Exhibit 99.1
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| Press Contact: | Katryn McGaughey |
508-293-7717
katryn.mcgaughey@emc.com
EMC Reports Second-Quarter 2015 Financial Results
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Second-Quarter 2015 Summary:
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| l | GAAP revenue up 2% year over year, non-GAAP revenue up 3% (up 8% on a constant currency basis) year over year
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| l | GAAP revenue was reduced by the amount of a VMware settlement with the Department of Justice (“DOJ”) and the General Service Administration (“GSA”), which was entered into and paid in cash by VMware in the second quarter
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| l | GAAP and non-GAAP EPS of $0.25 and $0.43, respectively
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| l | EMC Information Infrastructure revenue up 1% year over year (up 6% on a constant currency basis); Emerging Storage revenue up 49% year over year - led by XtremIO, Isilon and Software-Defined Storage - reached nearly a $3 billion revenue run-rate
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| l | Full-year 2015 outlook now: GAAP revenues of $25.2 billion and non-GAAP revenues of $25.3 billion; GAAP EPS of $1.17 and non-GAAP EPS of $1.87
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HOPKINTON, Mass. - July 22, 2015 - EMC Corporation (NYSE:EMC) today reported second-quarter 2015 financial results. Consolidated second-quarter GAAP revenue was $6 billion, up 2% year over year. GAAP revenue was reduced by the amount of a VMware settlement with the DOJ and the GSA, which was entered into and paid in cash by VMware in the second quarter. Consolidated second-quarter non-GAAP1 revenue was $6.1 billion, up 3% year over year and up 8% on a constant currency basis2. GAAP earnings per weighted average diluted share was $0.25, down 11% year over year. Non-GAAP1 earnings per weighted average diluted share was $0.43, flat compared with the year-ago quarter.
EMC generated $1 billion in operating cash flow and $647 million in free cash flow3 in the second quarter, and ended the quarter with $14.8 billion in cash and investments. EMC repurchased approximately $2 billion worth of its common stock year-to-date and returned $225 million to shareholders in the second quarter via a quarterly dividend.
Joe Tucci, EMC Chairman and CEO, said, “While pleased with many aspects of the second quarter, especially with the market acceptance and rapid growth of our newer products, we also saw customers become more conservative around refreshing their traditional infrastructures as they plan their IT transformations. We also saw ongoing geo-political factors in China and Russia. To capture more opportunity we have honed our growth strategy around four pillars: best-in class products and solutions that are, or will be, offered as a service; an expanded focus on cloud services; tighter coordination of our federated go-to-market approach; and a leadership team that is second to none. We are confident in our strategy in becoming the most trusted partner to customers embarking on digital transformation and hybrid cloud journeys, and we remain laser focused on enhancing shareholder value.”
Zane Rowe, EMC CFO, said, “My thanks to the entire team for their hard work and execution in the second quarter. We are seeing success in the growth areas of our portfolio, while our traditional storage category was impacted by customers focusing on their short-term purchasing needs as they develop their digital agendas. We continue to drive growth, cost efficiency and business transformation, as well as additional alignment across our businesses.”
David Goulden, CEO of EMC Information Infrastructure, said, “In an IT market that is changing rapidly, our new businesses are performing exceptionally well, with the Emerging Storage business now at nearly a $3 billion revenue run-rate, which we expect will grow more than 30% in 2015. We are focused on evolving our
storage portfolio, delivering solutions, leading in high-growth areas and getting more aggressive on costs and are taking additional steps to manage the trends in our traditional storage business. Going forward, the favorable mix toward new applications and transformational spend will serve us well beyond 2015.”
Business Highlights
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| • | EMC Information Infrastructure: Second-quarter revenue was up 1% year over year and up 6% on a constant currency basis2. Information Storage revenue in the second quarter was up 1% year over year and up 6% on a constant currency basis2. Emerging Storage4 revenue was up 49% year over year in the second quarter, led by XtremIO, Isilon and Software-Defined Storage. Within Emerging Storage, XtremIO revenue growth exceeded 300% year over year, and remains the all-flash array market segment leader. Within the Converged Infrastructure business, Vblock and Vblock-related revenue had greater than 30% growth year over year. |
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| • | Pivotal: Second-quarter revenue was up 18% year over year and up 19% on a constant currency basis2. Pivotal continues its transition to a subscription business model, more commonly measured by annual recurring revenue (ARR)6, which in the second quarter was approximately $60 million, up almost 60% quarter over quarter. Pivotal is achieving significant momentum as enterprise customers leverage the Pivotal portfolio for their digital transformation journey. |
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| • | VMware: Second-quarter 2015 GAAP revenue was up 4% year over year, non-GAAP revenue was up 10% (up 13% on a constant currency basis2) year over year. VMware continues to diversify its business by expanding its portfolio of products to enable the software-defined enterprise, making progress on its strategic initiatives focused on the software-defined data center, hybrid cloud solutions, business mobility and end-user computing. |
Global Highlights
EMC’s consolidated second-quarter GAAP and non-GAAP1 revenue from North America was up 6% and 9% year over year, respectively. EMEA and Asia Pacific and Japan revenue in the second quarter was down 3% and 1% year over year, respectively, and up 8% and 5% on a constant currency basis2, respectively.
Business Outlook
Details will be provided during today’s 8:30 a.m. ET live webcast for investors, which is available on the EMC Investor Relations website (http://www.emc.com/ir).
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not give effect to the potential impact of mergers, acquisitions, divestitures or business combinations that may be announced or closed after the date hereof. These statements supersede all prior statements made by EMC regarding 2015 financial results.
All dollar amounts and percentages set forth below should be considered to be approximations.
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| • | Consolidated GAAP revenues are expected to be $25.2 billion for 2015 and consolidated non-GAAP5 revenues are expected to be $25.3 billion for 2015. |
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| • | Consolidated GAAP operating income is expected to be 12.8% of revenues for 2015 and consolidated non-GAAP5 operating income is expected to be 20.7% of non-GAAP revenues for 2015. |
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| • | Consolidated GAAP earnings per weighted average diluted share are expected to be $1.17 for 2015 and consolidated non-GAAP5 earnings per weighted average diluted share are expected to be $1.87 for 2015. |
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| • | The consolidated GAAP income tax rate is expected to be 22.5% and the consolidated non-GAAP5 income tax rate is expected to be 23.6% for 2015. This assumes that the U.S. research and development tax credit is enacted during 2015. |
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| • | Consolidated net cash provided by operating activities is expected to be $5.5 billion for 2015 and free cash flow3 is expected to be $4 billion for 2015. |
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| • | The weighted average outstanding diluted shares are expected to be 1.96 billion for 2015. |
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| • | EMC expects to repurchase an aggregate of $3.0 billion of the company’s common stock in 2015. |
Resources
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| • | To access today’s webcast at 8:30 a.m. ET, visit the EMC Investor Relations website |
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| • | A replay of today’s webcast will be available here |
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| • | EMC financial results are available on the U.S. Securities and Exchange Commission website |
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| • | Visit the VMware Investor Relations website for more detail on its second-quarter results |
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| • | Download the EMC Investor Relations app here |
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| • | Connect with EMC on Twitter (@EMCCorp and @EMC_News), LinkedIn, Facebook and SocialSphere |
About EMC
EMC Corporation is a global leader in enabling businesses and service providers to transform their operations and deliver IT as a service. Fundamental to this transformation is cloud computing. Through innovative products and services, EMC accelerates the journey to cloud computing, helping IT departments to store, manage, protect and analyze their most valuable asset - information - in a more agile, trusted and cost-efficient way. Additional information about EMC can be found at www.EMC.com.
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1 Items excluded from the non-GAAP results for the second quarters of 2015 and 2014 are amounts relating to stock-based compensation expense, intangible asset amortization, restructuring charges, acquisition and other related charges, a fair value adjustment on asset held for sale, the VMware GSA settlement, a gain on previously held interests in strategic investments, an impairment of strategic investment and VMware litigation and other contingencies. A benefit of the U.S. research and development (“R&D”) tax credit for the second quarters of 2015 and 2014 is included in the non-GAAP results for the second quarters of 2015 and 2014 as if the credit had been enacted. See attached schedules for GAAP to non-GAAP reconciliations.
2 This press release refers to growth rates at constant currency or adjusting for currency so that business results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of EMC's business performance. To present this information, current period results for entities reporting in currencies other than US dollars are converted into US dollars at the exchange rate applied in each month of the prior year quarter. Constant currency includes the impacts from EMC's hedging program.
3 Free cash flow is a non-GAAP financial measure which is defined as net cash provided by operating activities, less additions to property, plant and equipment and capitalized software development costs. See attached schedules for a reconciliation of net cash provided by operating activities to free cash flow for the three and six months ended June 30, 2015 and 2014 and for the full year 2015 business outlook.
4 EMC’s Emerging Storage business primarily includes product and maintenance revenues from EMC Isilon, EMC Atmos, EMC VPLEX, EMC ViPR, EMC ScaleIO, EMC Elastic Cloud Storage Appliance, EMC RecoverPoint, Data Computing Appliance, ASD Suites and EMC vFlash and EMC XtremIO families.
5Items excluded from the non-GAAP business outlook for 2015 are amounts relating to stock-based compensation expense, intangible asset amortization, restructuring charges and acquisition and other related charges, the VMware GSA settlement and other one-time items. A benefit for an R&D tax credit is included in the GAAP and non-GAAP business outlook for 2015. See attached schedules for GAAP to non-GAAP reconciliations.
6Annual Recurring Revenue (“ARR”) is an operational performance metric used to assess the health and trajectory of our Pivotal segment. We calculate ARR as the value of contracted recurring revenue of term subscriptions which includes both current subscriptions and contracted subscriptions with a future start date, adjusted by the actual churn in the period. ARR should be viewed independently of revenue and any other GAAP measure.
EMC, Atmos, DSSD, Elastic Cloud Storage, EMC RecoverPoint, Isilon, Vblock, VPLEX, ViPR, ScaleIO and XtremIO are either registered trademarks or trademarks of EMC Corporation in the United States and/or other countries. All other trademarks used are the property of their respective owners.
Forward-Looking Statements
This release contains “forward-looking statements” as defined under the Federal Securities Laws. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in information technology spending; (iii) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (iv) competitive factors, including but not limited to pricing pressures and new product introductions; (v) component and product quality and availability; (vi) fluctuations in VMware, Inc.’s operating results and risks associated with trading of VMware stock; (vii) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (viii) risks associated with
managing the growth of our business, including risks associated with acquisitions and investments and the challenges and costs of integration, restructuring and achieving anticipated synergies; (ix) the ability to attract and retain highly qualified employees; (x) insufficient, excess or obsolete inventory; (xi) fluctuating currency exchange rates; (xii) threats and other disruptions to our secure data centers or networks; (xiii) our ability to protect our proprietary technology; (xiv) war or acts of terrorism; and (xv) other one-time events and other important factors disclosed previously and from time to time in EMC’s filings with the U.S. Securities and Exchange Commission. EMC disclaims any obligation to update any such forward-looking statements after the date of this release.
Use of Non-GAAP Financial Measures
This release, the accompanying schedules and the additional content that is available on EMC's website contain non-GAAP financial measures. These non-GAAP financial measures, which are used as measures of EMC's performance or liquidity, should be considered in addition to, not as a substitute for, measures of EMC's financial performance or liquidity prepared in accordance with GAAP. EMC's non-GAAP financial measures may be defined differently from time to time and may be defined differently than similar terms used by other companies, and accordingly, care should be exercised in understanding how EMC defines its non-GAAP financial measures in this release.
Where specified in the accompanying schedules for various periods entitled "Reconciliation of GAAP to Non-GAAP," (a) certain items noted on each such specific schedule (including, where noted, amounts relating to stock-based compensation expense, intangible asset amortization, restructuring charges, acquisition and other related charges, a fair value adjustment on asset held for sale, the VMware GSA settlement, a gain on previously held interests in strategic investments, an impairment of strategic investment, and VMware litigation and other contingencies) are excluded from the non-GAAP financial measures and (b) a benefit for the R&D tax credit for the second quarters of 2015 and 2014 is included in the non-GAAP financial measures for the second quarters of 2015 and 2014.
EMC’s management uses the non-GAAP financial measures in the accompanying schedules to gain an understanding of EMC's comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects and includes the benefit of the R&D tax credit in, and excludes the above-listed items from, its internal financial statements for purposes of its internal budgets and each reporting segment’s financial goals. These non-GAAP financial measures are used by EMC's management in their financial and operating decision-making because management believes they reflect EMC's ongoing business in a manner that allows meaningful period-to-period comparisons. EMC's management believes that these non-GAAP financial measures provide useful information to investors and others (a) in understanding and evaluating EMC's current operating performance and future prospects in the same manner as management does, if they so choose, and (b) in comparing in a consistent manner the Company's current financial results with the Company's past financial results.
This release also includes disclosures regarding free cash flow which is a non-GAAP financial measure. Free cash flow is defined as net cash provided by operating activities less additions to property, plant and equipment and capitalized software development costs. EMC uses free cash flow, among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than capital expenditures and capitalized software development costs. Management believes that information regarding free cash flow provides investors with an important perspective on the cash available to make strategic acquisitions and investments, repurchase shares, pay dividends, service debt and fund ongoing operations. As free cash flow is not a measure of liquidity calculated in accordance with GAAP, free cash flow should be considered in addition to, but not as a substitute for, the analysis provided in the statement of cash flows.
This release also refers to growth rates at constant currency or adjusting for currency so that business results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of EMC's business performance. To present this information, current period results for entities reporting in currencies other than US dollars are converted into US dollars at the exchange rate applied in each month of the prior year quarter. Constant currency includes the impacts from EMC's hedging program.
All of the foregoing non-GAAP financial measures have limitations. Specifically, the non-GAAP financial measures that exclude the items noted above do not include all items of income and expense that affect EMC's operations. Further, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and do not reflect any benefit that such items may confer on EMC. Management compensates for these limitations by also considering EMC's financial results as determined in accordance with GAAP.
EMC CORPORATION
CONSOLIDATED INCOME STATEMENTS
(in millions, except per share amounts)
(unaudited)
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| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, | | June 30, | | June 30, |
| | | 2015 | | 2014 | | 2015 | | 2014 |
| Revenues: | | | | | | | |
| | Product sales | $ | 3,225 |
| | $ | 3,319 |
| | $ | 6,130 |
| | $ | 6,327 |
|
| | Services | 2,772 |
| | 2,561 |
| | 5,480 |
| | 5,032 |
|
| | | 5,997 |
| | 5,880 |
| | 11,610 |
| | 11,359 |
|
| Cost and expenses: | | | | | | | |
| | Cost of product sales | 1,433 |
| | 1,372 |
| | 2,762 |
| | 2,668 |
|
| | Cost of services | 977 |
| | 854 |
| | 1,922 |
| | 1,690 |
|
| | Research and development | 782 |
| | 740 |
| | 1,570 |
| | 1,472 |
|
| | Selling, general and administrative | 2,102 |
| | 2,010 |
| | 4,139 |
| | 3,861 |
|
| | Restructuring and acquisition-related charges | 23 |
| | 30 |
| | 158 |
| | 149 |
|
| Operating income | 680 |
| | 874 |
| | 1,059 |
| | 1,519 |
|
| | | | | | | | |
| Non-operating income (expense): | | | | | | | |
| | Investment income | 26 |
| | 35 |
| | 51 |
| | 71 |
|
| | Interest expense | (41 | ) | | (34 | ) | | (81 | ) | | (68 | ) |
| | Other income (expense), net | 24 |
| | (66 | ) | | 34 |
| | (142 | ) |
| Total non-operating income (expense) | 9 |
| | (65 | ) | | 4 |
| | (139 | ) |
| Income before provision for income taxes | 689 |
| | 809 |
| | 1,063 |
| | 1,380 |
|
| Income tax provision | 170 |
| | 187 |
| | 252 |
| | 326 |
|
| Net income | 519 |
| | 622 |
| | 811 |
| | 1,054 |
|
| | Less: Net income attributable to the non-controlling interests in VMware, Inc. | (32 | ) | | (33 | ) | | (72 | ) | | (74 | ) |
| Net income attributable to EMC Corporation | $ | 487 |
| | $ | 589 |
| | $ | 739 |
| | $ | 980 |
|
| | | | | | | | |
| Net income per weighted average share, basic attributable to EMC Corporation common shareholders | $ | 0.25 |
| | $ | 0.29 |
| | $ | 0.38 |
| | $ | 0.48 |
|
| Net income per weighted average share, diluted attributable to EMC Corporation common shareholders | $ | 0.25 |
| | $ | 0.28 |
| | $ | 0.37 |
| | $ | 0.47 |
|
| | | | | | | | |
| Weighted average shares, basic | 1,927 |
| | 2,037 |
| | 1,950 |
| | 2,033 |
|
| Weighted average shares, diluted | 1,947 |
| | 2,064 |
| | 1,971 |
| | 2,070 |
|
| | | | | | | | | |
| Cash dividends declared per common share | $ | 0.12 |
| | $ | 0.12 |
| | $ | 0.23 |
| | $ | 0.22 |
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EMC CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
(unaudited)
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| | | | | | | | |
| | | June 30, | | December 31, |
| | | 2015 | | 2014 |
| ASSETS | | | |
| Current assets: | | | |
| | Cash and cash equivalents | $ | 5,803 |
| | $ | 6,343 |
|
| | Short-term investments | 1,939 |
| | 1,978 |
|
| | Accounts and notes receivable, less allowance for doubtful accounts of $71 and $72 | 3,345 |
| | 4,413 |
|
| | Inventories | 1,224 |
| | 1,276 |
|
| | Deferred income taxes | 1,061 |
| | 1,070 |
|
| | Other current assets | 715 |
| | 653 |
|
| Total current assets | 14,087 |
| | 15,733 |
|
| Long-term investments | 7,041 |
| | 6,334 |
|
| Property, plant and equipment, net | 3,788 |
| | 3,766 |
|
| Intangible assets, net | 1,953 |
| | 2,125 |
|
| Goodwill | 16,185 |
| | 16,134 |
|
| Other assets, net | 1,813 |
| | 1,767 |
|
| | Total assets | $ | 44,867 |
| | $ | 45,859 |
|
| | | | | |
| LIABILITIES & SHAREHOLDERS' EQUITY | | | |
| Current liabilities: | | | |
| | Accounts payable | $ | 1,219 |
| | $ | 1,696 |
|
| | Accrued expenses | 2,823 |
| | 3,141 |
|
| | Income taxes payable | 160 |
| | 852 |
|
| | Short-term debt | 1,948 |
| | — |
|
| | Deferred revenue | 6,357 |
| | 6,021 |
|
| Total current liabilities | 12,507 |
| | 11,710 |
|
| Income taxes payable | 318 |
| | 306 |
|
| Deferred revenue | 4,344 |
| | 4,144 |
|
| Deferred income taxes | 230 |
| | 274 |
|
| Long-term debt | 5,472 |
| | 5,469 |
|
| Other liabilities | 434 |
| | 431 |
|
| | Total liabilities | 23,305 |
| | 22,334 |
|
| Commitments and contingencies | | | |
| Shareholders' equity: | | | |
| | Preferred stock, par value $0.01; authorized 25 shares; none outstanding | — |
| | — |
|
| | Common stock, par value $0.01; authorized 6,000 shares; issued and outstanding 1,925 and 1,985 shares | 19 |
| | 20 |
|
| | Additional paid-in capital | — |
| | — |
|
| | Retained earnings | 20,516 |
| | 22,242 |
|
| | Accumulated other comprehensive loss, net | (458 | ) | | (366 | ) |
| | Total EMC Corporation's shareholders' equity | 20,077 |
| | 21,896 |
|
| Non-controlling interests | 1,485 |
| | 1,629 |
|
| | Total shareholders' equity | 21,562 |
| | 23,525 |
|
| | Total liabilities and shareholders' equity | $ | 44,867 |
| | $ | 45,859 |
|
EMC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
|
| | | | | | | | | | | |
| | | | | | Six Months Ended |
| | | | | | June 30, | | June 30, |
| | | | | | 2015 | | 2014 |
| Cash flows from operating activities: | | | |
| | Cash received from customers | $ | 13,137 |
| | $ | 12,644 |
|
| | Cash paid to suppliers and employees | (10,076 | ) | | (9,320 | ) |
| | Dividends and interest received | 68 |
| | 97 |
|
| | Interest paid | (67 | ) | | — |
|
| | Income taxes paid | (949 | ) | | (829 | ) |
| | | | Net cash provided by operating activities | 2,113 |
| | 2,592 |
|
| | | | | | | | |
| Cash flows from investing activities: | | | |
| | Additions to property, plant and equipment | (449 | ) | | (472 | ) |
| | Capitalized software development costs | (262 | ) | | (245 | ) |
| | Purchases of short- and long-term available-for-sale securities | (4,212 | ) | | (5,765 | ) |
| | Sales of short- and long-term available-for-sale securities | 2,667 |
| | 4,974 |
|
| | Maturities of short- and long-term available-for-sale securities | 913 |
| | 1,716 |
|
| | Business acquisitions, net of cash acquired | (61 | ) | | (1,694 | ) |
| | Purchases of strategic and other related investments | (160 | ) | | (83 | ) |
| | Sales of strategic and other related investments | 109 |
| | 10 |
|
| | Joint venture funding | — |
| | (63 | ) |
| | Increase in restricted cash | — |
| | (76 | ) |
| | | | Net cash used in investing activities | (1,455 | ) | | (1,698 | ) |
| | | | | | | | |
| Cash flows from financing activities: | | | |
| | Proceeds from the issuance of EMC's common stock | 170 |
| | 234 |
|
| | Proceeds from the issuance of VMware's common stock | 69 |
| | 99 |
|
| | EMC repurchase of EMC's common stock | (2,063 | ) | | (994 | ) |
| | VMware repurchase of VMware's common stock | (850 | ) | | (407 | ) |
| | Excess tax benefits from stock-based compensation | 54 |
| | 45 |
|
| | Payment of long- and short-term obligations | — |
| | (1,665 | ) |
| | Net proceeds from the issuance of short-term obligations | 1,948 |
| | — |
|
| | Dividend payment | (456 | ) | | (407 | ) |
| | Contributions from non-controlling interests
| 4 |
| | — |
|
| | | | Net cash used in financing activities | (1,124 | ) | | (3,095 | ) |
| | | | | | | | |
| Effect of exchange rate changes on cash and cash equivalents | (74 | ) | | (3 | ) |
| | | | | | | | |
| Net decrease in cash and cash equivalents | (540 | ) | | (2,204 | ) |
| Cash and cash equivalents at beginning of period | 6,343 |
| | 7,891 |
|
| Cash and cash equivalents at end of period | $ | 5,803 |
| | $ | 5,687 |
|
| | | | | | | | |
| Reconciliation of net income to net cash provided by operating activities: | | | |
| Net income | $ | 811 |
| | $ | 1,054 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| | Depreciation and amortization | 942 |
| | 903 |
|
| | Non-cash restructuring and other special charges | 13 |
| | 9 |
|
| | Stock-based compensation expense | 502 |
| | 498 |
|
| | Provision for doubtful accounts | 25 |
| | 2 |
|
| | Deferred income taxes, net | (48 | ) | | (168 | ) |
| | Excess tax benefits from stock-based compensation | (54 | ) | | (45 | ) |
| | Gain on previously held interests in strategic investments | — |
| | (45 | ) |
| | Impairment of strategic investment
| — |
| | 33 |
|
|
| | | | | | | | | | | |
| | Other, net | 18 |
| | 23 |
|
| | Changes in assets and liabilities, net of acquisitions: | | | |
| | | Accounts and notes receivable | 1,017 |
| | 549 |
|
| | | Inventories | (45 | ) | | (183 | ) |
| | | Other assets | (3 | ) | | 96 |
|
| | | Accounts payable | (443 | ) | | (241 | ) |
| | | Accrued expenses | (480 | ) | | (279 | ) |
| | | Income taxes payable | (650 | ) | | (336 | ) |
| | | Deferred revenue | 509 |
| | 701 |
|
| | | Other liabilities | (1 | ) | | 21 |
|
| | | | Net cash provided by operating activities | $ | 2,113 |
| | $ | 2,592 |
|
Reconciliation of GAAP to Non-GAAP*
(in millions, except per share amounts)
(unaudited)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended |
| | | | Diluted | | | | Diluted |
| | June 30, | | Earnings | | June 30, | | Earnings |
| | 2015 | | Per Share | | 2014 | | Per Share |
| Net Income Attributable to EMC - GAAP | $ | 487 |
| | $ | 0.249 |
| | $ | 589 |
| | $ | 0.285 |
|
| Stock-based compensation expense | 181 |
| | 0.094 |
| | 180 |
| | 0.087 |
|
| Intangible asset amortization | 66 |
| | 0.034 |
| | 65 |
| | 0.032 |
|
| Restructuring charges | 16 |
| | 0.008 |
| | 22 |
| | 0.011 |
|
| Acquisition and other related charges | 29 |
| | 0.010 |
| | 29 |
| | 0.014 |
|
| R&D tax credit | 12 |
| | 0.006 |
| | 12 |
| | 0.006 |
|
| Fair value adjustment on asset held for sale | 12 |
| | 0.006 |
| | — |
| | — |
|
| VMware GSA settlement | 42 |
| | 0.021 |
| | — |
| | — |
|
| Gain on previously held interests in strategic investments | — |
| | — |
| | (45 | ) | | (0.022 | ) |
| Impairment of strategic investment | — |
| | — |
| | 24 |
| | 0.011 |
|
| VMware litigation and other contingencies | — |
| | — |
| | 6 |
| | 0.003 |
|
| Net Income Attributable to EMC - Non-GAAP | $ | 845 |
| | $ | 0.433 |
| | $ | 882 |
| | $ | 0.427 |
|
| | | | | | | | |
| Weighted average shares, diluted | | | 1,947 |
| | | | 2,064 |
|
| Incremental VMware dilution | | | $ | 1 |
| | | | $ | 1 |
|
| |
| * | Net of tax and non-controlling interests in VMware, Inc., except weighted average shares, diluted. See Income Tax Provision and Net Income Attributable to VMware lines in Supplemental Information schedules. |
|
| | | | | | | |
| | Three Months Ended |
| | June 30, | | June 30, |
| | 2015 | | 2014 |
| Consolidated Revenue - GAAP | $ | 5,997 |
| | $ | 5,880 |
|
| VMware GSA settlement | 76 |
| | — |
|
| Consolidated Revenue - Non-GAAP | $ | 6,073 |
| | $ | 5,880 |
|
Note: Schedules may not add or recalculate due to rounding.
Reconciliation of GAAP to Non-GAAP
(in millions)
(unaudited)
|
| | | | | | | |
| | Three Months Ended |
| | June 30, | | June 30, |
| | 2015 | | 2014 |
| Gross Margin - GAAP | $ | 3,587 |
| | $ | 3,654 |
|
| Stock-based compensation expense | 37 |
| | 37 |
|
| Intangible asset amortization | 62 |
| | 61 |
|
| VMware GSA settlement | 76 |
| | — |
|
| Gross Margin - Non-GAAP | $ | 3,762 |
| | $ | 3,752 |
|
| | | | |
| Revenues: | | | |
| GAAP | $ | 5,997 |
| | $ | 5,880 |
|
| Non-GAAP | $ | 6,073 |
| | $ | 5,880 |
|
| Gross Margin Percentages: | | | |
| GAAP | 59.8 | % | | 62.1 | % |
| Non-GAAP | 61.9 | % | | 63.8 | % |
|
| | | | | | | |
| | Three Months Ended |
| | June 30, | | June 30, |
| | 2015 | | 2014 |
| Operating Margin - GAAP | $ | 680 |
| | $ | 874 |
|
| Stock-based compensation expense | 258 |
| | 262 |
|
| Intangible asset amortization | 100 |
| | 100 |
|
| Restructuring charges | 21 |
| | 28 |
|
| Acquisition and other related charges | 49 |
| | 52 |
|
| VMware litigation and other contingencies | — |
| | 11 |
|
| VMware GSA settlement | 70 |
| | — |
|
| Operating Margin - Non-GAAP | $ | 1,178 |
| | $ | 1,327 |
|
| | | | |
| Revenues: | | | |
| GAAP | $ | 5,997 |
| | $ | 5,880 |
|
| Non-GAAP | $ | 6,073 |
| | $ | 5,880 |
|
| Operating Margin Percentages: | | | |
| GAAP | 11.3 | % | | 14.9 | % |
| Non-GAAP | 19.4 | % | | 22.6 | % |
Note: Schedules may not add or recalculate due to rounding.
Reconciliation of GAAP to Non-GAAP
(in millions)
(unaudited)
|
| | | | | | | | | | |
| | Three Months Ended June 30, 2015 |
| | Income Before | | Tax Provision | | Tax |
| | Tax | | (Benefit) | | Rate |
| EMC Consolidated - GAAP | $ | 689 |
| | $ | 170 |
| | 24.6 | % |
| Stock-based compensation expense | 258 |
| | 58 |
| | 22.6 | % |
| Intangible asset amortization | 100 |
| | 29 |
| | 29.1 | % |
| Restructuring charges | 21 |
| | 5 |
| | 26.4 | % |
| Acquisition and other related charges | 49 |
| | 15 |
| | 31.4 | % |
| R&D tax credit | — |
| | (13 | ) | | N/A |
|
| Fair value adjustment on asset held for sale | 20 |
| | 8 |
| | 38.0 | % |
| VMware GSA settlement | 70 |
| | 18 |
| | 25.5 | % |
| EMC Consolidated - Non-GAAP | $ | 1,207 |
| | $ | 290 |
| | 24.0 | % |
|
| | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | June 30, | | June 30, | | June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| Cash Flow from Operations | $ | 1,033 |
| | $ | 1,253 |
| | $ | 2,113 |
| | $ | 2,592 |
|
| Capital expenditures | (252 | ) | | (196 | ) | | (449 | ) | | (472 | ) |
| Capitalized software development costs | (134 | ) | | (127 | ) | | (262 | ) | | (245 | ) |
| Free Cash Flow | $ | 647 |
| | $ | 930 |
| | $ | 1,402 |
| | $ | 1,875 |
|
Note: Schedules may not add or recalculate due to rounding.
Reconciliation of GAAP to Non-GAAP
Q2'15 vs Q2'14 Constant Currency Revenue Growth
(unaudited)
|
| | | | | | | | | | | | | | | |
| | | Information Storage | | EMC Information Infrastructure | | Pivotal | | VMware Virtual Infrastructure | | EMC Consolidated |
| |
| | Revenue growth - GAAP | 1 | % | | 1 | % | | 18 | % | | 4 | % | | 2 | % |
| | Impact of VMware GSA settlement | — |
| | — |
| | — |
| | 6 |
| | 1 |
|
| | Revenue growth - Non-GAAP | 1 | % | | 1 | % | | 18 | % | | 10 | % | | 3 | % |
| | Impact of currency | 5 |
| | 5 |
| | 1 |
| | 4 |
| | 4 |
|
| | Revenue growth on a constant currency basis | 6 | % | | 6 | % | | 19 | % | | 13 | % | | 8 | % |
|
| | | | | | | | | | | | |
| | | Europe, Middle East and Africa | | Asia Pacific and Japan | | Latin America | | North America |
| |
| | Revenue growth - GAAP | (3 | )% | | (1 | )% | | (15 | )% | | 6 | % |
| | Impact of VMware GSA settlement | — |
| | — |
| | — |
| | 3 |
|
| | Revenue growth - Non-GAAP | (3 | )% | | (1 | )% | | (15 | )% | | 9 | % |
| | Impact of currency | 11 |
| | 6 |
| | 11 |
| | — |
|
| | Revenue growth on a constant currency basis | 8 | % | | 5 | % | | (4 | )% | | 9 | % |
This presentation refers to growth rates at constant currency or adjusting for currency so that business results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of EMC's business performance. To present this information, current period results for entities reporting in currencies other than US dollars are converted into US dollars at the exchange rate applied in each month of the prior year quarter. Constant currency includes the impacts from EMC's hedging program.
Note: Schedule may not add or recalculate due to rounding.
Reconciliation of GAAP to Non-GAAP
(in billions, except per share amounts)
(unaudited)
|
| | | |
| | Twelve Months Ending December 31, |
| | 2015 |
| Consolidated Revenue - GAAP | $ | 25.2 |
|
| | |
| VMware GSA settlement | 0.1 |
|
| | |
| Consolidated Revenue - Non-GAAP | $ | 25.3 |
|
|
| | |
| | Twelve Months Ending December 31, |
| | 2015 |
| Operating Income as a % of Revenue - GAAP | 12.8 | % |
| | |
| Stock-based compensation expense | 4.4 |
|
| Intangible asset amortization | 1.5 |
|
| Restructuring charges | 0.9 |
|
| Acquisition and other related charges | 0.7 |
|
| One-time items | 0.4 |
|
| | |
| Operating Income as a % of Revenue - Non-GAAP | 20.7 | % |
|
| | | |
| | Twelve Months Ending December 31, |
| | 2015 |
| Diluted Earnings Per Share - GAAP | $ | 1.17 |
|
| | |
| Stock-based compensation expense | 0.42 |
|
| Intangible asset amortization | 0.13 |
|
| Restructuring charges | 0.08 |
|
| Acquisition and other related charges | 0.05 |
|
| One-time items | 0.02 |
|
| | |
| Diluted Earnings Per Share - Non-GAAP | $ | 1.87 |
|
|
| | |
| | Twelve Months Ending December 31, |
| | 2015 |
| Tax Rate - GAAP | 22.5 | % |
| | |
| Impact of stock-based compensation expense, intangible asset amortization, restructuring charges and acquisition and other related charges | 1.1 |
|
| | |
| Tax Rate - Non-GAAP | 23.6 | % |
|
| | | |
| | Twelve Months Ending December 31, |
| | 2015 |
| Cash Flow from Operations | $ | 5.5 |
|
| | |
| Cash expenditures | (1.0 | ) |
| Capitalized software development costs | (0.5 | ) |
| | |
| Free Cash Flow | $ | 4.0 |
|
Note: Schedules may not add or recalculate due to rounding.
Supplemental Information
For the Three Months Ended June 30, 2015
(in millions)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Stock-Based Compensation Expense | | Intangible Asset Amortization | | Restructuring Charges | | Acquisition and Other Related Charges | | R&D Tax Credit | | Fair Value Adjustment on Asset Held for Sale | | VMware GSA Settlement |
| EMC Consolidated | | | | | | | | | | | | | |
| Revenue | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 76 |
|
| Cost of revenue | (37 | ) | | (62 | ) | | — |
| | — |
| | — |
| | — |
| | — |
|
| Research and development | (91 | ) | | (1 | ) | | — |
| | — |
| | — |
| | — |
| | — |
|
| Selling, general and administrative | (130 | ) | | (37 | ) | | — |
| | (47 | ) | | — |
| | — |
| | 6 |
|
| Restructuring and acquisition-related charges | — |
| | — |
| | (21 | ) | | (2 | ) | | — |
| | — |
| | — |
|
| Non-operating (income) expense | — |
| | — |
| | — |
| | — |
| | — |
| | 20 |
| | — |
|
| Income tax provision (benefit) | 58 |
| | 29 |
| | 5 |
| | 15 |
| | (13 | ) | | 8 |
| | 18 |
|
| Net income attributable to VMware | (19 | ) | | (5 | ) | | — |
| | (5 | ) | | (1 | ) | | — |
| | (10 | ) |
| | | | | | | | | | | | | | |
| EMC Information Infrastructure plus Pivotal | | | | | | | | | | | | | |
| Revenue | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Cost of revenue | (27 | ) | | (33 | ) | | — |
| | — |
| | — |
| | — |
| | — |
|
| Research and development | (38 | ) | | (1 | ) | | — |
| | — |
| | — |
| | — |
| | — |
|
| Selling, general and administrative | (70 | ) | | (30 | ) | | — |
| | (5 | ) | | — |
| | — |
| | — |
|
| Restructuring and acquisition-related charges | — |
| | — |
| | (23 | ) | | (2 | ) | | — |
| | — |
| | — |
|
| Non-operating (income) expense | — |
| | — |
| | — |
| | — |
| | — |
| | 20 |
| | — |
|
| Income tax provision (benefit) | 33 |
| | 20 |
| | 6 |
| | — |
| | (7 | ) | | 8 |
| | — |
|
| Net income attributable to VMware | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | | |
| VMware within EMC | | | | | | | | | | | | | |
| Revenue | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 76 |
|
| Cost of revenue | (10 | ) | | (29 | ) | | — |
| | — |
| | — |
| | — |
| | — |
|
| Research and development | (53 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Selling, general and administrative | (60 | ) | | (7 | ) | | — |
| | (42 | ) | | — |
| | — |
| | 6 |
|
| Restructuring and acquisition-related charges | — |
| | — |
| | 2 |
| | — |
| | — |
| | — |
| | — |
|
| Non-operating (income) expense | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Income tax provision (benefit) | 25 |
| | 9 |
| | (1 | ) | | 15 |
| | (6 | ) | | — |
| | 18 |
|
| Net income attributable to VMware | (19 | ) | | (5 | ) | | — |
| | (5 | ) | | (1 | ) | | — |
| | (10 | ) |
Supplemental Information
For the Three Months Ended June 30, 2014
(in millions)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Stock-Based Compensation Expense | | Intangible Asset Amortization | | Restructuring Charges | | Acquisition and Other Related Charges | | R&D Tax Credit | | Gain on Previously Held Interests in Strategic Investments | | Impairment of Strategic Investment | | VMware Litigation and Other Contingencies |
| EMC Consolidated | | | | | | | | | | | | | | | |
| Cost of revenue | $ | (37 | ) | | $ | (61 | ) | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Research and development | (100 | ) | | (3 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Selling, general and administrative | (125 | ) | | (36 | ) | | — |
| | (50 | ) | | — |
| | — |
| | — |
| | (11 | ) |
| Restructuring and acquisition-related charges | — |
| | — |
| | (28 | ) | | (2 | ) | | — |
| | — |
| | — |
| | — |
|
| Non-operating (income) expense | — |
| | — |
| | — |
| | 1 |
| | — |
| | (45 | ) | | 33 |
| | — |
|
| Income tax provision (benefit) | 59 |
| | 30 |
| | 6 |
| | 18 |
| | (13 | ) | | — |
| | 9 |
| | 4 |
|
| Net income attributable to VMware | (23 | ) | | (5 | ) | | — |
| | (6 | ) | | (1 | ) | | — |
| | — |
| | (1 | ) |
| | | | | | | | | | | | | | | | |
| EMC Information Infrastructure plus Pivotal | | | | | | | | | | | | | | | |
| Cost of revenue | $ | (25 | ) | | $ | (34 | ) | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Research and development | (34 | ) | | (1 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Selling, general and administrative | (64 | ) | | (30 | ) | | — |
| | (8 | ) | | — |
| | — |
| | — |
| | — |
|
| Restructuring and acquisition-related charges | — |
| | — |
| | (29 | ) | | (2 | ) | | — |
| | — |
| | — |
| | — |
|
| Non-operating (income) expense | — |
| | — |
| | — |
| | — |
| | — |
| | (45 | ) | | 33 |
| | — |
|
| Income tax provision (benefit) | 31 |
| | 21 |
| | 6 |
| | 2 |
| | (9 | ) | | — |
| | 9 |
| | — |
|
| Net income attributable to VMware | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | | | | |
| VMware within EMC | | | | | | | | | | | | | | | |
| Cost of revenue | $ | (12 | ) | | $ | (27 | ) | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Research and development | (66 | ) | | (2 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Selling, general and administrative | (61 | ) | | (6 | ) | | — |
| | (42 | ) | | — |
| | — |
| | — |
| | (11 | ) |
| Restructuring and acquisition-related charges | — |
| | — |
| | 1 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Non-operating (income) expense | — |
| | — |
| | — |
| | 1 |
| | — |
| | — |
| | — |
| | — |
|
| Income tax provision (benefit) | 28 |
| | 9 |
| | — |
| | 16 |
| | (4 | ) | | — |
| | — |
| | 4 |
|
| Net income attributable to VMware | (23 | ) | | (5 | ) | | — |
| | (6 | ) | | (1 | ) | | — |
| | — |
| | (1 | ) |
Supplemental Information
For the Three Months Ended June 30, 2015
(in millions)
(unaudited) |
| | | | | | | | | | | |
| | VMware
Standalone
GAAP | | GAAP Adjustments and Eliminations | | VMware within EMC
GAAP |
| Revenue | $ | 1,521 |
| | $ | (9 | ) | | $ | 1,512 |
|
| Cost of revenue | 250 |
| | (4 | ) | | 246 |
|
| Gross margin | 1,271 |
| | (5 | ) | | 1,266 |
|
| Research and development | 322 |
| | (2 | ) | | 320 |
|
| Selling, general and administrative | 745 |
| | (2 | ) | | 743 |
|
| Restructuring and acquisition-related charges | (2 | ) | | — |
| | (2 | ) |
| Operating income | 206 |
| | (1 | ) | | 205 |
|
| Non-operating income (expense) | 7 |
| | 4 |
| | 11 |
|
| Income before taxes | 213 |
| | 3 |
| | 216 |
|
| Income tax provision (benefit) | 41 |
| | 6 |
| | 47 |
|
| Net income | $ | 172 |
| | (3 | ) | | 169 |
|
| Net income attributable to VMware | | | (32 | ) | | (32 | ) |
| Net income attributable to EMC | | | $ | (35 | ) | | $ | 137 |
|
Supplemental Information
For the Three Months Ended June 30, 2014
(in millions)
(unaudited)
|
| | | | | | | | | | | |
| | VMware
Standalone
GAAP | | GAAP Adjustments and Eliminations | | VMware within EMC
GAAP |
| Revenue | $ | 1,457 |
| | $ | (8 | ) | | $ | 1,449 |
|
| Cost of revenue | 218 |
| | (2 | ) | | 216 |
|
| Gross margin | 1,239 |
| | (6 | ) | | 1,233 |
|
| Research and development | 317 |
| | (3 | ) | | 314 |
|
| Selling, general and administrative | 723 |
| | (1 | ) | | 722 |
|
| Restructuring and acquisition-related charges | (1 | ) | | — |
| | (1 | ) |
| Operating income | 200 |
| | (2 | ) | | 198 |
|
| Non-operating income (expense) | 2 |
| | 5 |
| | 7 |
|
| Income before taxes | 202 |
| | 3 |
| | 205 |
|
| Income tax provision (benefit) | 35 |
| | 3 |
| | 38 |
|
| Net income | $ | 167 |
| | — |
| | 167 |
|
| Net income attributable to VMware | | | (33 | ) | | (33 | ) |
| Net income attributable to EMC | | | $ | (33 | ) | | $ | 134 |
|
Note: Schedules may not add due to rounding.
Segment Information
For the Three Months Ended June 30, 2015
(in millions)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | EMC Information Infrastructure | | | | | | |
| | Information Storage | | Enterprise Content Division | | RSA Information Security | | EMC Information Infrastructure | | Pivotal | | EMC Information Infrastructure plus Pivotal |
| Revenues | | | | | | | | | | | |
| Product revenues | $ | 2,509 |
| | $ | 40 |
| | $ | 97 |
| | $ | 2,646 |
| | $ | 20 |
| | $ | 2,666 |
|
| Services revenues | 1,519 |
| | 115 |
| | 141 |
| | 1,775 |
| | 44 |
| | 1,819 |
|
| Total consolidated revenues | 4,028 |
| | 155 |
| | 238 |
| | 4,421 |
| | 64 |
| | 4,485 |
|
| | | | | | | | | | | | |
| Gross profit | $ | 2,092 |
| | $ | 105 |
| | $ | 158 |
| | 2,355 |
| | 26 |
| | 2,381 |
|
| Gross profit percentage | 51.9 | % | | 67.8 | % | | 66.6 | % | | 53.3 | % | | 40.0 | % | | 53.1 | % |
| | | | | | | | | | | | |
| Research and development | | | | | | | 398 |
| | 25 |
| | 423 |
|
| Selling, general and administrative | | | | | | | 1,201 |
| | 53 |
| | 1,254 |
|
| Restructuring and acquisition-related charges | | | | | | | — |
| | — |
| | — |
|
| Total operating expenses | | | | | | | 1,599 |
| | 78 |
| | 1,677 |
|
| Operating income (expense) | | | | | | | $ | 756 |
| | $ | (52 | ) | | $ | 704 |
|
| Operating margin percentage | | | | | | | 17.1 | % | | (80.5 | )% | | 15.7 | % |
|
| | | | | | | | | | | | | | | |
| | EMC Information Infrastructure plus Pivotal | | VMware Virtual Infrastructure | | Corporate Reconciling Items | | Consolidated |
| Revenues | | | | | | | |
| Product revenues | $ | 2,666 |
| | $ | 635 |
| | $ | (76 | ) | | $ | 3,225 |
|
| Services revenues | 1,819 |
| | 953 |
| | — |
| | 2,772 |
|
| Total consolidated revenues | 4,485 |
| | 1,588 |
| | (76 | ) | | 5,997 |
|
| | | | | | | | |
| Gross profit | $ | 2,381 |
| | $ | 1,381 |
| | $ | (175 | ) | | $ | 3,587 |
|
| Gross profit percentage | 53.1 | % | | 87.0 | % | | — |
| | 59.8 | % |
| | | | | | | | |
| Research and development | 423 |
| | 267 |
| | 92 |
| | 782 |
|
| Selling, general and administrative | 1,254 |
| | 640 |
| | 208 |
| | 2,102 |
|
| Restructuring and acquisition-related charges | — |
| | — |
| | 23 |
| | 23 |
|
| Total operating expenses | 1,677 |
| | 907 |
| | 323 |
| | 2,907 |
|
| | | | | | | | |
| Operating income (expense) | 704 |
| | 474 |
| | (498 | ) | | 680 |
|
| Operating margin percentage | 15.7 | % | | 29.8 | % | | — |
| | 11.3 | % |
| | | | | | | | |
| Non-operating income (expense), net | 18 |
| | 11 |
| | (20 | ) | | 9 |
|
| Income tax provision (benefit) | 183 |
| | 107 |
| | (120 | ) | | 170 |
|
| Net income | 539 |
| | 378 |
| | (398 | ) | | 519 |
|
| Net income attributable to the non-controlling interests in VMware, Inc. | — |
| | (72 | ) | | 40 |
| | (32 | ) |
| Net income attributable to EMC Corporation | $ | 539 |
| | $ | 306 |
| | $ | (358 | ) | | $ | 487 |
|
Note: This segment information is presented on a consistent basis with the presentation in our quarterly and annual filings with the SEC. This schedule may not recalculate due to rounding.
Segment Information
For the Three Months Ended June 30, 2014
(in millions)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | EMC Information Infrastructure | | | | | | |
| | Information Storage | | Enterprise Content Division | | RSA Information Security | | EMC Information Infrastructure | | Pivotal | | EMC Information Infrastructure plus Pivotal |
| Revenues | | | | | | | | | | | |
| Product revenues | $ | 2,551 |
| | $ | 37 |
| | $ | 104 |
| | $ | 2,692 |
| | $ | 15 |
| | $ | 2,707 |
|
| Services revenues | 1,425 |
| | 121 |
| | 139 |
| | 1,685 |
| | 39 |
| | 1,724 |
|
| Total consolidated revenues | 3,976 |
| | 158 |
| | 243 |
| | 4,377 |
| | 54 |
| | 4,431 |
|
| | | | | | | | | | | | |
| Gross profit | $ | 2,192 |
| | $ | 100 |
| | $ | 162 |
| | 2,454 |
| | 26 |
| | 2,480 |
|
| Gross profit percentage | 55.1 | % | | 63.2 | % | | 66.7 | % | | 56.1 | % | | 47.2 | % | | 55.9 | % |
| | | | | | | | | | | | |
| Research and development | | | | | | | 358 |
| | 33 |
| | 391 |
|
| Selling, general and administrative | | | | | | | 1,140 |
| | 46 |
| | 1,186 |
|
| Restructuring and acquisition-related charges | | | | | | | — |
| | — |
| | — |
|
| Total operating expenses | | | | | | | 1,498 |
| | 79 |
| | 1,577 |
|
| Operating income (expense) | | | | | | | $ | 956 |
| | $ | (53 | ) | | $ | 903 |
|
| Operating margin percentage | | | | | | | 21.9 | % | | (99.4 | )% | | 20.4 | % |
|
| | | | | | | | | | | | | | | |
| | EMC Information Infrastructure plus Pivotal | | VMware Virtual Infrastructure | | Corporate Reconciling Items | | Consolidated |
| Revenues | | | | | | | |
| Product revenues | $ | 2,707 |
| | $ | 612 |
| | $ | — |
| | $ | 3,319 |
|
| Services revenues | 1,724 |
| | 837 |
| | — |
| | 2,561 |
|
| Total consolidated revenues | 4,431 |
| | 1,449 |
| | — |
| | 5,880 |
|
| | | | | | | | |
| Gross profit | $ | 2,480 |
| | $ | 1,272 |
| | $ | (98 | ) | | $ | 3,654 |
|
| Gross profit percentage | 55.9 | % | | 87.8 | % | | — |
| | 62.1 | % |
| | | | | | | | |
| Research and development | 391 |
| | 246 |
| | 103 |
| | 740 |
|
| Selling, general and administrative | 1,186 |
| | 602 |
| | 222 |
| | 2,010 |
|
| Restructuring and acquisition-related charges | — |
| | — |
| | 30 |
| | 30 |
|
| Total operating expenses | 1,577 |
| | 848 |
| | 355 |
| | 2,780 |
|
| | | | | | | | |
| Operating income (expense) | 903 |
| | 424 |
| | (453 | ) | | 874 |
|
| Operating margin percentage | 20.4 | % | | 29.3 | % | | — |
| | 14.9 | % |
| | | | | | | | |
| Non-operating income (expense), net | (84 | ) | | 8 |
| | 11 |
| | (65 | ) |
| Income tax provision (benefit) | 209 |
| | 91 |
| | (113 | ) | | 187 |
|
| Net income | 610 |
| | 341 |
| | (329 | ) | | 622 |
|
| Net income attributable to the non-controlling interests in VMware, Inc. | — |
| | (69 | ) | | 36 |
| | (33 | ) |
| Net income attributable to EMC Corporation | $ | 610 |
| | $ | 272 |
| | $ | (293 | ) | | $ | 589 |
|
Note: This segment information is presented on a consistent basis with the presentation in our quarterly and annual filings with the SEC. This schedule may not recalculate due to rounding.
Supplemental Information
(in millions)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Q1 2014 | | Q2 2014 | | Q3 2014 | | Q4 2014 | | FY 2014 | | Q1 2015 | | Q2 2015 |
| Information Storage: | | | | | | | | | | | | | |
| Product Revenues | $ | 2,302 |
| | $ | 2,551 |
| | $ | 2,595 |
| | $ | 3,338 |
| | $ | 10,785 |
| | $ | 2,179 |
| | $ | 2,509 |
|
| Services Revenues | 1,378 |
| | 1,425 |
| | 1,456 |
| | 1,497 |
| | 5,757 |
| | 1,484 |
| | 1,519 |
|
| Total Information Storage Revenues | $ | 3,680 |
| | $ | 3,976 |
| | $ | 4,051 |
| | $ | 4,835 |
| | $ | 16,542 |
| | $ | 3,663 |
| | $ | 4,028 |
|
| | | | | | | | | | | | | | |
| Enterprise Content Division: | | | | | | | | | | | | | |
| Product Revenues | $ | 35 |
| | $ | 37 |
| | $ | 36 |
| | $ | 56 |
| | $ | 164 |
| | $ | 27 |
| | $ | 40 |
|
| Services Revenues | 119 |
| | 121 |
| | 118 |
| | 118 |
| | 476 |
| | 111 |
| | 115 |
|
| Total Enterprise Content Division Revenues | $ | 154 |
| | $ | 158 |
| | $ | 154 |
| | $ | 174 |
| | $ | 640 |
| | $ | 138 |
| | $ | 155 |
|
| | | | | | | | | | | | | | |
| RSA Information Security: | | | | | | | | | | | | | |
| Product Revenues | $ | 104 |
| | $ | 104 |
| | $ | 114 |
| | $ | 139 |
| | $ | 462 |
| | $ | 100 |
| | $ | 97 |
|
| Services Revenues | 140 |
| | 139 |
| | 147 |
| | 148 |
| | 573 |
| | 148 |
| | 141 |
|
| Total RSA Information Security Revenues | $ | 244 |
| | $ | 243 |
| | $ | 261 |
| | $ | 287 |
| | $ | 1,035 |
| | $ | 248 |
| | $ | 238 |
|
| | | | | | | | | | | | | | |
| EMC Information Infrastructure: | | | | | | | | | | | | | |
| Product Revenues | $ | 2,441 |
| | $ | 2,692 |
| | $ | 2,745 |
| | $ | 3,533 |
| | $ | 11,411 |
| | $ | 2,306 |
| | $ | 2,646 |
|
| Services Revenues | 1,637 |
| | 1,685 |
| | 1,721 |
| | 1,763 |
| | 6,806 |
| | 1,743 |
| | 1,775 |
|
| Total EMC Information Infrastructure Revenues | $ | 4,078 |
| | $ | 4,377 |
| | $ | 4,466 |
| | $ | 5,296 |
| | $ | 18,217 |
| | $ | 4,049 |
| | $ | 4,421 |
|
| | | | | | | | | | | | | | |
| Pivotal: | | | | | | | | | | | | | |
| Product Revenues | $ | 11 |
| | $ | 15 |
| | $ | 17 |
| | $ | 21 |
| | $ | 65 |
| | $ | 16 |
| | $ | 20 |
|
| Services Revenues | 38 |
| | 39 |
| | 41 |
| | 44 |
| | 162 |
| | 38 |
| | 44 |
|
| Total Pivotal Revenues | $ | 49 |
| | $ | 54 |
| | $ | 58 |
| | $ | 65 |
| | $ | 227 |
| | $ | 54 |
| | $ | 64 |
|
| | | | | | | | | | | | | | |
| VMware Virtual Infrastructure Revenues: | | | | | | | | | | | | | |
| Product Revenues | $ | 556 |
| | $ | 612 |
| | $ | 638 |
| | $ | 768 |
| | $ | 2,575 |
| | $ | 583 |
| | $ | 635 |
|
| Services Revenues | 796 |
| | 837 |
| | 870 |
| | 919 |
| | 3,421 |
| | 927 |
| | 953 |
|
| Total VMware Virtual Infrastructure Revenues | $ | 1,352 |
| | $ | 1,449 |
| | $ | 1,508 |
| | $ | 1,687 |
| | $ | 5,996 |
| | $ | 1,510 |
| | $ | 1,588 |
|
| | | | | | | | | | | | | | |
| Corporate Reconciling Items | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | (76 | ) |
| | | | | | | | | | | | | | |
| Consolidated Revenues: | | | | | | | | | | | | | |
| Product Revenues | $ | 3,008 |
| | $ | 3,319 |
| | $ | 3,400 |
| | $ | 4,322 |
| | $ | 14,051 |
| | $ | 2,905 |
| | $ | 3,225 |
|
| Services Revenues | 2,471 |
| | 2,561 |
| | 2,632 |
| | 2,726 |
| | 10,389 |
| | 2,708 |
| | 2,772 |
|
| Total Consolidated Revenues | $ | 5,479 |
| | $ | 5,880 |
| | $ | 6,032 |
| | $ | 7,048 |
| | $ | 24,440 |
| | $ | 5,613 |
| | $ | 5,997 |
|
| | | | | | | | | | | | | | |
| Percentage impact to EMC revenues growth rate due to changes in exchange rates from the prior year | (0.4)% | | 0.5% | | (0.1)% | | (1.7)% | | (0.5)% | | (3.1)% | | (4.4)% |
