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 September 30, 2009

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

Indicate by check mark 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 September 30, 2009 was 2,039,821,792.

EMC CORPORATION

	Page No.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets at September 30, 2009 and December 31, 2008	3
Consolidated Income Statements for the Three and Nine Months Ended September 30, 2009 and 2008	4
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008	5
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September  30, 2009 and 2008	6
Consolidated Statements of Shareholders’ Equity for the Nine Months Ended September  30, 2009 and 2008	7
Notes to Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3. Quantitative and Qualitative Disclosures About Market Risk	46
Item 4. Controls and Procedures	46
PART II — OTHER INFORMATION
Item 1. Legal Proceedings	47
Item 1A. Risk Factors	47
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3. Defaults Upon Senior Securities	56
Item 4. Submission of Matters to a Vote of Security Holders	56
Item 5. Other Information	56
Item 6. Exhibits	56
SIGNATURES	57
EXHIBIT INDEX	58

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, but not limited to, those described in Item 1A of Part II (Risk Factors). 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.

2

PART I

FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

EMC CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)

	September 30, 2009			December 31, 2008
				(As Adjusted)
ASSETS
Current assets:
Cash and cash equivalents	$	5,518,359		$	5,843,685
Short-term investments		617,535			963,292
Accounts and notes receivable, less allowance for doubtful accounts of $50,500 and $48,080		1,864,121			2,252,640
Inventories		810,925			842,803
Deferred income taxes		486,463			477,101
Other current assets		331,162			285,508
Total current assets		9,628,565			10,665,029
Long-term investments		2,291,672			2,370,493
Property, plant and equipment, net		2,218,632			2,223,007
Intangible assets, net		1,245,447			795,616
Other assets, net		944,703			773,631
Goodwill		9,222,725			7,046,799
Total assets	$	25,551,744		$	23,874,575
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	819,204		$	757,405
Accrued expenses		1,864,892			1,901,884
Securities lending payable		—			412,321
Income taxes payable		13,378			136,802
Deferred revenue		2,220,602			2,010,024
Total current liabilities		4,918,076			5,218,436
Income taxes payable		241,506			255,182
Deferred revenue		1,257,876			1,182,360
Deferred income taxes		582,633			389,787
Long-term convertible debt		3,072,505			2,991,943
Other liabilities		212,880			180,917
Total liabilities		10,285,476			10,218,625
Commitments and contingencies (see Note 13)
EMC Corporation’s shareholders’ equity:
Preferred stock, par value $0.01; authorized 25,000 shares; none outstanding		—			—
Common stock, par value $0.01; authorized 6,000,000 shares; issued and outstanding 2,039,822 and 2,012,938 shares		20,398			20,129
Additional paid-in capital		3,536,678			2,817,054
Retained earnings		11,368,693			10,671,212
Accumulated other comprehensive loss, net		(118,369	)		(179,952	)
Total EMC Corporation’s shareholders’ equity		14,807,400			13,328,443
Non-controlling interest in VMware, Inc.		458,868			327,507
Total shareholders’ equity		15,266,268			13,655,950
Total liabilities and shareholders’ equity	$	25,551,744		$	23,874,575

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 Nine Months Ended
	September 30, 2009			September 30, 2008			September 30, 2009			September 30, 2008
				(As Adjusted)						(As Adjusted)
Revenues:
Product sales	$	2,200,581		$	2,492,941		$	6,174,971		$	7,295,022
Services		1,317,049			1,222,651			3,750,773			3,564,503
		3,517,630			3,715,592			9,925,744			10,859,525
Costs and expenses:
Cost of product sales		1,107,400			1,156,063			3,177,935			3,350,199
Cost of services		470,013			500,809			1,380,559			1,512,641
Research and development		422,092			410,793			1,203,266			1,286,809
Selling, general and administrative		1,177,775			1,172,579			3,253,752			3,390,468
In-process research and development		—			—			—			79,204
Restructuring and acquisition-related charges		34,781			4,398			83,587			4,041
Operating income		305,569			470,950			826,645			1,236,163
Investment income		38,106			56,717			109,293			192,587
Interest expense		(46,227	)		(44,501	)		(135,928	)		(131,614	)
Other income (expense), net		28,022			(13,313	)		17,281			(20,887	)
Income before provision for income taxes		325,470			469,853			817,291			1,276,249
Income tax provision		20,602			63,309			96,462			244,060
Net income		304,868			406,544			720,829			1,032,189
Less: Net income attributable to the non-controlling interest in VMware, Inc.		(6,688	)		(13,133	)		(23,348	)		(27,007	)
Net income attributable to EMC Corporation	$	298,180		$	393,411		$	697,481		$	1,005,182
Net income per weighted average share, basic attributable to EMC Corporation common shareholders	$	0.15		$	0.19		$	0.35		$	0.49
Net income per weighted average share, diluted attributable to EMC Corporation common shareholders	$	0.14		$	0.19		$	0.34		$	0.48
Weighted average shares, basic		2,027,347			2,048,594			2,015,920			2,060,952
Weighted average shares, diluted		2,065,951			2,077,474			2,038,984			2,095,116

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 Nine Months Ended
	September 30, 2009			September 30, 2008
				(As Adjusted)
Cash flows from operating activities:
Cash received from customers	$	10,600,727		$	11,437,259
Cash paid to suppliers and employees		(8,098,216	)		(8,842,798	)
Dividends and interest received		95,024			192,651
Interest paid		(39,550	)		(55,270	)
Income taxes paid		(232,257	)		(233,500	)
Net cash provided by operating activities		2,325,728			2,498,342
Cash flows from investing activities:
Additions to property, plant and equipment		(277,589	)		(490,066	)
Capitalized software development costs		(222,432	)		(209,441	)
Purchases of short and long-term available for sale securities		(4,224,872	)		(2,200,508	)
Sales and maturities of short and long-term available for sale securities		4,880,173			2,766,087
Acquisitions, net of cash acquired		(2,664,141	)		(678,218	)
Increase in strategic and other related investments		(152,667	)		(4,410	)
Net cash used in investing activities		(2,661,528	)		(816,556	)
Cash flows from financing activities:
Issuance of EMC’s common stock from the exercise of stock options		226,276			176,774
Issuance of VMware’s common stock from the exercise of stock options		166,523			167,417
Repayments on securities lending		(412,321	)		—
Repurchase of EMC’s common stock		—			(1,119,986	)
Excess tax benefits from stock-based compensation		25,355			96,046
Payment of short and long-term obligations		(19,836	)		(5,678	)
Proceeds from short and long-term obligations		1,615			2,125
Net cash used in financing activities		(12,388	)		(683,302	)
Effect of exchange rate changes on cash and cash equivalents		22,862			(6,995	)
Net (decrease) increase in cash and cash equivalents		(325,326	)		991,489
Cash and cash equivalents at beginning of period		5,843,685			4,482,211
Cash and cash equivalents at end of period	$	5,518,359		$	5,473,700
Reconciliation of net income to net cash provided by operating activities:
Net income	$	720,829		$	1,032,189
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		791,043			785,871
Non-cash interest expense on convertible debt		80,562			76,286
Non-cash restructuring and in-process research and development		22,138			80,705
Stock-based compensation expense		420,947			357,668
Increase in provision for doubtful accounts		15,160			16,615
Deferred income taxes, net		8,101			588
Excess tax benefits from stock-based compensation		(25,355	)		(96,046	)
Gain on Data Domain and SpringSource common stock		(25,822	)		—
Other, net		(13,567	)		(4,135	)
Changes in assets and liabilities, net of acquisitions:
Accounts and notes receivable		455,116			270,942
Inventories		(61,265	)		4,039
Other assets		(35,483	)		(68,180	)
Accounts payable		66,868			14,096
Accrued expenses		(175,982	)		(286,691	)
Income taxes payable		(143,896	)		4,326
Deferred revenue		204,707			290,177
Other liabilities		21,627			19,892
Net cash provided by operating activities	$	2,325,728		$	2,498,342

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 Nine Months Ended
	September 30, 2009			September 30, 2008			September 30, 2009			September 30, 2008
				(As Adjusted)						(As Adjusted)
Net income	$	304,868		$	406,544		$	720,829		$	1,032,189
Other comprehensive income (loss), net of taxes (benefits):
Foreign currency translation adjustments		19,726			(11,136	)		30,474			(10,249	)
Changes in market value of investments, including unrealized gains and losses and reclassification adjustment to net income, net of taxes (benefits) of $(1,168), $(9,336), $19,917 and $(20,873)		39			(15,424	)		30,650			(33,081	)
Other-than-temporary investment losses, excluding credit losses recognized in the Consolidated Income Statements, net of tax benefits of $(62), $0, $(1,446) and $0		(113	)		—			(2,684	)		—
Other-than-temporary investment losses reclassified to net income, net of tax benefits of $1,384, $0, $1,384 and $0		2,571			—			2,571			—
Changes in market value of derivatives, net of taxes (benefits) of $385, $147, $(57) and $121		895			1,329			572			1,091
Other comprehensive income (loss)		23,118			(25,231	)		61,583			(42,239	)
Comprehensive income		327,986			381,313			782,412			989,950
Less: Net income attributable to the non-controlling interest in VMware, Inc.		(6,688	)		(13,133	)		(23,348	)		(27,007	)
Less: Other comprehensive income attributable to the non-controlling interest in VMware, Inc.		(191	)		—			(515	)		—
Comprehensive income attributable to EMC Corporation	$	321,107		$	368,180		$	758,549		$	962,943

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

6

EMC CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)

For the nine months ended September 30, 2009:

	Common Stock			Additional Paid-in Capital			Retained Earnings		Other Comprehensive Loss			Non-controlling Interest in VMware		Total Shareholders’ Equity
	Shares	Par Value
Balance, January 1, 2009	2,012,938	$	20,129	$	2,817,054		$	10,671,212	$	(179,952	)	$	327,507	$	13,655,950
Stock issued through stock option and stock purchase plans	26,713		267		226,009			—		—			—		226,276
Tax benefit from stock options exercised	—		—		9,626			—		—			—		9,626
Restricted stock grants net of cancellations and withholdings	171		2		(49,203	)		—		—			—		(49,201	)
Stock options issued in business acquisitions	—		—		83,780			—		—			—		83,780
Stock-based compensation expense	—		—		426,654			—		—			—		426,654
Impact from equity transactions of VMware, Inc.	—		—		22,758			—		—			107,498		130,256
Change in market value of investments	—		—		—			—		30,650			515		31,165
Change in market value of derivatives	—		—		—			—		572			—		572
Non-credit other-than-temporary losses on investments	—		—		—			—		(113	)		—		(113	)
Currency translation adjustment	—		—		—			—		30,474			—		30,474
Net income	—		—		—			697,481		—			23,348		720,829
Balance, September 30, 2009	2,039,822	$	20,398	$	3,536,678		$	11,368,693	$	(118,369	)	$	458,868	$	15,266,268

For the nine months ended September 30, 2008:

(As Adjusted)

	Common Stock					Additional Paid-in Capital			Retained Earnings		Other Comprehensive Loss			Non-controlling Interest in VMware		Total Shareholders’ Equity
	Shares		Par Value
Balance, January 1, 2008	2,102,187		$	21,022		$	3,462,673		$	9,396,108	$	(8,449	)	$	188,988	$	13,060,342
Stock issued through stock option and stock purchase plans	15,831			158			176,616			—		—			—		176,774
Tax benefit from stock options exercised	—			—			108,913			—		—			—		108,913
Restricted stock grants net of cancellations and withholdings	(1,578	)		(15	)		(51,017	)		—		—			—		(51,032	)
Repurchase of common stock	(75,685	)		(757	)		(1,119,229	)		—		—			—		(1,119,986	)
Stock options issued in business acquisitions	—			—			4,057			—		—			—		4,057
Stock-based compensation expense	—			—			375,522			—		—			—		375,522
Impact from equity transactions of VMware, Inc.	—			—			31,888			—		—			79,294		111,182
Change in market value of investments	—			—			—			—		(33,081	)		—		(33,081	)
Change in market value of derivatives	—			—			—			—		1,091			—		1,091
Currency translation adjustment	—			—			—			—		(10,249	)		—		(10,249	)
Net income	—			—			—			1,005,182		—			27,007		1,032,189
Balance, September 30, 2008	2,040,755		$	20,408		$	2,989,423		$	10,401,290	$	(50,688	)	$	295,289	$	13,655,722

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

7

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Basis of Presentation

Company

EMC Corporation (“EMC”) and its subsidiaries develop, deliver and support 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 comprised of a majority equity stake in VMware, Inc. (“VMware”), is the leading provider of virtualization infrastructure solutions from the desktop to the data center. VMware’s virtual infrastructure software solutions run on industry-standard desktops and servers and support a wide range of operating system and application environments, as well as networking and storage infrastructures.

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, 2008 which are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2009.

Effective January 1, 2009, we adopted new authoritative guidance relating to the accounting for convertible debt instruments. The guidance changed the accounting treatment for certain convertible securities including our convertible debt. Under the guidance, issuers are required to allocate the bond proceeds into a debt portion and a conversion option. The allocation of the bond portion is based upon the fair value of the debt without the equity conversion option. The residual value is allocated to the conversion option which is accounted for as additional paid-in capital. As a result of this change, the bonds are recorded at a discount which is amortized over the instrument’s expected life using the effective interest method, resulting in additional non-cash interest expense.

We revised prior period financial statements by reclassifying $669.1 million of our convertible debt associated with our $1.725 billion 1.75% convertible senior notes due 2011 (the “2011 Notes”) and our $1.725 billion 1.75% convertible senior notes due 2013 (the “2013 Notes” and, together with the 2011 Notes, the “Notes”) to additional paid-in capital and increased interest expense by $26.0 million and $76.3 million for the three and nine months ended September 30, 2008, respectively. See Note 3. The revision reduced net income attributable to EMC Corporation by $17.9 million and $52.4 million for the three and nine months ended September 30, 2008, respectively, and reduced both basic and diluted net income attributable to EMC Corporation common shareholders by $0.01 and $0.02 for the three and nine months ended September 30, 2008, respectively. Retained earnings as of January 1, 2008 were reduced by $74.2 million.

Effective January 1, 2009, we adopted new authoritative guidance for non-controlling interests in Consolidated Financial Statements. The guidance requires that (a) the ownership interest in subsidiaries be clearly identified, labeled and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity, (b) the amount of consolidated net income attributable to the parent and to the non-controlling interest be clearly identified and presented on the face of the consolidated income statement, and (c) changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently within equity. A parent’s ownership interest in a subsidiary changes if the parent purchases additional ownership interest in its subsidiary, the parent sells some of its ownership interest or the subsidiary issues additional ownership interests. Upon adoption of the guidance, previously reported financial statements were revised and we

8

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

reclassified the previously reported Minority interest in VMware to a component of shareholders’ equity as non-controlling interest in VMware, Inc. Previously reported Minority interest was renamed Net income attributable to the non-controlling interest in VMware, Inc. See Note 4.

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 nine-month periods ended September 30, 2009 and 2008.

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, restricted stock and restricted stock units, our Notes and associated warrants (“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.

New Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance on business combinations which 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. This guidance was implemented on January 1, 2009.

In June 2009, the FASB issued the FASB Accounting Standards Codification (“Codification”). The Codification is the single source for all authoritative GAAP recognized by the FASB to be applied for financial statements issued for periods ending after September 15, 2009. The Codification does not change GAAP and will not have an effect on our financial position, results of operations or liquidity.

In June 2009, the FASB issued authoritative guidance for the transfer of assets, which clarifies whether a transferor and all of the entities included in the transferor’s financial statements being presented have surrendered control over transferred financial assets. The pronouncement is effective for us beginning in 2010. Early adoption is prohibited. We do not expect the guidance to have a material impact on our financial position or results of operations.

In June 2009, the FASB issued authoritative guidance to replace the quantitative-based risks and rewards calculation for determining which enterprise, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance. The pronouncement is effective for us beginning in 2010. Early adoption is prohibited. We are currently evaluating the potential impact of the guidance on our financial position and results of operations.

In September 2009, the FASB issued authoritative guidance on revenue arrangements with multiple deliverables. This guidance provides another alternative for establishing fair value for a deliverable. When vendor specific objective evidence or third-party evidence for deliverables in an arrangement cannot be determined, companies will be required to develop a best estimate of the selling price for separate deliverables and allocate arrangement consideration using the relative selling price method. This guidance is effective January 1, 2011, and early adoption is permitted. We are currently evaluating the impact of this guidance on our financial position and results of operations.

In September 2009, the FASB issued authoritative guidance on software-enabled products. Under this guidance, tangible products that have software components that are essential to the functionality of the tangible product will be excluded from the software revenue recognition guidance. The new guidance will include factors to help companies determine what is essential to the functionality. Software-enabled products will now be subject to other revenue guidance and will follow the above new guidance for

9

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

multiple deliverable arrangements. This guidance is effective in 2011, and early adoption is permitted. We are currently evaluating the impact of this guidance on our financial position and results of operations.

2.  Acquisitions

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

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

The purchase price for Data Domain, net of cash and investments, was approximately $2,017.3 million, which consisted of $1,933.9 million of cash consideration, including $65.0 million paid in the second quarter of 2009, and $83.4 million for the fair value of our stock options granted in exchange for existing Data Domain options. We incurred $12.0 million of transaction costs for financial advisory, legal and accounting services, which costs are included in restructuring and acquisition-related charges in our Consolidated Income Statements. The fair value of our stock options issued to employees of Data Domain was estimated using a Black-Scholes option pricing model. The fair value of the stock options was estimated assuming no expected dividends and the following weighted average assumptions:

Expected term (in years)	2.3
Expected volatility	37.0	%
Risk-free interest rate	1.2	%

The consolidated financial statements include the results of Data Domain from the date of acquisition. The purchase price has been allocated to the assets acquired and the liabilities assumed based on estimated fair values as of the acquisition date.

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

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

The total weighted-average amortization period for intangible assets is 4.3 years. The intangible assets are being amortized over the pattern in which the economic benefits of the intangible assets are being utilized, which in general reflects the cash flows generated from such assets. We acquired three in-process research and development (“IPR&D”) projects. The value assigned to the IPR&D projects was determined utilizing the income approach by determining cash flow projections relating to the projects. We

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applied discount rates ranging from 19% to 21% to determine the value of the IPR&D projects. Each IPR&D project will be assessed for impairment until completed. Upon completion, the project will be amortized over its estimated useful life over the pattern in which the economic benefits of the intangible assets are being utilized. The goodwill associated with this acquisition is reported within our Information Storage segment. None of the goodwill is deductible for tax purposes. The goodwill results from expected synergies from the transaction, including complementary products that will enhance our overall product portfolio, which we believe will result in incremental revenue and profitability.

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

In the third quarter of 2009, we acquired all of the capital stock of Kazeon Systems, Inc., a provider of eDiscovery products and solutions which allow corporations, legal service providers and law firms to efficiently search, classify and analyze the growing volumes of information dispersed through their networks. This acquisition complements and extends our Content Management and Archiving segment.

In the third quarter of 2009, VMware acquired the remaining outstanding capital stock of SpringSource Global, Inc. (“SpringSource”), a leader in enterprise and web application development and management. Through the acquisition of SpringSource, VMware plans to deliver new solutions that enable companies to more efficiently build, run and manage applications within both internal and external cloud architectures that can host both existing and new applications. These solutions will extend VMware’s strategy to deliver Platform-as-a-Service solutions that can be hosted at customer datacenters or at service providers. This acquisition will also support VMware’s mission to simplify enterprise information technology and make customer environments more efficient, scalable and easier to manage. The purchase price for SpringSource, net of cash acquired, was approximately $372.5 million, which consisted of $356.3 million of cash consideration and $16.2 million for the fair value of VMware stock options granted in exchange for existing SpringSource options.

Intangible assets, excluding goodwill, as of September 30, 2009 and December 31, 2008 consist of (tables in thousands):

	Nine Months Ended September 30, 2009
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Purchased technology	$	1,059,331	$	(707,893	)	$	351,438
Patents		62,170		(62,129	)		41
Software licenses		76,673		(55,749	)		20,924
Trademarks and tradenames		153,282		(53,908	)		99,374
Customer relationships and customer lists		899,128		(306,808	)		592,320
IPR&D		175,030		—			175,030
Other		22,337		(16,017	)		6,320
Total intangible assets, excluding goodwill	$	2,447,951	$	(1,202,504	)	$	1,245,447
	Year Ended December 31, 2008
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Purchased technology	$	913,531	$	(613,145	)	$	300,386
Patents		62,170		(62,126	)		44
Software licenses		72,263		(45,582	)		26,681
Trademarks and tradenames		139,536		(44,620	)		94,916
Customer relationships and customer lists		607,428		(240,875	)		366,553
Other		21,003		(13,967	)		7,036
Total intangible assets, excluding goodwill	$	1,815,931	$	(1,020,315	)	$	795,616

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Changes in the carrying amount of goodwill, net, on a consolidated basis and by segment for the period ended September 30, 2009 consist of the following (table in thousands):

	Nine Months Ended September 30, 2009
	Information Storage			Content Management and Archiving			RSA Information Security			VMware Virtual Infrastructure			Total
Balance, beginning of the year	$	3,300,463		$	1,403,547		$	1,530,809		$	811,980		$	7,046,799
Goodwill acquired		1,788,683			37,783			—			341,818			2,168,284
Fair market value adjustment for investments in Data Domain and SpringSource		19,963			—			—			5,859			25,822
Tax deduction from exercise of stock options		(83	)		—			(586	)		—			(669	)
Finalization of purchase price allocations		(7,844	)		(1,600	)		(2,713	)		(5,354	)		(17,511	)
Balance, September 30, 2009	$	5,101,182		$	1,439,730		$	1,527,510		$	1,154,303		$	9,222,725

The fair value adjustment for investments in Data Domain and SpringSource represent gains on their respective common stock. As part of the acquisition of these entities, our previously held investments were re-measured to fair value, resulting in $25.8 million of gains.

The results of the acquired companies have been included in our consolidated results of operations from their respective dates of acquisition. The following pro forma information gives effect to all the business combinations that were completed in the three and nine months ended September 30, 2009 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 September 30,				Nine Months Ended September 30,
	2009		2008		2009		2008
Revenue	$	3,525,109	$	3,803,979	$	10,061,751	$	11,086,155
Net income attributable to EMC Corporation common shareholders		285,502		363,140		657,777		922,139
Net income per weighted average share attributable to EMC Corporation common shareholders, basic	$	0.14	$	0.18	$	0.33	$	0.45
Net income per weighted average share attributable to EMC Corporation common shareholders, diluted	$	0.14	$	0.17	$	0.32	$	0.44

3.   Convertible Debt

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

Upon conversion, we will pay cash up to the principal amount of the debt converted. With respect to any conversion value in excess of the principal amount of the Notes converted, we have the option to settle the excess with cash, shares of our common stock, or a combination of cash and shares of our common stock based on a daily conversion value, determined in accordance with the indenture, calculated on a proportionate basis for each day of the relevant 20-day observation period. The initial conversion rate

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for the Notes will be 62.1978 shares of our common stock per one thousand dollars of principal amount of Notes, which represents a 27.5% conversion premium from the date the Notes were issued and is equivalent to a conversion price of approximately $16.08 per share of our common stock. The conversion price is subject to adjustment in some events as set forth in the indenture. In addition, if a “fundamental change” (as defined in the indenture) occurs prior to the maturity date, we will in some cases increase the conversion rate for a holder of Notes that elects to convert its Notes in connection with such fundamental change.

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

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

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

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

The carrying amount reported in the consolidated balance sheet as of September 30, 2009 for our long-term convertible debt was $3,072.5 million. The fair value of the long-term convertible debt as of September 30, 2009 was $4,162.7 million based on active market prices for the debt.

The following tables represent the key components of our convertible debt (tables in thousands):

	For the Three Months Ended
	September 30, 2009		September 30, 2008
Contractual interest expense on the coupon	$	15,094	$	15,094
Amortization of the discount component recognized as interest expense		27,483		26,009
Total interest expense on the convertible debt	$	42,577	$	41,103

	For the Nine Months Ended
	September 30, 2009		September 30, 2008
Contractual interest expense on the coupon	$	45,282	$	45,282
Amortization of the discount component recognized as interest expense		80,562		76,286
Total interest expense on the convertible debt	$	125,844	$	121,568

As of September 30, 2009, the unamortized discount consists of $133.1 million which will be amortized over 2.3 years and an unamortized discount of $244.4 million which will be amortized over 4.3 years. The effective interest rate on the Notes was 5.6% for the quarters ended September 30, 2009 and 2008. The carrying amount of the equity component was $669.1 million at both September 30, 2009 and December 31, 2008.

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4.   Non-controlling Interest in VMware, Inc.

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

	For the Nine Months Ended
	September 30, 2009			September 30, 2008
Net income attributable to EMC Corporation	$	697,481		$	1,005,182
Transfers (to) from the non-controlling interest in VMware:
Increase in EMC Corporation’s additional paid-in-capital for VMware’s equity issuances		63,181			74,656
Decrease in EMC Corporation’s additional paid-in-capital for VMware’s other equity activity		(40,423	)		(42,768	)
Net transfers from non-controlling interest		22,758			31,888
Change from net income attributable to EMC Corporation and transfers from the non-controlling interest in VMware, Inc.	$	720,239		$	1,037,070

5.   Derivatives

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

We also use foreign currency forward and option contracts to hedge our exposure on a portion of our forecasted revenue and expense transactions and commodity option contracts to hedge our exposure on a portion of our forecasted energy expense transactions. These derivatives are designated as cash flow hedges and we did not have any derivatives designated as fair value hedges as of September 30, 2009 and December 31, 2008. All outstanding derivatives are recognized on the balance sheet at fair value and changes in their fair value are recorded in accumulated other comprehensive loss until the underlying forecasted transactions occur. To achieve hedge accounting, the criteria specified in authoritative guidance must be met. These criteria include (i) ensuring at the inception of the hedge that formal documentation exists for both the hedging relationship and the entity’s risk management objective and strategy for undertaking the hedge and (ii) at the inception of the hedge and on an ongoing basis, the hedging relationship is expected to be highly effective in achieving offsetting changes in fair value attributed to the hedged risk during the period that the hedge is designated. Further, an assessment of effectiveness is required at a minimum on a quarterly basis. Absent meeting these criteria, changes in fair value are recognized currently in other expense, net, in the consolidated income statement. Once the underlying forecasted transaction is realized, the gain or loss from the derivative designated as a hedge of the transaction is reclassified from accumulated other comprehensive loss to the consolidated income statement, in the related revenue or expense caption, as appropriate. In the event the underlying forecasted transaction does not occur, the amount recorded in accumulated other comprehensive loss will be reclassified to other income (expense), net, in the consolidated income statement in the then-current period. Any ineffective portion of the derivatives designated as cash flow hedges is recognized in current earnings. The ineffective portion of the derivatives includes gains or losses associated with differences between actual and forecasted amounts.

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The following table provides the major types of derivative instruments outstanding as of September 30, 2009 and December 31, 2008 (table in thousands):

	Fair Values of Derivative Instruments
	Asset Derivatives
	September 30, 2009			December 31, 2008
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Foreign exchange contracts	Other assets	$	1,311	Other assets	$	4,977
Total derivatives designated as hedging instruments:		$	1,311		$	4,977
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other assets	$	41,976	Other assets	$	39,065
Total derivatives not designated as hedging instruments:		$	41,976		$	39,065
Total asset derivatives		$	43,287		$	44,042
	Liability Derivatives
	September 30, 2009			December 31, 2008
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Foreign exchange contracts	Accrued expenses	$	1,813	Accrued expenses	$	5,603
Commodity derivatives	Accrued expenses		308			—
Total derivatives designated as hedging instruments:		$	2,121		$	5,603
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Accrued expenses	$	39,665	Accrued expenses	$	34,347
Embedded derivatives with foreign exchange provisions	Accrued expenses		972			—
Total derivatives not designated as hedging instruments:		$	40,637		$	34,347
Total liability derivatives		$	42,758		$	39,950

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The following tables provide the effect derivative instruments had on other comprehensive loss (“OCI”) and results of operations (tables in thousands):

The Effect of Derivative Instruments on the Consolidated Income Statements For the Three Months Ended September 30, 2009 and 2008
Derivatives Designated as Hedging Instruments under Statement 133 – Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion)					Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2009			2008			2009			2008				2009			2008
Foreign exchange contracts	$	(6,883	)	$	20,064	Product sales	$	(9,751	)	$	27,954		Other expense, net	$	(1,952	)	$	(975	)
						SG&A		2,512			(9,366	)
Commodity derivatives		924			—			—			—				—			—
Total	$	(5,959	)	$	20,064	Total	$	(7,239	)	$	18,588		Total	$	(1,952	)	$	(975	)
Derivatives Not Designated as Hedging Instruments under Statement 133	Amount of Gain or (Loss) Recognized in Other expense, net
	2009			2008
Foreign exchange contracts	$	9,151		$	1,761
Embedded derivatives with foreign exchange provisions		(828	)		—
Total	$	8,323		$	1,761

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The Effect of Derivative Instruments on the Consolidated Income Statements For the Nine Months Ended September 30, 2009 and 2008
Derivatives Designated as Hedging Instruments under Statement 133 – Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion)						Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2009			2008				2009			2008				2009			2008
Foreign exchange contracts	$	(12,704	)	$	9,086		Product sales	$	(14,664	)	$	17,673		Other expense, net	$	(4,472	)	$	(3,577	)
							SG&A		1,142			(9,799	)
Commodity derivatives		(303	)		—				—			—				—			—
Total	$	(13,007	)	$	9,086		Total	$	(13,522	)	$	7,874		Total	$	(4,472	)	$	(3,577	)
Derivatives Not Designated as Hedging Instruments under Statement 133	Amount of Gain or (Loss) Recognized in Other expense, net
	2009			2008
Foreign exchange contracts	$	6,088		$	(5,952	)
Embedded derivatives with foreign exchange provisions		(1,849	)		—
Total	$	4,239		$	(5,952	)

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6.   Investments and Fair Value

In 2008, we adopted new authoritative guidance for fair value measurements that defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. Fair value is defined 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 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.

In the second quarter of 2009, we adopted new authoritative literature that requires the credit component of an other-than-temporary impairment of investments in debt securities to be recognized in earnings and the non-credit component to be recognized in other comprehensive loss when the securities are not intended to be sold and it is more likely than not that we will not be required to sell the security prior to the recovery. The adoption of the pronouncement required the recording of a cumulative effect adjustment to retained earnings with a corresponding adjustment to other comprehensive loss equal to the present value of the cash flows expected to be collected less the amortized cost basis of the debt securities held at March 31, 2009 for which an other-than-temporary impairment was previously recognized for securities that we do not intend to sell nor is it more likely than not that we will be required to sell before recovery of its amortized cost basis. We elected not to record the cumulative effect adjustment, as the amount was de minimis to our financial condition.

Our investments are comprised primarily of debt securities that are classified as available for sale and recorded at their fair market values. At September 30, 2009, with the exception of our auction rate securities, the vast majority of our investments were priced by pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs. In the event observable inputs are not available, we assess other factors to determine the security’s market value, including broker quotes or model valuations. Each month, we perform independent price verifications of all of our holdings. In the event a price fails a pre-established tolerance check, it is researched so that we can assess the cause of the variance to determine what we believe is the appropriate fair market value.

In general, investments with remaining effective maturities of 12 months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than 12 months from the balance sheet date are classified as long-term investments. As a result of the lack of liquidity for auction rate securities, we have classified these as long-term investments as of September 30, 2009. At September 30, 2009, all of our available for sale, short- and long-term investments, excluding auction rate securities, were recognized at fair value, which was determined based upon observable inputs from our pricing service vendors for identical or similar assets. At September 30, 2009 and December 31, 2008, auction rate securities were valued using a discounted cash flow model.

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The following tables summarize the composition of our investments at September 30, 2009 and December 31, 2008 (tables in thousands):

	September 30, 2009
	Amortized Cost		Unrealized Gains		Unrealized (Losses)			Aggregate Fair Value		Other-than- Temporary Impairments
U.S. government and agency obligations	$	1,343,045	$	16,087	$	(539	)	$	1,358,593	$	—
U.S. corporate debt securities		564,978		8,814		(457	)		573,335		—
Asset and mortgage-backed securities		78,458		735		(4,259	)		74,934		(776	)
Municipal obligations		440,234		5,097		(682	)		444,649		—
Auction rate securities		257,019		—		(26,389	)		230,630		—
Foreign debt securities		224,693		2,413		(40	)		227,066		—
Total	$	2,908,427	$	33,146	$	(32,366	)	$	2,909,207	$	(776	)

	December 31, 2008
	Amortized Cost		Unrealized Gains		Unrealized (Losses)			Aggregate Fair Value		Other-than- Temporary Impairments
U.S. government and agency obligations	$	1,102,739	$	28,040	$	(249	)	$	1,130,530	$	—
U.S. corporate debt securities		463,874		1,193		(13,254	)		451,813		—
Asset and mortgage-backed securities		304,769		7		(41,392	)		263,384		(2,690	)
Municipal obligations		1,230,772		15,786		(3,250	)		1,243,308		—
Auction rate securities		230,217		—		(31,048	)		199,169		—
Foreign debt securities		45,944		560		(923	)		45,581		—
Total	$	3,378,315	$	45,586	$	(90,116	)	$	3,333,785	$	(2,690	)

The following table represents our fair value hierarchy for our financial assets and liabilities measured at fair value as of September 30, 2009 (table in thousands):

	Level 1		Level 2		Level 3		Total
Cash	$	1,174,748	$	—	$	—	$	1,174,748
Cash equivalents		4,343,611		—		—		4,343,611
U.S. government and agency obligations		761,073		597,520		—		1,358,593
U.S. corporate debt securities		—		573,335		—		573,335
Asset and mortgage-backed securities		—		74,934		—		74,934
Municipal obligations		—		444,649		—		444,649
Auction rate securities		—		—		230,630		230,630
Foreign debt securities		—		227,066		—		227,066
Total cash and investments	$	6,279,432	$	1,917,504	$	230,630	$	8,427,566
Other items:
Foreign exchange derivative assets	$	—	$	43,287	$	—	$	43,287
Foreign exchange derivative liabilities		—		42,450		—		42,450
Commodity derivative liabilities		—		308		—		308

To determine the estimated fair value of our investment in auction rate securities, we used a discounted cash flow model. The assumptions used in preparing the discounted cash flow model include an incremental discount rate for the lack of liquidity in the market (“liquidity discount margin”) for an estimated period of time. The discount rate we selected was based on AA-rated banks as the majority of our portfolio is invested in student loans where EMC acts as a financier to these lenders. The liquidity discount margin represents an estimate of the additional return an investor would require for the lack of liquidity of these securities over an estimated five-year holding period. The rate used for the discount margin was 2% at September 30, 2009 versus 5% at December 31, 2008 as credit spreads on AA-rated banks have improved.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table provides a summary of changes in fair value of our Level 3 financial assets for the three and nine months ended September 30, 2009 (table in thousands):

	Three Months Ended September 30, 2009			Nine Months Ended September 30, 2009
Beginning balance	$	196,508		$	199,169
Transfers in from acquisitions		30,648			30,648
Sales		(1,800	)		(3,899	)
Decrease in previously recognized unrealized losses included in other comprehensive income		5,274			4,712
Balance at September 30, 2009	$	230,630		$	230,630

Unrealized losses on investments at September 30, 2009 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	$	116,350	$	(539	)	$	—	$	—		$	116,350	$	(539	)
U.S. corporate debt securities		51,155		(275	)		2,991		(182	)		54,146		(457	)
Asset and mortgage-backed securities		9,059		(1,844	)		26,661		(2,415	)		35,720		(4,259	)
Municipal obligations		73,468		(607	)		2,034		(75	)		75,502		(682	)
Auction rate securities		9,284		(967	)		221,346		(25,422	)		230,630		(26,389	)
Foreign debt securities		20,819		(40	)		—		—			20,819		(40	)
Total	$	280,135	$	(4,272	)	$	253,032	$	(28,094	)	$	533,167	$	(32,366	)

Investment Losses

For the three months ended September 30, 2009, we recognized other-than-temporary impairment losses of $0.8 million, of which $0.2 million was recognized in other comprehensive loss and $0.6 million was recognized in earnings. We did not present these amounts on the Consolidated Income Statements because they are immaterial.

For all of our securities where the amortized cost basis was greater than the fair value at September 30, 2009, we have concluded that currently we neither plan to sell the security nor is it more likely than not that we would be required to sell the security before its anticipated recovery. In making the determination as to whether the unrealized loss is other-than-temporary, we considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating, the underlying value and performance of the collateral, third party guarantees and the time to maturity. The following table provides a summary of changes in credit losses on investments with other-than-temporary impairments (table in thousands):

	Three Months Ended September 30, 2009			Nine Months Ended September 30, 2009
Beginning balance	$	(803	)	$	—
Add: Increase in credit losses on previously recognized other-than-temporary impairments		—			(687	)
Add: Increase in credit losses on new other-than-temporary investment impairments		(601	)		(717	)
Less: Reductions for securities sold		803			803
Balance at September 30, 2009	$	(601	)	$	(601	)

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The significant components of the temporary impairments and credit loss are as follows:

Auction Rate Securities

Our auction rate securities are predominantly rated AAA and are primarily collateralized by student loans. The underlying loans of all but two of our auction rate securities, with a market value of $17.9 million, have partial guarantees by the U.S. government as part of the Federal Family Education Loan Program (“FFELP”) through the U.S. Department of Education. FFELP guarantees at least 95.0% of the loans which collateralize the auction rate securities. The two securities whose underlying loans are not guaranteed by the U.S. government have credit enhancements and are insured by third party agencies. We believe the quality of the collateral underlying all of our auction rate securities will enable us to recover our principal balance in full.

Beginning in mid-February 2008, liquidity issues in the global credit markets resulted in the complete failure of auctions associated with our auction rate securities as the amount of securities submitted for sale in those auctions exceeded the amount of bids. For each unsuccessful auction, the interest rate moves to a maximum rate defined for each security, generally reset periodically at a level higher than defined short-term interest benchmarks. To date, we have collected all interest payable on all of our auction rate securities when due and expect to continue to do so in the future. The principal associated with failed auctions will not be accessible until successful auctions occur, a buyer is found outside of the auction process, the issuers establish a different form of financing to replace these securities, issuers repay principal over time from cash flows prior to final maturity, or final payments come due according to contractual maturities which range from 2024 to 2047. We understand that issuers and financial markets are in the process of developing alternatives that may improve liquidity, although it is not yet clear when or to what extent such efforts will be successful. We expect that we will receive the entire principal associated with these auction rate securities through one of the means described above, and accordingly, we did not experience credit losses within our Auction Rate Security portfolio. None of the auction rate securities in our portfolio are mortgage-backed or collateralized debt obligations.

Asset- and Mortgage-Backed Securities

Our asset- and mortgage-backed securities are predominantly rated AAA. The assets underlying these securities are generally residential or commercial obligations, automobile loans, credit card loans, equipment loans and home equity loans. The average maturity is 0.61 and 3.96 years for the asset-backed and mortgage-backed securities, respectively. For these securities, 59% are mortgage-backed. The mortgage loans may have fixed rate or adjustable rate terms. The remainder of the portfolio consists of asset-backed securities. To date, we have collected all interest payable on all these securities when due. For each security, regardless if it has a temporary decline in value, we analyzed the collateral value, collateral statistics, including the borrowers’ payment history and cash flows expected to be collected, and our position in the capital structure. We estimated the losses in the underlying loans for these securities and compared these losses to the amortized cost basis in the security. In estimating these losses, we included the remaining payment terms of the security, prepayment speeds, expected defaults and whether subordinated interests are capable of absorbing estimated losses on the loans underlying the security. For those securities where the underlying collateral is not sufficient or the expected cash flows to be collected is less than the amortized cost basis, we have recognized the credit component of the other-than-temporary losses on these securities. For the securities where the collateral and expected cash flows are deemed to be adequate, we believe we will realize the current cost basis of these securities based on our position in the credit structure and the aforementioned items previously mentioned.

The contractual maturities of investments held at September 30, 2009 are as follows (table in thousands):

	September 30, 2009
	Amortized Cost Basis		Aggregate Fair Value
Due within one year	$	431,434	$	434,613
Due after 1 year through 5 years		1,829,343		1,854,621
Due after 5 years through 10 years		125,258		126,253
Due after 10 years		522,392		493,720
Total	$	2,908,427	$	2,909,207

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes our strategic investments at September 30, 2009 and December 31, 2008 (table in thousands). The investments are classified within other assets, net, in the balance sheet and are stated at the lower of cost or fair value. Fair value for strategic investments in privately-held companies is primarily based on Level 2 and Level 3 inputs. Fair value for publicly-traded investments is determined based upon quoted prices representing a Level 1 input.

	September 30, 2009		December 31, 2008
Strategic investments in privately-held companies	$	48,125	$	43,589
Strategic investments in publicly-held companies		25,175		269

Gross unrealized gains on strategic investments were $5.0 million at September 30, 2009. Gross realized gains on strategic investments were $31.1 million for the quarter ended September 30, 2009. The realized gains primarily consist of adjustments to the fair value of previously held interests in Data Domain and SpringSource of $25.8 million (see Note 2). Gross realized losses on strategic investments were $2.0 million for the quarter ended September 30, 2009.

7.   Inventories

Inventories consist of (table in thousands):

	September 30, 2009		December 31, 2008
Purchased parts	$	23,718	$	62,866
Work-in-process		456,283		488,286
Finished goods		330,924		291,651
	$	810,925	$	842,803

8.   Property, Plant and Equipment

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

	September 30, 2009			December 31, 2008
Furniture and fixtures	$	230,564		$	224,736
Equipment		3,496,040			3,387,498
Buildings and improvements		1,425,748			1,280,580
Land		116,658			115,873
Building construction in progress		79,274			95,219
		5,348,284			5,103,906
Accumulated depreciation and amortization		(3,129,652	)		(2,880,899	)
	$	2,218,632		$	2,223,007

Building construction in progress at September 30, 2009 includes $62.7 million for facilities not yet placed in service that we are holding for future use.

9.   Notes Receivable

In June 2009, we entered into a term loan agreement with Quantum Corporation (“Quantum”), pursuant to which Quantum borrowed a principal amount equal to $75.4 million from us. The agreement requires quarterly interest payments at a rate of 12% per annum. The scheduled maturity date of this loan is September 30, 2014.

In June 2009, we entered into a second term loan agreement with Quantum pursuant to which Quantum borrowed an aggregate principal amount equal to $46.3 million from us. This second loan agreement has terms similar to the first loan agreement with quarterly interest payments at a rate of 12% per annum and provides for two tranches of borrowings. Quantum

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borrowed an amount equal to $24.6 million under the first tranche, with a scheduled maturity date of September 30, 2014 and an amount equal to $21.7 million under the second tranche, with a scheduled maturity date of December 31, 2011.

As of September 30, 2009, the aggregate outstanding principal amount under all loans was $121.7 million. These loans are junior to Quantum’s current senior debt and senior to all other indebtedness. These notes are included in “other assets, net” in the consolidated balance sheet.

10.   Accrued Expenses

Accrued expenses consist of (table in thousands):

	September 30, 2009		December 31, 2008
Salaries and benefits	$	675,115	$	712,237
Product warranties		276,853		269,218
Restructuring (see Note 12)		124,860		224,702
Other		788,064		695,727
	$	1,864,892	$	1,901,884

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 Nine Months Ended
	September 30, 2009			September 30, 2008			September 30, 2009			September 30, 2008
Balance, beginning of the period	$	267,246		$	274,741		$	269,218		$	263,561
Current period accrual		45,397			34,072			110,139			123,520
Amounts charged to the accrual		(35,790	)		(40,182	)		(102,504	)		(118,450	)
Balance, end of the period	$	276,853		$	268,631		$	276,853		$	268,631

The provision includes amounts accrued for systems at the time of shipment, adjustments for changes in estimated costs for warranties on systems shipped in the period and changes in estimated costs for warranties on systems shipped in prior periods. It is not practicable to determine the amounts applicable to each of the components. Additionally, the accrual for the nine months ended September 30, 2008 includes $6.3 million assumed in the acquisition of Iomega Corporation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

11.   Shareholders’ Equity

Net Income Per Share

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

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2009			September 30, 2008			September 30, 2009			September 30, 2008
Numerator:
Net income, as reported, basic	$	298,180		$	393,411		$	697,481		$	1,005,182
Incremental dilution from VMware		(510	)		(1,176	)		(1,392	)		(5,058	)
Net income, diluted	$	297,670		$	392,235		$	696,089		$	1,000,124
Denominator:
Basic weighted-average common shares outstanding		2,027,347			2,048,594			2,015,920			2,060,952
Weighted-average common stock equivalents		38,604			28,880			23,064			34,085
Assumed conversion of the Notes		—			—			—			79
Diluted weighted-average shares outstanding		2,065,951			2,077,474			2,038,984			2,095,116

Options to acquire 114.5 million and 172.4 million shares of our common stock for the three and nine months ended September 30, 2009, respectively, and options to acquire 154.1 million and 116.6 million shares of our common stock for the three and nine months ended September 30, 2008, respectively, were excluded from the calculation of diluted earnings per share attributable to EMC Corporation shareholders because of their antidilutive effect. For the three and nine months ended September 30, 2009, there were no shares potentially issuable under our Notes and the Sold Warrants because these instruments were not “in-the-money.” For the three and nine months ended September 30, 2008, there were no shares and 0.1 million shares, respectively, potentially issuable under our Notes. For the three and nine months ended September 30, 2008, there were no shares potentially issuable under the Sold Warrants because these instruments were not “in-the-money”.

The incremental dilution from VMware represents the impact of VMware’s dilutive securities on EMC’s 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.

Accumulated Other Comprehensive Loss, Net

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

	September 30, 2009			December 31, 2008
Foreign currency translation adjustments, net of tax benefits of $0 and $0	$	13,175		$	(17,299	)
Unrealized losses on temporarily impaired investments, net of tax benefits of $(11,581) and $(35,150)		(20,506	)		(54,423	)
Unrealized gains on investments, net of taxes of $13,767 and $17,419		24,357			27,624
Unrealized losses on other-than-temporary impaired securities, net of tax benefits of $(62) and $0		(113	)		—
Unrealized losses on derivatives, net of tax benefits of $(165) and $(108)		(404	)		(976	)
Recognition of actuarial net loss from pension and other postretirement plans, net of tax benefits of $(82,880) and $(82,880)		(134,878	)		(134,878	)
	$	(118,369	)	$	(179,952	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

12.  Restructuring and Acquisition-Related Charges

For the three and nine months ended September 30, 2009, we incurred restructuring and acquisition-related charges of $34.8 million and $83.6 million, respectively. For the three months ended September 30, 2009, we incurred $20.3 million of restructuring charges, primarily related to our 2008 restructuring program and $14.5 million of costs were incurred in connection with acquisitions for financial advisory, legal and accounting services. For the nine months ended September 30, 2009, we incurred $66.6 million of restructuring charges, primarily related to our 2008 restructuring program and $17.0 million of costs were incurred in connection with acquisitions for financial advisory, legal and accounting services.

For the third quarter of 2009, we also recognized a $12.5 million charge to write-off a prepaid royalty associated with a contractual obligation that included a minimum purchase commitment. We do not anticipate achieving the minimum purchase level. The charge is classified within cost of product sales on the accompanying Consolidated Income Statements.

During the three months ended September 30, 2008, we recognized restructuring charges of $4.4 million. For the nine months ended September 30, 2008, we recognized restructuring net charges of $2.7 million. For purposes of presentation, $4.0 million is presented as a restructuring charge and $1.3 million is presented as a reduction to SG&A.

In the fourth quarter of 2008, we implemented a restructuring program to further streamline the costs related to our Information Infrastructure business. The plan includes the following components:

• A reduction in force resulting in the elimination of approximately 2,400 positions which will be substantially completed by the end of 2009 and fully completed by the third quarter of 2010.

• The consolidation of facilities and the termination of contracts. These actions are expected to be completed by 2015.

• The write-off of certain assets for which EMC has determined it will no longer derive any benefit. These actions were completed in the fourth quarter of 2008.

In addition to this plan, we also recognized an asset impairment charge of $28.0 million for certain assets for which the forecasted cash flows from the assets were less than the assets’ net book value.

The total charge resulting from these actions is expected to be between $362.0 million and $387.0 million, with $247.9 million recognized in 2008, $100.0 million to $125.0 million to be recognized in 2009 and 2010 and the remainder to be recognized through 2015. Total cash expenditures associated with the plan are expected to be in the range of $310.7 million to $335.7 million.

Additionally, in the third quarter of 2008 we implemented a restructuring program resulting in a reduction in force of approximately 75 employees and the consolidation of excess facilities.

The charges for the three and nine months ended September 30, 2009 were primarily attributable to recognizing additional expense related to the restructuring program implemented in the fourth quarter of 2008.

The activity for each charge is explained in the following sections.

2008 Restructuring Programs

The activity for the 2008 restructuring programs for the three and nine months ended September 30, 2009 and 2008 is presented below (tables in thousands):

Three Months Ended September 30, 2009

Category	Balance as of June 30, 2009		2009 Charges Relating to the 2008 Plan		Utilization			Balance as of September 30, 2009
Workforce reductions	$	114,758	$	12,211	$	(36,045	)	$	90,924
Consolidation of excess facilities and other contractual obligations		9,029		7,642		(3,781	)		12,890
Abandoned assets		—		98		(98	)		—
Total	$	123,787	$	19,951	$	(39,924	)	$	103,814

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Nine Months Ended September 30, 2009

Category	Balance as of December 31, 2008		2009 Charges Relating to the 2008 Plan		Utilization			Balance as of September 30, 2009
Workforce reductions	$	186,274	$	35,363	$	(130,713	)	$	90,924
Consolidation of excess facilities and other contractual obligations		2,376		23,359		(12,845	)		12,890
Abandoned assets		—		6,203		(6,203	)		—
Total	$	188,650	$	64,925	$	(149,761	)	$	103,814

Three and Nine Months Ended

September 30, 2008

Category	Initial Provision		Utilization During 2008			Ending Balance		Non-Cash Portion of the Provision
Workforce reductions	$	5,474	$	(569	)	$	4,905	$	1,285
Consolidation of excess facilities and other items		3,118		(2,012	)		1,106		2,012
Total	$	8,592	$	(2,581	)	$	6,011	$	3,297

For the three and nine months ended September 30, 2009, the adjustment to the workforce reductions provision is primarily attributable to individuals whose severance expense is being recognized ratably from the date of notification through their last day of work. These employees are required to render services beyond a minimum retention period in order to receive their severance. As of September 30, 2009, we had completed approximately 80% of the headcount reductions. The adjustment to the provision for the consolidation of excess facilities and other contractual obligations represents lease termination costs for facilities vacated in the quarter in accordance with our plan as part of our 2008 restructuring programs. The adjustment for abandoned assets represents additional identified infrastructure determined to no longer have benefit and abandoned in 2009.

The remaining cash portion owed for the 2008 restructuring programs is $100.6 million. The cash expenditures relating to workforce reductions are expected to be substantially paid out by the end of 2010. The cash expenditures relating to the consolidation of excess facilities and other contractual obligations are expected to be paid out by the end of 2015.

Prior Restructuring Programs

Prior to 2008, we had instituted several restructuring programs. The activity for these programs for the three and nine months ended September 30, 2009 and 2008, respectively, is presented below (tables in thousands):

Three Months Ended September 30, 2009

Category	Balance as of June 30, 2009		Adjustment to the Provision			Utilization			Balance as of September 30, 2009
Workforce reductions	$	6,853	$	(10	)	$	(915	)	$	5,928
Consolidation of excess facilities		17,190		1			(2,192	)		14,999
Contractual and other obligations		1,107		313			(1,301	)		119
Total	$	25,150	$	304		$	(4,408	)	$	21,046

Nine Months Ended September 30, 2009

Category	Balance as of December 31, 2008		Adjustment to the Provision		Utilization			Balance as of September 30, 2009
Workforce reductions	$	14,322	$	912	$	(9,306	)	$	5,928
Consolidation of excess facilities		20,860		1		(5,862	)		14,999
Contractual and other obligations		870		750		(1,501	)		119
Total	$	36,052	$	1,663	$	(16,669	)	$	21,046

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Three Months Ended September 30, 2008

Category	Balance as of June 30, 2008		Adjustment to the Provision			Utilization			Balance as of September 30, 2008
Workforce reductions	$	34,203	$	(4,713	)	$	(8,721	)	$	20,769
Consolidation of excess facilities		21,220		519			(1,071	)		20,668
Contractual and other obligations		900		—			—			900
Total	$	56,323	$	(4,194	)	$	(9,792	)	$	42,337

Nine Months Ended September 30, 2008

Category	Balance as of December 31, 2007		Adjustment to the Provision			Utilization			Balance as of September 30, 2008
Workforce reductions	$	96,821	$	(5,945	)	$	(70,107	)	$	20,769
Consolidation of excess facilities		28,273		(29	)		(7,576	)		20,668
Contractual and other obligations		830		75			(5	)		900
Total	$	125,924	$	(5,899	)	$	(77,688	)	$	42,337

The remaining cash portion owed for these programs is $18.6 million. The cash expenditures relating to workforce reductions are expected to be substantially paid out by the end of 2010. The cash expenditures relating to the excess facilities are expected to be paid out by the end of 2015. The cash expenditures relating to the contractual obligations are expected to be paid out by the end of 2009.

13.  Commitments and Contingencies

Line of Credit

We have available for use a credit line of $50.0 million in the United States. As of September 30, 2009, 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 September 30, 2009, we were in compliance with the covenants.

Litigation

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

United States ex rel. Rille and Roberts v. EMC Corporation. On February 27, 2009, the U.S. District Court for the Eastern District of Arkansas entered an order unsealing a civil False Claims Act “qui tam” action by two individuals (the “relators”) that named EMC as a defendant in December 2006. This action relates to the previously disclosed investigation being conducted by the Civil Division of the United States Department of Justice (the “DoJ”) regarding (i) EMC’s fee arrangements with systems integrators and other partners in federal government transactions, and (ii) EMC’s compliance with the terms and conditions of

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certain agreements pursuant to which we sold products and services to the federal government. By the same order of February 27, 2009, the U.S. District Court for the Eastern District of Arkansas also unsealed a complaint in intervention filed by the DoJ in June 2008 in this matter and directed that EMC be served with both complaints. The DoJ complaint, which adopts the claims advanced by the relators, asserts claims under the Anti-Kickback Act and False Claims Act in addition to breach of contract and other claims. The DoJ and the relators seek various remedies, including treble damages and statutory penalties. By order dated June 3, 2009, the Arkansas Court granted a motion by EMC to transfer the action to the U.S. District Court for the Eastern District of Virginia, where it is now pending. This action could lead to other related proceedings by various agencies of the federal government, which could result in suspension or debarment from sales to the federal government. We are defending this matter vigorously.

Derivative Demand Letters. In April 2009, we received two derivative demand letters sent on behalf of individuals purporting to be EMC shareholders. Both letters contain allegations to the effect that the existence of the matter captioned United States ex rel. Rille and Roberts v. EMC Corporation serves as evidence that certain Company officers and directors failed to exercise due care and/or failed to oversee compliance with the laws identified in the Roberts complaints. The matters relating to the demand letters were referred to a Special Committee of independent directors of the Board of Directors, which investigated and made a determination regarding such allegations. At the conclusion of their investigation, the Special Committee determined in good faith that commencing or maintaining derivative proceedings based on the allegations would not be in the best interests of EMC. In October 2009, one of the individuals filed a complaint in the Superior Court for Middlesex County in Massachusetts alleging claims for breach of fiduciary duty against EMC directors and certain officers based on the same allegations set forth in the demand letter. We intend to defend this matter vigorously.

14.  Segment Information

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

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Our segment information for the three and nine months ended September 30, 2009 and 2008 is as follows (tables in thousands, except percentages):

	EMC Information Infrastructure									EMC Information Infrastructure			VMware Virtual Infrastructure within EMC			Corp Reconciling Items			Consolidated
	Information Storage			Content Management and Archiving			RSA Information Security
Three Months Ended:
September 30, 2009
Revenues:
Product revenues	$	1,818,230		$	58,209		$	84,080		$	1,960,519		$	240,062		$	—		$	2,200,581
Services revenues		880,807			118,979			68,420			1,068,206			248,843			—			1,317,049
Total consolidated revenues		2,699,037			177,188			152,500			3,028,725			488,905			—			3,517,630
Cost of sales		1,306,859			65,913			46,603			1,419,375			83,537			74,501			1,577,413
Gross profit	$	1,392,178		$	111,275		$	105,897			1,609,350			405,368			(74,501	)		1,940,217
Gross profit percentage		51.6	%		62.8	%		69.4	%		53.1	%		82.9	%		—			55.2	%
Research and development											255,028			98,087			68,977			422,092
Selling, general and administrative											830,277			208,855			138,643			1,177,775
Restructuring and acquisition-related charges											—			—			34,781			34,781
Total costs and expenses											1,085,305			306,942			242,401			1,634,648
Operating income											524,045			98,426			(316,902	)		305,569
Other income (expense), net											21,854			(292	)		(1,661	)		19,901
Income before tax											545,899			98,134			(318,563	)		325,470
Income tax provision											108,258			9,893			(97,549	)		20,602
Net income											437,641			88,241			(221,014	)		304,868
Net income attributable to the non-controlling interest in VMware, Inc.											—			(15,384	)		8,696			(6,688	)
Net income attributable to EMC Corporation										$	437,641		$	72,857		$	(212,318	)	$	298,180

	EMC Information Infrastructure									EMC Information Infrastructure			VMware Virtual Infrastructure within EMC			Corp Reconciling Items			Consolidated
	Information Storage			Content Management and Archiving			RSA Information Security
Three Months Ended:
September 30, 2008
Revenues:
Product revenues	$	2,056,498		$	62,576		$	88,779		$	2,207,853		$	285,088		$	—		$	2,492,941
Services revenues		851,825			125,493			58,561			1,035,879			186,772			—			1,222,651
Total consolidated revenues		2,908,323			188,069			147,340			3,243,732			471,860			—			3,715,592
Cost of sales		1,411,369			74,875			43,885			1,530,129			64,954			61,789			1,656,872
Gross profit	$	1,496,954		$	113,194		$	103,455			1,713,603			406,906			(61,789	)		2,058,720
Gross profit percentage		51.5	%		60.2	%		70.2	%		52.8	%		86.2	%		—			55.4	%
Research and development											302,216			69,039			39,538			410,793
Selling, general and administrative											892,132			191,544			88,903			1,172,579
Restructuring and acquisition-related charges											—			—			4,398			4,398
Total costs and expenses											1,194,348			260,583			132,839			1,587,770
Operating income											519,255			146,323			(194,628	)		470,950
Other income (expense), net											23,667			1,245			(26,009	)		(1,097	)
Income before tax											542,922			147,568			(220,637	)		469,853
Income tax provision											112,915			31,685			(81,291	)		63,309
Net income											430,007			115,883			(139,346	)		406,544
Net income attributable to the non-controlling interest in VMware, Inc.											—			(18,070	)		4,937			(13,133	)
Net income attributable to EMC Corporation										$	430,007		$	97,813		$	(134,409	)	$	393,411

29

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	EMC Information Infrastructure									EMC Information Infrastructure			VMware Virtual Infrastructure within EMC			Corp Reconciling Items			Consolidated
	Information Storage			Content Management and Archiving			RSA Information Security
Nine Months Ended:
September 30, 2009
Revenues:
Product revenues	$	5,022,947		$	177,711		$	248,831		$	5,449,489		$	725,482		$	—		$	6,174,971
Services revenues		2,514,297			354,029			193,510			3,061,836			688,937			—			3,750,773
Total consolidated revenues		7,537,244			531,740			442,341			8,511,325			1,414,419			—			9,925,744
Cost of sales		3,815,689			206,073			135,674			4,157,436			221,023			180,035			4,558,494
Gross profit	$	3,721,555		$	325,667		$	306,667			4,353,889			1,193,396			(180,035	)		5,367,250
Gross profit percentage		49.4	%		61.2	%		69.3	%		51.2	%		84.4	%		—			54.1	%
Research and development											768,264			272,628			162,374			1,203,266
Selling, general and administrative											2,363,321			579,024			311,407			3,253,752
Restructuring and acquisition-related charges											—			—			83,587			83,587
Total costs and expenses											3,131,585			851,652			557,368			4,540,605
Operating income											1,222,304			341,744			(737,403	)		826,645
Other income (expense), net											48,607			(3,221	)		(54,740	)		(9,354	)
Income before tax											1,270,911			338,523			(792,143	)		817,291
Income tax provision											264,804			55,493			(223,835	)		96,462
Net income											1,006,107			283,030			(568,308	)		720,829
Net income attributable to the non-controlling interest in VMware, Inc.											—			(46,735	)		23,387			(23,348	)
Net income attributable to EMC Corporation										$	1,006,107		$	236,295		$	(544,921	)	$	697,481

	EMC Information Infrastructure									EMC Information Infrastructure			VMware Virtual Infrastructure within EMC			Corp Reconciling Items			Consolidated
	Information Storage			Content Management and Archiving			RSA Information Security
Nine Months Ended:
September 30, 2008
Revenues:
Product revenues	$	5,978,163		$	197,119		$	259,529		$	6,434,811		$	860,211		$	—		$	7,295,022
Services revenues		2,515,236			380,159			166,714			3,062,109			502,394			—			3,564,503
Total consolidated revenues		8,493,399			577,278			426,243			9,496,920			1,362,605			—			10,859,525
Cost of sales		4,127,867			225,906			127,335			4,481,108			205,107			176,625			4,862,840
Gross profit	$	4,365,532		$	351,372		$	298,908			5,015,812			1,157,498			(176,625	)		5,996,685
Gross profit percentage		51.4	%		60.9	%		70.1	%		52.8	%		84.9	%		—			55.2	%
Research and development											902,141			260,995			123,673			1,286,809
Selling, general and administrative											2,583,605			542,647			264,216			3,390,468
In-process research and development											—			—			79,204			79,204
Restructuring and acquisition-related charges											(357	)		—			4,398			4,041
Total costs and expenses											3,485,389			803,642			471,491			4,760,522
Operating income											1,530,423			353,856			(648,116	)		1,236,163
Other income (expense), net											108,926			7,446			(76,286	)		40,086
Income before tax											1,639,349			361,302			(724,402	)		1,276,249
Income tax provision											366,759			74,198			(196,897	)		244,060
Net income											1,272,590			287,104			(527,505	)		1,032,189
Net income attributable to the non-controlling interest in VMware, Inc.											—			(42,806	)		15,799			(27,007	)
Net income attributable to EMC Corporation										$	1,272,590		$	244,298		$	(511,706	)	$	1,005,182

30

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Our revenues are attributed to the geographic areas according to the location of the customers. Revenues by geographic area are included in the following table (table in thousands):

	For the Three Months Ended				For the Nine Months Ended
	September 30, 2009		September 30, 2008		September 30, 2009		September 30, 2008
United States	$	1,899,919	$	2,024,975	$	5,219,413	$	5,837,510
Europe, Middle East and Africa		1,034,459		1,126,216		3,019,769		3,325,921
Asia Pacific		396,428		397,447		1,178,065		1,218,080
Latin America, Mexico and Canada		186,824		166,954		508,497		478,014
Total	$	3,517,630	$	3,715,592	$	9,925,744	$	10,859,525

No country other than the United States accounted for 10% or more of revenues during the three and nine months ended September 30, 2009 or 2008.

Long-lived assets, excluding financial instruments and deferred tax assets, in the United States were $12,556.2 million at September 30, 2009 and $9,902.8 million at December 31, 2008. No country other than the United States accounted for 10% or more of these assets at September 30, 2009 or December 31, 2008. Internationally, long-lived assets, excluding financial instruments and deferred tax assets, were $1,075.3 million at September 30, 2009 and $936.3 million at December 31, 2008.

For the three and nine months ended September 30, 2008, sales to Dell Inc. accounted for 10.4% and 11.7%, respectively, of our total revenues.

15.  Income Taxes

Our effective income tax rates were 6.3% and 11.8% for the three and nine months ended September 30, 2009, respectively. Our effective income tax rates were 13.5% and 19.1% for the three and nine months ended September 30, 2008, 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 or resolutions of tax audits or other tax contingencies. For the three and nine months ended September 30, 2008 and 2009, the effective tax rate varied from the statutory tax rate principally 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 September 30, 2008 to the three months ended September 30, 2009 due to the change in the mix of income between our foreign and domestic jurisdictions and the recognition of discrete tax benefits associated with the finalization of certain federal income tax liabilities. Additionally, in 2009 our tax rate was favorably impacted by an increase in tax credits.

Our effective income tax rate decreased from the nine months ended September 30, 2008 to the nine months ended September 30, 2009 due to the change in the mix of income between our foreign and domestic jurisdictions and the recognition of discrete tax benefits. The discrete benefits were principally the favorable resolution of uncertain tax positions related to transfer pricing and a U.S. federal income tax audit. Additionally, the decrease in our effective tax rate was due to an increase in tax credits, as well as non-deductible IPR&D charges during the quarter ended March 31, 2008 which increased the 2008 effective tax rate.

As of December 31, 2008, we had $218.5 million of unrecognized tax benefits and as of September 30, 2009 we had $185.6 million of unrecognized tax benefits. During the nine months ended September 30, 2009, the balance decreased by $39.0 million as a result of the favorable resolution of certain ruling requests from taxing authorities and the outcome of 2005 and 2006 U.S. federal income tax audits. There was also a net increase of $6.1 million, which included increases for acquired uncertain tax positions and uncertain tax positions taken by EMC during 2009, partially offset by certain decreases arising from changes in measurement of prior year uncertain tax positions and the expiration of statutes of limitations.

We have substantially concluded all U.S. federal income tax matters for years through 2006 and are in the process of a U.S. federal income tax audit for 2007 and 2008. We have income tax audits in process in numerous state, local and international jurisdictions. Based on the timing and outcome of examinations of EMC, the result of the expiration of statutes of limitations for

31

EMC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 $6 million to $18 million of reserves for unrecognized tax benefits may be released within one year as a result of the lapse of statutes of limitations and the resolution of agreements with various foreign tax authorities.

16.  Subsequent Events

Management has updated the financial statements for events through November 6, 2009.

32

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

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

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

Certain tables may not add due to rounding.

INTRODUCTION

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

EMC Information Infrastructure

Our EMC Information Infrastructure business consists of three of our segments: Information Storage, Content Management and Archiving and RSA Information Security. Our objective for our EMC Information Infrastructure business is to grow faster than the markets we serve by investing in the business for sustainable advantage.

To further improve the competitiveness and efficiency of our global business in response to a challenging global economy, in the fourth quarter of 2008, we implemented a restructuring program to further streamline the costs related to our Information Infrastructure business. We expected the program to reduce costs from our 2008 rate by approximately $350 in 2009, increasing to approximately $500 in 2010. The program’s focus is to consolidate back office functions, field and campus offices, rebalance investments towards higher-growth products and markets, reduce management layers, and further reduce indirect spend on contractors, third-party services and travel. The restructuring program will reduce our global Information Infrastructure workforce by approximately 2,400 positions. As part of our ongoing focus on costs, we have identified some additional near-term cost reduction actions that will save approximately another $100, predominantly in the second half of 2009, yielding total expected savings in 2009 of approximately $450. These actions consist of temporary reductions in salaries and employee benefits. Given the shorter-term nature of some of these new initiatives, we still expect total cost reductions to be approximately $500 in 2010.

These programs are favorably impacting our cost of sales, selling, general & administrative (“SG&A”) and research & development (“R&D”) expenses. For 2009, we estimate that approximately one-third of these reductions will be to our cost of sales and the remaining two-thirds will be to our other operating expenses.

The programs’ expected savings will come from both cost reductions and the transformation of several areas of our operational cost structure. As part of these efforts, we are undertaking several initiatives to transform the structural efficiency of our worldwide operations. These initiatives, which began in 2009, include the consolidation and movement of various facilities and processes which are expected to be completed by the end of 2010. As part of these transformation efforts, we expect to incur additional non-recurring transition costs of approximately $75 to $100 over this period. These investments are necessary to implement the new, more efficient capabilities ahead of transitioning from the existing cost structure. Through the end of the third quarter of 2009, we have incurred approximately $35 of these incremental transition costs.

VMware Virtual Infrastructure

VMware’s current financial focus is on long-term revenue growth to generate cash flows to fund its expansion of industry segment share and development of virtualization-based products for data centers, desktops and cloud computing. VMware expects to grow its business by broadening virtualization infrastructure software solutions technology and product portfolio, increasing product awareness, promoting the adoption of virtualization, and building long-term relationships with its customers through the adoption of enterprise license agreements (“ELAs”). In the second quarter of 2009, VMware vSphere 4, the next generation of VMware Infrastructure which is VMware’s flagship virtual data center operating system (“VDC-OS”) product, became generally available. VMware expects to continue to introduce products that build on the vSphere foundation through 2009 and 2010.

33

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

Since mid-2008, VMware has observed that customers have responded to the economic downturn with reductions in their IT spending. As a result, customers are subjecting larger orders, such as ELAs, to a longer review process and in certain cases are purchasing products to meet their immediate needs, foregoing larger discounts offered under ELAs. While the overall macroeconomic environment appears to be improving and customers appear to be moving forward cautiously with their IT spending, VMware remains cautious in planning and is assuming a slow economic recovery, in which IT spending will continue to be tempered into 2010 and perhaps longer.

Although VMware is currently the leading provider of virtualization infrastructure software solutions, they face competitive threats to their leadership position from a number of companies, some of which have significantly greater resources than VMware, which could result in increased pressure to reduce prices on its offerings. As a result, VMware believes it is important to continue to invest in strategic initiatives related to product research and development, market expansion and associated support functions to expand its industry leadership. These investments could result in contracting operating margins as VMware invests in its future. VMware believes that it will be able to continue to meet its product development objectives through continued investment in its business, supplemented with strategic hires and acquisitions, funded through the operating cash flows generated from the sale of existing products and services. VMware believes this is the appropriate priority for the long-term health of its business.

RESULTS OF OPERATIONS

Revenues

The following table presents revenue by our segments:

	For the Three Months Ended
	September 30, 2009		September 30, 2008		$ Change			% Change
Information Storage	$	2,699.0	$	2,908.3	$	(209.3	)	(7.2	)%
Content Management and Archiving		177.2		188.1		(10.9	)	(5.8	)%
RSA Information Security		152.5		147.3		5.2		3.5	%
VMware Virtual Infrastructure		488.9		471.9		17.0		3.6	%
Total revenues	$	3,517.6	$	3,715.6	$	(198.0	)	(5.3	)%

	For the Nine Months Ended
	September 30, 2009		September 30, 2008		$ Change			% Change
Information Storage	$	7,537.2	$	8,493.4	$	(956.2	)	(11.3	)%
Content Management and Archiving		531.7		577.3		(45.6	)	(7.9	)%
RSA Information Security		442.3		426.2		16.1		3.8	%
VMware Virtual Infrastructure		1,414.4		1,362.6		51.8		3.8	%
Total revenues	$	9,925.7	$	10,859.5	$	(933.8	)	(8.6	)%

Consolidated product revenues declined 11.7% to $2,200.6 for the three months ended September 30, 2009 and 15.4% to $6,175.0 for the nine months ended September 30, 2009. The Information Storage segment’s product revenues declined 11.6% to $1,818.2 for the three months ended September 30, 2009 and 16.0% to $5,022.9 for the nine months ended September 30, 2009. The Content Management and Archiving segment’s product revenues declined 7.0% to $58.2 for the three months ended September 30, 2009 and 9.8% to $177.7 for the nine months ended September 30, 2009. The RSA Information Security segment’s product revenues declined 5.3% to $84.1 for the three months ended September 30, 2009 and 4.1% to $248.8 for the nine months ended September 30, 2009. The VMware Virtual Infrastructure segment’s product revenues declined 15.8% to $240.1 for the three months ended September 30, 2009 and 15.7% to $725.5 for the nine months ended September 30, 2009. The decline in product revenues for all segments for the three and nine months ended September 30, 2009 was primarily attributable to lower demand resulting from the challenging global economic environment and resulting negative impact in our customers’ IT purchases.

Consolidated services revenues increased 7.7% to $1,317.0 for the three months ended September 30, 2009 and 5.2% to $3,750.8 for the nine months ended September 30, 2009. The Information Storage segment’s services revenues increased 3.4% to $880.8 for the three months ended September 30, 2009 and decreased less than 0.1% to $2,514.3 for the nine months ended September 30, 2009. The RSA Information Security segment’s services revenue increased 16.8% to $68.4 for the three months

34

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

ended September 30, 2009 and 16.1% to $193.5 for the nine months ended September 30, 2009. Services revenues for these segments primarily increased due to an increase in maintenance revenues resulting from continued demand for support from our installed base.

The Content Management and Archiving segment’s services revenues declined 5.2% to $119.0 for the three months ended September 30, 2009 and 6.9% to $354.0 for the nine months ended September 30, 2009. The decline in services revenues was primarily attributable to lower demand for our product offerings and professional services attributable to the challenging global economic environment and resulting negative impact in our customers’ IT purchases.

The VMware Virtual Infrastructure segment’s services revenues increased 33.2% to $248.8 for the three months ended September 30, 2009 and 37.1% to $688.9 for the nine months ended September 30, 2009. Services revenues increased as a result of customers becoming current on their maintenance agreements in order to receive VMware’s new product offerings as part of those arrangements. In addition, the growth in services revenues year-over-year reflects overall strong renewals, the benefit of multi-year software maintenance contracts sold in previous periods and additional maintenance contracts sold in conjunction with software licenses.

Consolidated revenues by geography were as follows:

	For the Three Months Ended
	September 30, 2009		September 30, 2008		% Change
United States	$	1,899.9	$	2,025.0	(6.2	)%
Europe, Middle East and Africa		1,034.5		1,126.2	(8.1	)
Asia Pacific		396.4		397.4	(0.3	)
Latin America, Mexico and Canada		186.8		167.0	11.9

	For the Nine Months Ended
	September 30, 2009		September 30, 2008		% Change
United States	$	5,219.4	$	5,837.5	(10.6	)%
Europe, Middle East and Africa		3,019.8		3,325.9	(9.2	)
Asia Pacific		1,178.1		1,218.1	(3.3	)
Latin America, Mexico and Canada		508.5		478.0	6.4

Revenues decreased for the three and nine months ended September 30, 2009 compared to the same periods in 2008 in all of our markets, with the exception of Latin America, Mexico and Canada, due to the challenging global economic environment and resulting negative impact in customers’ IT purchases. Revenues improved in Latin America, Mexico and Canada primarily due to increased services revenues. Changes in exchange rates contributed 1.3% and 2.8% to the overall revenue decrease for the three and nine months ended September 30, 2009, respectively, compared to the same periods in 2008. The impact of the change in rates was most significant in the European market, primarily Germany, France, Italy and the United Kingdom.

35

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

Costs and Expenses

The following tables present our costs and expenses, other income and net income attributable to EMC Corporation.

	For the Three Months Ended						$ Change			% Change
	September 30, 2009			September 30, 2008
Cost of revenue:
Information Storage	$	1,306.9		$	1,411.4		$	(104.5	)	(7.4	)%
Content Management and Archiving		65.9			74.9			(9.0	)	(12.0	)
RSA Information Security		46.6			43.9			2.7		6.2
VMware Virtual Infrastructure		83.5			65.0			18.5		28.5
Corporate reconciling items		74.5			61.8			12.7		20.6
Total cost of revenue		1,577.4			1,656.9			(79.5	)	(4.8	)
Gross margins:
Information Storage		1,392.2			1,497.0			(104.8	)	(7.0	)
Content Management and Archiving		111.3			113.2			(1.9	)	(1.7	)
RSA Information Security		105.9			103.5			2.4		2.3
VMware Virtual Infrastructure		405.4			406.9			(1.5	)	(0.4	)
Corporate reconciling items		(74.5	)		(61.8	)		(12.7	)	(20.6	)
Total gross margin		1,940.2			2,058.7			(118.5	)	(5.8	)
Operating expenses:
Research and development (1)		422.1			410.8			11.3		2.8
Selling, general and administrative (2)		1,177.8			1,172.6			5.2		0.4
Restructuring and acquisition-related charges		34.8			4.4			30.4		690.9
Total operating expenses		1,634.6			1,587.8			46.8		2.9
Operating income		305.6			471.0			(165.4	)	(35.1	)
Investment income, interest expense and other expense, net		19.9			(1.1	)		21.0		NM
Income before income taxes		325.5			469.9			(144.4	)	(30.7	)
Income tax provision		20.6			63.3			(42.7	)	(67.5	)
Net income		304.9			406.5			(101.6	)	(25.0	)
Less: Net income attributable to the non-controlling interest in VMware, Inc.		(6.7	)		(13.1	)		6.4		48.9
Net income attributable to EMC Corporation	$	298.2		$	393.4		$	(95.2	)	(24.2	)%

36

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

	For the Nine Months Ended						$ Change			% Change
	September 30, 2009			September 30, 2008
Cost of revenue:
Information Storage	$	3,815.7		$	4,127.9		$	(312.2	)	(7.6	)%
Content Management and Archiving		206.1			225.9			(19.8	)	(8.8	)
RSA Information Security		135.7			127.3			8.4		6.6
VMware Virtual Infrastructure		221.0			205.1			15.9		7.8
Corporate reconciling items		180.0			176.6			3.4		1.9
Total cost of revenue		4,558.5			4,862.8			(304.3	)	(6.3	)
Gross margins:
Information Storage		3,721.6			4,365.5			(643.9	)	(14.7	)
Content Management and Archiving		325.7			351.4			(25.7	)	(7.3	)
RSA Information Security		306.7			298.9			7.8		2.6
VMware Virtual Infrastructure		1,193.4			1,157.5			35.9		3.1
Corporate reconciling items		(180.0	)		(176.6	)		(3.4	)	(1.9	)
Total gross margin		5,367.3			5,996.7			(629.4	)	(10.5	)
Operating expenses:
Research and development (3)		1,203.3			1,286.8			(83.5	)	(6.5	)
Selling, general and administrative (4)		3,253.8			3,390.5			(136.7	)	(4.0	)
In-process research and development		—			79.2			(79.2	)	(100.0	)
Restructuring and acquisition-related charges		83.6			4.0			79.6		1,990.0
Total operating expenses		4,540.6			4,760.5			(219.9	)	(4.6	)
Operating income		826.6			1,236.2			(409.6	)	(33.1	)
Investment income, interest expense and other expense, net		(9.4	)		40.1			(49.5	)	(123.4	)
Income before income taxes		817.3			1,276.2			(458.9	)	(36.0	)
Income tax provision		96.5			244.1			(147.6	)	(60.5	)
Net income		720.8			1,032.2			(311.4	)	(30.2	)
Less: Net income attributable to the non-controlling interest in VMware, Inc.		(23.3	)		(27.0	)		3.7		13.7
Net income attributable to EMC Corporation	$	697.5		$	1,005.2		$	(307.7	)	(30.6	)%

(1) Amount includes corporate reconciling items of $69.0 and $39.5 for the three months ended September 30, 2009 and 2008, respectively.

(2) Amount includes corporate reconciling items of $138.6 and $88.9 for the three months ended September 30, 2009 and 2008, respectively.

(3) Amount includes corporate reconciling items of $162.4 and $123.7 for the nine months ended September 30, 2009 and 2008, respectively.

(4) Amount includes corporate reconciling items of $311.4 and $264.2 for the nine months ended September 30, 2009 and 2008, respectively.

NM – not measurable

Gross Margins

For the three months ended September 30, 2009 and 2008, our gross margin percentages were 55.2% and 55.4%, respectively. The decline in the gross margin percentage in the third quarter of 2009 compared to 2008 was primarily attributable to the VMware Virtual Infrastructure segment, which decreased overall gross margins by 29 basis points and the RSA Information Security segment, which decreased overall gross margins by 1 basis point. These declines were partially offset by a 31 basis points gross margin contribution from the Information Storage segment and a 12 basis points gross margin contribution from the Content Management and Archiving segment. The increase in corporate reconciling items, consisting of stock-based compensation, intangible asset amortization, restructuring charges and transition costs, decreased the consolidated gross margin percentage by 33 basis points.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

For the nine months ended September 30, 2009 and 2008, our gross margin percentages were 54.1% and 55.2%, respectively. The decline in the gross margin percentage for the nine months ended September 30, 2009 compared to 2008 was primarily attributable to the Information Storage segment, which decreased overall gross margins by 114 basis points, the Content Management and Archiving segment, which decreased overall gross margins by 1 basis point and the RSA Information Security segment, which decreased overall gross margins by 1 basis point. These declines were partially offset by gross margin improvements in the VMware Virtual Infrastructure segment, which contributed 8 basis points. The increase in corporate reconciling items, consisting of stock-based compensation, acquisition-related intangible asset amortization, restructuring charges and transition costs, decreased the consolidated gross margin percentage by 2 basis points.

For segment reporting purposes, stock-based compensation, intangible asset amortization, restructuring charges and transition costs are recognized as corporate expenses and are not allocated among our various operating segments. The increase of $12.7 in the corporate reconciling items for the three months ended September 30, 2009 was attributable to a $12.5 increase in restructuring charges, a $6.0 increase in stock-based compensation expense and a $0.8 increase in transition costs, partially offset by a $6.6 decrease in intangible asset amortization expense. The transition costs represent the incremental costs incurred to transform our current cost structure to a more streamlined cost structure. The increase of $3.4 in the corporate reconciling items for the nine months ended September 30, 2009 was attributable to a $12.5 increase in restructuring charges, a $10.8 increase in stock-based compensation expense and a $3.0 increase in transition costs, partially offset by a $22.9 decrease in intangible asset amortization expense. The increase in restructuring charges for the three and nine months ended September 30, 2009 was attributable to a loss recognized on a contractual obligation with a minimum purchase obligation that is not expected to be fulfilled. The decrease in intangible asset amortization expense for the three and nine months ended September 30, 2009 was attributable to intangible assets acquired in acquisitions becoming fully amortized.

The gross margin percentages for the Information Storage segment were 51.6% and 51.5% for the third quarters of 2009 and 2008, respectively, and 49.4% and 51.4% for the nine months ended September 30, 2009 and 2008, respectively. The decrease in gross margin percentage for the nine months ended September 30, 2009 compared to the same period in 2008 was primarily attributable to lower sales volume and a greater mix of lower margin Iomega revenue. Iomega operates within the consumer and small business marketplace which historically has had lower gross margins than marketplaces typically served by our Information Storage segment.

The gross margin percentages for the Content Management and Archiving segment were 62.8% and 60.2% for the third quarters of 2009 and 2008, respectively, and 61.2% and 60.9% for the nine months ended September 30, 2009 and 2008, respectively. The increase in gross margin percentage for both the three and nine months ended September 30, 2009 compared to the same periods in 2008 was primarily attributable to a change in the mix of services revenues with a higher proportion of maintenance revenues and a lower proportion of professional services revenues to total services revenues.

The gross margin percentages for the RSA Information Security segment were 69.4% and 70.2% for the third quarters of 2009 and 2008, respectively, and 69.3% and 70.1% for the nine months ended September 30, 2009 and 2008, respectively. The decrease in gross margin percentage for both the three and nine months ended September 30, 2009 compared to the same periods in 2008 was primarily attributable to the reduction in the mix of software license revenues as a percentage of total segment revenues. Software license revenues as a percentage of total revenues decreased to 51.6% and 52.4% for the three and nine months ended September 30, 2009, respectively, from 56.6% and 57.6% for the three and nine months ended September 30, 2008, respectively.

The gross margin percentages for VMware Virtual Infrastructure were 82.9% and 86.2% for the third quarters of 2009 and 2008, respectively, and 84.4% and 84.9% for the nine months ended September 30, 2009 and 2008, respectively. The decrease in gross margin percentage for both the three and nine months ended September 30, 2009 compared to the same periods in 2008 was primarily attributable to an increase in the amortization of software development costs as a percentage of total segment revenues. The amortization of software development costs as a percentage of total revenues increased to 4.5% and 3.2% for the three and nine months ended September 30, 2009, respectively, from 1.9% and 2.4% for the three and nine months ended September 30, 2008, respectively.

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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 11.1% for the three months ended September 30, 2009 and 2008, respectively, and 12.1% and 11.8% for the nine months ended September 30, 2009 and 2008, respectively. R&D expenses increased $11.3 for the three months ended September 30, 2009 compared to the same period in 2008 primarily due to an increase in personnel-related costs, including salaries and benefits, at VMware. A lower level of capitalized software development costs contributed to the increase in personnel-related costs for the three months ended September 30, 2009. Capitalized software development costs, which reduce R&D expense, decreased $19.9 for the three months ended September 30, 2009 compared to the same period in 2008. Partially offsetting this increase in expenses was an $8.8 and $3.3 decrease in facilities costs and the cost of materials to support new product development, respectively. R&D expenses decreased $83.5 for the nine months ended September 30, 2009 compared to the same period in 2008 primarily due to a decrease in personnel-related costs, facilities costs and materials costs. Personnel-related costs decreased by $43.3, the cost of facilities decreased by $24.7 and the cost of materials to support new product development decreased by $12.7. Capitalized software development costs, which reduce R&D expense, increased $13.0 for the nine months ended September 30, 2009 compared to the same period in 2008.

Corporate reconciling items within R&D, which consist of stock-based compensation, intangible asset amortization and transition costs, increased $29.4 and $38.7 to $69.0 and $162.4 for the three and nine months ended September 30, 2009, respectively, when compared to the same periods in 2008. Stock-based compensation expense increased $25.8 and $32.5, intangible asset amortization increased $0.5 and $1.0 and transition costs were $3.1 and $5.2 for the three and nine months ended September 30, 2009, respectively, when compared to the same periods in 2008. The increase in stock-based compensation expense for the three and nine months ended September 30, 2009 was primarily attributable to incremental expense associated with VMware’s equity grants and expense associated with options exchanged in the acquisition of Data Domain. 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 8.4% and 9.3% for the three months ended September 30, 2009 and 2008, respectively, and 9.0% and 9.5% for the nine months ended September 30, 2009 and 2008, respectively. R&D expenses decreased $47.2 and $133.9 for the three and nine months ended September 30, 2009, respectively, compared to the same periods in 2008 primarily due to a reduction in personnel-related costs, facilities costs and materials costs. Personnel-related costs decreased by $35.0 and $88.3, the cost of facilities decreased by $5.1 and $21.9 and the cost of materials to support new product development decreased by $3.5 and $12.8 for the three and nine months ended September 30, 2009, respectively. For the three and nine months ended September 30, 2009, the cost reductions were primarily due to savings achieved as a result of our 2008 restructuring programs, our cost savings initiatives and greater levels of capitalized software development. Capitalized software development costs, which reduce R&D expense, increased $9.2 and $13.4 for the three and nine months ended September 30, 2009, respectively, when compared to the same periods in 2008.

R&D expenses within the VMware Virtual Infrastructure business, as a percentage of VMware’s revenues, were 20.1% and 14.6% for the three months ended September 30, 2009 and 2008, respectively, and 19.3% and 19.2% for the nine months ended September 30, 2009 and 2008, respectively. R&D expenses increased $29.0 and $11.6 for the three and nine months ended September 30, 2009, respectively, compared to the same periods in 2008 primarily due to an increase in personnel-related costs, including salaries and benefits, which increased $32.4 and $12.4, respectively. A lower level of capitalized software development costs contributed to the increase in personnel-related costs. Capitalized software development costs, which reduce R&D expense, decreased $29.1 and $0.4 for the three and nine months ended September 30, 2009, respectively, when compared to the same periods in 2008.

Selling, General and Administrative

As a percentage of revenues, SG&A expenses were 33.5% and 31.6% for the three months ended September 30, 2009 and 2008, respectively, and 32.8% and 31.2% for the nine months ended September 30, 2009 and 2008, respectively. SG&A expenses increased $5.2 for the three months ended September 30, 2009 compared to the same period in 2008 primarily due to an increase in personnel-related costs at VMware partially offset by a decrease in travel and other SG&A expenses. Personnel-related costs increased by $45.4 for the three months ended September 30, 2009 compared to the same period in 2008. For the three months ended September 30, 2009, personnel-related costs increased primarily due to higher salaries and benefits resulting from additional personnel employed at VMware to enhance the infrastructure of the business. Partially offsetting these increases were reductions of $48.1 in overall other SG&A for the three months ended September 30, 2009 compared to the same period in 2008. SG&A expenses decreased $136.7 for

39

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

the nine months ended September 30, 2009 compared to the same period in 2008 primarily due to decreases in personnel-related costs and overall other SG&A, partially offset by an increase in depreciation expense. Personnel-related costs decreased by $52.7 with other SG&A costs decreasing by $72.7. The cost reductions were due to savings achieved as a result of our 2008 restructuring programs and our cost savings initiatives. Partially offsetting these decreases was an $18.5 increase in depreciation expense for the nine months ended September 30, 2009 compared to the same period in 2008.

Corporate reconciling items within SG&A, which consist of stock-based compensation, intangible asset amortization and transition costs increased $49.7 and $47.2 to $138.6 and $311.4 for the three and nine months ended September 30, 2009, respectively, when compared to the same periods in 2008. Stock-based compensation expense increased $39.4 and $23.1 and transition costs increased $12.8 and $27.1 for three and nine month periods ended September 30, 2009, respectively. Partially offsetting these increases were intangible asset amortization expense decreases of $2.5 and $3.0 for the three and nine months ended September 30, 2009, respectively. The increase in stock-based compensation expense for the three and nine months ended September 30, 2009 was primarily attributable to expense associated with options exchanged in the acquisition of Data Domain and incremental expense associated with VMware’s equity grants. 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 27.4% and 27.5% for the three months ended September 30, 2009 and 2008, respectively, and 27.8% and 27.2% for the nine months ended September 30, 2009 and 2008, respectively. SG&A expenses decreased $61.9 and $220.3 for the three and nine months ended September 30, 2009, respectively, compared to the same periods in 2008 primarily due to a reduction in personnel-related costs and other overall reductions in SG&A. Personnel-related costs decreased by $21.5 and $139.6 and other SG&A costs decreased by $37.5 and $60.4 for the three and nine months ended September 30, 2009, respectively. For the nine months ended September 30, 2009, the personnel-related and other SG&A costs decreases were partially offset by an $11.0 increase in depreciation expense. The cost reductions were primarily due to savings achieved as a result of our 2008 restructuring programs and our cost savings initiatives.

SG&A expenses within the VMware Virtual Infrastructure business, as a percentage of VMware’s revenues, were 42.7% and 40.6% for the three months ended September 30, 2009 and 2008, respectively, and 40.9% and 39.8% for the nine months ended September 30, 2009 and 2008, respectively. SG&A expenses increased $17.3 and $36.4 for the three and nine months ended September 30, 2009, respectively, compared to the same periods in 2008. The increase in SG&A expenses consisted primarily of higher salaries and benefits resulting from incremental headcount added in conjunction with VMware’s international expansion, as well as increased spending to enhance the sales and marketing systems infrastructure of its business.

In-Process Research and Development

We incurred no in-process research and development (“IPR&D”) charged to the Income Statement in 2009. In connection with acquisitions in 2009, we acquired and capitalized $175.0 of IPR&D. IPR&D charges for the three and nine months ended September 30, 2008 were $0.0 and $79.2, respectively.

For the nine months ended September 30, 2008, 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 and Acquisition-Related Charges

For the three and nine months ended September 30, 2009, we incurred restructuring and acquisition-related charges of $34.8 and $83.6, respectively. For the three months ended September 30, 2009, we incurred $20.3 of restructuring charges, primarily related to our 2008 restructuring program and $14.5 of costs were incurred in connection with acquisitions for financial advisory, legal and accounting services. For the nine months ended September 30, 2009, we incurred $66.6 of restructuring charges, primarily related to our 2008 restructuring program and $17.0 of costs were incurred in connection with acquisitions for financial advisory, legal and accounting services.

40

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

For the third quarter of 2009, we also recognized a $12.5 charge to write-off a prepaid royalty associated with a contractual obligation that included a minimum purchase commitment. We do not anticipate achieving the minimum purchase level. The charge is classified within cost of product sales on the accompanying Consolidated Income Statements.

During the three months ended September 30, 2008, we recognized restructuring charges of $4.4. For the nine months ended September 30, 2008, we recognized restructuring net charges of $2.7. For purposes of presentation, $4.0 is presented as a restructuring charge and $1.3 is presented as a reduction to SG&A.

In the fourth quarter of 2008, we implemented a restructuring program to further streamline the costs related to our Information Infrastructure business. The plan includes the following components:

• A reduction in force resulting in the elimination of approximately 2,400 positions which will be substantially completed by the end of 2009 and fully completed by the third quarter of 2010.

• The consolidation of facilities and the termination of contracts. These actions are expected to be completed by 2015.

• The write-off of certain assets for which EMC has determined it will no longer derive any benefit. These actions were completed in the fourth quarter of 2008.

In addition to this plan, we also recognized an asset impairment charge of $28.0 for certain assets for which the forecasted cash flows from the assets were less than the assets’ net book value.

The total charge resulting from these actions is expected to be between $362.0 and $387.0, with $247.9 recognized in 2008, $100.0 to $125.0 to be recognized in 2009 and 2010 and the remainder to be recognized through 2015. Total cash expenditures associated with the plan are expected to be in the range of $310.7 to $335.7.

Additionally, in the third quarter of 2008 we implemented a restructuring program resulting in a reduction in force of approximately 75 employees and the consolidation of excess facilities.

The charges for the three and nine months ended September 30, 2009 were primarily attributable to recognizing additional expense related to the restructuring program implemented in the fourth quarter of 2008.

The activity for each charge is explained in the following sections.

2008 Restructuring Programs

The activity for the 2008 restructuring programs for the three and nine months ended September 30, 2009 and 2008 is presented below:

Three Months Ended September 30, 2009

Category	Balance as of June 30, 2009		2009 Charges Relating to the 2008 Plan		Utilization			Balance as of September 30, 2009
Workforce reductions	$	114.8	$	12.2	$	(36.0	)	$	90.9
Consolidation of excess facilities and other contractual obligations		9.0		7.6		(3.8	)		12.9
Abandoned assets		—		0.1		(0.1	)		—
Total	$	123.8	$	20.0	$	(39.9	)	$	103.8

Nine Months Ended September 30, 2009

Category	Balance as of December 31, 2008		2009 Charges Relating to the 2008 Plan		Utilization			Balance as of September 30, 2009
Workforce reductions	$	186.3	$	35.4	$	(130.7	)	$	90.9
Consolidation of excess facilities and other contractual obligations		2.4		23.4		(12.8	)		12.9
Abandoned assets		—		6.2		(6.2	)		—
Total	$	188.7	$	64.9	$	(149.8	)	$	103.8

41

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

Three and Nine Months Ended

September 30, 2008

Category	Initial Provision		Utilization During 2008			Ending Balance		Non-Cash Portion of the Provision
Workforce reductions	$	5.5	$	(0.6	)	$	4.9	$	1.3
Consolidation of excess facilities and other items		3.1		(2.0	)		1.1		2.0
Total	$	8.6	$	(2.6	)	$	6.0	$	3.3

For the three and nine months ended September 30, 2009, the adjustment to the workforce reductions provision is primarily attributable to individuals whose severance expense is being recognized ratably from the date of notification through their last day of work. These employees are required to render services beyond a minimum retention period in order to receive their severance. As of September 30, 2009, we had completed approximately 80% of the headcount reductions. The adjustment to the provision for the consolidation of excess facilities and other contractual obligations represents lease termination costs for facilities vacated in the quarter in accordance with our plan as part of our 2008 restructuring programs. The adjustment for abandoned assets represents additional identified infrastructure determined to no longer have benefit and abandoned in 2009.

The remaining cash portion owed for the 2008 restructuring programs is $100.6. The cash expenditures relating to workforce reductions are expected to be substantially paid out by the end of 2010. The cash expenditures relating to the consolidation of excess facilities and other contractual obligations are expected to be paid out by the end of 2015.

Prior Restructuring Programs

Prior to 2008, we had instituted several restructuring programs. The activity for these programs for the three and nine months ended September 30, 2009 and 2008, respectively, is presented below:

Three Months Ended September 30, 2009

Category	Balance as of June 30, 2009		Adjustment to the Provision		Utilization			Balance as of September 30, 2009
Workforce reductions	$	6.9	$	—	$	(0.9	)	$	5.9
Consolidation of excess facilities		17.2		—		(2.2	)		15.0
Contractual and other obligations		1.1		0.3		(1.3	)		0.1
Total	$	25.2	$	0.3	$	(4.4	)	$	21.0

Nine Months Ended September 30, 2009

Category	Balance as of December 31, 2008		Adjustment to the Provision		Utilization			Balance as of September 30, 2009
Workforce reductions	$	14.3	$	0.9	$	(9.3	)	$	5.9
Consolidation of excess facilities		20.9		—		(5.9	)		15.0
Contractual and other obligations		0.9		0.8		(1.5	)		0.1
Total	$	36.1	$	1.7	$	(16.7	)	$	21.0

Three Months Ended September 30, 2008

Category	Balance as of June 30, 2008		Adjustment to the Provision			Utilization			Balance as of September 30, 2008
Workforce reductions	$	34.2	$	(4.7	)	$	(8.7	)	$	20.8
Consolidation of excess facilities		21.2		0.5			(1.1	)		20.7
Contractual and other obligations		0.9		—			—			0.9
Total	$	56.3	$	(4.2	)	$	(9.8	)	$	42.3

42

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

Nine Months Ended September 30, 2008

Category	Balance as of December 31, 2007		Adjustment to the Provision			Utilization			Balance as of September 30, 2008
Workforce reductions	$	96.8	$	(5.9	)	$	(70.1	)	$	20.8
Consolidation of excess facilities		28.3		—			(7.6	)		20.7
Contractual and other obligations		0.8		—			—			0.9
Total	$	125.9	$	(5.9	)	$	(77.7	)	$	42.3

The remaining cash portion owed for these programs is $18.6. The cash expenditures relating to workforce reductions are expected to be substantially paid out by the end of 2010. The cash expenditures relating to the excess facilities are expected to be paid out by the end of 2015. The cash expenditures relating to the contractual obligations are expected to be paid out by the end of 2009.

Investment Income

Investment income was $38.1 and $56.7 for the three months ended September 30, 2009 and 2008, respectively, and $109.3 and $192.6 for the nine months ended September 30, 2009 and 2008, respectively. Investment income decreased for the three and nine months ended September 30, 2009 compared to the same periods in 2008 primarily due to lower weighted-average returns on investments. The weighted-average return on investments, excluding realized losses and gains, were 1.3% and 3.0% for the three months ended September 30, 2009 and 2008, respectively, and 1.3% and 3.3% for the nine months ended September 30, 2009 and 2008, respectively.

Interest Expense

Interest expense was $46.2 and $44.5 for the three months ended September 30, 2009 and 2008, respectively, and $135.9 and $131.6 for the nine months ended September 30, 2009 and 2008, respectively. Interest expense consists primarily of interest on the Notes. Included in interest expense are non-cash interest charges of $27.5 and $26.0 for the three months ended September 30, 2009 and 2008, respectively, and $80.6 and $76.3 for the nine months ended September 30, 2009 and 2008, respectively. We are accreting the Notes to their face value over their term. See Note 3 to the Consolidated Financial Statements.

Other Income (Expense), Net

Other income (expense), net was $28.0 and $(13.3) for the three months ended September 30, 2009 and 2008, respectively, and $17.3 and $(20.9) for the nine months ended September 30, 2009 and 2008, respectively. The changes for each period were primarily attributable to gains on common stock investments in Data Domain and SpringSource. As part of the acquisition of these entities, our previously held investments were re-measured to fair value, resulting in $25.8 of gains. Additionally, foreign currency transaction losses were lower in 2009 when compared to the same periods in 2008.

Provision for Income Taxes

Our effective income tax rates were 6.3% and 11.8% for the three and nine months ended September 30, 2009, respectively. Our effective income tax rates were 13.5% and 19.1% for the three and nine months ended September 30, 2008, 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 or resolutions of tax audits or other tax contingencies. For the three and nine months ended September 30, 2008 and 2009, the effective tax rate varied from the statutory tax rate principally 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 September 30, 2008 to the three months ended September 30, 2009 due to the change in the mix of income between our foreign and domestic jurisdictions and the recognition of discrete tax benefits associated with the finalization of certain federal income tax liabilities. Additionally, in 2009 our tax rate was favorably impacted by an increase in tax credits.

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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 nine months ended September 30, 2008 to the nine months ended September 30, 2009 due to the change in the mix of income between our foreign and domestic jurisdictions and the recognition of discrete tax benefits. The discrete benefits were principally the favorable resolution of uncertain tax positions related to transfer pricing and a U.S. federal income tax audit. Additionally, the decrease in our effective tax rate was due to an increase in tax credits, as well as non-deductible IPR&D charges during the quarter ended March 31, 2008 which increased the 2008 effective tax rate.

We have substantially concluded all U.S. federal income tax matters for years through 2006 and are in the process of a U.S. federal income tax audit for 2007 and 2008. We have income tax audits in process in numerous state, local and international jurisdictions. Based on the timing and outcome of examinations of EMC, the result of the expiration of statutes of limitations for specific jurisdictions or the timing and result of ruling requests from taxing authorities, it is reasonably possible that 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 $6 to $18 of reserves for unrecognized tax benefits may be released within one year as a result of the lapse of statutes of limitations and the resolution of agreements with various foreign tax authorities.

Non-controlling Interest in VMware, Inc.

The net income attributable to the non-controlling interest in VMware was $6.7 and $13.1 for the three months ended September 30, 2009 and 2008, respectively, and $23.3 and $27.0 for the nine months ended September 30, 2009 and 2008, respectively. VMware’s reported net income was $38.2 and $83.3 for the three months ended September 30, 2009 and 2008, respectively, and $140.7 and $178.7 for the nine months ended September 30, 2009 and 2008, respectively. The weighted average non-controlling interest in VMware was approximately 17.5% and 15.7% for the three months ended September 30, 2009 and 2008, respectively, and approximately 16.6% and 15.1% for the nine months ended September 30, 2009 and 2008, respectively.

Financial Condition

Cash provided by operating activities was $2,325.7 and $2,498.3 for the nine months ended September 30, 2009 and 2008, respectively. Cash received from customers was $10,600.7 and $11,437.3 for the nine months ended September 30, 2009 and 2008, respectively. The decrease in cash received from customers was attributable to a reduction in sales volume. Cash paid to suppliers and employees was $8,098.2 and $8,842.8 for the nine months ended September 30, 2009 and 2008, respectively. The decrease was attributable to a reduction in purchases associated with a reduction in sales volume and a decrease in compensation costs. Cash received from dividends and interest declined to $95.0 for the nine months ended September 30, 2009 compared with $192.7 for the nine months ended September 30, 2008, due to lower yields on our investments. For the nine months ended September 30, 2009 and 2008, we paid $232.3 and $233.5, respectively, in income taxes. These payments are comprised of estimated taxes for the current year, extension payments for the prior year and refunds or payments associated with income tax filings and tax audits.

Cash used in investing activities was $2,661.5 and $816.6 for the nine months ended September 30, 2009 and 2008, respectively. Cash used for acquisitions, strategic and other related investments increased $2,134.2 in 2009 compared to the same period in 2008. In 2009, net of cash and investments acquired, we acquired Data Domain for $1,933.9 and VMware acquired SpringSource for $356.3. Capital additions were $277.6 and $490.1 for the nine months ended September 30, 2009 and 2008, respectively. The lower level of capital additions was due to lower spending on infrastructure as part of our cost savings initiatives. Capitalized software development costs were $222.4 and $209.4 for the nine months ended September 30, 2009 and 2008, respectively. Net sales of investments were $655.3 for the nine months ended September 30, 2009 compared to $565.6 for the nine months ended September 30, 2008. This activity varies from period to period based upon our cash collections, cash requirements and maturity dates of our investments.

Cash used in financing activities was $12.4 and $683.3 for the nine months ended September 30, 2009 and 2008, respectively. For the nine months ended September 30, 2008, we spent $1,120.0 to repurchase 75.7 million shares of our common stock. We made no share repurchases in 2009. We generated $392.8 and $344.2 during the nine months ended September 30, 2009 and 2008, respectively, from the exercise of stock options. In 2009, we satisfied our commitment under our securities lending program by repaying $412.3.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS - (Continued)

We have a credit line of $50.0 in the United States. As of September 30, 2009, we had no borrowings outstanding on the line of credit. The credit line bears interest at the bank’s base rate and requires us, upon utilization of the credit line, to meet certain financial covenants with respect to limitations on losses. In the event the covenants are not met, the lender may require us to provide collateral to secure the outstanding balance. At September 30, 2009, we were in compliance with the covenants. As of September 30, 2009, the aggregate amount of liabilities of our subsidiaries was approximately $3,650.0.

At September 30, 2009, our total cash, cash equivalents, and short-term and long-term investments were $8,427.6. This balance includes approximately $2,176.2 held by VMware and $3,728.0 held by EMC in overseas entities.

New Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance on business combinations which 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. This guidance was implemented on January 1, 2009.

In June 2009, the FASB issued the FASB Accounting Standards Codification (“Codification”). The Codification is the single source for all authoritative GAAP recognized by the FASB to be applied for financial statements issued for periods ending after September 15, 2009. The Codification does not change GAAP and will not have an effect on our financial position, results of operations or liquidity.

In June 2009, the FASB issued authoritative guidance for the transfer of assets, which clarifies whether a transferor and all of the entities included in the transferor’s financial statements being presented have surrendered control over transferred financial assets. The pronouncement is effective for us beginning in 2010. Early adoption is prohibited. We do not expect the guidance to have a material impact on our financial position or results of operations.

In June 2009, the FASB issued authoritative guidance to replace the quantitative-based risks and rewards calculation for determining which enterprise, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance. The pronouncement is effective for us beginning in 2010. Early adoption is prohibited. We are currently evaluating the potential impact of the guidance on our financial position and results of operations.

In September 2009, the FASB issued authoritative guidance on revenue arrangements with multiple deliverables. This guidance will provide another alternative for establishing fair value for a deliverable. When vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, companies will be required to develop a best estimate of the selling price for separate deliverables and allocate arrangement consideration using the relative selling price method. This guidance is effective January 1, 2011 and early adoption is permitted. We are currently evaluating the impact of this guidance on our financial position and results of operations.

In September 2009, the FASB issued authoritative guidance on software-enabled products. Under this guidance, tangible products that have software components that are essential to the functionality of the tangible product will be excluded from the software revenue recognition guidance. The new guidance will include factors to help companies determine what is essential to the functionality. Software-enabled products will now be subject to other revenue guidance and will follow the above new guidance for multiple deliverable arrangements. This guidance is effective in 2011 and early adoption is permitted. We are currently evaluating the impact of this guidance on our financial position and results of operations.

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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 27, 2009. 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 September 30, 2009, our management excluded the evaluation of the disclosure controls and procedures of Data Domain, Inc., which was acquired by EMC on July 23, 2009. 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 involved in a variety of claims, demands, suits, investigations, and proceedings, including those identified below, that arise from time to time relating to matters incidental to the ordinary course of our business, including actions with respect to contracts, intellectual property, product liability, employment, benefits and securities matters. As required by authoritative guidance, we have estimated the amount of probable losses that may result from any such pending matters, and such amounts are reflected in our consolidated financial statements. These recorded amounts are not material to our consolidated financial position or results of operations. While it is not possible to predict the outcome of these matters with certainty, we do not expect the results of any of these actions to have a material adverse effect on our business, results of operations or financial condition. Because litigation is inherently unpredictable, however, the actual amounts of loss may prove to be larger or smaller than the amounts reflected in our consolidated financial statements, and we could incur judgments or enter into settlements of claims that could adversely affect our operating results or cash flows in a particular period.

United States ex rel. Rille and Roberts v. EMC Corporation. On February 27, 2009, the U.S. District Court for the Eastern District of Arkansas entered an order unsealing a civil False Claims Act “qui tam” action by two individuals (the “relators”) that named EMC as a defendant in December 2006. This action relates to the previously disclosed investigation being conducted by the Civil Division of the United States Department of Justice (the “DoJ”) regarding (i) EMC’s fee arrangements with systems integrators and other partners in federal government transactions, and (ii) EMC’s compliance with the terms and conditions of certain agreements pursuant to which we sold products and services to the federal government. By the same order of February 27, 2009, the U.S. District Court for the Eastern District of Arkansas also unsealed a complaint in intervention filed by the DoJ in June 2008 in this matter and directed that EMC be served with both complaints. The DoJ complaint, which adopts the claims advanced by the relators, asserts claims under the Anti-Kickback Act and False Claims Act in addition to breach of contract and other claims. The DoJ and the relators seek various remedies, including treble damages and statutory penalties. By order dated June 3, 2009, the Arkansas Court granted a motion by EMC to transfer the action to the U.S. District Court for the Eastern District of Virginia, where it is now pending. This action could lead to other related proceedings by various agencies of the federal government, which could result in suspension or debarment from sales to the federal government. We are defending this matter vigorously.

Derivative Demand Letters. In April 2009, we received two derivative demand letters sent on behalf of individuals purporting to be EMC shareholders. Both letters contain allegations to the effect that the existence of the matter captioned United States ex rel. Rille and Roberts v. EMC Corporation serves as evidence that certain Company officers and directors failed to exercise due care and/or failed to oversee compliance with the laws identified in the Roberts complaints. The matters relating to the demand letters were referred to a Special Committee of independent directors of the Board of Directors, which investigated and made a determination regarding such allegations. At the conclusion of their investigation, the Special Committee determined in good faith that commencing or maintaining derivative proceedings based on the allegations would not be in the best interests of EMC. In October 2009, one of the individuals filed a complaint in the Superior Court for Middlesex County in Massachusetts alleging claims for breach of fiduciary duty against EMC directors and certain officers based on the same allegations set forth in the demand letter. We intend to defend this matter vigorously.

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, 2008. 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, including the current economic crisis.

We are subject to the effects of general global economic and market conditions. If these conditions remain uncertain or persist, spread or deteriorate further, our business, results of operations or financial condition could be materially adversely affected. In addition, the financial crisis in the banking sector and financial markets have resulted in a tightening in the credit markets, a low level of liquidity in many financial markets, and extreme volatility in fixed income, credit and equity markets. Possible consequences from the financial crisis on our business, including insolvency of key suppliers resulting in product delays, inability of customers to obtain credit to finance purchases of our products and/or customer insolvencies, increased risk that customers may delay payments, fail to pay or default on credit extended to them, and counterparty failures negatively impacting our treasury operations, could have a material adverse effect on our results of operations or financial condition.

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

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, 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. The current economic crisis may also negatively affect our suppliers’ solvency, which could, in turn, result in product delays or otherwise materially adversely affect our business, results of operations or financial condition.

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

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

• rates of customer adoption for virtualization solutions;

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

• fluctuations in foreign currency exchange rates;

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• 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 which as a result of software revenue recognition policies, can be affected by a number of factors, including product announcements and beta programs;

• the sale of VMware 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;

• 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;

• the timing and amount of R&D costs that qualify for capitalization;

• 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;

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

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

Our stock price is volatile and may be affected by the trading price of VMware Class A common stock and/or speculation about the possibility of future actions we might take in connection with our VMware stock ownership.

Our stock price, like that of other technology companies, is subject to significant volatility because of factors such as:

• the announcement of acquisitions, new products, services or technological innovations by us or our competitors;

• quarterly variations in our operating results;

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

• speculation in the press or investment community.

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

• the trading price for VMware Class A common stock;

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

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

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

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

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

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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; and

• delays in initial shipments of new products.

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

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

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

• executing on our plans.

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

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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 September 30, 2009. The investments are invested primarily in investment grade debt securities, and we limit the amount of investment with any one issuer. A further deterioration in the economy, including a continuing credit crisis, increased defaults by issuers, or significant volatility in interest rates, could cause the investments to decline in value or could impact the liquidity of the portfolio. If market conditions deteriorate significantly, our results of operations or financial condition could be materially adversely affected.

If our cost cutting measures are not successful, our business could be adversely affected.

A variety of factors could prevent us from achieving our goal of better aligning our revenues and cost structure. While we have achieved savings to date in 2009 from our cost savings initiatives, there is no assurance that we will be able to continue to achieve additional savings for the remainder of the year. Additionally, we may determine that the costs of implementing reductions outweigh the commensurate benefits. Should we implement certain cost reductions, there could be adverse consequences on our business which could have a material adverse effect on our results of operations or financial position.

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

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

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

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

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

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

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

• seasonal influences.

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

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

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

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

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

Loss of infrastructure, due to factors such as an information systems failure, loss of public utilities 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.

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

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

In addition to our direct sales force, we have agreements in place with many distributors, systems integrators, resellers and original equipment manufacturers to market and sell our products and services. We may, from time to time, derive a significant percentage of our revenues from such distribution channels. Our financial results could be materially adversely affected if our contracts with channel partners were terminated, if our relationship with channel partners were to deteriorate, if the financial condition of our channel partners were to weaken, if our channel partners 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.

Due to the international nature of our business, changes in foreign conditions or other factors could impair our international operations, future revenue or financial condition.

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

Undetected problems in our products could directly impair our financial results.

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

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

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

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.

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

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.

In May of 2009, President Obama and the U.S. Treasury Department proposed changing certain of the U.S. tax rules for U.S. corporations doing business outside the United States. The proposed changes include limiting the ability of U.S. corporations to deduct expenses attributable to offshore earnings, modifying the foreign tax credit rules and further restricting the ability of U.S. corporations to transfer funds between foreign subsidiaries without triggering U.S. income tax. Although the scope of the proposed changes is unclear, it is possible that these or other changes in the U.S. tax laws could increase the Company’s effective tax rate and adversely affect our profitability.

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.

Changes in generally accepted accounting principles may adversely affect us.

From time to time, the Financial Accounting Standards Board (“FASB”) promulgates new accounting principles that could have a material adverse impact on our results of operations or financial condition. For example, in May 2008, the FASB voted to issue authoritative guidance which changes the accounting treatment for certain convertible securities which include our Notes. See Note 1 to our Consolidated Financial Statements.

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In addition, in 2007, the FASB issued authoritative guidance on business combinations. This guidance, which is effective commencing in our 2009 fiscal year, will result in significant changes in accounting for acquisitions including our recently completed acquisition of Data Domain, Inc. Depending upon the number of and magnitude of acquisitions which we may consummate in 2009, this guidance could have a material adverse effect on our business, results of operations or financial condition.

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

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

Our pension 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 is 8.0%. For the ten years ended December 31, 2007, the actual long-term rate of return was 6.0%. In 2008, we experienced a 27.0% loss on the plans’ assets. As such, the actual long-term rate of return achieved on the plans’ assets for the ten years ended December 31, 2008 was 1.6%. 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 plans which could materially adversely affect our results of operations or financial condition.

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

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

Our business could be materially adversely affected as a result of war 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.

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

ISSUER PURCHASES OF EQUITY SECURITIES IN THE THIRD QUARTER OF 2009

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
July 1, 2009 – July 31, 2009	43,803	$	15.05	—	188,649,602
August 1, 2009 – August 31, 2009	484,128	$	15.17	—	188,649,602
September 1, 2009 – September 30, 2009	—	$	—	—	188,649,602
Total	527,931	$	15.16	—	188,649,602

(1) Represents 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

None.

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS

(a) Exhibits

See index to Exhibits on page 58 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: November 6, 2009	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. (3)
10.1	Data Domain, Inc. 2002 Stock Plan. (filed herewith)
10.2	Data Domain, Inc. 2007 Equity Incentive Plan. (filed herewith)
10.3	FastScale Technology, Inc. 2006 Stock Incentive Plan. (filed herewith)
10.4	Kazeon Systems, Inc. 2003 Stock Plan. (filed herewith)
10.5	Kazeon Systems, Inc. 2008 Equity Incentive Plan. (filed herewith)
10.6*	Amendment No. 3 to Employment Arrangement with Joseph M. Tucci dated October 30, 2009. (filed herewith)
31.1	Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
31.2	Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith)
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith)
101.INS	XBRL Instance Document. (filed herewith)
101.SCH	XBRL Taxonomy Extension Schema. (filed herewith)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase. (filed herewith)
101.DEF	XBRL Taxonomy Extension Definition Linkbase. (filed herewith)
101.LAB	XBRL Taxonomy Extension Label Linkbase. (filed herewith)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase. (filed herewith)

 * 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 27, 2009 (No. 1-9853).

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

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

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