11-K 1 a11-k.txt 11-K =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________________ FORM 11-K ________________________ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 /X/ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 / / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number 1-9853 EMC Corporation 401(k) Savings Plan (Full title of the Plan) EMC Corporation (Name of issuer of the securities held pursuant to the Plan) 35 Parkwood Drive, Hopkinton, Massachusetts 01748 (address of principal executive office) =============================================================================== EMC CORPORATION
PAGE NO ------- Reports of Independent Accountants 3-4 Financial Statements: Statement of Assets Available for Plan Benefits as of December 31, 1999 and 1998 5 Statement of Changes in Assets Available for Plan Benefits for the Years Ended 6 December 31, 1999 and 1998 Notes to Financial Statements 7-10 Supplemental Schedules* Assets Held for Investment Purposes as of December 31, 1999 11 Signature 12 Exhibit Index 13
*Other schedules have been omitted because such schedules are not applicable. 2 REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Plan Administrator of the EMC Corporation 401(k) Savings Plan In our opinion, the accompanying statement of assets available for plan benefits at December 31, 1999 and the related statement of changes in assets available for plan benefits for the year then ended present fairly, in all material respects, the assets available for plan benefits of the EMC Corporation 401(k) Savings Plan (the "Plan") at December 31, 1999, and the changes in assets available for plan benefits for the year then ended in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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. We believe that our audit provides a reasonable basis for the opinion expressed above. The financial statements for the year ended December 31, 1998 were audited by other independent accountants, whose report dated July 26, 1999 expressed an unqualified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held for investment purposes is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ PricewaterhouseCoopers LLP June 27, 2000 PricewaterhouseCoopers LLP Boston, Massachusetts 3 REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Plan Administrator of the EMC Corporation 401(k) Savings Plan We have audited the accompanying statement of net assets available for benefits of the EMC Corporation 401(k) Savings Plan as of December 31, 1998, and the related statement of changes in net assets available for benefits for the year then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the EMC Corporations 401(k) Savings Plan as of December 31, 1998, and the changes in its net assets available for benefits for the year then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes and reportable transactions are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. Dated: June 27, 2000 /s/ Rattet & Cohen, P.C. Rattet & Cohen, P.C. Certified Public Accountants 4 EMC CORPORATION EMC CORPORATION 401(k) SAVINGS PLAN STATEMENT OF ASSETS AVAILABLE FOR PLAN BENEFITS AS OF DECEMBER 31, 1999 AND 1998
1999 1998 ASSETS Investments at fair value: Common collective trust: Fidelity Managed Income Portfolio Fund $ 11,671,606 $ 10,530,937 * --------------- --------------- Mutual funds: Fidelity Equity Income Fund 30,662,701 * 27,911,933 * Fidelity Equity Income II Fund 28,832,326 * 26,502,922 * Fidelity Magellan Fund 102,602,595 * 64,889,425 * Fidelity Puritan Fund 24,479,025 * 22,976,627 * Fidelity Retirement Growth Fund 32,763,979 * 17,867,953 * Vanguard U.S. Growth Fund 17,604,505 * 6,639,457 Other mutual funds 56,340,445 23,484,601 =============== =============== Total mutual funds 293,285,576 190,272,918 --------------- --------------- EMC Corporation Stock Fund: EMC Corporation common stock 11,468,519 1,266,735 Interest bearing cash 70,671 - --------------- --------------- Total EMC Corporation Stock Fund 11,539,190 1,266,735 --------------- --------------- Loans to participants 5,864,808 4,539,226 --------------- --------------- Total investments 322,361,180 206,609,816 --------------- --------------- Receivables: Employer contributions 4,219,316 2,110,964 Participant contributions - 682,033 Investment income receivable 610 - Receivable for investments sold 160,130 - =============== =============== Total receivables 4,380,056 2,792,997 --------------- --------------- Assets available for plan benefits $ 326,741,236 $ 209,402,813 =============== ===============
* Represents 5% or more of assets available for plan benefits. The accompanying notes are an integral part of these financial statements. 5 EMC CORPORATION EMC CORPORATION 401(k) SAVINGS PLAN STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998 Additions: Investment income: Net appreciation of investments: Mutual funds $ 21,992,525 $ 21,154,018 EMC Corporation common stock 5,681,930 378,498 --------------- --------------- Total net appreciation of investments 27,674,455 21,532,516 Dividends and interest 23,964,802 12,969,232 --------------- --------------- 51,639,257 34,501,748 --------------- --------------- Contributions: Employer contributions 12,855,061 6,906,248 Participant contributions 38,464,491 25,785,542 Participant rollovers from other qualified plans 22,046,745 12,978,255 --------------- --------------- 73,366,297 45,670,045 --------------- --------------- Total additions 125,005,554 80,171,793 Deductions: Benefits paid to participants 7,667,131 7,494,586 --------------- --------------- Net increase 117,338,423 72,677,207 Assets available for plan benefits: Beginning of year 209,402,813 136,725,606 -------------- -------------- End of year $ 326,741,236 $ 209,402,813 ============== ==============
The accompanying notes are an integral part of these financial statements. 6 EMC CORPORATION EMC CORPORATION 401(k) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF THE PLAN The following description of the EMC Corporation 401(k) Savings Plan (the "Plan") provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. GENERAL The Plan is a contributory defined contribution plan established January 1, 1983 for the purpose of providing an opportunity for retirement income and increased savings to the employees of EMC Corporation (the "Company"), Plan sponsor, who meet the length of service requirements. Plan assets acquired under this Plan as a result of contributions, investment income, and other additions to the Plan will be administered for the exclusive benefit of the participants and their beneficiaries. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). CONTRIBUTIONS Participants may elect to contribute an amount not to exceed, in the aggregate, between 1% and 15% of their compensation on a pretax basis while participating in the Plan. Participants may also contribute amounts representing distributions from other qualified plans (rollover contributions). In any Plan year, the Company may contribute to participants' accounts a quarterly matching contribution equal to a percentage of the participant's compensation contributed to the Plan as determined by the Company's Board of Directors up to a maximum quarterly matching contribution of $750. In addition, discretionary Company profit sharing contributions based on different discretionary goals established for separate business units within the Company may be made upon a vote of the Board of Directors. To be eligible for an allocation of Company quarterly matching contributions, a participant must be employed by the Company on the last day of the calendar quarter. To be eligible for an allocation of discretionary Company profit sharing contributions, a participant must have completed at least 1,000 hours of service during the Plan year and be employed by the Company on the last day of the Plan year. Contributions are subject to certain limitations under the Internal Revenue Code (the "Code"). PARTICIPANT ACCOUNTS Fidelity Investments Institutional Operations Company, Inc. is the Plan's recordkeeper. Each participant's account is credited with the participant's contribution, the Company's discretionary matching contribution and an allocation of the profit sharing contributions and Plan earnings. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. 7 VESTING AND FORFEITURE Participants are immediately vested 100% in their voluntary contributions, rollover contributions, Company matching contributions plus the investment earnings arising from these contributions. Company discretionary profit sharing contributions are subject to a vesting schedule based on the number of years of continuous service as follows:
YEARS OF SERVICE VESTED PERCENTAGE Less than 1 year 0% 1 year but less than 2 25% 2 years but less than 3 50% 3 years but less than 4 75% 4 years or more 100%
Participants' interest in their accounts shall become 100% vested and nonforfeitable without regard to their credited years of service if they are employed by the Company on or after age 65, incur a permanent and total disability or die while employed by the Company. If a participant who is not fully vested terminates employment with the Company, the participant shall be entitled to the vested portion of their account. The nonvested portion is forfeited and will be applied to the payment of Plan expenses. INVESTMENT OPTIONS Participants elect to invest the contributions to their accounts in five- percent increments in the following options: FIDELITY FUNDS Fidelity Aggressive Strategy Fund Fidelity Managed Income Portfolio Fund Fidelity Spartan U.S. Equity Index Fund (Stable Value Fund) AMERICAN FUNDS Fidelity Magellan Fund Washington Mutual Fund Fidelity Puritan Fund Europacific Growth Fund Fidelity Equity Income Fund Brandywine Growth Fund Fidelity Retirement Money Market Fund PIMCO Total Return Adm Fund Fidelity Retirement Growth Fund Franklin Small Cap Growth Fund Fidelity Equity Income II Fund Templeton Foreign A Fund Fidelity Conservative Strategy Fund Vanguard U.S. Growth Fund Fidelity Moderate Strategy Fund EMC Corporation Stock Fund
Participants may change their investment options as determined by the rules applicable to each investment. Fidelity Management Trust Company is the Plan Trustee. PAYMENT OF BENEFITS Benefits are payable upon normal retirement age (65), death, and separation from service or proven hardship. Participants who were a Plan member as of December 31, 1998 may elect to receive the value of their vested interest in his or her account in the form of an installment or in a lump-sum distribution. Participants who became Plan members after such date will receive their vested interest in his or her account in a lump-sum distribution. In any event, payment of benefits must commence when the participant reaches age 70 1/2, or following the year they terminate employment. However, a 5% owner of the Company will be required to begin receiving minimum distributions from their account by the April 1 following attainment of age 70 1/2 regardless of whether they have terminated employment at that time. 8 PARTICIPANT NOTES RECEIVABLE Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or one-half of the participant's vested account balance. Loan terms range from 1-5 years or up to 10 years if used for the purchase of a primary residence. The loans are secured by the balance in the participant's account and bear interest at a rate commensurate with local prevailing rates as determined by the Plan Administrator. Interest rates ranged from 8.75% - 10% for 1999 and 1998. Principal and interest are paid ratably through payroll deductions. MERGER INTO PLAN On October 12, 1999, the Company acquired Data General Corporation. In connection with the acquisition, the Data General Corporation Savings and Investment Plan (the "Data General Plan") merged into the Plan on January 1, 2000 resulting in the transfer of assets of $223,571,109 into the Plan. Former participants of the Data General Plan, eligible to participate in the Plan, began to participate in the Plan on January 1, 2000. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements of the Plan are prepared using the accrual method of accounting. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. INVESTMENT VALUATION AND INCOME RECOGNITION Investments are valued at fair value. Investments in shares of mutual funds and the common collective trust are value based on net asset value announced by the fund. EMC Corporation common stock is valued at the quoted market price. Loans to participants are valued at cost plus accrued interest, which approximates fair value. The Plan presents in the statements of changes in assets available for plan benefits net appreciation (depreciation) in the fair value of its investments which consists of realized gains or losses and unrealized appreciation (depreciation) on investments. The cost of investments is determined on the average cost basis in calculating realized gains or losses. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. EXPENSES OF THE PLAN Administrative expenses, including legal and participant accounting, and other costs of administrating the Plan, and all expenses directly relating to the investments are charged to and paid by the Plan unless paid by the Company. For 1999 and 1998, the Company paid all Plan expenses. TERMINATION OF THE PLAN Although it has not expressed any intent to do so, the Company has the right to terminate the Plan. The Plan administrator, upon termination of the Plan, shall cause the assets of the Plan to be allocated as described in the Plan agreement. In the event of Plan termination, participants will become 100% vested in their accounts. 9 PAYMENT OF BENEFITS Benefits are recorded when paid. RECLASSIFICATIONS Amounts shown by investment fund option on the statement of assets available for plan benefits as of December 31, 1998 and the statement of changes in assets available for plan benefits for the year ended December 31, 1998 have been reclassified to be shown in total to conform to current year presentation in order to adopt AICPA Statement of Position 99-3, "Accounting for and Reporting of Certain Defined Contribution Plan Investments and Other Disclosure Matters." 3. TAX STATUS OF THE PLAN The Internal Revenue Service has determined and informed the Plan sponsor by a letter dated November 18, 1998 that the Plan and related trust are designed in accordance with applicable sections of the Code. The Plan has since been amended and a new letter has not been requested. Management has asserted the Plan, as amended, and its operations have been and continue to be in accordance with all applicable provisions of the Code and the Employee Retirement Income Security Act of 1974. Therefore, a provision for income taxes is not required. 4. EMC CORPORATION COMMON STOCK The Plan invests in EMC Corporation common stock. During the years ended December 31, 1999 and 1998, the Plan purchased shares of the common stock in the amounts of $10,822,030 and $1,289,813, respectively, and sold shares of the common stock in the amounts of $389,052 and $23,079, respectively. The total value of shares held of EMC Corporation common stock was $11,468,519 and $1,266,735 at December 31, 1999 and 1998, respectively. 5. DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND PRESENTATION OF ASSET INFORMATION IN FORM 5500 As described in Note 1 of these financial statements, the Data General Plan was merged into the Plan as of January 1, 2000 and the December 31, 1999 financial statements for the Plan do not reflect the merger. The Form 5500 for the Plan shows the transfer of assets occurring on December 31, 1999. The two approaches reflect agreement that the assets and participants had moved to the respective recipient plan as of January 1, 2000. The only difference concerns whether the transfer in from the Data General Plan occurred as of January 1, 2000 or, instead, occurred the moment before that - i.e., as of the close of business on December 31, 1999. 10 EMC CORPORATION EMC CORPORATION 401(k) SAVINGS PLAN ASSETS HELD FOR INVESTMENT PURPOSES SUPPLEMENTAL SCHEDULE DECEMBER 31, 1999
CURRENT SHARES/UNITS DESCRIPTION VALUE Common Collective Trust: 11,671,606 Fidelity Managed Income Portfolio Fund* $ 11,671,606 --------------- Mutual Funds: Fidelity Mutual Funds: 750,952 Magellan Fund* 102,602,595 1,286,339 Puritan Fund* 24,479,025 573,349 Equity Income Fund* 30,662,701 10,336,881 Retirement Money Market Fund* 10,336,881 1,267,465 Retirement Growth Fund* 32,763,979 1,053,428 Equity Income II Fund* 28,832,326 81,065 Conservative Strategy Fund* 1,010,879 251,824 Moderate Strategy Fund* 3,387,028 516,139 Aggressive Strategy Fund* 7,979,505 202,678 Spartan U.S. Equity Index Fund* 10,557,485 American Funds: 96,347 Washington Mutual Fund 2,848,026 103,981 Europacific Growth Fund 4,435,818 75,692 Brandywine Growth Fund 3,245,655 179,659 PIMCO Total Return Adm Fund 1,778,625 205,599 Franklin Small Cap Growth Fund 9,073,079 150,398 Templeton Foreign A Fund 1,687,464 404,422 Vanguard U.S. Growth Fund 17,604,505 --------------- Total mutual funds 293,285,576 --------------- 104,975 EMC Corporation common stock* 11,468,519 Interest bearing cash 70,671 --------------- Total EMC Corporation Stock Fund 11,539,190 --------------- Loans to participants* 5,864,808 --------------- Total $ 322,361,180 ===============
* Party-in-interest. 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. EMC CORPORATION 401(k) SAVINGS PLAN Date: June 27, 2000 By: /s/ William J. Teuber, Jr. -------------------------- William J. Teuber, Jr. Senior Vice President and Chief Financial Officer (PRINCIPAL FINANCIAL OFFICER AND CHIEF ACCOUNTING OFFICER) 12 EXHBIT INDEX Exhibit 23.1 Consent of Independent Accountants, PricewaterhouseCoopers LLP Exhibit 23.2 Consent of Independent Accountants, Rattet & Cohen, P.C. 13