U.S. Department of Justice Investigating Allegations Concerning EMC’s Fee Arrangements

In a recent SEC filing, EMC wrote:

We have learned that the Civil Division of the United States Department of Justice (the DoJ) is investigating allegations concerning:

• (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, including potential violations of the False Claims Act.

The subject matter of this investigation also overlaps with that of a previous audit by the U.S. General Services Administration (GSA) concerning our recordkeeping and pricing practices under a schedule agreement we entered into with GSA in November 1999 which, following several extensions, expired in June 2007. We have cooperated with both the audit and the DoJ investigation, voluntarily providing documents and information, and have engaged in discussions aimed at resolving this matter without any admission or finding of liability on the part of EMC. We believe that we have meritorious factual and legal defenses to the allegations raised and, if the matter is not resolved and proceeds to litigation, we intend to defend vigorously. If the matter proceeds to litigation, possible sanctions include an award of damages, including treble damages, fines, penalties and other sanctions, including suspension or debarment from sales to the federal government.

In accordance with Statement of Financial Accounting Standards No. 5, we have estimated the loss that may result from this matter, and such amount is reflected in our consolidated financial statements. It is not possible to predict the outcome of this matter with certainty, and the actual amount of loss may prove to be larger or smaller than the amount reflected in our consolidated financial statements.