Exhibit 99.1
| | | | |
| | Contact: | | Michael Gallant |
| | | | 508-293-6357 |
| FOR IMMEDIATE RELEASE | | | | gallant_michael@emc.com |
EMC REPORTS RECORD THIRD-QUARTER FINANCIAL RESULTS
HOPKINTON, Mass. – Oct. 25, 2007 – EMC Corporation (NYSE:EMC), the world leader in information infrastructure solutions, today announced record third-quarter revenue and net income. EMC has now delivered seventeen consecutive quarters of double-digit revenue growth marked by strong, balanced execution across all its business lines and major geographies.
Total consolidated revenue for the third quarter of 2007 was $3.3 billion, an increase of 17% over the $2.8 billion reported for the third quarter of 2006. GAAP net income for the third quarter of 2007 was $492.9 million or $0.23 per diluted share, 77% higher than the GAAP earnings per diluted share of $0.13 reported for the year-ago period. GAAP net income for the third quarter of 2007 includes net gains of $115.2 million, primarily from the sale of six million shares of EMC’s interest in VMware to Cisco Systems. Excluding this item, net income was $377.8 million or $0.17 per diluted share, an increase of 31% year-over-year. During the quarter, EMC generated operating cash flow of $718 million, an increase of 57% compared with the same period a year ago and free cash flow of $475 million, an increase of 124% year-over-year.
“Solid global execution of our strategy resulted in record third-quarter financial results,” said Joe Tucci, EMC Chairman, President and Chief Executive Officer. “Customers around the world are benefiting from the breadth and quality of our information infrastructure product and services portfolio, which provides them with the most cost-effective way to store, protect, optimize, and leverage their vast and growing quantities of strategic information. We see broad opportunities in the global marketplace, and we will continue to drive profitable growth by furthering technology integration across our portfolio, investing in research and development, and expanding into the fastest-growing global markets.”
Tucci continued, “Among the many standouts during the quarter was VMware’s quarterly performance and the completion of the initial public offering of approximately 10% of VMware. VMware is not only one of the fastest-growing businesses in the history of the software industry, but it has also created an entire IT category based on one of the very few game-changing technologies out there today. The IPO has enabled EMC to expose and unlock more of VMware’s value for shareholders.”
EMC systems revenue increased 9% year-over-year and represented 43% of total third-quarter revenue. Software license and maintenance revenue increased 25% year-over-year and accounted for 41% of total third-quarter revenue. Professional services, systems maintenance and other services revenue grew by 25% year-over-year and represented 16% of total third-quarter revenue.
Revenue from North America increased 15% compared with the same period a year ago and represented 59% of total third-quarter revenue. Revenue from operations outside of North America grew 21% year-over-year, highlighted by double-digit year-over-year revenue growth in EMC’s Europe, Middle East and Africa (EMEA) and Asia-Pacific and Japan (APJ) regions.
“We demonstrated crisp business and financial execution around the world with operating income growing faster than revenue and free cash flow more than doubling compared to the same period a year ago,” said David Goulden, EMC Executive Vice President and Chief Financial Officer. “We remain focused on driving operating leverage across the business. To continue to return value back to shareholders, we are also increasing our previously announced stock buyback commitment from $1 billion to $2 billion. Based on our results year-to-date and our expectations for a solid fourth quarter, we are now very clearly on track to exceed the annual financial targets we set in January.”
Third-Quarter Highlights
EMC’s Information Storage business, which includes revenue from storage systems, storage software and related customer and professional services, reached $2.6 billion, an increase of 8% compared with the year-ago period. Third-quarter growth in this business was largely driven by strong customer demand for EMC’s industry-leading CLARiiON and Celerra networked storage systems and from EMC’s expansive information protection portfolio, including the EMC Disk Library for back-up to disk, EMC Avamar for data de-duplication and EMC Recoverpoint for CDP. EMC Smarts resource management and EMC Rainfinity global file virtualization software experienced double-digit, year-over-year revenue growth. In the third quarter, EMC also announced its expansion of the industry’s broadest set of storage technologies – spanning from entry-level to the high-end, helping customers of all sizes store information more cost-effectively, securely and intelligently.
EMC’s Content Management and Archiving business posted double-digit revenue growth, increasing third-quarter revenue 27% year-over-year to $189 million. New license revenue increased 34% on a year-over-year basis. During the quarter, EMC announced the Documentum 6 platform, a key component of EMC’s suite of enterprise content management products. With the release of Documentum 6, EMC continues to lead the industry into the next generation of enterprise content management, as it moves from a separate application platform to an integral part of an organization’s information infrastructure.
RSA information security revenues for the third quarter of 2007 grew 22% when compared with the results of the division’s constituent companies in the year-ago period, reaching $133 million in revenue. This growth was primarily driven by RSA’s core authentication business, as well as its consumer-facing applications and information and event management offerings. The division also continued to see success in its comprehensive security solutions for businesses seeking to comply with regulatory mandates and managing information risk holistically across the enterprise.
VMware Inc. (NYSE: VMW), which is the global leader in virtual infrastructure software for industry-standard systems and is majority-owned by EMC, had third-quarter revenues of $354 million, an increase of approximately 90% compared to the year-ago quarter. Visit http://ir.vmware.com for more information about the virtualization software leader’s third-quarter financial results.
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, Celerra, Avamar, Smarts and Rainfinity 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) our ability to protect our proprietary technology; (iv) 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; (v) fluctuations in VMware, Inc.’s operating results and risks associated with trading of VMware stock; (vi) competitive factors, including but not limited to pricing pressures and new product introductions; (vii) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (viii) component and product quality and availability; (ix) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (x) insufficient, excess or obsolete inventory; (xi) war or acts of terrorism; (xii) the ability to attract and retain highly qualified employees; (xiii) fluctuating currency exchange rates; and (xiv) 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 schedules for various periods entitled “Reconciliation of GAAP to Non-GAAP,” certain items noted on each such specific schedule (including, for certain time periods where noted, amounts relating to tax benefits, net gains on investments, including gain on sale of VMware stock, restructuring and IPR&D charges relating to EMC on a consolidated basis, and stock-based compensation expense and intangible amortization relating to only EMC Information Infrastructure) 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 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, 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 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 thousands, except per share amounts)
Unaudited
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | | | September 30, | | | September 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Revenues: | | | | | | | | | | | | | | | | |
Product sales | | $ | 2,332,884 | | | $ | 2,035,652 | | | $ | 6,667,665 | | | $ | 5,717,780 | |
Services | | | 966,870 | | | | 779,654 | | | | 2,731,766 | | | | 2,222,736 | |
| | | | | | | | | | | | | | | | |
| | | 3,299,754 | | | | 2,815,306 | | | | 9,399,431 | | | | 7,940,516 | |
| | | | |
Cost and expenses: | | | | | | | | | | | | | | | | |
Cost of product sales | | | 1,056,714 | | | | 992,272 | | | | 3,131,434 | | | | 2,794,910 | |
Cost of services | | | 421,396 | | | | 339,295 | | | | 1,175,600 | | | | 970,532 | |
Research and development | | | 383,600 | | | | 312,302 | | | | 1,123,958 | | | | 895,220 | |
Selling, general and administrative | | | 983,774 | | | | 809,086 | | | | 2,783,813 | | | | 2,339,326 | |
In-process research and development | | | 800 | | | | 23,000 | | | | 800 | | | | 35,410 | |
Restructuring credits | | | (571 | ) | | | (2,779 | ) | | | (3,241 | ) | | | (4,359 | ) |
| | | | | | | | | | | | | | | | |
Operating income | | | 454,041 | | | | 342,130 | | | | 1,187,067 | | | | 909,477 | |
| | | | |
Net gain on investments, including gain on sale of VMware stock | | | 137,330 | | | | — | | | | 137,330 | | | | — | |
Investment income | | | 67,192 | | | | 51,160 | | | | 170,181 | | | | 174,676 | |
Interest expense | | | (17,937 | ) | | | (5,807 | ) | | | (54,366 | ) | | | (8,438 | ) |
Other income (expense), net | | | (6,857 | ) | | | (947 | ) | | | 951 | | | | 2,248 | |
| | | | | | | | | | | | | | | | |
Income before taxes, minority interest and cumulative effect of a change in accounting principle | | | 633,769 | | | | 386,536 | | | | 1,441,163 | | | | 1,077,963 | |
Income tax provision | | | 136,390 | | | | 102,872 | | | | 296,770 | | | | 239,378 | |
| | | | | | | | | | | | | | | | |
Income before minority interest and cumulative effect of a change in accounting principle | | | 497,379 | | | | 283,664 | | | | 1,144,393 | | | | 838,585 | |
Minority interest, net of taxes(1) | | | (4,459 | ) | | | — | | | | (4,459 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Income before cumulative effect of a change in accounting principle | | | 492,920 | | | | 283,664 | | | | 1,139,934 | | | | 838,585 | |
Cumulative effect of a change in accounting principle, net of taxes of $107 | | | — | | | | — | | | | — | | | | 247 | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 492,920 | | | $ | 283,664 | | | $ | 1,139,934 | | | $ | 838,832 | |
| | | | | | | | | | | | | | | | |
Net income per weighted average share, basic: | | | | | | | | | | | | | | | | |
| | | | |
Income before cumulative effect of a change in accounting principle | | $ | 0.24 | | | $ | 0.13 | | | $ | 0.55 | | | $ | 0.37 | |
Cumulative effect of a change in accounting principle | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 0.24 | | | $ | 0.13 | | | $ | 0.55 | | | $ | 0.37 | |
| | | | | | | | | | | | | | | | |
Net income per weighted average share, diluted: | | | | | | | | | | | | | | | | |
| | | | |
Income before cumulative effect of a change in accounting principle | | $ | 0.23 | | | $ | 0.13 | | | $ | 0.53 | | | $ | 0.36 | |
Cumulative effect of a change in accounting principle | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 0.23 | | | $ | 0.13 | | | $ | 0.53 | | | $ | 0.36 | |
| | | | | | | | | | | | | | | | |
Weighted average shares, basic | | | 2,080,507 | | | | 2,215,039 | | | | 2,077,289 | | | | 2,290,157 | |
Weighted average shares, diluted | | | 2,177,259 | | | | 2,240,291 | | | | 2,140,555 | | | | 2,327,365 | |
| | | | |
As a % of total revenue: | | | | | | | | | | | | | | | | |
Gross margin | | | 55.2 | % | | | 52.7 | % | | | 54.2 | % | | | 52.6 | % |
Selling, general and administrative | | | 29.8 | % | | | 28.7 | % | | | 29.6 | % | | | 29.5 | % |
Research and development | | | 11.6 | % | | | 11.1 | % | | | 12.0 | % | | | 11.3 | % |
Operating income | | | 13.8 | % | | | 12.2 | % | | | 12.6 | % | | | 11.5 | % |
Net income | | | 14.9 | % | | | 10.1 | % | | | 12.1 | % | | | 10.6 | % |
Note: Prior periods have been adjusted to reclassify a portion of the cumulative effect of adoption of FAS123R in Q1'06 from the income statement to stockholders' equity. This reclassification results in an increase to net income in Q1'06 and YTD 2006 of $3,619 and a corresponding decrease in additional paid-in capital.
| (1) | Represents minority interest in the net income of VMware which equaled approximately 7% of VMware’s net income for the three months ended September 30, 2007. |
Reconciliation of GAAP to Non-GAAP
For the Nine Months Ended September 30, 2007
(in thousands, except per share amounts)
Unaudited
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Revenue | | | Cost of
Revenue | | | Research
and
Development | | | Selling,
General and
Administrative | | | Restructuring
and IPR&D | | | Operating
Income | | | Other
Income,
net | | | Income
Before
Taxes and
Minority
Interest | | | Income
Tax
Provision | | | Income
Before
Minority
Interest | | | Minority
Interest | | | Net
Income | | | Net
Income
per
Weighted
Average
Share,
Basic | | | Net
Income
per
Weighted
Average
Share,
Diluted | |
EMC Consolidated GAAP | | $ | 9,399,431 | | | $ | 4,307,034 | | | $ | 1,123,958 | | | $ | 2,783,813 | | | $ | (2,441 | ) | | $ | 1,187,067 | | | $ | 254,096 | | | $ | 1,441,163 | | | $ | 296,770 | | | $ | 1,144,393 | | | $ | (4,459 | ) | | $ | 1,139,934 | | | $ | 0.549 | | | $ | 0.533 | |
Tax benefits | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | | | | | 19,912 | | | | (19,912 | ) | | | — | | | | (19,912 | ) | | $ | (0.010 | ) | | $ | (0.009 | ) |
Net gains on investments, including gain on sale of VMware stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (137,330 | ) | | | (137,330 | ) | | | (22,180 | ) | | | (115,150 | ) | | | — | | | | (115,150 | ) | | $ | (0.055 | ) | | $ | (0.054 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Consolidated Non-GAAP | | | 9,399,431 | | | | 4,307,034 | | | | 1,123,958 | | | | 2,783,813 | | | | (2,441 | ) | | | 1,187,067 | | | | 116,766 | | | | 1,303,833 | | | | 294,502 | | | | 1,009,331 | | | | (4,459 | ) | | | 1,004,872 | | | $ | 0.484 | | | $ | 0.469 | |
VMware standalone GAAP | | | 913,336 | | | | 151,492 | | | | 194,379 | | | | 408,598 | | | | — | | | | 158,867 | | | | (1,649 | ) | | | 157,218 | | | | 17,236 | | | | 139,982 | | | | — | | | | 139,982 | | | $ | 0.067 | | | $ | 0.065 | |
Adjustments and minority interest elimination | | | (4,930 | ) | | | (832 | ) | | | 10,310 | | | | 3,598 | | | | — | | | | (18,006 | ) | | | — | | | | (18,006 | ) | | | (4,137 | ) | | | (13,869 | ) | | | (4,459 | ) | | | (18,328 | ) | | $ | (0.009 | ) | | $ | (0.009 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC | | | 908,406 | | | | 150,660 | | | | 204,689 | | | | 412,196 | | | | — | | | | 140,861 | | | | (1,649 | ) | | | 139,212 | | | | 13,099 | | | | 126,113 | | | | (4,459 | ) | | | 121,654 | | | $ | 0.059 | | | $ | 0.057 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure (1) | | | 8,491,025 | | | | 4,156,374 | | | | 919,269 | | | | 2,371,617 | | | | (2,441 | ) | | | 1,046,206 | | | | 118,415 | | | | 1,164,621 | | | | 281,403 | | | | 883,218 | | | | — | | | | 883,218 | | | $ | 0.425 | | | $ | 0.413 | |
Stock based compensation expense | | | — | | | | (38,136 | ) | | | (49,527 | ) | | | (124,169 | ) | | | — | | | | 211,832 | | | | — | | | | 211,832 | | | | 54,592 | | | | 157,240 | | | | — | | | | 157,240 | | | $ | 0.076 | | | $ | 0.073 | |
Intangible amortization | | | — | | | | (72,765 | ) | | | (6,486 | ) | | | (49,295 | ) | | | — | | | | 128,546 | | | | — | | | | 128,546 | | | | 44,966 | | | | 83,580 | | | | — | | | | 83,580 | | | $ | 0.040 | | | $ | 0.039 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure Non-GAAP (2) | | $ | 8,491,025 | | | $ | 4,045,473 | | | $ | 863,256 | | | $ | 2,198,153 | | | $ | (2,441 | ) | | $ | 1,386,584 | | | $ | 118,415 | | | $ | 1,504,999 | | | $ | 380,962 | | | $ | 1,124,037 | | | $ | — | | | $ | 1,124,037 | | | $ | 0.541 | | | $ | 0.525 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Represents EMC Consolidated Non-GAAP less VMware within EMC. |
| (2) | Represents EMC Information Infrastructure less stock based compensation expense and intangible amortization. |
May not foot due to rounding.
Reconciliation of GAAP to Non-GAAP
For the Nine Months Ended September 30, 2006
(in thousands, except per share amounts)
Unaudited
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Revenue | | Cost of
Revenue | | | Research
and
Development | | | Selling,
General and
Administrative | | | Restructuring
and IPR&D | | | Operating
Income | | Other
Income,
net | | | Income
Before
Taxes and
Cumulative
Effect of a
Change in
Accounting
Principle | | Income
Tax
Provision | | Income
Before
Cumulative
Effect of a
Change in
Accounting
Principle | | | Cumulative
Effect of a
Change in
Accounting
Principle | | | Net
Income | | | Net
Income
per
Weighted
Average
Share,
Basic | | | Net
Income
per
Weighted
Average
Share,
Diluted | |
EMC Consolidated GAAP | | $ | 7,940,516 | | $ | 3,765,442 | | | $ | 895,220 | | | $ | 2,339,326 | | | $ | 31,051 | | | $ | 909,477 | | $ | 168,486 | | | $ | 1,077,963 | | $ | 239,378 | | $ | 838,585 | | | $ | 247 | | | $ | 838,832 | | | $ | 0.366 | | | $ | 0.360 | |
Restructuring and IPR&D | | | — | | | — | | | | — | | | | — | | | | (35,024 | ) | | | 35,024 | | | — | | | | 35,024 | | | — | | | 35,024 | | | | — | | | | 35,024 | | | $ | 0.015 | | | $ | 0.015 | |
Tax benefits | | | — | | | — | | | | — | | | | — | | | | — | | | | — | | | — | | | | — | | | 33,266 | | | (33,266 | ) | | | — | | | | (33,266 | ) | | $ | (0.015 | ) | | $ | (0.014 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Consolidated Non-GAAP | | | 7,940,516 | | | 3,765,442 | | | | 895,220 | | | | 2,339,326 | | | | (3,973 | ) | | | 944,501 | | | 168,486 | | | | 1,112,987 | | | 272,644 | | | 840,343 | | | | 247 | | | | 840,590 | | | $ | 0.367 | | | $ | 0.361 | |
VMware standalone GAAP (1) | | | 474,323 | | | 86,132 | | | | 98,123 | | | | 202,238 | | | | — | | | | 87,830 | | | 674 | | | | 88,504 | | | 30,068 | | | 58,436 | | | | 175 | | | | 58,611 | | | $ | 0.026 | | | $ | 0.025 | |
Adjustments | | | 2,682 | | | 1,926 | | | | (1,924 | ) | | | (4,231 | ) | | | — | | | | 6,911 | | | (13 | ) | | | 6,898 | | | 1,580 | | | 5,318 | | | | — | | | | 5,318 | | | $ | 0.002 | | | $ | 0.002 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC | | | 477,005 | | | 88,058 | | | | 96,199 | | | | 198,007 | | | | — | | | | 94,741 | | | 661 | | | | 95,402 | | | 31,648 | | | 63,754 | | | | 175 | | | | 63,929 | | | $ | 0.028 | | | $ | 0.027 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure (2) | | | 7,463,511 | | | 3,677,384 | | | | 799,021 | | | | 2,141,319 | | | | (3,973 | ) | | | 849,760 | | | 167,825 | | | | 1,017,585 | | | 240,996 | | | 776,589 | | | | 72 | | | | 776,661 | | | $ | 0.339 | | | $ | 0.334 | |
Stock based compensation expense | | | — | | | (47,646 | ) | | | (62,224 | ) | | | (154,622 | ) | | | — | | | | 264,492 | | | — | | | | 264,492 | | | 55,247 | | | 209,245 | | | | (72 | ) | | | 209,173 | | | $ | 0.091 | | | $ | 0.090 | |
Intangible amortization | | | — | | | (50,268 | ) | | | (10,623 | ) | | | (29,398 | ) | | | — | | | | 90,289 | | | — | | | | 90,289 | | | 31,066 | | | 59,223 | | | | — | | | | 59,223 | | | $ | 0.026 | | | $ | 0.025 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure Non-GAAP (3) | | $ | 7,463,511 | | $ | 3,579,470 | | | $ | 726,174 | | | $ | 1,957,299 | | | $ | (3,973 | ) | | $ | 1,204,541 | | $ | 167,825 | | | $ | 1,372,366 | | $ | 327,310 | | $ | 1,045,056 | | | $ | — | | | $ | 1,045,057 | | | $ | 0.456 | | | $ | 0.449 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Represents EMC Information Infrastructure less stock based compensation expense and intangible amortization. |
| (2) | Represents EMC Consolidated Non-GAAP less VMware within EMC. |
| (3) | Represents EMC Information Infrastructure less stock based compensation expense and intangible amortization. |
May not foot due to rounding.
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended September 30, 2007
(in thousands, except per share amounts)
Unaudited
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Revenue | | | Cost of
Revenue | | | Research
and
Development | | | Selling,
General and
Administrative | | | Restructuring
and IPR&D | | Operating
Income | | | Other
Income,
net | | | Income
Before
Taxes
and
Minority
Interest | | | Income
Tax
Provision | | | Income
Before
Minority
Interest | | | Minority
Interest | | | Net
Income | | | Net
Income
per
Weighted
Average
Share,
Basic | | | Net
Income
per
Weighted
Average
Share,
Diluted | |
EMC Consolidated GAAP | | $ | 3,299,754 | | | $ | 1,478,110 | | | $ | 383,600 | | | $ | 983,774 | | | $ | 229 | | $ | 454,041 | | | $ | 179,728 | | | $ | 633,769 | | | $ | 136,390 | | | $ | 497,379 | | | $ | (4,459 | ) | | $ | 492,920 | | | $ | 0.237 | | | $ | 0.226 | |
Net gains on investments, including gain on sale of VMware stock | | | — | | | | — | | | | — | | | | — | | | | — | | | — | | | | (137,330 | ) | | | (137,330 | ) | | | (22,180 | ) | | | (115,150 | ) | | | — | | | | (115,150 | ) | | $ | (0.055 | ) | | $ | (0.053 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Consolidated Non-GAAP | | | 3,299,754 | | | | 1,478,110 | | | | 383,600 | | | | 983,774 | | | | 229 | | | 454,041 | | | | 42,398 | | | | 496,439 | | | | 114,210 | | | | 382,229 | | | | (4,459 | ) | | | 377,770 | | | $ | 0.182 | | | $ | 0.174 | |
VMware standalone GAAP | | | 357,816 | | | | 58,651 | | | | 67,840 | | | | 165,575 | | | | — | | | 65,750 | | | | 538 | | | | 66,288 | | | | 1,610 | | | | 64,678 | | | | — | | | | 64,678 | | | $ | 0.031 | | | $ | 0.030 | |
Adjustments and minority interest elimination | | | (3,525 | ) | | | — | | | | — | | | | — | | | | — | | | (3,525 | ) | | | — | | | | (3,525 | ) | | | (806 | ) | | | (2,719 | ) | | | (4,459 | ) | | | (7,178 | ) | | $ | (0.003 | ) | | $ | (0.003 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC | | | 354,291 | | | | 58,651 | | | | 67,840 | | | | 165,575 | | | | — | | | 62,225 | | | | 538 | | | | 62,763 | | | | 804 | | | | 61,959 | | | | (4,459 | ) | | | 57,500 | | | $ | 0.028 | | | $ | 0.026 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure (1) | | | 2,945,463 | | | | 1,419,459 | | | | 315,760 | | | | 818,199 | | | | 229 | | | 391,816 | | | | 41,860 | | | | 433,676 | | | | 113,406 | | | | 320,270 | | | | — | | | | 320,270 | | | $ | 0.154 | | | $ | 0.147 | |
Stock based compensation expense | | | — | | | | (12,652 | ) | | | (15,996 | ) | | | (40,248 | ) | | | — | | | 68,896 | | | | — | | | | 68,896 | | | | 17,738 | | | | 51,158 | | | | — | | | | 51,158 | | | $ | 0.025 | | | $ | 0.023 | |
Intangible amortization | | | — | | | | (25,003 | ) | | | (2,206 | ) | | | (17,071 | ) | | | — | | | 44,280 | | | | — | | | | 44,280 | | | | 15,470 | | | | 28,810 | | | | — | | | | 28,810 | | | $ | 0.014 | | | $ | 0.013 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure Non-GAAP (2) | | $ | 2,945,463 | | | $ | 1,381,804 | | | $ | 297,558 | | | $ | 760,880 | | | $ | 229 | | $ | 504,992 | | | $ | 41,860 | | | $ | 546,852 | | | $ | 146,614 | | | $ | 400,238 | | | $ | — | | | $ | 400,238 | | | $ | 0.192 | | | $ | 0.184 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Represents EMC Consolidated Non-GAAP less VMware within EMC. |
| (2) | Represents EMC Information Infrastructure less stock based compensation expense and intangible amortization. |
May not foot due to rounding.
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended June 30, 2007
(in thousands, except per share amounts)
Unaudited
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Revenue | | Cost of
Revenue | | | Research
and
Development | | | Selling,
General and
Administrative | | | Operating
Income | | | Other
Income,
net | | | Income
Before
Taxes | | | Income
Tax
Provision | | | Net
Income | | | Net
Income
per
Weighted
Average
Share,
Basic | | | Net
Income
per
Weighted
Average
Share,
Diluted | |
EMC Consolidated GAAP | | $ | 3,124,672 | | $ | 1,423,859 | | | $ | 384,966 | | | $ | 924,349 | | | $ | 391,498 | | | $ | 35,682 | | | $ | 427,180 | | | $ | 92,773 | | | $ | 334,407 | | | $ | 0.161 | | | $ | 0.158 | |
VMware standalone GAAP | | | 296,825 | | | 48,817 | | | | 71,581 | | | | 129,692 | | | | 46,735 | | | | (5,223 | ) | | | 41,512 | | | | 7,288 | | | | 34,224 | | | $ | 0.017 | | | $ | 0.016 | |
Adjustments | | | 1,272 | | | 665 | | | | (634 | ) | | | 2,496 | | | | (1,255 | ) | | | (290 | ) | | | (1,545 | ) | | | (360 | ) | | | (1,185 | ) | | $ | (0.001 | ) | | $ | (0.001 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC | | | 298,097 | | | 49,482 | | | | 70,947 | | | | 132,188 | | | | 45,480 | | | | (5,513 | ) | | | 39,967 | | | | 6,928 | | | | 33,039 | | | $ | 0.016 | | | $ | 0.016 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure (1) | | | 2,826,575 | | | 1,374,377 | | | | 314,019 | | | | 792,161 | | | | 346,018 | | | | 41,195 | | | | 387,213 | | | | 85,845 | | | | 301,368 | | | $ | 0.146 | | | $ | 0.142 | |
Stock based compensation expense | | | — | | | (12,456 | ) | | | (16,481 | ) | | | (42,296 | ) | | | 71,233 | | | | — | | | | 71,233 | | | | 17,054 | | | | 54,179 | | | $ | 0.026 | | | $ | 0.026 | |
Intangible amortization | | | — | | | (23,970 | ) | | | (2,167 | ) | | | (16,171 | ) | | | 42,308 | | | | — | | | | 42,308 | | | | 14,781 | | | | 27,527 | | | $ | 0.013 | | | $ | 0.013 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure Non-GAAP (2) | | $ | 2,826,575 | | $ | 1,337,951 | | | $ | 295,371 | | | $ | 733,694 | | | $ | 459,559 | | | $ | 41,195 | | | $ | 500,754 | | | $ | 117,680 | | | $ | 383,074 | | | $ | 0.185 | | | $ | 0.181 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Represents EMC Consolidated GAAP less VMware within EMC. |
| (2) | Represents EMC Information Infrastructure less stock based compensation expense and intangible amortization. |
May not foot due to rounding.
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended March 31, 2007
(in thousands, except per share amounts)
Unaudited
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Revenue | | | Cost of
Revenue | | | Research
and
Development | | | Selling,
General and
Administrative | | | Restructuring
and IPR&D | | | Operating
Income | | | Other
Income,
net | | Income
Before
Taxes | | | Income
Tax
Provision | | | Net
Income | | | Net
Income
per
Weighted
Average
Share,
Basic | | | Net
Income
per
Weighted
Average
Share,
Diluted | |
EMC Consolidated GAAP | | $ | 2,975,005 | | | $ | 1,405,065 | | | $ | 355,392 | | | $ | 875,690 | | | $ | (2,670 | ) | | $ | 341,528 | | | $ | 38,686 | | $ | 380,214 | | | $ | 67,607 | | | $ | 312,607 | | | $ | 0.150 | | | $ | 0.147 | |
Tax benefits | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | — | | | | 19,912 | | | | (19,912 | ) | | $ | (0.010 | ) | | $ | (0.009 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Consolidated Non-GAAP | | | 2,975,005 | | | | 1,405,065 | | | | 355,392 | | | | 875,690 | | | | (2,670 | ) | | | 341,528 | | | | 38,686 | | | 380,214 | | | | 87,519 | | | | 292,695 | | | $ | 0.141 | | | $ | 0.138 | |
VMware standalone GAAP | | | 258,695 | | | | 44,024 | | | | 54,958 | | | | 113,331 | | | | — | | | | 46,382 | | | | 3,036 | | | 49,418 | | | | 8,338 | | | | 41,080 | | | $ | 0.020 | | | $ | 0.019 | |
Adjustments | | | (2,677 | ) | | | (1,497 | ) | | | 10,944 | | | | 1,102 | | | | — | | | | (13,226 | ) | | | 290 | | | (12,936 | ) | | | (2,971 | ) | | | (9,965 | ) | | $ | (0.005 | ) | | $ | (0.005 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC | | | 256,018 | | | | 42,527 | | | | 65,902 | | | | 114,433 | | | | — | | | | 33,156 | | | | 3,326 | | | 36,482 | | | | 5,367 | | | | 31,115 | | | $ | 0.015 | | | $ | 0.015 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure (1) | | | 2,718,987 | | | | 1,362,538 | | | | 289,490 | | | | 761,257 | | | | (2,670 | ) | | | 308,372 | | | | 35,360 | | | 343,732 | | | | 82,152 | | | | 261,580 | | | $ | 0.126 | | | $ | 0.123 | |
Stock based compensation expense | | | — | | | | (13,028 | ) | | | (17,050 | ) | | | (41,625 | ) | | | — | | | | 71,703 | | | | — | | | 71,703 | | | | 19,801 | | | | 51,902 | | | $ | 0.025 | | | $ | 0.024 | |
Intangible amortization | | | — | | | | (23,792 | ) | | | (2,113 | ) | | | (16,053 | ) | | | — | | | | 41,958 | | | | — | | | 41,958 | | | | 14,715 | | | | 27,243 | | | $ | 0.013 | | | $ | 0.013 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure Non-GAAP (2) | | $ | 2,718,987 | | | $ | 1,325,718 | | | $ | 270,327 | | | $ | 703,579 | | | $ | (2,670 | ) | | $ | 422,033 | | | $ | 35,360 | | $ | 457,393 | | | $ | 116,667 | | | $ | 340,726 | | | $ | 0.164 | | | $ | 0.161 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Represents EMC Consolidated Non-GAAP less VMware within EMC. |
| (2) | Represents EMC Information Infrastructure less stock based compensation expense and intangible amortization. |
May not foot due to rounding.
Reconciliation of GAAP to Non-GAAP
For the Year Ended December 31, 2006
(in thousands, except per share amounts)
Unaudited
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Revenue | | Cost of
Revenue | | | Research
and
Development | | | Selling,
General and
Administrative | | | Restructuring
and IPR&D | | | Operating
Income | | Other
Income,
net | | Income
Before
Taxes and
Cumulative
Effect of a
Change in
Accounting
Principle | | Income
Tax
Provision | | Income
Before
Cumulative
Effect of a
Change in
Accounting
Principle | | | Cumulative
Effect of a
Change in
Accounting
Principle | | | Net
Income | | | Net
Income
per
Weighted
Average
Share,
Basic | | | Net
Income
per
Weighted
Average
Share,
Diluted | |
EMC Consolidated GAAP | | $ | 11,155,090 | | $ | 5,241,891 | | | $ | 1,254,193 | | | $ | 3,253,274 | | | $ | 197,974 | | | $ | 1,207,758 | | $ | 182,260 | | $ | 1,390,018 | | $ | 162,664 | | $ | 1,227,354 | | | $ | 247 | | | $ | 1,227,601 | | | $ | 0.546 | | | $ | 0.537 | |
Restructuring and IPR&D | | | — | | | — | | | | — | | | | — | | | | (201,947 | ) | | | 201,947 | | | — | | | 201,947 | | | 37,833 | | | 164,114 | | | | — | | | | 164,114 | | | $ | 0.072 | | | $ | 0.072 | |
Tax benefits | | | — | | | — | | | | — | | | | — | | | | — | | | | — | | | — | | | — | | | 144,856 | | | (144,856 | ) | | | — | | | | (144,856 | ) | | $ | (0.064 | ) | | $ | (0.063 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Consolidated Non-GAAP | | | 11,155,090 | | | 5,241,891 | | | | 1,254,193 | | | | 3,253,274 | | | | (3,973 | ) | | | 1,409,705 | | | 182,260 | | | 1,591,965 | | | 345,353 | | | 1,246,612 | | | | 247 | | | | 1,246,859 | | | $ | 0.555 | | | $ | 0.545 | |
VMware standalone GAAP | | | 703,904 | | | 123,382 | | | | 148,254 | | | | 307,929 | | | | — | | | | 124,339 | | | 1,908 | | | 126,247 | | | 36,832 | | | 89,415 | | | | 175 | | | | 89,590 | | | $ | 0.040 | | | $ | 0.039 | |
Adjustments | | | 5,132 | | | 4,069 | | | | (4,722 | ) | | | (3,529 | ) | | | — | | | | 9,314 | | | — | | | 9,314 | | | 2,141 | | | 7,173 | | | | — | | | | 7,173 | | | $ | 0.003 | | | $ | 0.003 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC | | | 709,036 | | | 127,451 | | | | 143,532 | | | | 304,400 | | | | — | | | | 133,653 | | | 1,908 | | | 135,561 | | | 38,973 | | | 96,588 | | | | 175 | | | | 96,763 | | | $ | 0.043 | | | $ | 0.042 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure (1) | | | 10,446,054 | | | 5,114,440 | | | | 1,110,661 | | | | 2,948,874 | | | | (3,973 | ) | | | 1,276,052 | | | 180,352 | | | 1,456,404 | | | 306,380 | | | 1,150,024 | | | | 72 | | | | 1,150,096 | | | $ | 0.512 | | | $ | 0.503 | |
Stock based compensation expense | | | — | | | (63,805 | ) | | | (81,139 | ) | | | (202,518 | ) | | | — | | | | 347,462 | | | — | | | 347,462 | | | 77,134 | | | 270,328 | | | | (72 | ) | | | 270,256 | | | $ | 0.120 | | | $ | 0.118 | |
Intangible amortization | | | — | | | (72,491 | ) | | | (12,600 | ) | | | (42,411 | ) | | | — | | | | 127,502 | | | — | | | 127,502 | | | 44,269 | | | 83,233 | | | | — | | | | 83,233 | | | $ | 0.037 | | | $ | 0.036 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure Non-GAAP (2) | | $ | 10,446,054 | | $ | 4,978,144 | | | $ | 1,016,922 | | | $ | 2,703,945 | | | $ | (3,973 | ) | | $ | 1,751,016 | | $ | 180,352 | | $ | 1,931,368 | | $ | 427,783 | | $ | 1,503,585 | | | $ | — | | | $ | 1,503,586 | | | $ | 0.669 | | | $ | 0.658 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Represents EMC Consolidated Non-GAAP less VMware within EMC. |
| (2) | Represents EMC Information Infrastructure less stock based compensation expense and intangible amortization. |
May not foot due to rounding.
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended December 31, 2006
(in thousands, except per share amounts)
Unaudited
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Revenue | | Cost of
Revenue | | | Research
and
Development | | | Selling,
General and
Administrative | | | Restructuring
and IPR&D | | | Operating
Income | | Other
Income,
net | | Income
Before
Taxes | | Income
Tax
Provision | | | Net Income | | | Net
Income
per
Weighted
Average
Share,
Basic | | | Net
Income
per
Weighted
Average
Share,
Diluted | |
EMC Consolidated GAAP | | $ | 3,214,574 | | $ | 1,476,449 | | | $ | 358,973 | | | $ | 913,948 | | | $ | 166,923 | | | $ | 298,281 | | $ | 13,774 | | $ | 312,055 | | $ | (76,714 | ) | | $ | 388,769 | | | $ | 0.183 | | | $ | 0.180 | |
Restructuring charges | | | — | | | — | | | | — | | | | — | | | | (166,923 | ) | | | 166,923 | | | — | | | 166,923 | | | 37,833 | | | | 129,090 | | | $ | 0.061 | | | $ | 0.060 | |
Tax benefits | | | — | | | — | | | | — | | | | — | | | | — | | | | — | | | — | | | — | | | 111,590 | | | | (111,590 | ) | | $ | (0.053 | ) | | $ | (0.052 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Consolidated Non-GAAP | | | 3,214,574 | | | 1,476,449 | | | | 358,973 | | | | 913,948 | | | | — | | | | 465,204 | | | 13,774 | | | 478,978 | | | 72,709 | | | | 406,269 | | | $ | 0.191 | | | $ | 0.188 | |
VMware standalone GAAP | | | 229,581 | | | 37,250 | | | | 50,131 | | | | 105,691 | | | | — | | | | 36,509 | | | 1,234 | | | 37,743 | | | 6,764 | | | | 30,979 | | | $ | 0.015 | | | $ | 0.014 | |
Adjustments | | | 2,450 | | | 2,143 | | | | (2,798 | ) | | | 702 | | | | — | | | | 2,403 | | | 13 | | | 2,416 | | | 561 | | | | 1,855 | | | $ | 0.001 | | | $ | 0.001 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC | | | 232,031 | | | 39,393 | | | | 47,333 | | | | 106,393 | | | | — | | | | 38,912 | | | 1,247 | | | 40,159 | | | 7,325 | | | | 32,834 | | | $ | 0.015 | | | $ | 0.015 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure (1) | | | 2,982,543 | | | 1,437,056 | | | | 311,640 | | | | 807,555 | | | | — | | | | 426,292 | | | 12,527 | | | 438,819 | | | 65,384 | | | | 373,435 | | | $ | 0.176 | | | $ | 0.173 | |
Stock based compensation expense | | | — | | | (16,159 | ) | | | (18,915 | ) | | | (47,896 | ) | | | — | | | | 82,970 | | | — | | | 82,970 | | | 21,887 | | | | 61,083 | | | $ | 0.029 | | | $ | 0.028 | |
Intangible amortization | | | — | | | (22,223 | ) | | | (1,977 | ) | | | (13,013 | ) | | | — | | | | 37,213 | | | — | | | 37,213 | | | 13,202 | | | | 24,011 | | | $ | 0.011 | | | $ | 0.011 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure Non-GAAP (2) | | $ | 2,982,543 | | $ | 1,398,674 | | | $ | 290,748 | | | $ | 746,646 | | | $ | — | | | $ | 546,475 | | $ | 12,527 | | $ | 559,002 | | $ | 100,473 | | | $ | 458,529 | | | $ | 0.216 | | | $ | 0.212 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Represents EMC Consolidated Non-GAAP less VMware within EMC. |
| (2) | Represents EMC Information Infrastructure less stock based compensation expense and intangible amortization. |
May not foot due to rounding.
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended September 30, 2006
(in thousands, except per share amounts)
Unaudited
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Revenue | | | Cost of
Revenue | | | Research
and
Development | | | Selling,
General and
Administrative | | | Restructuring
and IPR&D | | | Operating
Income | | | Other
Income,
net | | | Income
Before
Taxes | | | Income
Tax
Provision | | | Net
Income | | | Net
Income
per
Weighted
Average
Share,
Basic | | | Net
Income
per
Weighted
Average
Share,
Diluted | |
EMC Consolidated GAAP | | $ | 2,815,306 | | | $ | 1,331,567 | | | $ | 312,302 | | | $ | 809,086 | | | $ | 20,221 | | | $ | 342,130 | | | $ | 44,406 | | | $ | 386,536 | | | $ | 102,872 | | | $ | 283,664 | | | $ | 0.128 | | | $ | 0.127 | |
IPR&D | | | — | | | | — | | | | — | | | | — | | | | (23,000 | ) | | | 23,000 | | | | — | | | | 23,000 | | | | — | | | | 23,000 | | | $ | 0.010 | | | $ | 0.010 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Consolidated Non-GAAP | | | 2,815,306 | | | | 1,331,567 | | | | 312,302 | | | | 809,086 | | | | (2,779 | ) | | | 365,130 | | | | 44,406 | | | | 409,536 | | | | 102,872 | | | | 306,664 | | | $ | 0.138 | | | $ | 0.137 | |
VMware standalone GAAP | | | 188,806 | | | | 37,512 | | | | 43,169 | | | | 80,093 | | | | — | | | | 28,032 | | | | 964 | | | | 28,996 | | | | 9,765 | | | | 19,231 | | | $ | 0.009 | | | $ | 0.009 | |
Adjustments | | | (306 | ) | | | 1,311 | | | | 3,711 | | | | (1,980 | ) | | | — | | | | (3,348 | ) | | | (605 | ) | | | (3,953 | ) | | | (1,094 | ) | | | (2,859 | ) | | $ | (0.001 | ) | | $ | (0.001 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC | | | 188,500 | | | | 38,823 | | | | 46,880 | | | | 78,113 | | | | — | | | | 24,684 | | | | 359 | | | | 25,043 | | | | 8,671 | | | | 16,372 | | | $ | 0.007 | | | $ | 0.007 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure (1) | | | 2,626,806 | | | | 1,292,744 | | | | 265,422 | | | | 730,973 | | | | (2,779 | ) | | | 340,446 | | | | 44,047 | | | | 384,493 | | | | 94,201 | | | | 290,292 | | | $ | 0.131 | | | $ | 0.130 | |
Stock based compensation expense | | | — | | | | (12,902 | ) | | | (19,216 | ) | | | (48,861 | ) | | | — | | | | 80,979 | | | | — | | | | 80,979 | | | | 18,017 | | | | 62,962 | | | $ | 0.028 | | | $ | 0.028 | |
Intangible amortization | | | — | | | | (17,590 | ) | | | (3,933 | ) | | | (10,314 | ) | | | — | | | | 31,837 | | | | — | | | | 31,837 | | | | 10,960 | | | | 20,877 | | | $ | 0.009 | | | $ | 0.009 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure Non-GAAP (2) | | $ | 2,626,806 | | | $ | 1,262,252 | | | $ | 242,273 | | | $ | 671,798 | | | $ | (2,779 | ) | | $ | 453,262 | | | $ | 44,047 | | | $ | 497,309 | | | $ | 123,178 | | | $ | 374,131 | | | $ | 0.169 | | | $ | 0.167 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Represents EMC Consolidated Non-GAAP less VMware within EMC. |
| (2) | Represents EMC Information Infrastructure less stock based compensation expense and intangible amortization. |
May not foot due to rounding.
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended June 30, 2006
(in thousands, except per share amounts)
Unaudited
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Revenue | | Cost of
Revenue | | | Research
and
Development | | | Selling,
General and
Administrative | | | Restructuring
and IPR&D | | | Operating
Income | | Other
Income,
net | | | Income
Before
Taxes | | Income
Tax
Provision | | Net
Income | | | Net
Income
per
Weighted
Average
Share,
Basic | | | Net
Income
per
Weighted
Average
Share,
Diluted | |
EMC Consolidated GAAP | | $ | 2,574,523 | | $ | 1,216,531 | | | $ | 299,429 | | | $ | 782,016 | | | $ | 12,024 | | | $ | 264,523 | | $ | 61,571 | | | $ | 326,094 | | $ | 47,001 | | $ | 279,093 | | | $ | 0.121 | | | $ | 0.119 | |
Restructuring and IPR&D | | | — | | | — | | | | — | | | | — | | | | (12,024 | ) | | | 12,024 | | | — | | | | 12,024 | | | — | | | 12,024 | | | $ | 0.005 | | | $ | 0.005 | |
Tax benefits | | | — | | | — | | | | — | | | | — | | | | — | | | | — | | | — | | | | — | | | 33,266 | | | (33,266 | ) | | $ | (0.014 | ) | | $ | (0.014 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Consolidated Non-GAAP | | | 2,574,523 | | | 1,216,531 | | | | 299,429 | | | | 782,016 | | | | — | | | | 276,547 | | | 61,571 | | | | 338,118 | | | 80,267 | | | 257,851 | | | $ | 0.112 | | | $ | 0.110 | |
VMware standalone (1) | | | 156,440 | | | 26,616 | | | | 32,619 | | | | 67,732 | | | | — | | | | 29,473 | | | (282 | ) | | | 29,191 | | | 10,322 | | | 18,869 | | | $ | 0.008 | | | $ | 0.008 | |
Adjustments | | | 1,052 | | | (186 | ) | | | (1,121 | ) | | | 326 | | | | — | | | | 2,033 | | | 498 | | | | 2,531 | | | 577 | | | 1,954 | | | $ | 0.001 | | | $ | 0.001 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC | | | 157,492 | | | 26,430 | | | | 31,498 | | | | 68,058 | | | | — | | | | 31,506 | | | 216 | | | | 31,722 | | | 10,899 | | | 20,823 | | | $ | 0.009 | | | $ | 0.009 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure (2) | | | 2,417,031 | | | 1,190,101 | | | | 267,931 | | | | 713,958 | | | | — | | | | 245,041 | | | 61,355 | | | | 306,396 | | | 69,368 | | | 237,028 | | | $ | 0.103 | | | $ | 0.101 | |
Stock based compensation expense | | | — | | | (15,850 | ) | | | (19,970 | ) | | | (50,545 | ) | | | — | | | | 86,365 | | | — | | | | 86,365 | | | 16,622 | | | 69,743 | | | $ | 0.030 | | | $ | 0.030 | |
Intangible amortization | | | — | | | (16,466 | ) | | | (3,277 | ) | | | (9,672 | ) | | | — | | | | 29,415 | | | — | | | | 29,415 | | | 10,154 | | | 19,261 | | | $ | 0.008 | | | $ | 0.008 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure
Non-GAAP (3) | | $ | 2,417,031 | | $ | 1,157,785 | | | $ | 244,684 | | | $ | 653,741 | | | $ | — | | | $ | 360,821 | | $ | 61,355 | | | $ | 422,176 | | $ | 96,144 | | $ | 326,032 | | | $ | 0.141 | | | $ | 0.139 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Excludes IPR&D charge of $3,700. |
| (2) | Represents EMC Consolidated Non-GAAP less VMware within EMC. |
| (3) | Represents EMC Information Infrastructure less stock based compensation expense and intangible amortization. |
May not foot due to rounding.
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended March 31, 2006
(in thousands, except per share amounts)
Unaudited
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Revenue | | Cost of
Revenue | | | Research
and
Development | | | Selling,
General and
Administrative | | | Restructuring
and IPR&D | | | Operating
Income | | Other
Income,
net | | | Income
Before
Taxes and
Cumulative
Effect of a
Change in
Accounting
Principle | | Income
Tax
Provision | | Income
Before
Cumulative
Effect of a
Change in
Accounting
Principle | | Cumulative
Effect of a
Change in
Accounting
Principle | | | Net
Income | | Net
Income
per
Weighted
Average
Share,
Basic | | Net
Income
per
Weighted
Average
Share,
Diluted |
EMC Consolidated GAAP | | $ | 2,550,687 | | $ | 1,217,344 | | | $ | 283,489 | | | $ | 748,224 | | | $ | (1,194 | ) | | $ | 302,824 | | $ | 62,509 | | | $ | 365,333 | | $ | 89,505 | | $ | 275,828 | | $ | 247 | | | $ | 276,075 | | $ | 0.117 | | $ | 0.115 |
VMware standalone GAAP | | | 129,077 | | | 22,004 | | | | 22,335 | | | | 54,413 | | | | — | | | | 30,325 | | | (8 | ) | | | 30,317 | | | 9,981 | | | 20,336 | | | 175 | | | | 20,511 | | $ | 0.009 | | $ | 0.009 |
Adjustments | | | 1,936 | | | 801 | | | | (4,514 | ) | | | (2,577 | ) | | | — | | | | 8,226 | | | 94 | | | | 8,320 | | | 2,097 | | | 6,223 | | | — | | | | 6,223 | | $ | 0.003 | | $ | 0.003 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC | | | 131,013 | | | 22,805 | | | | 17,821 | | | | 51,836 | | | | — | | | | 38,551 | | | 86 | | | | 38,637 | | | 12,078 | | | 26,559 | | | 175 | | | | 26,734 | | $ | 0.011 | | $ | 0.011 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure (1) | | | 2,419,674 | | | 1,194,539 | | | | 265,668 | | | | 696,388 | | | | (1,194 | ) | | | 264,273 | | | 62,423 | | | | 326,696 | | | 77,427 | | | 249,269 | | | 72 | | | | 249,341 | | $ | 0.106 | | $ | 0.104 |
Stock based compensation expense | | | — | | | (18,894 | ) | | | (23,038 | ) | | | (55,216 | ) | | | — | | | | 97,148 | | | — | | | | 97,148 | | | 20,608 | | | 76,540 | | | (72 | ) | | | 76,468 | | $ | 0.033 | | $ | 0.032 |
Intangible amortization | | | — | | | (16,212 | ) | | | (3,413 | ) | | | (9,412 | ) | | | — | | | | 29,037 | | | — | | | | 29,037 | | | 9,953 | | | 19,084 | | | — | | | | 19,084 | | $ | 0.008 | | $ | 0.008 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure Non-GAAP (2) | | $ | 2,419,674 | | $ | 1,159,433 | | | $ | 239,217 | | | $ | 631,760 | | | $ | (1,194 | ) | | $ | 390,458 | | $ | 62,423 | | | $ | 452,881 | | $ | 107,988 | | $ | 344,893 | | $ | — | | | $ | 344,893 | | $ | 0.147 | | $ | 0.144 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Represents EMC Consolidated GAAP less VMware within EMC. |
| (2) | Represents EMC Information Infrastructure less stock based compensation expense and intangible amortization. |
May not foot due to rounding.
EMC CORPORATION
Consolidated Balance Sheets
(in thousands, except per share amounts)
Unaudited
| | | | | | | | |
| | | September 30,
2007 | | | December 31,
2006 | |
ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 4,546,010 | | | $ | 1,828,106 | |
Short-term investments | | | 1,281,930 | | | | 1,521,925 | |
Accounts and notes receivable, less allowance for doubtful accounts of $30,819 and $39,509 | | | 1,920,172 | | | | 1,692,214 | |
Inventories | | | 886,729 | | | | 834,800 | |
Deferred income taxes | | | 447,224 | | | | 418,146 | |
Other current assets | | | 298,571 | | | | 225,396 | |
| | | | | | | | |
Total current assets | | | 9,380,636 | | | | 6,520,587 | |
Long-term investments | | | 1,699,368 | | | | 2,246,290 | |
Property, plant and equipment, net | | | 2,106,207 | | | | 2,035,559 | |
Deferred income taxes | | | — | | | | 104,446 | |
Intangible assets, net | | | 942,510 | | | | 1,003,549 | |
Other assets, net | | | 684,261 | | | | 638,655 | |
Goodwill, net | | | 6,408,993 | | | | 6,017,161 | |
| | | | | | | | |
Total assets | | $ | 21,221,975 | | | $ | 18,566,247 | |
| | | | | | | | |
| | |
LIABILITIES & STOCKHOLDERS' EQUITY | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 805,592 | | | $ | 680,263 | |
Accrued expenses | | | 1,547,502 | | | | 1,592,022 | |
Income taxes payable | | | 114,154 | | | | 63,806 | |
Deferred revenue | | | 1,618,435 | | | | 1,325,671 | |
| | | | | | | | |
Total current liabilities | | | 4,085,683 | | | | 3,661,762 | |
Income taxes payable | | | 239,675 | | | | 219,342 | |
Deferred revenue | | | 904,513 | | | | 780,124 | |
Deferred income taxes | | | 351,910 | | | | — | |
Long-term convertible debt | | | 3,450,000 | | | | 3,450,000 | |
Other liabilities | | | 128,135 | | | | 129,312 | |
| | |
Minority interest(1) | | | 173,347 | | | | — | |
| | |
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 2,098,225 and 2,122,339 shares | | | 20,982 | | | | 21,223 | |
Additional paid-in capital | | | 2,957,177 | | | | 2,560,935 | |
Retained earnings | | | 8,944,555 | | | | 7,798,112 | |
Accumulated other comprehensive loss | | | (34,002 | ) | | | (54,563 | ) |
| | | | | | | | |
Total stockholders' equity | | | 11,888,712 | | | | 10,325,707 | |
| | | | | | | | |
Total liabilities and stockholders' equity | | $ | 21,221,975 | | | $ | 18,566,247 | |
| | | | | | | | |
(1) | Represents minority interest in the stockholders’ equity of VMware which equaled approximately 14% of VMware’s stockholders’ equity. |
EMC CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
| | | | | | | | |
| | | Nine Months Ended | |
| | | September 30,
2007 | | | September 30,
2006 | |
Cash flows from operating activities: | | | | | | | | |
Cash received from customers | | $ | 9,620,908 | | | $ | 8,074,003 | |
Cash paid to suppliers and employees | | | (7,455,043 | ) | | | (6,311,034 | ) |
Dividends and interest received | | | 182,840 | | | | 198,721 | |
Interest paid | | | (41,706 | ) | | | (3,115 | ) |
Income taxes paid | | | (159,106 | ) | | | (471,078 | ) |
| | | | | | | | |
Net cash provided by operating activities | | | 2,147,893 | | | | 1,487,497 | |
| | | | | | | | |
| | |
Cash flows from investing activities: | | | | | | | | |
Additions to property, plant and equipment | | | (501,462 | ) | | | (506,054 | ) |
Capitalized software development costs | | | (163,350 | ) | | | (152,614 | ) |
Purchases of short and long-term available for sale securities | | | (5,053,999 | ) | | | (5,011,854 | ) |
Sales and maturities of short and long-term available for sale securities | | | 5,871,715 | | | | 6,016,126 | |
Proceeds from the sale of EMC's interest in VMware to Cisco | | | 150,000 | | | | — | |
Business acquisitions, net of cash acquired | | | (508,574 | ) | | | (2,464,187 | ) |
Other | | | (10,860 | ) | | | (20,860 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (216,530 | ) | | | (2,139,443 | ) |
| | | | | | | | |
| | |
Cash flows from financing activities: | | | | | | | | |
Issuance of common stock from the exercise of stock options | | | 553,319 | | | | 144,602 | |
Proceeds from the sale of VMware's common stock | | | 1,253,533 | | | | — | |
Issuance of VMware's common stock from the exercise of stock options | | | 2,760 | | | | — | |
Repurchase of EMC common stock | | | (1,102,602 | ) | | | (2,464,888 | ) |
Excess tax benefits from stock based compensation | | | 55,250 | | | | 12,036 | |
Payment of long-term and short-term obligations | | | (4,369 | ) | | | (127,538 | ) |
Proceeds from long-term and short-term obligations | | | 19,550 | | | | 2,200,085 | |
| | | | | | | | |
Net cash provided by (used in) financing activities | | | 777,441 | | | | (235,703 | ) |
| | | | | | | | |
Effect of exchange rate changes on cash | | | 9,100 | | | | 23,599 | |
| | | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | 2,717,904 | | | | (864,050 | ) |
Cash and cash equivalents at beginning of period | | | 1,828,106 | | | | 2,322,370 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 4,546,010 | | | $ | 1,458,320 | |
| | | | | | | | |
| | |
Reconciliation of net income to net cash provided by operating activities: | | | | | | | | |
Net income | | $ | 1,139,934 | | | $ | 838,832 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Cumulative effect of a change in accounting principle | | | — | | | | (247 | ) |
Minority interest in VMware | | | 4,459 | | | | — | |
Net gain on investments, including gain on sale of VMware stock | | | (137,330 | ) | | | — | |
Depreciation and amortization | | | 669,168 | | | | 555,965 | |
In-process research and development | | | 800 | | | | 35,410 | |
Stock-based compensation expense | | | 271,189 | | | | 299,510 | |
Increase in provision for doubtful accounts | | | 2,605 | | | | 9,512 | |
Deferred income taxes, net | | | (31,495 | ) | | | (80,647 | ) |
Excess tax benefits from stock based compensation | | | (55,250 | ) | | | (12,036 | ) |
Other | | | 5,262 | | | | 23,934 | |
Changes in assets and liabilities, net of acquisitions: | | | | | | | | |
Accounts and notes receivable | | | (188,486 | ) | | | 2,013 | |
Inventories | | | (2,702 | ) | | | (131,284 | ) |
Other assets | | | (125,538 | ) | | | (53,473 | ) |
Accounts payable | | | 109,594 | | | | 141,775 | |
Accrued expenses | | | (87,235 | ) | | | (115,146 | ) |
Income taxes payable | | | 169,065 | | | | (151,320 | ) |
Deferred revenue | | | 407,357 | | | | 121,962 | |
Other liabilities | | | (3,504 | ) | | | 2,737 | |
| | | | | | | | |
Net cash provided by operating activities | | $ | 2,147,893 | | | $ | 1,487,497 | |
| | | | | | | | |
EMC CORPORATION
Reconciliation of Cash Flow from Operations to Free Cash Flow
(in thousands)
Unaudited
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Q1 2006 | | | Q2 2006 | | | Q3 2006 | | | Q4 2006 | | | Q1 2007 | | | Q2 2007 | | | Q3 2007 | | | YTD Q3 2006 | | | YTD Q3 2007 | |
EMC Consolidated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash flow from Operations | | $ | 637,178 | | | $ | 392,024 | | | $ | 458,295 | | | $ | 652,927 | | | $ | 808,683 | | | $ | 621,565 | | | $ | 717,645 | | | $ | 1,487,497 | | | $ | 2,147,893 | |
Capital Expenditures | | | (160,520 | ) | | | (155,600 | ) | | | (189,934 | ) | | | (212,041 | ) | | | (170,526 | ) | | | (153,684 | ) | | | (177,252 | ) | | | (506,054 | ) | | | (501,462 | ) |
Capitalized Software | | | (48,883 | ) | | | (47,191 | ) | | | (56,540 | ) | | | (40,281 | ) | | | (51,920 | ) | | | (46,126 | ) | | | (65,304 | ) | | | (152,614 | ) | | | (163,350 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Free Cash Flow | | $ | 427,775 | | | $ | 189,233 | | | $ | 211,821 | | | $ | 400,605 | | | $ | 586,237 | | | $ | 421,755 | | | $ | 475,089 | | | $ | 828,829 | | | $ | 1,483,081 | |
| | | | | | | | | |
VMware within EMC: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash flow from Operations | | $ | 92,317 | | | $ | 89,475 | | | $ | 108,107 | | | $ | 100,253 | | | $ | 192,596 | | | $ | 150,119 | | | $ | 188,616 | | | $ | 289,899 | | | $ | 531,331 | |
Capital Expenditures | | | (10,440 | ) | | | (11,362 | ) | | | (47,904 | ) | | | (45,563 | ) | | | (47,817 | ) | | | (62,921 | ) | | | (48,302 | ) | | | (69,706 | ) | | | (159,040 | ) |
Capitalized Software | | | (10,839 | ) | | | (10,079 | ) | | | (8,684 | ) | | | (2,150 | ) | | | (6,959 | ) | | | (3,872 | ) | | | (22,314 | ) | | | (29,602 | ) | | | (33,145 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Free Cash Flow | | $ | 71,038 | | | $ | 68,034 | | | $ | 51,519 | | | $ | 52,540 | | | $ | 137,820 | | | $ | 83,326 | | | $ | 118,000 | | | $ | 190,591 | | | $ | 339,146 | |
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EMC Information Infrastructure: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash flow from Operations | | $ | 544,861 | | | $ | 302,549 | | | $ | 350,188 | | | $ | 552,674 | | | $ | 616,087 | | | $ | 471,446 | | | $ | 529,029 | | | $ | 1,197,598 | | | $ | 1,616,562 | |
Capital Expenditures | | | (150,080 | ) | | | (144,238 | ) | | | (142,030 | ) | | | (166,478 | ) | | | (122,709 | ) | | | (90,763 | ) | | | (128,950 | ) | | | (436,348 | ) | | | (342,422 | ) |
Capitalized Software | | | (38,044 | ) | | | (37,112 | ) | | | (47,856 | ) | | | (38,131 | ) | | | (44,961 | ) | | | (42,254 | ) | | | (42,990 | ) | | | (123,012 | ) | | | (130,205 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Free Cash Flow | | $ | 356,737 | | | $ | 121,199 | | | $ | 160,302 | | | $ | 348,065 | | | $ | 448,417 | | | $ | 338,429 | | | $ | 357,089 | | | $ | 638,238 | | | $ | 1,143,935 | |
Free cash flow for VMware and EMC excludes the change in the intercompany due to/due from balances. Additionally, capital expenditures for VMware’s headquarters facilities which were reimbursed by EMC during 2006 and 2007 have been classified as VMware capital expenditures as incurred. Including the change in the intercompany due to/due from balances and excluding capital expenditures for VMware’s headquarters facilities as VMware expenditures as incurred, results in free cash flow for VMware of $76,844 for the quarter ended March 31, 2006, $38,281 for the quarter ended June 30, 2006, $130,103 for the quarter ended September 30, 2006, $109,744 for the quarter ended December 31, 2006, $81,642 for the quarter ended March 31, 2007, $49,424 for the quarter ended June 30, 2007, $133,644 for the quarter ended September 30, 2007, $85,022 for the nine months ended September 30, 2006 and $339,146 for the nine months ended September 30, 2007. Including the change in the intercompany due to/due from balances and excluding capital expenditures for VMware’s headquarters facilities as VMware expenditures as incurred, results in free cash flow for EMC Information Infrastructure of $264,710 for the quarter ended March 31, 2006, $150,952 for the quarter ended June 30, 2006, $241,924 for the quarter ended September 30, 2006, $290,861 for the quarter ended December 31, 2006, $504,595 for the quarter ended March 31, 2007, $372,331 for the quarter ended June 30, 2007, $341,445 for the quarter ended September 30, 2007, $743,807 for the nine months ended September 30, 2006 and $1,218,371 for the nine months ended September 30, 2007.
EMC Corporation
Supplemental Financial Data
Revenue Analysis
(in thousands)
Unaudited
Revenue Components
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Q1 2006 | | | Q2 2006 | | | Q3 2006 | | | YTD 2006 | | | Q4 2006 | | | 2006 | | | Q1 2007 | | | Q2 2007 | | | Q3 2007 | | | YTD 2007 | |
Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Systems | | $ | 1,226,928 | | | $ | 1,151,600 | | | $ | 1,299,321 | | | $ | 3,677,849 | | | $ | 1,462,777 | | | $ | 5,140,626 | | | $ | 1,305,766 | | | $ | 1,354,438 | | | $ | 1,411,367 | | | $ | 4,071,571 | |
| | | | | | | | | | |
Software: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Software License | | | 621,602 | | | | 681,998 | | | | 736,331 | | | | 2,039,931 | | | | 897,485 | | | | 2,937,416 | | | | 806,660 | | | | 867,917 | | | | 921,517 | | | | 2,596,094 | |
Software Maintenance | | | 303,202 | | | | 315,189 | | | | 345,650 | | | | 964,041 | | | | 371,163 | | | | 1,335,204 | | | | 382,080 | | | | 400,233 | | | | 426,198 | | | | 1,208,511 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Software License & Maintenance | | | 924,804 | | | | 997,187 | | | | 1,081,981 | | | | 3,003,972 | | | | 1,268,648 | | | | 4,272,620 | | | | 1,188,740 | | | | 1,268,150 | | | | 1,347,715 | | | | 3,804,605 | |
| | | | | | | | | | |
Professional, Systems Maintenance and Other Services | | | 396,081 | | | | 423,525 | | | | 431,989 | | | | 1,251,595 | | | | 481,471 | | | | 1,733,066 | | | | 478,972 | | | | 500,798 | | | | 539,609 | | | | 1,519,379 | |
| | | | | | | | | | |
| | | 2,547,813 | | | | 2,572,312 | | | | 2,813,291 | | | | 7,933,416 | | | | 3,212,896 | | | | 11,146,312 | | | | 2,973,478 | | | | 3,123,386 | | | | 3,298,691 | | | | 9,395,555 | |
| | | | | | | | | | |
Other Businesses | | | 2,874 | | | | 2,211 | | | | 2,015 | | | | 7,100 | | | | 1,678 | | | | 8,778 | | | | 1,527 | | | | 1,286 | | | | 1,063 | | | | 3,876 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Consolidated Revenues | | $ | 2,550,687 | | | $ | 2,574,523 | | | $ | 2,815,306 | | | $ | 7,940,516 | | | $ | 3,214,574 | | | $ | 11,155,090 | | | $ | 2,975,005 | | | $ | 3,124,672 | | | $ | 3,299,754 | | | $ | 9,399,431 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Percentage impact to EMC revenue growth rate due to changes in exchange rates from the prior year | | | (2.1 | )% | | | (1.1 | )% | | | 0.7 | % | | | (0.8 | )% | | | 1.4 | % | | | (0.2 | )% | | | 2.1 | % | | | 2.1 | % | | | 1.8 | % | | | 2.0 | % |
EMC Corporation
Supplemental Financial Data
Revenue Analysis
(in thousands)
Unaudited
Supplemental Revenue Data
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Q1 2006 | | Q2 2006 | | Q3 2006 | | YTD 2006 | | Q4 2006 | | 2006 | | Q1 2007 | | Q2 2007 | | Q3 2007 | | YTD 2007 |
Storage systems revenue | | $ | 1,222,624 | | $ | 1,147,892 | | $ | 1,295,524 | | $ | 3,666,040 | | $ | 1,458,740 | | $ | 5,124,780 | | $ | 1,302,741 | | $ | 1,347,357 | | $ | 1,405,139 | | $ | 4,055,237 |
Storage software license revenue | | | 446,720 | | | 493,002 | | | 524,679 | | | 1,464,401 | | | 550,856 | | | 2,015,257 | | | 486,558 | | | 512,521 | | | 515,056 | | | 1,514,135 |
Storage maintenance and services revenue | | | 583,010 | | | 610,015 | | | 619,496 | | | 1,812,521 | | | 656,020 | | | 2,468,541 | | | 637,629 | | | 668,140 | | | 703,092 | | | 2,008,861 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Storage revenue | | $ | 2,252,354 | | $ | 2,250,909 | | $ | 2,439,699 | | $ | 6,942,962 | | $ | 2,665,616 | | $ | 9,608,578 | | $ | 2,426,928 | | $ | 2,528,018 | | $ | 2,623,287 | | $ | 7,578,233 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Content Management and Archiving systems revenue | | $ | 4,304 | | $ | 3,708 | | $ | 87 | | $ | 8,099 | | $ | 522 | | $ | 8,621 | | $ | 68 | | $ | 1,708 | | $ | 1,485 | | $ | 3,261 |
Content Management and Archiving Software license revenue | | | 83,038 | | | 75,161 | | | 59,092 | | | 217,291 | | | 106,302 | | | 323,593 | | | 68,472 | | | 69,046 | | | 79,247 | | | 216,765 |
Content Management and Archiving maintenance and services revenue | | | 79,978 | | | 87,253 | | | 90,173 | | | 257,404 | | | 96,172 | | | 353,576 | | | 103,658 | | | 102,848 | | | 108,580 | | | 315,086 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Content Management and Archiving revenue | | $ | 167,320 | | $ | 166,122 | | $ | 149,352 | | $ | 482,794 | | $ | 202,996 | | $ | 685,790 | | $ | 172,198 | | $ | 173,602 | | $ | 189,312 | | $ | 535,112 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Security systems revenue | | $ | — | | $ | — | | $ | 3,710 | | $ | 3,710 | | $ | 3,515 | | $ | 7,225 | | $ | 2,958 | | $ | 5,373 | | $ | 4,743 | | $ | 13,074 |
Security software license revenue | | | — | | | — | | | 27,084 | | | 27,084 | | | 76,835 | | | 103,919 | | | 81,934 | | | 81,300 | | | 82,979 | | | 246,213 |
Security maintenance and services revenue | | | — | | �� | — | | | 6,961 | | | 6,961 | | | 33,581 | | | 40,542 | | | 34,969 | | | 38,282 | | | 45,142 | | | 118,393 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Security revenue | | $ | — | | $ | — | | $ | 37,755 | | $ | 37,755 | | $ | 113,931 | | $ | 151,686 | | $ | 119,861 | | $ | 124,955 | | $ | 132,864 | | $ | 377,680 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware software license revenue | | $ | 91,844 | | $ | 113,835 | | $ | 125,476 | | $ | 331,155 | | $ | 163,492 | | $ | 494,647 | | $ | 169,696 | | $ | 205,050 | | $ | 244,235 | | $ | 618,981 |
VMware maintenance and services revenue | | | 39,169 | | | 43,657 | | | 63,024 | | | 145,850 | | | 68,539 | | | 214,389 | | | 86,322 | | | 93,047 | | | 110,056 | | | 289,425 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total VMware revenue | | $ | 131,013 | | $ | 157,492 | | $ | 188,500 | | $ | 477,005 | | $ | 232,031 | | $ | 709,036 | | $ | 256,018 | | $ | 298,097 | | $ | 354,291 | | $ | 908,406 |
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