Exhibit 99.1
Contact: Greg Eden
508-293-7195
eden_greg@emc.com
FOR IMMEDIATE RELEASE
EMC REPORTS THIRD QUARTER RESULTS
Record Quarterly Revenues Driven by Growth of New EMC Storage Platforms,
VMware Infrastructure
HOPKINTON, Mass. – October 17, 2006 – EMC Corporation (NYSE:EMC), the world leader in information management and storage, today reported financial results for the third quarter of 2006. The company’s 13th consecutive quarter of double-digit revenue growth was highlighted by strong demand for new EMC® Symmetrix® DMX-3 and EMC CLARiiON® CX3 networked storage systems and VMware® Infrastructure.
Total consolidated revenue for the third quarter of 2006 was a record $2.82 billion, 19% higher than the $2.37 billion reported for the third quarter of 2005. The September 2006 acquisitions of RSA Security and Network Intelligence, which form the foundation of EMC’s new security division, contributed $37.8 million to EMC’s third quarter 2006 revenue. Excluding revenue related to these acquisitions, revenue for the quarter was $2.78 billion, also a record for EMC and 17% higher than the third quarter of 2005.
Net income for the third quarter of 2006 was $283.7 million or $0.13 per diluted share. Excluding the impact of the September acquisitions, diluted earnings per share were also $0.13. Reported third quarter 2005 diluted earnings per share were $0.17, which included a $0.04 tax-related benefit and excluded $0.03 related to stock option expense. Adjusting for these third-quarter 2005 items, diluted earnings per share for the third quarter of 2006 were up 30% compared with the year-ago third quarter.
EMC also announced plans to implement consolidation efforts designed to deliver a more unified experience to customers through the further integration of EMC and most of the 21 acquisitions made over the past three years and by improving efficiencies across the company’s business. The actions are expected to result in the departure of approximately 1,250 employees worldwide by the end of 2007. As a result, EMC estimates that it will record a pre-tax charge of between $150 million and $175 million or $0.06 per diluted share in the fourth quarter of 2006 to cover the cost of these consolidation efforts. VMware will continue to operate as an independent subsidiary of EMC and is not part of these actions.
Joe Tucci, EMC Chairman, President and Chief Executive Officer, said, “EMC had a very solid quarter. We delivered the highest quarterly revenues in our 27-year history, even before including revenues from the newly acquired RSA Security and Network Intelligence businesses. We also achieved higher-than-expected earnings per share. We continue to grow significantly faster than the markets we serve, and we are clearly gaining a larger share of our growing worldwide market opportunity.
“Information storage, VMware and our EMC Smarts® resource management software were among the standouts during the quarter,” continued Tucci. “Our storage business benefited from strong customer response to the new Symmetrix DMX-3 and CLARiiON CX-3 systems introduced in the first half of the year. Outstanding execution from VMware delivered accelerated revenue growth for the second consecutive quarter as the new VMware Infrastructure 3 began to be deployed in data centers around the world. License revenue from our EMC Smarts products more than doubled as customers took advantage of our model-based approach to resource management, deploying it not only within their networks, but also across application and storage environments.
“At EMC our focus is on information,” Tucci continued. “Over the past three years we have invested nearly $10 billion to bring innovative technologies to our customers through our own R&D and acquisitions. Today we have the world’s best solutions for storing information, protecting and securing information, managing and moving information, and optimizing information infrastructures. Our greatest opportunity and competitive advantages lie in the value realized by our customers when these capabilities come together in a unified information infrastructure.”
Commenting further on the planned consolidation efforts, Tucci said, “These actions, while difficult, are necessary. Customers are asking us to approach them more as a single, integrated partner, and to streamline some of our processes in order to bring innovation to them even faster, more simply and more cost-effectively than we do today. The time is right for us to accelerate the integration of EMC and most of the companies we have acquired over the past three years, create more efficient, centralized corporate functions, reduce management layers, and take greater advantage of opportunities to improve our overall cost structure.”
Quarterly Results
Systems revenue in the third quarter was $1.3 billion, a 19% increase over the year-ago quarter. Software license and maintenance revenue grew 25% to $1.1 billion, and professional services, systems maintenance and other services revenue grew 7% year-over-year to $432 million.
EMC completed the third quarter with $5.5 billion in cash and investments. During the third quarter, EMC borrowed $2.2 billion on a short-term, unsecured credit facility to finance the acquisition of RSA Security. Year-to-date the company has spent approximately $2.6 billion to purchase 208 million EMC shares in the open market and to redeem $125 million in convertible debt.
David Goulden, EMC Executive Vice President and Chief Financial Officer, said, “With overall revenues up 14% year-to-date, EMC is one of the fastest-growing large-cap technology companies in the world. We accelerated our stock buyback during the quarter, buying nearly a third more shares than we purchased during the second quarter and placing us on target to invest at least $3 billion repurchasing EMC shares during 2006.”
Quarterly Highlights
EMC information storage revenues increased 14% compared with the year-ago quarter. EMC Symmetrix sales grew 21%, as customers continue to consolidate information and capitalize on the
performance, scalability and flexibility of these market-leading, high-end platforms. In the mid-tier, EMC CLARiiON revenues grew 18% over the year-ago quarter, driven by widespread customer and partner adoption of the easy-to-use and flexible new CLARiiON CX3 UltraScale™ systems. EMC Smarts model-based resource management software license revenues grew more than 100% during the quarter, highlighting the importance customers place on quickly gaining actionable management intelligence to minimize the impact of failures or congestion across the information infrastructure. EMC NetWorker™ software had double-digit, year-over-year revenue growth as organizations continued to invest in backup-to-disk and recovery management.
The EMC Content Management software business grew 25% compared with the year-ago quarter. During the quarter, EMC reached a significant milestone with the announcement of its 15,000th content management customer, reflecting EMC’s strong share gains and leadership in this rapidly growing market.
Security revenues for the full quarter, including the period in which EMC did not own RSA Security or Network Intelligence, grew 30% compared with the year-ago period, with both companies having record revenue during the quarter. New customer acquisitions grew to over 1,500 during the quarter, reflecting, in part, the ongoing success of the recently-introduced RSA SecurWorld™ Channel Program and increasing traction with consumer-facing applications in financial services. Additional third quarter factors included positive momentum from Network Intelligence, as well as customer enthusiasm for RSA Security’s acquisition by EMC.
VMware, an independent EMC subsidiary, had another record quarter and grew total revenues 86% year-over-year to $188.5 million. VMware delivered its highest year-over-year growth rate in five quarters and the second consecutive quarter of sequential quarterly growth of 20%. VMware’s exceptional performance, which now places the company’s revenue on an annualized run rate of $750 million, was fueled by broad adoption of VMware Infrastructure 3, which began shipping in June. VMware’s third quarter momentum and expanding customer base were driven in part by the release of the free VMware Server, which includes the option to purchase enterprise-class support, and the announcement of a new product for Apple Mac users.
Business Outlook
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 after the date hereof. These statements supersede all prior statements regarding business outlook set forth in prior EMC news releases.
• | Consolidated revenues for the fourth quarter are expected to be at or exceed $3.16 billion, which includes at least $110 million from the new security division. |
• | Diluted earnings per share for the fourth quarter are expected to be $0.09, including a $0.06 charge related to the aforementioned consolidation efforts and a loss of $0.01 from the security division, primarily due to loan interest for the acquisition of RSA Security. Excluding the consolidation efforts and the loss related to the security division, diluted earnings per share for the fourth quarter are expected to be $0.16. |
About EMC
EMC Corporation (NYSE: EMC) is the world leader in products, services and solutions for information management and storage that help organizations extract the maximum value from their information, at the lowest total cost, across every point in the information lifecycle. Information about EMC’s products and services can be found atwww.EMC.com.
EMC, Symmetrix, CLARiiON and Smarts are registered trademarks, and Network, SecurWorld and UltraScale are trademarks, of EMC and its subsidiaries. VMware is a registered trademark of VMware Inc. RSA is a registered trademark of RSA. All other trademarks used are the property of their respective owners.
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) risks associated with acquisitions and investments, including the challenges and costs of integration, restructuring and achieving anticipated synergies; (iv) competitive factors, including but not limited to pricing pressures and new product introductions; (v) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (vi) component and product quality and availability; (vii) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (viii) insufficient, excess or obsolete inventory; (ix) war or acts of terrorism; (x) the ability to attract and retain highly qualified employees; (xi) fluctuating currency exchange rates; and (xii) 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.
This release contains non-GAAP financial measures. These non-GAAP financial measures, which are used as measures of EMC’s performance, should be considered in addition to, not as a substitute for, measures of EMC’s financial performance prepared in accordance with GAAP. The reconciliation for the diluted earnings per share for the third quarter of 2006, excluding the September acquisitions follows. In the third quarter of 2006, the results of operations for the security division resulted in a net loss of less than $0.01 per diluted share. As noted in the release, the third quarter 2006 diluted earnings per share was $0.13 both including and excluding the results of operations of the security division. A reconciliation of the remaining non-GAAP financial measures to the most directly comparable GAAP financial measures is provided in the text of this release or in the tables entitled “Selected Non-GAAP Data” for the periods ended September 30, 2006 and 2005 attached to this release. EMC’s non-GAAP financial measures 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.
As specified certain non-GAAP financial measures in this release are adjusted for the results of operations of the security division, stock option expense, tax related benefit and restructuring charges. In addition, stock option expense, restricted stock expense, intangible amortization and in-process research and development and the related tax impact of each is excluded from the non-GAAP financial measures in the schedules entitled “Selected Non-GAAP Data”. Finally, where specified in the table entitled “Selected Non-GAAP Data” for the three-month period ended September 30, 2005, restructuring charges, the related tax impact and certain tax benefits are excluded from the non-GAAP financial measures in the schedule.
EMC’s management uses non-GAAP financial measures to gain an understanding of EMC’s comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects and excludes the above listed expenses from its internal financial statements for purposes of its internal budgets and each reporting segment’s financial goals. 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. These non-GAAP financial measures have limitations, however, because they do not include all items of income and expense that affect EMC’s operations. Specifically, 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 with respect to the non-GAAP financial measures that exclude the security division, stock-based compensation, intangible amortization, in-process research and development, restructuring charges, the related tax impact of each and certain tax benefits, 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 thousands, except per share amounts)
Unaudited
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2006 | September 30, 2005 | September 30, 2006 | September 30, 2005 | |||||||||||||
Revenues: | ||||||||||||||||
Product sales | $ | 2,035,652 | $ | 1,687,277 | $ | 5,717,780 | $ | 4,996,110 | ||||||||
Services | 779,654 | 678,465 | 2,222,736 | 1,957,578 | ||||||||||||
2,815,306 | 2,365,742 | 7,940,516 | 6,953,688 | |||||||||||||
Cost and expenses: | ||||||||||||||||
Cost of product sales | 992,272 | 813,760 | 2,794,910 | 2,425,379 | ||||||||||||
Cost of services | 339,295 | 274,365 | 970,532 | 819,829 | ||||||||||||
Research and development | 312,302 | 254,720 | 895,220 | 742,359 | ||||||||||||
Selling, general and administrative | 809,086 | 641,219 | 2,339,326 | 1,899,619 | ||||||||||||
In-process research and development | 23,000 | — | 35,410 | 3,100 | ||||||||||||
Restructuring charges (credits) | (2,779 | ) | 5,849 | (4,359 | ) | 3,717 | ||||||||||
Operating income | 342,130 | 375,829 | 909,477 | 1,059,685 | ||||||||||||
Investment income | 51,160 | 47,986 | 174,676 | 134,475 | ||||||||||||
Interest expense | (5,807 | ) | (1,907 | ) | (8,438 | ) | (5,923 | ) | ||||||||
Other income (expense), net | (947 | ) | 2,439 | 2,248 | (934 | ) | ||||||||||
Income before taxes | 386,536 | 424,347 | 1,077,963 | 1,187,303 | ||||||||||||
Income tax provision | 102,872 | 2,675 | 239,378 | 202,433 | ||||||||||||
Income before cumulative effect of a change in accounting principle | 283,664 | 421,672 | 838,585 | 984,870 | ||||||||||||
Cumulative effect of a change in accounting principle, net of tax benefit of $808 | — | — | (3,372 | ) | — | |||||||||||
Net income | $ | 283,664 | $ | 421,672 | $ | 835,213 | $ | 984,870 | ||||||||
Net income per weighted average share, basic: | ||||||||||||||||
Income before cumulative effect of a change in accounting principle | $ | 0.13 | $ | 0.18 | $ | 0.37 | $ | 0.41 | ||||||||
Cumulative effect of a change in accounting principle | — | — | — | — | ||||||||||||
Net Income | $ | 0.13 | $ | 0.18 | $ | 0.36 | $ | 0.41 | ||||||||
Net income per weighted average share, diluted: | ||||||||||||||||
Income before cumulative effect of a change in accounting principle | $ | 0.13 | $ | 0.17 | $ | 0.36 | $ | 0.40 | ||||||||
Cumulative effect of a change in accounting principle | — | — | — | — | ||||||||||||
Net Income | $ | 0.13 | $ | 0.17 | $ | 0.36 | $ | 0.40 | ||||||||
Weighted average shares, basic | 2,215,039 | 2,383,770 | 2,290,157 | 2,390,314 | ||||||||||||
Weighted average shares, diluted | 2,240,291 | 2,433,079 | 2,327,365 | 2,439,576 | ||||||||||||
As a % of total revenue: | ||||||||||||||||
Gross margin | 52.7 | % | 54.0 | % | 52.6 | % | 53.3 | % | ||||||||
Selling, general and administrative | 28.7 | % | 27.1 | % | 29.5 | % | 27.3 | % | ||||||||
Research and development | 11.1 | % | 10.8 | % | 11.3 | % | 10.7 | % | ||||||||
Operating income | 12.2 | % | 15.9 | % | 11.5 | % | 15.2 | % | ||||||||
Net income | 10.1 | % | 17.8 | % | 10.5 | % | 14.2 | % |
EMC CORPORATION
Selected Non-GAAP Data
For the Three Months Ended September 30, 2006
(in thousands, except per share amounts)
Unaudited
Costs and Expenses | Operating Income | ||||||||||||||||||
Cost of Revenue | Research and Development | Selling, General and Administrative | In-Process Research and Development | ||||||||||||||||
GAAP | $ | 1,331,567 | $ | 312,302 | $ | 809,086 | $ | 23,000 | $ | 342,130 | |||||||||
Adjustments to reconcile to Non-GAAP: | |||||||||||||||||||
Stock Option Expense (1) | (11,279 | ) | (15,597 | ) | (35,543 | ) | — | 62,419 | |||||||||||
Restricted Stock Expense (1) | (2,353 | ) | (12,870 | ) | (19,930 | ) | — | 35,153 | |||||||||||
Intangible Amortization (2) | (23,124 | ) | (3,933 | ) | (11,236 | ) | — | 38,293 | |||||||||||
In-Process Research and Development (3) | — | — | — | (23,000 | ) | 23,000 | |||||||||||||
Non-GAAP | $ | 1,294,811 | $ | 279,902 | $ | 742,377 | $ | — | $ | 500,995 | |||||||||
Income Before Tax | Income Tax Provision | Net Income | Net Income per Weighted Average Share, Basic | Net Income per Weighted Average Share, Diluted | |||||||||||||||
GAAP | $ | 386,536 | $ | 102,872 | $ | 283,664 | $ | 0.13 | $ | 0.13 | |||||||||
Adjustments to reconcile to Non-GAAP: | |||||||||||||||||||
Stock Option Expense (1) | 62,419 | 12,470 | 49,949 | $ | 0.02 | $ | 0.02 | ||||||||||||
Restricted Stock Expense (1) | 35,153 | 9,530 | 25,623 | $ | 0.01 | $ | 0.01 | ||||||||||||
Intangible Amortization (2) | 38,293 | 13,413 | 24,880 | $ | 0.01 | $ | 0.01 | ||||||||||||
In-Process Research and Development (3) | 23,000 | — | 23,000 | $ | 0.01 | $ | 0.01 | ||||||||||||
Non-GAAP | $ | 545,401 | $ | 138,285 | $ | 407,116 | $ | 0.18 | $ | 0.18 | |||||||||
(1) | Represents equity compensation recognized pursuant to Financial Accounting Board Standard No. 123R “Share-Based Payment”. |
(2) | Represents amortization associated with intangible assets acquired in connection with business combinations. |
(3) | Represents in-process research and development associated with business combinations. |
EMC CORPORATION
Selected Non-GAAP Data
For the Three Months Ended September 30, 2005
(in thousands, except per share amounts)
Unaudited
Costs and Expenses | Operating Income | |||||||||||||||||||
Cost of Revenue | Research and Development | Selling, General and Administrative | Restructuring Charges | |||||||||||||||||
GAAP | $ | 1,088,125 | $ | 254,720 | $ | 641,219 | $ | 5,849 | $ | 375,829 | ||||||||||
Adjustments to reconcile to Non-GAAP: | ||||||||||||||||||||
Stock Option Expense (1) | (725 | ) | (2,807 | ) | (3,572 | ) | — | 7,104 | ||||||||||||
Restricted Stock Expense (1) | (521 | ) | (6,018 | ) | (8,668 | ) | — | 15,207 | ||||||||||||
Intangible Amortization (2) | (18,139 | ) | (3,212 | ) | (6,938 | ) | — | 28,289 | ||||||||||||
Restructuring charges (3) | — | — | — | (5,849 | ) | 5,849 | ||||||||||||||
Tax Benefits (4) | — | — | — | — | — | |||||||||||||||
Non-GAAP | $ | 1,068,740 | $ | 242,683 | $ | 622,041 | $ | — | $ | 432,278 | ||||||||||
Income Before Tax | Income Tax Provision | Net Income | Net Income per Weighted Average Share, Basic | Net Income per Weighted Average Share, Diluted | ||||||||||||||||
GAAP | $ | 424,347 | $ | 2,675 | $ | 421,672 | $ | 0.18 | $ | 0.17 | ||||||||||
Adjustments to reconcile to Non-GAAP: | ||||||||||||||||||||
Stock Option Expense (1) | 7,104 | 2,565 | 4,539 | $ | — | $ | — | |||||||||||||
Restricted Stock Expense (1) | 15,207 | 5,490 | 9,717 | $ | — | $ | — | |||||||||||||
Intangible Amortization (2) | 28,289 | 10,190 | 18,099 | $ | 0.01 | $ | 0.01 | |||||||||||||
Restructuring charges (3) | 5,849 | 1,616 | 4,233 | $ | — | $ | — | |||||||||||||
Tax Benefits (4) | — | 105,681 | (105,681 | ) | $ | (0.04 | ) | $ | (0.04 | ) | ||||||||||
Non-GAAP | $ | 480,796 | $ | 128,217 | $ | 352,579 | $ | 0.15 | $ | 0.15 | # | |||||||||
(1) | Represents equity compensation recognized pursuant to Financial Accounting Board Standard No. 123R “Share-Based Payment”. |
(2) | Represents amortization associated with intangible assets acquired in connection with business combinations. |
(3) | Represents adjustments to prior years’ restructuring charges. |
(4) | Represents special tax items. |
# | May not foot due to rounding. |
EMC CORPORATION
Consolidated Balance Sheets
(in thousands, except per share amounts)
Unaudited
September 30, 2006 | December 31, 2005 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,458,320 | $ | 2,322,370 | ||||
Short-term investments | 1,211,177 | 1,615,495 | ||||||
Accounts and notes receivable, less allowance for doubtful accounts of $43,271 and $38,126 | 1,449,757 | 1,405,564 | ||||||
Inventories | 895,091 | 724,751 | ||||||
Deferred income taxes | 372,398 | 326,318 | ||||||
Other current assets | 252,307 | 179,478 | ||||||
Total current assets | 5,639,050 | 6,573,976 | ||||||
Long-term investments | 2,809,592 | 3,417,589 | ||||||
Property, plant and equipment, net | 1,970,318 | 1,754,035 | ||||||
Intangible assets, net | 1,019,214 | 563,024 | ||||||
Other assets, net | 677,959 | 598,252 | ||||||
Goodwill, net | 5,949,818 | 3,883,507 | ||||||
Total assets | $ | 18,065,951 | $ | 16,790,383 | ||||
LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 745,678 | $ | 583,756 | ||||
Accrued expenses | 1,326,561 | 1,279,857 | ||||||
Income taxes payable | 492,676 | 645,694 | ||||||
Notes payable | 2,200,000 | — | ||||||
Deferred revenue | 1,258,512 | 1,164,551 | ||||||
Total current liabilities | 6,023,427 | 3,673,858 | ||||||
Deferred revenue | 730,421 | 640,598 | ||||||
Deferred income taxes | 213,965 | 175,192 | ||||||
Long-term convertible debt | — | 126,963 | ||||||
Other liabilities | 137,458 | 108,342 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Series preferred stock, par value $.01; authorized 25,000 shares, none outstanding | — | — | ||||||
Common stock, par value $.01; authorized 6,000,000 shares; issued 2,202,402 and 2,384,147 shares | 22,024 | 23,841 | ||||||
Additional paid-in capital | 3,562,499 | 5,867,076 | ||||||
Deferred compensation | — | (332,311 | ) | |||||
Retained earnings | 7,405,724 | 6,570,511 | ||||||
Accumulated other comprehensive loss | (29,567 | ) | (63,687 | ) | ||||
Total stockholders’ equity | 10,960,680 | 12,065,430 | ||||||
Total liabilities and stockholders’ equity | $ | 18,065,951 | $ | 16,790,383 | ||||
EMC CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Nine Months Ended | ||||||||
September 30, 2006 | September 30, 2005 | |||||||
Cash flows from operating activities: | ||||||||
Cash received from customers | $ | 8,074,003 | $ | 7,149,428 | ||||
Cash paid to suppliers and employees | (6,311,034 | ) | (5,646,136 | ) | ||||
Dividends and interest received | 198,721 | 184,133 | ||||||
Interest paid | (3,115 | ) | (7,014 | ) | ||||
Income taxes paid | (471,078 | ) | (61,162 | ) | ||||
Net cash provided by operating activities | 1,487,497 | 1,619,249 | ||||||
Cash flows from investing activities: | ||||||||
Additions to property, plant and equipment | (506,054 | ) | (418,962 | ) | ||||
Capitalized software development costs | (152,614 | ) | (121,208 | ) | ||||
Purchases of short and long-term available for sale securities | (5,011,854 | ) | (8,277,684 | ) | ||||
Sales and maturities of short and long-term available for sale securities | 6,016,126 | 8,037,653 | ||||||
Business acquisitions, net of cash acquired | (2,464,187 | ) | (349,957 | ) | ||||
Other | (20,860 | ) | (8,155 | ) | ||||
Net cash used in investing activities | (2,139,443 | ) | (1,138,313 | ) | ||||
Cash flows from financing activities: | ||||||||
Issuance of common stock | 144,602 | 152,724 | ||||||
Purchase of treasury stock | (2,464,888 | ) | (603,419 | ) | ||||
Excess tax benefits from stock based compensation | 12,036 | — | ||||||
Payment of long-term and short-term obligations | (127,538 | ) | (3,011 | ) | ||||
Proceeds from long-term and short-term obligations | 2,200,085 | 201 | ||||||
Net cash used in financing activities | (235,703 | ) | (453,505 | ) | ||||
Effect of exchange rate changes on cash | 23,599 | (35,973 | ) | |||||
Net decrease in cash and cash equivalents | (864,050 | ) | (8,542 | ) | ||||
Cash and cash equivalents at beginning of period | 2,322,370 | 1,476,803 | ||||||
Cash and cash equivalents at end of period | $ | 1,458,320 | $ | 1,468,261 | ||||
Reconciliation of net income to net cash provided by operating activities: | ||||||||
Net income | $ | 835,213 | $ | 984,870 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Cumulative effect of a change in accounting principle | 3,372 | — | ||||||
Depreciation and amortization | 555,965 | 474,889 | ||||||
Non-cash restructuring and other special charges | 35,410 | 3,100 | ||||||
Stock-based compensation expense | 299,510 | 56,704 | ||||||
Provision for doubtful accounts | 9,512 | 6,026 | ||||||
Deferred income taxes, net | (80,647 | ) | 55,430 | |||||
Tax benefit from stock options exercised | — | 36,263 | ||||||
Excess tax benefits from stock based compensation | (12,036 | ) | — | |||||
Other | 23,934 | 40,872 | ||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||
Accounts and notes receivable | 2,013 | 10,871 | ||||||
Inventories | (131,284 | ) | (220,333 | ) | ||||
Other assets | (53,473 | ) | (46,414 | ) | ||||
Accounts payable | 141,775 | (16,054 | ) | |||||
Accrued expenses | (115,146 | ) | 11,507 | |||||
Income taxes payable | (151,320 | ) | 50,194 | |||||
Deferred revenue | 121,962 | 178,843 | ||||||
Other liabilities | 2,737 | (7,519 | ) | |||||
Net cash provided by operating activities | $ | 1,487,497 | $ | 1,619,249 | ||||
Non-cash activity: | ||||||||
- Issuance of stock options exchanged in business combinations | $ | 37,903 | $ | 41,381 | ||||
EMC Corporation
Supplemental Financial Data
Revenue Analysis
(in thousands)
Unaudited
Revenue Components
Q1 2005 | Q2 2005 | Q3 2005 | Q4 2005 | YTD 2005 | Q1 2006 | Q2 2006 | Q3 2006 | YTD 2006 | ||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||
Systems | $ | 1,025,971 | $ | 1,068,725 | $ | 1,091,881 | $ | 1,300,290 | $ | 4,486,867 | $ | 1,226,928 | $ | 1,151,600 | $ | 1,299,321 | $ | 3,677,849 | ||||||||||||||||||||
Software: | ||||||||||||||||||||||||||||||||||||||
Software License | 594,532 | 619,605 | 595,396 | 712,626 | 2,522,159 | 621,602 | 681,998 | 736,331 | 2,039,931 | |||||||||||||||||||||||||||||
Software Maintenance | 237,894 | 258,622 | 269,145 | 287,587 | 1,053,248 | 303,202 | 315,189 | 345,650 | 964,041 | |||||||||||||||||||||||||||||
Total Software License & Maintenance | 832,426 | 878,227 | 864,541 | 1,000,213 | 3,575,407 | 924,804 | 997,187 | 1,081,981 | 3,003,972 | |||||||||||||||||||||||||||||
Professional, Systems Maintenance and Other Services | 374,609 | 389,359 | 402,087 | 402,830 | 1,568,885 | 396,081 | 423,525 | 431,989 | 1,251,595 | |||||||||||||||||||||||||||||
2,233,006 | 2,336,311 | 2,358,509 | 2,703,333 | 9,631,159 | 2,547,813 | 2,572,312 | 2,813,291 | 7,933,416 | ||||||||||||||||||||||||||||||
Other Businesses | 10,125 | 8,504 | 7,233 | 6,934 | 32,796 | 2,874 | 2,211 | 2,015 | 7,100 | |||||||||||||||||||||||||||||
Total Consolidated Revenues | $ | 2,243,131 | $ | 2,344,815 | $ | 2,365,742 | $ | 2,710,267 | $ | 9,663,955 | $ | 2,550,687 | $ | 2,574,523 | $ | 2,815,306 | $ | 7,940,516 | ||||||||||||||||||||
Percentage impact to EMC revenue growth rate due to changes in exchange rates from the prior year | 1.7 | % | 1.7 | % | 0.6 | % | (0.5 | )% | 0.8 | % | (2.1 | )% | (1.1 | )% | 0.7 | % | (0.8 | )% | ||||||||||||||||||||
EMC Corporation
Supplemental Financial Data
Revenue Analysis
(in thousands)
Unaudited
Supplemental Revenue Data
Q1 2005 | Q2 2005 | Q3 2005 | Q4 2005 | YTD 2005 | Q1 2006 | Q2 2006 | Q3 2006 | YTD 2006 | |||||||||||||||||||||
Symmetrix Hardware and Software Revenue ( a ) | $ | 652,328 | $ | 677,655 | $ | 633,308 | $ | 754,345 | $ | 2,717,636 | $ | 718,356 | $ | 676,649 | $ | 763,770 | $ | 2,158,775 | |||||||||||
CLARiiON Hardware and Software Revenue ( a ) | 418,641 | 430,960 | 425,375 | 518,729 | 1,793,705 | 472,003 | 446,511 | 501,704 | 1,420,218 | ||||||||||||||||||||
Connectivity Revenue ( b ) | 176,053 | 188,189 | 226,829 | 242,992 | 834,063 | 204,113 | 211,713 | 234,844 | 650,670 | ||||||||||||||||||||
Platform Software License Revenue | $ | 284,485 | $ | 312,827 | $ | 284,446 | $ | 333,442 | $ | 1,215,200 | $ | 272,819 | $ | 291,059 | $ | 313,662 | $ | 877,540 | |||||||||||
Platform Software Maintenance Revenue | 100,064 | 104,601 | 109,727 | 116,182 | 430,574 | 124,057 | 118,883 | 124,005 | 366,945 | ||||||||||||||||||||
Total Platform Revenue | $ | 384,549 | $ | 417,428 | $ | 394,173 | $ | 449,624 | $ | 1,645,774 | $ | 396,876 | $ | 409,942 | $ | 437,667 | $ | 1,244,485 | |||||||||||
Multi-platform Software License Revenue: | |||||||||||||||||||||||||||||
Resource Management Software License Revenue | $ | 146,708 | $ | 151,833 | $ | 141,002 | $ | 167,404 | $ | 606,947 | $ | 136,467 | $ | 150,652 | $ | 165,455 | $ | 452,574 | |||||||||||
Backup and Archive Software License Revenue | 51,742 | 49,877 | 50,467 | 59,881 | 211,967 | 40,797 | 56,218 | 51,875 | 148,890 | ||||||||||||||||||||
Content Management Software License Revenue | 49,302 | 39,160 | 47,637 | 64,400 | 200,499 | 79,675 | 70,234 | 52,779 | 202,688 | ||||||||||||||||||||
Total Multi-platform Software License Revenue | $ | 247,752 | $ | 240,870 | $ | 239,106 | $ | 291,685 | $ | 1,019,413 | $ | 256,939 | $ | 277,104 | $ | 270,109 | $ | 804,152 | |||||||||||
Multi-platform Software Maintenance Revenue | 125,371 | 134,476 | 137,196 | 149,258 | 546,301 | 149,534 | 162,711 | 166,550 | 478,795 | ||||||||||||||||||||
Total Multi-platform Software License and Maintenance Revenue | $ | 373,123 | $ | 375,346 | $ | 376,302 | $ | 440,943 | $ | 1,565,714 | $ | 406,473 | $ | 439,815 | $ | 436,659 | $ | 1,282,947 | |||||||||||
VMware Software License Revenue | $ | 62,295 | $ | 65,908 | $ | 71,844 | $ | 87,499 | $ | 287,546 | $ | 91,844 | $ | 113,835 | $ | 125,476 | $ | 331,155 | |||||||||||
VMware Maintenance and Services Revenue | 17,795 | 25,019 | 29,416 | 27,710 | 99,940 | 39,169 | 43,657 | 63,024 | 145,850 | ||||||||||||||||||||
Total VMware Revenue | $ | 80,090 | $ | 90,927 | $ | 101,260 | $ | 115,209 | $ | 387,486 | $ | 131,013 | $ | 157,492 | $ | 188,500 | $ | 477,005 | |||||||||||
Total Security Revenue | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 37,755 | $ | 37,755 | |||||||||||
( a ) | Includes hardware, hardware upgrades and platform software. |
( b ) | Includes Connectrix fibre channel switch/director revenues, Celerra file server revenue, exclusive of disk revenue, Rainstorage product revenues and Invista product revenues. |