10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

  For the quarterly period ended June 30, 2008

OR

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

  For 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)

(508) 435-1000

(Registrant’s telephone number, including area code)

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 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 Exchange Act).     Yes  ¨    No  x

The number of shares of common stock, par value $.01 per share, of the registrant outstanding as of June 30, 2008 was 2,070,528,070.

EMC CORPORATION

	Page No.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets at June 30, 2008 and December 31, 2007	3
Consolidated Income Statements for the Three and Six Months Ended June 30, 2008 and 2007	4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007	5
Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2008 and 2007	6
Notes to Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3. Quantitative and Qualitative Disclosures About Market Risk	36
Item 4. Controls and Procedures	36
PART II — OTHER INFORMATION
Item 1. Legal Proceedings	37
Item 1A. Risk Factors	37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3. Defaults Upon Senior Securities	45
Item 4. Submission of Matters to a Vote of Security Holders	45
Item 5. Other Information	46
Item 6. Exhibits	46
SIGNATURES	47
EXHIBIT INDEX	48

FACTORS THAT MAY AFFECT FUTURE RESULTS

This Quarterly Report on Form 10-Q 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 those described in Item 1A of Part II (Risk Factors) of this Quarterly Report. The forward-looking statements speak only as of the date of this Quarterly 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 Quarterly Report.

PART I

FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

EMC CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)

	June 30, 2008			December 31, 2007
ASSETS
Current assets:
Cash and cash equivalents	$	5,219,347		$	4,482,211
Short-term investments		642,598			1,644,703
Accounts and notes receivable, less allowance for doubtful accounts of $34,302 and $34,389		2,190,188			2,307,512
Inventories		972,032			877,243
Deferred income taxes		475,820			475,544
Other current assets		308,782			265,889
Total current assets		9,808,767			10,053,102
Long-term investments		2,267,398			1,825,572
Property, plant and equipment, net		2,168,760			2,159,396
Intangible assets, net		921,720			940,077
Other assets, net		791,172			775,001
Goodwill		6,918,935			6,531,506
Total assets	$	22,876,752		$	22,284,654
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	825,531		$	840,886
Accrued expenses		1,586,963			1,696,309
Income taxes payable		19,303			146,104
Deferred revenue		1,946,033			1,724,909
Total current liabilities		4,377,830			4,408,208
Income taxes payable		284,025			246,951
Deferred revenue		1,127,045			1,053,394
Deferred income taxes		274,885			288,175
Long-term convertible debt		3,450,000			3,450,000
Other liabilities		158,347			127,621
Total liabilities		9,672,132			9,574,349
Minority interest in VMware		263,566			188,988
Commitments and contingencies
Stockholders’ equity:
Series 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 2,070,528 and 2,102,187 shares		20,705			21,022
Additional paid-in capital		2,829,211			3,038,455
Retained earnings		10,116,595			9,470,289
Accumulated other comprehensive loss, net		(25,457	)		(8,449	)
Total stockholders’ equity		12,941,054			12,521,317
Total liabilities and stockholders’ equity	$	22,876,752		$	22,284,654

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

3

EMC CORPORATION

CONSOLIDATED INCOME STATEMENTS

(in thousands, except per share amounts)

(unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30, 2008			June 30, 2007			June 30, 2008			June 30, 2007
Revenues:
Product sales	$	2,461,651		$	2,222,355		$	4,802,081		$	4,334,781
Services		1,212,223			902,317			2,341,852			1,764,896
		3,673,874			3,124,672			7,143,933			6,099,677
Costs and expenses:
Cost of product sales		1,119,553			1,036,242			2,194,136			2,074,720
Cost of services		525,751			387,617			1,011,832			754,204
Research and development		442,502			384,966			876,016			740,358
Selling, general and administrative		1,135,674			924,349			2,217,889			1,800,039
In-process research and development		—			—			79,204			—
Restructuring credits		—			—			(357	)		(2,670	)
Operating income		450,394			391,498			765,213			733,026
Investment income		58,730			50,850			135,870			102,989
Interest expense		(18,794	)		(18,136	)		(36,836	)		(36,429	)
Other (expense) income, net		(2,811	)		2,968			(7,574	)		7,808
Income before taxes and minority interest in VMware		487,519			427,180			856,673			807,394
Income tax provision		102,338			92,773			196,493			160,380
Income before minority interest in VMware		385,181			334,407			660,180			647,014
Minority interest in VMware, net of taxes		(7,713	)		—			(13,874	)		—
Net income	$	377,468		$	334,407		$	646,306		$	647,014
Net income per weighted average share, basic	$	0.18		$	0.16		$	0.31		$	0.31
Net income per weighted average share, diluted	$	0.18		$	0.16		$	0.31		$	0.30
Weighted average shares, basic		2,057,766			2,070,636			2,066,470			2,075,683
Weighted average shares, diluted		2,094,795			2,121,645			2,102,184			2,122,080

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

4

EMC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	For the Six Months Ended
	June 30, 2008			June 30, 2007
Cash flows from operating activities:
Cash received from customers	$	7,585,822		$	6,391,546
Cash paid to suppliers and employees		(5,947,544	)		(4,930,350	)
Dividends and interest received		135,058			116,747
Interest paid		(36,778	)		(38,854	)
Income taxes paid		(199,689	)		(108,841	)
Net cash provided by operating activities		1,536,869			1,430,248
Cash flows from investing activities:
Additions to property, plant and equipment		(326,449	)		(324,210	)
Capitalized software development costs		(118,848	)		(98,046	)
Purchases of short and long-term available for sale securities		(1,005,655	)		(3,165,846	)
Sales and maturities of short and long-term available for sale securities		1,572,954			4,148,396
Acquisitions, net of cash acquired		(604,788	)		(161,002	)
Other		(3,060	)		(6,860	)
Net cash (used in) provided by investing activities		(485,846	)		392,432
Cash flows from financing activities:
Issuance of EMC’s common stock from the exercise of stock options		156,220			355,324
Issuance of VMware’s common stock from the exercise of stock options		133,327			—
Repurchase of EMC’s common stock		(686,950	)		(878,226	)
Excess tax benefits from stock-based compensation		88,613			32,684
Payment of short and long-term obligations		(5,279	)		(4,263	)
Proceeds from short and long-term obligations		1,820			2,506
Net cash used in financing activities		(312,249	)		(491,975	)
Effect of exchange rate changes on cash and cash equivalents		(1,638	)		(4,716	)
Net increase in cash and cash equivalents		737,136			1,325,989
Cash and cash equivalents at beginning of period		4,482,211			1,828,106
Cash and cash equivalents at end of period	$	5,219,347		$	3,154,095
Reconciliation of net income to net cash provided by operating activities:
Net income	$	646,306		$	647,014
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interest in VMware		13,874			—
Depreciation and amortization		517,692			438,260
Non-cash restructuring and in-process research and development		80,970			—
Stock-based compensation expense		239,405			170,553
Increase (decrease) in provision for doubtful accounts		8,576			(82	)
Deferred income taxes, net		26,173			(28,163	)
Excess tax benefits from stock-based compensation		(88,613	)		(32,684	)
Other		(5,123	)		6,524
Changes in assets and liabilities, net of acquisitions:
Accounts and notes receivable		160,492			29,166
Inventories		12,668			39,897
Other assets		(35,719	)		(79,042	)
Accounts payable		(61,343	)		9,373
Accrued expenses		(248,139	)		(105,797	)
Income taxes payable		(32,677	)		79,731
Deferred revenue		272,821			262,784
Other liabilities		29,506			(7,286	)
Net cash provided by operating activities	$	1,536,869		$	1,430,248

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

5

EMC CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30, 2008			June 30, 2007			June 30, 2008			June 30, 2007
Net income	$	377,468		$	334,407		$	646,306		$	647,014
Other comprehensive income, net of tax benefits:
Foreign currency translation adjustments		(10,599	)		(11,154	)		887			(3,905	)
Changes in market value of investments, including unrealized gains and losses and reclassification adjustment to net income, net of tax benefits of $(12,598), $(901), $(11,537) and $(3,370)		(12,419	)		(5,228	)		(17,657	)		(2,668	)
Changes in market value of derivatives, net of tax benefits of $(8), $0, $(26), and $(7)		525			(41	)		(238	)		(112	)
Other comprehensive loss		(22,493	)		(16,423	)		(17,008	)		(6,685	)
Comprehensive income	$	354,975		$	317,984		$	629,298		$	640,329

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

6

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Basis of Presentation

Company

EMC Corporation (“EMC”) develops, delivers and supports the Information Technology (“IT”) industry’s broadest range of information infrastructure technologies and solutions.

EMC’s Information Infrastructure business supports customers’ information lifecycle management (“ILM”) strategies and helps them build information infrastructures that store, protect, optimize and leverage their vast and growing quantities of information. EMC’s Information Infrastructure business consists of three segments – Information Storage, Content Management and Archiving and RSA Information Security.

EMC’s VMware Virtual Infrastructure business, which is represented by a majority equity stake in VMware, Inc. (“VMware”), is the leading provider of virtualization solutions that separate the operating system and application software from the underlying hardware to achieve significant improvements in efficiency, availability, flexibility and manageability.

General

The accompanying interim consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. These consolidated financial statements include the accounts of EMC, its wholly-owned subsidiaries and VMware, a company majority-owned by EMC. All intercompany transactions have been eliminated.

Certain information and footnote disclosures normally included in our annual consolidated financial statements have been condensed or omitted. Accordingly, these interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2007 which are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2008.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for any future period or the entire fiscal year. The interim consolidated financial statements, in the opinion of management, reflect all adjustments necessary to fairly state the results as of and for the three and six month periods ended June 30, 2008 and 2007.

Revenue Recognition Policy Update

In the second quarter of 2008, we acquired all of the outstanding capital stock of Iomega Corporation (“Iomega”), a global leader in reliable portable data storage (see Note 2 to the consolidated financial statements). Iomega’s customers include original equipment manufacturers (“OEMs”), retailers, distributors, value added resellers (“VARs”), mail order direct marketing resellers (“DMR channels”) and end users. Typically, retail and distribution customer agreements in the United States have provisions that allow the customer to return product under certain conditions within specified time periods. We have established reserves for estimated returns, which are reflected as a reduction of sales and trade receivables in our consolidated financial statements. In addition to reserves for estimated returns, we defer recognition of sales and costs of sales of Iomega’s excess inventory in the distribution, retail and DMR channels. For this purpose, excess inventory is the amount of inventory that exceeds the channel’s four-week requirement. OEM and VAR customers are not considered to have excess inventory, as they usually do not carry more than four weeks of inventory.

Net Income Per Share

Basic net income per weighted average share has been computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income per weighted average 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, 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 associated warrants (the “Sold Warrants”). Additionally, for purposes of calculating diluted net income per weighted average share, net income is adjusted for the difference between VMware’s reported diluted and basic net income per weighted average share, if any, multiplied by the number of shares of VMware held by EMC.

7

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

New Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“FAS”) No. 141 (revised 2007), “Business Combinations” (“FAS No. 141R”). This statement establishes principles and requirements for how the acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. FAS No. 141R is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the potential impact of FAS No. 141R on our financial position and results of operations.

In December 2007, the FASB issued FAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of Accounting Research Board (“ARB”) No. 51” (“FAS No. 160”). The objective of this statement is to improve the relevance, comparability and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. FAS No. 160 is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the potential impact of FAS No. 160 on our financial position and results of operations.

In March 2008, the FASB issued FAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS No. 161”). This statement changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. FAS No. 161 is effective for fiscal years beginning after November 15, 2008. We do not expect FAS No. 161 to have a material impact on our financial position or results of operations.

In April 2008, the FASB issued FASB Staff Position (“FSP”) on FAS No. 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP FAS No. 142-3”). FSP FAS No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FAS No. 142, “Goodwill and Other Intangible Assets” (“FAS No. 142”). The intent of FSP FAS No. 142-3 is to improve the consistency between the useful life of a recognized intangible asset under FAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under FAS No. 141 (revised 2007), “Business Combinations”, and other U.S. generally accepted accounting principles. FSP FAS No. 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. We are currently evaluating the potential impact of FSP FAS No. 142-3 on our financial position and results of operations.

In May 2008, the FASB voted to issue FSP APB 14-1, which changes the accounting treatment for certain convertible securities which include our Notes. Under FSP APB 14-1, issuers are required to allocate the bond proceeds into a bond portion and a conversion option. The allocation of the bond portion is based upon determining the value of a bond based upon the issuance costs of debt with no conversion option. The residual value is allocated to the conversion option. As a result of this change, the bonds are recorded at a discount which is accreted to its face value over the term of the debt using the effective interest method resulting in additional interest expense. The separated conversion option will be recorded in equity and not marked to market provided that the requirement for equity classification is met. FSP APB 14-1 requires issuers to retroactively revise all periods presented. FSP APB 14-1 is effective for financial statements for fiscal years ended after December 15, 2008 and early adoption is not permitted. We plan to adopt FSP APB 14-1 on January 1, 2009.

Upon adoption of FSP APB 14-1, we expect to revise prior periods by reclassifying $669.1 million of our Notes to additional paid-in capital. Our interest expense will increase by $11.5 million for 2006, $96.9 million for 2007 and $50.3 million for the six months ended June 30, 2008.

8

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

2.   Acquisitions

In the first quarter of 2008, we acquired all of the outstanding capital stock of Pi Corporation (“Pi”), a developer of software and online services to enable individuals to control how they find, access, share and protect their increasing volumes of digital information. This acquisition is a key element of our newly formed Cloud Infrastructure and Services Division, which is reported within our Information Storage segment. At the time of the acquisition, Pi was considered a development stage enterprise that resulted in the recognition of this purchase as an acquisition of assets rather than a business combination.

In the first quarter of 2008, we acquired all of the outstanding capital stock of Document Sciences Corporation, a provider of document output management software that facilitates highly personalized, multi-channel communications to customers, partners and suppliers. The acquisition complements and extends our Content Management and Archiving segment’s position in the transactional content management marketplace.

In the first quarter of 2008, we acquired all of the outstanding capital stock of Infra Corporation Pty Limited (“Infra”), a provider of IT service management software. Infra is reported within our Information Storage segment.

In the second quarter of 2008, we acquired all of the outstanding capital stock of WysDM Software Inc., (“WysDM”), a developer of Data Protection Management (DPM) solutions. WysDM is reported within our Information Storage segment.

In the second quarter of 2008, we acquired all of the outstanding capital stock of Conchango plc. (“Conchango”), a technology consulting firm specializing in the design, development and delivery of custom applications and digital experiences. The acquisition of Conchango will further enhance and expand our services we provide within the Information Storage segment.

In the second quarter of 2008, we acquired all of the outstanding capital stock of Iomega, a global leader in reliable portable data storage. Iomega solutions help consumers and home and small business customers to manage, preserve, use and share their digital content and data. Iomega will serve as the core of our new consumer/small business products division within our Information Storage segment.

In the first quarter of 2008, VMware acquired two businesses. One, a provider of virtualization technologies and services, allows VMware to leverage the acquired application and desktop virtualization services expertise to help VMware partners expand their virtualization services businesses. The other, a developer of application virtualization solutions, allows VMware to expand its growing virtualization capabilities.

The aggregate purchase price, net of cash acquired for these acquisitions, was $634.8 million and includes $30.0 million payable in 2010 associated with one of the acquisitions. Based on our preliminary purchase price allocations, acquired amortizing intangibles totaling $116.0 million have been recorded with estimated useful lives of between one and ten years. The business combinations resulted in total goodwill of $368.8 million. In addition, $79.2 million was allocated to in-process research and development (“IPR&D”). Two IPR&D projects related to the acquisition of Pi and one IPR&D project related to the acquisition of Infra were identified and written off at the time of the respective date of each acquisition because they had no alternative uses and had not reached technological feasibility. 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 a discount rate of 50% for the Pi IPR&D projects and 20% for the Infra IPR&D project. The purchase price allocations are preliminary and a final determination of required purchase accounting adjustments will be made upon the finalization of our integration activities.

9

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The results of the acquired companies have been included in our consolidated results of operations from their respective closing dates. The following pro forma information gives effect to the business combinations that were completed in the three and six months ended June 30, 2008 as if the business combinations occurred at the beginning of the periods presented. The pro forma results are not necessarily indicative of what actually would have occurred had the business combinations been in effect for the periods presented (table in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2008		2007		2008		2007
Revenue	$	3,731,874	$	3,221,373	$	7,329,642	$	6,306,225
Net income		375,136		322,280		653,743		618,101
Net income per weighted average share, basic	$	0.18	$	0.16	$	0.32	$	0.30
Net income per weighted average share, diluted	$	0.18	$	0.15	$	0.31	$	0.29

3.   Investments and Fair Value

Effective January 1, 2008, we adopted FAS No. 157, “Fair Value Measurements” (“FAS No. 157”). In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157”, which provides a one-year deferral of the effective date of FAS No. 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. In 2008, we adopted the provisions of FAS No. 157 with respect to only financial assets and liabilities. FAS No. 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under FAS No. 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under FAS No. 157 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, that may be used to measure fair value:

• 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.

Our investments are comprised primarily of debt securities that are classified as available for sale and recorded at their fair market values. 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. At December 31, 2007, our available for sale, short and long-term investments were recognized at fair value which was determined based upon quoted market prices. At June 30, 2008, our available for sale, short and long-term investments, excluding auction rate securities, were recognized at fair value which was determined based upon quoted market prices. At June 30, 2008, auction rate securities were valued using a discounted cash flow model.

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

At December 31, 2007, we held $972.5 million of auction rate securities and classified these as short-term investments. We have liquidated a portion of these securities through June 30, 2008, reducing our holdings in auction rate securities to $220.5 million or 2.7% of our total cash, cash equivalents and investments of $8,129.3 million at June 30, 2008. As a result of the volatility in the credit markets, the occurrence of failures of auctions for our auction rate securities and the related impact on the liquidity of these securities, we classified our auction rate securities as long-term investments at June 30, 2008, and we recognized a $10.5 million temporary decrease in their value that is included within other comprehensive loss since we believe the impairment

10

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

in value of these investments is only temporary. Our investment in auction rate securities is primarily composed of student loans that are supported by the federal government as part of the Federal Family Education Loan Program (“FFELP”) through the U.S. Department of Education, or to a lesser extent are obligations of municipalities rated single-A or higher. We believe the quality of the collateral underlying these securities will enable us to recover our principal balance.

The following tables summarize the composition of our investments at June 30, 2008 and December 31, 2007 (tables in thousands):

	June 30, 2008
	Amortized Cost Basis		Aggregate Fair Value
U.S. government and agency obligations	$	747,801	$	754,940
U.S. corporate debt securities		204,660		204,811
Asset and mortgage-backed securities		223,924		216,136
Municipal obligations		1,458,287		1,457,494
Auction rate securities		231,016		220,501
Foreign debt securities		55,652		56,114
Total	$	2,921,340	$	2,909,996
	December 31, 2007
	Amortized Cost Basis		Aggregate Fair Value
U.S. government and agency obligations	$	578,547	$	589,558
U.S. corporate debt securities		188,512		189,772
Asset and mortgage-backed securities		276,661		277,050
Municipal obligations		1,387,711		1,392,252
Auction rate securities		972,514		972,525
Foreign debt securities		48,523		49,118
Total	$	3,452,468	$	3,470,275

Gross unrealized gains on all of our investments were $18.8 million and $22.0 million at June 30, 2008 and December 31, 2007, respectively. Gross unrealized losses on these investments were $30.1 million and $4.2 million at June 30, 2008 and December 31, 2007, respectively.

In accordance with FAS No. 157, the following table represents our fair value hierarchy for our financial assets and liabilities measured at fair value as of June 30, 2008 (in thousands):

	Level 1		Level 2			Level 3		Total
Money market funds	$	3,769,031	$	—		$	—	$	3,769,031
U.S. government and agency obligations		380,820		374,120			—		754,940
U.S. corporate debt securities		—		204,811			—		204,811
Asset and mortgage-backed securities		—		216,136			—		216,136
Municipal obligations		—		1,457,494			—		1,457,494
Auction rate securities		—		—			220,501		220,501
Foreign debt securities		—		56,114			—		56,114
Strategic investments in publicly-traded companies		510		—			—		510
Foreign exchange derivative assets		—		10,477			—		10,477
Foreign exchange derivative liabilities		—		(14,605	)		—		(14,605	)

11

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 two-year holding period. The following table provides a summary of changes in fair value of our Level 3 financial assets for each of the three and six months ended June 30, 2008 (in thousands):

	Three months ended June 30, 2008			Six months ended June 30, 2008
Beginning balance	$	273,902		$	—
Transfers in from Level 1		—			288,500
Sales		(57,484	)		(57,484	)
Unrealized gain (loss) included in other comprehensive income		4,083			(10,515	)
Balance at June 30, 2008	$	220,501		$	220,501

Unrealized losses on investments at June 30, 2008 by investment category and length of time the investment has been in a continuous unrealized loss position are as follows (table in thousands):

	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	$	244,734	$	(2,759	)	$	349	$	(7	)	$	245,083	$	(2,766	)
U.S. corporate debt securities		88,025		(1,078	)		2,240		(20	)		90,265		(1,098	)
Asset and mortgage-backed securities		107,527		(8,277	)		3,504		(445	)		111,031		(8,722	)
Municipal obligations		535,816		(4,865	)		69,704		(2,026	)		605,520		(6,891	)
Auction rate securities		220,501		(10,515	)		—		—			220,501		(10,515	)
Foreign debt securities		10,536		(124	)		—		—			10,536		(124	)
Total	$	1,207,139	$	(27,618	)	$	75,797	$	(2,498	)	$	1,282,936	$	(30,116	)

We evaluate investments with unrealized losses to determine if the losses are other than temporary. We have determined that the gross unrealized losses at June 30, 2008 are temporary. In making this determination, we considered the financial condition and near-term prospects of the issuers, the magnitude of the losses compared to the investments’ cost, the length of time the investments have been in an unrealized loss position and our ability and intent to hold the investment to maturity.

4.   Inventories

Inventories consist of (table in thousands):

	June 30, 2008		December 31, 2007
Purchased parts	$	89,540	$	70,981
Work-in-process		500,137		484,929
Finished goods		382,355		321,333
	$	972,032	$	877,243

12

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

5.   Property, Plant and Equipment

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

	June 30, 2008			December 31, 2007
Furniture and fixtures	$	221,504		$	217,503
Equipment		3,266,348			3,198,878
Buildings and improvements		1,263,722			1,182,648
Land		115,480			115,539
Building construction in progress		84,850			92,183
		4,951,904			4,806,751
Accumulated depreciation and amortization		(2,783,144	)		(2,647,355	)
	$	2,168,760		$	2,159,396

Building construction in progress at June 30, 2008 includes $62.5 million for a facility not yet placed in service that we are holding for future use.

6.  Accrued Expenses

Accrued expenses consist of (table in thousands):

	June 30, 2008		December 31, 2007
Salaries and benefits	$	649,624	$	672,715
Product warranties		274,741		263,561
Restructuring (See Note 9)		56,323		125,924
Other		606,275		634,109
	$	1,586,963	$	1,696,309

Product Warranties

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

	For the Three Months Ended						For the Six Months Ended
	June 30, 2008			June 30, 2007			June 30, 2008			June 30, 2007
Balance, beginning of the period	$	267,296		$	248,481		$	263,561		$	242,744
Current period accrual		48,866			34,075			89,448			71,179
Amounts charged to the accrual		(41,421	)		(31,802	)		(78,268	)		(63,169	)
Balance, end of the period	$	274,741		$	250,754		$	274,741		$	250,754

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 practical to determine the amounts applicable to each of the components. Additionally, the current period accrual includes $6.3 million assumed in the acquisition of Iomega.

13

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

7.  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):

	For the Three Months Ended					For the Six Months Ended
	June 30, 2008			June 30, 2007		June 30, 2008			June 30, 2007
Numerator:
Net income, as reported, basic	$	377,468		$	334,407	$	646,306		$	647,014
Incremental dilution from VMware		(1,795	)		—		(3,511	)		—
Net income, diluted	$	375,673		$	334,407	$	642,795		$	647,014
Denominator:
Basic weighted average common shares outstanding		2,057,766			2,070,636		2,066,470			2,075,683
Weighted average common stock equivalents		37,029			51,009		35,714			46,397
Diluted weighted average shares outstanding		2,094,795			2,121,645		2,102,184			2,122,080

Options to acquire 95.0 million and 97.8 million shares of our common stock for the three and six months ended June 30, 2008, respectively, and options to acquire 110.8 million and 137.9 million shares of our common stock for the three and six months ended June 30, 2007, respectively, were excluded from the calculation of diluted earnings per share because of their antidilutive effect. For the three and six months ended June 30, 2008, there were 0.2 million and 0.1 million shares, respectively, potentially issuable under our Notes. For the three and six months ended June 30, 2007, there were no shares potentially issuable under our Notes because these instruments were not “in the money”. As a result, the Notes were excluded from the calculation of diluted net income per weighted average share for the three and six months ended June 30, 2007. For the three and six months ended June 30, 2008 and 2007, there were no shares potentially issuable under the Sold Warrants because these instruments were not “in the money”. As a result, the Sold Warrants were excluded from the calculation of diluted net income per weighted average share for the three and six months ended June 30, 2008 and 2007. 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.

8.  Stockholders’ Equity

Repurchases of Common Stock

We utilize authorized and unissued shares (including repurchased shares) to satisfy all shares issued under our equity plans. In April 2006, our Board of Directors authorized the repurchase of 250.0 million shares of our common stock. For the three and six months ended June 30, 2008, we spent $129.7 million to repurchase 8.6 million shares of our common stock and $687.0 million to repurchase 44.4 million shares of our common stock, respectively. Of the 250.0 million shares authorized for repurchase in 2006, we have repurchased 243.6 million shares at a cost of $3.3 billion, leaving a remaining balance of 6.4 million shares. In April 2008, our Board of Directors authorized the repurchase of an additional 250.0 million shares of our common stock, increasing the number of shares authorized for repurchase to 256.4 million shares.

9.  Restructuring Credits

During the three months ended June 30, 2008, we recognized restructuring credits of $1.3 million which is included in selling, general and administrative expenses (“SG&A”). There were no restructuring credits for the three months ended June 30, 2007. For the six months ended June 30, 2008 and 2007 we recognized restructuring credits of $1.7 million and $2.7 million, respectively. For the six months ended June 30, 2008, $1.3 million of these credits are included in SG&A.

The restructuring credits for the three and six months ended June 30, 2008 were primarily attributable to lower than expected severance payments to our 2006 restructuring programs partially offset by higher than expected severance payments to our 2007 and prior restructuring programs.

14

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The restructuring credits for the six months ended June 30, 2007 were primarily attributable to lower than expected costs associated with vacating leased facilities.

2007 Restructuring Program

The activity for the 2007 restructuring program for the three and six months ended June 30, 2008, respectively, is presented below (tables in thousands):

Three Months Ended June 30, 2008

Category	Balance as of March 31, 2008		Adjustment to the Provision		Utilization			Balance as of June 30, 2008
Workforce reductions	$	11,169	$	1,104	$	(3,064	)	$	9,209
Total	$	11,169	$	1,104	$	(3,064	)	$	9,209

Six Months Ended June 30, 2008

Category	Balance as of December 31, 2007		Adjustment to the Provision		Utilization			Balance as of June 30, 2008
Workforce reductions	$	12,415	$	6,362	$	(9,568	)	$	9,209
Total	$	12,415	$	6,362	$	(9,568	)	$	9,209

The 2007 restructuring program commenced in the fourth quarter of 2007 and included approximately 450 employees. These actions impacted the Information Storage, Content Management and Archiving and RSA Information Security segments. The adjustment to the provision in 2008 was primarily attributable to finalizing severance payments. Approximately 425 employees included in this plan have been terminated, and the remaining cash portion owed is $7.7 million which is expected to be substantially paid out through December 31, 2008.

2006 Restructuring Programs

The activity for the 2006 restructuring programs for the three and six months ended June 30, 2008 and 2007, respectively, is presented below (tables in thousands):

Three Months Ended June 30, 2008

Category	Balance as of March 31, 2008		Adjustment to the Provision			Utilization			Balance as of June 30, 2008
Workforce reductions	$	49,717	$	(3,395	)	$	(23,629	)	$	22,693
Consolidation of excess facilities		2,528		(255	)		—			2,273
Total	$	52,245	$	(3,650	)	$	(23,629	)	$	24,966

Six Months Ended June 30, 2008

Category	Balance as of December 31, 2007		Adjustment to the Provision			Utilization			Balance as of June 30, 2008
Workforce reductions	$	83,155	$	(9,127	)	$	(51,335	)	$	22,693
Consolidation of excess facilities		2,563		(290	)		—			2,273
Total	$	85,718	$	(9,417	)	$	(51,335	)	$	24,966

15

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Three Months Ended June 30, 2007

Category	Balance as of March 31, 2007		Adjustment to the Provision		Utilization			Balance as of June 30, 2007
Workforce reductions	$	107,483	$	—	$	(24,600	)	$	82,883
Consolidation of excess facilities		5,387		—		(295	)		5,092
Contractual and other obligations		525		—		(324	)		201
Total	$	113,395	$	—	$	(25,219	)	$	88,176

Six Months Ended June 30, 2007

Category	Balance as of December 31, 2006		Adjustment to the Provision		Utilization			Balance as of June 30, 2007
Workforce reductions	$	127,820	$	—	$	(44,937	)	$	82,883
Consolidation of excess facilities		5,536		350		(794	)		5,092
Contractual and other obligations		4,814		—		(4,613	)		201
Total	$	138,170	$	350	$	(50,344	)	$	88,176

The adjustment to the provision in 2008 results primarily from finalizing severance payments. Substantially all employees included in these programs have been terminated. The remaining cash balance associated with workforce reductions is $18.0 million and is expected to be substantially paid out through 2008. The remaining balance owed for the consolidation of excess facilities is expected to be paid out through 2018.

Prior Restructuring Programs

We implemented restructuring programs from 1998 through 2005. The activity for these programs for the three and six months ended June 30, 2008 and 2007, respectively, is presented below (tables in thousands):

Three Months Ended June 30, 2008

Category	Balance as of March 31, 2008		Adjustment to the Provision			Utilization			Balance as of June 30, 2008
Workforce reductions	$	861	$	1,457		$	(17	)	$	2,301
Consolidation of excess facilities		22,524		(258	)		(3,319	)		18,947
Other contractual obligations		900		—			—			900
Total	$	24,285	$	1,199		$	(3,336	)	$	22,148

Six Months Ended June 30, 2008

Category	Balance as of December 31, 2007		Adjustment to the Provision			Utilization			Balance as of June 30, 2008
Workforce reductions	$	1,251	$	1,534		$	(484	)	$	2,301
Consolidation of excess facilities		25,710		(258	)		(6,505	)		18,947
Other contractual obligations		830		75			(5	)		900
Total	$	27,791	$	1,351		$	(6,994	)	$	22,148

16

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Three Months Ended June 30, 2007

Category	Balance as of March 31, 2007		Adjustment to the Provision		Utilization			Balance as of June 30, 2007
Workforce reductions	$	9,857	$	—	$	(2,783	)	$	7,074
Consolidation of excess facilities		34,649		—		(3,925	)		30,724
Other contractual obligations		1,922		—		(74	)		1,848
Total	$	46,428	$	—	$	(6,782	)	$	39,646

Six Months Ended June 30, 2007

Category	Balance as of December 31, 2006		Adjustment to the Provision			Utilization			Balance as of June 30, 2007
Workforce reductions	$	19,219	$	—		$	(12,145	)	$	7,074
Consolidation of excess facilities		40,233		(3,020	)		(6,489	)		30,724
Other contractual obligations		1,916		—			(68	)		1,848
Total	$	61,368	$	(3,020	)	$	(18,702	)	$	39,646

All employees included in these programs have been terminated. The remaining balance owed for the consolidation of excess facilities is expected to be paid out through 2015.

10.  Commitments and Contingencies

Line of Credit

We have available for use a credit line of $50.0 million in the United States. As of June 30, 2008, 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, if any. At June 30, 2008, we were in compliance with the covenants.

Litigation

We are a party to various litigation matters which we consider routine and incidental to our business. Management does not expect the results of any of these actions to have a material adverse effect on our business, results of operations or financial condition.

17

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

11.  Segment Information

We manage our business in two broad categories: EMC Information Infrastructure and VMware Virtual Infrastructure. The EMC Information Infrastructure business operates in three segments: Information Storage, Content Management and Archiving 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 charges and infrequently occurring gains or losses are also excluded from the measures used by management in assessing segment performance. As a result of preparing separate financial statements for VMware’s initial public offering in August 2007, there have been some adjustments to VMware’s stand-alone consolidated financial statements that have been recorded in different periods by EMC and VMware. These differences are not material to the consolidated financial statements and segment disclosures of EMC. 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.

Our segment information for the three and six months ended June 30, 2008 and 2007 is as follows (tables in thousands, except percentages):

	EMC Information Infrastructure
	Information Storage			Content Management and Archiving			RSA Information Security			EMC Information Infrastructure			VMware Virtual Infrastructure within EMC			Corp Reconciling Items			Consolidated
Three Months Ended:
June 30, 2008
Revenues:
Systems revenues	$	1,523,695		$	138		$	4,179		$	1,528,012		$	—		$	—		$	1,528,012
Software revenues:
Software license		494,331			73,277			84,888			652,496			281,143			—			933,639
Software maintenance		283,292			75,660			30,108			389,060			135,665			—			524,725
Total software revenues		777,623			148,937			114,996			1,041,556			416,808			—			1,458,364
Other services revenues		571,929			54,931			24,871			651,731			35,767			—			687,498
Total revenues		2,873,247			204,006			144,046			3,221,299			452,575			—			3,673,874
Cost of sales		1,395,594			76,674			43,131			1,515,399			71,579			58,326			1,645,304
Gross profit	$	1,477,653		$	127,332		$	100,915			1,705,900			380,996			(58,326	)		2,028,570
Gross profit percentage		51.4	%		62.4	%		70.1	%		53.0	%		84.2	%		—			55.2	%
Research and development											305,420			94,783			42,299			442,502
Selling, general, and administrative											868,495			178,607			88,572			1,135,674
Total costs and expenses											1,173,915			273,390			130,871			1,578,176
Operating income											531,985			107,606			(189,197	)		450,394
Other income, net											33,563			3,562			—			37,125
Income before taxes and minority interest										$	565,548		$	111,168		$	(189,197	)	$	487,519

18

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	EMC Information Infrastructure
	Information Storage			Content Management and Archiving			RSA Information Security			EMC Information Infrastructure			VMware Virtual Infrastructure within EMC			Corp Reconciling Items			Consolidated
Three Months Ended:
June 30, 2007
Revenues:
Systems revenues	$	1,347,357		$	1,708		$	5,373		$	1,354,438		$	—		$	—		$	1,354,438
Software revenues:
Software license		512,521			69,046			81,300			662,867			205,050			—			867,917
Software maintenance		242,941			60,416			23,392			326,749			73,485			—			400,234
Total software revenues		755,462			129,462			104,692			989,616			278,535			—			1,268,151
Other services revenues		425,199			42,432			14,890			482,521			19,562			—			502,083
Total revenues		2,528,018			173,602			124,955			2,826,575			298,097			—			3,124,672
Cost of sales		1,238,748			65,733			33,470			1,337,951			43,274			42,634			1,423,859
Gross profit	$	1,289,270		$	107,869		$	91,485			1,488,624			254,823			(42,634	)		1,700,813
Gross profit percentage		51.0	%		62.1	%		73.2	%		52.7	%		85.5	%		—			54.4	%
Research and development											295,371			62,695			26,900			384,966
Selling, general, and administrative											733,694			124,387			66,268			924,349
Total costs and expenses											1,029,065			187,082			93,168			1,309,315
Operating income											459,559			67,741			(135,802	)		391,498
Other income, net											41,195			(5,513	)		—			35,682
Income before taxes and minority interest										$	500,754		$	62,228		$	(135,802	)	$	427,180
	EMC Information Infrastructure
	Information Storage			Content Management and Archiving			RSA Information Security			EMC Information Infrastructure			VMware Virtual Infrastructure within EMC			Corp Reconciling Items			Consolidated
Six Months Ended:
June 30, 2008
Revenues:
Systems revenues	$	2,956,885		$	2,659		$	8,591		$	2,968,135		$	—		$	—		$	2,968,135
Software revenues:
Software license		964,780			131,884			162,159			1,258,823			575,123			—			1,833,946
Software maintenance		574,848			149,418			58,893			783,159			247,784			—			1,030,943
Total software revenues		1,539,628			281,302			221,052			2,041,982			822,907			—			2,864,889
Other services revenues		1,088,563			105,248			49,260			1,243,071			67,838			—			1,310,909
Total revenues		5,585,076			389,209			278,903			6,253,188			890,745			—			7,143,933
Cost of sales		2,716,498			151,031			83,450			2,950,979			140,153			114,836			3,205,968
Gross profit	$	2,868,578		$	238,178		$	195,453			3,302,209			750,592			(114,836	)		3,937,965
Gross profit percentage		51.4	%		61.2	%		70.1	%		52.8	%		84.3	%		—			55.1	%
Research and development											599,925			191,956			84,135			876,016
Selling, general, and administrative											1,691,473			351,103			175,313			2,217,889
In-process research and development											—			—			79,204			79,204
Restructuring credits											(357	)		—			—			(357	)
Total costs and expenses											2,291,041			543,059			338,652			3,172,752
Operating income											1,011,168			207,533			(453,488	)		765,213
Other income, net											85,259			6,201			—			91,460
Income before taxes and minority interest										$	1,096,427		$	213,734		$	(453,488	)	$	856,673

19

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	EMC Information Infrastructure
	Information Storage			Content Management and Archiving			RSA Information Security			EMC Information Infrastructure			VMware Virtual Infrastructure within EMC			Corp Reconciling Items			Consolidated
Six Months Ended:
June 30, 2007
Revenues:
Systems revenues	$	2,650,097		$	1,776		$	8,331		$	2,660,204		$	—		$	—		$	2,660,204
Software revenues:
Software license		999,079			137,518			163,234			1,299,831			374,746			—			1,674,577
Software maintenance		477,737			120,755			45,019			643,511			138,803			—			782,314
Total software revenues		1,476,816			258,273			208,253			1,943,342			513,549			—			2,456,891
Other services revenues		828,033			85,751			28,232			942,016			40,566			—			982,582
Total revenues		4,954,946			345,800			244,816			5,545,562			554,115			—			6,099,677
Cost of sales		2,470,448			128,035			65,186			2,663,669			80,056			85,199			2,828,924
Gross profit	$	2,484,498		$	217,765		$	179,630			2,881,893			474,059			(85,199	)		3,270,753
Gross profit percentage		50.1	%		63.0	%		73.4	%		52.0	%		85.6	%		—			53.6	%
Research and development											565,698			122,205			52,455			740,358
Selling, general, and administrative											1,437,273			233,028			129,738			1,800,039
Restructuring credits											(2,670	)		—			—			(2,670	)
Total costs and expenses											2,000,301			355,233			182,193			2,537,727
Operating income											881,592			118,826			(267,392	)		733,026
Other income, net											76,555			(2,187	)		—			74,368
Income before taxes and minority interest										$	958,147		$	116,639		$	(267,392	)	$	807,394

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):

	For the Three Months Ended				For the Six Months Ended
	June 30, 2008		June 30, 2007		June 30, 2008		June 30, 2007
United States	$	1,927,094	$	1,754,270	$	3,812,535	$	3,427,550
Europe, Middle East and Africa		1,147,098		900,947		2,199,705		1,774,233
Asia Pacific		440,846		346,636		820,633		667,565
Latin America, Mexico and Canada		158,836		122,819		311,060		230,329
Total	$	3,673,874	$	3,124,672	$	7,143,933	$	6,099,677

No country other than the United States accounted for 10% or more of revenues during the three and six months ended June 30, 2008 or 2007.

Long-lived assets, excluding financial instruments and deferred tax assets in the United States were $9,206.3 million at June 30, 2008 and $9,006.5 million at December 31, 2007. No country other than the United States accounted for 10% or more of these assets at June 30, 2008 or December 31, 2007. Long-lived assets, excluding financial instruments and deferred tax assets, internationally were $1,594.3 million at June 30, 2008 and $1,379.5 million at December 31, 2007.

For the three and six months ended June 30, 2008, sales to Dell Inc. accounted for 12.3% and 12.4%, respectively, of our total revenues. For the three and six months ended June 30, 2007, sales to Dell Inc. accounted for 15.6% and 14.6%, respectively, of our total revenues.

20

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

12.   Income Taxes

Our effective income tax rates were 21.0% and 22.9% for the three and six months ended June 30, 2008, respectively. Our effective income tax rates were 21.7% and 19.9% for the three and six months ended June 30, 2007, respectively. The effective income tax rate is based upon the estimated income for the year, the composition of the income in different countries, and adjustments, if any, in the applicable quarterly periods for the potential tax consequences, benefits, resolutions of tax audits or other tax contingencies. For the three and six months ended June 30, 2008 and 2007, the effective tax rate varied from the statutory tax rate as a result of the mix of income attributable to foreign versus domestic jurisdictions. Our aggregate income tax rate in foreign jurisdictions is lower than our income tax rate in the United States.

Our effective income tax rate decreased from the three months ended June 30, 2007 compared to the three months ended June 30, 2008 as a result of the mix of income between our foreign and domestic jurisdictions, partially offset by the expiration of the U.S. federal research and development tax credit.

Our effective income tax rate increased from the six months ended June 30, 2007 compared to the six months ended June 30, 2008 due to non-deductible IPR&D charges in 2008, the expiration of the U.S. federal research and development tax credit for 2008 and higher discrete tax benefits in 2007, partially offset by a change in the mix of income between our foreign and domestic jurisdictions. Non-deductible IPR&D charges totaling $79.2 million during the quarter ended March 31, 2008 and the expiration of the U.S. federal research and development tax credit increased the 2008 effective tax rate by approximately 3.5%. In addition, during the six months ended June 30, 2007, we recognized discrete net tax benefits of $22.2 million which reduced the 2007 effective tax rate by 2.8%. This was made up primarily of reductions of income tax contingencies, release of a valuation allowance recorded on certain foreign deferred tax assets, and the tax benefit from employees’ disqualifying dispositions of qualified stock options.

We have substantially concluded all U.S. federal income tax matters for all years through 2004 and are continuing with the U.S. federal income tax audit for 2005 and 2006. We have income tax audits in process in numerous state, local and international jurisdictions. Based on the timing and outcome of these examinations, 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 the related unrecognized tax benefits could change from those recorded in our statement of financial position. We anticipate that several of these audits may be finalized within the next 12 months. Based on the status of these examinations and the protocol of finalizing such audits, it is not possible to estimate the impact of any amount of such changes, if any, to our previously recorded uncertain tax positions. However, it is reasonably possible that up to $46.0 million of individually insignificant unrecognized tax positions may be recognized within one year as a result of the lapse of statutes of limitations and the resolution of agreements with various foreign tax authorities.

21

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our interim consolidated financial statements and notes thereto which appear elsewhere in this Quarterly Report on Form 10-Q and the MD&A contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 29, 2008. The following discussion contains forward-looking statements and should also be read in conjunction with the risk factors set forth in Item 1A of Part II of this Quarterly Report on Form 10-Q. The forward-looking statements do not include the impact of any potential mergers, acquisitions, divestitures, securities offerings or business combinations that may be announced or closed after the date hereof.

All dollar amounts expressed numerically in the MD&A are in millions, except per share amounts.

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, Content Management and Archiving and RSA Information Security. Our objective for our EMC Information Infrastructure business is to achieve profitable growth by increasing our operating income, measured on a cash basis, at a rate greater than our revenue growth. Management believes that by providing a combination of systems, software, services and solutions to meet customers’ needs, we will be able to profitably increase revenues. Our efforts over the past few years have been primarily focused on growing revenues by enhancing and expanding our portfolio of offerings to satisfy our customers’ information infrastructure requirements. We have enhanced and expanded our portfolio of offerings through both internal research and development (“R&D”) and through acquisitions. We have increased our overall investment in R&D from $565.7 for the six months ended June 30, 2007 to $599.9 for the six months ended June 30, 2008. Additionally, we invested $571.5 on acquisitions during the six months ended June 30, 2008. These R&D expenditures and acquisitions have enabled us and should continue to enable us to introduce new and enhanced offerings. We plan to continue our R&D efforts to enable further innovation so we can continue to introduce new and enhanced offerings. Revenue from new and enhanced product offerings introduced in the last 12 months, including all product revenues from companies acquired during the last 12 months, contributed $842.9 of revenue to the current quarter and $1,653.5 to the six months ended June 30, 2008.

Concurrent with our objective of growing revenues, we are focused on controlling our costs. In 2008, we have focused and will continue to focus on our indirect spending in order to reduce our overall operating expenses. This will enable us to further reinvest in R&D and add additional sales personnel in higher growth emerging markets and our commercial business.

VMware Virtual Infrastructure

Our VMware Virtual Infrastructure business has achieved significant revenue growth to date and is focused on extending its growth by broadening its product portfolio, enabling choice for customers and driving standards, expanding its network of technology and distribution partners, increasing product awareness and promoting the adoption of server virtualization. In addition to selling to new customers, VMware, Inc. (“VMware”) is also focused on promoting the adoption of virtualization and building long-term relationships with its customers through the adoption of enterprise license agreements (“ELAs”). VMware will continue to invest in its corporate infrastructure, including customer support, information technology and general and administrative functions.

The financial focus of VMware is on sustaining its growth in revenue to generate cash flow to expand its industry segment market share and its virtualization solutions. Although VMware is currently the leading provider of virtualization solutions, management believes the adoption by customers of virtualization solutions is at very early stages. The business expects to face competitive threats to its leadership position from a number of companies, some of whom may have significantly greater resources. As a result, management believes it is important to continue to invest in research and product development, sales and marketing and the support function to maintain or expand its leadership in providing virtualization solutions. This investment could result in contracting operating margins as VMware invests in its future.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

RESULTS OF OPERATIONS

Revenues

The following table presents revenue by our segments:

	For the Three Months Ended
	June 30, 2008		June 30, 2007		$ Change		% Change
Information Storage	$	2,873.2	$	2,528.0	$	345.2	13.7	%
Content Management and Archiving		204.0		173.6		30.4	17.5
RSA Information Security		144.0		125.0		19.0	15.2
VMware Virtual Infrastructure		452.6		298.1		154.5	51.8
Total revenues	$	3,673.9	$	3,124.7	$	549.2	17.6	%
	For the Six Months Ended
	June 30, 2008		June 30, 2007		$ Change		% Change
Information Storage	$	5,585.1	$	4,954.9	$	630.2	12.7	%
Content Management and Archiving		389.2		345.8		43.4	12.6
RSA Information Security		278.9		244.8		34.1	13.9
VMware Virtual Infrastructure		890.7		554.1		336.6	60.7
Total revenues	$	7,143.9	$	6,099.7	$	1,044.2	17.1	%

The Information Storage segment revenues include systems, software and other services revenues. Systems revenues were $1,523.7 and $1,347.4 for the three months ended June 30, 2008 and 2007, respectively, representing an increase of 13.1% and were $2,956.9 and $2,650.1 for the six months ended June 30, 2008 and 2007, respectively, representing an increase of 11.6%. The increases in systems revenues were due to greater demand for these products attributable to increased demand for our Information Technology (“IT”) infrastructure offerings and a broadened product portfolio. Software revenues were $777.6 and $755.5 for the second quarter of 2008 and 2007, respectively, representing an increase of 2.9% and were $1,539.6 and $1,476.8 for the first six months of 2008 and 2007, respectively, representing an increase of 4.3%. The second quarter increase of 2.9% was due to a $40.4 or 16.6% increase in software maintenance revenues, partially offset by a decrease in software license revenues of $18.2 or 3.5%. The six month increase of 4.3% was due to a $97.1 or 20.3% increase in software maintenance revenues, partially offset by a decrease in software license revenues of $34.3 or 3.4%. Software maintenance revenues increased due to continued demand for support and unspecified upgrades from our installed base. The decline in software license revenues was due to a combination of factors, including existing systems’ customers migrating to higher end systems while continuing to utilize their existing software licenses and increased lower end systems sales which utilize less software. Revenue from new and enhanced product offerings introduced in the last 12 months, including all product revenue from companies acquired during the last 12 months, contributed $789.1 of revenue to the current quarter and $1,547.9 for the six months ended June 30, 2008. Total other services were $571.9 and $425.2 for the three months ended June 30, 2008 and 2007, respectively, representing an increase of 34.5% and were $1,088.6 and $828.0 for the first six months ended June 30, 2008 and 2007, respectively, representing an increase of 31.5%. Other services primarily consist of professional services and system maintenance. Professional services increased 41.1% and 36.8% for the three and six months ended June 30, 2008, respectively, and system maintenance revenues increased 19.8% and 15.8% for the three and six months ended June 30, 2008, respectively. The increase in professional services was partially attributable to greater demand for our professional services, largely to support and implement information lifecycle management-based solutions and to acquisitions consummated in 2007 and 2008. Total information storage revenue growth was also driven by higher sales volume from our channel partners. Our channel partners accounted for 47.3% and 47.9% of the revenue growth in the three and six months ended June 30, 2008, respectively.

The Content Management and Archiving segment revenues primarily include software revenues and other services revenues. Total software revenues were $148.9 and $129.5 for the three months ended June 30, 2008 and 2007, respectively, representing an increase of 15.0% and were $281.3 and $258.3 for the six months ended June 30, 2008 and 2007, respectively, representing an

23

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

increase of 8.9%. Revenue from new and enhanced product offerings introduced in the last 12 months, including all product revenues from companies acquired during the last 12 months, contributed $51.6 for the quarter ended June 30, 2008 and $95.0 for the six months ended June 30, 2008. The 15.0% increase in second quarter software revenues was due to an increase in software maintenance revenues of $15.2 or 25.2% and a $4.2 or 6.1% increase in software license revenue. Software maintenance revenues increased due to continued demand for support and unspecified upgrades from our installed base. The 8.9% increase in software revenues for the six months ended June 30, 2008 was due to an increase in software maintenance revenue of $28.7 or 23.7% partially offset by a $5.6 or 4.1% decrease in software license revenue. The decline in software license revenues was primarily due to lower demand in the United States during the first quarter of 2008. Other services consist primarily of professional services. The increases in other services revenues were due to greater demand for our professional services to support and implement solutions for managing increasing volumes of customers’ unstructured data.

The RSA Information Security segment revenues primarily include software revenues and other services revenues. Total software revenues were $115.0 and $104.7 for the three months ended June 30, 2008 and 2007, respectively, representing an increase of 9.8% and were $221.1 and $208.3 for the six months ended June 30, 2008 and 2007, respectively, representing an increase of 6.1%. Revenue from new and enhanced product offerings introduced in the last 12 months, including all product revenues from companies acquired during the last 12 months, contributed $2.2 to the quarter ended June 30, 2008 and $10.6 for the six months ended June 30, 2008. The 9.8% increase in second quarter software revenues was primarily due to an increase in software maintenance revenues of $6.7 or 28.7% and a $3.6 or 4.4% increase in software license revenues. The 6.1% increase in software revenues for the six months ended June 30, 2008 was primarily due to an increase in software maintenance revenue of $13.9 or 30.8%, partially offset by a $1.1 or a 0.7% decrease in software license revenue. Software maintenance revenues increased due to continued demand for support and unspecified upgrades from our installed base. The change in software license revenues for the six months ended June 30, 2008 was impacted by lower demand in the first quarter of 2008 when compared to the second quarter of 2008. Other services increased $10.0 or 67.0% and $21.0 or 74.5% for the three and six months ended June 30, 2008, respectively, as a result of increased demand for professional services.

The VMware Virtual Infrastructure segment includes software license revenues and service revenues. Total revenues were $452.6 and $298.1 for the three months ended June 30, 2008 and 2007, respectively, representing an increase of 51.8% and were $890.7 and $554.1 for the six months ended June 30, 2008 and 2007, respectively, representing an increase of 60.7%. For the three months ended June 30, 2008 software license revenues increased by $76.0 or 37.1%, to $281.1, compared with $205.1 in the second quarter of 2007. For the six months ended June 30, 2008 software license revenues increased by $200.4 or 53.5%, to $575.1, compared with $374.7 for the six months ended June 30, 2007. A significant majority of the revenue growth for the three and six months ended June 30, 2008 compared to the prior year comparable periods is the result of greater demand for VMware’s virtualization product offerings attributable to wider industry acceptance of virtualization as part of organizations’ IT infrastructure, a broadened product portfolio and expansion of VMware’s network of indirect channel partners. VMware expects license revenues to continue to grow throughout 2008, as VMware continues to broaden its virtual infrastructure solutions technology and product portfolio for more uses to more users, increase its channel partner transaction business and acquire new customers. However, it expects the rate of growth to decelerate due primarily to the size and scale of the business and lengthened sales cycles attributable to the uncertain economic environment. ELAs continue to be a significant component of VMware’s revenue growth. Under an ELA, a portion of the revenue is attributed to the license and recognized immediately, but the majority is deferred and recognized as services revenue in future periods. Although license revenue grew in the second quarter of 2008 when compared to the second quarter of 2007, license revenue declined slightly from the first quarter of 2008. At the end of the second quarter of 2008, VMware observed a change in certain customers’ behavior with the lengthening of the sales cycle on ELAs that VMware believes is primarily correlated to economic uncertainty, especially in the United States. In certain cases, although customers made the decision to purchase VMware solutions, they did so in smaller quantities. VMware believes this had a negative impact on revenue and deferred revenue in the second quarter. VMware expects this trend to continue throughout 2008 and perhaps longer term.

For the three months ended June 30, 2008, VMware software maintenance and services revenues increased by $78.4 or 84.3%, to $171.4 compared with $93.0 in the second quarter of 2007. For the six months ended June 30, 2008 software maintenance and service revenues increase by $136.2 or 75.9%, to $315.6 compared with $179.4 for the six months ended June 30, 2007. Software maintenance and services revenues primarily consist of software maintenance and professional services revenues. The increase in software maintenance and services revenues for both the three and six months ended June 30, 2008 was primarily attributable to growth in VMware’s software maintenance revenues and to a lesser extent growth in VMware’s professional services revenue. Software maintenance revenue growth reflects the increase in VMware’s license revenues and renewals to customer contracts. Professional services revenue growth reflects increased demand for design and implementation services and

24

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

training programs, as end-user organizations deployed virtualization across their organizations. Given the reasons cited previously, VMware expects that service revenue will compose a larger proportion of its revenue mix and revenue growth in 2008.

Consolidated revenues by geography were as follows:

	For the Three Months Ended
	June 30, 2008		June 30, 2007		% Change
United States	$	1,927.1	$	1,754.3	9.9	%
Europe, Middle East and Africa		1,147.1		900.9	27.3
Asia Pacific		440.8		346.6	27.2
Latin America, Mexico and Canada		158.8		122.8	29.3
	For the Six Months Ended
	June 30, 2008		June 30, 2007		% Change
United States	$	3,812.5	$	3,427.6	11.2	%
Europe, Middle East and Africa		2,199.7		1,774.2	24.0
Asia Pacific		820.6		667.6	22.9
Latin America, Mexico and Canada		311.1		230.3	35.1

Revenue increased for the three and six months ended June 30, 2008 compared to the same periods in 2007 in all of our markets due to greater demand for our products and services. Changes in exchange rates favorably impacted revenue growth by 2.7% and 2.5% for the three and six months ended June 30, 2008, respectively. The impact of the change in rates in both periods 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:

	For the Three Months Ended
	June 30, 2008			June 30, 2007			$ Change			% Change
Cost of revenue:
Information Storage	$	1,395.6		$	1,238.7		$	156.9		12.7	%
Content Management and Archiving		76.7			65.7			11.0		16.7
RSA Information Security		43.1			33.5			9.6		28.7
VMware Virtual Infrastructure		71.6			43.3			28.3		65.4
Corporate reconciling items		58.3			42.6			15.7		36.9
Total cost of revenue		1,645.3			1,423.9			221.4		15.5
Gross margins:
Information Storage		1,477.7			1,289.3			188.4		14.6
Content Management and Archiving		127.3			107.9			19.4		18.0
RSA Information Security		100.9			91.5			9.4		10.3
VMware Virtual Infrastructure		381.0			254.8			126.2		49.5
Corporate reconciling items		(58.3	)		(42.6	)		(15.7	)	36.9
Total gross margin		2,028.6			1,700.8			327.8		19.3
Operating expenses:
Research and development (1)		442.5			385.0			57.5		14.9
Selling, general and administrative (2)		1,135.7			924.3			211.4		22.9
Total operating expenses		1,578.2			1,309.3			268.9		20.5
Operating income		450.4			391.5			58.9		15.0
Investment income, interest expense and other income, net		37.1			35.7			1.4		3.9
Income before income taxes		487.5			427.2			60.3		14.1
Provision for income taxes		102.3			92.8			9.5		10.2
Minority interest, net of taxes		(7.7	)		—			(7.7	)	NM
Net income	$	377.5		$	334.4		$	43.1		12.9	%

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

	For the Six Months Ended
	June 30, 2008			June 30, 2007			$ Change			% Change
Cost of revenue:
Information Storage	$	2,716.5		$	2,470.4		$	246.1		10.0	%
Content Management and Archiving		151.0			128.0			23.0		18.0
RSA Information Security		83.5			65.2			18.3		28.1
VMware Virtual Infrastructure		140.2			80.1			60.1		75.0
Corporate reconciling items		114.8			85.2			29.6		34.7
Total cost of revenue		3,206.0			2,828.9			377.1		13.3
Gross margins:
Information Storage		2,868.6			2,484.5			384.1		15.5
Content Management and Archiving		238.2			217.8			20.4		9.4
RSA Information Security		195.5			179.6			15.9		8.9
VMware Virtual Infrastructure		750.6			474.1			276.5		58.3
Corporate reconciling items		(114.8	)		(85.2	)		(29.6	)	34.7
Total gross margin		3,938.0			3,270.8			667.2		20.4
Operating expenses:
Research and development (3)		876.0			740.4			135.6		18.3
Selling, general and administrative (4)		2,217.9			1,800.0			417.9		23.2
In-process research and development		79.2			—			79.2		NM
Restructuring credits		(0.4	)		(2.7	)		2.3		(85.2	)
Total operating expenses		3,172.8			2,537.7			635.1		25.0
Operating income		765.2			733.0			32.2		4.4
Investment income, interest expense and other income, net		91.5			74.4			17.1		23.0
Income before income taxes		856.7			807.4			49.3		6.1
Provision for income taxes		196.5			160.4			36.1		22.5
Minority interest, net of taxes		(13.9	)		—			(13.9	)	NM
Net income	$	646.3		$	647.0		$	(0.7	)	(0.1	)%

(1) Amount includes reconciling items of $42.3 and $26.9 for the three months ended June 30, 2008 and 2007, respectively. See footnote 11 for additional information regarding corporate reconciling items.

(2) Amount includes reconciling items of $88.6 and $66.3 for the three months ended June 30, 2008 and 2007, respectively. See footnote 11 for additional information regarding corporate reconciling items.

(3) Amount includes reconciling items of $84.1 and $52.5 for the six months ended June 30, 2008 and 2007, respectively. See footnote 11 for additional information regarding corporate reconciling items.

(4) Amount includes reconciling items of $175.3 and $129.7 for the six months ended June 30, 2008 and 2007, respectively. See footnote 11 for additional information regarding corporate reconciling items.

NM – not measurable

Gross Margins

Overall our gross margin percentages were 55.2% and 54.4% for the second quarters of 2008 and 2007, respectively. The improvement in the gross margin percentage in the second quarter of 2008 compared to 2007 was attributable to the VMware Virtual Infrastructure segment, which contributed 124 basis points and the Content Management and Archiving segment which contributed 8 basis points. These improvements were partially offset by the margin impact of the Information Storage segment and the RSA Information Security segment, which each decreased overall gross margins by 3 basis points. The increase in corporate reconciling items, consisting of stock-based compensation and acquisition-related intangible asset amortization, decreased the consolidated gross margin percentage by 46 basis points.

26

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

For the six months ended June 30, 2008 and 2007, the overall gross margin percentages were 55.1% and 53.6%, respectively. The improvement in the gross margin percentage for the six months ended June 30, 2008 compared to 2007 was attributable to the VMware Virtual Infrastructure segment, which contributed 142 basis points and the Information Storage segment which contributed 62 basis points. These improvements were partially offset by the margin impact of the Content Management and Archiving segment, which decreased overall gross margins by 5 basis points, and the RSA Information Security segment, which decreased overall gross margins by 4 basis points. The increase in corporate reconciling items, consisting of stock-based compensation and acquisition-related intangible asset amortization, decreased the consolidated gross margin percentage by 45 basis points.

For segment reporting purposes, stock-based compensation and acquisition-related intangible asset amortization are recognized as corporate expenses and are not allocated among our various operating segments. The increase of $15.7 in the corporate reconciling items for the quarter ended June 30, 2008 was attributable to a $10.1 increase in intangible asset amortization expense associated with acquisitions and a $5.6 increase in stock-based compensation expense primarily attributable to grants of equity-based compensation made in conjunction with VMware’s initial public offering in the third quarter of 2007. The increase of $29.6 in the corporate reconciling items for the six months ended June 30, 2008 was attributable to a $19.3 increase in intangible asset amortization expense associated with acquisitions and a $10.3 increase in stock-based compensation expense primarily attributable to grants of equity-based compensation made in conjunction with VMware’s initial public offering in the third quarter of 2007.

The gross margin percentages for the Information Storage segment were 51.4% and 51.0% for the second quarters of 2008 and 2007, respectively, and were 51.4% and 50.1% for the six months ended June 30, 2008 and 2007, respectively. The increases were primarily attributable to our ability to achieve higher gross margins from our focus on selling overall solutions to our customers.

The gross margin percentages for the Content Management and Archiving segment were 62.4% and 62.1% for the second quarters of 2008 and 2007, respectively. The increase in the gross margin percentage for the three months ended June 30, 2008 was primarily due to improved gross margin in other services when compared to the prior period partially offset by a decrease in the mix of software license and maintenance revenues as a percentage of total segment revenues. For the three months ended June 30, 2008, software license and maintenance revenues as a percentage of total revenues decreased from 74.6% to 73.0%. Software license and maintenance revenues generally provide a higher gross margin percentage than services revenues. For the six months ended June 30, 2008, the Content Management and Archiving segment’s gross margin decreased from 63.0% to 61.2%. This decrease in the gross margin percentage was primarily due to a reduction in the mix of software license and maintenance revenue as a percentage of total segment revenues. Software license and maintenance revenues as a percentage of total revenues declined to 72.3% for the six months ended June 30, 2008 from 74.7% for the six months ended June 30, 2007.

The gross margin percentages for the RSA Information Security segment were 70.1% and 73.2% for the three months ended June 30, 2008 and 2007, respectively. The decrease in the gross margin percentage for the three months ended June 30, 2008 compared to the comparable 2007 period was primarily due to a decrease in the mix of software license and maintenance revenues as a percentage of total segment revenues. Software license and maintenance revenues as a percentage of total revenues decreased from 83.8% for the three months ended June 30, 2007 to 79.8% for the three months ended June 30, 2008. Software license and maintenance revenues generally provide a higher gross margin percentage than services revenues. For the six months ended June 30, 2008, the RSA Information Security segment gross margin decreased from 73.4% to 70.1%. The decrease in the gross margin percentage was primarily due to a decrease in the mix of software license and maintenance revenues as a percentage of total segment revenues. Software license and maintenance revenues as a percentage of total revenues decreased from 85.1% for the six months ended June 30, 2007 to 79.3% for the six months ended June 30, 2008.

The gross margin percentages for VMware Virtual Infrastructure segment were 84.2% and 85.5% for the second quarters of 2008 and 2007, respectively, and were 84.3% and 85.6% for the six months ended June 30, 2008 and 2007, respectively. The decrease in the gross margin percentage for both the three and six months ended June 30, 2008 compared to the comparable 2007 periods were primarily due to a reduction in the mix of software license revenues. Software license revenues as a percentage of total revenues decreased from 68.8% to 62.1% for the three months ended June 30, 2008 and decreased from 67.6% to 64.6% for the six months ended June 30, 2008.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

Research and Development

As a percentage of revenues, R&D expenses were 12.0% and 12.3% for the three months ended June 30, 2008 and 2007, respectively, and were 12.3% and 12.1% for the six months ended June 30, 2008 and 2007, respectively. R&D expenses increased $57.5 and $135.6 for the three and six months ended June 30, 2008 compared to the same period in 2007, primarily due to higher personnel-related costs, including salaries, benefits, recruiting, contract labor and consulting, and higher cost of facilities. Personnel-related costs increased by $67.1 and $131.9 and the cost of facilities increased by $7.8 and $13.9 for the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007. Partially offsetting the increases were an increase in capitalized software development costs of $15.4 and $12.6 for the three and six months ended June 30, 2008, respectively, which reduce R&D costs and a reduction in the cost of materials to support new product development of $2.0 and $5.7 for the three and six months ended June 30, 2008, respectively.

Corporate reconciling items within R&D consist of stock-based compensation and intangible asset amortization. These costs increased $15.4 and $31.6 to $42.3 and $84.1 for the three and six months ended June 30, 2008, respectively. For the three months ended June 30, 2008, stock-based compensation expense increased $14.7 and intangible asset amortization increased $0.7. The increase in stock-based compensation expense consisted of an $11.6 increase within the VMware Virtual Infrastructure business and a $3.1 increase within EMC’s Information Infrastructure business. For the six months ended June 30, 2008, stock-based compensation expense increased $30.0 and intangible asset amortization increased $1.6. The increase in stock-based compensation expense for the six months ended June 30, 2008 consisted of a $26.0 increase within the VMware Virtual Infrastructure business and a $4.0 increase within EMC’s Information Infrastructure business. The increase in stock-based compensation within the VMware Virtual Infrastructure business was primarily attributable to grants of equity-based compensation made in conjunction with VMware’s initial public offering. For segment reporting purposes, corporate reconciling items are not allocated to our various operating segments.

R&D expenses within EMC’s Information Infrastructure business, as a percentage of EMC’s Information Infrastructure business revenues, were 9.5% and 10.4% for the three months ended June 30, 2008 and 2007, respectively, and were 9.6% and 10.2% for the six months ended June 30, 2008 and 2007, respectively. R&D expenses increased $10.0 and $34.2 for the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007. For the three months ended June 30, 2008 the increase was primarily due to higher personnel-related costs and increased facilities costs which increased by $18.8 and $0.9, respectively. Partially offsetting the increase was an increase in capitalized software development costs of $7.7 which reduce R&D costs and a reduction in the cost of materials to support new product development of $2.7. For the six months ended June 30, 2008 the increase was primarily due to higher personel-related costs and increased facilities cost which increased by $40.0 and $3.8, respectively. Partially offsetting the increase was a reduction in the costs of materials to support new product development of $7.1 and an increase in capitalized software development costs of $5.0 which reduce R&D costs.

R&D expenses within the VMware Virtual Infrastructure business, as a percentage of VMware’s revenues, were 20.9% and 21.0% for the three months ended June 30, 2008 and 2007, respectively, and were 21.6% and 22.1% for the six months ended June 30, 2008 and 2007, respectively. R&D expenses increased $32.1 and $69.8 for the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007. The increase in R&D expenses consisted primarily of increased salaries, benefits expense and consulting fees, resulting from the deployment of additional resources to support new product development. Partially offsetting these increases were software capitalization costs increases of $7.7 and $7.6 for the three and six months ended June 30, 2008, respectively, which reduce R&D costs.

Selling, General and Administrative

As a percentage of revenues, selling, general and administrative (“SG&A”) expenses were 30.9% and 29.6% for the three months ended June 30, 2008 and 2007, respectively, and were 31.0% and 29.5% for the six months ended June 30, 2008 and 2007, respectively. SG&A expenses increased by $211.3 and $417.9 for the three and six months ended June 30, 2008 compared to the same periods in 2007, primarily due to higher personnel-related costs, depreciation, travel costs and facilities costs to support the overall growth of the business. Personnel-related costs increased by $161.8 and $306.5, depreciation increased by $12.9 and $26.0, travel increased by $8.1 and $19.0 and facilities increased by $9.7 and $16.9 for the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007.

Corporate reconciling items within SG&A consist of stock-based compensation and intangible asset amortization. These costs increased $22.3 and $45.6 to $88.6 and $175.3 for the three and six months ended June 30, 2008, respectively, compared to the

28

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

same periods in 2007. For the three months ended June 30, 2008, stock-based compensation increased $12.8 and intangible asset amortization increased $9.5. The increase in stock-based compensation consisted of an $11.8 increase within the VMware Virtual Infrastructure business and $1.0 within EMC’s Information Infrastructure business. For the six months ended June 30, 2008, stock-based compensation increased $28.4 and intangible asset amortization increased $17.2. The increase in stock-based compensation consisted of a $24.6 increase within the VMware Virtual Infrastructure business and a $3.8 increase within EMC’s Information Infrastructure business. The increase in stock-based compensation within the VMware Virtual Infrastructure business for the three and six months ended June 30, 2008 was primarily attributable to grants of equity-based compensation made in conjunction with VMware’s initial public offering in the third quarter of 2007. The increase in intangible asset amortization for the three and six months ended June 30, 2008 was attributable to amortization of intangible assets associated with acquisitions by both EMC’s Information Infrastructure business and the VMware Virtual Infrastructure business. For segment reporting purposes, corporate reconciling items are not allocated to our various operating segments.

SG&A expenses within EMC’s Information Infrastructure business, as a percentage of EMC’s Information Infrastructure business revenues were 27.0% and 26.0% for the three months ended June 30, 2008 and 2007, respectively, and were 27.0% and 25.9% for the six months ended June 30, 2008 and 2007, respectively. SG&A expenses increased by $134.8 and $254.2 for the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007, primarily due to higher personnel-related costs, depreciation, travel costs and facilities costs to support the overall growth of the business. Personnel-related costs increased by $101.2 and $185.4, depreciation increased by $8.9 and $17.9, travel increased by $4.4 and $10.7 and facilities increased by $6.8 and $9.5 for the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007.

SG&A expenses within the VMware Virtual Infrastructure business, as a percentage of VMware’s revenues were 39.5% and 41.7% for the three months ended June 30, 2008 and 2007, respectively, and were 39.4% and 42.1% for the six months ended June 30, 2008 and 2007, respectively. SG&A expenses increased $54.2 and $118.1 for the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007. The increase in SG&A expenses for both the three and six months ended June 30, 2008 was primarily the result of higher salaries and benefits costs due to increases in sales, marketing and administrative personnel. The resources were added to support the growth of the business, including greater finance and legal personnel in response to being a public company, as well as higher commission expense resulting from increased sales volume.

In-Process Research and Development

In-process research and development (“IPR&D”) was $0.0 and $79.2 for the three and six months ended June 30, 2008, respectively. There were no IPR&D charges for the three or six months ended June 30, 2007. Two IPR&D projects related to the acquisition of Pi Corporation (“Pi”) and one IPR&D project related to the acquisition of Infra Corporation Pty Limited (“Infra”) were identified and written off at the time of the respective date of each acquisition because they had no alternative uses and had not reached technological feasibility. 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 a discount rate of 50% for the Pi IPR&D projects and 20% for the Infra IPR&D project.

Restructuring Credits

During the three months ended June 30, 2008, we recognized restructuring credits of $1.3 which is included in SG&A. There were no restructuring credits for the three months ended June 30, 2007. For the six months ended June 30, 2008 and 2007 we recognized restructuring credits of $1.7 and $2.7, respectively. For the six months ended June 30, 2008, $1.3 of these credits are included in SG&A.

The restructuring credits for the three and six months ended June 30, 2008 were primarily attributable to lower than expected severance payments to our 2006 restructuring programs partially offset by higher than expected severance payments to our 2007 and prior restructuring programs.

The restructuring credits for the six months ended June 30, 2007 were primarily attributable to lower than expected costs associated with vacating leased facilities.

29

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

2007 Restructuring Program

The activity for the 2007 restructuring program for the three and six months ended June 30, 2008, respectively, is presented below:

Three Months Ended June 30, 2008

Category	Balance as of March 31, 2008		Adjustment to the Provision		Utilization			Balance as of June 30, 2008
Workforce reductions	$	11.2	$	1.1	$	(3.1	)	$	9.2
Total	$	11.2	$	1.1	$	(3.1	)	$	9.2

Six Months Ended June 30, 2008

Category	Balance as of December 31, 2007		Adjustment to the Provision		Utilization			Balance as of June 30, 2008
Workforce reductions	$	12.4	$	6.4	$	(9.6	)	$	9.2
Total	$	12.4	$	6.4	$	(9.6	)	$	9.2

The 2007 restructuring program commenced in the fourth quarter of 2007 and included approximately 450 employees. These actions impacted the Information Storage, Content Management and Archiving and RSA Information Security segments. The adjustment to the provision in 2008 was primarily attributable to finalizing severance payments. Approximately 425 employees included in this plan have been terminated and the remaining cash portion owed is $7.7 which is expected to be substantially paid out through December 31, 2008.

2006 Restructuring Programs

The activity for the 2006 restructuring programs for the three and six months ended June 30, 2008 and 2007, respectively, is presented below:

Three Months Ended June 30, 2008

Category	Balance as of March 31, 2008		Adjustment to the Provision			Utilization			Balance as of June 30, 2008
Workforce reductions	$	49.7	$	(3.4	)	$	(23.6	)	$	22.7
Consolidation of excess facilities		2.5		(0.3	)		—			2.3
Total	$	52.2	$	(3.7	)	$	(23.6	)	$	25.0

Six Months Ended June 30, 2008

Category	Balance as of December 31, 2007		Adjustment to the Provision			Utilization			Balance as of June 30, 2008
Workforce reductions	$	83.2	$	(9.1	)	$	(51.3	)	$	22.7
Consolidation of excess facilities		2.6		(0.3	)		—			2.3
Total	$	85.7	$	(9.4	)	$	(51.3	)	$	25.0

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

Three Months Ended June 30, 2007

Category	Balance as of March 31, 2007		Adjustment to the Provision		Utilization			Balance as of June 30, 2007
Workforce reductions	$	107.5	$	—	$	(24.6	)	$	82.9
Consolidation of excess facilities		5.4		—		(0.3	)		5.1
Contractual and other obligations		0.5		—		(0.3	)		0.2
Total	$	113.4	$	—	$	(25.2	)	$	88.2

Six Months Ended June 30, 2007

Category	Balance as of December 31, 2006		Adjustment to the Provision		Utilization			Balance as of June 30, 2007
Workforce reductions	$	127.8	$	—	$	(44.9	)	$	82.9
Consolidation of excess facilities		5.5		0.4		(0.8	)		5.1
Contractual and other obligations		4.8		—		(4.6	)		0.2
Total	$	138.2	$	0.4	$	(50.3	)	$	88.2

The adjustment to the provision in 2008 results primarily from finalizing severance payments. Substantially all employees included in these programs have been terminated. The remaining cash balance associated with workforce reductions is $18.0 and is expected to be substantially paid out through 2008. The remaining balance owed for the consolidation of excess facilities is expected to be paid out through 2018.

Prior Restructuring Programs

We implemented restructuring programs from 1998 through 2005. The activity for these programs for the three and six months ended June 30, 2008 and 2007, respectively, is presented below:

Three Months Ended June 30, 2008

Category	Balance as of March 31, 2008		Adjustment to the Provision			Utilization			Balance as of June 30, 2008
Workforce reductions	$	0.9	$	1.5		$	—		$	2.3
Consolidation of excess facilities		22.5		(0.3	)		(3.3	)		18.9
Other contractual obligations		0.9		—			—			0.9
Total	$	24.3	$	1.2		$	(3.3	)	$	22.1

Six Months Ended June 30, 2008

Category	Balance as of December 31, 2007		Adjustment to the Provision			Utilization			Balance as of June 30, 2008
Workforce reductions	$	1.3	$	1.5		$	(0.5	)	$	2.3
Consolidation of excess facilities		25.7		(0.3	)		(6.5	)		18.9
Other contractual obligations		0.8		—			—			0.9
Total	$	27.8	$	1.4		$	(7.0	)	$	22.1

31

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

Three Months Ended June 30, 2007

Category	Balance as of March 31, 2007		Adjustment to the Provision		Utilization			Balance as of June 30, 2007
Workforce reductions	$	9.9	$	—	$	(2.8	)	$	7.1
Consolidation of excess facilities		34.6		—		(3.9	)		30.7
Other contractual obligations		1.9		—		—			1.8
Total	$	46.4	$	—	$	(6.8	)	$	39.6

Six Months Ended June 30, 2007

Category	Balance as of December 31, 2006		Adjustment to the Provision			Utilization			Balance as of June 30, 2007
Workforce reductions	$	19.2	$	—		$	(12.1	)	$	7.1
Consolidation of excess facilities		40.2		(3.0	)		(6.5	)		30.7
Other contractual obligations		1.9		—			—			1.8
Total	$	61.4	$	(3.0	)	$	(18.7	)	$	39.6

All employees included in these programs have been terminated. The remaining balance owed for the consolidation of excess facilities is expected to be paid out through 2015.

Investment Income

Investment income was $58.7 and $50.9 for the three months ended June 30, 2008 and 2007, respectively, and was $135.9 and $103.0 for the six months ended June 30, 2008 and 2007, respectively. Investment income increased for the three and six months ended June 30, 2008 compared to the same periods in 2007 due to higher average outstanding cash and investment balances and improved returns on sales of investments. The weighted average return on investments, excluding realized losses and gains, was 3.1% and 4.2% for three months ended June 30, 2008 and 2007, respectively, and were 3.4% and 4.3% for the six months ended June 30, 2008 and 2007, respectively. Net realized gains (losses) were ($0.2) and ($6.0) for the three months ended June 30, 2008 and 2007, respectively, and were $4.6 and ($10.5) for the six months ended June 30, 2008 and 2007, respectively.

Interest Expense

Interest expense was $18.8 and $18.1 for the three months ended June 30, 2008 and 2007, respectively, and were $36.8 and $36.4 for the six months ended June 30, 2008 and 2007, respectively. Interest expense consists primarily of interest on the Notes.

Other (Expense) Income, Net

Other (expense) income, net was ($2.8) and $3.0 for the three months ended June 30, 2008 and 2007, respectively, and were ($7.6) and $7.8 for the six months ended June 30, 2008 and 2007, respectively. The change was primarily attributable to an increase in foreign currency transaction losses.

Provision for Income Taxes

Our effective income tax rates were 21.0% and 22.9% for the three and six months ended June 30, 2008, respectively. Our effective income tax rates were 21.7% and 19.9% for the three and six months ended June 30, 2007, respectively. The effective income tax rate is based upon the estimated income for the year, the composition of the income in different countries, and adjustments, if any, in the applicable quarterly periods for the potential tax consequences, benefits, resolutions of tax audits or other tax contingencies. For the three and six months ended June 30, 2008 and 2007, the effective tax rate varied from the statutory tax rate as a result of the mix of income attributable to foreign versus domestic jurisdictions. Our aggregate income tax rate in foreign jurisdictions is lower than our income tax rate in the United States.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

Our effective income tax rate decreased from the three months ended June 30, 2007 compared to the three months ended June 30, 2008 as a result of the mix of income between our foreign and domestic jurisdictions, partially offset by the expiration of the U.S. federal research and development tax credit.

Our effective income tax rate increased from the six months ended June 30, 2007 compared to the six months ended June 30, 2008 due to non-deductible IPR&D charges in 2008, the expiration of the U.S. federal research and development tax credit for 2008 and higher discrete tax benefits in 2007, partially offset by a change in the mix of income between our foreign and domestic jurisdictions. Non-deductible IPR&D charges totaling $79.2 during the quarter ended March 31, 2008 and the expiration of the U.S. federal research and development tax credit increased the 2008 effective tax rate by approximately 3.5%. In addition, during the six months ended June 30, 2007, we recognized discrete net tax benefits of $22.2 which reduced the 2007 effective tax rate by 2.8%. This was made up primarily of reductions of income tax contingencies, release of a valuation allowance recorded on certain foreign deferred tax assets, and the tax benefit from employees’ disqualifying dispositions of qualified stock options.

We have substantially concluded all U.S. federal income tax matters for all years through 2004 and are continuing with the U.S. federal income tax audit for 2005 and 2006. We have income tax audits in process in numerous state, local and international jurisdictions. Based on the timing and outcome of these examinations, 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 the related unrecognized tax benefits could change from those recorded in our statement of financial position. We anticipate that several of these audits may be finalized within the next 12 months. Based on the status of these examinations and the protocol of finalizing such audits, it is not possible to estimate the impact of any amount of such changes, if any, to our previously recorded uncertain tax positions. However, it is reasonably possible that up to $46.0 of individually-insignificant unrecognized tax positions may be recognized within one year as a result of the lapse of statutes of limitations and the resolution of agreements with various foreign tax authorities.

Minority Interests

As a result of VMware’s initial public offering in the third quarter of 2007, VMware is no longer a wholly-owned subsidiary of EMC. The weighted average minority interest in VMware was 14.7% and 14.5% for the three and six months ended June 30, 2008, respectively, resulting in a minority interest expense of $7.7 and $13.9 for the three and six months ended June 30, 2008, respectively.

Financial Condition and Liquidity

Cash provided by operating activities was $1,536.9 and $1,430.2 for the six months ended June 30, 2008 and 2007, respectively. Cash received from customers was $7,585.8 and $6,391.5 for the six months ended June 30, 2008 and 2007, respectively. The increase in cash received from customers was attributable to higher sales volume and greater cash proceeds from the sale of maintenance contracts, which are typically billed and paid in advance of services being rendered. Cash paid to suppliers and employees was $5,947.5 and $4,930.4 for the six months ended June 30, 2008 and 2007, respectively. The increase was partially attributable to higher headcount. Total headcount was approximately 40,500 and 33,400 at June 30, 2008 and 2007, respectively. The headcount increase was due to the growth of the business, as well as continued acquisition activity. Inventory increased from $877.2 at December 31, 2007 to $972.0 at June 30, 2008. The increase was attributable to the acquisition of Iomega Corporation which contributed $45.7 to the increase and higher inventory levels to ensure customer demand would be met. Cash received from dividends and interest was $135.1 and $116.7 for the six months ended June 30, 2008 and 2007, respectively. For the six months ended June 30, 2008 and 2007, we paid $199.7 and $108.8, 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) provided by investing activities were ($485.8) and $392.4 for the six months ended June 30, 2008 and 2007, respectively. Cash paid for acquisitions, net of cash acquired was $604.8 and $161.0 for the six months ended June 30, 2008 and 2007, respectively. The $443.8 increase in cash paid for acquisitions when compared to the comparable prior period is primarily attributable to an increase in the average investment per acquisition. Capitalized software development costs were $118.8 and $98.0 for the first six months ended June 30, 2008 and 2007, respectively. Net sales and maturities of investments were $567.3 and $982.6 for the first six months ended June 30, 2008 and 2007, respectively. This activity varies from period to period based upon our cash collections, cash requirements and maturity dates of our investments.

33

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

Cash used in financing activities was $312.2 and $492.0 for the six months ended June 30, 2008 and 2007, respectively. For the six months ended June 30, 2008 and 2007, we spent $687.0 and $878.2 to repurchase 44.4 million and 60.9 million shares of our common stock, respectively. We plan to spend a total of $1,000.0 to $1,500.0 on common stock repurchases during 2008; however, the number of shares purchased and timing of our purchases will be dependent upon a number of factors, including the price of our stock, market conditions, our cash position and alternative demands for our cash resources. We generated $289.5 and $355.3 during the six months ended June 30, 2008 and 2007, respectively, from the exercise of stock options. Stock options exercises from VMware’s stock option grants contributed $133.3 to the $289.5 generated in cash from the exercise of options. Additionally, the exercising of stock options generated excess tax benefits of $88.6 for the six months ended June 30, 2008 compared to $32.7 for the six months ended June 30, 2007. The increase in excess tax benefits of $55.9 is primarily attributable to the exercising of VMware options at a per share price in excess of the Black-Sholes value at the date of the grant to the employee.

We have a credit line of $50.0 in the United States. As of June 30, 2008, 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, if any. At June 30, 2008, we were in compliance with the covenants. As of June 30, 2008, the aggregate amount of liabilities of our subsidiaries was approximately $3,200.

At June 30, 2008, our total cash, cash equivalents, and short-term and long-term investments were $8,129.3. This balance includes approximately $1,547 held by VMware and $3,057 held by EMC in overseas entities.

At December 31, 2007, we held $972.5 of auction rate securities and classified these as short-term investments. We have liquidated a portion of these securities through June 30, 2008 reducing our holdings in auction rate securities to $220.5 or 2.7% of our total cash, cash equivalents and investments of $8,129.3 at June 30, 2008. As a result of the volatility in the credit markets, the occurrence of failures of auctions for our auction rate securities and the related impact on the liquidity of these securities, we classified our auction rate securities as long-term investments at June 30, 2008 and we recognized a $10.5 temporary decrease in their value that is included within other comprehensive income. Active quoted market prices are not currently available for auction rate securities. Therefore, to determine the estimated fair value of our investment in auction rate securities we utilized 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 two-year holding period. We believe the underlying assumptions in the model, specifically the liquidity discount margin of 2% and an estimated holding period of two years, are reasonable based upon the estimated premium required to hold a similar investment with a similar duration and our experience in liquidating these investments since December 31, 2007. Our investment in auction rate securities is primarily composed of student loans that are supported by the federal government as part of the Federal Family Education Loan Program (“FFELP”) through the U.S. Department of Education, or to a lesser extent are obligations of municipalities rated single-A or higher. We believe the quality of the collateral underlying these securities will enable us to recover our principal balance.

At June 30, 2008, we held $216.1 of asset and mortgage-backed securities or 2.7% of our total cash, cash equivalents and investment of $8,129.3. These asset and mortgage-backed securities are primarily AAA-rated and the assets underlying these securities are generally residential or commercial mortgage obligations, automobile loans, credit card loans, equipment loans or home equity loans. The average maturity is 0.72 years and 2.0 years for the asset-backed and mortgaged-backed securities, respectively.

At June 30, 2008, we held $5,219.3 of cash and cash equivalents with a maturity of 90 days or less. Due to the nature of these assets, we consider it reasonable to expect that their fair market values will not be significantly impacted by a change in interest rates.

The remaining $2,910.0 held at June 30, 2008 was invested in short and long-term investments consisting of U.S. government and agency obligations, U.S. corporate debt securities, asset and mortgage-backed securities, auction rate securities, municipal obligations and foreign debt securities. Included in the $2,910.0 was $220.5 of auction rate securities valued using unobservable inputs. As of June 30, 2008, a 100 basis point change in the unobservable discount rate resulting from a different holding period would result in a change of approximately $4 in the fair value of the auction rate securities.

To date, inflation has not had a material impact on our financial results.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

New Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“FAS”) No. 141 (revised 2007), “Business Combinations” (“FAS No. 141R”). This statement establishes principles and requirements for how the acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. FAS No. 141R is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the potential impact of FAS No. 141R on our financial position and results of operations.

In December 2007, the FASB issued FAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of Accounting Research Board (“ARB”) No. 51” (“FAS No. 160”). The objective of this statement is to improve the relevance, comparability and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. FAS No. 160 is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the potential impact of FAS No. 160 on our financial position and results of operations.

In March 2008, the FASB issued FAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS No. 161”). This statement changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. FAS No. 161 is effective for fiscal years beginning after November 15, 2008. We do not expect FAS No. 161 to have a material impact on our financial position or results of operations.

In April 2008, the FASB issued FASB Staff Position (“FSP”) on FAS No. 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP FAS No. 142-3”). FSP FAS No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FAS No. 142, “Goodwill and Other Intangible Assets” (“FAS No. 142”). The intent of FSP FAS No. 142-3 is to improve the consistency between the useful life of a recognized intangible asset under FAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under FAS No. 141 (revised 2007), “Business Combinations”, and other U.S. generally accepted accounting principles. FSP FAS No. 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. We are currently evaluating the potential impact of FSP FAS No. 142-3 on our financial position and results of operations.

In May 2008, the FASB voted to issue FSP APB 14-1, which changes the accounting treatment for certain convertible securities which include our Notes. Under FSP APB 14-1, issuers are required to allocate the bond proceeds into a bond portion and a conversion option. The allocation of the bond portion is based upon determining the value of a bond based upon the issuance costs of debt with no conversion option. The residual value is allocated to the conversion option. As a result of this change, the bonds are recorded at a discount which is accreted to its face value over the term of the debt using the effective interest method resulting in additional interest expense. The separated conversion option will be recorded in equity and not marked to market provided that the requirement for equity classification is met. FSP APB 14-1 requires issuers to retroactively revise all periods presented. FSP APB 14-1 is effective for financial statements for fiscal years ended after December 15, 2008 and early adoption is not permitted. We plan to adopt FSP APB 14-1 on January 1, 2009.

Upon adoption of FSP APB 14-1, we expect to revise prior periods by reclassifying approximately $669.1 of our Notes to additional paid-in capital. Our interest expense will increase by $11.5 for 2006, $96.9 for 2007 and $50.3 for the six months ended June 30, 2008.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures about market risk affecting us, see Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K filed with the SEC on February 29, 2008. Our exposure to market risks has not changed materially from that set forth in our Annual Report.

Item 4. 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report on Form 10-Q. 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.

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 period covered by this Quarterly Report on Form 10-Q 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 June 30, 2008, our management excluded the evaluation of the disclosure controls and procedures of Iomega Corporation, which was acquired by EMC on June 9, 2008. See Note 2 to the consolidated financial statements (Acquisitions) under Item 1 for a discussion of the acquisition.

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PART II

OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

We are a party to various litigation matters which we consider routine and incidental to our business. Management does not expect the results of any of these actions to have a material adverse effect on our business, results of operations or financial condition.

Item 1A. RISK FACTORS

The risk factors that appear below could materially affect our business, financial condition and results of operations. This description includes any material changes to and supersedes the description of the risk factors associated with our business previously disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2007. 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 deteriorate, our business, results of operations or financial condition could be materially adversely affected.

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, including the financial services, credit and housing and construction 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 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 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. We currently believe that pricing pressures are likely to continue.

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:

• rates of customer adoption for virtualization solutions;

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• fluctuations in demand, adoption, 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 new competitors;

• the timing of recognizing revenue in any given quarter as a result of software revenue recognition policies;

• the sale of VMware products in the timeframes they anticipate, 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 amount of equity-based compensation expense as a result of VMware equity grants;

• VMware’s ability to effectively manage future growth and acquisitions;

• 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;

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

• VMware’s ability to implement scalable systems of internal controls;

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

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

• general economic conditions in VMware’s domestic and international markets.

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.

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. 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,

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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.

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.

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.

In 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 141(R) “Business Combinations.” The standard, which is effective commencing in our 2009 fiscal year, will result in significant changes in accounting for acquisitions. Depending upon the number of and magnitude of acquisitions which we may consummate in 2009, the standard could have a material adverse effect on our business, results of operations and financial condition.

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.

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.

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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

• 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, management or virtualization 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 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

• 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.

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

We held $2.9 billion in short and long-term investments as of June 30, 2008. The investments are invested primarily in investment grade securities, and we limit the amount of investment with any one issuer. A deterioration in the economy, including a credit crisis 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 could be materially adversely affected as a result of war or acts of terrorism.

Terrorist acts or acts of war 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 conflicts 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.

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.

In addition, we have historically used stock options and other equity awards as key elements of our compensation packages for many of our employees. As a result of the requirement to expense stock-based compensation, we have reduced and may further reduce the number of shares and type of equity awards granted to employees. Additionally, the value of our equity awards may be adversely affected by the volatility of our stock price. Changes to regulatory or stock exchange rules and regulations and in institutional shareholder voting guidelines on equity plans may result in additional requirements or limitations on our equity plans. These factors may impair our ability to attract, retain and motivate employees.

Changes in generally accepted accounting principles may adversely affect us.

From time to time, the FASB promulgates new accounting principles that could have a material adverse impact on our results of operations or financial condition. For example, in May 2008 the FASB voted to issue FASB Staff Position (“FSP”) APB 14-1, which changes the accounting treatment for certain convertible securities which include our Notes. See Note 1 to the consolidated financial statements (New Accounting Pronouncements) under Item 1.

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

• 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

• seasonal influences

Our uneven sales pattern also makes it extremely difficult to predict near-term demand and adjust manufacturing capacity 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.

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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

• customers may 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 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. For the quarter ended June 30, 2008, Dell Inc., one of our channel partners, accounted for 12.3% of our revenues. 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 are not able to timely and effectively implement their planned actions or if the level of demand for our channel partners’ products and services decreases. 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.

Changes in foreign conditions could impair our international operations.

A substantial portion of our revenues is derived from sales outside the United States. 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, including changes in foreign currency exchange rates, changes in a specific country’s or region’s political or economic conditions, trade restrictions, import or export licensing requirements, the overlap of different tax structures or changes in international tax laws, changes in regulatory requirements, compliance with a variety of foreign laws and regulations and longer payment cycles in certain countries.

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.

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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.

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.

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

From time to time in the ordinary course of our business, we may become involved in various legal proceedings, 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.

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. 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.

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.

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Our pension and retirement benefit plan assets are subject to market volatility.

We have noncontributory defined benefit pension plans and a post-retirement benefit plan assumed as part of our Data General acquisition. The plans’ assets are invested in common stocks, bonds and cash. The expected long-term rate of return on the plans’ assets for 2008 is 8.25%. The actual long-term rate of return achieved on the plans’ assets for the ten years ended December 31, 2007 was 6.0%. Given current market conditions, should we not achieve the expected rate of return on our plans’ assets or if our plans experience a decline in the fair value of their assets, we may be required to contribute assets to the plan which could materially adversely affect our results of operations or financial condition.

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Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ISSUER PURCHASES OF EQUITY SECURITIES IN THE SECOND QUARTER OF 2008

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 of Shares that May Yet Be Purchased Under the Plans or Programs
April 1, 2008 – April 30, 2008	2,951,864		$	14.62	2,946,044	262,000,279
May 1, 2008 – May 31, 2008	12,734		$	17.30	—	262,000,279
June 1, 2008 – June 30, 2008	5,699,874		$	15.41	5,631,182	256,369,097
Total	8,664,472	(2)	$	15.14	8,577,226	256,369,097

(1) Except as noted in note (2), all shares were purchased in open-market transactions pursuant to a previously announced authorization by our Board of Directors in April 2006 to repurchase 250.0 million shares of our common stock. In April 2008, our Board of Directors authorized the repurchase of an additional 250.0 million shares of our common stock, increasing the aggregate number of shares available for repurchase to 256.4 million. These repurchase authorizations do not have a fixed termination date.

(2) Includes an aggregate of 87,246 shares withheld from employees for the payment of taxes.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

EMC’s Annual Meeting of Shareholders was held on May 21, 2008. There was no solicitation in opposition to management’s nominees as listed in EMC’s proxy statement, and all such nominees were elected directors for a one-year term. The shareholders ratified the selection by the Audit Committee of PricewaterhouseCoopers LLP as EMC’s independent auditors for the fiscal year ending December 31, 2008, approved amendments to EMC’s Articles of Organization and Bylaws to implement majority vote for directors and approved amendments to EMC’s Articles of Organization to implement simple majority vote. The results of the votes for each of these proposals were as follows:

1. Election of Directors:

	FOR	WITHHELD
Michael W. Brown	1,716,227,327	40,344,964
Michael J. Cronin	1,712,963,702	43,608,589
Gail Deegan	1,726,668,149	29,904,142
John R. Egan	1,717,984,357	38,587,934
W. Paul Fitzgerald	1,623,841,594	132,730,697
Olli-Pekka Kallasvuo	1,305,941,307	450,630,984
Edmund F. Kelly	1,691,853,703	64,718,588
Windle B. Priem	1,726,122,500	30,449,791
Paul Sagan	1,726,552,053	30,020,238
David N. Strohm	1,714,941,029	41,631,262
Joseph M. Tucci	1,721,997,393	34,574,898

2. Ratification of the selection by the Audit Committee of PricewaterhouseCoopers LLP as EMC’s independent auditors for the fiscal year ending December 31, 2008:

For:	1,718,253,513
Against:	19,761,085
Abstain:	18,557,693
Broker Non-Vote:	0

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3. Approval of amendments to EMC’s Articles of Organization and Bylaws to implement majority vote for directors:

For:	1,677,693,684
Against:	58,413,124
Abstain:	20,465,483
Broker Non-Vote:	0

4. Approval of amendments to EMC’s Articles of Organization to implement simple majority vote:

For:	1,721,366,015
Against:	15,248,990
Abstain:	19,957,286
Broker Non-Vote:	0

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS

(a) Exhibits

See index to Exhibits on page 48 of this report.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	EMC CORPORATION
Date: August 8, 2008	By:	/s/ DAVID I. GOULDEN
		David I. Goulden
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

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EXHIBIT INDEX

3.1	Restated Articles of Organization of EMC Corporation, as amended. (1)
3.2	Amended and Restated Bylaws of EMC Corporation. (2)
4.1	Form of Stock Certificate. (1)
10.1	SysDM, Inc. 2003 Stock Option/Stock Issuance Plan. (filed herewith)
10.2	Iomega Corporation 1997 Stock Incentive Plan, as amended. (filed herewith)
10.3	Iomega Corporation 2007 Stock Incentive Plan. (filed herewith)
10.4*	Employment Arrangement with Joseph M. Tucci dated November 28, 2007. (3)
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)

 * Identifies an exhibit that is a management contract or compensatory plan or arrangement.

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

(2) Incorporated by reference to EMC Corporation’s Current Report on Form 8-K filed August 6, 2008 (No. 1-9853).

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

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EX-10.1

Exhibit 10.1

SYSDM, INC.

2003 STOCK OPTION/STOCK ISSUANCE PLAN

ARTICLE ONE

GENERAL PROVISIONS

I. PURPOSE OF THE PLAN

This 2003 Stock Option/Stock Issuance Plan is intended to promote the interests of SysDM, Inc., a Delaware corporation (the “Corporation”), by providing eligible persons in the Corporation’s employ or service with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to continue in such employ or service.

Capitalized terms shall have the meanings assigned to such terms in the attached Appendix.

II. STRUCTURE OF THE PLAN

A. The Plan shall be divided into two (2) separate equity programs:

(i) the Option Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock, and

(ii) the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the immediate purchase of such shares or as a bonus for services rendered the Corporation (or any Parent or Subsidiary).

B. The provisions of Articles One and Four shall apply to both equity programs under the Plan and shall accordingly govern the interests of all persons under the Plan.

III. ADMINISTRATION OF THE PLAN

A. The Plan shall be administered by the Board. However, any or all administrative functions otherwise exercisable by the Board may be delegated to a Board Committee. Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee.

B. The Plan Administrator shall have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate proper administration of the Plan and to make such determinations under, and issue such interpretations of, the Plan and any outstanding options or stock issuances thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Plan or any option or stock issuance thereunder.

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IV. ELIGIBILITY

A. The persons eligible to participate in the Plan are as follows:

(i) Employees,

(ii) non-employee members of the Board or the non-employee members of the board of directors of any Parent or Subsidiary, and

(iii) consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

B. The Plan Administrator shall have full authority to determine, (i) with respect to the grants made under the Option Grant Program, which eligible persons are to receive the option grants, the time or times when those grants are to be made, the number of shares to be covered by each such grant, the status of the granted option as either an Incentive Option or a Non-Statutory Option, the time or times when each option is to become exercisable, the vesting schedule (if any) applicable to the option shares and the maximum term for which the option is to remain outstanding and (ii) with respect to stock issuances made under the Stock Issuance Program, which eligible persons are to receive stock issuances, the time or times when those issuances are to be made, the number of shares to be issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the consideration to be paid by the Participant for such shares.

C. The Plan Administrator shall have the absolute discretion either to grant options in accordance with the Option Grant Program or to effect stock issuances in accordance with the Stock Issuance Program.

V. STOCK SUBJECT TO THE PLAN

A. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock.

B. Shares of Common Stock subject to outstanding options shall be available for subsequent issuance under the Plan to the extent (i) the options expire or terminate for any reason prior to exercise in full or (ii) the options are cancelled in accordance with the cancellation-regrant provisions of Article Two. Unvested shares issued under the Plan and subsequently repurchased by the Corporation, at the option exercise or direct issue price paid per share, pursuant to the Corporation’s repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent option grants or direct stock issuances under the Plan.

C. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan and (ii) the number and/or class of securities and the exercise price per share in effect under each outstanding option in order to prevent the dilution or enlargement of benefits thereunder. The adjustments determined by the Plan Administrator shall be final, binding and conclusive. In no event shall any such adjustments be made in connection with the conversion of one or more outstanding shares of the Corporation’s preferred stock into shares of Common Stock.

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ARTICLE TWO

OPTION GRANT PROGRAM

I. OPTION TERMS

Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options.

I. Exercise Price.

1. The exercise price per share shall be fixed by the Plan Administrator and may be less than, equal to or greater than the Fair Market Value per share of Common Stock on the option grant date.

2. The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section I of Article Four and the documents evidencing the option, be payable in cash or check made payable to the Corporation. Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then the exercise price may also be paid as follows:

(i) in shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or

(ii) to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions (a) to a Corporation designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale.

Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

II. Exercise and Term of Options. Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option grant. However, no option shall have a term in excess of ten (10) years measured from the option grant date.

III. Effect of Termination of Service.

1. The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death:

(i) Should the Optionee cease to remain in Service for any reason other than death, Permanent Disability or Misconduct, then the Optionee shall have a period of three (3) months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee.

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(ii) Should Optionee’s Service terminate by reason of Permanent Disability, then the Optionee shall have a period of twelve (12) months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee.

(iii) If the Optionee dies while holding an outstanding option, then the personal representative of his or her estate or the person or persons to whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance shall have a twelve (12)-month period following the date of the Optionee’s death to exercise such option.

(iv) Under no circumstances, however, shall any such option be exercisable after the specified expiration of the option term.

(v) During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of vested shares for which the option is exercisable on the date of the Optionee’s cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee’s cessation of Service, terminate and cease to be outstanding with respect to any and all option shares for which the option is not otherwise at the time exercisable or in which the Optionee is not otherwise at that time vested.

(vi) Should Optionee’s Service be terminated for Misconduct, then all outstanding options held by the Optionee shall terminate immediately and cease to remain outstanding.

2. The Plan Administrator shall have the discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to:

(i) extend the period of time for which the option is to remain exercisable following the Optionee’s cessation of Service or death from the limited period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term, and/or

(ii) permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested under the option had the Optionee continued in Service.

IV. Stockholder Rights. The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become the record-holder of the purchased shares.

V. Repurchase Rights. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise price paid

4

per share, any or all of those unvested shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right.

VI. First Refusal Rights. Until such time as the Common Stock is first registered under Section 12 of the 1934 Act, the Corporation shall have the right of first refusal with respect to any proposed disposition by the Optionee (or any successor in interest) of any shares of Common Stock issued under the Option Grant Program. Such right of first refusal shall be exercisable in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right.

VII. Limited Transferability of Options. During the lifetime of the Optionee, Incentive Options shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or by the laws of descent and distribution following the Optionee’s death. Non-Statutory Options shall be subject to the same restrictions, except that a Non-Statutory Option may, to the extent permitted by the Plan Administrator, be assigned in whole or in part during the Optionee’s lifetime (i) as a gift to one or more members of the Optionee’s immediate family, to a trust in which Optionee and/or one or more such family members hold more than fifty percent (50%) of the beneficial interest or to an entity in which more than fifty percent (50%) of the voting interests are owned by one or more such family members or (ii) pursuant to a domestic relations order. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.

VIII. Withholding. The Corporation’s obligation to deliver shares of Common Stock upon the exercise of any options granted under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income and employment tax withholding requirements.

IX. Drag-Along Right. The Plan Administrator shall have the discretion, exercisable at the time an option is granted, to make such options subject to a Drag-Along right with the following terms:

1. If a Transferring Stockholders proposes to enter into a Corporate Transaction, the Corporation may require Optionee to participate in such Corporate Transaction with respect to all or such number of Optionee’s Vested and/or Unvested Shares as the Corporation may specify in its discretion, by giving Optionee written notice thereof at least ten (10) calendar days in advance of the date of the transaction or the date that tender is required, as the case may be; and/or

2. If the Corporation and/or any Transferring Stockholders propose to enter into any such Corporate Transaction, the Corporation may require Optionee to vote in favor of such transaction, where approval of the stockholders is required by law or otherwise sought, by giving Optionee notice thereof within the time prescribed by law and the Corporation’s Certificate of Incorporation and Bylaws for giving notice of a meeting of stockholders called for the purpose of approving such transaction. If the Corporation requires such vote, Optionee agrees that he or she will, if requested, deliver his or her proxy to the person designated by the Corporation to vote his or her shares in favor of such Corporate Transaction.

II. INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section 11, all the provisions of Articles One, Two and Four shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options shall not be subject to the terms of this Section II.

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A. Eligibility. Incentive Options may only be granted to Employees.

B. Exercise Price. The exercise price per share shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.

C. Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one (1) calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted.

D. 10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the exercise price per share shall not be less than one hundred ten percent (I 10%) of the Fair Market Value per share of Common Stock on the option grant date and the option term shall not exceed five (5) years measured from the option grant date.

III. CORPORATE TRANSACTION

A. The Plan Administrator shall also have full power and authority, exercisable either at the time an option is granted or at any time while the option remains outstanding, to structure an option such that the all, or any portion of, the shares subject to the option will immediately vest in part, or in full, immediately prior to the effective date of the Corporate Transaction, and thereby become fully exercisable for all of the shares of Common Stock at the time subject to that option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. PROVIDED, HOWEVER, the shares subject to an outstanding option shall not vest on such an accelerated basis if and to the extent: (i) such option is assumed by the successor corporation (or parent thereof) in the Corporate Transaction and the Corporation’s repurchase rights with respect to the unvested option shares are concurrently assigned to such successor corporation (or parent thereof) or (ii) such option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested option shares at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to those unvested option shares or (iii) the acceleration of such option is subject to other limitations imposed by the Plan Administrator at the time of the option grant.

B. All outstanding repurchase rights shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.

C. Immediately following the consummation of the Corporate Transaction, all outstanding options shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof).

D. Each option which is assumed in connection with a Corporate Transaction shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate

6

Transaction, had the option been exercised immediately prior to such Corporate Transaction. Appropriate adjustments shall also be made to (i) the number and class of securities available for issuance under the Plan following the consummation of such Corporate Transaction and (ii) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same.

E. The Plan Administrator shall have the discretion, exercisable either at the time the option is granted or at any time while the option remains outstanding, to provide for the automatic acceleration (in whole or in part) of one or more outstanding options (and the immediate termination of the Corporation’s repurchase rights with respect to the shares subject to those options) upon the occurrence of a Corporate Transaction, whether or not those options are to be assumed in the Corporate Transaction.

F. The Plan Administrator shall also have full power and authority, exercisable either at the time the option is granted or at any time while the option remains outstanding, to structure such option so that the shares subject to that option will automatically vest on an accelerated basis should the Optionee’s Service terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which the option is assumed and the repurchase rights applicable to those shares do not otherwise terminate. Any option so accelerated shall remain exercisable for the fully-vested option shares until the earlier of (i) the expiration of the option term or (ii) the expiration of the one (1) year period measured from the effective date of the Involuntary Termination. In addition, the Plan Administrator may provide that one or more of the Corporation’s outstanding repurchase rights with respect to shares held by the Optionee at the time of such Involuntary Termination shall immediately terminate on an accelerated basis, and the shares subject to those terminated rights shall accordingly vest at that time.

G. The portion of any Incentive Option accelerated in connection with a Corporate Transaction shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws.

The grant of options under the Plan shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

IV. CANCELLATION AND REGRANT OF OPTIONS

The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected option holders, the cancellation of any or all outstanding options under the Option Grant Program and to grant in substitution new options covering the same or different number of shares of Common Stock but with an exercise price per share based on the Fair Market Value per share of Common Stock on the new grant date.

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ARTICLE THREE

STOCK ISSUANCE PROGRAM

I. STOCK ISSUANCE TERMS

Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants. Each such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below.

A. Purchase Price.

1. The purchase price per share shall be fixed by the Plan Administrator and may be less than, equal to or greater than the Fair Market Value per share of Common Stock on the issue date.

2. Subject to the provisions of Section I of Article Four, shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance:

(i) cash or check made payable to the Corporation, or

(ii) past services rendered to the Corporation (or any Parent or Subsidiary).

B. Vesting Provisions.

1. Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service or upon attainment of specified performance objectives.

2. Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

3. The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.

4. Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent (including the Participant’s purchase-money indebtedness), the Corporation shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the unpaid principal balance of any outstanding purchase-money note of the Participant attributable to the surrendered shares.

5. The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock (or other assets attributable thereto), which would otherwise occur upon the non-completion of the vesting schedule applicable to such shares. Such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock as

8

to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives.

C. First Refusal Rights.

Until such time as the Common Stock is first registered under Section 12 of the 1934 Act, the Corporation shall have the right of first refusal with respect to any proposed disposition by the Participant (or any successor in interest) of any shares of Common Stock issued under the Stock Issuance Program. Such right of first refusal shall be exercisable in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right.

II. CORPORATE TRANSACTION

A. All of the outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and all the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase night is issued.

B. The Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation’s repurchase rights with respect to those shares remain outstanding, to provide that those rights shall automatically terminate on an accelerated basis, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the Participant’s Service should subsequently terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which those repurchase rights are assigned to the successor corporation (or parent thereof).

III. SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.

ARTICLE FOUR

MISCELLANEOUS

I. FINANCING

The Plan Administrator may permit any Optionee or Participant to pay the option exercise price under the Option Grant Program or the purchase price for shares issued under the Stock Issuance program by delivering a full recourse, interest bearing promissory note payable in one or more installments and secured by the purchased shares. The terms of any such promissory note (including the interest rate and the terms of repayment) shall be established by the Plan Administrator in its sole discretion. In no event shall the maximum credit available to the Optionee or Participant exceed the sum of (i) the aggregate option exercise price or purchase price payable for the purchased shares plus (ii) any Federal, state and local income and employment tax liability incurred by the Optionee or the Participant in connection with the option exercise or share purchase.

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II. EFFECTIVE DATE AND TERM OF THE PLAN

A. The Plan shall become effective when adopted by the Board, but no option granted under the Plan may be exercised, and no shares shall be issued under the Plan, until the Plan is approved by the Corporation’s stockholders. If such stockholder approval is not obtained within twelve (12) months after the date of the Board’s adoption of the Plan, then all options previously granted under the Plan shall terminate and cease to be outstanding, and no further options shall be granted and no shares shall be issued under the Plan. Subject to such limitation, the Plan Administrator may grant options and issue shares under the Plan at any time after the effective date of the Plan and before the date fixed herein for termination of the Plan.

B. The Plan shall terminate upon the earliest of (i) the expiration of the ten (10)-year period measured from the date the Plan is adopted by the Board, (ii) the date on which all shares available for issuance under the Plan shall have been issued as fully-vested shares or (iii) the termination of all outstanding options in connection with an Corporate Transaction. All options and unvested stock issuances outstanding at the time of a clause (i) termination event shall continue to have full force and effect in accordance with the provisions of the documents evidencing such options or issuances.

III. AMENDMENT OF THE PLAN

A. The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, no such amendment or modification shall adversely affect any rights and obligations with respect to options or unvested stock issuances at the time outstanding under the Plan, unless the Optionee or the Participant consents to such amendment or modification. In addition, certain amendments may require stockholder approval pursuant to applicable laws or regulations.

B. Options to purchase shares of Common Stock may be granted under the Option Grant Program and shares of Common Stock may be issued under the Stock Issuance Program which are in each instance in excess of the number of shares then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in escrow until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such stockholder approval is not obtained within twelve (12) months after the date the first such excess grants or issuances are made, then (i) any unexercised options granted on the basis of such excess shares shall terminate and cease to be outstanding and (ii) the Corporation shall promptly refund to the Optionees and the Participants the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest (at the applicable Short-Term Federal Rate) for the period the shares were held in escrow, and such shares shall thereupon be automatically cancelled and cease to be outstanding.

IV. USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes.

V. WITHHOLDING

The Corporation’s obligation to deliver shares of Common Stock upon the exercise of any options or upon the issuance or vesting of any shares issued under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income and employment tax withholding requirements.

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VI. REGULATORY APPROVALS

The implementation of the Plan, the granting of any option under the Plan and the issuance of any shares of Common Stock (i) upon the exercise of any option or (ii) under the Stock Issuance Program shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the options granted under it and the shares of Common Stock issued pursuant to it.

VII. NO EMPLOYMENT OR SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person’s Service at any time for any reason, with or without cause.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

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ADOPTED by the Board of Directors.

RATIFIED AND APPROVED by the shareholders.

/s/ Alan Atkinson

Alan Atkinson, Secretary

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APPENDIX

The following definitions shall be in effect under the Plan:

A. Board shall mean the Corporation’s Board of Directors.

B. Code shall mean the Internal Revenue Code of 1986, as amended.

C. Committee shall mean a committee of one (1) or more Board members appointed by the Board to exercise one or more administrative functions under the Plan.

D. Common Stock shall mean the Corporation’s common stock.

E. Corporate Transaction shall mean either of the following stockholder-approved transactions to which the Corporation is a party:

(i) a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or

(ii) the sale, transfer or other disposition of all or substantially all of the Corporation’s assets in complete liquidation or dissolution of the Corporation.

F. Corporation shall mean SysDM, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of SysDM, Inc., which shall by appropriate action adopt the Plan.

G. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

H. Exercise Date shall mean the date on which the Corporation shall have received written notice of the option exercise.

I. Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

(i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

(ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

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(iii) If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate.

J. Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

K. Involuntary Termination shall mean the termination of the Service of any individual which occurs by reason of:

(i) such individual’s involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or

(ii) such individual’s voluntary resignation following (A) a reduction in his or her level of compensation (including base salary, fringe benefits and target bonuses under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (B) a relocation of such individual’s place of employment by more than fifty (50) miles, provided and only if such reduction or relocation is effected without the individual’s consent.

L. Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary).

M. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.

N. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

O. Option Grant Program shall mean the option grant program in effect under the Plan.

P. Optionee shall mean any person to whom an option is granted under the Option Grant Program.

Q. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

R. Participant shall mean any person who is issued shares of Common Stock under the Stock Issuance Program.

S. Permanent Disability shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in such person’s death or to continue for a period of twelve (12) consecutive months or more.

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T. Plan shall mean the Corporation’s 2003 Stock Option/Stock Issuance Plan, as set forth in this document.

U. Plan Administrator shall mean either the Board or the Committee acting in its capacity as administrator of the Plan.

V. Service shall mean the provision of services to the Corporation (or any Parent or Subsidiary) by a person in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant or stock issuance.

W. Stock Exchange shall mean either the American Stock Exchange or the New York Stock Exchange.

X. Stock Issuance Agreement shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program.

Y. Stock Issuance Program shall mean the stock issuance program in effect under the Plan.

Z. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

AA. Transferring Stockholder shall mean a stockholder of the Corporation, or group of stockholders, owning a majority or more of the voting capital stock of the Corporation.

BB. 10% Stockholder shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary).

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EX-10.2

Exhibit 10.2

IOMEGA CORPORATION

1997 STOCK INCENTIVE PLAN

(as amended through February 22, 2001, and

adjusted for stock splits through September 28, 2001)

1. PURPOSE

The purpose of this 1997 Stock Incentive Plan (the “Plan”) of Iomega Corporation, a Delaware corporation (the “Company”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing such persons with equity ownership opportunities and thereby better aligning the interests of such persons with those of the Company’s stockholders. Except where the context otherwise requires, the term “Company” shall include any present or future subsidiary corporations of Iomega Corporation as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”).

2. ELIGIBILITY

All of the Company’s employees, officers, directors, consultants and advisors are eligible to be granted options or restricted stock (each, an “Award”) under the Plan to purchase shares of the Company’s common stock, $0.03 1/3 par value per share (the “Common Stock”). In addition, non-employee directors are eligible to receive Awards of unrestricted Common stock in lieu of director fees in accordance with Section 6A. Any person who has been granted an Award under the Plan shall be deemed a “Participant”.

3. ADMINISTRATION, DELEGATION

(a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by the Board of Directors of the Company (the “Board”). The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board’s sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan made in good faith.

(b) DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by applicable law, the Board may delegate to one or more executive officers of the Company the power to make Awards and exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the maximum number of shares subject to Awards and the maximum number of shares subject to Awards for any one Participant to be made by such executive officers in any calendar year.

(c) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”). The Board shall appoint one such Committee consisting of not less than two members, each of whom shall be an “outside director” within the meaning of Section 162(m) of the

Code and a “non-employee director” as defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All references in the Plan to the “Board” shall mean a Committee or the Board or the executive officer referred to in Section 3(b) to the extent of such delegation.

4. STOCK AVAILABLE FOR AWARDS

(a) NUMBER OF SHARES. Subject to adjustment under Section 4(c), Awards may be made under the Plan for up to 4,100,000 shares of Common Stock. If any Award expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part or results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan, subject, however, in the case of Incentive Stock Options (as hereinafter defined), to any limitation required under the Code. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

(b) PER-PARTICIPANT LIMIT. Subject to adjustment under Section 4(c), the maximum number of shares with respect to which an Award may be granted to any Participant under the Plan shall be 500,000 shares per calendar year or, in the case of an initial Award made in connection with the employment of a new employee, 1,000,000 shares in the initial calendar year of such employee’s employment. The per-participant limit described in this Section 4(b) shall be construed and applied consistently with Section 162(m) of the Code.

(c) ADJUSTMENT TO COMMON STOCK. In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a normal cash dividend, (i) the number and class of securities available under this Plan, (ii) the number and class of security and exercise price per share subject to each outstanding Option, and (iii) the repurchase price per security subject to each outstanding Restricted Stock Award, shall be appropriately adjusted by the Company (or substituted Awards may be made, if applicable). Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding an conclusive. If this Section 4(c) applies and Section 7(e) also applies to any event, Section 7(e) shall be applicable to such event, and this Section 4(c) shall not be applicable.

5. STOCK OPTIONS

(a) GENERAL. The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. An Option which is not intended to be an Incentive Stock Option (as hereinafter defined) shall be designated a “Nonstatutory Stock Option”.

(b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted to employees of the Company and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) which is intended to be an Incentive Stock Option is not an Incentive Stock Option.

(c) EXERCISE PRICE. The Board shall establish the exercise price at the time each Option is granted and specify it in the applicable option agreement. The exercise price of each Incentive Stock

Option granted under the Plan shall be no less than 100% of the Fair Market Value (as defined in paragraph (f)(2) of this Section 5) of the Common Stock at the time such Option is granted. The exercise price of each Nonstatutory Stock Option shall be no less than 25% of the Fair Market Value of the Common Stock at the time such Option is granted; provided however, that the maximum number of shares of Common Stock subject to Nonstatutory Stock Options granted in any calendar year at below 100% of Fair Market Value shall not exceed 10% of the total number of shares of Common Stock subject to Options granted in the prior calendar year (or, with respect to the first year of the Plan, in 1997).

(d) DURATION OF OPTIONS. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement. No Option will be granted for a term in excess of 10 years, except those options granted in foreign jurisdictions which can be granted for a term of up to 11 years.

(e) EXERCISE OF OPTION. Options may be exercised only by delivery to the Company of a written notice of exercise signed by the proper person together with payment in full as specified in Section 5(f) for the number of shares for which the Option is exercised.

(f) PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:

(1) in cash or by check, payable to the order of the Company;

(2) except as the Board may otherwise provide in an Option, (i) delivery of an irrevocable and unconditional undertaking by a credit worthy broker to deliver promptly to the Company sufficient funds to pay the exercise price, (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a credit worthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price; or (iii) delivery of shares of Common Stock owned by the Participant valued at their fair market value as determined by the Board in good faith (“Fair Market Value”), which Common Stock was owned by the Participant at least six months prior to such delivery;

(3) to the extent permitted by the Board and explicitly provided in the Option (i) by delivery of a promissory note of the Participant to the Company on terms agreed to and determined by the Board, (ii) by reduction in the amount of any liability owed by the Company to the Participant, including any liability attributable to the Participant’s participation in any Company-sponsored deferred compensation program or arrangement, or (iii) by payment of such other lawful consideration as the Board may determine; or

(4) any combination of the above permitted forms of payment.

6. RESTRICTED STOCK

(a) GRANTS. The Board may grant Awards entitling recipients to acquire shares of Common Stock, subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award (each, “Restricted Stock Award”); provided, however, that the maximum number of shares of Common Stock subject to Restricted Stock Awards granted in any calendar year at below 100% of Fair Market Value shall not exceed 10% of the total number of shares of Common Stock subject to Awards made in the prior calendar year (or, with respect to the first year of the Plan, in 1997).

(b) TERMS AND CONDITIONS. The Board shall determine the terms and conditions of any such Restricted Stock Award, including the conditions for repurchase (or forfeiture) and the issue price (which shall not be less than the par value of the Common Stock), if any. Any stock certificates issued in respect of a Restricted Stock Award shall be registered in the name of the Participant and, unless otherwise determined by the Board, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death (the “Designated Beneficiary”). In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant’s estate.

6A. STOCK IN LIEU OF DIRECTOR FEES

(a) Each non-employee director of the Company may elect, in accordance with the provisions of this Section 6A, to receive all, half or none of his or her director fees in the form of an Award under this Plan of unrestricted shares of Common stock. Such election shall be made in writing prior to January 1 of the year for which such election is to be effective and shall be irrevocable; provided, however, that in the case of 2001 such election shall be made no later than March 10, 2001. Any directed elected to the Board after the applicable deadline for making an election for any year shall have 15 days following the date he or she becomes a director to make an election pursuant to this Section 6A. If any director does not submit a timely election, such director shall be deemed to have elected to receive none of his or her director fees in the form of an Award under this Section 6A.

(b) For services rendered in the calendar quarter then ending, an Award of unrestricted shares of Common Stock will be made as of the last day of each March, June, September and December, commencing March 31, 2001, to each non-employee director who has made a timely election in accordance with Section 6A(a) to receive all or half of his or her director fees in the form of an Award under this Section 6A. The number of shares of Common Stock subject to each such Award shall be determined by dividing (1) 100% or 50%, as applicable, based on such director’s election, of the total amount payable to such director for attendance at Board and committee meetings during the quarter plus one-quarter of such director’s annual retainer and committee fees (pro rated as appropriate) by (2) the average of the high and low sales prices, regular way, of the Common stock on the issuance date of the Award, as reported by the New York Stock Exchange (without regard to any after-hours trading).

(c) The receipt of an Award under this Section 6A shall be in lieu of the cash payment of the fees as to which a director has made an election.

7. GENERAL PROVISIONS APPLICABLE TO AWARDS

(a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise determine or provide in an Award, Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the life of the Participant, shall be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees.

(b) DOCUMENTATION. Each Award under the Plan shall be evidenced by a written instrument in such form as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan.

(c) BOARD DISCRETION. Except as otherwise provided by the Plan, each type of Award may be made alone in addition to any other type of Award. The terms of each type of Award made under the Plan need not be identical, and the Board need not treat Participants uniformly.

(d) TERMINATION OF STATUS. The Board shall determine the effect on an Award of the disability, death, retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, the Participant’s legal representative, conservator, guardian or Designated Beneficiary may exercise rights under the Award.

(e) ACQUISITION EVENTS; DISSOLUTION OR LIQUIDATION

(1) CONSEQUENCES OF ACQUISITION EVENTS. Upon the occurrence of an Acquisition Event (as defined below), or the execution by the Company of any agreement with respect to an Acquisition Event, the Board shall provide that outstanding Awards shall be assumed, or equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), provided that any such Options substituted for Incentive Stock Options shall satisfy, in the determination of the Board, the requirements of Section 424(a) of the Code; provided however, that if any successor corporation refuses to assume or substitute such Awards, then the Board shall: (i) upon written notice to the Participants, provide that all then unexercised Options will become exercisable in full as of a specified date (the “Acceleration Date”) prior to the Acquisition Event and will terminate immediately prior to the consummation of such Acquisition Event, except to the extent exercised by the Participants between the Acceleration Date and the consummation of such Acquisition Event (provided that, in the event of an Acquisition Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share of Common Stock surrendered pursuant to such Acquisition Event (the “Acquisition Price”), the Board may provide that all outstanding Options shall terminate upon consummation of such Acquisition Event and each Participant shall receive, in exchange therefor, a cash payment equal to the amount (if any) by which (A) the Acquisition Price multiplied by the number of shares of Common Stock subject to such outstanding Options (whether or not then exercisable), exceeds (B) the aggregate exercise price of such Options); and (ii) provide that all Restricted Stock Awards then outstanding shall become free of all restrictions prior to the consummation of the Acquisition Event.

An “Acquisition Event” shall mean: (a) any merger or consolidation which results 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 or acquiring entity) less than 50% of the combined voting power of the voting securities of the Company or such surviving or acquiring entity outstanding immediately after such merger or consolidation; (b) any sale of all or substantially all of the assets of the Company; or (c) the acquisition of “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act) of securities of the Company representing 50% or more of the

combined voting power of the Company’s then outstanding securities (other than through a merger or consolidation or an acquisition of securities directly from the Company) by any “person”, as such term is used in Sections 13(d) and 14(d) of the Exchange Act other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company.

(2) DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution or liquidation of the Company, the Board shall notify each Participant as soon as practicable prior to the effective date of such proposed event. The Board, in its discretion, may upon written notice to the Participants, (i) provide that all then unexercised Options will become exercisable in full as of a specified date and for a specified period of time prior to such proposed event and (ii) provide that all Restricted Stock Awards then outstanding shall become free of all restrictions immediately prior to the effectiveness of such proposed event.

(3) ASSUMPTION OF OPTIONS UPON CERTAIN EVENTS. The Board may grant Awards under the Plan in substitution for stock and stock-based awards held by employees of another corporation who become employees of the Company as a result of a merger or consolidation of the employing corporation with the Company or the acquisition by the Company of property or stock of the employing corporation. The substitute Awards shall be granted on such terms and conditions as the Board considers appropriate in the circumstances.

(f) WITHHOLDING. Each Participant shall pay to the Company, or make provision satisfactory to the Board for payment of, any taxes required by law to be withheld in connection with Awards made to such Participant no later than the date of the event creating the tax liability. The Board may allow Participants to satisfy such tax obligations in whole or in part in shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value. The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to a Participant.

(g) AMENDMENT OF AWARD. The Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant’s consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant.

(h) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.

(i) ACCELERATION. The Board may at any time provide that any Options shall become immediately exercisable in full or in part, or that any Restricted Stock Awards shall be free of all restrictions, as the case may be.

8. MISCELLANEOUS

(a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.

(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares.

(c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on the date on which it is adopted by the Board, but no Award granted to a Participant designated as subject to Section 162(m) by the Board shall become exercisable, vested or realizable, as applicable to such Award, unless and until the Plan has been approved by the Company’s stockholders. No Awards shall be granted under the Plan after the completion of ten years from the date on which the Plan was adopted, by the Board but Awards previously granted may extend beyond that date.

(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan or any portion thereof at any time, provided that no Award granted to a Participant designated as subject to Section 162(m) by the Board after the date of such amendment shall become exercisable, realizable or vested, as applicable to such Award (to the extent that such amendment to the Plan was required to grant such Award to a particular Participant), unless and until such amendment shall have been approved by the Company’s stockholders.

(e) STOCKHOLDER APPROVAL. For purposes of this Plan, stockholder approval shall mean approval by a vote of the stockholders in accordance with the requirements of Section 162(m) of the Code.

(f) GOVERNING LAW. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without regard to any applicable conflicts of law.

Approved by Board of Directors:	January 28, 1997
Approved by Stockholders:	April 22, 1997
Amendment:	April 20, 1999
Amendment:	February 22, 2001

EX-10.3

Exhibit 10.3

IOMEGA CORPORATION

2007 STOCK INCENTIVE PLAN

1. Purpose

The purpose of this 2007 Stock Incentive Plan (the “Plan”) of Iomega Corporation, a Delaware corporation (the “Company”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s stockholders. Except where the context otherwise requires, the term “Company” shall include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the “Board”).

2. Eligibility

All of the Company’s employees, officers, directors, consultants and advisors are eligible to be granted options, restricted stock, and other stock-based awards (each, an “Award”) under the Plan. Each person who receives an Award under the Plan is deemed a “Participant”.

3. Administration and Delegation

(a) Administration by Board of Directors. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect, and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board’s sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan made in good faith.

(b) Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”). All references in the Plan to the “Board” shall mean the Board or a Committee of the Board to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee.

4. Stock Available for Awards

(a) Number of Shares. Subject to adjustment under Section 10, Awards may be made under the Plan for up to 5.5 million shares of common stock, .03-1/3 par value per share, of the Company (the “Common Stock”). For purposes of counting the number of shares available for the grant of Awards

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under the Plan, (i) if any Award (A) expires or is terminated, surrendered or canceled without having been fully exercised, or is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right) or (B) results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan; provided, however, in the case of Incentive Stock Options (as hereinafter defined), the foregoing shall be subject to any limitations under the Code; and (ii) shares of Common Stock tendered to the Company by a Participant to (A) purchase shares of Common Stock upon the exercise of an Award or (B) satisfy tax withholding obligations (including shares retained from the Award creating the tax obligation) shall not be added back to the number of shares available for the future grant of Awards under the Plan. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

(b) Sub-limits. Subject to adjustment under Section 10, the following sub-limits on the number of shares subject to Awards shall apply:

(1) Section 162(m) Per-Participant Limit. The maximum number of shares of Common Stock with respect to which any Awards may be granted to any Participant under the Plan shall be 500,000 per calendar year, or in the case of an initial Award made in connection with employment of a new employee, 1,000,000 shares. The per-Participant limit described in this Section 4(b)(1) shall be construed and applied consistently with Section 162(m) of the Code or any successor provision thereto, and the regulations thereunder (“Section 162(m)”).

(2) Limit on Awards other than Options. The maximum number of shares with respect to which Awards other than Options may be granted (determined net of any Awards that have returned to the pool of shares available for grant in accordance with Section 4(a)) shall be 33% of the maximum number of shares available for Awards under the Plan as set forth in Section 4(a).

(3) Limit on Awards to Directors. The maximum number of shares with respect to which Awards may be granted to directors who are not employees of the Company at the time of grant (determined net of any Awards that have returned to the pool of shares available for grant in accordance with Section 4(a)) shall be 15% of the maximum number of shares available for Awards under the Plan as set forth in Section 4(a).

(c) Substitute Awards. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan. Substitute Awards shall not count against the overall share limit set forth in Section 4(a), except as may be required by reason of Section 422 and related provisions of the Code.

5. Stock Options

(a) General. The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. An Option that is not intended to be an Incentive Stock Option (as hereinafter defined) shall be designated a “Nonstatutory Stock Option.”

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(b) Incentive Stock Options. An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted to employees of Iomega Corporation, any of Iomega Corporation’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or for any action taken by the Board, including without limitation the conversion of an Incentive Stock Option to a Nonstatutory Stock Option.

(c) Exercise Price. The Board shall establish the exercise price of each Option and specify such exercise price in the applicable option agreement. The exercise price shall be not less than 100% of the Fair Market Value (as defined below) on the date the Option is granted; provided that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the exercise price shall be not less than 100% of the Fair Market Value on such future date.

(1) “Fair Market Value” of a share of Common Stock for purposes of the Plan will be determined as follows:

If the Common Stock trades on a national securities exchange, the closing sale price (for the primary trading session) on the date of grant; or

If the Common Stock does not trade on any such exchange, the average of the closing bid and asked prices as reported by an authorized OTCBB market data vendor as listed on the OTCBB website (otcbb.com) on the Date of Grant; or

If the Common Stock is not publicly traded, the Board will determine the Fair Market Value for purposes of the Plan using any measure of value it determines to be appropriate (including, as it considers appropriate, relying on appraisals) in a manner consistent with the valuation principles under Code Section 409A, except as the Board or Committee may expressly determine otherwise.

For any date that is not a trading day, the Fair Market Value of a share of Common Stock for such date will be determined by using the closing sale price or average of the bid and asked prices, as appropriate, for the immediately preceding trading day and with the timing in the formulas above adjusted accordingly. The Board can substitute a particular time of day or other measure of “closing sale price” or “bid and asked prices” if appropriate because of exchange or market procedures or can, in its sole discretion, use weighted averages either on a daily basis or such long period as complies with Code Section 409A.

The Board has sole discretion to determine the Fair Market Value for purposes of this Plan, and all Awards are conditioned on the participants’ agreement that the Administrator’s determination is conclusive and binding even though others might make a different determination.

(d) Duration of Options. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement, provided, however, that no Option will be granted for a term in excess of ten years, except as may be required under laws of other countries.

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(e) No Reload Right. No Option granted under the Plan shall contain any provision entitling the optionee to the automatic grant of additional Options in connection with any exercise of the original option.

(f) Exercise of Option. Options may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board, together with payment in full as specified in Section 5(g) for the number of shares for which the Option is exercised. Shares of Common Stock subject to the Option will be delivered by the Company following exercise either as soon as practicable or, subject to such conditions as the Board shall specify, on a deferred basis (with the Company’s obligation to be evidenced by an instrument providing for future delivery of the deferred shares at the time or times specified by the Board).

(g) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:

(1) in cash or by check, payable to the order of the Company;

(2) except as may otherwise be provided in the applicable option agreement, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;

(3) to the extent provided for in the applicable option agreement or approved by the Board, in its sole discretion, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their fair market value as determined by (or in a manner approved by) the Board (“Fair Market Value”), provided (i) such method of payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

(4) to the extent permitted by applicable law and provided for in the applicable option agreement or approved by the Board, in its sole discretion, by (i) delivery of a promissory note of the Participant to the Company on terms determined by the Board, or (ii) payment of such other lawful consideration as the Board may determine; or

(5) by any combination of the above permitted forms of payment.

(h) Limitation on Repricing. Unless such action is approved by the Company’s stockholders: (i) no outstanding Option granted under the Plan may be amended to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Option (other than adjustments pursuant to Section 10) and (2) the Board may not cancel any outstanding option (whether or not granted under the Plan) and grant in substitution therefore new Awards under the Plan covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled option.

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6. Director Options.

(a) Terms of Director Options. Options granted under this Plan to members of the Board of Directors who are not employees of the Company shall (i) have an exercise price equal to the Fair Market Value (as defined herein) on the day of grant, (ii) vest as the Board may specify in the applicable option agreement, provided that no additional vesting shall take place after the Participant ceases to serve as a director, (iii) expire on the earlier of 10 years from the date of grant or three months following cessation of service on the Board and (iv) contain such other terms and conditions as the Board shall determine.

Notwithstanding the foregoing, if the director ceases to be a director by reason of (i) death, (ii) disability or (iii) the director’s resignation or decision not to stand for re-election at 55 or older following five years of consecutive service as a director, the period during which then vested, exercisable options may be exercised shall be two years rather than three months (but not after the tenth anniversary of the grant date). In addition, if a director’s service is terminated by reason of death or disability, all unvested options shall automatically vest and become immediately exercisable for a two year period following such death or disability (but not after the tenth anniversary of the grant date).

(b) Board Discretion. The Board retains the specific authority to set and from time to time increase or decrease the number of shares subject to options granted under this Section 6, subject to the provisions of Section 4(b)(3).

7. Restricted Stock.

(a) General. The Board may grant Awards entitling recipients to acquire shares of Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award.

(b) Terms and Conditions. The Board shall determine the terms and conditions of a Restricted Stock Award, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.

(1) Limitations on Vesting. Restricted Stock Awards that vest based on the passage of time alone shall be zero percent vested prior to the first anniversary of the date of grant, no more than 33-1/3% vested prior to the second anniversary of the date of grant, and no more than 66-2/3% vested prior to the third anniversary of the date of grant. Restricted Stock Awards that vest upon the passage of time and provide for accelerated vesting based on performance shall not vest prior to the first anniversary of the date of grant.

Notwithstanding any other provision of this Plan, the Board may, in its discretion, either at the time a Restricted Stock Award is made or at any time thereafter, waive its right to repurchase shares of Common Stock (or waive the forfeiture thereof) or remove or modify any part or all of the restrictions applicable to the Restricted Stock Award, provided that the Board may only exercise such rights in certain circumstances which shall include, without limitation, death or disability of the Participant; estate planning needs of the Participant; a merger, consolidation, sale, reorganization, recapitalization, or change in control of the Company; or any other nonrecurring significant event affecting the Company, a Participant or the Plan.

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(c) Additional Provisions Relating to Restricted Stock.

(1) Dividends. Participants holding shares of Restricted Stock will be entitled to all ordinary cash dividends paid with respect to such shares, unless otherwise provided by the Board. If any such dividends or distributions are paid in shares, or consist of a dividend or distribution to holders of Common Stock other than an ordinary cash dividend, the shares, cash or other property will be subject to the same restrictions on transferability and forfeitability as the shares of Restricted Stock with respect to which they were paid.

(2) Stock Certificates. The Company may require that any stock certificates issued in respect of shares of Restricted Stock shall be deposited in escrow by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death (the “Designated Beneficiary”). In the absence of an effective designation by a Participant, “Designated Beneficiary” shall mean the Participant’s estate.

8. Performance Awards.

(a) Grants. Restricted Stock Awards and Other Stock-Based Awards under the Plan may be made subject to the achievement of performance goals pursuant to this Section 8(a) (“Performance Awards”), subject to the limit in Section 4(b)(1) on shares covered by such grants.

(b) Committee. Grants of Performance Awards to any Covered Employee intended to qualify as “performance-based compensation” under Section 162(m) (“Performance-Based Compensation”) shall be made only by a Committee (or subcommittee of a Committee) comprised solely of two or more directors eligible to serve on a committee making Awards qualifying as “performance-based compensation” under Section 162(m). In the case of such Awards granted to Covered Employees, references to the Board or to a Committee shall be deemed to be references to such Committee or subcommittee. “Covered Employee” shall mean any person who is a “covered employee” under Section 162(m)(3) of the Code.

(c) Performance Measures. For any Award that is intended to qualify as Performance-Based Compensation, the Committee shall specify that the degree of granting, vesting and/or payout shall be subject to the achievement of one or more objective performance measures established by the Committee, which shall be based on the relative or absolute attainment of specified levels of one or any combination of the following: (a) net income, (b) earnings before or after discontinued operations, interest, taxes, depreciation and/or amortization, (c) operating profit before or after discontinued operations and/or taxes, (d) sales, (e) sales growth, (f) earnings growth, (g) cash flow or cash position, (h) gross margins, (i) stock price, (j) market share, (k) return on sales, assets, equity or investment, (l) achievement of balance sheet or income statement objectives or (m) total shareholder return, and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. Such performance measures may be adjusted to exclude any one or more of (i) extraordinary items, (ii) gains or losses on the dispositions of discontinued operations, (iii) the cumulative effects of changes in accounting principles, (iv) the writedown of any asset, and (v) charges for restructuring and rationalization programs. Such performance measures: (i) may vary by Participant and may be different for different Awards; (ii) may be particular to a Participant or the department, branch, line of business, subsidiary or other unit in which the Participant works and may cover such period as may be specified by the Committee; and (iii) shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m). Awards that are not intended to qualify as Performance-Based Compensation may be based on these or such other performance measures as the Board may determine.

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(d) Adjustments. Notwithstanding any provision of the Plan, with respect to any Performance Award that is intended to qualify as Performance-Based Compensation, the Committee may adjust downwards, but not upwards, the cash or number of Shares payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance measures except in the case of the death or disability of the Participant or a change in control of the Company.

(e) Other. The Committee shall have the power to impose such other restrictions on Performance Awards as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for Performance-Based Compensation.

9. Other Stock-Based Awards.

Other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other property, may be granted hereunder to Participants (“Other Stock-Based-Awards”), including without limitation Awards entitling recipients to receive shares of Common Stock to be delivered in the future. Such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Board shall determine. Subject to the provisions of the Plan, the Board shall determine the terms and conditions of each Other Stock-Based Award, including any purchase price applicable thereto.

10. Adjustments for Changes in Common Stock and Certain Other Events.

(a) Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under this Plan, (ii) the sub-limits set forth in Section 4(b), (iii) the number and class of securities and exercise price per share of each outstanding Option and each Option issuable under Section 6, and (iv) the number of shares subject to and the repurchase price per share subject to each outstanding Restricted Stock Award, (v) and the share and per share provisions and purchase price, if any, of each outstanding Other Stock Based Award, shall be appropriately equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board. Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

(b) Reorganization Events.

(1) Definition. A “Reorganization Event” shall mean: (a) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (b) any exchange of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange transaction or (c) any liquidation or dissolution of the Company.

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(2) Consequences of a Reorganization Event on Awards Other than Restricted Stock Awards. In connection with a Reorganization Event, the Board may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards other than Restricted Stock Awards on such terms as the Board determines: (i) provide that Awards shall be assumed, or substantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to a Participant, provide that the Participant’s unexercised Options or other unexercised Awards will terminate immediately prior to the consummation of such Reorganization Event unless exercised by the Participant within a specified period following the date of such notice, (iii) provide that outstanding Awards shall become exercisable, realizable, or deliverable and restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such Reorganization Event, (iv) in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a cash payment to a Participant equal to the excess, if any, of (A) the Acquisition Price times the number of shares of Common Stock subject to the Participant’s Options or other Awards (to the extent the exercise price does not exceed the Acquisition Price) over (B) the aggregate exercise price of all such outstanding Options or other Awards and any applicable tax withholdings, in exchange for the termination of such Options or other Awards, (v) provide that, in connection with a liquidation or dissolution of the Company, Awards shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise price thereof and any applicable tax withholdings) and (v) any combination of the foregoing. In taking any of the actions permitted under this Section 10(b), the Board shall not be obligated by the Plan to treat all Awards, or all Awards of the same type, identically.

For purposes of clause (i) above, an Option shall be considered assumed if, following consummation of the Reorganization Event, the Option confers the right to purchase, for each share of Common Stock subject to the Option immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise of Options to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate thereof) equivalent in value (as determined by the Board) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.

(3) Consequences of a Reorganization Event on Restricted Stock Awards. Upon the occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the repurchase and other rights of the Company under each outstanding Restricted Stock Award shall inure to the benefit of the Company’s successor and shall, unless the Board determines otherwise, apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Common Stock subject to such Restricted Stock Award. Upon the occurrence of a Reorganization Event involving the liquidation or dissolution of the Company, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock Award or any other agreement between a Participant and the Company, all restrictions and conditions on all Restricted Stock Awards then outstanding shall automatically be deemed terminated or satisfied.

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(c) Change in Control Events.

(1) Definition. A “Change in Control Event” shall mean:

(A) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 40% or more of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (A), the following acquisitions shall not constitute a Change in Control Event: (1) any acquisition directly from the Company or (2) any acquisition by any corporation pursuant to a Business Combination (as defined below) which complies with clauses (x) and (y) of subsection (C) of this definition; or

(B) such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (x) who was a member of the Board on the date of the initial adoption of this Plan by the Board or (y) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (y) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or

(C) the consummation of a merger, consolidation, reorganization, recapitalization or share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively,

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of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination and (y) no Person (excluding any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, 40% or more of the then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination); or

(D) the liquidation or dissolution of the Company.

“Good Reason” shall mean any significant diminution in the Participant’s status, title, offices, authority, responsibilities, or reporting requirements from and after such Reorganization Event or Change in Control Event, as the case may be, or any reduction in the annual cash compensation payable to the Participant from and after such Reorganization Event or Change in Control Event, as the case may be, or the relocation of the place of business at which the Participant is principally located to a location that is greater than 50 miles from its location immediately prior to such Reorganization Event or Change in Control Event.

“Cause” shall mean any (i) willful failure by the Participant, which failure is not cured within 30 days of written notice to the Participant from the Company, to perform his or her material responsibilities to the Company or (ii) willful misconduct by the Participant which affects the business reputation of the Company.

(2) Effect on Options. Notwithstanding the provisions of Section 10(b), effective immediately prior to a Change in Control Event, except to the extent specifically provided to the contrary in the instrument evidencing any Option or any other agreement between a Participant and the Company, the vesting schedule of such Option shall continue to vest in accordance with the original vesting schedule set forth in such option; provided, however, that each such Option shall be immediately exercisable in full if, on or prior to the second anniversary of the date of the consummation of the Change in Control Event, the Participant’s employment or service as a director, as the case may be, with the Company or the acquiring or succeeding corporation is terminated for Good Reason by the Participant or is terminated without Cause by the Company or the acquiring or succeeding corporation.

(3) Effect on Restricted Stock Awards. Notwithstanding the provisions of Section 10(b), effective immediately prior to a Change in Control Event, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock Award or any other agreement between a Participant and the Company, the vesting schedule of such Award shall continue to vest in accordance with the original vesting schedule; provided, however, that each such Restricted Stock Award shall immediately become free from all conditions or restrictions if, on or prior to the second anniversary of the date of the consummation of the Change in Control Event, the Participant’s employment or service as a director, as the case may be, with the Company or the acquiring or succeeding corporation is terminated for Good Reason by the Participant or is terminated without Cause by the Company or the acquiring or succeeding corporation.

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(4) Effect on Other Stock-Based Awards. The Board may specify in an Award at the time of the grant the effect of a Change in Control Event on any Other Stock-Based Award.

11. General Provisions Applicable to Awards

(a) Transferability of Awards. Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the life of the Participant, shall be exercisable only by the Participant; provided, however, that the Board may permit or provide in an Award for the gratuitous transfer of the Award by the Participant to or for the benefit of any immediate family member, family trust or other entity established for the benefit of the Participant and/or an immediate family member thereof if, with respect to such proposed transferee, the Company would be eligible to use a Form S-8 for the registration of the sale of the Common Stock subject to such Award under the Securities Act of 1933, as amended; provided, further, that the Company shall not be required to recognize any such transfer until such time as the Participant and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees.

(b) Documentation. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine. Such written instrument may be in the form of an agreement signed by the Company and the Participant or a written confirming memorandum to the Participant from the Company. Each Award may contain terms and conditions in addition to those set forth in the Plan.

(c) Board Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly.

(d) Termination of Status. The Board shall determine the effect on an Award of the disability, death, termination of employment, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award.

(e) Withholding. The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company may decide to satisfy the withholding obligations through additional withholding on salary or wages. If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations. Payment of withholding obligations is due before the Company will issue any shares on exercise or release from forfeiture of an Award or, if the Company so requires, at the same time as is payment of the exercise price unless the Company determines otherwise. If provided for in an Award or approved by the Board in its sole discretion, a Participant may satisfy such tax obligations in whole or in part by delivery of shares of Common Stock, including shares retained from the Award creating the tax

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obligation, valued at their Fair Market Value; provided, however, except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). Shares surrendered to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

(f) Amendment of Award. Except as otherwise provided in Section 5(h) with respect to repricings, Section 7(b) with respect to the vesting of Restricted Stock Awards, or Section 8 with respect to Performance Awards, the Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant’s consent to such action shall be required unless (i) the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant’s rights under the Plan or (ii) the change is permitted under Section 10 hereof.

(g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.

(h) Acceleration. Except as otherwise provided in Section 7(b) with respect to the vesting of Restricted Stock Awards or Section 8 with respect to Performance Awards, the Board may at any time provide that any Award shall become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be.

12. Miscellaneous

(a) No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.

(b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares.

(c) Effective Date and Term of Plan. The Plan shall become effective on the date the Plan is approved by the Company’s stockholders (the “Effective Date”). No Awards shall be granted under the Plan after the expiration of 10 years from the Effective Date, but Awards previously granted may extend beyond that date.

(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time provided that (i) to the extent required by Section 162(m), no Award granted to a Participant that is intended to comply with Section 162(m) after the date of such amendment shall become

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exercisable, realizable or vested, as applicable to such Award, unless and until such amendment shall have been approved by the Company’s stockholders if required by Section 162(m) (including the vote required under Section 162(m)); (ii) no amendment that would require stockholder approval under the rules of the New York Stock Exchange may be made effective unless and until such amendment shall have been approved by the Company’s stockholders; and (iii) if the NYSE amends its corporate governance rules so that such rules no longer require stockholder approval of “material revisions” to equity compensation plans, then, from and after the effective date of such amendment to the NYSE rules, no amendment to the Plan (A) materially increasing the number of shares authorized under the Plan (other than pursuant to Section 4(c) or 10), (B) expanding the types of Awards that may be granted under the Plan, or (C) materially expanding the class of participants eligible to participate in the Plan shall be effective unless stockholder approval is obtained. In addition, if at any time the approval of the Company’s stockholders is required as to any other modification or amendment under Section 422 of the Code or any successor provision with respect to Incentive Stock Options, the Board may not effect such modification or amendment without such approval. Unless otherwise specified in the amendment, any amendment to the Plan adopted in accordance with this Section 12(d) shall apply to, and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment is adopted, provided the Board determines that such amendment does not materially and adversely affect the rights of Participants under the Plan. No Award shall be made that is conditioned upon stockholder approval of any amendment to the Plan.

(e) Provisions for Foreign Participants. The Board may modify Awards or Options granted to Participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Plan to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.

(f) Compliance with Code Section 409A. No Award shall provide for deferral of compensation that does not comply with Section 409A of the Code, unless the Board, at the time of grant, specifically provides that the Award is not intended to comply with Section 409A of the Code. The Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A is not so exempt or compliant or for any action taken by the Board.

(g) Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state.

Approved by Board of Directors: 2/13/2007

Approved by Stockholders: 5/23/2007

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EX-31.1

Exhibit 31.1

PRINCIPAL EXECUTIVE OFFICER CERTIFICATION

I, Joseph M. Tucci, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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: August 8, 2008	/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 Quarterly Report on Form 10-Q 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: August 8, 2008	/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 Quarterly Report on Form 10-Q of EMC Corporation for the quarter ended June 30, 2008, 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

August 8, 2008

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 Quarterly Report on Form 10-Q of EMC Corporation for the quarter ended June 30, 2008, 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

August 8, 2008

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.