Exhibit 99.1
| Contact: | Michael Gallant | |
| 508-293-6357 | ||
| gallant_michael@emc.com |
FOR IMMEDIATE RELEASE
EMC REPORTS RECORD SECOND-QUARTER RESULTS
Balanced, Double-Digit Revenue Growth in Systems, Software and Services
and Across All Major Geographies
HOPKINTON, Mass.—July 24, 2007—EMC Corporation (NYSE:EMC), the world leader in information infrastructure solutions, today reported record second-quarter revenue and strong profit growth marked by double-digit revenue growth in its systems, software and services businesses and across all major geographies. EMC has now delivered double-digit top-line growth for 16 consecutive quarters.
Total consolidated revenue for the second quarter of 2007 was $3.12 billion, 21% higher than the $2.57 billion reported for the second quarter of 2006. GAAP net income for the second quarter of 2007 was $334.4 million or $0.16 per diluted share, 33% higher than the GAAP earnings per diluted share of $0.12 reported for the year-ago period. EMC generated strong operating cash flow of $622 million, an increase of 59%, and free cash flow of $422 million, an increase of 123%, compared with the same period a year ago.
Joe Tucci, EMC Chairman, President and Chief Executive Officer, said, “EMC executed well in the second quarter. Customers continued to choose EMC for the depth and breadth of our information infrastructure technologies and solutions, which translated into solid revenue growth that was well balanced across our systems, software and services businesses and all major geographies. Add to this the explosion of digital information and the positive 2007 IT spending outlook we see in all major geographies, and it is clear that we are in a sweet spot of the IT industry.”
Compared with the second quarter of 2006, EMC systems revenue increased 18% year-over-year, led by strong revenue growth from the company’s mid-range information storage products. EMC systems revenue represented 43% of total second-quarter revenue. Software license and maintenance revenue increased 27% year-over-year, led by strong customer demand for RSA’s security offerings and for VMware Virtual Infrastructure. Software license and maintenance revenue accounted for 41% of total revenue in the quarter. Professional services, systems maintenance and other services revenue grew by 18%, driven by double-digit services growth in all four major EMC business segments. Professional services, systems maintenance and other services represented 16% of total second-quarter revenue.
For the second-quarter of 2007, revenue from North America increased 20% compared with the same period a year ago and represented 58% of total reported revenue. Revenue from operations outside of North America grew 23% year-over-year, highlighted by double-digit year-over-year revenue growth in EMC’s major international regions: Europe, Middle East and Africa (EMEA); Latin America and Asia-Pacific and Japan (APJ). APJ, which experienced 32% revenue growth year-over-year, retained its distinction as EMC’s fastest-growing major international region for the second straight quarter.
David Goulden, EMC Executive Vice President and Chief Financial Officer, said, “Looking across our business, we remain pleased with our strong, balanced performance and the progress EMC is making towards its 2007 operational and financial goals. We believe we are now on track to exceed the annual targets we set in January, as we continue to execute on our plan to help customers address their information infrastructure requirements.”
Second-Quarter Highlights
EMC’s Information Storage business, which includes revenue from storage systems, information management, information protection and resource management software, and related customer and professional services, reached $2.5 billion, an increase of 12% compared with the year-ago quarter. The second-quarter momentum was led by double-digit year-over-year revenue growth in EMC CLARiiON networked storage systems and solid customer demand for EMC’s backup to disk offerings. EMC also announced deeper technology integration across its product portfolio, including EMC Avamar data protection software optimized with VMware and EMC Celerra, and EMC RecoverPoint replication technology with EMC Replication Manager software.
RSA Information Security revenues for the second quarter of 2007 grew 21% when compared with the results of the division’s constituent companies in the year-ago period and generated approximately $125 million in revenue. The information security business continued to do well during the quarter due to significant success in Payment Card Industry Data Security Standard (PCI DSS) initiatives and notable demand across multiple industries for stronger authentication requirements. Also during the quarter, the division experienced strong growth in alternative forms of authentication, which include software tokens and smart cards, as well as in its information and event management offerings, consumer-facing applications, and encryption and key management solutions.
EMC’s Content Management and Archiving business grew second-quarter revenue to $174 million, an increase of 5% year-over-year. In May 2007, EMC announced the availability of EMC Documentum TaskSpace — a new, highly configurable user interface for the next-generation EMC Documentum 6 enterprise content management (ECM) platform. Next week, EMC will formally announce the Documentum 6 platform, advancing EMC’s ability to lead the industry into the next generation of enterprise content management. In recognition of its ECM market presence, EMC was honored in the quarter with two marquis ECM industry awards: E-DOCmagazine’s Readers’ Choice Award and theECM ConnectionACE Award. Last week EMC also announced that it has been positioned as a leader in the Forrester Wave™: Business Process Management for Document Processes.
VMware, an EMC subsidiary, grew sales 89% year-over-year to $298 million during the second quarter as it continued to unlock the value of virtualization for existing and new customers around the world. During the quarter, the virtualization leader broadened its product portfolio with new releases of its award-winning virtual desktop software and continued to expand its network of technology and distribution partners.VMware recently announced that Intel Corporation, through its global investment arm, Intel Capital, has agreed to become an investor. The partial initial public offering (IPO) of VMware is expected to be completed this summer.
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 revenue for 2007 is expected to exceed $12.7 billion. |
| • | GAAP diluted earnings per share for 2007 are expected to exceed $0.64. |
About EMC
EMC Corporation (NYSE: EMC) is the world’s leading developer and provider of information infrastructure technology and solutions that enable organizations of all sizes to transform the way they compete and create value from their information. Information about EMC’s products and services can be found atwww.EMC.com.
EMC, Documentum, CLARiiON and Celerra are registered trademarks of EMC Corporation. VMware is a registered trademark of VMware, Inc. RSA is a registered trademark of RSA Security Inc. 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) risks associated with acquisitions and investments, including the challenges and costs of integration, restructuring and achieving anticipated synergies; (iv) risks associated with the VMware IPO, including the inability to manage successfully and complete the IPO, and risks associated with trading of VMware stock if the IPO is completed; (v) competitive factors, including but not limited to pricing pressures and new product introductions; (vi) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (vii) component and product quality and availability; (viii) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (ix) insufficient, excess or obsolete inventory; (x) war or acts of terrorism; (xi) the ability to attract and retain highly qualified employees; (xii) fluctuating currency exchange rates; and (xiii) 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 contains 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 than similar terms used by other companies, and accordingly, care should be exercised in understanding how EMC defines its non-GAAP financial measures.
Where specified in the accompanying schedule entitled “Selected Non-GAAP Data For the Three Months Ended June 30, 2007,” stock option expense, restricted stock expense and intangible amortization are excluded from the non-GAAP financial measures. In addition, where specified in the accompanying schedule entitled “Selected Non-GAAP Data For the Three Months Ended June 30, 2006,” stock option expense, restricted stock expense, intangible amortization, in-process research and development and restructuring credits are excluded from the non-GAAP financial measures.
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 excludes the above-listed expenses (stock option expense, restricted stock expense, intangible amortization, in-process research and development and restructuring credits) 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. For the second quarter of 2007, free cash flow equals $422 million and is calculated as follows: net cash provided by operating activities (as defined by GAAP) of $622 million minus additions to property, plant and equipment of $154 million minus capitalized software development costs of $46 million. For the second quarter of 2006, free cash flow equals $189 million and is calculated as follows: net cash provided by operating activities (as defined by GAAP) of $392 million minus
additions to property, plant and equipment of $156 million minus capitalized software development costs of $47 million. 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, 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.
All of the foregoing non-GAAP financial measures have limitations. Specifically, the non-GAAP financial measures that exclude stock option expense, restricted stock expense, intangible amortization, in-process research and development and restructuring credits, 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 with respect to the non-GAAP financial measures that exclude stock-based compensation, intangible amortization and certain tax charges and 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 | Six Months Ended | |||||||||||||||
| June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, 2006 | |||||||||||||
Revenues: | ||||||||||||||||
Product sales | $ | 2,222,355 | $ | 1,833,598 | $ | 4,334,781 | $ | 3,682,128 | ||||||||
Services | 902,317 | 740,925 | 1,764,896 | 1,443,082 | ||||||||||||
| 3,124,672 | 2,574,523 | 6,099,677 | 5,125,210 | |||||||||||||
Cost and expenses: | ||||||||||||||||
Cost of product sales | 1,036,242 | 884,741 | 2,074,720 | 1,802,638 | ||||||||||||
Cost of services | 387,617 | 331,790 | 754,204 | 631,237 | ||||||||||||
Research and development | 384,966 | 299,429 | 740,358 | 582,918 | ||||||||||||
Selling, general and administrative | 924,349 | 782,016 | 1,800,039 | 1,530,240 | ||||||||||||
In-process research and development | — | 12,410 | — | 12,410 | ||||||||||||
Restructuring credits | — | (386 | ) | (2,670 | ) | (1,580 | ) | |||||||||
Operating income | 391,498 | 264,523 | 733,026 | 567,347 | ||||||||||||
Investment income | 50,850 | 61,713 | 102,989 | 123,516 | ||||||||||||
Interest expense | (18,136 | ) | (621 | ) | (36,429 | ) | (2,631 | ) | ||||||||
Other income, net | 2,968 | 479 | 7,808 | 3,195 | ||||||||||||
Income before taxes | 427,180 | 326,094 | 807,394 | 691,427 | ||||||||||||
Income tax provision | 92,773 | 47,001 | 160,380 | 136,506 | ||||||||||||
Income before cumulative effect of a change in accounting principle | 334,407 | 279,093 | 647,014 | 554,921 | ||||||||||||
Cumulative effect of a change in accounting principle, net of taxes of $107 | — | — | — | 247 | ||||||||||||
Net income | $ | 334,407 | $ | 279,093 | $ | 647,014 | $ | 555,168 | ||||||||
Net income per weighted average share, basic: | ||||||||||||||||
Income before cumulative effect of a change in accounting principle | $ | 0.16 | $ | 0.12 | $ | 0.31 | $ | 0.24 | ||||||||
Cumulative effect of a change in accounting principle | — | — | — | — | ||||||||||||
Net income | $ | 0.16 | $ | 0.12 | $ | 0.31 | $ | 0.24 | ||||||||
Net income per weighted average share, diluted: | ||||||||||||||||
Income before cumulative effect of a change in accounting principle | $ | 0.16 | $ | 0.12 | $ | 0.30 | $ | 0.23 | ||||||||
Cumulative effect of a change in accounting principle | — | — | — | — | ||||||||||||
Net income | $ | 0.16 | $ | 0.12 | $ | 0.30 | $ | 0.23 | ||||||||
Weighted average shares, basic | 2,070,636 | 2,306,457 | 2,075,683 | 2,328,360 | ||||||||||||
Weighted average shares, diluted | 2,121,645 | 2,341,785 | 2,122,080 | 2,371,301 | ||||||||||||
As a % of total revenue: | ||||||||||||||||
Gross margin | 54.4 | % | 52.7 | % | 53.6 | % | 52.5 | % | ||||||||
Selling, general and administrative | 29.6 | % | 30.4 | % | 29.5 | % | 29.9 | % | ||||||||
Research and development | 12.3 | % | 11.6 | % | 12.1 | % | 11.4 | % | ||||||||
Operating income | 12.5 | % | 10.3 | % | 12.0 | % | 11.1 | % | ||||||||
Net income | 10.7 | % | 10.8 | % | 10.6 | % | 10.8 | % | ||||||||
Note: The presentation of the results of operations for the six months ended June 30, 2006 has been revised to adjust the cumulative effect of the accounting change for the initial adoption of FAS No. 123R. The effect of this change was to increase net income by $3.6 million and decrease additional paid-in-capital at January 1, 2006 by the same amount.
EMC CORPORATION
Selected Non-GAAP Data
For the Three Months Ended June 30, 2007
(in thousands, except per share amounts)
Unaudited
| Costs and Expenses | ||||||||||||||||||
| Cost of Revenue | Research and Development | Selling, General and Administrative | Operating Income | |||||||||||||||
GAAP | $ | 1,423,859 | $ | 384,966 | $ | 924,349 | $ | 391,498 | ||||||||||
Adjustments to reconcile to Non-GAAP: | ||||||||||||||||||
Stock Option Expense (1) | (9,968 | ) | (14,937 | ) | (28,284 | ) | 53,189 | |||||||||||
Restricted Stock Expense (1) | (3,481 | ) | (9,796 | ) | (20,740 | ) | 34,017 | |||||||||||
Intangible Amortization (2) | (29,185 | ) | (2,167 | ) | (17,244 | ) | 48,596 | |||||||||||
Non-GAAP | $ | 1,381,225 | $ | 358,066 | $ | 858,081 | $ | 527,300 | ||||||||||
| Income Before Taxes | Income Tax Provision | Net Income | Net Income per Weighted Average Share, Basic | Net Income per Weighted Average Share, Diluted | ||||||||||||||
GAAP | $ | 427,180 | $ | 92,773 | $ | 334,407 | $ | 0.16 | $ | 0.16 | ||||||||
Adjustments to reconcile to Non-GAAP: | ||||||||||||||||||
Stock Option Expense (1) | 53,189 | 12,382 | 40,807 | 0.02 | 0.02 | |||||||||||||
Restricted Stock Expense (1) | 34,017 | 9,481 | 24,536 | 0.01 | 0.01 | |||||||||||||
Intangible Amortization (2) | 48,596 | 17,108 | 31,488 | 0.02 | 0.01 | |||||||||||||
Non-GAAP | $ | 562,982 | $ | 131,744 | $ | 431,238 | $ | 0.21 | $ | 0.20 | ||||||||
| (1) | Represents equity compensation recognized pursuant to FAS No. 123R "Share-Based Payment". |
| (2) | Represents amortization associated with intangible assets acquired in connection with business combinations. |
EMC CORPORATION
Selected Non-GAAP Data
For the Three Months Ended June 30, 2006
(in thousands, except per share amounts)
Unaudited
| Costs and Expenses | ||||||||||||||||||||||||
| Cost of Revenue | Research and Development | Selling, General and Administrative | In-process Research and Development | Restructuring Credits | Operating Income | |||||||||||||||||||
GAAP | $ | 1,216,531 | $ | 299,429 | $ | 782,016 | $ | 12,410 | $ | (386 | ) | $ | 264,523 | |||||||||||
Adjustments to reconcile to Non-GAAP: | ||||||||||||||||||||||||
Stock Option Expense (1) | (14,225 | ) | (13,839 | ) | (37,114 | ) | — | — | 65,178 | |||||||||||||||
Restricted Stock Expense (1) | (2,214 | ) | (11,996 | ) | (18,935 | ) | — | — | 33,145 | |||||||||||||||
Intangible Amortization (2) | (21,853 | ) | (3,277 | ) | (10,594 | ) | — | — | 35,724 | |||||||||||||||
In-Process Research and Development (3) | — | — | — | (12,410 | ) | — | 12,410 | |||||||||||||||||
Restructuring Credits (4) | — | — | — | — | 386 | (386 | ) | |||||||||||||||||
Non-GAAP | $ | 1,178,239 | $ | 270,317 | $ | 715,373 | $ | — | $ | — | $ | 410,594 | ||||||||||||
| Income Before Taxes | Income Tax Provision | Net Income | Net Income per Weighted Average Share, Basic | Net Income per Weighted Average Share, Diluted | ||||||||||||||||||||
GAAP | $ | 326,094 | $ | 47,001 | $ | 279,093 | $ | 0.12 | $ | 0.12 | ||||||||||||||
Adjustments to reconcile to Non-GAAP: | ||||||||||||||||||||||||
Stock Option Expense (1) | 65,178 | 10,133 | 55,045 | 0.02 | 0.02 | |||||||||||||||||||
Restricted Stock Expense (1) | 33,145 | 9,355 | 23,790 | 0.01 | 0.01 | |||||||||||||||||||
Intangible Amortization (2) | 35,724 | 12,551 | 23,173 | 0.01 | 0.01 | |||||||||||||||||||
In-Process Research and Development (3) | 12,410 | — | 12,410 | 0.01 | 0.01 | |||||||||||||||||||
Restructuring Credits (4) | (386 | ) | 33,266 | (33,652 | ) | (0.01 | ) | (0.01 | ) | |||||||||||||||
Non-GAAP | $ | 472,165 | $ | 112,306 | $ | 359,859 | $ | 0.16 | $ | 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 in-process research and development associated with business combinations. |
| (4) | Represent adjustment to prior years’ restructuring and the associated tax benefit. |
| # | May not foot due to rounding. |
EMC CORPORATION
Consolidated Balance Sheets
(in thousands, except per share amounts)
Unaudited
June 30, 2007 | December 31, 2006 | |||||||
| ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 3,154,095 | $ | 1,828,106 | ||||
Short-term investments | 1,436,863 | 1,521,925 | ||||||
Accounts and notes receivable, less allowance for doubtful accounts of $32,415 and $39,509 | 1,669,203 | 1,692,214 | ||||||
Inventories | 823,281 | 834,800 | ||||||
Deferred income taxes | 426,739 | 418,146 | ||||||
Other current assets | 273,181 | 225,396 | ||||||
Total current assets | 7,783,362 | 6,520,587 | ||||||
Long-term investments | 1,343,998 | 2,246,290 | ||||||
Property, plant and equipment, net | 2,081,447 | 2,035,559 | ||||||
Deferred income taxes | 119,865 | 104,446 | ||||||
Intangible assets, net | 949,421 | 1,003,549 | ||||||
Other assets, net | 668,892 | 638,655 | ||||||
Goodwill, net | 6,137,848 | 6,017,161 | ||||||
Total assets | $ | 19,084,833 | $ | 18,566,247 | ||||
| LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 690,016 | $ | 680,263 | ||||
Accrued expenses | 1,511,337 | 1,592,022 | ||||||
Income taxes payable | 69,872 | 63,806 | ||||||
Deferred revenue | 1,458,542 | 1,325,671 | ||||||
Total current liabilities | 3,729,767 | 3,661,762 | ||||||
Income taxes payable | 231,000 | 219,342 | ||||||
Deferred revenue | 912,990 | 780,124 | ||||||
Long-term convertible debt | 3,450,000 | 3,450,000 | ||||||
Other liabilities | 122,772 | 129,312 | ||||||
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 2,097,290 and 2,122,339 shares | 20,973 | 21,223 | ||||||
Additional paid-in capital | 2,226,944 | 2,560,935 | ||||||
Retained earnings | 8,451,635 | 7,798,112 | ||||||
Accumulated other comprehensive loss | (61,248 | ) | (54,563 | ) | ||||
Total stockholders’ equity | 10,638,304 | 10,325,707 | ||||||
Total liabilities and stockholders’ equity | $ | 19,084,833 | $ | 18,566,247 | ||||
EMC CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
| Six Months Ended | ||||||||
| June 30, 2007 | June 30, 2006 | |||||||
Cash flows from operating activities: | ||||||||
Cash received from customers | $ | 6,391,546 | $ | 5,423,035 | ||||
Cash paid to suppliers and employees | (4,930,350 | ) | (4,124,686 | ) | ||||
Dividends and interest received | 116,747 | 134,906 | ||||||
Interest paid | (38,854 | ) | (2,696 | ) | ||||
Income taxes paid | (108,841 | ) | (401,357 | ) | ||||
Net cash provided by operating activities | 1,430,248 | 1,029,202 | ||||||
Cash flows from investing activities: | ||||||||
Additions to property, plant and equipment | (324,210 | ) | (316,120 | ) | ||||
Capitalized software development costs | (98,046 | ) | (96,074 | ) | ||||
Purchases of short and long-term available for sale securities | (3,165,846 | ) | (3,486,712 | ) | ||||
Sales and maturities of short and long-term available for sale securities | 4,148,396 | 3,752,790 | ||||||
Business acquisitions, net of cash acquired | (161,002 | ) | (296,730 | ) | ||||
Other | (6,860 | ) | (13,910 | ) | ||||
Net cash provided by (used in) investing activities | 392,432 | (456,756 | ) | |||||
Cash flows from financing activities: | ||||||||
Issuance of common stock | 355,324 | 129,897 | ||||||
Repurchase of EMC common stock | (878,226 | ) | (1,375,608 | ) | ||||
Excess tax benefits from stock based compensation | 32,684 | 9,727 | ||||||
Payment of long-term and short-term obligations | (4,263 | ) | (127,396 | ) | ||||
Proceeds from long-term and short-term obligations | 2,506 | 85 | ||||||
Net cash used in financing activities | (491,975 | ) | (1,363,295 | ) | ||||
Effect of exchange rate changes on cash | (4,716 | ) | 28,863 | |||||
Net increase (decrease) in cash and cash equivalents | 1,325,989 | (761,986 | ) | |||||
Cash and cash equivalents at beginning of period | 1,828,106 | 2,322,370 | ||||||
Cash and cash equivalents at end of period | $ | 3,154,095 | $ | 1,560,384 | ||||
Reconciliation of net income to net cash provided by operating activities: | ||||||||
Net income | $ | 647,014 | $ | 555,168 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Cumulative effect of a change in accounting principle | — | (247 | ) | |||||
Depreciation and amortization | 438,260 | 364,641 | ||||||
In-process research and development | — | 12,410 | ||||||
Stock-based compensation expense | 170,553 | 201,938 | ||||||
(Decrease) increase in provision for doubtful accounts | (82 | ) | 866 | |||||
Deferred income taxes, net | (28,163 | ) | (67,065 | ) | ||||
Excess tax benefits from stock based compensation | (32,684 | ) | (9,727 | ) | ||||
Other | 6,524 | 14,977 | ||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||
Accounts and notes receivable | 29,166 | 147,483 | ||||||
Inventories | 39,897 | (19,999 | ) | |||||
Other assets | (79,042 | ) | (72,514 | ) | ||||
Accounts payable | 9,373 | 22,884 | ||||||
Accrued expenses | (105,797 | ) | (76,886 | ) | ||||
Income taxes payable | 79,731 | (198,018 | ) | |||||
Deferred revenue | 262,784 | 149,476 | ||||||
Other liabilities | (7,286 | ) | 3,815 | |||||
Net cash provided by operating activities | $ | 1,430,248 | $ | 1,029,202 | ||||
Non-cash activity: | ||||||||
— Issuance of stock options exchanged in business combinations | $ | 659 | $ | 7,500 | ||||
EMC Corporation
Supplemental Financial Data
Revenue Analysis
(in thousands)
Unaudited
Revenue Components
| Q1 2006 | Q2 2006 | Q3 2006 | Q4 2006 | YTD 2006 | Q1 2007 | Q2 2007 | YTD 2007 | |||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||
Systems | $ | 1,226,928 | $ | 1,151,600 | $ | 1,299,321 | $ | 1,462,777 | $ | 5,140,626 | $ | 1,305,766 | $ | 1,354,438 | $ | 2,660,204 | ||||||||||||||||
Software: | ||||||||||||||||||||||||||||||||
Software License | 621,602 | 681,998 | 736,331 | 897,485 | 2,937,416 | 806,660 | 867,917 | 1,674,577 | ||||||||||||||||||||||||
Software Maintenance | 303,202 | 315,189 | 345,650 | 371,163 | 1,335,204 | 382,080 | 400,233 | 782,313 | ||||||||||||||||||||||||
Total Software License & Maintenance | 924,804 | 997,187 | 1,081,981 | 1,268,648 | 4,272,620 | 1,188,740 | 1,268,150 | 2,456,890 | ||||||||||||||||||||||||
Professional, Systems Maintenance and Other Services | 396,081 | 423,525 | 431,989 | 481,471 | 1,733,066 | 478,972 | 500,798 | 979,770 | ||||||||||||||||||||||||
| 2,547,813 | 2,572,312 | 2,813,291 | 3,212,896 | 11,146,312 | 2,973,478 | 3,123,386 | 6,096,864 | |||||||||||||||||||||||||
Other Businesses | 2,874 | 2,211 | 2,015 | 1,678 | 8,778 | 1,527 | 1,286 | 2,813 | ||||||||||||||||||||||||
| Total Consolidated Revenues | $ | 2,550,687 | $ | 2,574,523 | $ | 2,815,306 | $ | 3,214,574 | $ | 11,155,090 | $ | 2,975,005 | $ | 3,124,672 | $ | 6,099,677 | ||||||||||||||||
Percentage impact to EMC revenue growth rate due to changes in exchange rates from the prior year | (2.1 | )% | (1.1 | )% | 0.7 | % | 1.4 | % | (0.2 | )% | 2.1 | % | 2.1 | % | 2.1 | % | ||||||||||||||||
EMC Corporation
Supplemental Financial Data
Revenue Analysis
(in thousands)
Unaudited
Supplemental Revenue Data
| Q1 2006 | Q2 2006 | Q3 2006 | Q4 2006 | YTD 2006 | Q1 2007 | Q2 2007 | YTD 2007 | |||||||||||||||||
Storage Systems Revenue | $ | 1,222,624 | $ | 1,147,892 | $ | 1,295,524 | $ | 1,458,740 | $ | 5,124,780 | $ | 1,302,741 | $ | 1,347,357 | $ | 2,650,098 | ||||||||
Storage Software License Revenue | 446,720 | 493,002 | 524,679 | 550,856 | 2,015,257 | 486,558 | 512,521 | 999,079 | ||||||||||||||||
Storage Maintenance and Services Revenue | 583,010 | 610,015 | 619,496 | 656,020 | 2,468,541 | 637,629 | 668,140 | 1,305,769 | ||||||||||||||||
Total Storage Revenue | $ | 2,252,354 | $ | 2,250,909 | $ | 2,439,699 | $ | 2,665,616 | $ | 9,608,578 | $ | 2,426,928 | $ | 2,528,018 | $ | 4,954,946 | ||||||||
Content Management and Archiving Systems Revenue | $ | 4,304 | $ | 3,708 | $ | 87 | $ | 522 | $ | 8,621 | $ | 68 | $ | 1,708 | $ | 1,776 | ||||||||
Content Management and Archiving Software License Revenue | 83,038 | 75,161 | 59,092 | 106,302 | 323,593 | 68,472 | 69,046 | 137,518 | ||||||||||||||||
Content Management and Archiving Maintenance and Services Revenue | 79,978 | 87,253 | 90,173 | 96,172 | 353,576 | 103,658 | 102,848 | 206,506 | ||||||||||||||||
Total Content Management and Archiving Revenue | $ | 167,320 | $ | 166,122 | $ | 149,352 | $ | 202,996 | $ | 685,790 | $ | 172,198 | $ | 173,602 | $ | 345,800 | ||||||||
VMware Software License Revenue | $ | 91,844 | $ | 113,835 | $ | 125,476 | $ | 163,492 | $ | 494,647 | $ | 169,696 | $ | 205,050 | $ | 374,746 | ||||||||
VMware Maintenance and Services Revenue | 39,169 | 43,657 | 63,024 | 68,539 | 214,389 | 86,322 | 93,047 | 179,369 | ||||||||||||||||
Total VMware Revenue | $ | 131,013 | $ | 157,492 | $ | 188,500 | $ | 232,031 | $ | 709,036 | $ | 256,018 | $ | 298,097 | $ | 554,115 | ||||||||
Security Systems Revenue | $ | — | $ | — | $ | 3,710 | $ | 3,515 | $ | 7,225 | $ | 2,958 | $ | 5,373 | $ | 8,331 | ||||||||
Security Software License Revenue | — | — | 27,084 | 76,835 | 103,919 | 81,934 | 81,300 | 163,234 | ||||||||||||||||
Security Maintenance and Services Revenue | — | — | 6,961 | 33,581 | 40,542 | 34,969 | 38,282 | 73,251 | ||||||||||||||||
Total Security Revenue | $ | — | $ | — | $ | 37,755 | $ | 113,931 | $ | 151,686 | $ | 119,861 | $ | 124,955 | $ | 244,816 | ||||||||
