Exhibit 99.1
| | | | | | |
| | | | | Contact: | | Dave Farmer |
| | | | | | 508-293-7206 |
| | | | | | dave.farmer@emc.com |
EMC REPORTS RECORD REVENUE AND
58% PROFIT GROWTH
Third-Quarter Highlights
| | • | | All-time record consolidated revenue up 20% year over year |
| | • | | Balanced, double-digit year-over-year revenue growth across U.S. and International geographies |
| | • | | GAAP net income up 58% year over year |
| | • | | Record third-quarter non-GAAP net income up 35% year over year |
| | • | | Strong year-over-year increase in gross and operating margins |
HOPKINTON, Mass. – October 19, 2010 – EMC Corporation (NYSE:EMC) today reported record financial results for the company’s third fiscal quarter of 2010. Strong execution and continued healthy customer demand for the company’s storage, data protection, virtualization, and security products and services contributed to EMC achieving all-time record consolidated revenue and record third-quarter non-GAAP net income.
For the third quarter, consolidated revenue was $4.21 billion, an increase of 20% compared with the year-ago quarter; GAAP net income attributable to EMC increased 58% year over year to $472.5 million; and GAAP diluted earnings per share were $0.22, up 57% year over year. Non-GAAP1 net income attributable to EMC for the third quarter was $649.4 million, an increase of 35% compared with the year-ago quarter, and non-GAAP1 earnings per diluted share were $0.30, an increase of 30% year over year.
During the quarter, EMC expanded gross and operating margins substantially on a year-over-year basis. The company achieved all-time record year-to-date operating cash flow and free cash flow of $3.0 billion and $2.2 billion, which grew 31% and 22%, respectively, compared with the year-ago period. The company completed the quarter with $10.5 billion in cash and investments.
Joe Tucci, EMC’s Chairman and Chief Executive Officer, said, “Customers are embracing EMC in increasing numbers as a trusted partner for their cloud computing build-outs. To lead this transformational IT wave, EMC remains focused on – and is taking share in – markets that are growing considerably faster than IT as a whole. With our compelling technology and services portfolio, partner ecosystem, and strong product roadmap, we remain confident that we’ll continue to produce double-digit growth rates over the long term.”
David Goulden, EMC’s Executive Vice President and Chief Financial Officer, said, “For the third consecutive quarter EMC achieved our ‘triple play’ – we gained market share, invested aggressively to capitalize on the shift to cloud computing, and increased profitability. Cloud computing is driving a fundamental change in the way IT is designed and managed, represents a massive opportunity, and is happening now in various phases across the globe. Our strategy and business model remain strong, and our investments continue to pay off. Moving forward, EMC has never been better positioned to deliver our ‘triple play’ results over the long term.”
Third-Quarter Highlights
Third-quarter highlights included strong customer demand and double-digit revenue growth for the company’s market-leading high-endEMC Symmetrix storage product portfolio, which increased 23% compared with the year-ago quarter, and EMC’s mid-tier storage product portfolio2, which grew revenue 22% year over year. Revenue fromEMC’s RSA information security business grew 22% year over year, and VMware (NYSE: VMW), which is majority-owned by EMC, increased revenue 46% compared with the year-ago quarter. Additional third-quarter highlights included strong customer demand for EMC’s backup and recovery solutions as part of the company’s fast-growingBackup and Recovery Systems Division, and a number of significant new customer wins with EMC’s Information Intelligence solutions. Also in the third quarter, EMC completed its acquisition of data warehousing and business analytics pioneer Greenplum, forming the foundation of the company’s newData Computing Products Division. The new division is focused on helping customers rapidly deploy and generate disruptive competitive advantage from “big data” clouds and self-service analytics.
EMC consolidated third-quarter revenue from the United States reached $2.3 billion, an increase of 21% year over year, representing 54% of consolidated third-quarter revenue. Revenue from EMC’s business operations outside of the United States reached $1.9 billion, an increase of 19% year over year, representing 46% of consolidated third-quarter revenue. Within this, revenue increased 14%, 28% and 23% year over year, respectively, in EMC’s Europe, Middle East and Africa; Asia Pacific and Japan; and Latin America regions.
Business Outlook
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not give effect to the potential impact of mergers, acquisitions, divestitures or business combinations that may be announced or closed after the date hereof. These statements supersede all prior statements regarding 2010 financial results set forth in prior EMC news releases.
All dollar amounts and percentages set forth below should be considered to be approximations.
| | • | | For 2010, EMC expects consolidated revenues of $16.9 billion, $0.91 in consolidated GAAP diluted earnings per share, and $1.25 in consolidated non-GAAP diluted earnings per share, which excludes the impact of restructuring and acquisition-related charges, stock-based compensation expense, and intangible asset amortization. |
| | • | | For 2010, consolidated restructuring and acquisition-related charges, stock-based compensation expense, and intangible asset amortization are expected to be $0.02, $0.23 and $0.09 per diluted share, respectively. |
| | • | | GAAP operating income is expected to be 15% to 16% of revenues for 2010, and non-GAAP operating income is expected to be 21% to 22% of revenues for 2010. Excluded from non-GAAP operating income are restructuring and acquisition-related charges, stock-based compensation expense, and intangible asset amortization, which account for less than 1%, 4% and less than 2% of revenues, respectively. |
| | • | | The consolidated GAAP income tax rate is expected to be 20% for 2010. Excluding the impact of restructuring and acquisition-related charges, stock-based compensation expense, and intangible asset amortization, which collectively impact the tax rate by 2%, the consolidated non-GAAP income tax rate is expected to be 22% for 2010. The expected annual GAAP and non-GAAP income tax rates assume that the U.S. research and development tax credit will be re-enacted in 2010 which is expected to favorably impact both the GAAP and non-GAAP income tax expense by $45 million to $50 million. The R&D credit is expected to favorably impact the GAAP tax rate by 2% and the non-GAAP tax rate by 1%. |
| | • | | Total non-operating expense, which includes investment income, interest expense, and other expense, is expected to be $80 million in 2010. |
| | • | | The total weighted average diluted outstanding shares for 2010 are expected to be 2.14 billion. |
| | • | | EMC expects to repurchase up to $1.0 billion of the company’s common stock in 2010. |
Supporting Resources
| | • | | EMC will host its third-quarter 2010 earnings conference call today at 8:30 a.m. ET, which will be available on EMC’s web site athttp://www.emc.com/about/investor-relations/index.htm |
| | • | | Additional information regarding EMC’s financials, as well as a webcast of the conference call, will be available at 8:30 a.m. ET athttp://www.emc.com/about/investor-relations/index.htm |
| | • | | Visithttp://ir.vmware.com for more information about VMware’s third-quarter financial results. |
About EMC
EMC Corporation (NYSE: EMC) is the world’s leading developer and provider of information infrastructure technology and solutions that enable organizations of all sizes to transform the way they compete and create value from their information. Information about EMC’s products and services can be found at www.EMC.com.
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¹ Items excluded from the non-GAAP results are restructuring and acquisition-related charges, stock-based compensation expense and intangible asset amortization for the third quarters of 2010 and 2009. In addition, for the third quarter of 2009, gains on Data Domain and SpringSource common stock were also excluded. See attached schedules for reconciliation of GAAP to non-GAAP.
2 Mid-tier platform products include hardware and software products from EMC CLARiiON, EMC Celerra, EMC Centera, EMC Data Domain, EMC Avamar and EMC Atmos.
EMC, Atmos, Avamar, Celerra, Centera, CLARiiON, Data Domain, RSA and Symmetrix are either registered trademarks or trademarks of EMC Corporation in the United States and/or other countries. VMware is a registered trademark or trademark of VMware, Inc. in the United States and/or other countries. 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, the accompanying schedules and the additional content that is available on EMC’s website contain 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 from time to time and 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 in this release.
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 restructuring and acquisition-related charges, stock-based compensation expense, intangible asset amortization and amounts relating to gains on Data Domain and SpringSource common stock) are excluded from the non-GAAP financial measures.
EMC’s management uses the non-GAAP financial measures in the accompanying schedules to gain an understanding of EMC’s comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects and excludes the above-listed items from its internal financial statements for purposes of its internal budgets and each reporting segment’s financial goals. These non-GAAP financial measures are used by EMC’s management in their financial and operating decision-making because management believes they reflect EMC’s ongoing business in a manner that allows meaningful period-to-period comparisons. EMC’s management believes that these non-GAAP financial measures provide useful information to investors and others (a) in understanding and evaluating EMC’s current operating performance and future prospects in the same manner as management does, if they so choose, and (b) in comparing in a consistent manner the Company’s current financial results with the Company’s past financial results.
This release also includes disclosures regarding free cash flow which is a non-GAAP financial measure. Free cash flow is defined as net cash provided by operating activities less additions to property, plant and equipment and capitalized software development costs. EMC uses free cash flow, among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than capital expenditures and capitalized software development costs. Management believes that information regarding free cash flow provides investors with an important perspective on the cash available to make strategic acquisitions and investments, repurchase shares, service debt and fund ongoing operations. As free cash flow is not a measure of liquidity calculated in accordance with GAAP, free cash flow should be considered in addition to, but not as a substitute for, the analysis provided in the statement of cash flows.
All of the foregoing non-GAAP financial measures have limitations. Specifically, the non-GAAP financial measures that exclude the items noted above do not include all items of income and expense that affect EMC’s operations. Further, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and do not reflect any benefit that such items may confer on EMC. Management compensates for these limitations by also considering EMC’s financial results as determined in accordance with GAAP.
EMC CORPORATION
Consolidated Income Statements
(in thousands, except per share amounts)
Unaudited
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30,
2010 | | | September 30,
2009 | | | September 30,
2010 | | | September 30,
2009 | |
Revenues: | | | | | | | | | | | | | | | | |
Product sales | | $ | 2,675,925 | | | $ | 2,200,581 | | | $ | 7,707,958 | | | $ | 6,174,971 | |
Services | | | 1,536,346 | | | | 1,317,049 | | | | 4,418,502 | | | | 3,750,773 | |
| | | | | | | | | | | | | | | | |
| | | 4,212,271 | | | | 3,517,630 | | | | 12,126,460 | | | | 9,925,744 | |
| | | | |
Cost and expenses: | | | | | | | | | | | | | | | | |
Cost of product sales | | | 1,194,297 | | | | 1,107,400 | | | | 3,513,961 | | | | 3,177,935 | |
Cost of services | | | 531,000 | | | | 470,013 | | | | 1,547,807 | | | | 1,380,559 | |
Research and development | | | 483,264 | | | | 422,092 | | | | 1,395,922 | | | | 1,203,266 | |
Selling, general and administrative | | | 1,343,325 | | | | 1,177,775 | | | | 3,888,260 | | | | 3,253,752 | |
Restructuring and acquisition-related charges | | | 12,561 | | | | 34,781 | | | | 40,902 | | | | 83,587 | |
| | | | | | | | | | | | | | | | |
| | | | |
Operating income | | | 647,824 | | | | 305,569 | | | | 1,739,608 | | | | 826,645 | |
| | | | |
Non-operating (expense) income: | | | | | | | | | | | | | | | | |
Investment income | | | 40,563 | | | | 38,106 | | | | 104,198 | | | | 109,293 | |
Interest expense | | | (44,827 | ) | | | (46,227 | ) | | | (132,539 | ) | | | (135,928 | ) |
Other (expense) income, net | | | (5,823 | ) | | | 28,022 | | | | (12,714 | ) | | | 17,281 | |
| | | | | | | | | | | | | | | | |
Total non-operating (expense) income | | | (10,087 | ) | | | 19,901 | | | | (41,055 | ) | | | (9,354 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Income before provision for income taxes | | | 637,737 | | | | 325,470 | | | | 1,698,553 | | | | 817,291 | |
Income tax provision | | | 148,663 | | | | 20,602 | | | | 381,292 | | | | 96,462 | |
| | | | | | | | | | | | | | | | |
| | | | |
Net income | | | 489,074 | | | | 304,868 | | | | 1,317,261 | | | | 720,829 | |
Less: Net income attributable to the non-controlling interest in VMware, Inc. | | | (16,558 | ) | | | (6,688 | ) | | | (45,825 | ) | | | (23,348 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Net income attributable to EMC Corporation | | $ | 472,516 | | | $ | 298,180 | | | $ | 1,271,436 | | | $ | 697,481 | |
| | | | | | | | | | | | | | | | |
| | | | |
Net income per weighted average share, basic attributable to EMC Corporation common shareholders | | $ | 0.23 | | | $ | 0.15 | | | $ | 0.62 | | | $ | 0.35 | |
| | | | | | | | | | | | | | | | |
| | | | |
Net income per weighted average share, diluted attributable to EMC Corporation common shareholders | | $ | 0.22 | | | $ | 0.14 | | | $ | 0.59 | | | $ | 0.34 | |
| | | | | | | | | | | | | | | | |
| | | | |
Weighted average shares, basic | | | 2,055,876 | | | | 2,027,347 | | | | 2,053,026 | | | | 2,015,920 | |
| | | | |
Weighted average shares, diluted | | | 2,146,753 | | | | 2,065,951 | | | | 2,132,948 | | | | 2,038,984 | |
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended September 30, 2010
(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)
Income,
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 | | $ | 4,212,271 | | | $ | 1,725,297 | | | $ | 483,264 | | | $ | 1,343,325 | | | $ | 12,561 | | | $ | 647,824 | | $ | (10,087 | ) | | $ | 637,737 | | $ | 148,663 | | $ | 489,074 | | $ | (16,558 | ) | | $ | 472,516 | | | $ | 0.230 | | | $ | 0.219 | |
Restructuring and acquisition-related charges | | | — | | | | — | | | | — | | | | — | | | | (12,561 | ) | | | 12,561 | | | — | | | | 12,561 | | | 2,222 | | | 10,339 | | | (202 | ) | | | 10,137 | | | $ | 0.005 | | | $ | 0.005 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Consolidated Adjusted (1) | | | 4,212,271 | | | | 1,725,297 | | | | 483,264 | | | | 1,343,325 | | | | — | | | | 660,385 | | | (10,087 | ) | | | 650,298 | | | 150,885 | | | 499,413 | | | (16,760 | ) | | | 482,653 | | | $ | 0.235 | | | $ | 0.224 | |
Stock-based compensation expense | | | — | | | | (27,871 | ) | | | (66,387 | ) | | | (77,513 | ) | | | — | | | | 171,771 | | | 406 | | | | 172,177 | | | 41,525 | | | 130,652 | | | (12,913 | ) | | | 117,739 | | | $ | 0.057 | | | $ | 0.055 | |
Intangible asset amortization | | | — | | | | (32,342 | ) | | | (6,456 | ) | | | (34,631 | ) | | | — | | | | 73,429 | | | — | | | | 73,429 | | | 22,606 | | | 50,823 | | | (1,802 | ) | | | 49,021 | | | $ | 0.024 | | | $ | 0.023 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Consolidated Non-GAAP (2) | | $ | 4,212,271 | | | $ | 1,665,084 | | | $ | 410,421 | | | $ | 1,231,181 | | | $ | — | | | $ | 905,585 | | $ | (9,681 | ) | | $ | 895,904 | | $ | 215,016 | | $ | 680,888 | | $ | (31,475 | ) | | $ | 649,413 | | | $ | 0.316 | | | $ | 0.301 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
EMC Information Infrastructure GAAP | | $ | 3,500,812 | | | $ | 1,598,897 | | | $ | 309,800 | | | $ | 1,027,760 | | | $ | 11,527 | | | $ | 552,828 | | $ | (12,100 | ) | | $ | 540,728 | | $ | 136,450 | | $ | 404,278 | | $ | — | | | $ | 404,278 | | | $ | 0.197 | | | $ | 0.188 | |
Restructuring and acquisition-related charges | | | — | | | | — | | | | — | | | | — | | | | (11,527 | ) | | | 11,527 | | | — | | | | 11,527 | | | 2,222 | | | 9,305 | | | — | | | | 9,305 | | | $ | 0.005 | | | $ | 0.004 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure Adjusted (3) | | | 3,500,812 | | | | 1,598,897 | | | | 309,800 | | | | 1,027,760 | | | | — | | | | 564,355 | | | (12,100 | ) | | | 552,255 | | | 138,672 | | | 413,583 | | | — | | | | 413,583 | | | $ | 0.201 | | | $ | 0.193 | |
Stock-based compensation expense | | | — | | | | (18,285 | ) | | | (23,474 | ) | | | (51,763 | ) | | | — | | | | 93,522 | | | 406 | | | | 93,928 | | | 29,259 | | | 64,669 | | | — | | | | 64,669 | | | $ | 0.031 | | | $ | 0.030 | |
Intangible asset amortization | | | — | | | | (24,182 | ) | | | (5,829 | ) | | | (33,498 | ) | | | — | | | | 63,509 | | | — | | | | 63,509 | | | 21,893 | | | 41,616 | | | — | | | | 41,616 | | | $ | 0.020 | | | $ | 0.019 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure Non-GAAP (4) | | $ | 3,500,812 | | | $ | 1,556,430 | | | $ | 280,497 | | | $ | 942,499 | | | $ | — | | | $ | 721,386 | | $ | (11,694 | ) | | $ | 709,692 | | $ | 189,824 | | $ | 519,868 | | $ | — | | | $ | 519,868 | | | $ | 0.253 | | | $ | 0.242 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
VMware standalone GAAP | | $ | 714,245 | | | $ | 126,562 | | | $ | 175,429 | | | $ | 318,242 | | | $ | — | | | $ | 94,012 | | $ | 2,733 | | | $ | 96,745 | | $ | 12,145 | | $ | 84,600 | | $ | — | | | $ | 84,600 | | | $ | 0.041 | | | $ | 0.039 | |
GAAP adjustments and eliminations | | | (2,786 | ) | | | (162 | ) | | | (1,965 | ) | | | (2,677 | ) | | | 1,034 | | | | 984 | | | (720 | ) | | | 264 | | | 68 | | | 196 | | | (16,558 | ) | | | (16,362 | ) | | $ | (0.008 | ) | | $ | (0.009 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC GAAP (5) | | | 711,459 | | | | 126,400 | | | | 173,464 | | | | 315,565 | | | | 1,034 | | | | 94,996 | | | 2,013 | | | | 97,009 | | | 12,213 | | | 84,796 | | | (16,558 | ) | | | 68,238 | | | $ | 0.033 | | | $ | 0.031 | |
Acquisition-related charges | | | — | | | | — | | | | — | | | | — | | | | (1,034 | ) | | | 1,034 | | | — | | | | 1,034 | | | — | | | 1,034 | | | (202 | ) | | | 832 | | | $ | 0.000 | | | $ | 0.000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC Adjusted (6) | | | 711,459 | | | | 126,400 | | | | 173,464 | | | | 315,565 | | | | — | | | | 96,030 | | | 2,013 | | | | 98,043 | | | 12,213 | | | 85,830 | | | (16,760 | ) | | | 69,070 | | | $ | 0.034 | | | $ | 0.031 | |
Stock-based compensation expense | | | — | | | | (9,586 | ) | | | (42,913 | ) | | | (25,750 | ) | | | — | | | | 78,249 | | | — | | | | 78,249 | | | 12,266 | | | 65,983 | | | (12,913 | ) | | | 53,070 | | | $ | 0.026 | | | $ | 0.025 | |
Intangible asset amortization | | | — | | | | (8,160 | ) | | | (627 | ) | | | (1,133 | ) | | | — | | | | 9,920 | | | — | | | | 9,920 | | | 713 | | | 9,207 | | | (1,802 | ) | | | 7,405 | | | $ | 0.004 | | | $ | 0.003 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC Non-GAAP (7) | | $ | 711,459 | | | $ | 108,654 | | | $ | 129,924 | | | $ | 288,682 | | | $ | — | | | $ | 184,199 | | $ | 2,013 | | | $ | 186,212 | | $ | 25,192 | | $ | 161,020 | | $ | (31,475 | ) | | $ | 129,545 | | | $ | 0.063 | | | $ | 0.059 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Wtd. Average Share O/S | | | | 2,055,876 | | | | 2,146,753 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended September 30, 2010
(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)
Income,
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) | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | $ | (26,559 | ) | | $ | (26,559 | ) | | $ | (9,581 | ) | | $ | (16,978 | ) | | $ | — | | $ | (16,978 | ) | | $ | (0.008 | ) | | $ | (0.008 | ) |
Transition costs (9) | | | — | | | 536 | | | 1,093 | | | 6,183 | | | — | | | (7,812 | ) | | | — | | | | (7,812 | ) | | | (2,238 | ) | | | (5,574 | ) | | | — | | | (5,574 | ) | | $ | (0.003 | ) | | $ | (0.003 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | — | | $ | 536 | | $ | 1,093 | | $ | 6,183 | | $ | — | | $ | (7,812 | ) | | $ | (26,559 | ) | | $ | (34,371 | ) | | $ | (11,819 | ) | | $ | (22,552 | ) | | $ | — | | $ | (22,552 | ) | | $ | (0.011 | ) | | $ | (0.011 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Represents EMC Consolidated GAAP excluding restructuring and acquisition-related charges. |
| (2) | Represents EMC Consolidated Adjusted excluding stock-based compensation expense and intangible asset amortization. |
| (3) | Represents EMC Information Infrastructure GAAP excluding restructuring and acquisition-related charges. |
| (4) | Represents EMC Information Infrastructure Adjusted excluding stock-based compensation expense and intangible asset 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 asset 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 Three Months Ended September 30, 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 | | $ | 3,517,630 | | | $ | 1,577,413 | | | $ | 422,092 | | | $ | 1,177,775 | | | $ | 34,781 | | | $ | 305,569 | | $ | 19,901 | | | $ | 325,470 | | | $ | 20,602 | | | $ | 304,868 | | | $ | (6,688 | ) | | $ | 298,180 | | | $ | 0.147 | | | $ | 0.144 | |
Gain on Data Domain and SpringSource common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | (25,822 | ) | | | (25,822 | ) | | | — | | | | (25,822 | ) | | | 1,025 | | | | (24,797 | ) | | $ | (0.012 | ) | | $ | (0.012 | ) |
Restructuring and acquisition-related charges | | | — | | | | (12,485 | ) | | | — | | | | — | | | | (34,781 | ) | | | 47,266 | | | — | | | | 47,266 | | | | 14,724 | | | | 32,542 | | | | (135 | ) | | | 32,407 | | | $ | 0.016 | | | $ | 0.016 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Consolidated Adjusted (1) | | | 3,517,630 | | | | 1,564,928 | | | | 422,092 | | | | 1,177,775 | | | | — | | | | 352,835 | | | (5,921 | ) | | | 346,914 | | | | 35,326 | | | | 311,588 | | | | (5,798 | ) | | | 305,790 | | | $ | 0.151 | | | $ | 0.148 | |
Stock-based compensation expense | | | — | | | | (27,106 | ) | | | (62,557 | ) | | | (99,915 | ) | | | — | | | | 189,578 | | | — | | | | 189,578 | | | | 47,078 | | | | 142,500 | | | | (9,181 | ) | | | 133,319 | | | $ | 0.066 | | | $ | 0.065 | |
Intangible asset amortization | | | — | | | | (34,121 | ) | | | (3,261 | ) | | | (25,903 | ) | | | — | | | | 63,285 | | | — | | | | 63,285 | | | | 21,651 | | | | 41,634 | | | | (405 | ) | | | 41,229 | | | $ | 0.020 | | | $ | 0.020 | |
| | | | | �� | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Consolidated Non-GAAP (2) | | $ | 3,517,630 | | | $ | 1,503,701 | | | $ | 356,274 | | | $ | 1,051,957 | | | $ | — | | | $ | 605,698 | | $ | (5,921 | ) | | $ | 599,777 | | | $ | 104,055 | | | $ | 495,722 | | | $ | (15,384 | ) | | $ | 480,338 | | | $ | 0.237 | | | $ | 0.232 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
EMC Information Infrastructure GAAP | | $ | 3,028,725 | | | $ | 1,481,485 | | | $ | 289,715 | | | $ | 944,637 | | | $ | 34,008 | | | $ | 278,880 | | $ | 14,334 | | | $ | 293,214 | | | $ | 26,897 | | | $ | 266,317 | | | $ | — | | | $ | 266,317 | | | $ | 0.131 | | | $ | 0.129 | |
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 | ) | | | — | | | | — | | | | (34,008 | ) | | | 46,493 | | | — | | | | 46,493 | | | | 14,724 | | | | 31,769 | | | | — | | | | 31,769 | | | $ | 0.016 | | | $ | 0.015 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure Adjusted (3) | | | 3,028,725 | | | | 1,469,000 | | | | 289,715 | | | | 944,637 | | | | — | | | | 325,373 | | | (5,629 | ) | | | 319,744 | | | | 41,621 | | | | 278,123 | | | | — | | | | 278,123 | | | $ | 0.137 | | | $ | 0.135 | |
Stock-based compensation expense | | | — | | | | (17,608 | ) | | | (28,307 | ) | | | (76,146 | ) | | | — | | | | 122,061 | | | — | | | | 122,061 | | | | 32,023 | | | | 90,038 | | | | — | | | | 90,038 | | | $ | 0.044 | | | $ | 0.044 | |
Intangible asset amortization | | | — | | | | (31,228 | ) | | | (3,221 | ) | | | (25,389 | ) | | | — | | | | 59,838 | | | — | | | | 59,838 | | | | 20,518 | | | | 39,320 | | | | — | | | | 39,320 | | | $ | 0.019 | | | $ | 0.019 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMC Information Infrastructure Non-GAAP (4) | | $ | 3,028,725 | | | $ | 1,420,164 | | | $ | 258,187 | | | $ | 843,102 | | | $ | — | | | $ | 507,272 | | $ | (5,629 | ) | | $ | 501,643 | | | $ | 94,162 | | | $ | 407,481 | | | $ | — | | | $ | 407,481 | | | $ | 0.201 | | | $ | 0.197 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
VMware standalone GAAP | | $ | 489,751 | | | $ | 96,073 | | | $ | 133,509 | | | $ | 236,933 | | | $ | — | | | $ | 23,236 | | $ | 8,638 | | | $ | 31,874 | | | $ | (6,345 | ) | | $ | 38,219 | | | $ | — | | | $ | 38,219 | | | $ | 0.019 | | | $ | 0.018 | |
GAAP adjustments and eliminations | | | (846 | ) | | | (145 | ) | | | (1,132 | ) | | | (3,795 | ) | | | 773 | | | | 3,453 | | | (3,071 | ) | | | 382 | | | | 50 | | | | 332 | | | | (6,688 | ) | | | (6,356 | ) | | $ | (0.003 | ) | | $ | (0.003 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC GAAP (5) | | | 488,905 | | | | 95,928 | | | | 132,377 | | | | 233,138 | | | | 773 | | | | 26,689 | | | 5,567 | | | | 32,256 | | | | (6,295 | ) | | | 38,551 | | | | (6,688 | ) | | | 31,863 | | | $ | 0.016 | | | $ | 0.015 | |
Gain on SpringSource common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | (5,859 | ) | | | (5,859 | ) | | | — | | | | (5,859 | ) | | | 1,025 | | | | (4,834 | ) | | $ | (0.002 | ) | | $ | (0.002 | ) |
Acquistion-related charges | | | — | | | | — | | | | — | | | | — | | | | (773 | ) | | | 773 | | | — | | | | 773 | | | | — | | | | 773 | | | | (135 | ) | | | 638 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC Adjusted (6) | | | 488,905 | | | | 95,928 | | | | 132,377 | | | | 233,138 | | | | — | | | | 27,462 | | | (292 | ) | | | 27,170 | | | | (6,295 | ) | | | 33,465 | | | | (5,798 | ) | | | 27,667 | | | $ | 0.014 | | | $ | 0.013 | |
Stock-based compensation expense | | | — | | | | (9,498 | ) | | | (34,250 | ) | | | (23,769 | ) | | | — | | | | 67,517 | | | — | | | | 67,517 | | | | 15,055 | | | | 52,462 | | | | (9,181 | ) | | | 43,281 | | | $ | 0.021 | | | $ | 0.021 | |
Intangible asset amortization | | | — | | | | (2,893 | ) | | | (40 | ) | | | (514 | ) | | | — | | | | 3,447 | | | — | | | | 3,447 | | | | 1,133 | | | | 2,314 | | | | (405 | ) | | | 1,909 | | | $ | 0.001 | | | $ | 0.001 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
VMware within EMC Non-GAAP (7) | | $ | 488,905 | | | $ | 83,537 | | | $ | 98,087 | | | $ | 208,855 | | | $ | — | | | $ | 98,426 | | $ | (292 | ) | | $ | 98,134 | | | $ | 9,893 | | | $ | 88,241 | | | $ | (15,384 | ) | | $ | 72,857 | | | $ | 0.036 | | | $ | 0.035 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Wtd. Average Share O/S | | | | 2,027,347 | | | | 2,065,951 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended September 30, 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) | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | $ | (27,483 | ) | | $ | (27,483 | ) | | $ | (9,153 | ) | | $ | (18,330 | ) | | $ | — | | $ | (18,330 | ) | | $ | (0.009 | ) | | $ | (0.009 | ) |
Transition costs (9) | | | — | | | 789 | | | 3,159 | | | 12,825 | | | — | | | (16,773 | ) | | | — | | | | (16,773 | ) | | | (4,943 | ) | | | (11,830 | ) | | | — | | | (11,830 | ) | | $ | (0.006 | ) | | $ | (0.006 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | — | | $ | 789 | | $ | 3,159 | | $ | 12,825 | | $ | — | | $ | (16,773 | ) | | $ | (27,483 | ) | | $ | (44,256 | ) | | $ | (14,096 | ) | | $ | (30,160 | ) | | $ | — | | $ | (30,160 | ) | | $ | (0.015 | ) | | $ | (0.015 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Represents EMC Consolidated GAAP excluding gain on Data Domain and SpringSource common stock and restructuring and acquisition-related charges. |
| (2) | Represents EMC Consolidated Adjusted excluding stock-based compensation expense and intangible asset amortization. |
| (3) | Represents EMC Information Infrastructure GAAP excluding gain on Data Domain common stock and restructuring and acquisition-related charges. |
| (4) | Represents EMC Information Infrastructure Adjusted excluding stock-based compensation expense and intangible asset 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 asset 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
| | | | | | | | |
| | | September 30,
2010 | | | December 31,
2009 | |
| | | (unaudited) | | | | |
ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 4,940,592 | | | $ | 6,302,499 | |
Short-term investments | | | 1,712,410 | | | | 392,839 | |
Accounts and notes receivable, less allowance for doubtful accounts of $56,763 and $47,414 | | | 2,120,679 | | | | 2,108,575 | |
Inventories | | | 838,622 | | | | 886,289 | |
Deferred income taxes | | | 596,568 | | | | 564,174 | |
Other current assets | | | 387,362 | | | | 283,926 | |
| | | | | | | | |
Total current assets | | | 10,596,233 | | | | 10,538,302 | |
Long-term investments | | | 3,860,062 | | | | 2,692,323 | |
Property, plant and equipment, net | | | 2,430,679 | | | | 2,224,346 | |
Intangible assets, net | | | 1,213,680 | | | | 1,185,632 | |
Goodwill | | | 9,787,321 | | | | 9,210,376 | |
Other assets, net | | | 1,038,933 | | | | 961,024 | |
| | | | | | | | |
Total assets | | $ | 28,926,908 | | | $ | 26,812,003 | |
| | | | | | | | |
| | |
LIABILITIES & SHAREHOLDERS’ EQUITY | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 827,181 | | | $ | 899,298 | |
Accrued expenses | | | 2,033,790 | | | | 1,944,210 | |
Income taxes payable | | | 46,055 | | | | 41,691 | |
Deferred revenue | | | 2,641,559 | | | | 2,262,968 | |
| | | | | | | | |
Total current liabilities | | | 5,548,585 | | | | 5,148,167 | |
Income taxes payable | | | 253,075 | | | | 235,976 | |
Deferred revenue | | | 1,628,473 | | | | 1,373,798 | |
Deferred income taxes | | | 605,400 | | | | 708,378 | |
Long-term convertible debt | | | 3,185,417 | | | | 3,100,290 | |
Other liabilities | | | 186,122 | | | | 184,920 | |
| | | | | | | | |
Total liabilities | | | 11,407,072 | | | | 10,751,529 | |
| | | | | | | | |
| | |
Commitments and contingencies | | | | | | | | |
Shareholders’ equity: | | | | | | | | |
Preferred stock, par value $0.01; authorized 25,000 shares; none outstanding | | | — | | | | — | |
Common stock, par value $0.01; authorized 6,000,000 shares; issued 2,060,396 and 2,052,441 shares | | | 20,604 | | | | 20,524 | |
Additional paid-in capital | | | 3,886,415 | | | | 3,875,791 | |
Retained earnings | | | 13,030,725 | | | | 11,759,289 | |
Accumulated other comprehensive loss, net | | | (120,268 | ) | | | (105,722 | ) |
| | | | | | | | |
Total EMC Corporation’s shareholders’ equity | | | 16,817,476 | | | | 15,549,882 | |
Non-controlling interest in VMware, Inc. | | | 702,360 | | | | 510,592 | |
| | | | | | | | |
Total shareholders’ equity | | | 17,519,836 | | | | 16,060,474 | |
| | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 28,926,908 | | | $ | 26,812,003 | |
| | | | | | | | |
EMC CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
| | | | | | | | |
| | | Nine Months Ended | |
| | | September 30,
2010 | | | September 30,
2009 | |
Cash flows from operating activities: | | | | | | | | |
Cash received from customers | | $ | 12,733,156 | | | $ | 10,600,727 | |
Cash paid to suppliers and employees | | | (9,567,360 | ) | | | (8,098,216 | ) |
Dividends and interest received | | | 92,834 | | | | 95,024 | |
Interest paid | | | (41,621 | ) | | | (39,550 | ) |
Income taxes paid | | | (180,403 | ) | | | (232,257 | ) |
| | | | | | | | |
Net cash provided by operating activities | | | 3,036,606 | | | | 2,325,728 | |
| | | | | | | | |
| | |
Cash flows from investing activities: | | | | | | | | |
Additions to property, plant and equipment | | | (541,866 | ) | | | (277,589 | ) |
Capitalized software development costs | | | (272,492 | ) | | | (222,432 | ) |
Purchases of short and long-term available-for-sale securities | | | (5,091,454 | ) | | | (4,224,872 | ) |
Sales of short and long-term available-for-sale securities | | | 2,624,509 | | | | 4,880,173 | |
Business acquisitions, net of cash acquired | | | (851,380 | ) | | | (2,664,141 | ) |
Increase in strategic and other related investments | | | (5,642 | ) | | | (152,667 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (4,138,325 | ) | | | (2,661,528 | ) |
| | | | | | | | |
| | |
Cash flows from financing activities: | | | | | | | | |
Issuance of EMC’s common stock from the exercise of stock options | | | 552,846 | | | | 226,276 | |
Issuance of VMware’s common stock from the exercise of stock options | | | 355,846 | | | | 166,523 | |
EMC repurchase of EMC’s common stock | | | (800,267 | ) | | | — | |
EMC purchase of VMware’s common stock | | | (289,587 | ) | | | — | |
VMware repurchase of VMware’s common stock | | | (285,940 | ) | | | — | |
Payments on securities lending | | | — | | | | (412,321 | ) |
Excess tax benefits from stock-based compensation | | | 210,711 | | | | 25,355 | |
Payment of long-term and short-term obligations | | | (3,755 | ) | | | (19,836 | ) |
Proceeds from long-term and short-term obligations | | | 1,116 | | | | 1,615 | |
| | | | | | | | |
Net cash used in financing activities | | | (259,030 | ) | | | (12,388 | ) |
| | | | | | | | |
| | |
Effect of exchange rate changes on cash and cash equivalents | | | (1,158 | ) | | | 22,862 | |
| | | | | | | | |
| | |
Net decrease in cash and cash equivalents | | | (1,361,907 | ) | | | (325,326 | ) |
Cash and cash equivalents at beginning of period | | | 6,302,499 | | | | 5,843,685 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 4,940,592 | | | $ | 5,518,359 | |
| | | | | | | | |
| | |
Reconciliation of net income to net cash provided by operating activities: | | | | | | | | |
| | |
Net income | | $ | 1,317,261 | | | $ | 720,829 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 862,964 | | | | 791,043 | |
Non-cash interest expense on convertible debt | | | 78,731 | | | | 80,562 | |
Non-cash restructuring and other special charges | | | 3,114 | | | | 22,138 | |
Stock-based compensation expense | | | 484,141 | | | | 420,947 | |
Provision for doubtful accounts | | | 18,599 | | | | 15,160 | |
Deferred income taxes, net | | | (41,355 | ) | | | 8,101 | |
Excess tax benefits from stock-based compensation | | | (210,711 | ) | | | (25,355 | ) |
Gain on Data Domain and SpringSource common stock | | | — | | | | (25,822 | ) |
Other | | | (9,192 | ) | | | (13,567 | ) |
Changes in assets and liabilities, net of acquisitions: | | | | | | | | |
Accounts and notes receivable | | | (14,380 | ) | | | 455,116 | |
Inventories | | | (55,862 | ) | | | (61,265 | ) |
Other assets | | | (127,401 | ) | | | (35,483 | ) |
Accounts payable | | | (71,839 | ) | | | 66,868 | |
Accrued expenses | | | (38,343 | ) | | | (175,982 | ) |
Income taxes payable | | | 242,244 | | | | (143,896 | ) |
Deferred revenue | | | 602,477 | | | | 204,707 | |
Other liabilities | | | (3,842 | ) | | | 21,627 | |
| | | | | | | | |
Net cash provided by operating activities | | $ | 3,036,606 | | | $ | 2,325,728 | |
| | | | | | | | |
EMC Corporation
Reconciliation of Cash Flow from Operations to Free Cash Flow
(in thousands)
Unaudited
| | | | | | | | | | | | | | | | |
| | | Nine Months Ended | | | Three Months Ended | |
| | | September 30,
2010 | | | September 30,
2009 | | | September 30,
2010 | | | September 30,
2009 | |
| | | | |
EMC Consolidated | | | | | | | | | | | | | | | | |
| | | | |
Cash flow from Operations | | $ | 3,036,606 | | | $ | 2,325,728 | | | $ | 962,400 | | | $ | 887,649 | |
| | | | |
Capital Expenditures | | | (541,866 | ) | | | (277,589 | ) | | | (240,674 | ) | | | (72,077 | ) |
| | | | |
Capitalized Software | | | (272,492 | ) | | | (222,432 | ) | | | (86,858 | ) | | | (70,658 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Free Cash Flow | | $ | 2,222,248 | | | $ | 1,825,707 | | | $ | 634,868 | | | $ | 744,914 | |
| | | | | | | | | | | | | | | | |
EMC Corporation
Reconciliation of GAAP to Non-GAAP Tax Rate
(in thousands)
Unaudited
For the three months ended September 30, 2010
| | | | | | | | | |
| | | Income Before
Tax | | Tax
Provision | | Tax
Rate | |
| | | |
EMC Consolidated GAAP | | $ | 637,737 | | $ | 148,663 | | 23 | % |
Stock-based compensation expense | | | 172,177 | | | 41,525 | | 24 | % |
Intangible asset amortization | | | 73,429 | | | 22,606 | | 31 | % |
Restructuring and acquisition-related charges | | | 12,561 | | | 2,222 | | 18 | % |
| | | | | | | | | |
EMC Consolidated Non-GAAP | | $ | 895,904 | | $ | 215,016 | | 24 | % |
| | | | | | | | | |
EMC Corporation
Supplemental
Revenue Analysis
(in thousands)
Unaudited
Supplemental Revenue Data
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Q1 2009 | | | Q2 2009 | | | Q3 2009 | | | Q4 2009 | | | FY 2009 | | | Q1 2010 | | | Q2 2010 | | | Q3 2010 | | | YTD 2010 | |
Storage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Product Revenue | | $ | 1,572,408 | | | $ | 1,632,309 | | | $ | 1,818,230 | | | $ | 2,175,104 | | | $ | 7,198,051 | | | $ | 2,017,314 | | | $ | 2,076,855 | | | $ | 2,172,875 | | | $ | 6,267,044 | |
Services Revenue | | | 790,932 | | | | 842,558 | | | | 880,807 | | | | 947,061 | | | | 3,461,358 | | | | 901,781 | | | | 922,067 | | | | 966,414 | | | | 2,790,262 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Total Storage Revenue | | $ | 2,363,340 | | | $ | 2,474,867 | | | $ | 2,699,037 | | | $ | 3,122,165 | | | $ | 10,659,409 | | | $ | 2,919,095 | | | $ | 2,998,922 | | | $ | 3,139,289 | | | $ | 9,057,306 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Information Intelligence Group: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Product Revenue | | $ | 58,710 | | | $ | 60,792 | | | $ | 58,209 | | | $ | 83,125 | | | $ | 260,836 | | | $ | 63,662 | | | $ | 62,329 | | | $ | 59,078 | | | $ | 185,069 | |
Services Revenue | | | 115,605 | | | | 119,445 | | | | 118,979 | | | | 124,724 | | | | 478,753 | | | | 114,502 | | | | 116,105 | | | | 116,713 | | | | 347,320 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Total Information Intelligence Group Revenue | | $ | 174,315 | | | $ | 180,237 | | | $ | 177,188 | | | $ | 207,849 | | | $ | 739,589 | | | $ | 178,164 | | | $ | 178,434 | | | $ | 175,791 | | | $ | 532,389 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Security: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Product Revenue | | $ | 80,671 | | | $ | 84,080 | | | $ | 84,080 | | | $ | 91,441 | | | $ | 340,272 | | | $ | 85,814 | | | $ | 90,876 | | | $ | 102,442 | | | $ | 279,132 | |
Services Revenue | | | 62,035 | | | | 63,055 | | | | 68,420 | | | | 72,168 | | | | 265,678 | | | | 75,654 | | | | 82,460 | | | | 83,290 | | | | 241,404 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Total Security Revenue | | $ | 142,706 | | | $ | 147,135 | | | $ | 152,500 | | | $ | 163,609 | | | $ | 605,950 | | | $ | 161,468 | | | $ | 173,336 | | | $ | 185,732 | | | $ | 520,536 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
EMC Information Infrastructure: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Product Revenue | | $ | 1,711,789 | | | $ | 1,777,181 | | | $ | 1,960,519 | | | $ | 2,349,670 | | | $ | 7,799,159 | | | $ | 2,166,790 | | | $ | 2,230,060 | | | $ | 2,334,395 | | | $ | 6,731,245 | |
Services Revenue | | | 968,572 | | | | 1,025,058 | | | | 1,068,206 | | | | 1,143,953 | | | | 4,205,789 | | | | 1,091,937 | | | | 1,120,632 | | | | 1,166,417 | | | | 3,378,986 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Total EMC Information Infrastructure Revenue | | $ | 2,680,361 | | | $ | 2,802,239 | | | $ | 3,028,725 | | | $ | 3,493,623 | | | $ | 12,004,948 | | | $ | 3,258,727 | | | $ | 3,350,692 | | | $ | 3,500,812 | | | $ | 10,110,231 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
VMware: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Product Revenue | | $ | 257,331 | | | $ | 228,089 | | | $ | 240,062 | | | $ | 303,504 | | | $ | 1,028,986 | | | $ | 311,927 | | | $ | 323,256 | | | $ | 341,530 | | | $ | 976,713 | |
Services Revenue | | | 213,070 | | | | 227,024 | | | | 248,843 | | | | 303,039 | | | | 991,976 | | | | 320,038 | | | | 349,549 | | | | 369,929 | | | | 1,039,516 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Total VMware Revenue | | $ | 470,401 | | | $ | 455,113 | | | $ | 488,905 | | | $ | 606,543 | | | $ | 2,020,962 | | | $ | 631,965 | | | $ | 672,805 | | | $ | 711,459 | | | $ | 2,016,229 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Consolidated Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Product Revenue | | $ | 1,969,120 | | | $ | 2,005,270 | | | $ | 2,200,581 | | | $ | 2,653,174 | | | $ | 8,828,145 | | | $ | 2,478,717 | | | $ | 2,553,316 | | | $ | 2,675,925 | | | $ | 7,707,958 | |
Services Revenue | | | 1,181,642 | | | | 1,252,082 | | | | 1,317,049 | | | | 1,446,992 | | | | 5,197,765 | | | | 1,411,975 | | | | 1,470,181 | | | | 1,536,346 | | | | 4,418,502 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Total Consolidated Revenues | | $ | 3,150,762 | | | $ | 3,257,352 | | | $ | 3,517,630 | | | $ | 4,100,166 | | | $ | 14,025,910 | | | $ | 3,890,692 | | | $ | 4,023,497 | | | $ | 4,212,271 | | | $ | 12,126,460 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Percentage impact to EMC revenue growth rate due to changes in exchange rates from the prior year | | | (3.5 | )% | | | (3.7 | )% | | | (1.3 | )% | | | 2.5 | % | | | (1.4 | )% | | | 2.4 | % | | | 0.0 | % | | | (0.6 | )% | | | 0.6 | % |
EMC Corporation
Reconciliation of Gross Margin GAAP to Non-GAAP
(in thousands)
Unaudited
| | | | | | | | |
| | | Q3 2010 | | | Q3 2009 | |
| | |
Gross Margin GAAP | | $ | 2,486,974 | | | $ | 1,940,217 | |
Restructuring and acquisition-related charges | | | — | | | | 12,485 | |
Stock-based compensation expense | | | 27,871 | | | | 27,106 | |
Intangible asset amortization | | | 32,342 | | | | 34,121 | |
| | | | | | | | |
| | |
Gross Margin Non-GAAP | | $ | 2,547,187 | | | $ | 2,013,929 | |
| | | | | | | | |
| | |
Revenues | | $ | 4,212,271 | | | $ | 3,517,630 | |
% GAAP | | | 59.0 | % | | | 55.2 | % |
% Non-GAAP | | | 60.5 | % | | | 57.3 | % |
EMC Corporation
Reconciliation of Operating Margin GAAP to Non-GAAP
(in thousands)
Unaudited
| | | | | | | | |
| | | Q3 2010 | | | Q3 2009 | |
| | |
Operating Margin GAAP | | $ | 647,824 | | | $ | 305,569 | |
Restructuring and acquisition-related charges | | | 12,561 | | | | 47,266 | |
Stock-based compensation expense | | | 171,771 | | | | 189,578 | |
Intangible asset amortization | | | 73,429 | | | | 63,285 | |
| | | | | | | | |
| | |
Operating Margin Non-GAAP | | $ | 905,585 | | | $ | 605,698 | |
| | | | | | | | |
| | |
Revenues | | $ | 4,212,271 | | | $ | 3,517,630 | |
% GAAP | | | 15.4 | % | | | 8.7 | % |
% Non-GAAP | | | 21.5 | % | | | 17.2 | % |
EMC Corporation
Reconciliation of EMC’s Compounded Annual Growth Rate
(in thousands)
Unaudited
| | | | | | | | | |
| | | Actual
2004 | | Guidance
2010 | | Guidance
CAGR | |
| | | |
GAAP diluted earnings per share | | $ | 0.36 | | $ | 0.91 | | 17 | % |
| | | |
Restructuring and acquisition-related charges | | | 0.01 | | | 0.02 | | 9 | % |
Stock-based compensation expense | | | 0.02 | | | 0.23 | | 55 | % |
Intangible asset amortization | | | 0.03 | | | 0.09 | | 21 | % |
| | | | | | | | | |
Non-GAAP diluted earnings per share | | $ | 0.41 | | $ | 1.25 | | 20 | % |
| | | | | | | | | |
Schedule may not add due to rounding
