Exhibit 99.1
| Contact: | Lesley Ogrodnick | |
| 508-293-6961 | ||
| lesley.ogrodnick@emc.com |
EMC REPORTS RECORD SECOND-QUARTER REVENUE AND PROFIT
Second-Quarter Highlights
| • | Record Q2 consolidated revenue – up 20% year over year |
| • | Record Q2 GAAP net income – up 28% year over year |
| • | Record Q2 non-GAAP net income – up 33% year over year |
| • | Strong year-over-year percentage increases in non-GAAP gross and operating margins |
| • | All-time record consolidated quarterly revenue for EMC’s business operations outside of the United States |
HOPKINTON, Mass. – July 20, 2011 – EMC Corporation (NYSE:EMC) today reported record financial results for the second quarter of 2011. Strong worldwide customer demand for EMC’s information infrastructure and virtual infrastructure products and services, balanced growth and continued outstanding execution contributed to EMC achieving record second-quarter consolidated revenue and net income. The results were also highlighted by strong year-over-year percentage increases in non-GAAP operating and gross margins and all-time record consolidated quarterly revenue for EMC’s business operations outside of the United States.
Second-quarter consolidated revenue was $4.85 billion, an increase of 20% compared with the year-ago quarter. Second-quarter GAAP net income attributable to EMC increased 28% year over year to $546 million. Second-quarter GAAP earnings per weighted average diluted share increased 20% year over year to $0.24. Non-GAAP1 net income attributable to EMC for the second quarter was $793 million, an increase of 33% compared with the year-ago quarter. Second-quarter non-GAAP1 earnings per weighted average diluted share were $0.35, an increase of 25% year over year.
EMC achieved year-to-date operating cash flow of $2.2 billion and free cash flow2 of $1.6 billion. The company ended the second quarter with $9.5 billion in cash and investments.
Joe Tucci, EMC Chairman and Chief Executive Officer, said, “Our record-setting performance during the quarter was marked by balanced growth, solid execution and significant technology innovation as customers around the world continue to embrace EMC’s cloud computing and Big Data strategies. It is our firm belief that this strategy is well-placed and underpinned with winning products and services and strategic partners. We remain confident in
our ability to continue delivering strong results this year and over the long term. Furthermore, we remain committed to investing heavily to extend our technology lead and help customers and service provider partners accelerate their IT and business model transformations.”
David Goulden, EMC Executive Vice President and Chief Financial Officer, said, “EMC’s second-quarter results are further evidence that our strategy is on target and that we continue to execute our financial ‘triple play’ – gaining market share, investing aggressively to take full advantage of the massive opportunities at the intersection of cloud computing and Big Data, and improving profitability. Our focus on providing technology and services that accelerate our customers’ journey to the cloud and enable them to leverage their data for more competitive advantage is resonating strongly in the market. Given the strong results we have achieved this year and the opportunity we see for the remainder of 2011, we are raising our financial outlook for the year. We now expect to exceed 2011 consolidated revenue of $19.8 billion, GAAP EPS of $1.07 and non-GAAP EPS of $1.48.”
Second-Quarter Highlights
Second-quarter highlights included double-digit revenue growth for EMC Information Storage business, which increased 19% year over year. EMC’s high-end EMC Symmetrix storage product portfolio, which includes the EMC Symmetrix VMAX, increased revenue 15% compared with the year-ago quarter, and EMC’s portfolio of mid-tier storage products3 grew revenue 27% year over year. Revenue from VMware (NYSE: VMW), which is majority-owned by EMC, increased 37% and revenue from EMC’s RSA Information Security business grew 13% year over year. Additional second-quarter highlights included strong revenue growth for the EMC VNX unified storage and the company’s backup and recovery solutions. EMC saw increasing customer demand for its Big Data technologies – product revenue from EMC Isilon, EMC Atmos and EMC Greenplum each doubled year over year. Further second-quarter highlights included continued customer demand for EMC’s broad consulting and professional services portfolio.
Also during the quarter, VCE, the Virtual Computing Environment Company formed by Cisco and EMC with investments from VMware and Intel, experienced continued momentum as demand from customers for best-of-breed converged infrastructure through the Vblock Infrastructure Platform grew. VCE’s year-to-date revenue for 2011 has already exceeded its full-year 2010 revenue amount.
EMC’s consolidated second-quarter revenue from the United States reached $2.5 billion, an increase of 17% year over year, representing 52% of consolidated second-quarter revenue. Revenue from EMC’s business operations outside of the United States hit an all-time record $2.3 billion, an increase of 25% year over year, representing 48% of consolidated second-quarter revenue. Within this, revenue increased 20%, 34% and 43% 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 2011 financial results.
All dollar amounts and percentages set forth below should be considered to be approximations.
| • | Consolidated revenues are expected to exceed $19.8 billion for 2011. |
| • | Consolidated GAAP operating income is expected to be 16% to 17% of revenues for 2011 and consolidated non-GAAP operating income is expected to be 23% to 24% of revenues for 2011. Excluded from consolidated non-GAAP operating income are restructuring and acquisition-related charges, stock-based compensation expense, intangible asset amortization and an RSA special charge, which account for 0.5%, 4%, 2% and 0.5% of revenues, respectively. |
| • | Total consolidated GAAP non-operating expense, which includes investment income, interest expense and other income and expense, is expected to be $119 million in 2011 and total consolidated non-GAAP non-operating expense is expected to be $175 million in 2011. Excluded from non-GAAP non-operating expense is a non-recurring gain on strategic investments of $56 million. |
| • | Consolidated GAAP net income is expected to exceed $2.44 billion in 2011 and consolidated non-GAAP net income is expected to exceed $3.35 billion in 2011. Excluded from consolidated non-GAAP net income are restructuring and acquisition-related charges, stock-based compensation expense, intangible asset amortization, a non-recurring gain on strategic investments and an RSA special charge, which account for $75 million, $600 million, $225 million, ($29 million) and $56 million, respectively. |
| • | Consolidated GAAP diluted earnings per share are expected to exceed $1.07 for 2011 and consolidated non-GAAP diluted earnings per share are expected to exceed $1.48 for 2011. Excluded from consolidated non-GAAP diluted earnings per share are restructuring and acquisition-related charges, stock-based compensation expense, intangible asset amortization, a non-recurring gain on strategic investments and an RSA special charge, which are expected to be $0.03, $0.27, $0.10, ($0.01) and $0.02 per diluted share, respectively. |
| • | The consolidated GAAP income tax rate is expected to be 21% for 2011. Excluding the impact of restructuring and acquisition-related charges, stock-based compensation expense, intangible asset amortization, a non-recurring gain on strategic investments and an RSA special charge, which collectively impact the tax rate by 1%, the consolidated non-GAAP income tax rate is expected to be 22% for 2011. |
| • | GAAP net income attributable to the non-controlling interest in VMware is expected to be $121 million and non-GAAP net income attributable to the non-controlling interest in VMware is expected to be $185 million for 2011. Excluded from non-GAAP net income |
attributable to the non-controlling interest in VMware are acquisition-related charges, stock-based compensation expense, intangible asset amortization and a non-recurring gain on strategic investments which are expected to be $1 million, $60 million, $10 million and ($7 million), respectively. The incremental dilution attributable to the shares of VMware held by EMC is expected to be $16 million for 2011. |
| • | The weighted-average outstanding diluted shares are expected to be 2.265 billion for 2011. |
| • | Consolidated net cash provided by operating activities is expected to be $5.4 billion for 2011, and free cash flow is expected to be $4.0 billion in 2011. Excluded from free cash flow are $950 million of additions to property, plant and equipment and $450 million of capitalized software development costs. |
| • | EMC expects to repurchase $1.5 billion of the company’s stock in 2011. |
Supporting Resources
| • | EMC will host its second-quarter 2011 earnings conference call today at 8:30 a.m. ET, which will be available via webcast on EMC’s Investor Relations website athttp://www.emc.com/ir. |
| • | Visithttp://ir.vmware.com for more information about VMware’s second-quarter financial results. |
About EMC
EMC Corporation is a global leader in enabling businesses and service providers to transform their operations and deliver IT as a service. Fundamental to this transformation is cloud computing. Through innovative products and services, EMC accelerates the journey to cloud computing, helping IT departments to store, manage, protect and analyze their most valuable asset — information — in a more agile, trusted and cost-efficient way. Additional information about EMC can be found atwww.EMC.com.
# # #
| ¹ | Items excluded from the non-GAAP results for the second quarters of 2011 and 2010 are amounts relating to restructuring and acquisition-related charges, stock-based compensation expense and intangible asset amortization. In addition, for the second quarter of 2011, a non-recurring gain on strategic investments and an RSA special charge are also excluded. See attached schedules for reconciliation of GAAP to non-GAAP. |
| ² | Free cash flow is a non-GAAP financial measure which is defined as net cash provided by operating activities, less additions to property, plant and equipment and capitalized software development costs. See attached schedules for a reconciliation of net cash provided by operating activities to free cash flow for the second quarters of 2011 and 2010. |
| 3 | EMC’s mid-tier storage products include EMC VNX, EMC CLARiiON, EMC Celerra, EMC Centera, EMC Data Domain, EMC Isilon, EMC Avamar and EMC Atmos hardware and software products. |
EMC, Atmos, Avamar, Celerra, Centera, CLARiiON, Data Domain, Greenplum, Isilon, RSA, Symmetrix, Symmetrix VMAX, VNX and Vblock 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) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (iv) competitive factors, including but not limited to pricing pressures and new product introductions; (v) component and product quality and availability; (vi) fluctuations in VMware, Inc.’s operating results and risks associated with trading of VMware stock; (vii) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (viii) 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; (ix) the ability to attract and retain highly qualified employees; (x) insufficient, excess or obsolete inventory; (xi) fluctuating currency exchange rates; (xii) threats and other disruptions to our secure data centers or networks; (xiii) our ability to protect our proprietary technology; (xiv) war or acts of terrorism; and (xv) 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, a non-recurring gain on strategic investments and an RSA special charge) 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 | Six Months Ended | |||||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: | ||||||||||||||||
Product sales | $ | 3,043,984 | $ | 2,553,316 | $ | 5,975,243 | $ | 5,032,033 | ||||||||
Services | 1,801,354 | 1,470,181 | 3,477,713 | 2,882,156 | ||||||||||||
| 4,845,338 | 4,023,497 | 9,452,956 | 7,914,189 | |||||||||||||
Cost and expenses: | ||||||||||||||||
Cost of product sales | 1,327,217 | 1,157,742 | 2,647,705 | 2,319,664 | ||||||||||||
Cost of services | 637,834 | 506,556 | 1,225,913 | 1,016,807 | ||||||||||||
Research and development | 538,891 | 477,725 | 1,040,999 | 912,658 | ||||||||||||
Selling, general and administrative | 1,575,689 | 1,283,651 | 3,071,620 | 2,544,935 | ||||||||||||
Restructuring and acquisition-related charges | 21,216 | 9,839 | 48,109 | 28,341 | ||||||||||||
Operating income | 744,491 | 587,984 | 1,418,610 | 1,091,784 | ||||||||||||
Non-operating income (expense): | ||||||||||||||||
Investment income | 35,986 | 32,103 | 74,213 | 63,635 | ||||||||||||
Interest expense | (46,476 | ) | (44,744 | ) | (91,455 | ) | (87,712 | ) | ||||||||
Other income (expense), net | 30,357 | 2,130 | (12,817 | ) | (6,891 | ) | ||||||||||
Total non-operating income (expense) | 19,867 | (10,511 | ) | (30,059 | ) | (30,968 | ) | |||||||||
Income before provision for income taxes | 764,358 | 577,473 | 1,388,551 | 1,060,816 | ||||||||||||
Income tax provision | 172,731 | 136,976 | 294,370 | 232,629 | ||||||||||||
Net income | 591,627 | 440,497 | 1,094,181 | 828,187 | ||||||||||||
Less: Net income attributable to the non-controlling interest in VMware, Inc. | (45,133 | ) | (14,281 | ) | (70,539 | ) | (29,267 | ) | ||||||||
Net income attributable to EMC Corporation | $ | 546,494 | $ | 426,216 | $ | 1,023,642 | $ | 798,920 | ||||||||
Net income per weighted average share, basic attributable to EMC Corporation common shareholders | $ | 0.27 | $ | 0.21 | $ | 0.50 | $ | 0.39 | ||||||||
Net income per weighted average share, diluted attributable to EMC Corporation common shareholders | $ | 0.24 | $ | 0.20 | $ | 0.45 | $ | 0.37 | ||||||||
Weighted average shares, basic | 2,060,748 | 2,052,161 | 2,063,427 | 2,051,599 | ||||||||||||
Weighted average shares, diluted | 2,266,465 | 2,132,997 | 2,262,308 | 2,126,062 | ||||||||||||
Consolidated Balance Sheets
(in thousands, except per share amounts)
Unaudited
| June 30, 2011 | December 31, 2010 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 3,896,369 | $ | 4,119,138 | ||||
Short-term investments | 1,436,290 | 1,256,175 | ||||||
Accounts and notes receivable, less allowance for doubtful accounts of $57,964 and $57,385 | 2,620,448 | 2,569,523 | ||||||
Inventories | 1,005,690 | 856,405 | ||||||
Deferred income taxes | 634,183 | 609,832 | ||||||
Other current assets | 640,430 | 372,249 | ||||||
Total current assets | 10,233,410 | 9,783,322 | ||||||
Long-term investments | 4,180,205 | 4,115,918 | ||||||
Property, plant and equipment, net | 2,701,797 | 2,528,432 | ||||||
Intangible assets, net | 1,872,226 | 1,624,267 | ||||||
Goodwill | 12,108,156 | 11,772,650 | ||||||
Other assets, net | 1,236,068 | 1,008,695 | ||||||
Total assets | $ | 32,331,862 | $ | 30,833,284 | ||||
LIABILITIES & SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 983,589 | $ | 1,062,600 | ||||
Accrued expenses | 2,254,329 | 2,090,035 | ||||||
Income taxes payable | — | 199,735 | ||||||
Convertible debt | 3,271,865 | 3,214,771 | ||||||
Deferred revenue | 3,205,297 | 2,810,873 | ||||||
Total current liabilities | 9,715,080 | 9,378,014 | ||||||
Income taxes payable | 254,902 | 265,549 | ||||||
Deferred revenue | 2,204,553 | 1,853,263 | ||||||
Deferred income taxes | 631,014 | 717,004 | ||||||
Other liabilities | 257,151 | 217,449 | ||||||
Total liabilities | 13,062,700 | 12,431,279 | ||||||
Convertible debt | 175,907 | 235,229 | ||||||
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 2,064,946 and 2,069,246 shares | 20,649 | 20,692 | ||||||
Additional paid-in capital | 3,593,443 | 3,816,681 | ||||||
Retained earnings | 14,682,926 | 13,659,284 | ||||||
Accumulated other comprehensive loss, net | (93,597 | ) | (92,617 | ) | ||||
Total EMC Corporation’s shareholders’ equity | 18,203,421 | 17,404,040 | ||||||
Non-controlling interest in VMware, Inc. | 889,834 | 762,736 | ||||||
Total shareholders’ equity | 19,093,255 | 18,166,776 | ||||||
Total liabilities and shareholders’ equity | $ | 32,331,862 | $ | 30,833,284 | ||||
EMC CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
| Six Months Ended | ||||||||
| June 30, 2011 | June 30, 2010 | |||||||
Cash flows from operating activities: | ||||||||
Cash received from customers | $ | 10,176,306 | $ | 8,495,542 | ||||
Cash paid to suppliers and employees | (7,621,684 | ) | (6,291,713 | ) | ||||
Dividends and interest received | 40,181 | 54,219 | ||||||
Interest paid | (40,811 | ) | (38,251 | ) | ||||
Income taxes paid | (355,785 | ) | (145,591 | ) | ||||
Net cash provided by operating activities | 2,198,207 | 2,074,206 | ||||||
Cash flows from investing activities: | ||||||||
Additions to property, plant and equipment | (406,158 | ) | (301,192 | ) | ||||
Capitalized software development costs | (231,561 | ) | (185,634 | ) | ||||
Purchases of short- and long-term available-for-sale securities | (3,249,888 | ) | (2,929,754 | ) | ||||
Sales of short- and long-term available-for-sale securities | 2,413,493 | 1,244,979 | ||||||
Maturities of short- and long-term available-for-sale securities | 563,996 | 178,201 | ||||||
Business acquisitions, net of cash acquired | (437,102 | ) | (348,846 | ) | ||||
Increase in strategic and other related investments | (312,302 | ) | (5,812 | ) | ||||
Purchase of leasehold interest | (173,126 | ) | — | |||||
Net cash used in investing activities | (1,832,648 | ) | (2,348,058 | ) | ||||
Cash flows from financing activities: | ||||||||
Issuance of EMC's common stock from the exercise of stock options | 422,506 | 317,300 | ||||||
Issuance of VMware's common stock from the exercise of stock options | 200,714 | 215,907 | ||||||
EMC repurchase of EMC's common stock | (1,099,997 | ) | (517,370 | ) | ||||
EMC purchase of VMware's common stock | (99,930 | ) | (198,087 | ) | ||||
VMware repurchase of VMware's common stock | (280,389 | ) | (144,500 | ) | ||||
Excess tax benefits from stock-based compensation | 252,124 | 111,807 | ||||||
Payment of long-term and short-term obligations | (549 | ) | (3,515 | ) | ||||
Proceeds from long-term and short-term obligations | 1,071 | 1,116 | ||||||
Net cash used in financing activities | (604,450 | ) | (217,342 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 16,122 | (26,493 | ) | |||||
Net decrease in cash and cash equivalents | (222,769 | ) | (517,687 | ) | ||||
Cash and cash equivalents at beginning of period | 4,119,138 | 6,302,499 | ||||||
Cash and cash equivalents at end of period | $ | 3,896,369 | $ | 5,784,812 | ||||
Reconciliation of net income to net cash provided by operating activities: | ||||||||
Net income | $ | 1,094,181 | $ | 828,187 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 689,075 | 566,439 | ||||||
Non-cash interest expense on convertible debt | 51,799 | 52,172 | ||||||
Non-cash restructuring and other special charges | (524 | ) | 999 | |||||
Stock-based compensation expense | 414,667 | 319,397 | ||||||
Provision for doubtful accounts | 3,733 | 11,358 | ||||||
Deferred income taxes, net | (24,852 | ) | (101,930 | ) | ||||
Excess tax benefits from stock-based compensation | (252,124 | ) | (111,807 | ) | ||||
Other | (38,308 | ) | 2,399 | |||||
Changes in assets and liabilities, net of acquisitions: | ||||||||
Accounts and notes receivable | (21,617 | ) | 163,646 | |||||
Inventories | (258,959 | ) | 13,598 | |||||
Other assets | (114,971 | ) | (104,326 | ) | ||||
Accounts payable | (79,995 | ) | (84,470 | ) | ||||
Accrued expenses | 13,718 | (63,195 | ) | |||||
Income taxes payable | (36,563 | ) | 188,968 | |||||
Deferred revenue | 741,234 | 406,349 | ||||||
Other liabilities | 17,713 | (13,578 | ) | |||||
Net cash provided by operating activities | $ | 2,198,207 | $ | 2,074,206 | ||||
EMC Corporation
Reconciliation of GAAP to Non-GAAP*
(in thousands, except per share amounts)
Unaudited
| Q2 2011 | Q2 2011 Diluted Earnings Per Share | Q2 2010 | Q2 2010 Diluted Earnings Per Share | |||||||||||||
Net Income Attributable to EMC GAAP | $ | 546,494 | $ | 0.239 | $ | 426,216 | $ | 0.199 | ||||||||
Stock-based compensation expense | 142,890 | 0.063 | 111,826 | 0.052 | ||||||||||||
Intangible asset amortization | 57,860 | 0.026 | 47,842 | 0.022 | ||||||||||||
Restructuring and acquisition-related charges | 18,638 | 0.008 | 10,372 | 0.005 | ||||||||||||
RSA special charge | 56,222 | 0.025 | — | — | ||||||||||||
Gain on strategic investment | (28,938 | ) | (0.013 | ) | — | — | ||||||||||
Net Income Attributable to EMC Non-GAAP | $ | 793,166 | $ | 0.348 | $ | 596,256 | $ | 0.279 | ||||||||
Weighted Average Shares, Diluted | 2,266,465 | 2,132,997 | ||||||||||||||
Incremental VMware Dilution | $ | 4,404 | $ | 2,055 | ||||||||||||
| * | Net of tax and non-controlling interest in VMware, Inc., except Weighted Average Shares, Diluted. See Income Tax Provision and Net Income Attributable to VMware lines in Supplemental Information schedules. |
EMC Corporation
Reconciliation of GAAP to Non-GAAP
(in thousands)
Unaudited
| Six Months Ended | ||||||||
| June 30, 2011 | June 30, 2010 | |||||||
Cash Flow from Operations | $ | 2,198,207 | $ | 2,074,206 | ||||
Capital Expenditures | (406,158 | ) | (301,192 | ) | ||||
Capitalized Software | (231,561 | ) | (185,634 | ) | ||||
Free Cash Flow | $ | 1,560,488 | $ | 1,587,380 | ||||
EMC Corporation
Reconciliation of GAAP to Non-GAAP
(in thousands)
Unaudited
| Q2 2011 | Q2 2010 | |||||||
Gross Margin GAAP | $ | 2,880,287 | $ | 2,359,199 | ||||
Stock-based compensation expense | 30,073 | 25,085 | ||||||
Intangible asset amortization | 39,244 | 34,016 | ||||||
Restructuring and acquisition-related charges | — | — | ||||||
RSA special charge | 66,300 | — | ||||||
Gross Margin Non-GAAP | $ | 3,015,904 | $ | 2,418,300 | ||||
Revenues | $ | 4,845,338 | $ | 4,023,497 | ||||
% GAAP | 59.4 | % | 58.6 | % | ||||
% Non-GAAP | 62.2 | % | 60.1 | % | ||||
| Q2 2011 | Q2 2010 | |||||||
Operating Margin GAAP | $ | 744,491 | $ | 587,984 | ||||
Stock-based compensation expense | 202,996 | 161,423 | ||||||
Intangible asset amortization | 86,443 | 71,963 | ||||||
Restructuring and acquisition-related charges | 21,216 | 9,839 | ||||||
RSA special charge | 66,300 | — | ||||||
Operating Margin Non-GAAP | $ | 1,121,446 | $ | 831,209 | ||||
Revenues | $ | 4,845,338 | $ | 4,023,497 | ||||
% GAAP | 15.4 | % | 14.6 | % | ||||
% Non-GAAP | 23.1 | % | 20.7 | % | ||||
Supplemental Information
For the Three Months Ended June 30, 2011
(in thousands)
Unaudited
| Stock-Based Compensation Expense | Intangible Asset Amortization | Restructuring and Acquisition- Related Charges | RSA Special Charge | Gain on Strategic Investments | ||||||||||||||||
EMC Consolidated | ||||||||||||||||||||
Cost of Revenue | $ | (30,073 | ) | $ | (39,244 | ) | $ | — | $ | (66,300 | ) | $ | — | |||||||
Research and Development | (75,769 | ) | (4,331 | ) | — | — | — | |||||||||||||
Selling, General and Administrative | (97,154 | ) | (42,868 | ) | — | — | — | |||||||||||||
Restructuring and Acquisition-Related Charges | — | — | (21,216 | ) | — | — | ||||||||||||||
Other Expense (Income), net | 2,479 | — | — | — | (56,000 | ) | ||||||||||||||
Income Tax Provision | 47,584 | 26,192 | 2,330 | 10,078 | (19,600 | ) | ||||||||||||||
Net Income Attributable to VMware | (15,001 | ) | (2,391 | ) | (248 | ) | — | 7,462 | ||||||||||||
EMC Information Infrastructure | ||||||||||||||||||||
Cost of Revenue | $ | (20,393 | ) | $ | (27,584 | ) | $ | — | $ | (66,300 | ) | $ | — | |||||||
Research and Development | (29,695 | ) | (3,534 | ) | — | — | — | |||||||||||||
Selling, General and Administrative | (63,693 | ) | (40,406 | ) | — | — | — | |||||||||||||
Restructuring and Acquisition-Related Charges | — | — | (20,006 | ) | — | — | ||||||||||||||
Other Expense (Income), net | 2,479 | — | — | — | — | |||||||||||||||
Income Tax Provision | 31,543 | 22,935 | 2,330 | 10,078 | — | |||||||||||||||
Net Income Attributable to VMware | — | — | — | — | — | |||||||||||||||
VMware within EMC | ||||||||||||||||||||
Cost of Revenue | $ | (9,680 | ) | $ | (11,660 | ) | $ | — | $ | — | $ | — | ||||||||
Research and Development | (46,074 | ) | (797 | ) | — | — | — | |||||||||||||
Selling, General and Administrative | (33,461 | ) | (2,462 | ) | — | — | — | |||||||||||||
Restructuring and Acquisition-Related Charges | — | — | (1,210 | ) | — | — | ||||||||||||||
Other Expense (Income), net | — | — | — | — | (56,000 | ) | ||||||||||||||
Income Tax Provision | 16,041 | 3,257 | — | — | (19,600 | ) | ||||||||||||||
Net Income Attributable to VMware | (15,001 | ) | (2,391 | ) | (248 | ) | — | 7,462 | ||||||||||||
Supplemental Information
For the Three Months Ended June 30, 2010
(in thousands)
Unaudited
| Stock-Based Compensation Expense | Intangible Asset Amortization | Restructuring and Acquisition- Related Charges | ||||||||||
EMC Consolidated | ||||||||||||
Cost of Revenue | $ | (25,085 | ) | $ | (34,016 | ) | $ | — | ||||
Research and Development | (61,349 | ) | (6,252 | ) | — | |||||||
Selling, General and Administrative | (74,989 | ) | (31,695 | ) | — | |||||||
Restructuring and Acquisition-Related Charges | — | — | (9,839 | ) | ||||||||
Other Expense, net | 298 | — | — | |||||||||
Income Tax Provision | 38,869 | 22,882 | (1,700 | ) | ||||||||
Net Income Attributable to VMware | (11,026 | ) | (1,239 | ) | (1,167 | ) | ||||||
EMC Information Infrastructure | ||||||||||||
Cost of Revenue | $ | (16,622 | ) | $ | (26,934 | ) | $ | — | ||||
Research and Development | (22,037 | ) | (5,625 | ) | — | |||||||
Selling, General and Administrative | (51,045 | ) | (31,059 | ) | — | |||||||
Restructuring and Acquisition-Related Charges | — | — | (8,939 | ) | ||||||||
Other Expense, net | 224 | — | — | |||||||||
Income Tax Provision | 24,621 | 21,003 | 3,490 | |||||||||
Net Income Attributable to VMware | — | — | — | |||||||||
VMware within EMC | ||||||||||||
Cost of Revenue | $ | (8,463 | ) | $ | (7,082 | ) | $ | — | ||||
Research and Development | (39,312 | ) | (627 | ) | — | |||||||
Selling, General and Administrative | (23,944 | ) | (636 | ) | — | |||||||
Restructuring and Acquisition-Related Charges | — | — | (900 | ) | ||||||||
Other Expense, net | 74 | — | — | |||||||||
Income Tax Provision | 14,248 | 1,879 | (5,190 | ) | ||||||||
Net Income Attributable to VMware | (11,026 | ) | (1,239 | ) | (1,167 | ) | ||||||
Supplemental Information
For the Three Months Ended June 30, 2011
(in thousands)
Unaudited
| VMware Standalone GAAP | GAAP Adjustments and Eliminations | VMware within EMC GAAP | ||||||||||
Revenue | $ | 921,210 | $ | (372 | ) | $ | 920,838 | |||||
Cost of Revenue | 152,475 | 1,330 | 153,805 | |||||||||
Gross Margin | 768,735 | (1,702 | ) | 767,033 | ||||||||
Research and Development | 189,241 | (2,032 | ) | 187,209 | ||||||||
Selling, General and Administrative | 392,602 | (1,840 | ) | 390,762 | ||||||||
Restructuring and Acquisition-Related Charges | — | 1,210 | 1,210 | |||||||||
Operating Income | 186,892 | 960 | 187,852 | |||||||||
Other Income (Expense), net | 59,382 | (637 | ) | 58,745 | ||||||||
Income Before Taxes | 246,274 | 323 | 246,597 | |||||||||
Income Tax Provision | 26,116 | 5,695 | 31,811 | |||||||||
Net Income | $ | 220,158 | (5,372 | ) | 214,786 | |||||||
Net Income Attributable to VMware | (45,133 | ) | (45,133 | ) | ||||||||
Net Income Attributable to EMC | $ | (50,505 | ) | $ | 169,653 | |||||||
Supplemental Information
For the Three Months Ended June 30, 2010
(in thousands)
Unaudited
| VMware Standalone GAAP | GAAP Adjustments and Eliminations | VMware within EMC GAAP | ||||||||||
Revenue | $ | 673,904 | $ | (1,099 | ) | $ | 672,805 | |||||
Cost of Revenue | 118,152 | (92 | ) | 118,060 | ||||||||
Gross Margin | 555,752 | (1,007 | ) | 554,745 | ||||||||
Research and Development | 161,756 | (1,578 | ) | 160,178 | ||||||||
Selling, General and Administrative | 292,815 | (2,481 | ) | 290,334 | ||||||||
Restructuring and Acquisition-Related Charges | — | 900 | 900 | |||||||||
Operating Income | 101,181 | 2,152 | 103,333 | |||||||||
Other Income (Expense), net | (4,237 | ) | (767 | ) | (5,004 | ) | ||||||
Income Before Taxes | 96,944 | 1,385 | 98,329 | |||||||||
Income Tax Provision | 22,406 | 2,912 | 25,318 | |||||||||
Net Income | $ | 74,538 | (1,527 | ) | 73,011 | |||||||
Net Income Attributable to VMware | (14,281 | ) | (14,281 | ) | ||||||||
Net Income Attributable to EMC | $ | (15,808 | ) | $ | 58,730 | |||||||
EMC Corporation
Supplemental
Revenue Analysis
(in thousands)
Unaudited
| Q1 2010 | Q2 2010 | Q3 2010 | Q4 2010 | FY 2010 | Q1 2011 | Q2 2011 | ||||||||||||||||||||||
Storage: | ||||||||||||||||||||||||||||
Product Revenue | $ | 2,017,314 | $ | 2,076,855 | $ | 2,172,875 | $ | 2,557,243 | $ | 8,824,287 | $ | 2,381,891 | $ | 2,430,587 | ||||||||||||||
Services Revenue | 901,781 | 922,067 | 966,414 | 1,084,564 | 3,874,826 | 1,048,406 | 1,128,477 | |||||||||||||||||||||
Total Storage Revenue | $ | 2,919,095 | $ | 2,998,922 | $ | 3,139,289 | $ | 3,641,807 | $ | 12,699,113 | $ | 3,430,297 | $ | 3,559,064 | ||||||||||||||
Information Intelligence Group: | ||||||||||||||||||||||||||||
Product Revenue | $ | 63,662 | $ | 62,329 | $ | 59,078 | $ | 84,069 | $ | 269,138 | $ | 43,252 | $ | 46,341 | ||||||||||||||
Services Revenue | 114,502 | 116,105 | 116,713 | 119,439 | 466,759 | 117,103 | 122,961 | |||||||||||||||||||||
Total Information Intelligence Group Revenue | $ | 178,164 | $ | 178,434 | $ | 175,791 | $ | 203,508 | $ | 735,897 | $ | 160,355 | $ | 169,302 | ||||||||||||||
Security: | ||||||||||||||||||||||||||||
Product Revenue | $ | 85,814 | $ | 90,876 | $ | 102,442 | $ | 121,019 | $ | 400,151 | $ | 87,180 | $ | 102,273 | ||||||||||||||
Services Revenue | 75,654 | 82,460 | 83,290 | 87,828 | 329,232 | 87,074 | 93,861 | |||||||||||||||||||||
Total Security Revenue | $ | 161,468 | $ | 173,336 | $ | 185,732 | $ | 208,847 | $ | 729,383 | $ | 174,254 | $ | 196,134 | ||||||||||||||
EMC Information Infrastructure: | ||||||||||||||||||||||||||||
Product Revenue | $ | 2,166,790 | $ | 2,230,060 | $ | 2,334,395 | $ | 2,762,331 | $ | 9,493,576 | $ | 2,512,323 | $ | 2,579,201 | ||||||||||||||
Services Revenue | 1,091,937 | 1,120,632 | 1,166,417 | 1,291,831 | 4,670,817 | 1,252,583 | 1,345,299 | |||||||||||||||||||||
Total EMC Information Infrastructure Revenue | $ | 3,258,727 | $ | 3,350,692 | $ | 3,500,812 | $ | 4,054,162 | $ | 14,164,393 | $ | 3,764,906 | $ | 3,924,500 | ||||||||||||||
VMware: | ||||||||||||||||||||||||||||
Product Revenue | $ | 311,927 | $ | 323,256 | $ | 341,530 | $ | 422,568 | $ | 1,399,281 | $ | 418,936 | $ | 464,783 | ||||||||||||||
Services Revenue | 320,038 | 349,549 | 369,929 | 411,936 | 1,451,452 | 423,776 | 456,055 | |||||||||||||||||||||
| �� | ||||||||||||||||||||||||||||
Total VMware Revenue | $ | 631,965 | $ | 672,805 | $ | 711,459 | $ | 834,504 | $ | 2,850,733 | $ | 842,712 | $ | 920,838 | ||||||||||||||
Consolidated Revenues: | ||||||||||||||||||||||||||||
Product Revenue | $ | 2,478,717 | $ | 2,553,316 | $ | 2,675,925 | $ | 3,184,899 | $ | 10,892,857 | $ | 2,931,259 | $ | 3,043,984 | ||||||||||||||
Services Revenue | 1,411,975 | 1,470,181 | 1,536,346 | 1,703,767 | 6,122,269 | 1,676,359 | 1,801,354 | |||||||||||||||||||||
Total Consolidated Revenues | $ | 3,890,692 | $ | 4,023,497 | $ | 4,212,271 | $ | 4,888,666 | $ | 17,015,126 | $ | 4,607,618 | $ | 4,845,338 | ||||||||||||||
Percentage impact to EMC revenue growth rate due to changes in exchange rates from the prior year | 2.4 | % | 0.0 | % | (0.6 | )% | (0.6 | )% | 0.2 | % | 1.1 | % | 3.4 | % | ||||||||||||||