Exhibit 99.1
Contact: | Dave Farmer | |
508-293-7206 | ||
farmer_dave@emc.com |
EMC POSTS RECORD FIRST-QUARTER REVENUE
Achieves Double-Digit Revenue Growth in Systems, Software and Services
and Across U.S., Europe, and Asia Pacific
HOPKINTON, Mass. – April 23, 2008 – EMC Corporation (NYSE: EMC), the world leader in information infrastructure solutions, today announced all-time record first-quarter revenue and its 19th consecutive quarter of double-digit year-over-year revenue growth. EMC’s total consolidated revenue for the first quarter of 2008 was $3.47 billion, an increase of 17% over the $2.98 billion reported for the first quarter of 2007.
First-quarter GAAP net income was $268.8 million, or $0.13 per diluted share, which included a $79.2 million non-cash charge for in-process research and development (IPR&D) resulting from acquisitions completed during the quarter. Excluding this charge, net income was $348.0 million or $0.16 per diluted share. Non-GAAP first-quarter net income, which excludes the IPR&D charge and other items¹, was $477.3 million or $0.23 per diluted share, 28% higher than the non-GAAP earnings per diluted share of $0.18 for the year-ago period.
During the quarter, EMC generated operating cash flow of $918.3 million, an increase of 14% compared with the same period a year ago, and free cash flow of $717.5 million, an increase of 22% year-over-year.
Joe Tucci, EMC Chairman, President and Chief Executive Officer, said, “EMC is off to a solid start to the year, and we remain on track to achieve the 2008 financial targets we set for the business at the beginning of the year. We entered the year with the strongest and most diversified product, solutions and services portfolio in our history. From the consumer to the small- and medium-sized business and up through the enterprise, we are delivering to the market high-quality, innovative IT solutions faster than ever before. These offerings remain squarely aligned with top CIO spending priorities and are optimized to help businesses manage their information and drive IT efficiency throughout their organizations.”
“Looking ahead, EMC’s growth opportunities are many as we continue to aggressively strengthen our core business, grow into new and adjacent markets and expand our presence around the globe,” Tucci added. “The power of our technology portfolio positions us well to extend our leadership and continue gaining share.”
Compared with the first quarter of 2007, EMC systems revenue increased 10% and represented 41% of total first-quarter revenue. Software license and maintenance revenue increased 18% and accounted for 41% of total revenue. Other services revenue grew 30% and represented 18% of total revenue.
From a geographic perspective, revenue from North America increased 14% compared with the same period a year ago and represented 57% of total first-quarter revenue. Revenue from operations outside of North America grew 21% year-over-year, driven by double-digit revenue growth in each of EMC’s Europe, Middle East and Africa (EMEA), Asia-Pacific and Japan (APJ) and Latin America regions.
David Goulden, EMC Executive Vice President and Chief Financial Officer, said, “EMC demonstrated strong revenue growth and operating performance. Our focus on investing in and delivering the right solutions to the right markets continues as the driving force behind our successful and diversified business model. This focus will serve EMC, our customers and shareholders well as we not only sustain but extend our market and technology leadership.”
In the first quarter, EMC continued to return value to shareholders by leveraging its strong cash position, spending approximately $557.2 million to repurchase approximately 36 million shares of EMC. This completed the company’s $2 billion share repurchase plan it embarked upon in January 2007. In addition, EMC recently increased its share repurchase authorization by 250 million shares.
First-Quarter Highlights
Revenue from EMC’s Information Storage business, which includes revenue from storage systems, storage software and related customer and professional services, reached $2.71 billion, an increase of 12% compared with the year-ago period. Growth in the Information Storage business was driven by strong demand for EMC’s storage products and professional services portfolio across all major geographies. EMC Symmetrix revenue increased 8%, EMC CLARiiON revenue increased 19% and EMC Celerra network-attached storage revenue increased more than 50%, each compared with the year-ago quarter. During the quarter, EMC continued to expand its storage portfolio with new products and capabilities that provide customers with ease-of-use, proven reliability and information storage innovation. For example, EMC became the first enterprise storage vendor to integrate flash-based solid state drives (SSDs) into its core product portfolio, enabling Symmetrix DMX-4 customers to achieve unprecedented performance and energy efficiency.
EMC’s Content Management and Archiving business increased first-quarter revenue 8% year-over-year to $185.2 million. Organizations around the world continued to choose EMC’s enterprise content management and archiving solutions to effectively manage their growing volumes of unstructured data, while improving business efficiencies, increasing productivity, and meeting compliance and risk mitigation requirements. Also during the first quarter, EMC’s Content Management and Archiving business captured several honors, including an ACE award fromECM Connectionat the AIIM International Conference.
For the first quarter of 2008, revenue from RSA, The Security Division of EMC, grew 13% year-over-year, reaching $134.9 million. This growth was driven primarily by global demand for the division’s risk-based authentication solutions, anti-fraud services, and security information and event management solutions. Companies across industries and around the world continued to choose the powerful portfolio of RSA security products and services to address their
critical requirements around data security, security information management and data loss prevention, and to drive business acceleration and innovation across their organizations.
VMware (NYSE: VMW), which is majority-owned by EMC, had first-quarter revenues of $438.2 million, an increase of approximately 71% compared to the year-ago quarter. VMware is the global leader in virtualization solutions from the desktop to the datacenter. Customers of all sizes rely on VMware to reduce capital and operating expenses, ensure business continuity, strengthen security and be more energy efficient. With 2007 revenues of $1.32 billion, more than 100,000 customers, and nearly 14,000 partners, VMware is one of the fastest growing public software companies. Visithttp://ir.vmware.com for more information about the virtualization software leader’s first-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.
# # #
¹Other items excluded are stock-based compensation, intangible amortization and a tax benefit recognized in the first quarter of 2007. See attached schedules for reconciliation of GAAP to non-GAAP.
EMC, Documentum, CLARiiON, Celerra and Symmetrix are registered trademarks of EMC Corporation. Symmetrix DMX is a trademark 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, where noted, amounts relating to tax benefits, in-process research and development charges, stock-based compensation expense and intangible amortization) 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 | ||||||||
March 31, 2008 | March 31, 2007 | |||||||
Revenues: | ||||||||
Product sales | $ | 2,340,430 | $ | 2,112,426 | ||||
Services | 1,129,629 | 862,579 | ||||||
3,470,059 | 2,975,005 | |||||||
Cost and expenses: | ||||||||
Cost of product sales | 1,074,583 | 1,038,478 | ||||||
Cost of services | 486,081 | 366,587 | ||||||
Research and development | 433,514 | 355,392 | ||||||
Selling, general and administrative | 1,082,215 | 875,690 | ||||||
In-process research and development | 79,204 | — | ||||||
Restructuring credits | (357 | ) | (2,670 | ) | ||||
Operating income | 314,819 | 341,528 | ||||||
Investment income | 77,140 | 52,139 | ||||||
Interest expense | (18,042 | ) | (18,293 | ) | ||||
Other (expense) income, net | (4,763 | ) | 4,840 | |||||
Income before taxes and minority interest | 369,154 | 380,214 | ||||||
Income tax provision | 94,155 | 67,607 | ||||||
Income before minority interest | 274,999 | 312,607 | ||||||
Minority interest, net of taxes | (6,161 | ) | — | |||||
Net income | $ | 268,838 | $ | 312,607 | ||||
Net income per weighted average share, basic: | $ | 0.13 | $ | 0.15 | ||||
Net income per weighted average share, diluted: | $ | 0.13 | $ | 0.15 | ||||
Weighted average shares, basic | 2,075,152 | 2,080,039 | ||||||
Weighted average shares, diluted | 2,110,805 | 2,121,826 |
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended March 31, 2008
(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 | $ | 3,470,059 | $ | 1,560,664 | $ | 433,514 | $ | 1,082,215 | $ | 78,847 | $ | 314,819 | $ | 54,335 | $ | 369,154 | $ | 94,155 | $ | 274,999 | $ | (6,161 | ) | $ | 268,838 | $ | 0.130 | $ | 0.127 | ||||||||||||||||||||||
IPR&D | — | — | — | — | (79,204 | ) | 79,204 | — | 79,204 | — | 79,204 | — | 79,204 | $ | 0.038 | $ | 0.038 | ||||||||||||||||||||||||||||||||||
EMC Consolidated Adjusted (1) | 3,470,059 | 1,560,664 | 433,514 | 1,082,215 | (357 | ) | 394,023 | 54,335 | 448,358 | 94,155 | 354,203 | (6,161 | ) | 348,042 | $ | 0.168 | $ | 0.164 | |||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | (18,312 | ) | (38,825 | ) | (61,950 | ) | — | 119,087 | — | 119,087 | 27,831 | 91,256 | (5,095 | ) | 86,161 | $ | 0.042 | $ | 0.041 | |||||||||||||||||||||||||||||||
Intangible amortization | — | (38,198 | ) | (3,011 | ) | (24,791 | ) | — | 66,000 | — | 66,000 | 22,533 | 43,467 | (349 | ) | 43,118 | $ | 0.021 | $ | 0.020 | |||||||||||||||||||||||||||||||
EMC Consolidated Non-GAAP (2) | $ | 3,470,059 | $ | 1,504,154 | $ | 391,678 | $ | 995,474 | $ | (357 | ) | $ | 579,110 | $ | 54,335 | $ | 633,445 | $ | 144,519 | $ | 488,926 | $ | (11,605 | ) | $ | 477,321 | $ | 0.230 | $ | 0.225 | |||||||||||||||||||||
EMC Information Infrastructure GAAP | $ | 3,031,889 | $ | 1,483,604 | $ | 315,428 | $ | 890,640 | $ | 78,847 | $ | 263,370 | $ | 51,696 | $ | 315,066 | $ | 85,436 | $ | 229,630 | $ | — | $ | 229,630 | $ | 0.111 | $ | 0.109 | |||||||||||||||||||||||
IPR&D | — | — | — | — | (79,204 | ) | 79,204 | — | 79,204 | — | 79,204 | — | 79,204 | $ | 0.038 | $ | 0.038 | ||||||||||||||||||||||||||||||||||
EMC Information Infrastructure Adjusted (3) | 3,031,889 | 1,483,604 | 315,428 | 890,640 | (357 | ) | 342,574 | 51,696 | 394,270 | 85,436 | 308,834 | — | 308,834 | $ | 0.149 | $ | 0.146 | ||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | (12,136 | ) | (17,912 | ) | (44,412 | ) | — | 74,460 | — | 74,460 | 18,834 | 55,626 | — | 55,626 | $ | 0.027 | $ | 0.026 | ||||||||||||||||||||||||||||||||
Intangible amortization | — | (35,888 | ) | (3,011 | ) | (23,250 | ) | — | 62,149 | — | 62,149 | 21,122 | 41,027 | — | 41,027 | $ | 0.020 | $ | 0.019 | ||||||||||||||||||||||||||||||||
EMC Information Infrastructure Non-GAAP (4) | $ | 3,031,889 | $ | 1,435,580 | $ | 294,505 | $ | 822,978 | $ | (357 | ) | $ | 479,183 | $ | 51,696 | $ | 530,879 | $ | 125,393 | $ | 405,486 | $ | — | $ | 405,486 | $ | 0.195 | $ | 0.192 | ||||||||||||||||||||||
VMware standalone GAAP | $ | 438,175 | $ | 77,170 | $ | 119,255 | $ | 193,359 | $ | — | $ | 48,391 | $ | 2,639 | $ | 51,030 | $ | 7,975 | $ | 43,055 | $ | — | $ | 43,055 | $ | 0.021 | $ | 0.020 | |||||||||||||||||||||||
GAAP adjustments and eliminations | (5 | ) | (110 | ) | (1,169 | ) | (1,784 | ) | — | 3,058 | — | 3,058 | 744 | 2,314 | (6,161 | ) | (3,847 | ) | $ | (0.002 | ) | $ | (0.003 | ) | |||||||||||||||||||||||||||
VMware within EMC | 438,170 | 77,060 | 118,086 | 191,575 | — | 51,449 | 2,639 | 54,088 | 8,719 | 45,369 | (6,161 | ) | 39,208 | $ | 0.019 | $ | 0.018 | ||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | (6,176 | ) | (20,913 | ) | (17,538 | ) | — | 44,627 | — | 44,627 | 8,997 | 35,630 | (5,095 | ) | 30,535 | $ | 0.015 | $ | 0.014 | |||||||||||||||||||||||||||||||
Intangible amortization | — | (2,310 | ) | — | (1,541 | ) | — | 3,851 | — | 3,851 | 1,411 | 2,440 | (349 | ) | 2,091 | $ | 0.001 | $ | 0.001 | ||||||||||||||||||||||||||||||||
VMware within EMC Non-GAAP (5) | $ | 438,170 | $ | 68,574 | $ | 97,173 | $ | 172,496 | $ | — | $ | 99,927 | $ | 2,639 | $ | 102,566 | $ | 19,126 | $ | 83,440 | $ | (11,605 | ) | $ | 71,834 | $ | 0.035 | $ | 0.033 | ||||||||||||||||||||||
| Wtd. Average Share O/S | | 2,075,152 | 2,110,805 | |||||||||||||||||||||||||||||||||||||||||||||||
(1) | Represents EMC Consolidated GAAP excluding IPR&D. |
(2) | Represents EMC Consolidated Adjusted excluding stock-based compensation expense and intangible amortization. |
(3) | Represents EMC Information Infrastructure GAAP excluding IPR&D. |
(4) | Represents EMC Information Infrastructure Adjusted less stock-based compensation expense and intangible amortization. |
(5) | Represents VMware within EMC excluding stock-based compensation expense and intangible amortization. |
Note: | schedule may not add 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 Adjusted (1) | 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 | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | (13,558 | ) | (23,442 | ) | (46,347 | ) | — | 83,347 | — | 83,347 | 22,725 | 60,622 | $ | 0.029 | $ | 0.029 | ||||||||||||||||||||||||||||||
Intangible amortization | — | (29,007 | ) | (2,113 | ) | (17,123 | ) | — | 48,243 | — | 48,243 | 17,040 | 31,203 | $ | 0.015 | $ | 0.015 | ||||||||||||||||||||||||||||||
EMC Consolidated Non-GAAP (2) | $ | 2,975,005 | $ | 1,362,500 | $ | 329,837 | $ | 812,220 | $ | (2,670 | ) | $ | 473,118 | $ | 38,686 | $ | 511,804 | $ | 127,284 | $ | 384,520 | $ | 0.185 | $ | 0.181 | ||||||||||||||||||||||
EMC Information Infrastructure GAAP | $ | 2,718,987 | $ | 1,362,538 | $ | 289,490 | $ | 761,257 | $ | (2,670 | ) | $ | 308,372 | $ | 35,360 | $ | 343,732 | $ | 62,240 | $ | 281,492 | $ | 0.135 | $ | 0.133 | ||||||||||||||||||||||
Tax benefits | — | — | — | — | — | — | — | — | 19,912 | (19,912 | ) | $ | (0.010 | ) | $ | (0.009 | ) | ||||||||||||||||||||||||||||||
EMC Information Infrastructure Adjusted (3) | 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 (4) | $ | 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 | ||||||||||||||||||||||
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 | |||||||||||||||||||||||
GAAP adjustments and eliminations | (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 | |||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | (530 | ) | (6,392 | ) | (4,722 | ) | — | 11,644 | — | 11,644 | 2,924 | 8,720 | $ | 0.004 | $ | 0.004 | ||||||||||||||||||||||||||||||
Intangible amortization | — | (5,215 | ) | — | (1,070 | ) | — | 6,285 | — | 6,285 | 2,325 | 3,960 | $ | 0.002 | $ | 0.002 | |||||||||||||||||||||||||||||||
VMware within EMC Non-GAAP (5) | $ | 256,018 | $ | 36,782 | $ | 59,510 | $ | 108,641 | $ | — | $ | 51,085 | $ | 3,326 | $ | 54,411 | $ | 10,617 | $ | 43,794 | $ | 0.021 | $ | 0.021 | |||||||||||||||||||||||
| Wtd. Average Share O/S | | 2,080,039 | 2,121,826 | |||||||||||||||||||||||||||||||||||||||||||
(1) | Represents EMC Consolidated GAAP excluding special tax benefits. |
(2) | Represents EMC Consolidated Adjusted excluding stock-based compensation expense and intangible amortization. |
(3) | Represents EMC Information Infrastructure GAAP excluding special tax benefits. |
(4) | Represents EMC Information Infrastructure Adjusted excluding stock-based compensation expense and intangible amortization. |
(5) | Represents VMware within EMC excluding stock-based compensation expense and intangible amortization. |
Note: | schedule may not add due to rounding |
EMC CORPORATION
Consolidated Balance Sheets
(in thousands, except per share amounts)
Unaudited
March 31, 2008 | December 31, 2007 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 4,978,446 | $ | 4,482,211 | ||||
Short-term investments | 635,056 | 1,644,703 | ||||||
Accounts and notes receivable, less allowance for doubtful accounts of $33,732 and $34,389 | 1,897,712 | 2,307,512 | ||||||
Inventories | 953,085 | 877,243 | ||||||
Deferred income taxes | 515,122 | 475,544 | ||||||
Other current assets | 330,673 | 265,889 | ||||||
Total current assets | 9,310,094 | 10,053,102 | ||||||
Long-term investments | 2,246,942 | 1,845,572 | ||||||
Property, plant and equipment, net | 2,141,922 | 2,159,396 | ||||||
Intangible assets, net | 939,204 | 940,077 | ||||||
Other assets, net | 803,190 | 755,001 | ||||||
Goodwill, net | 6,774,690 | 6,531,506 | ||||||
Total assets | $ | 22,216,042 | $ | 22,284,654 | ||||
LIABILITIES & STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 881,481 | $ | 840,886 | ||||
Accrued expenses | 1,540,050 | 1,696,309 | ||||||
Income taxes payable | 82,110 | 146,104 | ||||||
Deferred revenue | 1,818,956 | 1,724,909 | ||||||
Total current liabilities | 4,322,597 | 4,408,208 | ||||||
Income taxes payable | 259,117 | 246,951 | ||||||
Deferred revenue | 1,153,674 | 1,053,394 | ||||||
Deferred income taxes | 286,843 | 288,175 | ||||||
Long-term convertible debt | 3,450,000 | 3,450,000 | ||||||
Other liabilities | 159,446 | 127,621 | ||||||
Total Liabilities | 9,631,677 | 9,574,349 | ||||||
Minority interest | 209,959 | 188,988 | ||||||
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 2,067,237 and 2,102,187 shares | 20,672 | 21,022 | ||||||
Additional paid-in capital | 2,617,571 | 3,038,455 | ||||||
Retained earnings | 9,739,127 | 9,470,289 | ||||||
Accumulated other comprehensive loss | (2,964 | ) | (8,449 | ) | ||||
Total stockholders' equity | 12,374,406 | 12,521,317 | ||||||
Total liabilities and stockholders' equity | $ | 22,216,042 | $ | 22,284,654 | ||||
EMC CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Three Months Ended | ||||||||
March 31, 2008 | March 31, 2007 | |||||||
Cash flows from operating activities: | ||||||||
Cash received from customers | $ | 4,066,805 | $ | 3,298,580 | ||||
Cash paid to suppliers and employees | (3,027,739 | ) | (2,471,509 | ) | ||||
Dividends and interest received | 77,958 | 57,824 | ||||||
Interest paid | (2,865 | ) | (3,201 | ) | ||||
Income taxes paid | (195,867 | ) | (73,011 | ) | ||||
Net cash provided by operating activities | 918,292 | 808,683 | ||||||
Cash flows from investing activities: | ||||||||
Additions to property, plant and equipment | (146,512 | ) | (170,526 | ) | ||||
Capitalized software development costs | (54,321 | ) | (51,920 | ) | ||||
Purchases of short and long-term available for sale securities | (608,819 | ) | (1,891,806 | ) | ||||
Sales and maturities of short and long-term available for sale securities | 1,196,985 | 2,192,202 | ||||||
Acquisitions, net of cash acquired | (337,809 | ) | (3,261 | ) | ||||
Other | (3,030 | ) | (860 | ) | ||||
Net cash provided by investing activities | 46,494 | 73,829 | ||||||
Cash flows from financing activities: | ||||||||
Issuance of common stock from the exercise of stock options | 27,397 | 103,312 | ||||||
Issuance of VMware's common stock from the exercise of stock options | 23,669 | — | ||||||
Repurchase of EMC common stock | (557,244 | ) | (488,662 | ) | ||||
Excess tax benefits from stock based compensation | 28,511 | 12,812 | ||||||
Payment of short and long-term obligations | (3,782 | ) | (620 | ) | ||||
Proceeds from short and long-term obligations | 1,114 | 2,229 | ||||||
Net cash used in financing activities | (480,335 | ) | (370,929 | ) | ||||
Effect of exchange rate changes on cash | 11,784 | 7,685 | ||||||
Net increase in cash and cash equivalents | 496,235 | 519,268 | ||||||
Cash and cash equivalents at beginning of period | 4,482,211 | 1,828,106 | ||||||
Cash and cash equivalents at end of period | $ | 4,978,446 | $ | 2,347,374 | ||||
Reconciliation of net income to net cash provided by operating activities: | ||||||||
Net income | $ | 268,838 | $ | 312,607 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Minority interest in subsidiary | 6,161 | — | ||||||
Depreciation and amortization | �� | 254,619 | 212,848 | |||||
Non-cash restructuring and other special charges | 80,970 | — | ||||||
Stock-based compensation expense | 119,087 | 83,347 | ||||||
Increase/(decrease) in provision for doubtful accounts | 3,975 | (787 | ) | |||||
Deferred income taxes, net | (26,656 | ) | (457 | ) | ||||
Excess tax benefits from stock based compensation | (28,511 | ) | (12,812 | ) | ||||
Other | (4,887 | ) | 1,980 | |||||
Changes in assets and liabilities, net of acquisitions: | ||||||||
Accounts and notes receivable | 416,788 | 142,873 | ||||||
Inventories | (28,174 | ) | 18,302 | |||||
Other assets | (78,881 | ) | (11,068 | ) | ||||
Accounts payable | 27,501 | 45,685 | ||||||
Accrued expenses | (253,761 | ) | (150,962 | ) | ||||
Income taxes payable | (46,545 | ) | (4,952 | ) | ||||
Deferred revenue | 175,983 | 181,489 | ||||||
Other liabilities | 31,785 | (9,410 | ) | |||||
Net cash provided by operating activities | $ | 918,292 | $ | 808,683 | ||||
EMC CORPORATION
Reconciliation of Cash Flow from Operations to Free Cash Flow
(in thousands)
Unaudited
Q1 2008 | Q1 2007 | |||||||
EMC Consolidated: | ||||||||
Cash flows from Operations | $ | 918,292 | $ | 808,683 | ||||
Capital Expenditures | (146,512 | ) | (170,526 | ) | ||||
Capitalized Software | (54,321 | ) | (51,920 | ) | ||||
Free Cash Flow | $ | 717,459 | $ | 586,237 | ||||
VMware within EMC: | ||||||||
Cash flows from Operations | $ | 106,058 | $ | 136,418 | ||||
Capital Expenditures | (41,019 | ) | (47,817 | ) | ||||
Capitalized Software | (4,164 | ) | (6,959 | ) | ||||
Free Cash Flow | $ | 60,875 | $ | 81,642 | ||||
EMC Information Infrastructure: | ||||||||
Cash flows from Operations | $ | 812,234 | $ | 672,265 | ||||
Capital Expenditures | (105,493 | ) | (122,709 | ) | ||||
Capitalized Software | (50,157 | ) | (44,961 | ) | ||||
Free Cash Flow | $ | 656,584 | $ | 504,595 |
Cash flows from operations, capital expenditures and free cash flow for VMware within EMC and EMC Information Infrastructure have been adjusted to exclude the impact of purchases of equipment by VMware from EMC which have been recorded as capital expenditures by VMware on a stand-alone basis but are eliminated in consolidation. Additionally, cash flow from operations, capital expenditures and free cash flow for VMware within EMC and EMC Information Infrastructure have been adjusted for VMware's capital expenditures for its headquarters facilities which were reimbursed by EMC during Q1 2007. Also, cash flows from operations and free cash flow for VMware within EMC have been adjusted for shares repurchased for tax withholdings on the vesting of restricted stock which have been recorded by VMware on a stand-alone basis as a financing activity but as an operating activity in consolidation. Had these items not been adjusted, cash flows from operations, capital expenditures and free cash flow for VMware within EMC would have been $133,180, $49,022 and $79,994, for Q1 2008 and $104,902, $16,584 and $81,646 for Q1 2007.
EMC Corporation
Supplemental Revenue Analysis
(in thousands)
Unaudited
Revenue Components
Q1 2007 | Q2 2007 | Q3 2007 | Q4 2007 | YTD 2007 | Q1 2008 | |||||||||||||||||||
Consolidated Revenues | ||||||||||||||||||||||||
Systems | $ | 1,305,766 | $ | 1,354,438 | $ | 1,411,367 | $ | 1,688,565 | $ | 5,760,136 | $ | 1,440,123 | ||||||||||||
Software: | ||||||||||||||||||||||||
Software License | 806,660 | 867,917 | 921,517 | 1,055,746 | 3,651,840 | 900,307 | ||||||||||||||||||
Software Maintenance | 382,080 | 400,233 | 426,198 | 472,264 | 1,680,775 | 506,218 | ||||||||||||||||||
Total Software License & Maintenance | 1,188,740 | 1,268,150 | 1,347,715 | 1,528,010 | 5,332,615 | 1,406,525 | ||||||||||||||||||
Other Services | 480,499 | 502,084 | 540,672 | 614,199 | 2,137,454 | 623,411 | ||||||||||||||||||
Total Consolidated Revenues | $ | 2,975,005 | $ | 3,124,672 | $ | 3,299,754 | $ | 3,830,774 | $ | 13,230,205 | $ | 3,470,059 | ||||||||||||
Percentage impact to EMC revenue growth rate due to changes in exchange rates from the prior year | 2.1 | % | 2.1 | % | 1.8 | % | 3.2 | % | 2.3 | % | 2.3 | % |
EMC Corporation
Supplemental Revenue Analysis
(in thousands)
Unaudited
Supplemental Revenue Data
Q1 2007 | Q2 2007 | Q3 2007 | Q4 2007 | YTD 2007 | Q1 2008 | |||||||||||||
Storage Systems Revenue | $ | 1,302,740 | $ | 1,347,357 | $ | 1,405,139 | $ | 1,682,395 | $ | 5,737,631 | $ | 1,433,190 | ||||||
Storage Software: | ||||||||||||||||||
Storage Software License | 486,558 | 512,521 | 515,056 | 561,622 | 2,075,757 | 470,449 | ||||||||||||
Storage Software Maintenance | 234,796 | 242,940 | 252,642 | 271,848 | 1,002,226 | 291,556 | ||||||||||||
Total Storage Software License & Maintenance | 721,354 | 755,461 | 767,698 | 833,470 | 3,077,983 | 762,005 | ||||||||||||
Storage Other Services | 402,834 | 425,200 | 450,450 | 516,782 | 1,795,266 | 516,634 | ||||||||||||
Total Storage Revenue | $ | 2,426,928 | $ | 2,528,018 | $ | 2,623,287 | $ | 3,032,647 | $ | 10,610,880 | $ | 2,711,829 | ||||||
Content Management and Archiving Systems Revenue | $ | 68 | $ | 1,708 | $ | 1,485 | $ | 2,157 | $ | 5,418 | $ | 2,521 | ||||||
Content Management and Archiving Software: | ||||||||||||||||||
Content Management and Archiving Software License | 68,472 | 69,046 | 79,247 | 115,305 | 332,070 | 58,607 | ||||||||||||
Content Management and Archiving Software Maintenance | 60,339 | 60,416 | 61,595 | 70,590 | 252,940 | 73,758 | ||||||||||||
Total Content Management and Archiving Software License & Maintenance | 128,811 | 129,462 | 140,842 | 185,895 | 585,010 | 132,365 | ||||||||||||
Content Management and Archiving Other Services | 43,319 | 42,432 | 46,985 | 50,074 | 182,810 | 50,317 | ||||||||||||
Total Content Management and Archiving Revenue | $ | 172,198 | $ | 173,602 | $ | 189,312 | $ | 238,126 | $ | 773,238 | $ | 185,203 | ||||||
Security Systems Revenue | $ | 2,958 | $ | 5,373 | $ | 4,743 | $ | 4,013 | $ | 17,087 | $ | 4,412 | ||||||
Security Software: | ||||||||||||||||||
Security Software License | 81,934 | 81,300 | 82,979 | 94,604 | 340,817 | 77,271 | ||||||||||||
Security Software Maintenance | 21,627 | 23,392 | 25,126 | 27,752 | 97,897 | 28,785 | ||||||||||||
Total Security Software License & Maintenance | 103,561 | 104,692 | 108,105 | 122,356 | 438,714 | 106,056 | ||||||||||||
Security Other Services | 13,342 | 14,890 | 20,016 | 21,226 | 69,474 | 24,389 | ||||||||||||
Total Security Revenue | $ | 119,861 | $ | 124,955 | $ | 132,864 | $ | 147,595 | $ | 525,275 | $ | 134,857 | ||||||
EMC Information Infrastructure Systems Revenue | $ | 1,305,766 | $ | 1,354,438 | $ | 1,411,367 | $ | 1,688,565 | $ | 5,760,136 | $ | 1,440,123 | ||||||
EMC Information Infrastructure Software: | ||||||||||||||||||
EMC Information Infrastructure Software License | 636,964 | 662,867 | 677,282 | 771,531 | 2,748,644 | 606,327 | ||||||||||||
EMC Information Infrastructure Software Maintenance | 316,762 | 326,748 | 339,363 | 370,190 | 1,353,063 | 394,099 | ||||||||||||
Total EMC Information Infrastructure Software License & Maintenance | 953,726 | 989,615 | 1,016,645 | 1,141,721 | 4,101,707 | 1,000,426 | ||||||||||||
EMC Information Infrastructure Other Services | 459,495 | 482,522 | 517,451 | 588,082 | 2,047,550 | 591,340 | ||||||||||||
Total EMC Information Infrastructure Revenue | $ | 2,718,987 | $ | 2,826,575 | $ | 2,945,463 | $ | 3,418,368 | $ | 11,909,393 | $ | 3,031,889 | ||||||
VMware Software: | ||||||||||||||||||
VMware Software License | $ | 169,696 | $ | 205,050 | $ | 244,235 | $ | 284,215 | $ | 903,196 | $ | 293,980 | ||||||
VMware Software Maintenance | 65,318 | 73,485 | 86,835 | 102,074 | 327,712 | 112,119 | ||||||||||||
Total VMware Software License & Maintenance | 235,014 | 278,535 | 331,070 | 386,289 | 1,230,908 | 406,099 | ||||||||||||
VMware Other Services | 21,004 | 19,562 | 23,221 | 26,117 | 89,904 | 32,071 | ||||||||||||
Total VMware Revenue | $ | 256,018 | $ | 298,097 | $ | 354,291 | $ | 412,406 | $ | 1,320,812 | $ | 438,170 | ||||||