Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Thousands | Dec. 31, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and cash equivalents | $6,302,499 | $5,843,685 |
Short-term investments | 392,839 | 963,292 |
Accounts and notes receivable, less allowance for doubtful accounts of $47,414 and $48,080 | 2,108,575 | 2,252,640 |
Inventories | 886,289 | 842,803 |
Deferred income taxes | 564,174 | 477,101 |
Other current assets | 283,926 | 285,508 |
Total current assets | 10,538,302 | 10,665,029 |
Long-term investments | 2,692,323 | 2,370,493 |
Property, plant and equipment, net | 2,224,346 | 2,223,007 |
Intangible assets, net | 1,185,632 | 795,616 |
Goodwill | 9,210,376 | 7,046,799 |
Other assets, net | 961,024 | 773,631 |
Total assets | 26,812,003 | 23,874,575 |
Current liabilities: | ||
Accounts payable | 899,298 | 757,405 |
Accrued expenses | 1,944,210 | 1,901,884 |
Securities lending payable | 0 | 412,321 |
Income taxes payable | 41,691 | 136,802 |
Deferred revenue | 2,262,968 | 2,010,024 |
Total current liabilities | 5,148,167 | 5,218,436 |
Income taxes payable | 235,976 | 255,182 |
Deferred revenue | 1,373,798 | 1,182,360 |
Deferred income taxes | 708,378 | 389,787 |
Long-term convertible debt | 3,100,290 | 2,991,943 |
Other liabilities | 184,920 | 180,917 |
Total liabilities | 10,751,529 | 10,218,625 |
Shareholders' equity: | ||
Preferred stock, par value $0.01; authorized 25,000 shares; none outstanding | 0 | 0 |
Common stock, par value $0.01; authorized 6,000,000 shares; issued and outstanding 2,052,441 and 2,012,938 shares | 20,524 | 20,129 |
Additional paid-in capital | 3,875,791 | 2,817,054 |
Retained earnings | 11,759,289 | 10,671,212 |
Accumulated other comprehensive loss, net | (105,722) | (179,952) |
Total EMC Corporation's shareholders' equity | 15,549,882 | 13,328,443 |
Non-controlling interest in VMware, Inc. | 510,592 | 327,507 |
Total shareholders' equity | 16,060,474 | 13,655,950 |
Total liabilities and shareholders' equity | $26,812,003 | $23,874,575 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
In Thousands, except Per Share data | Dec. 31, 2009
| Dec. 31, 2008
|
Accounts and notes receivable, allowance for doubtful accounts | $47,414 | $48,080 |
Preferred stock, par value | 0.01 | 0.01 |
Preferred stock, authorized | 25,000 | 25,000 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value | 0.01 | 0.01 |
Common stock, authorized | 6,000,000 | 6,000,000 |
Common stock, issued | 2,052,441 | 2,012,938 |
Common stock, outstanding | 2,052,441 | 2,012,938 |
Statement Of Income Alternative
Statement Of Income Alternative (USD $) | |||
In Thousands, except Per Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Revenues: | |||
Product sales | $8,828,145 | $10,071,816 | $9,411,976 |
Services | 5,197,765 | 4,804,347 | 3,818,229 |
Revenues, Total | 14,025,910 | 14,876,163 | 13,230,205 |
Costs and expenses: | |||
Cost of product sales | 4,406,187 | 4,663,667 | 4,359,041 |
Cost of services | 1,874,824 | 1,990,127 | 1,659,836 |
Research and development | 1,627,509 | 1,721,330 | 1,526,928 |
Selling, general and administrative | 4,595,625 | 4,601,588 | 3,912,688 |
In-process research and development | 0 | 85,780 | 1,150 |
Restructuring and acquisition-related charges | 107,490 | 244,735 | 31,310 |
Operating income | 1,414,275 | 1,568,936 | 1,739,252 |
Non-operating income (expense): | |||
Investment income | 140,430 | 247,049 | 249,264 |
Interest expense | (182,499) | (176,355) | (169,793) |
Other income (expense), net | 2,370 | (39,405) | (4,677) |
Gain on sale of VMware stock to Cisco | 0 | 0 | 148,585 |
Total non-operating income (expense) | (39,699) | 31,289 | 223,379 |
Income before provision for income taxes | 1,374,576 | 1,600,225 | 1,962,631 |
Income tax provision | 252,775 | 280,396 | 348,211 |
Net income | 1,121,801 | 1,319,829 | 1,614,420 |
Less: Net income attributable to the non-controlling interest in VMware, Inc. | (33,724) | (44,725) | (15,455) |
Net income attributable to EMC Corporation | $1,088,077 | $1,275,104 | $1,598,965 |
Net income per weighted average share, basic attributable to EMC Corporation common shareholders | 0.54 | 0.62 | 0.77 |
Net income per weighted average share, diluted attributable to EMC Corporation common shareholders | 0.53 | 0.61 | 0.74 |
Weighted average shares, basic | 2,022,371 | 2,048,506 | 2,079,542 |
Weighted average shares, diluted | 2,055,146 | 2,079,853 | 2,157,873 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Cash flows from operating activities: | |||
Cash received from customers | $14,647,691 | $15,378,081 | $13,333,489 |
Cash paid to suppliers and employees | (11,032,859) | (11,747,031) | (10,182,600) |
Dividends and interest received | 109,525 | 240,031 | 254,062 |
Interest paid | (73,430) | (73,695) | (76,025) |
Income taxes paid | (316,542) | (232,298) | (202,324) |
Net cash provided by operating activities | 3,334,385 | 3,565,088 | 3,126,602 |
Cash flows from investing activities: | |||
Additions to property, plant and equipment | (411,579) | (695,899) | (699,038) |
Capitalized software development costs | (304,520) | (294,973) | (232,047) |
Purchases of short and long-term available-for-sale securities | (5,409,540) | (3,318,545) | (6,204,762) |
Sales of short and long-term available-for-sale securities | 5,171,449 | 3,189,547 | 6,177,552 |
Maturities of short and long-term available-for-sale securities | 704,653 | 204,091 | 349,475 |
Proceeds from the sale of portion of EMC's interest in VMware to Cisco | 0 | 0 | 150,000 |
Business acquisitions, net of cash acquired | (2,664,141) | (725,521) | (692,003) |
Increase in strategic and other related investments | (182,994) | (5,510) | (12,074) |
Other | 1,184 | 31,878 | 0 |
Net cash used in investing activities | (3,095,488) | (1,614,932) | (1,162,897) |
Cash flows from financing activities: | |||
Issuance of EMC's common stock | 366,361 | 241,060 | 782,449 |
Issuance of VMware's common stock from the exercise of stock options | 227,666 | 190,107 | 2,760 |
Purchase of VMware's common stock | 0 | (13,259) | 0 |
Proceeds from the sale of VMware's common stock | 0 | 0 | 1,253,533 |
Proceeds from securities lending | 0 | 412,321 | 0 |
Repayments of proceeds from securities lending | (412,321) | 0 | 0 |
Repurchase of EMC's common stock | 0 | (1,489,501) | (1,453,669) |
Excess tax benefits from stock-based compensation | 46,082 | 97,705 | 91,782 |
Payment of long-term and short-term obligations | (20,835) | (6,151) | (17,178) |
Proceeds from long-term and short-term obligations | 4,969 | 33,707 | 19,815 |
Net cash provided by (used in) financing activities | 211,922 | (534,011) | 679,492 |
Effect of exchange rate changes on cash | 7,995 | (54,671) | 10,908 |
Net increase in cash and cash equivalents | 458,814 | 1,361,474 | 2,654,105 |
Cash and cash equivalents at beginning of year | 5,843,685 | 4,482,211 | 1,828,106 |
Cash and cash equivalents at end of year | 6,302,499 | 5,843,685 | 4,482,211 |
Reconciliation of net income to net cash provided by operating activities: | |||
Net income | 1,121,801 | 1,319,829 | 1,614,420 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Gain on sale of VMware stock to Cisco | 0 | 0 | (148,585) |
Depreciation and amortization | 1,073,135 | 1,057,511 | 917,274 |
Non-cash interest expense on convertible debt | 108,347 | 102,581 | 96,938 |
Non-cash restructuring and other special charges | 25,050 | 139,193 | 3,778 |
Stock-based compensation expense | 600,537 | 501,439 | 367,404 |
Provision for doubtful accounts | 14,351 | 34,667 | 8,885 |
Deferred income taxes, net | 27,198 | 4,629 | (98,632) |
Excess tax benefits from stock-based compensation | (46,082) | (97,705) | (91,782) |
Gain on Data Domain and SpringSource common stock | (25,822) | 0 | 0 |
Other | (13,906) | (13,471) | 3,850 |
Changes in assets and liabilities, net of acquisitions: | |||
Accounts and notes receivable | 241,069 | 73,184 | (576,422) |
Inventories | (158,482) | 165,813 | 13,574 |
Other assets | 3,600 | (16,178) | (86,022) |
Accounts payable | 140,376 | (148,821) | 155,296 |
Accrued expenses | (80,642) | 8,688 | 35,934 |
Income taxes payable | (91,142) | 44,821 | 243,216 |
Deferred revenue | 366,361 | 394,067 | 670,820 |
Other liabilities | 28,636 | (5,159) | (3,344) |
Net cash provided by operating activities | 3,334,385 | 3,565,088 | 3,126,602 |
Non-cash investing and financing activity: | |||
Issuance of common stock and stock options exchanged in business acquisitions | $83,780 | $4,057 | $4,607 |
Statement Of Shareholders Equit
Statement Of Shareholders Equity And Other Comprehensive Income (USD $) | ||||||
In Thousands | Common Stock
| Additional Paid-in Capital
| Retained Earnings
| Accumulated Other Comprehensive Loss
| Non-controlling Interest in VMware
| Total
|
Beginning Balance at Dec. 31, 2006 | $21,223 | $2,979,108 | $7,790,634 | ($54,563) | $0 | $10,736,402 |
Beginning Balance (in shares) at Dec. 31, 2006 | 2,122,339 | |||||
Stock issued through stock option and stock purchase plans (in shares) | 77,864 | |||||
Stock issued through stock option and stock purchase plans | 780 | 781,669 | 782,449 | |||
Tax benefit from stock options exercised | 140,441 | 140,441 | ||||
Restricted stock grants, cancellations and withholdings, net (in shares) | (8,629) | |||||
Restricted stock grants, cancellations and withholdings, net | (87) | (38,012) | (38,099) | |||
Repurchase of common stock (in shares) | (89,387) | |||||
Repurchase of common stock | (894) | (1,452,775) | (1,453,669) | |||
Stock options issued in business acquisitions | 4,607 | 4,607 | ||||
Stock-based compensation | 378,243 | 378,243 | ||||
Impact of adopting new standard on uncertainty in income taxes | 6,509 | 6,509 | ||||
Impact from equity transactions of VMware, Inc. | (16,836) | 173,533 | 156,697 | |||
Gain on VMware's sale of its common stock, net of tax of $411,738 | 686,228 | 686,228 | ||||
Actuarial gain (loss) on pension plan, net of tax (benefit) of $13,092 in 2009, ($55,680) in 2008 and $10,501 in 2007 | 17,960 | 17,960 | ||||
Change in market value of investments | 20,938 | 20,938 | ||||
Change in market value of derivatives | 107 | 107 | ||||
Translation adjustment | 7,109 | 7,109 | ||||
Net income | 1,598,965 | 15,455 | 1,614,420 | |||
Ending Balance (in shares) at Dec. 31, 2007 | 2,102,187 | |||||
Ending Balance at Dec. 31, 2007 | 21,022 | 3,462,673 | 9,396,108 | (8,449) | 188,988 | 13,060,342 |
Stock issued through stock option and stock purchase plans (in shares) | 23,538 | |||||
Stock issued through stock option and stock purchase plans | 234 | 240,826 | 241,060 | |||
Tax benefit from stock options exercised | 109,236 | 109,236 | ||||
Restricted stock grants, cancellations and withholdings, net (in shares) | (633) | |||||
Restricted stock grants, cancellations and withholdings, net | (6) | (56,035) | (56,041) | |||
Repurchase of common stock (in shares) | (112,154) | |||||
Repurchase of common stock | (1,121) | (1,488,380) | (1,489,501) | |||
Repurchase of VMware common stock from Cisco | (13,259) | (13,259) | ||||
Stock options issued in business acquisitions | 4,057 | 4,057 | ||||
Stock-based compensation | 531,086 | 531,086 | ||||
Impact from equity transactions of VMware, Inc. | 26,850 | 93,794 | 120,644 | |||
Actuarial gain (loss) on pension plan, net of tax (benefit) of $13,092 in 2009, ($55,680) in 2008 and $10,501 in 2007 | (94,563) | (94,563) | ||||
Change in market value of investments | (37,715) | (37,715) | ||||
Change in market value of derivatives | (1,145) | (1,145) | ||||
Translation adjustment | (38,080) | (38,080) | ||||
Net income | 1,275,104 | 44,725 | 1,319,829 | |||
Ending Balance (in shares) at Dec. 31, 2008 | 2,012,938 | |||||
Ending Balance at Dec. 31, 2008 | 20,129 | 2,817,054 | 10,671,212 | (179,952) | 327,507 | 13,655,950 |
Stock issued through stock option and stock purchase plans (in shares) | 38,729 | |||||
Stock issued through stock option and stock purchase plans | 387 | 365,974 | 366,361 | |||
Tax benefit from stock options exercised | 33,967 | 33,967 | ||||
Restricted stock grants, cancellations and withholdings, net (in shares) | 774 | |||||
Restricted stock grants, cancellations and withholdings, net | 8 | (55,310) | (55,302) | |||
Stock options issued in business acquisitions | 83,780 | 83,780 | ||||
Stock-based compensation | 604,757 | 604,757 | ||||
Impact from equity transactions of VMware, Inc. | 25,569 | 148,522 | 174,091 | |||
Actuarial gain (loss) on pension plan, net of tax (benefit) of $13,092 in 2009, ($55,680) in 2008 and $10,501 in 2007 | 21,877 | 21,877 | ||||
Change in market value of investments | 34,216 | 839 | 35,055 | |||
Change in market value of derivatives | 3,187 | 3,187 | ||||
Translation adjustment | 14,950 | 14,950 | ||||
Net income | 1,088,077 | 33,724 | 1,121,801 | |||
Ending Balance (in shares) at Dec. 31, 2009 | 2,052,441 | |||||
Ending Balance at Dec. 31, 2009 | $20,524 | $3,875,791 | $11,759,289 | ($105,722) | $510,592 | $16,060,474 |
2_Statement Of Shareholders Equ
Statement Of Shareholders Equity And Other Comprehensive Income (Parenthetical) (USD $) | |
In Thousands | 12 Months Ended
Dec. 31, 2007 |
Gain on VMware's sale of its common stock, tax | $411,738 |
Actuarial gain (loss) on pension plan, tax (benefit) | $10,501 |
Statement Of Other Comprehensiv
Statement Of Other Comprehensive Income (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Net income | $1,121,801 | $1,319,829 | $1,614,420 |
Other comprehensive income (loss), net of taxes (benefit): | |||
Recognition of actuarial net gain (loss) from pension and other postretirement plans, net of taxes (benefit) of $13,092, $(55,680) and $10,501 | 21,877 | (94,563) | 17,960 |
Foreign currency translation adjustments | 14,950 | (38,080) | 7,109 |
Changes in market value of investments, including unrealized gains (loss) and reclassification adjustments to net income, net of taxes (benefit) of $23,381, $(25,025) and $4,934 | 35,055 | (37,715) | 20,938 |
Changes in market value of derivatives, net of taxes (benefit) of $707, $(127) and $13 | 3,187 | (1,145) | 107 |
Other comprehensive income (loss) | 75,069 | (171,503) | 46,114 |
Comprehensive income | 1,196,870 | 1,148,326 | 1,660,534 |
Less: Net income attributable to the non-controlling interest in VMware, Inc. | (33,724) | (44,725) | (15,455) |
Less: Other comprehensive income attributable to the non-controlling interest in VMware, Inc. | (839) | 0 | 0 |
Comprehensive income attributable to EMC Corporation | $1,162,307 | $1,103,601 | $1,645,079 |
3_Statement Of Other Comprehens
Statement Of Other Comprehensive Income (Parenthetical) (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Recognition of actuarial net gain (loss) from pension and other postretirement plans, taxes (benefit) | $13,092 | ($55,680) | $10,501 |
Changes in market value of investments, including unrealized gains (loss) and reclassification adjustments to net income, taxes (benefit) | 23,381 | (25,025) | 4,934 |
Changes in market value of derivatives, taxes (benefit) | $707 | ($127) | $13 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Summary of Significant Accounting Policies | A. Summary of Significant Accounting Policies Company EMC Corporation (EMC) and its subsidiaries develop, deliver and support the Information Technology (IT) industrys broadest range of information infrastructure and virtual infrastructure technologies and solutions. EMCs Information Infrastructure business provides a foundation for customers to manage and secure their vast and ever-increasing quantities of information, automate their data center operations, reduce power and cooling costs, and leverage critical information for business agility and competitive advantage. EMCs Information Infrastructure business comprises three segments Information Storage, Content Management and Archiving and RSA Information Security. EMCs VMware Virtual Infrastructure business, which is represented by EMCs majority equity stake in VMware,Inc. (VMware), is the leading provider of virtual infrastructure software solutions from the desktop to the data center and to the cloud. VMwares virtual infrastructure software solutions run on industry-standard desktop computers and servers and support a wide range of operating system and application environments, as well as networking and storage infrastructures. Accounting Principles The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The financial statements for 2008 and 2007 are labeled as adjusted as they reflect the Companys adoption of new accounting guidance as described in Note B. Principles of Consolidation These consolidated financial statements include the accounts of EMC, its wholly-owned subsidiaries and VMware, a company that is majority-owned by EMC. All intercompany transactions have been eliminated. As described in Note C, in August 2007, EMC and VMware completed transactions involving the sale of VMware common stock which reduced EMCs interest in VMware from 100% to approximately 84% and 81% as of December31, 2008 and 2009, respectively. VMwares financial results have been consolidated with that of EMC for all periods presented as EMC is VMwares controlling stockholder. The portion of the results of operations of VMware allocable to its other owners is shown as net income attributable to the non-controlling interest in VMware, Inc. on EMCs consolidated income statements. Additionally, the cumulative portion of the results of operations of VMware allocable to its other owners, along with the interest in the net assets of VMware attributable to those other owners, is shown as non-controlling interest in VMware, Inc. on EMCs consolidated balance sheets. Use of Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses during the reporting period and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Revenue Recognition We derive revenue from sales of information systems, software and services. |
Adoption of New Authoritative G
Adoption of New Authoritative Guidance and Revised Financial Statements | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Adoption of New Authoritative Guidance and Revised Financial Statements | B. Adoption of New Authoritative Guidance and Revised Financial Statements Effective January1, 2009, we adopted new authoritative guidance relating to the accounting for convertible debt instruments. The guidance changed the accounting treatment for certain convertible securities including our convertible debt. Under the guidance, issuers are required to allocate the bond proceeds into a debt portion and a conversion option. The allocation of the bond portion is based upon the fair value of the debt without the equity conversion option. The residual value is allocated to the conversion option which is accounted for as additional paid-in capital. As a result of this change, the bonds are recorded at a discount which is amortized over the instruments expected life using the effective interest method, resulting in additional non-cash interest expense. We revised prior period financial statements by reclassifying $669.1 million of our Notes to additional paid-in capital, offset by a deferred tax liability of $250.9 million as of the date of the issuance of the Notes. We also increased interest expense by $102.6 million and $96.9 million and decreased the tax provision by $32.1 million and $30.2 million in 2008 and 2007, respectively. The revision reduced net income attributable to EMC Corporation by $70.5 million and $66.7 million in 2008 and 2007, respectively, and reduced basic and diluted net income attributable to EMC Corporation common shareholders by $.04 and $.03 in 2008 and $.03 and $.03 in 2007, respectively. Retained earnings as of January1, 2007 were reduced by $7.5 million. See Note F. Effective January1, 2009, we adopted new authoritative guidance for non-controlling interests in Consolidated Financial Statements. The guidance requires that (a)the ownership interest in subsidiaries be clearly identified, labeled and presented in the consolidated statement of financial position within equity, but separate from the parents equity, (b)the amount of consolidated net income attributable to the parent and to the non-controlling interest be clearly identified and presented on the face of the consolidated income statement, and (c)changes in a parents ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently within equity. A parents ownership interest in a subsidiary changes if the parent purchases additional ownership interest in its subsidiary, the parent sells some of its ownership interest or the subsidiary issues additional ownership interests. Upon adoption of the guidance, previously reported financial statements were revised and we reclassified the previously reported Minority interest in VMware to a component of shareholders equity as non-controlling interest in VMware, Inc. Previously reported Minority interest was renamed Net income attributable to the non-controlling interest in VMware, Inc. See Note C. |
Non-controlling Interest in VMw
Non-controlling Interest in VMware, Inc. | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Non-controlling Interest in VMware, Inc. | C. Non-controlling Interest in VMware, Inc. In the third quarter of 2007, VMware completed an initial public offering (IPO) of its ClassA common stock. Prior to the IPO, EMC amended VMwares certificate of incorporation to authorize shares of ClassA and Class B common stock. After a conversion of existing common stock into ClassA and Class B common stock, EMC held 32.5million shares of ClassA common stock and 300.0million shares of Class B common stock. The ownership rights of ClassA and Class B common stock are the same, except with respect to voting, conversion, certain actions that require the consent of holders of Class B common stock and other protective provisions. Each share of Class B common stock has ten votes, while each share of ClassA common stock has one vote for all matters to be voted on by stockholders. In the IPO, VMware sold 37.95million shares of its ClassA common stock at $29.00 per share, resulting in net proceeds of approximately $1,035.2 million. The gain of $551.1 million, net of taxes, of $330.7 million from this transaction was recorded as an increase to additional paid-in capital which reflects the amount of EMCs share of VMwares net assets (after non-controlling interest) in excess of EMCs carrying value prior to the IPO. In October 2008, we purchased 500,000 shares of VMwares ClassA common stock from Intel Capital Corporation for $13.3 million. The non-controlling interests share of equity in VMware is reflected as Non-controlling interest in VMware, Inc. in the accompanying consolidated balance sheets and was $510.6 million and $327.5 million as of December31, 2009 and 2008, respectively. At December31, 2009, EMC held approximately 98% of the combined voting power of VMwares outstanding common stock and approximately 81% of the economic interest in VMware. The effects of changes in our ownership interest in VMware on our equity were as follows (table in thousands): For the Twelve Months Ended December31,2009 December31,2008 Net income attributable to EMC Corporation $ 1,088,077 $ 1,275,104 Transfers (to) from the non-controlling interest in VMware, Inc.: Increase in EMC Corporations additional paid-in-capital for VMwares equity issuances 85,226 81,029 Decrease in EMC Corporations additional paid-in-capital for VMwares other equity activity (59,657 ) (54,179 ) Net transfers from non-controlling interest 25,569 26,850 Change from net income attributable to EMC Corporation and transfers from the non-controlling interest in VMware,Inc. $ 1,113,646 $ 1,301,954 |
Acquisitions
Acquisitions | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Acquisitions | D. Acquisitions 2009 Acquisitions Acquisition of Data Domain, Inc. In the third quarter of 2009, we acquired all of the outstanding capital stock of Data Domain, Inc. (Data Domain), a provider of storage solutions for backup and archive applications based on deduplication technology. Data Domain deduplication storage systems are designed to deliver reliable, efficient and cost-effective solutions that enable enterprises of all sizes to manage, retain and protect their data. This acquisition further complements and expands our Information Storage business. The purchase price for Data Domain, net of cash and investments, was $2,017.3 million, which consisted of $1,933.9 million of cash consideration and $83.4 million for the fair value of our stock options granted in exchange for existing Data Domain options. We incurred $12.0 million of transaction costs for financial advisory, legal and accounting services, that are included in restructuring and acquisition-related charges in our Consolidated Income Statements. The fair value of our stock options issued to employees of Data Domain was estimated using a Black-Scholes option pricing model. The consolidated financial statements include the results of Data Domain from the date of acquisition. The purchase price has been allocated to the assets acquired and the liabilities assumed based on estimated fair values as of the acquisition date. The following represents the allocation of the Data Domain purchase price (table in thousands): Trade accounts receivable (approximates contractual value) $ 72,455 Other current assets 9,275 Property and equipment 40,403 Intangible assets: Developed technology (weighted-average useful life of 2.6 years) 106,300 Customer maintenance relationships (weighted-average useful life of 5.8 years) 133,700 Customer product relationships (weighted-average useful life of 4.2 years) 111,500 Tradename (weighted-average useful life of 2.0 years) 6,400 In-process research and development (IPRD) 174,600 Total intangible assets 532,500 Other long-term assets 60 Goodwill 1,658,321 Current liabilities (67,212 ) Income tax payable (4,671 ) Deferred revenue (60,800 ) Deferred income taxes (152,818 ) Long-term liabilities (10,243 ) Total purchase price $ 2,017,270 The total weighted-average amortization period for intangible assets is 4.3 years. The intangible assets are being amortized over the pattern in which the economic benefits of the intangible assets are being utilized, which in general reflects the cash flows generated from such assets. The goodwill associated with this acquisition is reported within our Information Storage segment. None of the goodwill is deductible for tax purposes. The goodwill results from expected synergies from the transaction, including complementary products that will enhance our overall product portfolio, which we believe will result in incremental revenue and profitability. Other 2009 Acquisitions In the second quarter of 2009, |
Intangibles and Goodwill
Intangibles and Goodwill | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Intangibles and Goodwill | E. Intangibles and Goodwill Intangible Assets Intangible assets, excluding goodwill, as of December31, 2009 and 2008 consist of (tables in thousands): Year Ended December31, 2009 GrossCarrying Amount Accumulated Amortization NetBookValue Purchased technology $ 1,121,385 $ (743,938 ) $ 377,447 Patents 62,170 (62,130 ) 40 Software licenses 78,873 (59,040 ) 19,833 Trademarks and tradenames 153,331 (57,339 ) 95,992 Customer relationships and customer lists 899,128 (329,518 ) 569,610 IPRD 116,930 116,930 Other 22,303 (16,523 ) 5,780 Total intangible assets, excluding goodwill $ 2,454,120 $ (1,268,488 ) $ 1,185,632 Year Ended December31, 2008 GrossCarrying Amount Accumulated Amortization NetBookValue Purchased technology $ 913,531 $ (613,145 ) $ 300,386 Patents 62,170 (62,126 ) 44 Software licenses 72,263 (45,582 ) 26,681 Trademarks and tradenames 139,536 (44,620 ) 94,916 Customer relationships and customer lists 607,428 (240,875 ) 366,553 Other 21,003 (13,967 ) 7,036 Total intangible assets, excluding goodwill $ 1,815,931 $ (1,020,315 ) $ 795,616 Amortization expense on intangibles was $247.8 million, $280.9 million and $204.8 million in 2009, 2008 and 2007, respectively. As of December31, 2009, amortization expense on intangible assets for the next five years is expected to be as follows (table in thousands): 2010 $ 272,501 2011 241,086 2012 202,849 2013 169,776 2014 128,010 Total $ 1,014,222 Changes in the carrying amount of goodwill, net, on a consolidated basis and by segment for the years ended December31, 2009 and 2008 consist of the following (tables in thousands): Year Ended December31, 2009 Information Storage Content Management andArchiving RSA Information Security VMware Virtual Infrastructure Total Balance, beginning of the year $ 3,253,966 $ 1,442,281 $ 1,535,872 $ 814,680 $ 7,046,799 Goodwill acquired 1,804,873 38,245 346,083 2,189,201 Tax deduction from exercise of stock options (101 ) (2,022 ) (834 ) (2,957 ) Finalization of purchase price allocations (13,652 ) (1,984 ) (5,630 ) (1,401 ) (22,667 ) Balance, end of the year $ 5,045,086 $ 1,476,520 $ 1,529,408 $ 1,159,362 $ 9,210,376 Year Ended December31, 2008 Information Storage Content Management andArchiving RSA Information Security VMware Virtual Infrastructure Total Balance, beginning of the year $ 2,943,524 $ 1,374,264 $ 1,530,475 $ 683,243 $ 6,531,506 |
Convertible Debt
Convertible Debt | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Convertible Debt | F. Convertible Debt In November 2006, we issued our Notes for total gross proceeds of $3.45 billion. The Notes are senior unsecured obligations and rank equally with all other existing and future senior unsecured debt. Holders may convert their Notes at their option on any day prior to the close of business on the scheduled trading day immediately preceding (i)September1, 2011, with respect to the 2011 Notes, and (ii)September1, 2013, with respect to the 2013 Notes, in each case only under the following circumstances: (1)during the five business-day period after any five consecutive trading-day period (the measurement period) in which the price per Note of the applicable series for each day of that measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such day; (2)during any calendar quarter, if the last reported sale price of our common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; or (3)upon the occurrence of certain events specified in the Notes. Additionally, the Notes will become convertible during the last three months prior to the respective maturities of the 2011 Notes and the 2013 Notes. Upon conversion, we will pay cash up to the principal amount of the debt converted. With respect to any conversion value in excess of the principal amount of the Notes converted, we have the option to settle the excess with cash, shares of our common stock, or a combination of cash and shares of our common stock based on a daily conversion value, determined in accordance with the indenture, calculated on a proportionate basis for each day of the relevant 20-day observation period. The initial conversion rate for the Notes will be 62.1978 shares of our common stock per one thousand dollars of principal amount of Notes, which represents a 27.5% conversion premium from the date the Notes were issued and is equivalent to a conversion price of approximately $16.08 per share of our common stock. The conversion price is subject to adjustment in some events as set forth in the indenture. In addition, if a fundamental change (as defined in the indenture) occurs prior to the maturity date, we will in some cases increase the conversion rate for a holder of Notes that elects to convert its Notes in connection with such fundamental change. The Notes pay interest in cash at a rate of 1.75% semi-annually in arrears on December1 and June1 of each year. In connection with the sale of the Notes, we entered into separate convertible note hedge transactions with respect to our common stock (the Purchased Options). The Purchased Options allow us to receive shares of our common stock and/or cash related to the excess conversion value that we would pay to the holders of the Notes upon conversion. The Purchased Options will cover, subject to customary anti-dilution adjustments, approximately 215million shares of our common stock. Half of the Purchase |
Investments
Investments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Investments | G. Investments In 2008, we adopted new authoritative guidance for fair value measurements that defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. In the second quarter of 2009, we adopted new authoritative guidance that requires the credit component of an other-than-temporary impairment of investments in debt securities to be recognized in earnings and the non-credit component to be recognized in other comprehensive loss when the securities are not intended to be sold and it is more likely than not that we will not be required to sell the security prior to the recovery. The adoption of the guidance required the recording of a cumulative effect adjustment to retained earnings with a corresponding adjustment to other comprehensive loss equal to the present value of the cash flows expected to be collected less the amortized cost basis of the debt securities held at March31, 2009 for which an other-than-temporary impairment was previously recognized for securities that we do not intend to sell nor is it more likely than not that we will be required to sell before recovery of its amortized cost basis. We elected not to record the cumulative effect adjustment, as the amount was de minimis to our financial condition. Our investments are comprised primarily of debt securities that are classified as available for sale and recorded at their fair market values. At December31, 2009, with the exception of our auction rate securities, the vast majority of our investments were priced by pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs. In the event observable inputs are not available, we assess other factors to determine the securitys market value, including broker quotes or model valuations. Each month, we perfo |
Inventories
Inventories | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Inventories | H. Inventories Inventories consist of (table in thousands): December31, 2009 December31, 2008 Purchased parts $ 73,612 $ 62,866 Work-in-process 469,901 488,286 Finished goods 342,776 291,651 $ 886,289 $ 842,803 |
Notes Receivable
Notes Receivable | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes Receivable | I. Notes Receivable Notes receivable are from sales-type leases of our products. The payment schedule for such notes at December31, 2009 is as follows (table in thousands): 2010 $ 71,276 2011 65,907 2012 44,230 Thereafter 1,108 Total 182,521 Less amounts representing interest (13,953 ) Present value 168,568 Current portion (included in accounts and notes receivable) 65,693 Long-term portion (included in other assets, net) $ 102,875 Actual cash collections may differ from amounts shown on the table due to early customer buyouts, trade-ins or refinancings. We typically sell without recourse our notes receivable and underlying equipment associated with our sales-type leases to third parties. Subsequent to December31, 2009, we sold $37.8 million of these notes to third parties without recourse. In June 2009, we entered into a term loan agreement with Quantum Corporation (Quantum), pursuant to which Quantum borrowed $75.4 million from us. The agreement requires quarterly interest payments at a rate of 12%per annum. The scheduled maturity date of this loan is September30, 2014. We also entered into a second term loan agreement with Quantum pursuant to which Quantum borrowed $46.3 million from us. This second loan agreement has terms similar to the first loan agreement with quarterly interest payments at a rate of 12%per annum and provides for two tranches of borrowings. Quantum borrowed $24.6 million under the first tranche, with a scheduled maturity date of September30, 2014 and $21.7 million under the second tranche, with a scheduled maturity date of December31, 2011. As of December31, 2009, the aggregate outstanding principal amount under all loans was $121.7 million. These loans are junior to Quantums current senior debt and senior to all other indebtedness. These notes are included in other assets, net in the consolidated balance sheet. We maintain an allowance for doubtful accounts for the estimated probable losses on uncollected notes receivable. That allowance is part of our allowance for bad debts (See Note A). |
Property, Plant and Equipment
Property, Plant and Equipment | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Property, Plant and Equipment | J. Property, Plant and Equipment Property, plant and equipment consist of (table in thousands): December31, 2009 December31, 2008 Furniture and fixtures $ 229,006 $ 224,736 Equipment 3,447,209 3,387,498 Buildings and improvements 1,427,656 1,280,580 Land 122,260 115,873 Building construction in progress 91,501 95,219 5,317,632 5,103,906 Accumulated depreciation (3,093,286 ) (2,880,899 ) $ 2,224,346 $ 2,223,007 Depreciation expense was $565.5 million, $561.1 million and $530.3 million in 2009, 2008 and 2007, respectively. |
Accrued Expenses
Accrued Expenses | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Accrued Expenses | K. Accrued Expenses Accrued expenses consist of (table in thousands): December31, 2009 December31, 2008 Salaries and benefits $ 742,748 $ 712,237 Standard product warranties 271,594 269,218 Restructuring (See Note Q) 105,760 224,702 Other 824,108 695,727 $ 1,944,210 $ 1,901,884 Product Warranties Systems sales include a standard product warranty. At the time of the sale, we accrue for systems warranty costs. The initial systems warranty accrual is based upon our historical experience, expected future costs and specific identification of systems requirements. Upon expiration of the initial warranty, we may sell additional maintenance contracts to our customers. Revenue from these additional maintenance contracts is included in deferred revenue and recognized ratably over the service period. The following represents the activity in our warranty accrual for our standard product warranty (table in thousands): Year Ended December31, 2009 2008 2007 Balance, beginning of the year $ 269,218 $ 263,561 $ 242,744 Provision 145,517 160,556 151,367 Amounts charged to the accrual (143,141 ) (154,899 ) (130,550 ) Balance, end of the year $ 271,594 $ 269,218 $ 263,561 The provision includes amounts accrued for systems at the time of shipment, adjustments for changes in estimated costs for warranties on systems shipped in the period and changes in estimated costs for warranties on systems shipped in prior periods. It is not practicable to determine the amounts applicable to each of the components. Additionally, the provision for the year ended December31, 2008 includes $6.9 million assumed in the acquisition of Iomega Corporation. |
Income Taxes
Income Taxes | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Income Taxes | L. Income Taxes Our provision (benefit) for income taxes consists of (table in thousands): 2009 2008 2007 Federal: Current $ 181,578 $ 156,501 $ 324,812 Deferred 7,977 9,681 (81,531 ) 189,555 166,182 243,281 State: Current 13,114 18,387 21,475 Deferred 13,419 1,128 (3,572 ) 26,533 19,515 17,903 Foreign: Current 30,885 100,879 100,556 Deferred 5,802 (6,180 ) (13,529 ) 36,687 94,699 87,027 Total provision for income taxes $ 252,775 $ 280,396 $ 348,211 In 2009, 2008 and 2007, we were able to utilize $68.9 million, $52.6 million and $62.3 million, respectively, of net operating loss carryforwards and tax credits to reduce the current portion of our tax provision. The effective income tax rate is based upon the income for the year, the composition of the income in different countries, and adjustments, if any, for the potential tax consequences, benefits or resolutions of tax audits. A reconciliation of our income tax provision to the statutory federal tax rate is as follows: 2009 2008 2007 Statutory federal tax rate 35.0 % 35.0 % 35.0 % State taxes, net of federal taxes 1.0 1.2 1.2 Resolution of uncertain tax positions (4.5 ) (2.9 ) (1.3 ) Tax rate differential for international jurisdictions and other international related tax items (17.5 ) (15.9 ) (15.2 ) U.S. tax credits (3.1 ) (5.2 ) (2.1 ) Changes in valuation allowance (1.5 ) Reorganization of RSA and Data Domain 4.4 Permanent items 4.2 5.3 2.1 Other (1.1 ) (0.5 ) 18.4 % 17.5 % 17.7 % In 2009, we effected a plan to reorganize our international operations by transferring certain assets of our RSA and Data Domain entities and legacy foreign corporations owned directly by EMC into a single EMC international holding company. As a result of this reorganization, we incurred income taxes which negatively impacted the rate by 4.4 percentage points. The components of the current and noncurrent deferred tax assets and liabilities are as follows (table in thousands): December31, 2009 December31, 2008 (As Adjusted) Deferred Tax Asset Deferred Tax Liability Deferred Tax Asset Deferred Tax Liability Current: Accounts and notes receivable $ 77,052 $ $ 53,627 $ Inventory 62,840 52,150 Accrued expenses 253,803 213,245 Deferred revenue 170,479 158,079 Total current 564,174 477,101 Noncurrent: Property, plant and equ |
Retirement Plan Benefits
Retirement Plan Benefits | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Retirement Plan Benefits | M. Retirement Plan Benefits 401(k) Plan EMCs Information Infrastructure business has established a deferred compensation program for certain employees that is qualified under Section401(k) of the Code. EMC will match pre-tax employee contributions up to 6% of eligible compensation during each pay period (subject to a $750 maximum match each quarter). Matching contributions are immediately 100% vested. Our contributions amounted to $27.1 million, $60.4 million and $52.8 million in 2009, 2008 and 2007, respectively. We matched employees contributions in the first half of 2009. Beginning in the third quarter of 2009, we suspended our company match of pre-tax contributions. Employees may elect to invest their contributions in a variety of funds, including an EMC stock fund. The deferred compensation program limits an employees maximum investment allocation in the EMC stock fund to 30% of their total contribution. Our matching contribution mirrors the investment allocation of the employees contribution. Defined Benefit Pension Plan We have noncontributory defined benefit pension plans which were assumed as part of the Data General acquisition, which cover substantially all former Data General employees located in the U.S. and Canada. In addition, certain of the former Data General foreign subsidiaries also have retirement plans covering substantially all of their employees. All of these plans were frozen in 1999 resulting in employees no longer accruing pension benefits for future services. Certain of our foreign subsidiaries also have a defined benefit pension plan. Benefits under these plans are generally based on either career average or final average salaries and creditable years of service as defined in the plans. The annual cost for these plans is determined using the projected unit credit actuarial cost method that includes actuarial assumptions and estimates which are subject to change. The measurement date for the plans is December31. Our investment policy provides that no security, except issues of the U.S. Government, shall comprise more than 5% of total plan assets, measured at market. At December31, 2009, the Data General U.S. pension plan held $0.5 million of our common stock. The Data General U.S. pension plan and Canada pension plan (the Pension Plans) are summarized in the following tables. The other pension plans are not presented because they do not have a material impact on our consolidated financial position or results of operations. The components of the change in benefit obligation of the Pension Plans are as follows (table in thousands): December31, 2009 December31, 2008 Benefit obligation, at beginning of year $ 351,074 $ 339,835 Interest cost 22,027 21,876 Benefits paid (13,635 ) (12,481 ) Settlement payments (1 ) (7 ) Actuarial loss 26,851 1,851 Benefit obligation, at end of year $ 386,316 $ 351,074 The reconciliation of the beginning and ending balances of the fair value of the assets of the Pension Plans is as follows (table in thousands): |
Commitments and Contingencies
Commitments and Contingencies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Commitments and Contingencies | N. Commitments and Contingencies Operating Lease Commitments We lease office and warehouse facilities and equipment under various operating leases. Facility leases generally include renewal options. Rent expense was as follows (table in thousands): 2009 2008 2007 Rent expense $ 300,609 $ 299,481 $ 277,602 Sublease proceeds (6,114 ) (10,740 ) (12,811 ) Net rent expense $ 294,495 $ 288,741 $ 264,791 Our future operating lease commitments as of December31, 2009 are as follows (table in thousands): 2010 $ 273,814 2011 219,300 2012 172,033 2013 129,068 2014 107,243 Thereafter 450,940 Total minimum lease payments $ 1,352,398 We sublet certain of our office facilities. Expected future non-cancelable sublease proceeds as of December31, 2009 are as follows (table in thousands): 2010 $ 6,114 2011 4,237 2012 1,887 2013 2014 Thereafter Total sublease proceeds $ 12,238 Outstanding Purchase Orders At December31, 2009, we had outstanding purchase orders aggregating approximately $1.6 billion. The purchase orders are for manufacturing and non-manufacturing related goods and services. While the purchase orders are generally cancelable without penalty, certain vendor agreements provide for percentage-based cancellation fees or minimum restocking charges based on the nature of the product or service. Line of Credit We have available for use a credit line of $50.0 million in the United States. As of December31, 2009, we had no borrowings outstanding on the line of credit. The credit line bears interest at the banks base rate and requires us, upon utilization of the credit line, to meet certain financial covenants with respect to limitations on losses. In the event the covenants are not met, the lender may require us to provide collateral to secure the outstanding balance. At December31, 2009, we were in compliance with the covenants. Guarantees and Indemnification Obligations EMCs subsidiaries have entered into arrangements with financial institutions for such institutions to provide guarantees for rent, taxes, insurance, leases, performance bonds, bid bonds and customs duties aggregating $70.0 million as of December31, 2009. The guarantees vary in length of time. In connection with these arrangements, we have agreed to guarantee substantially all of the guarantees provided by these financial institutions. We enter into agreements in the ordinary course of business with, among others, customers, resellers, OEMs, systems integrators and distributors. Most of these agreements require us to indemnify the other party against third-party claims alleging that an EMC product infringes a patent and/or copyright. Certain agreements in which we grant limited licenses to specific EMC-trademarks require us to indemnify the other party against third-party claims alleging that the use of the licensed trademark infringes a third-party trademark. Certain of th |
Stockholders' Equity
Stockholders' Equity | |
1/1/2009 - 12/31/2009
USD / shares | |
Stockholders' Equity | O. Stockholders Equity Net Income Per Share The reconciliation from basic to diluted earnings per share for both the numerators and denominators is as follows (table in thousands): 2009 2008 (AsAdjusted) 2007 (AsAdjusted) Numerator: Net income attributable to EMC Corporation $ 1,088,077 $ 1,275,104 $ 1,598,965 Incremental dilution from VMware (2,252 ) (7,516 ) (4,756 ) Net income diluted attributable to EMC Corporation $ 1,085,825 $ 1,267,588 $ 1,594,209 Denominator: Weighted average shares, basic 2,022,371 2,048,506 2,079,542 Weighted common stock equivalents 29,393 31,287 54,651 Assumed conversion of the Notes and Sold Warrants 3,382 60 23,680 Weighted average shares, diluted 2,055,146 2,079,853 2,157,873 Options to acquire 152.4million, 144.2million and 98.4million shares of common stock for the years ended December31, 2009, 2008 and 2007, respectively, were excluded from the calculation of diluted earnings per share because they were antidilutive. The incremental dilution from VMware represents the impact of VMwares dilutive securities on EMCs consolidated diluted net income per share and is calculated by multiplying the difference between VMwares basic and diluted earnings per share by the number of VMware shares owned by EMC. Share Repurchase Program We utilize both authorized and unissued shares including repurchased shares, to satisfy all shares issued under our equity plans. Our Board of Directors authorized the repurchase of 250.0million shares of our common stock in April 2006 and an additional 250.0million shares of our common stock in April 2008. Of the 500.0million shares authorized for repurchase through December31, 2009, we have repurchased 311.4million shares at a total cost of $4.2 billion, leaving a remaining balance of 188.6million shares authorized for future repurchases. In January 2010, a buyback of up to $1.0 billion for future repurchases was authorized. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss, which is presented net of tax, consists of the following (table in thousands): December31, 2009 December31, 2008 Foreign currency translation adjustments, net of tax benefits of $0 and $0 $ (2,349 ) $ (17,299 ) Unrealized losses on temporarily impaired investments, net of tax benefits of $(8,679) and $(35,150) (15,361 ) (54,423 ) Unrealized gains on investments, net of taxes of $14,329 and $17,419 23,617 27,624 Unrealized gains (losses) on derivatives, net of taxes (benefits) of $599 and $(108) 2,211 (976 ) Recognition of actuarial net loss from pension and other postretirement plans, net of tax benefits of $(68,996) and $(82,088) (113,001 ) (134,878 ) (104,883 ) (179,952 ) Less: Accumulated Other Comprehensive Income attributable to the non-contr |
Stock-Based Compensation
Stock-Based Compensation | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Stock-Based Compensation | P. Stock-Based Compensation EMC Information Infrastructure Equity Plans The EMC Corporation 2003 Stock Plan (the 2003 Plan) provides for the grant of stock options, stock appreciation rights, restricted stock and restricted stock units. The exercise price for a stock option shall not be less than 100% of the fair market value of our common stock on the date of grant. Options generally become exercisable in annual installments over a period of three to five years after the date of grant and expire ten years after the date of grant. Incentive stock options will expire no later than ten years after the date of grant. Restricted stock is common stock that is subject to a risk of forfeiture or other restrictions that will lapse upon satisfaction of specified conditions. Restricted stock units represent the right to receive shares of common stock in the future, with the right to future delivery of the shares subject to a risk of forfeiture or other restrictions that will lapse upon satisfaction of specified conditions. Grants of restricted stock awards or restricted stock units that vest only by the passage of time will not vest fully in less than three years after the date of grant, except for grants to non-employee Directors that are not subject to this minimum three-year vesting requirement. The 2003 Plan allows us to grant up to 300.0million shares of common stock. Beginning in May 2007, we started recognizing restricted stock awards and restricted stock units against the 2003 Plan share reserve as two shares for every one share issued in connection with such awards. In addition to the 2003 Plan, we have four other stock option plans (the 1985 Plan, the 1993 Plan, the 2001 Plan and the 1992 Directors Plan). In May 2007, these four plans were consolidated into the 2003 Plan such that all future grants will be granted under the 2003 Plan and shares that are not issued as a result of cancellations, expirations or forfeitures, will become available for grant under the 2003 Plan. A total of 862.4million shares of common stock have been reserved for issuance under the above five plans. At December31, 2009, there were an aggregate of 60.8million shares of common stock available for issuance pursuant to future grants under the 2003 Plan. We have, in connection with the acquisition of various companies, assumed the stock option plans of these companies. We do not intend to make future grants under any of such plans. EMC Information Infrastructure Employee Stock Purchase Plan Under our 1989 Employee Stock Purchase Plan (the 1989 Plan), eligible employees may purchase shares of common stock through payroll deductions at 85% of the fair market value at the time of exercise. Options to purchase shares are granted twice yearly, on January1 and July1, and are exercisable on the succeeding June30 or December31. A total of 153.0million shares of common stock have been reserved for issuance under the 1989 Plan. In 2009, 2008 and 2007, 10.3million shares, 11.7million shares and 9.3million shares, respectively, were purchased under the 1989 Plan at a weighted average purchase price per share of $11.17, $10.49 and $12.95, respectively. Total cash |
Restructuring and Acquisition-R
Restructuring and Acquisition-Related Charges | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Restructuring and Acquisition-Related Charges | Q. Restructuring and Acquisition-Related Charges In 2009, 2008 and 2007, we incurred restructuring and acquisition-related charges of $107.5 million, $250.3million and $31.3million, respectively. In 2009, we incurred $88.4 million of restructuring charges, primarily related to our 2008 restructuring program and $19.1 million of costs in connection with acquisitions for financial advisory, legal and accounting services. In 2008 and 2007, all charges are only related to restructuring activities as acquisition costs were generally capitalized under prior business combination accounting rules. In the fourth quarter of 2008, to further improve the competitiveness and efficiency of our global business in response to a challenging global economy, we implemented a restructuring program to further streamline the costs related to our Information Infrastructure business. The plan included the following components: A reduction in force resulting in the elimination of approximately 2,400 positions which was substantially completed by the end of 2009 and will be fully completed in 2010. The consolidation of facilities and the termination of contracts. These actions are expected to be completed by 2015. The write-off of certain assets for which EMC has determined it will no longer derive any benefit. These actions were completed in the fourth quarter of 2008. In addition to this plan, we also recognized in 2008 an asset impairment charge of $28 million for certain assets for which the forecasted cash flows from the assets are less than the assets net book value. The total charge resulting from these actions is expected to be approximately $400.0 million, with $247.9million recognized in 2008, $87.0 million recognized in 2009, $35.0 million expected to be recognized in 2010 and the remainder expected to be recognized in 2011 through 2015. The 2009 restructuring charge consisted of $87.0 million from the fourth quarter 2008 program and net charges of $1.4 million from other prior years programs. The charges related to the 2008 program in 2009 include a provision for $54.4 million of workforce reduction costs for individuals who had a required transition period and whose severance expense, which is incremental to their normal compensation, is being recognized ratably from the date of notification through their last day of work. These employees were required to render services beyond a minimum retention period to receive their severance. As of December31, 2009, we have substantially completed the headcount reductions. Additionally, in 2009, we recognized charges for $26.4 million of lease termination costs for facilities vacated in the quarter in accordance with our plan as part of our 2008 restructuring programs. We recognized a $6.2 million charge for abandoned assets which represent identified infrastructure determined to no longer have benefit that were abandoned in 2009. In addition, in 2009, we also recognized a $12.5 million charge to write-off a prepaid royalty associated with a contractual obligation that included a minimum purchase commitment since we do not anticipate achieving the minimum purchase le |
Related Party Transactions
Related Party Transactions | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Related Party Transactions | R. Related Party Transactions In 2009, 2008 and 2007, we leased certain real estate from a company owned by a member of our Board of Directors and such Directors siblings, for which payments aggregated approximately $4.8 million, $4.1 million and $3.7 million, respectively. Such lease was initially assumed by us as a result of our acquisition of Data General in 1999 and renewed in 2003 for a ten-year term. In 2007, VMware entered into an agreement to license software from a third party. A member of our Board of Directors is a managing partner and general partner in a limited partnership which, until November 2009, had an equity interest in such third party of greater than 10%. The amounts expensed or paid to such third party in 2009, 2008 and 2007 were not material to our Consolidated Financial Statements. In accordance with its written policy and procedures relating to related person transactions, EMCs Audit Committee has approved each of the above transactions occurring since the policys adoption. EMC is a large global organization which engages in thousands of purchase, sales and other transactions annually. We enter into purchase and sales transactions with other publicly- and privately-held companies, universities, hospitals and not-for-profit organizations with which members of our Board of Directors or executive officers are affiliated. We enter into these arrangements in the ordinary course of our business. From time to time, we make strategic investments in privately-held companies that develop software, hardware and other technologies or provide services supporting our technologies. We may purchase from or make sales to these organizations. We believe that the terms of each of these arrangements described above were fair and not less favorable to us than could have been obtained from unaffiliated parties. |
Segment Information
Segment Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Segment Information | S. Segment Information We manage our business in two broad categories: EMC Information Infrastructure and VMware Virtual Infrastructure. EMC Information Infrastructure operates in three segments: Information Storage, Content Management and Archiving and RSA Information Security, while VMware Virtual Infrastructure operates in a single segment. Our management measures are designed to assess performance of these operating segments excluding certain items. As a result, the corporate reconciling items are used to capture the items excluded from the segment operating performance measures, including stock-based compensation expense and acquisition-related intangible asset amortization expense. Additionally, in certain instances, IPRD charges, restructuring and acquisition-related charges, transition costs and infrequently occurring gains or losses are also excluded from the measures used by management in assessing segment performance. As a result of preparing separate financial statements for VMwares initial public offering in the third quarter of 2007, there have been some adjustments to VMwares stand-alone consolidated financial statements that have been recorded in different periods by EMC and VMware. These differences are not material to the consolidated financial statements and segment disclosures of EMC. The VMware Virtual Infrastructure amounts represent the revenues and expenses of VMware as reflected within EMCs consolidated financial statements. Research and development expenses, SGA, and other income associated with the EMC Information Infrastructure business are not allocated to the segments within the EMC Information Infrastructure business, as they are managed centrally at the business unit level. For the three segments within the EMC Information Infrastructure business, gross profit is the segment operating performance measure. Our segment information for the years ended 2009, 2008 and 2007 are as follows (tables in thousands, except percentages): EMC Information Infrastructure 2009: Information Storage Content Management andArchiving RSA Information Security EMC Information Infrastructure VMware Virtual Infrastructure within EMC Corp Reconciling Items Consolidated Revenues: Product revenues $ 7,198,051 $ 260,836 $ 340,272 $ 7,799,159 $ 1,028,986 $ $ 8,828,145 Services revenues 3,461,358 478,753 265,678 4,205,789 991,976 5,197,765 Total consolidated revenues 10,659,409 739,589 605,950 12,004,948 2,020,962 14,025,910 Cost of sales 5,256,682 274,763 186,462 5,717,907 316,278 246,826 6,281,011 Gross profit $ 5,402,727 $ 464,826 $ 419,488 6,287,041 1,704,684 (246,826 ) 7,744,899 Gross profit percentage 50.7 % 62.8 % 6 |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (unaudited) | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Selected Quarterly Financial Data (unaudited) | T. Selected Quarterly Financial Data (unaudited) Quarterly financial data for 2009 and 2008 is as follows (tables in thousands, except per share amounts): 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Revenues $ 3,150,762 $ 3,257,352 $ 3,517,630 $ 4,100,166 Gross profit 1,683,255 1,743,778 1,940,217 2,377,649 Net income attributable to EMC Corporation 194,069 205,232 298,180 390,596 Net income per weighted average share, diluted: common shareholders $ 0.10 $ 0.10 $ 0.14 $ 0.19 2008 Q1 2008 (AsAdjusted) Q2 2008 (AsAdjusted) Q3 2008 (AsAdjusted) Q4 2008 (AsAdjusted) Revenues $ 3,470,059 $ 3,673,874 $ 3,715,592 $ 4,016,638 Gross profit 1,909,395 2,028,570 2,058,720 2,225,684 Net income attributable to EMC Corporation 251,647 360,124 393,411 269,922 Net income per weighted average share, diluted: common shareholders $ 0.12 $ 0.17 $ 0.19 $ 0.13 Quarterly financial data for the fourth quarter of 2009 includes an after-tax charge for provision for litigation of $52.3 million or $0.02 per diluted share. Quarterly financial data for the fourth quarter of 2008 includes an after-tax restructuring charge which reduced net income by $199.5 million or $0.10 per diluted share. |
Subsequent Events
Subsequent Events | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Subsequent Events | U. Subsequent Events EMC has been in ongoing settlement discussions with the Civil Division of the U.S. Department of Justice to resolve the claims alleged in U.S. ex rel. Rille Roberts v. EMC. Based on these discussions, and without any admission or finding of liability, we have determined that a settlement of the matter is probable.As a result, we have adjusted our fourth quarter andfull year2009 EMC financial statements by recognizing an additional pre-tax charge of $57.5 million ($52.3 million after tax). See Note N. On February25, 2010, EMC entered into a definitive agreement with VMware to transfer key management technologies to VMware, including solutions aimed at delivering configuration compliance for virtualized environments. The acquisition by VMware will further enhance its mission of driving complexity out of the data center, desktop, application development and core IT services, while delivering a fundamentally new and more efficient approach to IT. VMware will pay EMC up to $200 million. The transaction is expected to close during the second quarter of 2010. |
SCHEDULE II-VALUATION AND QUALI
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS | EMC CORPORATION AND SUBSIDIARIES SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS (in thousands) Allowance for Bad Debts Balanceat Beginning of Period Allowancefor Bad Debts Charged to Selling,General and Administrative Expenses Chargedto Other Accounts Bad Debts Write-Offs Balanceat End of Period Description Year ended December31, 2009 allowance for doubtful accounts $ 50,580 $ 14,351 $ $ (13,817 ) $ 51,114 Year ended December31, 2008 allowance for doubtful accounts 35,889 34,667 (19,976 ) 50,580 Year ended December31, 2007 allowance for doubtful accounts 41,509 8,885 (14,505 ) 35,889 Note: The allowance for doubtful accounts includes both current and non-current portions. Allowance for Sales Returns Balanceat Beginning of Period Allowancefor Sales Returns Accountedforas aReduction in Revenue Chargedto Other Accounts SalesReturns Balanceat End of Period Description Year ended December31, 2009 allowance for sales returns $ 89,433 $ 69,346 $ $ (29,574 ) $ 129,205 Year ended December31, 2008 allowance for sales returns 49,217 73,856 (33,640 ) 89,433 Year ended December31, 2007 allowance for sales returns 39,378 66,359 (56,520 ) 49,217 Tax Valuation Allowance Balanceat Beginning of Period TaxValuation Allowance Charged to Income Tax Provision Charged (credited) to Other Accounts* TaxValuation Allowance Credited to IncomeTax Provision Balanceat End of Period Description Year ended December31, 2009 income tax valuation allowance $ 15,993 $ $ 5,822 $ $ 21,815 Year ended December31, 2008 income tax valuation allowance 28,019 (12,026 ) 15,993 Year ended December31, 2007 income tax valuation allowance 55,531 4,427 (31,939 ) 28,019 * Amount represents valuation allowances recognized in connection with business combinations and equity. |
Document Information
Document Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Document Type | 10-K |
Amendment Flag | false |
Document Period End Date | 2009-12-31 |
Entity Information
Entity Information (USD $) | |||
12 Months Ended
Dec. 31, 2009 | Jan. 31, 2010
| Jun. 30, 2009
| |
Trading Symbol | EMC | ||
Entity Registrant Name | EMC CORP | ||
Entity Central Index Key | 0000790070 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 2,052,724,194 | ||
Entity Public Float | $26,397,075,378 |