise price for the Shares to be issued pursuant to exercise of a Stock Appreciation Right shall be determined by the Administrator and shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant, except that Stock Appreciation Rights may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. Otherwise, subject to Section 6(a) of the Plan, the Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan.

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(d) Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

(e) Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 6(d) also will apply to Stock Appreciation Rights.

(f) Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:

(i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times

(ii) The number of Shares with respect to which the Stock Appreciation Right is exercised.

At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof.

10. Performance Units and Performance Shares.

(a) Grant of Performance Units/Shares. Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant; provided that during any Fiscal Year, for Performance Units or Performance Shares intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, (i) no Participant will receive Performance Units having an initial value greater than $1,000,000, and (ii) no Participant will receive more than 1,200,000 Performance Shares.

(b) Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.

(c) Performance Objectives and Other Terms. The Administrator will set performance objectives or other vesting provisions (including, without limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Service Providers. Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, or individual goals, applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion.

(d) Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a

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function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such Performance Unit/Share.

(e) Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof.

(f) Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan.

(g) Section 162(m) Performance Restrictions. For purposes of qualifying grants of Performance Units/Shares as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Performance Units/Shares which are intended to qualify under Section 162(m) of the Code, the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in determining the Performance Goals).

11. Formula Awards to Outside Directors.

(a) General. Outside Directors will be entitled to receive all types of Awards (except Incentive Stock Options) under this Plan, including discretionary Awards not covered under this Section 11. All grants of Awards to Outside Directors pursuant to this Section will be automatic and nondiscretionary, except as otherwise provided herein, and will be made in accordance with the following provisions:

(b) Type of Option. If Options are granted pursuant to this Section they will be Nonstatutory Stock Options and, except as otherwise provided herein, will be subject to the other terms and conditions of the Plan.

(c) No Discretion. No person will have any discretion to select which Outside Directors will be granted Awards under this Section or to determine the number of Shares to be covered by such Awards (except as provided in Sections 11(d), 11(g) and 15).

(d) Initial Award. Each person who first becomes an Outside Director following the Registration Date will be granted an Option to purchase such number of Shares as determined by the Administrator in its sole discretion (the “Initial Award”) on or about the date on which such person first becomes an Outside Director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy. Nothing in this Section 11(d) shall obligate the Administrator to grant an Initial Award if it should determine in its discretion not to do so.

(e) Annual Award. Each Outside Director will be automatically granted an Option to purchase 20,000 Shares (an “Annual Award”) on each date of the annual meeting of the stockholders of the Company beginning in 2007, if as of such date, he or she will have served on the Board for at least the preceding ten (10) months.

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(f) Terms. The terms of each Award granted pursuant to this Section will be as follows:

(i) The term of the Award will be ten (10) years.

(ii) The exercise price for Shares subject to Awards will be one hundred percent (100%) of the Fair Market Value on the grant date.

(iii) Subject to Section 15, the Initial Award will vest and become exercisable as the Administrator determines in its sole discretion.

(iv) Subject to Section 15, the Annual Award will vest and become exercisable as to one hundred percent (100%) of the Shares subject to such Award on the day prior to the next year’s annual stockholder meeting (but in no event later than December 31 of the calendar year following the calendar year during which the Annual Award was granted), provided that the Participant continues to serve as a Director through such date.

(g) Adjustments. The Administrator in its discretion may change and otherwise revise the terms of Awards granted under this Section 11, including, without limitation, the number of Shares and exercise prices thereof, for Awards granted on or after the date the Administrator determines to make any such change or revision.

12. Performance-Based Compensation Under Code Section 162(m).

(a) General. If the Administrator, in its discretion, decides to grant an Award intended to qualify as “performance-based compensation” under Code Section 162(m), the provisions of this Section 12 will control over any contrary provision in the Plan; provided, however, that the Administrator may in its discretion grant Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code to such Participants that are based on Performance Goals or other specific criteria or goals but that do not satisfy the requirements of this Section 12.

(b) Performance Goals. The granting and/or vesting of Awards of Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units and other incentives under the Plan may be made subject to the attainment of performance goals relating to one or more business criteria within the meaning of Code Section 162(m) and may provide for a targeted level or levels of achievement (“Performance Goals”) including attainment of research and development milestones, bookings, cash flow, cash position, contract awards or backlog, customer renewals, earnings (which may include earnings before interest and taxes; earnings before taxes; net earnings; and earnings before interest, taxes, depreciation and amortization), earnings per Share, expense reduction, gross margin, growth with respect to any of the foregoing measures, growth in bookings, growth in revenues, growth in stockholder value relative to the moving average of the S&P 500 Index or another index, internal rate of return, market share, net income, net profit, net sales, new product development, new product invention or innovation, number of customers, operating cash flow, operating expenses, operating income (GAAP and non-GAAP), operating margin, pre-tax profit, product release timelines, productivity, profit, return on assets, return on capital, return on stockholder equity, return on investment, return on sales, revenue, revenue growth, sales results, sales growth, stock price increase, time to market, total stockholder return, and working capital. Any Performance Goals may be used to measure the performance of the Company as a whole or a business unit of the Company and may be measured relative to a peer group or index.

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The Performance Goals may differ from Participant to Participant and from Award to Award. Prior to the Determination Date, the Administrator will determine whether any significant element(s) will be included in or excluded from the calculation of any Performance Goal with respect to any Participant.

(c) Procedures. To the extent necessary to comply with the performance-based compensation provisions of Code Section 162(m), with respect to any Award granted subject to Performance Goals, within the first twenty-five percent (25%) of the Performance Period, but in no event more than ninety (90) days following the commencement of any Performance Period (or such other time as may be required or permitted by Code Section 162(m)), the Administrator will, in writing: (i) designate one or more Participants to whom an Award will be made, (ii) select the Performance Goals applicable to the Performance Period, (iii) establish the Performance Goals, and amounts of such Awards, as applicable, which may be earned for such Performance Period, and (iv) specify the relationship between Performance Goals and the amounts of such Awards, as applicable, to be earned by each Participant for such Performance Period. Following the completion of each Performance Period, the Administrator will certify in writing whether the applicable Performance Goals have been achieved for such Performance Period. In determining the amounts earned by a Participant, the Administrator will have the right to reduce or eliminate (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Administrator may deem relevant to the assessment of individual or corporate performance for the Performance Period. A Participant will be eligible to receive payment pursuant to an Award for a Performance Period only if the Performance Goals for such period are achieved.

(d) Additional Limitations. Notwithstanding any other provision of the Plan, any Award which is granted to a Participant and is intended to constitute qualified “performance-based compensation” under Code Section 162(m) will be subject to any additional limitations set forth in the Code (including any amendment to Section 162(m)) or any regulations and ruling issued thereunder that are requirements for qualification as qualified “performance-based compensation” as described in Section 162(m) of the Code, and the Plan will be deemed amended to the extent necessary to conform to such requirements.

13. Leaves of Absence/Transfer Between Locations. Unless the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company, or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months and one (1) day following the commencement of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.

14. Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate.

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15. Adjustments; Dissolution or Liquidation; Merger or Change in Control.

(a) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, the numerical Share limits set forth in Sections 3, 6, 7, 8, 9 and 10 of the Plan, and the number of Shares issuable pursuant to Awards to be granted under Section 11 of the Plan.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.

(c) Change in Control. In the event of a merger or Change in Control, each outstanding Award will be treated as the Administrator determines, including, without limitation, that each Award be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. The Administrator shall not be required to treat all Awards similarly in the transaction.

In the event that the successor corporation does not assume or substitute for the Award, the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, all Performance Goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or substituted in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be fully vested and exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period.

For the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, Performance Unit or Performance Share, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control.

Notwithstanding anything in this Section 15(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more Performance Goals will not be considered assumed if the Company or its successor modifies any of such Performance Goals without the Participant’s consent; provided, however, a modification to such Performance Goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.

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(d) Outside Director Awards. With respect to Awards granted to an Outside Director that are assumed or substituted for, if on the date of or following such assumption or substitution the Participant’s status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant (unless such resignation is at the request of the acquirer), then the Participant will fully vest in and have the right to exercise Options and/or Stock Appreciation Rights as to all of the Shares underlying such Award, including those Shares which would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Performance Units and Performance Shares, all Performance Goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met.

16. Tax.

(a) Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).

(b) Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, or (iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.

(c) Compliance With Code Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Code Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A, except as otherwise determined in the sole discretion of the Administrator. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Code Section 409A and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Code Section 409A the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Code Section 409A, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A.

17. No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.

18. Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.

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19. Term of Plan. Subject to Section 23 of the Plan, the Plan will become effective upon its adoption by the Board. It will continue in effect until November 22, 2016, a term of ten (10) years from the date initially adopted by the Board, unless terminated earlier under Section 20 of the Plan.

20. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

(b) Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

21. Conditions Upon Issuance of Shares.

(a) Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.

(b) Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

22. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained.

23. Stockholder Approval. The Plan, as last amended and restated, will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan, as last amended and restated, is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.

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EX-10.22

Exhibit 10.22

ISILON SYSTEMS, INC.

AMENDED AND RESTATED 2001 STOCK PLAN

(As Amended September 22, 2006)

1. Purposes of the Plan. The purposes of this Amended and Restated 2001 Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees and Consultants and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant of an option and subject to the applicable provisions of Section 422 of the Code and the regulations promulgated thereunder. Stock purchase rights may also be granted under the Plan.

2. Definitions. As used herein, the following definitions shall apply:

(a) “Administrator” means the Board or its Committee appointed pursuant to Section 4 of the Plan.

(b) “Affiliate” means an entity other than a Subsidiary (as defined below) which, together with the Company, is under common control of a third person or entity.

(c) “Applicable Laws” means the legal requirements relating to the administration of stock option and restricted stock purchase plans under applicable U.S. state corporate laws, U.S. federal and applicable state securities laws, the Code, any Stock Exchange rules or regulations and the applicable laws of any other country or jurisdiction where Options or Stock Purchase Rights are granted under the Plan, as such laws, rules, regulations and requirements shall be in place from time to time.

(d) “Board” means the Board of Directors of the Company.

(e) “Cause” for termination of a Participant’s Continuous Service will exist if the Participant is terminated for any of the following reasons: (i) Participant’s willful failure substantially to perform his or her duties and responsibilities to the Company or deliberate violation of a Company policy; (ii) Participant’s commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in material injury to the Company; (iii) unauthorized use or disclosure by Participant of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (iv) Participant’s willful breach of any of his or her obligations under any written agreement or covenant with the Company. The determination as to whether a Participant is being terminated for Cause shall be made in good faith by the Company and shall be final and binding on the Participant. The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time as provided in Section 5(d) below, and the term “Company” will be interpreted to include any Subsidiary, Parent, Affiliate or successor thereto, if appropriate.

(f) “Change of Control” means a sale of all or substantially all of the Company’s assets, or any merger or consolidation of the Company with or into another corporation other than a merger or consolidation in which the holders of more than 50% of the shares of capital stock of the Company outstanding immediately prior to such transaction continue to hold (either by the voting

securities remaining outstanding or by their being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company, or such surviving entity, outstanding immediately after such transaction.

(g) “Code” means the Internal Revenue Code of 1986, as amended.

(h) “Committee” means one or more committees or subcommittees of the Board appointed by the Board to administer the Plan in accordance with Section 4 below.

(i) “Common Stock” means the Common Stock of the Company.

(j) “Company” means Isilon Systems, Inc., a Delaware corporation.

(k) “Consultant” means any person, including an advisor, who is engaged by the Company or any Parent, Subsidiary or Affiliate to render services and is compensated for such services, and any director of the Company whether compensated for such services or not.

(l) “Continuous Service Status” means the absence of any interruption or termination of service as an Employee or Consultant. Continuous Service Status as an Employee or Consultant shall not be considered interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of absence approved by the Administrator, provided that such leave is for a period of not more than ninety (90) days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time to time; or (iv) in the case of transfers between locations of the Company or between the Company, its Parents, Subsidiaries, Affiliates or their respective successors. A change in status from an Employee to a Consultant or from a Consultant to an Employee will not constitute an interruption of Continuous Service.

(m) “Corporate Transaction” means a sale of all or substantially all of the Company’s assets, or a merger, consolidation or other capital reorganization of the Company with or into another corporation and includes a Change of Control, excluding a merger effected only to reincorporate the Company in another jurisdiction.

(n) “Director” means a member of the Board.

(o) “Employee” means any person employed by the Company or any Parent, Subsidiary or Affiliate, with the status of employment determined based upon such factors as are deemed appropriate by the Administrator in its discretion, subject to any requirements of the Code or the Applicable Laws. The payment by the Company of a director’s fee to a Director shall not be sufficient to constitute “employment” of such Director by the Company.

(p) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(q) “Fair Market Value” means, as of any date, the fair market value of the Common Stock, as determined by the Administrator in good faith on such basis as it deems appropriate and applied consistently with respect to Participants. Whenever possible, the determination of Fair Market Value shall be based upon the closing price for the Shares as reported in the Wall Street Journal for the applicable date.

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(r) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code, as designated in the applicable Option Agreement.

(s) “Involuntary Termination” means termination of a Participant’s Continuous Service Status under the following circumstances: (i) termination without Cause by the Company or a Subsidiary, Parent, Affiliate or successor thereto, as appropriate; or (ii) voluntary termination by the Participant within 30 days following (A) a material reduction in the Participant’s job responsibilities, provided that neither a mere change in title alone nor reassignment following a Change of Control to a position that is substantially similar to the position held prior to the Change of Control shall constitute a material reduction in job responsibilities; (B) relocation by the Company or a Subsidiary, Parent, Affiliate or successor thereto, as appropriate, of the Participant’s work site to a facility or location more than 40 miles from the Participant’s principal work site for the Company at the time of the Change of Control; or (C) a reduction in Participant’s then-current base salary by at least 10%, provided that an across-the-board reduction in the salary level of all other employees or consultants in positions similar to the Participant’s by the same percentage amount as part of a general salary level reduction shall not constitute such a salary reduction.

(t) “Listed Security” means any security of the Company that is listed or approved for listing on a national securities exchange or designated or approved for designation as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc.

(u) “Named Executive” means any individual who, on the last day of the Company’s fiscal year, is the chief executive officer of the Company (or is acting in such capacity) or among the four most highly compensated officers of the Company (other than the chief executive officer). Such officer status shall be determined pursuant to the executive compensation disclosure rules under the Exchange Act.

(v) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option, as designated in the applicable Option Agreement.

(w) “Option” means a stock option granted pursuant to the Plan.

(x) “Option Agreement” means a written document, the form(s) of which shall be approved from time to time by the Administrator, reflecting the terms of an Option granted under the Plan and includes any documents attached to or incorporated into such Option Agreement, including, but not limited to, a notice of stock option grant and a form of exercise notice.

(y) “Option Exchange Program” means a program approved by the Administrator whereby outstanding Options are exchanged for Options with a lower exercise price or are amended to decrease the exercise price as a result of a decline in the Fair Market Value of the Common Stock.

(z) “Optioned Stock” means the Common Stock subject to an Option.

(aa) “Optionee” means an Employee or Consultant who receives an Option.

(bb) “Parent” means a “parent corporation,”, whether now or hereafter existing, as defined in Section 424(e) of the Code, or any successor provision.

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(cc) “Participant” means any holder of one or more Options or Stock Purchase Rights, or the Shares issuable or issued upon exercise of such awards, under the Plan.

(dd) “Plan” means this Amended and Restated 2001 Stock Plan.

(ee) “Reporting Person” means an officer, Director, or greater than ten percent stockholder of the Company within the meaning of Rule 16a-2 under the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under the Exchange Act.

(ff) “Restricted Stock” means Shares of Common Stock acquired pursuant to a grant of a Stock Purchase Right under Section 11 below.

(gg) “Restricted Stock Purchase Agreement” means a written document, the form(s) of which shall be approved from time to time by the Administrator, reflecting the terms of a Stock Purchase Right granted under the Plan and includes any documents attached to such agreement.

(hh) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, as amended from time to time, or any successor provision.

(ii) “Share” means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.

(jj) “Stock Exchange” means any stock exchange or consolidated stock price reporting system on which prices for the Common Stock are quoted at any given time.

(kk) “Stock Purchase Right” means the right to purchase Common Stock pursuant to Section 11 below.

(ll) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code, or any successor provision.

(mm) “Ten Percent Holder” means a person who owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary.

3. Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares that may be sold under the Plan is 30,126,000 Shares of Common Stock. The Shares may be authorized, but unissued, or reacquired Common Stock. If an award should expire or become unexercisable for any reason without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares that were subject thereto shall, unless the Plan shall have been terminated, become available for future grant under the Plan. In addition, any Shares of Common Stock which are retained by the Company upon exercise of an award in order to satisfy the exercise or purchase price for such award or any withholding taxes due with respect to such exercise or purchase shall be treated as not issued and shall continue to be available under the Plan. Shares issued under the Plan and later repurchased by the Company pursuant to any repurchase right which the Company may have shall not be available for future grant under the Plan.

4. Administration of the Plan.

(a) General. The Plan shall be administered by the Board or a Committee, or a combination thereof, as determined by the Board. The Plan may be administered by different administrative bodies with respect to different classes of Participants and, if permitted by the Applicable Laws, the Board may authorize one or more officers to make awards under the Plan.

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(b) Committee Composition. If a Committee has been appointed pursuant to this Section 4, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the Board may increase the size of any Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies (however caused) and remove all members of a Committee and thereafter directly administer the Plan, all to the extent permitted by the Applicable Laws and, in the case of a Committee administering the Plan in accordance with the requirements of Rule 16b-3 or Section 162(m) of the Code, to the extent permitted or required by such provisions.

(c) Powers of the Administrator. Subject to the provisions of the Plan and in the case of a Committee, the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion:

(i) to determine the Fair Market Value of the Common Stock, in accordance with Section 2(q) of the Plan, provided that such determination shall be applied consistently with respect to Participants under the Plan;

(ii) to select the Employees and Consultants to whom Options and Stock Purchase Rights may from time to time be granted;

(iii) to determine whether and to what extent Options and Stock Purchase Rights are granted;

(iv) to determine the number of Shares of Common Stock to be covered by each award granted;

(v) to approve the form(s) of agreement(s) used under the Plan;

(vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder, which terms and conditions include but are not limited to the exercise or purchase price, the time or times when awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option, Optioned Stock, Stock Purchase Right or Restricted Stock, based in each case on such factors as the Administrator, in its sole discretion, shall determine; provided, that the Administrator shall have the authority to determine terms and conditions of acceleration of vesting of any award granted hereunder that are inconsistent with the terms of the Plan (including Section 14(c) and the defined terms used therein) based on such factors as the Administrator, in its sole discretion, shall determine, and that such terms and conditions, if any, will be reflected in the agreement representing such award;

(vii) to determine whether and under what circumstances an Option may be settled in cash under Section 10(c) instead of Common Stock;

(viii) to implement an Option Exchange Program on such terms and conditions as the Administrator in its discretion deems appropriate, provided that no amendment or adjustment to an Option that would materially and adversely affect the rights of any Optionee shall be made without the prior written consent of the Optionee;

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(ix) to adjust the vesting of an Option held by an Employee or Consultant as a result of a change in the terms or conditions under which such person is providing services to the Company;

(x) to construe and interpret the terms of the Plan and awards granted under the Plan, which constructions, interpretations and decisions shall be final and binding on all Participants; and

(xi) in order to fulfill the purposes of the Plan and without amending the Plan, to modify grants of Options or Stock Purchase Rights to Participants who are foreign nationals or employed outside of the United States in order to recognize differences in local law, tax policies or customs.

(d) Default Vesting Provisions. Without limiting the powers of the Administrator provided above or the other terms and conditions provided in the Plan, the default time-based vesting provisions for grants of Options or Stock Purchase Rights under the Plan shall be as follows: 25% of the Shares subject to Options or Stock Purchase Rights shall vest on the first anniversary of the Vesting Commencement Date (as defined in the applicable Notice of Stock Option Grant, Option Agreement or Restricted Stock Purchase Agreement) and the balance shall vest monthly thereafter in 36 equal installments; provided, however, that, notwithstanding the foregoing, different vesting provisions may be granted by the Administrator in its sole discretion.

5. Eligibility.

(a) Recipients of Grants. Nonstatutory Stock Options and Stock Purchase Rights may be granted to Employees and Consultants. Incentive Stock Options may be granted only to Employees, provided that Employees of Affiliates shall not be eligible to receive Incentive Stock Options.

(b) Type of Option. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.

(c) ISO $100,000 Limitation. Notwithstanding any designation under Section 5(b), to the extent that the aggregate Fair Market Value of Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 5(c), Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares subject to an Incentive Stock Option shall be determined as of the date of the grant of such Option.

(d) No Employment Rights. The Plan shall not confer upon any Participant any right with respect to continuation of an employment or consulting relationship with the Company, nor shall it interfere in any way with such Participant’s right or the Company’s right to terminate his or her employment or consulting relationship at any time, with or without Cause.

6. Term of Plan. The Plan shall become effective upon its adoption by the Board of Directors. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 16 of the Plan.

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7. Term of Option. The term of each Option shall be the term stated in the Option Agreement; provided that the term shall be no more than ten years from the date of grant thereof or such shorter term as may be provided in the Option Agreement and provided further that, in the case of an Incentive Stock Option granted to a person who at the time of such grant is a Ten Percent Holder, the term of the Option shall be five years from the date of grant thereof or such shorter term as may be provided in the Option Agreement.

8. [Reserved.]

9. Option Exercise Price and Consideration.

(a) Exercise Price. The per Share exercise price for the Shares to be issued pursuant to exercise of an Option shall be such price as is determined by the Administrator and set forth in the Option Agreement, but shall be subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who at the time of grant is a Ten Percent Holder, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant; or

(B) granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

(ii) In the case of a Nonstatutory Stock Option, the per share Exercise Price shall be such price as determined by the Administrator provided that if such eligible person is, at the time of the grant of such Option, a Named Executive of the Company, the per share Exercise Price shall be no less than 100% of the Fair Market Value on the date of grant if such Option is intended to qualify as performance-based compensation under Section 162(m) of the Code.

(iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction.

(b) Permissible Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant) and may consist entirely of (1) cash; (2) check; (3) delivery of Optionee’s promissory note with such recourse, interest, security and redemption provisions as the Administrator determines to be appropriate (subject to the provisions of Section 153 of the Delaware General Corporation Law); (4) cancellation of indebtedness; (5) other Shares that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which the Option is exercised, provided that in the case of Shares acquired, directly or indirectly, from the Company, such Shares must have been owned by the Optionee for more than six months on the date of surrender (or such other period as may be required to avoid the Company’s incurring an adverse accounting charge); (6) delivery of a properly executed exercise notice together with such other documentation as the Administrator and a securities broker approved by the Company shall require to effect exercise of the Option and prompt delivery to the Company of the sale or loan proceeds required to pay the exercise price and any applicable withholding taxes; or (7) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company and the Administrator may, in its sole discretion, refuse to accept a particular form of consideration at the time of any Option exercise.

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10. Exercise of Option.

(a) General.

(i) Exercisability. Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator, consistent with the term of the Plan and reflected in the Option Agreement, including vesting requirements and/or performance criteria with respect to the Company and/or the Optionee. The Administrator shall have the discretion to determine whether and to what extent the vesting of Options shall be tolled during any unpaid leave of absence.

(ii) Minimum Exercise Requirements. An Option may not be exercised for a fraction of a Share. The Administrator may require that an Option be exercised as to a minimum number of Shares, provided that such requirement shall not prevent an Optionee from exercising the full number of Shares as to which the Option is then exercisable.

(iii) Procedures for and Results of Exercise. An Option shall be deemed exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option and the Company has received full payment for the Shares with respect to which the Option is exercised. Full payment may, as authorized by the Administrator, consist of any consideration and method of payment allowable under Section 9(b) of the Plan, provided that the Administrator may, in its sole discretion, refuse to accept any form of consideration at the time of any Option exercise.

Exercise of an Option in any manner shall result in a decrease in the number of Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(iv) Rights as Stockholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 14 of the Plan.

(b) Termination of Employment or Consulting Relationship. Except as otherwise set forth in this Section 10(b), the Administrator shall establish and set forth in the applicable Option Agreement the terms and conditions upon which an Option shall remain exercisable, if at all, following termination of an Optionee’s Continuous Service Status, which provisions may be waived or modified by the Administrator at any time in the Administrator’s sole discretion. To the extent that the Optionee is not entitled to exercise an Option at the date of his or her termination of Continuous Service Status, or if the Optionee (or other person entitled to exercise the Option) does not exercise the Option to the extent so entitled within the time specified in the Option Agreement or below (as applicable), the Option shall terminate and the Optioned Stock underlying the unexercised portion of the Option shall revert to the Plan. In no event may any Option be exercised after the expiration of the Option term as set forth in the Option Agreement (and subject to Section 7).

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The following provisions (1) shall apply to the extent an Option Agreement does not specify the terms and conditions upon which an Option shall terminate upon termination of an Optionee’s Continuous Service Status, and (2) establish the minimum post-termination exercise periods that may be set forth in an Option Agreement:

(i) Termination other than Upon Disability or Death or for Cause. In the event of termination of an Optionee’s Continuous Service Status, such Optionee may exercise an Option for 30 days following such termination to the extent the Optionee was entitled to exercise it at the date of such termination. No termination shall be deemed to occur and this Section 10(b)(i) shall not apply if (i) the Optionee is a Consultant who becomes an Employee, or (ii) the Optionee is an Employee who becomes a Consultant.

(ii) Disability of Optionee. In the event of termination of an Optionee’s Continuous Service Status as a result of his or her disability (including a disability within the meaning of Section 22(e)(3) of the Code), such Optionee may exercise an Option at any time within twelve months following such termination to the extent the Optionee was entitled to exercise it at the date of such termination.

(iii) Death of Optionee. In the event of the death of an Optionee during the period of Continuous Service Status since the date of grant of the Option, or within thirty days following termination of Optionee’s Continuous Service, the Option may be exercised by Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance at any time within twelve months following the date of death, but only to the extent of the right to exercise that had accrued at the date of death or, if earlier, the date the Optionee’s Continuous Service Status terminated.

(iv) Termination for Cause. In the event of termination of an Optionee’s Continuous Service Status for Cause, any Option (including any exercisable portion thereof) held by such Optionee shall immediately terminate in its entirety upon first notification to the Optionee of termination of the Optionee’s Continuous Service Status. If an Optionee’s employment or consulting relationship with the Company is suspended pending an investigation of whether the Optionee shall be terminated for Cause, all the Optionee’s rights under any Option likewise shall be suspended during the investigation period and the Optionee shall have no right to exercise any Option. This Section 10(b)(iv) shall apply with equal effect to vested Shares acquired upon exercise of an Option granted prior to the date, if any, upon which the Common Stock becomes a Listed Security to a person other than an officer, Director or Consultant, in that the Company shall have the right to repurchase such Shares from the Participant upon the following terms: (A) the repurchase is made within 90 days of termination of the Participant’s Continuous Service Status for Cause at the Fair Market Value of the Shares as of the date of termination, (B) consideration for the repurchase consists of cash or cancellation of purchase money indebtedness, and (C) the repurchase right terminates upon the effective date of the Company’s initial public offering of its Common Stock. With respect to vested Shares issued upon exercise of an Option granted to any officer, Director or Consultant, the Company’s right to repurchase such Shares upon termination of the Participant’s Continuous Service Status for Cause shall be made at the Participant’s original cost for the Shares and shall be effected pursuant to such terms and conditions, and at such time, as the Administrator shall determine. Nothing in this Section 10(b)(iv) shall in any way limit the Company’s right to purchase unvested Shares issued upon exercise of an Option as set forth in the applicable Option Agreement.

(c) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares an Option previously granted under the Plan based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made.

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11. Stock Purchase Rights.

(a) Rights to Purchase. When the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must accept such offer. The offer to purchase Shares subject to Stock Purchase Rights shall be accepted by execution of a Restricted Stock Purchase Agreement in the form determined by the Administrator.

(b) Repurchase Option.

(i) General. Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser’s employment with the Company for any reason (including death or disability). The purchase price for Shares repurchased pursuant to the Restricted Stock Purchase Agreement shall be the original purchase price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine.

(ii) Termination for Cause. In the event of termination of a Participant’s Continuous Service for Cause, the Company shall have the right to repurchase from the Participant vested Shares issued upon exercise of a Stock Purchase Right at the Participant’s original cost for the Shares. Such repurchase shall be effected pursuant to such terms and conditions, and at such time, as the Administrator shall determine. Nothing in this Section 11(b)(ii) shall in any way limit the Company’s right to purchase unvested Shares as set forth in the applicable Restricted Stock Purchase Agreement.

(c) Other Provisions. The Restricted Stock Purchase Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. In addition, the provisions of Restricted Stock Purchase Agreements need not be the same with respect to each purchaser.

(d) Rights as a Stockholder. Once the Stock Purchase Right is exercised, the purchaser shall have the rights equivalent to those of a stockholder, and shall be a stockholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 14 of the Plan.

12. Taxes.

(a) As a condition of the exercise of an Option or Stock Purchase Right granted under the Plan, the Participant (or in the case of the Participant’s death, the person exercising the Option or Stock Purchase Right) shall make such arrangements as the Administrator may require for the satisfaction of any applicable federal, state, local or foreign withholding tax obligations that may arise in connection with the exercise of the Option or Stock Purchase Right and the issuance of Shares. The Company shall not be required to issue any Shares under the Plan until such obligations are satisfied. If the Administrator allows the withholding or surrender of Shares to satisfy a Participant’s tax withholding obligations under this Section 12 (whether pursuant to Section 12(c), (d) or (e), or otherwise), the Administrator shall not allow Shares to be withheld in an amount that exceeds the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes.

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(b) In the case of an Employee and in the absence of any other arrangement, the Employee shall be deemed to have directed the Company to withhold or collect from his or her compensation an amount sufficient to satisfy such tax obligations from the next payroll payment otherwise payable after the date of an exercise of the Option or Stock Purchase Right.

(c) This Section 12(c) shall apply only after the date, if any, upon which the Common Stock becomes a Listed Security. In the case of Participant other than an Employee (or in the case of an Employee where the next payroll payment is not sufficient to satisfy such tax obligations, with respect to any remaining tax obligations), in the absence of any other arrangement and to the extent permitted under the Applicable Laws, the Participant shall be deemed to have elected to have the Company withhold from the Shares to be issued upon exercise of the Option or Stock Purchase Right that number of Shares having a Fair Market Value determined as of the applicable Tax Date (as defined below) equal to the amount required to be withheld. For purposes of this Section 12, the Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined under the Applicable Laws (the “Tax Date”).

(d) If permitted by the Administrator, in its discretion, a Participant may satisfy his or her tax withholding obligations upon exercise of an Option or Stock Purchase Right by surrendering to the Company Shares that have a Fair Market Value determined as of the applicable Tax Date equal to the amount required to be withheld. In the case of shares previously acquired from the Company that are surrendered under this Section 12(d), such Shares must have been owned by the Participant for more than six (6) months on the date of surrender (or such other period of time as is required for the Company to avoid adverse accounting charges).

(e) Any election or deemed election by a Participant to have Shares withheld to satisfy tax withholding obligations under Section 12(c) or (d) above shall be irrevocable as to the particular Shares as to which the election is made and shall be subject to the consent or disapproval of the Administrator. Any election by a Participant under Section 12(d) above must be made on or prior to the applicable Tax Date.

(f) In the event an election to have Shares withheld is made by a Participant and the Tax Date is deferred under Section 83 of the Code because no election is filed under Section 83(b) of the Code, the Participant shall receive the full number of Shares with respect to which the Option or Stock Purchase Right is exercised but such Participant shall be unconditionally obligated to tender back to the Company the proper number of Shares on the Tax Date.

13. Non-Transferability of Options and Stock Purchase Rights.

(a) General. Except as set forth in this Section 13, Options and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution. The designation of a beneficiary by an Optionee will not constitute a transfer. An Option or Stock Purchase Right may be exercised, during the lifetime of the holder of an Option or Stock Purchase Right, only by such holder or a transferee permitted by this Section 13.

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(b) Limited Transferability Rights. Notwithstanding anything else in this Section 13, prior to the date, if any, on which the Common Stock becomes a Listed Security, the Administrator may in its discretion grant Nonstatutory Stock Options that may be transferred by instrument to an inter vivos or testamentary trust in which the Options are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift to “Immediate Family” (as defined below), on such terms and conditions as the Administrator deems appropriate. Following the date, if any, on which the Common Stock becomes a Listed Security, the Administrator may in its discretion grant transferable Nonstatutory Stock Options pursuant to Option Agreements specifying the manner in which such Nonstatutory Stock Options are transferable. “Immediate Family” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships.

14. Adjustments Upon Changes in Capitalization, Merger or Certain Other Transactions.

(a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of Shares of Common Stock covered by each outstanding Option or Stock Purchase Right, and the number of Shares of Common Stock that have been authorized for issuance under the Plan but as to which no Options or Stock Purchase Rights have yet been granted or that have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase Right, as well as the price per Share of Common Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued Shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination, recapitalization or reclassification of the Common Stock, or any other increase or decrease in the number of issued Shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Administrator, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares of Common Stock subject to an Option or Stock Purchase Right.

(b) Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company, each Option and Stock Purchase Right will terminate immediately prior to the consummation of such action, unless otherwise determined by the Administrator.

(c) Corporate Transaction; Change of Control.

(i) In the event of a Corporate Transaction, each outstanding Option or Stock Purchase Right shall be assumed or an equivalent option or right shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation (the “Successor Corporation”), unless the Successor Corporation does not agree to assume the award or to substitute an equivalent option or right, in which case such Option or Stock Purchase Right shall terminate upon the consummation of the transaction.

(ii) In the event of a Change of Control, the exercisability of each outstanding Option or, with respect to Stock Purchase Rights, the lapsing of a repurchase option, shall automatically be accelerated completely so that one hundred percent (100%) of the number of Shares covered by such Option or Stock Purchase Right shall be fully vested immediately prior to the consummation of the Change of Control; provided, however, that the vesting of each outstanding Option or, with respect to Stock Purchase Rights, the lapsing of a repurchase option, shall automatically be accelerated by only

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twenty-five percent (25%) of the total number of Shares subject to the Option or Stock Purchase Right immediately prior to consummation of the Change of Control if and to the extent that: (A) such Option or Stock Purchase Right is either to be assumed by the Successor Corporation at the consummation of the Change of Control or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation at the consummation of the Change of Control, or (B) such Option or Stock Purchase Right is to be replaced by a comparable cash incentive program of the successor corporation based on the value of the Option or Stock Purchase Right at the time of the consummation of the Change of Control.

(iii) The acceleration of the vesting of outstanding Options and, with respect to Stock Purchase Rights, the lapsing of a repurchase option, provided for under this Section 14(c) shall not decrease the amount of the time over which such Options or Stock Purchase Rights vest but shall decrease the number of shares under such Options or Stock Purchase Rights that were to vest or, with respect to Stock Purchase Rights, that were to have the repurchase option lapse, in each remaining vesting period pro rata based on the total number of shares under such Options or Stock Repurchase Rights that were accelerated or, with respect to Stock Repurchase Rights, that had the repurchase option lapse.

(iv) With respect to executive officers (officers having the title of Vice President and more senior officers, in each case who report to the Company’s Chief Executive Officer), if such executive officer is terminated by the acquiring entity for reasons other than for Cause or by such executive officer by reason of an Involuntary Termination within twelve (12) months after the consummation of a Change of Control, the exercisability of each outstanding Option or, with respect to Stock Purchase Rights, the lapsing of a repurchase option held by such executive officer shall be accelerated completely so that, in addition to the automatic acceleration provided pursuant to clause (ii) above, an additional twenty-five percent (25%) of the number of Shares covered by such Option or Stock Purchase Right, in each case that are remaining unvested as of the date of termination, shall become vested.

(v) The Administrator shall have the authority, in the Administrator’s sole discretion, to provide for the automatic acceleration of any outstanding Option or, with respect to Stock Purchase Rights, the lapsing of a repurchase option, upon the occurrence of a Change of Control.

(vi) For purposes of this Section 14(c), an Option or Stock Purchase Right shall be considered assumed, without limitation, if, at the time of issuance of the stock or other consideration upon a Corporate Transaction or a Change of Control, as the case may be, each holder of an Option or Stock Purchase Right would be entitled to receive upon exercise of the award the same number and kind of shares of stock or the same amount of property, cash or securities as such holder would have been entitled to receive upon the occurrence of the transaction if the holder had been, immediately prior to such transaction, the holder of the number of Shares of Common Stock covered by the award at such time (after giving effect to any adjustments in the number of Shares covered by the Option or Stock Purchase Right as provided for in this Section 14); provided that if such consideration received in the transaction is not solely common stock of the Successor Corporation, the Administrator may, with the consent of the Successor Corporation, provide for the consideration to be received upon exercise of the award to be solely common stock of the Successor Corporation equal to the Fair Market Value of the per Share consideration received by holders of Common Stock in the transaction.

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(d) Certain Distributions. In the event of any distribution to the Company’s stockholders of securities of any other entity or other assets (other than dividends payable in cash or stock of the Company) without receipt of consideration by the Company, the Administrator may, in its discretion, appropriately adjust the price per Share of Common Stock covered by each outstanding Option or Stock Purchase Right to reflect the effect of such distribution.

15. Time of Granting Options and Stock Purchase Rights. The date of grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such other date as is determined by the Administrator, provided that in the case of any Incentive Stock Option, the grant date shall be the later of the date on which the Administrator makes the determination granting such Incentive Stock Option or the date of commencement of the Optionee’s employment relationship with the Company. Notice of the determination shall be given to each Employee or Consultant to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant.

16. Amendment and Termination of the Plan.

(a) Authority to Amend or Terminate. The Board may at any time amend, alter, suspend or discontinue the Plan, but no amendment, alteration, suspension or discontinuation (other than an adjustment pursuant to Section 14 above) shall be made that would materially and adversely affect the rights of any Optionee or holder of Stock Purchase Rights under any outstanding grant, without his or her consent. In addition, to the extent necessary and desirable to comply with the Applicable Laws, the Company shall obtain stockholder approval of any Plan amendment in such a manner and to such a degree as required.

(b) Effect of Amendment or Termination. No amendment or termination of the Plan shall materially and adversely affect Options or Stock Purchase Rights already granted, unless mutually agreed otherwise between the Optionee or holder of the Stock Purchase Rights and the Administrator, which agreement must be in writing and signed by the Optionee or holder and the Company.

17. Conditions Upon Issuance of Shares. Notwithstanding any other provision of the Plan or any agreement entered into by the Company pursuant to the Plan, the Company shall not be obligated, and shall have no liability for failure, to issue or deliver any Shares under the Plan unless such issuance or delivery would comply with the Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. As a condition to the exercise of an Option or Stock Purchase Right, the Company may require the person exercising the award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by law.

18. Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

19. Agreements. Options and Stock Purchase Rights shall be evidenced by Option Agreements and Restricted Stock Purchase Agreements, respectively, in such form(s) as the Administrator shall from time to time approve.

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20. Stockholder Approval. If required by the Applicable Laws, continuance of the Plan shall be subject to approval by the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted. Such stockholder approval shall be obtained in the manner and to the degree required under the Applicable Laws.

21. Information and Documents to Optionees and Purchasers. Prior to the date, if any, upon which the Common Stock becomes a Listed Security and if required by the Applicable Laws, the Company shall provide financial statements at least annually to each Optionee and to each individual who acquired Shares pursuant to the Plan, during the period such Optionee or purchaser has one or more Options or Stock Purchase Rights outstanding, and in the case of an individual who acquired Shares pursuant to the Plan, during the period such individual owns such Shares. The Company shall not be required to provide such information if the issuance of Options or Stock Purchase Rights under the Plan is limited to key employees whose duties in connection with the Company assure their access to equivalent information.

22. Awards Granted to California Residents. Prior to the date, if any, upon which the Common Stock becomes a Listed Security, Options or Stock Purchase Rights granted under the Plan to persons resident in California shall be subject to the provisions set forth in Attachment A hereto. To the extent the provisions of the Plan conflict with the provisions set forth on Attachment A, the provisions on Attachment A shall govern the terms of such Options.

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Attachment A

Provisions Applicable to Award Recipients

Resident in California

Until such time as any security of the Company becomes a Listed Security and if required by Applicable Laws, the following additional terms shall apply to Options and Stock Purchase Rights, and Shares issued upon exercise of such awards, granted under the Amended and Restated 2001 Stock Plan (the “Plan”) to persons resident in California as of the grant date of any such award (each such person, a “California Recipient”):

1. In the case of an Option, whether an Incentive Stock Option or a Nonqualified Stock Option, that is granted to a California Recipient who, at the time of the grant of such Option, owns stock representing more than 10% of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value on the grant date.

2. In the case of a Nonqualified Stock Option that is granted to any other California Recipient, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the grant date.

3. In the case of a Stock Purchase Right granted to a California Recipient, the purchase price applicable to stock purchased under such Stock Award shall not be less than 85% of the Fair Market Value of the Shares as of the Grant Date, or, in the case of a person owning stock representing more than 10% of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the price shall not be less than 100% of the Fair Market Value of the Shares as of the grant date.

4. With respect to an Option or Stock Purchase Right issued to any California Recipient who is not an Officer, Director or Consultant, such Option or Stock Purchase Right shall become exercisable, or any repurchase option in favor of the Company shall lapse, at the rate of at least 20% per year over five years from the grant date.

5. The following rules shall apply to an Option issued to any California Recipient or to stock issued to a California Recipient upon exercise of a Stock Purchase Right, in the event of termination of the California Recipient’s employment or services with the Company:

(a) If such termination was for reasons other than death or disability, the California Recipient shall have at least 30 days after the date of such termination (but in no event later than the expiration of the term of such Option established by the Plan Administrator as of the grant date) to exercise such Option.

(b) If such termination was on account of the death or disability of the California Recipient, the holder of the Option may, but only within six months from the date of such termination (but in no event later than the expiration date of the term of such Option established by the Plan Administrator as of the grant date), exercise the Option to the extent the California Recipient was otherwise entitled to exercise it at the date of such termination. To the extent that the California Recipient was not entitled to exercise the Option at the date of termination, or if the holder does not exercise such Option to the extent so entitled within six months from the date of termination, the Option shall terminate and the Common Stock underlying the unexercised portion of the Option shall revert to the Plan.

(c) Section 10(b)(iv) of the Plan shall apply with equal effect to vested Shares acquired upon exercise of an Option granted prior to the date, if any, upon which the Common Stock becomes a Listed Security to a person other than an Officer, Director or Consultant, in that the Company shall have the right to repurchase such Shares from the Participant upon the following terms: (A) the repurchase is made within 90 days of termination of the Participant’s Continuous Service for Cause at the Fair Market Value of the Shares as of the date of termination, (B) consideration for the repurchase consists of cash or cancellation of purchase money indebtedness, and (C) the repurchase right terminates upon the effective date of the Company’s initial public offering of its Common Stock. With respect to vested Shares issued upon exercise of an Option granted to any Officer, Director or Consultant, the Company’s right to repurchase such Shares upon termination of the Participant’s Continuous Service for Cause shall be made at the Participant’s original cost for the Shares and shall be effected pursuant to such terms and conditions, and at such time, as the Administrator shall determine. Nothing in this Section 10(b)(iv) shall in any way limit the Company’s right to purchase unvested Shares issued upon exercise of an Option as set forth in the applicable Option Agreement.

(d) In the event of termination of a Participant’s Continuous Service Status for Cause, the Company shall have the right to repurchase from the Participant vested Shares issued upon exercise of a Stock Purchase Right granted prior to the date, if any, upon which the Common Stock becomes a Listed Security to any person other than an Officer, Director or Consultant prior to the date, if any, upon which the Common stock becomes a Listed Security upon the following terms: (A) the repurchase must be made within 90 days of termination of the Participant’s Continuous Service for Cause at the Fair Market Value of the Shares as of the date of termination, (B) consideration for the repurchase consists of cash or cancellation of purchase money indebtedness, and (C) the repurchase right terminates upon the effective date of the Company’s initial public offering of its Common Stock. With respect to vested Shares issued upon exercise of a Stock Purchase Right granted to any officer, Director or Consultant, the Company’s right to repurchase such Shares upon termination of such Participant’s Continuous Service for Cause shall be made at the Participant’s original cost for the Shares and shall be effected pursuant to such terms and conditions, and at such time, as the Administrator shall determine.

6. The Company shall provide financial statements at least annually to each California Recipient during the period such person has one or more Options or Stock Awards outstanding, and in the case of an individual who acquired Shares pursuant to the Plan, during the period such individual owns such Shares. The Company shall not be required to provide such information if the issuance of awards under the Plan is limited to key employees whose duties in connection with the Company assure their access to equivalent information.

7. Unless defined below or otherwise in this Attachment, Capitalized terms shall have the meanings set forth in the Plan. For purposes of this Attachment, “Officer” means a person who is an officer of the Company within the meaning of Section 16(a) of the Exchange Act and the rules and regulations promulgated thereunder.

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PLAN ADOPTION AND AMENDMENTS

Effective Date of Adoption/ Amendment	Section	Effect of Amendment
July 24, 2003	All	Adoption of Amended and Restated 2001 Stock Plan.
September 11, 2003	3	1) Increase in shares reserved from 8,600,000 to 12,000,000. 2) Modification of Section 14(c)(iv) and 14(c)(v) Corporate Transaction; Change of Control provisions.
March 29, 2004	3	On March 25, 2004, Board approved increase in shares reserved from 12,000,000 to 15,662,100, to be effective upon March 29, 2004 closing.
September 10, 2004	3	Increase in shares reserved from 15,662,100 to 21,861,428
May 9, 2005	3	Increase in shares reserved from 21,861,428 to 23,871,428
December 7, 2005	3	Increase in shares reserved from 23,871,428 to 28,592,167
September 22, 2006	3	Increase in shares reserved from 28,592,167 to 30,126,000

EX-12.1

Exhibit 12.1

EMC CORPORATION

STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	Year Ended December 31,
	2010		2009		2008		2007		2006
Computation of Earnings:
Income before provision for taxes and cumulative effect of a change in accounting principle	$	2,607,983	$	1,374,576	$	1,600,225	$	1,962,631	$	1,378,518
Fixed charges		267,992		280,664		272,602		258,058		120,593
Total earnings	$	2,875,975	$	1,655,240	$	1,872,827	$	2,220,689	$	1,499,111
Computation of Fixed Charges:
Interest expense	$	178,345	$	182,499	$	176,355	$	169,794	$	45,623
Estimate of interest within rental expense(1)		89,647		98,165		96,247		88,264		74,970
Total fixed charges	$	267,992	$	280,664	$	272,602	$	258,058	$	120,593
Ratio of Earnings to Fixed Charges		10.7x		5.90x		6.87x		8.61x		12.43x

(1) Estimate of interest within rental expense is calculated under the assumption that 1/3 of rent expense is representative of interest costs.

EX-21.1

Exhibit 21.1

Significant Subsidiaries

Name	State of Jurisdiction of Organization
EMC (Benelux) B.V.	Netherlands
EMC Global Holdings Company	Massachusetts
EMC Information Systems International	Ireland
RSA Security LLC	Delaware
VMware, Inc.	Delaware

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-41079, 333-47112, 333-61360, 333-111146, 333-140430 and 333-104116) and on Form S-8 (Nos. 33-51800, 33-71262, 333-05133, 333-90331, 33-54860, 33-71598, 33-63665, 333-31471, 333-55801, 333-90329, 333-41150, 333-61113, 333-63045, 333-57263, 333-86659, 333-32906, 333-50108, 333-52362, 333-71848, 333-91342, 333-100584, 333-111838, 333-111395, 333-109845, 333-105057, 333-104114, 333-119831, 333-122631, 333-126927, 333-127994, 333-131058, 333-134151, 333-135085, 333-137472, 333-138861, 333-139282, 333-146865, 333-146417, 333-143855, 333-152368, 333-152363, 333-151558, 333-150393, 333-149986, 333-160062, 333-160763, 333-162075, 333-162946, 333-165731, 333-168840, 333-168841 and 333-171654) of EMC Corporation of our report dated February 28, 2011 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

February 28, 2011

EX-31.1

Exhibit 31.1

PRINCIPAL EXECUTIVE OFFICER CERTIFICATION

I, Joseph M. Tucci, certify that:

1. I have reviewed this Annual Report on Form 10-K of EMC Corporation (“the Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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 principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) 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.

Date: February 28, 2011	/s/    JOSEPH M. TUCCI
	Joseph M. Tucci
	Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

PRINCIPAL FINANCIAL OFFICER CERTIFICATION

I, David I. Goulden, certify that:

1. I have reviewed this Annual Report on Form 10-K of EMC Corporation (“the Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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 principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) 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.

Date: February 28, 2011	/s/    DAVID I. GOULDEN
	David I. Goulden
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph M. Tucci, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-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, 2010, 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 Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of EMC Corporation.

/s/    JOSEPH M. TUCCI                                                 

Joseph M. Tucci

Chairman, President and Chief Executive Officer

February 28, 2011

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section. This certification shall not be deemed incorporated by reference in any filing under the Securities Act or Exchange Act, except to the extent that the Company specifically incorporates it by reference.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, David I. Goulden, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-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, 2010, 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 Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of EMC Corporation.

/s/    DAVID I. GOULDEN                                             

David I. Goulden

Executive Vice President and

Chief Financial Officer

February 28, 2011

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section. This certification shall not be deemed incorporated by reference in any filing under the Securities Act or Exchange Act, except to the extent that the Company specifically incorporates it by reference.