EMC 8-K Other Events

EMC CORPORATION

Consolidated Income Statements

(in thousands, except per share amounts)

Unaudited

	Three Months Ended						Twelve Months Ended
	December 31, 2009			December 31, 2008			December 31, 2009			December 31, 2008
				(As Adjusted)						(As Adjusted)
Revenues:
Product sales	$	2,653,174		$	2,776,794		$	8,828,145		$	10,071,816
Services		1,446,992			1,239,844			5,197,765			4,804,347
		4,100,166			4,016,638			14,025,910			14,876,163
Cost and expenses:
Cost of product sales		1,228,252			1,313,468			4,406,187			4,663,667
Cost of services		494,265			477,486			1,874,824			1,990,127
Research and development		424,243			434,521			1,627,509			1,721,330
Selling, general and administrative		1,341,873			1,211,120			4,595,625			4,601,588
In-process research and development		—			6,576			—			85,780
Restructuring and acquisition-related charges		23,903			240,694			107,490			244,735
Operating income		587,630			332,773			1,414,275			1,568,936
Non-operating income (expense):
Investment income		31,137			54,462			140,430			247,049
Interest expense		(46,571	)		(44,741	)		(182,499	)		(176,355	)
Other income (expense), net		(14,911	)		(18,518	)		2,370			(39,405	)
Total non-operating income (expense)		(30,345	)		(8,797	)		(39,699	)		31,289
Income before provision for income taxes		557,285			323,976			1,374,576			1,600,225
Income tax provision		156,313			36,336			252,775			280,396
Net income		400,972			287,640			1,121,801			1,319,829
Less: Net income attributable to the non-controlling interest in VMware, Inc.		(10,376	)		(17,718	)		(33,724	)		(44,725	)
Net income attributable to EMC Corporation	$	390,596		$	269,922		$	1,088,077		$	1,275,104
Net income per weighted average share, basic attributable to EMC Corporation common shareholders	$	0.19		$	0.13		$	0.54		$	0.62
Net income per weighted average share, diluted attributable to EMC Corporation common shareholders	$	0.19		$	0.13		$	0.53		$	0.61
Weighted average shares, basic		2,041,601			2,012,389			2,022,371			2,048,506
Weighted average shares, diluted		2,103,569			2,028,635			2,055,146			2,079,853

Reconciliation of GAAP to Non-GAAP

For the Three Months Ended December 31, 2009

(in thousands, except per share amounts)

Unaudited

	Revenue			Cost of Revenue			Research and Development			Selling, General and Administrative			Restructuring and Acquisition- Related Charges			Operating Income		Other Expense, net			Income Before Taxes			Income Tax Provision			Net Income			Net Income Attributable to VMware			Net Income Attributable to EMC			Net Income per Weighted Average Share, Basic			Net Income per Weighted Average Share, Diluted
EMC Consolidated GAAP	$	4,100,166		$	1,722,517		$	424,243		$	1,341,873		$	23,903		$	587,630	$	(30,345	)	$	557,285		$	156,313		$	400,972		$	(10,376	)	$	390,596		$	0.191		$	0.185
Provision for litigation		—			—			—			(57,500	)		—			57,500		—			57,500			5,156			52,344			—			52,344		$	0.026		$	0.025
Restructuring and acquistion-related charges		—			—			—			—			(23,903	)		23,903		—			23,903			9,130			14,773			(152	)		14,621		$	0.007		$	0.007
Special income tax charge		—			—			—			—			—			—		—			—			(60,718	)		60,718			—			60,718		$	0.030		$	0.029
EMC Consolidated Adjusted (1)		4,100,166			1,722,517			424,243			1,284,373			—			669,033		(30,345	)		638,688			109,881			528,807			(10,528	)		518,279		$	0.254		$	0.246
Stock-based compensation expense		—			(30,136	)		(67,040	)		(84,421	)		—			181,597		—			181,597			36,849			144,748			(11,554	)		133,194		$	0.065		$	0.063
Intangible amortization		—			(36,488	)		(3,191	)		(26,224	)		—			65,903		—			65,903			21,443			44,460			(468	)		43,992		$	0.022		$	0.021
EMC Consolidated Non-GAAP (2)	$	4,100,166		$	1,655,893		$	354,012		$	1,173,728		$	—		$	916,533	$	(30,345	)	$	886,188		$	168,173		$	718,015		$	(22,550	)	$	695,465		$	0.341		$	0.330
EMC Information Infrastructure GAAP	$	3,493,623		$	1,614,231		$	290,130		$	1,051,889		$	23,075		$	514,298	$	(24,067	)	$	490,231		$	145,535		$	344,696		$	—		$	344,696		$	0.169		$	0.164
Provision for litigation		—			—			—			(57,500	)		—			57,500		—			57,500			5,156			52,344			—			52,344		$	0.026		$	0.025
Restructuring and acquistion-related charges		—			—			—			—			(23,075	)		23,075		—			23,075			9,130			13,945			—			13,945		$	0.007		$	0.007
Special income tax charge		—			—			—			—			—			—		—			—			(60,718	)		60,718			—			60,718		$	0.030		$	0.029
EMC Information Infrastructure Adjusted (3)		3,493,623			1,614,231			290,130			994,389			—			594,873		(24,067	)		570,806			99,103			471,703			—			471,703		$	0.231		$	0.224
Stock-based compensation expense		—			(20,633	)		(29,880	)		(58,024	)		—			108,537		—			108,537			26,614			81,923			—			81,923		$	0.040		$	0.039
Intangible amortization		—			(32,960	)		(3,124	)		(25,710	)		—			61,794		—			61,794			19,881			41,913			—			41,913		$	0.021		$	0.020
EMC Information Infrastructure Non-GAAP (4)	$	3,493,623		$	1,560,638		$	257,126		$	910,655		$	—		$	765,204	$	(24,067	)	$	741,137		$	145,598		$	595,539		$	—		$	595,539		$	0.292		$	0.283
VMware standalone GAAP	$	608,201		$	107,506		$	136,262		$	293,276		$	—		$	71,157	$	(3,920	)	$	67,237		$	10,828		$	56,409		$	—		$	56,409		$	0.028		$	0.027
GAAP adjustments and eliminations		(1,658	)		780			(2,149	)		(3,292	)		828			2,175		(2,358	)		(183	)		(50	)		(133	)		(10,376	)		(10,509	)	$	(0.005	)	$	(0.006	)
VMware within EMC GAAP (5)		606,543			108,286			134,113			289,984			828			73,332		(6,278	)		67,054			10,778			56,276			(10,376	)		45,900		$	0.022		$	0.021
Acquistion-related charges		—			—			—			—			(828	)		828		—			828			—			828			(152	)		676		$	—		$	—
VMware within EMC Adjusted (6)		606,543			108,286			134,113			289,984			—			74,160		(6,278	)		67,882			10,778			57,104			(10,528	)		46,576		$	0.023		$	0.022
Stock-based compensation expense		—			(9,503	)		(37,160	)		(26,397	)		—			73,060		—			73,060			10,235			62,825			(11,554	)		51,271		$	0.025		$	0.024
Intangible amortization		—			(3,528	)		(67	)		(514	)		—			4,109		—			4,109			1,562			2,547			(468	)		2,079		$	0.001		$	0.001
VMware within EMC Non-GAAP (7)	$	606,543		$	95,255		$	96,886		$	263,073		$	—		$	151,329	$	(6,278	)	$	145,051		$	22,575		$	122,476		$	(22,550	)	$	99,926		$	0.049		$	0.047
																															Wtd. Average Share O/S						2,041,601			2,103,569
																															Incremental VMware dilution								$	1,150

Reconciliation of GAAP to Non-GAAP

For the Three Months Ended December 31, 2009

(in thousands, except per share amounts)

Unaudited

(Continued)

The following costs are included in EMC Consolidated Non-GAAP and EMC Information Infrastructure Non-GAAP results

	Revenue		Cost of Revenue		Research and Development		Selling, General and Administrative		Restructuring and Acquisition- Related Charges		Operating Income			Other Expense, net			Income Before Taxes			Income Tax Provision			Net Income			Net Income Attributable to VMware		Net Income Attributable to EMC			Net Income per Weighted Average Share, Basic			Net Income per Weighted Average Share, Diluted
Non-cash interest expense on convertible debt (8)	$	—	$	—	$	—	$	—	$	—	$	—		$	(27,785	)	$	(27,785	)	$	(9,253	)	$	(18,532	)	$	—	$	(18,532	)	$	(0.009	)	$	(0.009	)
Transition costs (9)		—		167		3,243		15,921		—		(19,331	)		—			(19,331	)		(5,053	)		(14,278	)		—		(14,278	)	$	(0.007	)	$	(0.007	)
	$	—	$	167	$	3,243	$	15,921	$	—	$	(19,331	)	$	(27,785	)	$	(47,116	)	$	(14,306	)	$	(32,810	)	$	—	$	(32,810	)	$	(0.016	)	$	(0.016	)

(1) Represents EMC Consolidated GAAP excluding provision for litigation, restructuring and acquisition-related charges and a special income tax charge.

(2) Represents EMC Consolidated Adjusted excluding stock-based compensation expense and intangible amortization.

(3) Represents EMC Information Infrastructure GAAP excluding provision for litigation, restructuring and acquisition-related charges and a special income tax charge.

(4) Represents EMC Information Infrastructure Adjusted excluding stock-based compensation expense and intangible amortization.

(5) Represents VMware within EMC GAAP.

(6) Represents VMware within EMC GAAP excluding acquisition-related charges.

(7) Represents VMware within EMC Adjusted excluding stock-based compensation expense and intangible amortization.

(8) Represents the non-cash interest charge associated with our convertible senior notes due 2011 and 2013 totaling $3,450 million.

(9) Represents incremental costs incurred to transform our current cost structure to a more streamlined cost structure.

Note: schedule may not add due to rounding

Reconciliation of GAAP to Non-GAAP

For the Twelve Months Ended December 31, 2009

(in thousands, except per share amounts)

Unaudited

	Revenue			Cost of Revenue			Research and Development			Selling, General and Administrative			Restructuring and Acquisition- Related Charges			Operating Income		Other Income (Expense), net			Income Before Taxes			Income Tax Provision			Net Income			Net Income Attributable to VMware			Net Income Attributable to EMC			Net Income per Weighted Average Share, Basic			Net Income per Weighted Average Share, Diluted
EMC Consolidated GAAP	$	14,025,910		$	6,281,011		$	1,627,509		$	4,595,625		$	107,490		$	1,414,275	$	(39,699	)	$	1,374,576		$	252,775		$	1,121,801		$	(33,724	)	$	1,088,077		$	0.538		$	0.528
Provision for litigation		—			—			—			(57,500	)		—			57,500		—			57,500			5,156			52,344			—			52,344		$	0.026		$	0.025
Gain on Data Domain and SpringSource common stock		—			—			—			—			—			—		(25,822	)		(25,822	)		—			(25,822	)		1,025			(24,797	)	$	(0.012	)	$	(0.012	)
Restructuring and acquistion-related charges		—			(12,485	)		—			—			(107,490	)		119,975		—			119,975			35,884			84,091			(287	)		83,804		$	0.041		$	0.041
Special income tax charge		—			—			—			—			—			—		—			—			(60,718	)		60,718			—			60,718		$	0.030		$	0.030
EMC Consolidated Adjusted (1)		14,025,910			6,268,526			1,627,509			4,538,125			—			1,591,750		(65,521	)		1,526,229			233,097			1,293,132			(32,986	)		1,260,146		$	0.623		$	0.612
Stock-based compensation expense		—			(99,393	)		(214,554	)		(291,759	)		—			605,706		—			605,706			135,130			470,576			(34,731	)		435,845		$	0.216		$	0.212
Intangible amortization		—			(131,754	)		(12,883	)		(103,151	)		—			247,788		—			247,788			83,842			163,946			(1,568	)		162,378		$	0.080		$	0.079
EMC Consolidated Non-GAAP (2)	$	14,025,910		$	6,037,379		$	1,400,072		$	4,143,215		$	—		$	2,445,244	$	(65,521	)	$	2,379,723		$	452,069		$	1,927,654		$	(69,285	)	$	1,858,369		$	0.919		$	0.903
EMC Information Infrastructure GAAP	$	12,004,948		$	5,921,103		$	1,136,100		$	3,657,916		$	105,889		$	1,183,940	$	(36,059	)	$	1,147,881		$	225,799		$	922,082		$	—		$	922,082		$	0.456		$	0.449
Provision for litigation		—			—			—			(57,500	)		—			57,500		—			57,500			5,156			52,344			—			52,344		$	0.026		$	0.025
Gain on Data Domain common stock		—			—			—			—			—			—		(19,963	)		(19,963	)		—			(19,963	)		—			(19,963	)	$	(0.010	)	$	(0.010	)
Restructuring and acquistion-related charges		—			(12,485	)		—			—			(105,889	)		118,374		—			118,374			35,884			82,490			—			82,490		$	0.041		$	0.040
Special income tax charge		—			—			—			—			—			—		—			—			(60,718	)		60,718			—			60,718		$	0.030		$	0.030
EMC Information Infrastructure Adjusted (3)		12,004,948			5,908,618			1,136,100			3,600,416			—			1,359,814		(56,022	)		1,303,792			206,121			1,097,671			—			1,097,671		$	0.543		$	0.534
Stock-based compensation expense		—			(67,698	)		(92,766	)		(198,239	)		—			358,703		—			358,703			89,055			269,648			—			269,648		$	0.133		$	0.131
Intangible amortization		—			(119,819	)		(12,776	)		(101,059	)		—			233,654		—			233,654			78,824			154,830			—			154,830		$	0.077		$	0.075
EMC Information Infrastructure Non-GAAP (4)	$	12,004,948		$	5,721,101		$	1,030,558		$	3,301,118		$	—		$	1,952,171	$	(56,022	)	$	1,896,149		$	374,000		$	1,522,149		$	—		$	1,522,149		$	0.753		$	0.741
VMware standalone GAAP	$	2,023,937		$	359,728		$	496,552		$	948,362		$	—		$	219,295	$	4,154		$	223,449		$	26,351		$	197,098		$	—		$	197,098		$	0.097		$	0.096
GAAP adjustments and eliminations		(2,975	)		180			(5,143	)		(10,653	)		1,601			11,040		(7,794	)		3,246			625			2,621			(33,724	)		(31,103	)	$	(0.015	)	$	(0.016	)
VMware within EMC GAAP (5)		2,020,962			359,908			491,409			937,709			1,601			230,335		(3,640	)		226,695			26,976			199,719			(33,724	)		165,995		$	0.082		$	0.080
Gain on SpringSource common stock		—			—			—			—			—			—		(5,859	)		(5,859	)		—			(5,859	)		1,025			(4,834	)	$	(0.002	)	$	(0.002	)
Acquistion-related charges		—			—			—			—			(1,601	)		1,601		—			1,601			—			1,601			(287	)		1,314		$	0.001		$	0.001
VMware within EMC Adjusted (6)		2,020,962			359,908			491,409			937,709			—			231,936		(9,499	)		222,437			26,976			195,461			(32,986	)		162,475		$	0.080		$	0.078
Stock-based compensation expense		—			(31,695	)		(121,788	)		(93,520	)		—			247,003		—			247,003			46,075			200,928			(34,731	)		166,197		$	0.082		$	0.081
Intangible amortization		—			(11,935	)		(107	)		(2,092	)		—			14,134		—			14,134			5,018			9,116			(1,568	)		7,548		$	0.004		$	0.004
VMware within EMC Non-GAAP (7)	$	2,020,962		$	316,278		$	369,514		$	842,097		$	—		$	493,073	$	(9,499	)	$	483,574		$	78,069		$	405,505		$	(69,285	)	$	336,220		$	0.166		$	0.163
																															Wtd. Average Share O/S						2,022,371			2,055,146
																															Incremental VMware dilution								$	2,252

Reconciliation of GAAP to Non-GAAP

For the Twelve Months Ended December 31, 2009

(in thousands, except per share amounts)

Unaudited

(Continued)

The following costs are included in EMC Consolidated Non-GAAP and EMC Information Infrastructure Non-GAAP results

	Revenue		Cost of Revenue		Research and Development		Selling, General and Administrative		Restructuring and Acquisition- Related Charges		Operating Income			Other Income (Expense), net			Income Before Taxes			Income Tax Provision			Net Income			Net Income Attributable to VMware		Net Income Attributable to EMC			Net Income per Weighted Average Share, Basic			Net Income per Weighted Average Share, Diluted
Non-cash interest expense on convertible debt (8)	$	—	$	—	$	—	$	—	$	—	$	—		$	(108,347	)	$	(108,347	)	$	(35,025	)	$	(73,322	)	$	—	$	(73,322	)	$	(0.036	)	$	(0.036	)
Transition costs (9)		—		3,194		8,411		43,063		—		(54,668	)		—			(54,668	)		(15,683	)		(38,985	)		—		(38,985	)	$	(0.019	)	$	(0.019	)
	$	—	$	3,194	$	8,411	$	43,063	$	—	$	(54,668	)	$	(108,347	)	$	(163,015	)	$	(50,708	)	$	(112,307	)	$	—	$	(112,307	)	$	(0.056	)	$	(0.055	)

(1) Represents EMC Consolidated GAAP excluding provision for litigation, gain on Data Domain and SpringSource common stock, restructuring and acquisition-related charges and a special income tax charge.

(2) Represents EMC Consolidated Adjusted excluding stock-based compensation expense and intangible amortization.

(3) Represents EMC Information Infrastructure GAAP excluding provision for litigation, gain on Data Domain common stock, restructuring and acquisition-related charges and a special income tax charge.

(4) Represents EMC Information Infrastructure Adjusted excluding stock-based compensation expense and intangible amortization.

(5) Represents VMware within EMC GAAP.

(6) Represents VMware within EMC GAAP excluding gain on SpringSource common stock and acquisition-related charges.

(7) Represents VMware within EMC Adjusted excluding stock-based compensation expense and intangible amortization.

(8) Represents the non-cash interest charge associated with our convertible senior notes due 2011 and 2013 totaling $3,450 million.

(9) Represents incremental costs incurred to transform our current cost structure to a more streamlined cost structure.

Note: schedule may not add due to rounding

EMC CORPORATION

Consolidated Balance Sheets

(in thousands, except per share amounts)

Unaudited

	December 31, 2009			December 31, 2008
				(As Adjusted)
ASSETS
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
LIABILITIES & SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	899,298		$	757,405
Accrued expenses		1,944,210			1,901,884
Securities lending payable		—			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
Commitments and contingencies
Shareholders’ equity:
Preferred stock, par value $.01; authorized 25,000 shares; none outstanding		—			—
Common stock, par value $.01; authorized 6,000,000 shares; issued 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

EMC CORPORATION

Consolidated Statements of Cash Flows

(in thousands)

Unaudited

	Twelve Months Ended
	December 31, 2009			December 31, 2008
				(As Adjusted)
Cash flows from operating activities:
Cash received from customers	$	14,647,691		$	15,378,081
Cash paid to suppliers and employees		(11,032,859	)		(11,747,031	)
Dividends and interest received		109,525			240,031
Interest paid		(73,430	)		(73,695	)
Income taxes paid		(316,542	)		(232,298	)
Net cash provided by operating activities		3,334,385			3,565,088
Cash flows from investing activities:
Additions to property, plant and equipment		(411,579	)		(695,899	)
Capitalized software development costs		(304,520	)		(294,973	)
Purchases of short and long-term available-for-sale securities		(5,409,540	)		(3,318,545	)
Sales of short and long-term available-for-sale securities		5,171,449			3,189,547
Maturities of short and long-term available-for-sale securities		704,653			204,091
Business acquisitions, net of cash acquired		(2,664,141	)		(725,521	)
Increase in strategic and other related investments		(182,994	)		(5,510	)
Other		1,184			31,878
Net cash used in investing activities		(3,095,488	)		(1,614,932	)
Cash flows from financing activities:
Issuance of EMC’s common stock		366,361			241,060
Issuance of VMware’s common stock from the exercise of stock options		227,666			190,107
Purchase of VMware’s common stock		—			(13,259	)
Proceeds from securities lending		—			412,321
Repayments of proceeds from securities lending		(412,321	)		—
Repurchase of EMC’s common stock		—			(1,489,501	)
Excess tax benefits from stock-based compensation		46,082			97,705
Payment of long-term and short-term obligations		(20,835	)		(6,151	)
Proceeds from long-term and short-term obligations		4,969			33,707
Net cash provided by (used in) financing activities		211,922			(534,011	)
Effect of exchange rate changes on cash		7,995			(54,671	)
Net increase in cash and cash equivalents		458,814			1,361,474
Cash and cash equivalents at beginning of period		5,843,685			4,482,211
Cash and cash equivalents at end of period	$	6,302,499		$	5,843,685
Reconciliation of net income to net cash provided by operating activities:
Net income	$	1,121,801		$	1,319,829
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,073,135			1,057,511
Non-cash interest expense on convertible debt		108,347			102,581
Non-cash restructuring and other special charges		25,050			139,193
Stock-based compensation expense		600,537			501,439
Provision for doubtful accounts		14,351			34,667
Deferred income taxes, net		27,198			4,629
Excess tax benefits from stock-based compensation		(46,082	)		(97,705	)
Gain on Data Domain and SpringSource common stock		(25,822	)		—
Other		(13,906	)		(13,471	)
Changes in assets and liabilities, net of acquisitions:
Accounts and notes receivable		241,069			73,184
Inventories		(158,482	)		165,813
Other assets		3,600			(16,178	)
Accounts payable		140,376			(148,821	)
Accrued expenses		(80,642	)		8,688
Income taxes payable		(91,142	)		44,821
Deferred revenue		366,361			394,067
Other liabilities		28,636			(5,159	)
Net cash provided by operating activities	$	3,334,385		$	3,565,088