EMC CORPORATION Consolidated Balance Sheets (in thousands, except
per share amounts) Unaudited September 30, December 31, 2007 2006
------------- ------------ ASSETS Current assets: Cash and cash
equivalents $4,546,010 $1,828,106 Short-term investments 1,281,930
1,521,925 Accounts and notes receivable, less allowance for
doubtful accounts of $30,819 and $39,509 1,920,172 1,692,214
Inventories 886,729 834,800 Deferred income taxes 447,224 418,146
Other current assets 298,571 225,396 ------------- ------------
Total current assets 9,380,636 6,520,587 Long-term investments
1,699,368 2,246,290 Property, plant and equipment, net 2,106,207
2,035,559 Deferred income taxes - 104,446 Intangible assets, net
942,510 1,003,549 Other assets, net 684,261 638,655 Goodwill, net
6,408,993 6,017,161 ------------- ------------ Total assets
$21,221,975 $18,566,247 ============= ============ LIABILITIES
& STOCKHOLDERS' EQUITY Current liabilities: Accounts payable
$805,592 $680,263 Accrued expenses 1,547,502 1,592,022 Income taxes
payable 114,154 63,806 Deferred revenue 1,618,435 1,325,671
------------- ------------ Total current liabilities 4,085,683
3,661,762 Income taxes payable 239,675 219,342 Deferred revenue
904,513 780,124 Deferred income taxes 351,910 - Long-term
convertible debt 3,450,000 3,450,000 Other liabilities 128,135
129,312 Minority interest (1) 173,347 - Commitments and
contingencies Stockholders' equity: Series preferred stock, par
value $.01; authorized 25,000 shares, none outstanding - - Common
stock, par value $.01; authorized 6,000,000 shares; issued
2,098,225 and 2,122,339 shares 20,982 21,223 Additional paid-in
capital 2,957,177 2,560,935 Retained earnings 8,944,555 7,798,112
Accumulated other comprehensive loss (34,002) (54,563)
------------- ------------ Total stockholders' equity 11,888,712
10,325,707 ------------- ------------ Total liabilities and
stockholders' equity $21,221,975 $18,566,247 =============
============ (1) Represents minority interest in the stockholders'
equity of VMware which equaled approximately 14% of VMware's
stockholders' equity. EMC CORPORATION Consolidated Statements of
Cash Flows (in thousands) Unaudited Nine Months Ended
----------------- September 30, September 30, 2007 2006
------------ ------------ Cash flows from operating activities:
Cash received from customers $9,620,908 $8,074,003 Cash paid to
suppliers and employees (7,455,043) (6,311,034) Dividends and
interest received 182,840 198,721 Interest paid (41,706) (3,115)
Income taxes paid (159,106) (471,078) ------------ ------------ Net
cash provided by operating activities 2,147,893 1,487,497
------------ ------------ Cash flows from investing activities:
Additions to property, plant and equipment (501,462) (506,054)
Capitalized software development costs (163,350) (152,614)
Purchases of short and long-term available for sale securities
(5,053,999) (5,011,854) Sales and maturities of short and long-term
available for sale securities 5,871,715 6,016,126 Proceeds from the
sale of EMC's interest in VMware to Cisco 150,000 - Business
acquisitions, net of cash acquired (508,574) (2,464,187) Other
(10,860) (20,860) ------------ ------------ Net cash used in
investing activities (216,530) (2,139,443) ------------
------------ Cash flows from financing activities: Issuance of
common stock from the exercise of stock options 553,319 144,602
Proceeds from the sale of VMware's common stock 1,253,533 -
Issuance of VMware's common stock from the exercise of stock
options 2,760 - Repurchase of EMC common stock (1,102,602)
(2,464,888) Excess tax benefits from stock based compensation
55,250 12,036 Payment of long-term and short-term obligations
(4,369) (127,538) Proceeds from long-term and short-term
obligations 19,550 2,200,085 ------------ ------------ Net cash
provided by (used in) financing activities 777,441 (235,703)
------------ ------------ Effect of exchange rate changes on cash
9,100 23,599 ------------ ------------ Net increase (decrease) in
cash and cash equivalents 2,717,904 (864,050) Cash and cash
equivalents at beginning of period 1,828,106 2,322,370 ------------
------------ Cash and cash equivalents at end of period $4,546,010
$1,458,320 ============ ============ Reconciliation of net income
to net cash provided by operating activities: Net income $1,139,934
$838,832 Adjustments to reconcile net income to net cash provided
by operating activities: Cumulative effect of a change in
accounting principle - (247) Minority interest in VMware 4,459 -
Net gain on investments, including gain on sale of VMware stock
(137,330) - Depreciation and amortization 669,168 555,965
In-process research and development 800 35,410 Stock-based
compensation expense 271,189 299,510 Increase in provision for
doubtful accounts 2,605 9,512 Deferred income taxes, net (31,495)
(80,647) Excess tax benefits from stock based compensation (55,250)
(12,036) Other 5,262 23,934 Changes in assets and liabilities, net
of acquisitions: Accounts and notes receivable (188,486) 2,013
Inventories (2,702) (131,284) Other assets (125,538) (53,473)
Accounts payable 109,594 141,775 Accrued expenses (87,235)
(115,146) Income taxes payable 169,065 (151,320) Deferred revenue
407,357 121,962 Other liabilities (3,504) 2,737 ------------
------------ Net cash provided by operating activities $2,147,893
$1,487,497 ============ ============ EMC CORPORATION Reconciliation
of Cash Flow from Operations to Free Cash Flow (in thousands)
Unaudited Q1 2006 Q2 2006 Q3 2006 Q4 2006 -------- --------
-------- -------- EMC Consolidated: Cash flow from Operations
$637,178 $392,024 $458,295 $652,927 Capital Expenditures (160,520)
(155,600) (189,934) (212,041) Capitalized Software (48,883)
(47,191) (56,540) (40,281) -------- -------- -------- -------- Free
Cash Flow $427,775 $189,233 $211,821 $400,605 VMware within EMC:
Cash flow from Operations $92,317 $89,475 $108,107 $100,253 Capital
Expenditures (10,440) (11,362) (47,904) (45,563) Capitalized
Software (10,839) (10,079) (8,684) (2,150) -------- --------
-------- -------- Free Cash Flow $71,038 $68,034 $51,519 $52,540
EMC Information Infrastructure: Cash flow from Operations $544,861
$302,549 $350,188 $552,674 Capital Expenditures (150,080) (144,238)
(142,030) (166,478) Capitalized Software (38,044) (37,112) (47,856)
(38,131) -------- -------- -------- -------- Free Cash Flow
$356,737 $121,199 $160,302 $348,065 Q1 2007 Q2 2007 Q3 2007 YTD Q3
2006 YTD Q3 2007 -------- -------- -------- ----------- -----------
EMC Consolidated: Cash flow from Operations $808,683 $621,565
$717,645 $1,487,497 $2,147,893 Capital Expenditures (170,526)
(153,684) (177,252) (506,054) (501,462) Capitalized Software
(51,920) (46,126) (65,304) (152,614) (163,350) -------- --------
-------- ----------- ----------- Free Cash Flow $586,237 $421,755
$475,089 $828,829 $1,483,081 VMware within EMC: Cash flow from
Operations $192,596 $150,119 $188,616 $289,899 $531,331 Capital
Expenditures (47,817) (62,921) (48,302) (69,706) (159,040)
Capitalized Software (6,959) (3,872) (22,314) (29,602) (33,145)
-------- -------- -------- ----------- ----------- Free Cash Flow
$137,820 $83,326 $118,000 $190,591 $339,146 EMC Information
Infrastructure: Cash flow from Operations $616,087 $471,446
$529,029 $1,197,598 $1,616,562 Capital Expenditures (122,709)
(90,763) (128,950) (436,348) (342,422) Capitalized Software
(44,961) (42,254) (42,990) (123,012) (130,205) -------- --------
-------- ----------- ----------- Free Cash Flow $448,417 $338,429
$357,089 $638,238 $1,143,935 Free cash flow for VMware and EMC
excludes the change in the intercompany due to/due from balances.
Additionally, capital expenditures for VMware's headquarters
facilities which were reimbursed by EMC during 2006 and 2007 have
been classified as VMware capital expenditures as incurred.
Including the change in the intercompany due to/due from balances
and excluding capital expenditures for VMware's headquarters
facilities as VMware expenditures as incurred, results in free cash
flow for VMware of $76,844 for the quarter ended March 31, 2006,
$38,281 for the quarter ended June 30, 2006, $ 130,103 for the
quarter ended September 30, 2006, $109,744 for the quarter ended
December 31, 2006, $81,642 for the quarter ended March 31, 2007,
$49,424 for the quarter ended June 30, 2007, $133,644 for the
quarter ended September 30, 2007, $85,022 for the nine months ended
September 30, 2006 and $339,146 for the nine months ended September
30, 2007. Including the change in the intercompany due to/due from
balances and excluding capital expenditures for VMware's
headquarters facilities as VMware expenditures as incurred, results
in free cash flow for EMC Information Infrastructure of $264,710
for the quarter ended March 31, 2006, $150,952 for the quarter
ended June 30, 2006, $241,924 for the quarter ended September 30,
2006, $290,861 for the quarter ended December 31, 2006, $504,595
for the quarter ended March 31, 2007, $372,331 for the quarter
ended June 30, 2007, $341,445 for the quarter ended September 30,
2007, $743,807 for the nine months ended September 30, 2006 and
$1,218,371 for the nine months ended September 30, 2007. EMC
Corporation Supplemental Financial Data Revenue Analysis (in
thousands) Unaudited Revenue Components Q1 2006 Q2 2006 Q3 2006
------------------------------------ Revenues Systems $1,226,928
$1,151,600 $1,299,321 Software: Software License 621,602 681,998
736,331 Software Maintenance 303,202 315,189 345,650
------------------------------------ Total Software License &
Maintenance 924,804 997,187 1,081,981 Professional, Systems
Maintenance and Other Services 396,081 423,525 431,989 2,547,813
2,572,312 2,813,291 Other Businesses 2,874 2,211 2,015
------------------------------------ Total Consolidated Revenues
$2,550,687 $2,574,523 $2,815,306
==================================== Percentage impact to EMC
revenue growth rate due to changes in exchange rates from the prior
year (2.1)% (1.1)% 0.7% Revenue Components YTD 2006 Q4 2006 2006
------------------------------------ Revenues Systems $3,677,849
$1,462,777 $5,140,626 Software: Software License 2,039,931 897,485
2,937,416 Software Maintenance 964,041 371,163 1,335,204
------------------------------------ Total Software License &
Maintenance 3,003,972 1,268,648 4,272,620 Professional, Systems
Maintenance and Other Services 1,251,595 481,471 1,733,066
7,933,416 3,212,896 11,146,312 Other Businesses 7,100 1,678 8,778
------------------------------------ Total Consolidated Revenues
$7,940,516 $3,214,574 $11,155,090
==================================== Percentage impact to EMC
revenue growth rate due to changes in exchange rates from the prior
year (0.8)% 1.4% (0.2)% Q1 2007 Q2 2007 Q3 2007 YTD 2007
------------------------------------------------- Revenues Systems
$1,305,766 $1,354,438 $1,411,367 $4,071,571 Software: Software
License 806,660 867,917 921,517 2,596,094 Software Maintenance
382,080 400,233 426,198 1,208,511
------------------------------------------------- Total Software
License & Maintenance 1,188,740 1,268,150 1,347,715 3,804,605
Professional, Systems Maintenance and Other Services 478,972
500,798 539,609 1,519,379 2,973,478 3,123,386 3,298,691 9,395,555
Other Businesses 1,527 1,286 1,063 3,876
------------------------------------------------- Total
Consolidated Revenues $2,975,005 $3,124,672 $3,299,754 $9,399,431
================================================= Percentage impact
to EMC revenue growth rate due to changes in exchange rates from
the prior year 2.1% 2.1% 1.8% 2.0% EMC Corporation Supplemental
Financial Data Revenue Analysis (in thousands) Unaudited
Supplemental Revenue Data Q1 2006 Q2 2006 Q3 2006
------------------------------------ Storage systems revenue
$1,222,624 $1,147,892 $1,295,524 Storage software license revenue
446,720 493,002 524,679 Storage maintenance and services revenue
583,010 610,015 619,496 ------------------------------------ Total
Storage revenue $2,252,354 $2,250,909 $2,439,699
==================================== Content Management and
Archiving systems revenue $4,304 $3,708 $87 Content Management and
Archiving Software license revenue 83,038 75,161 59,092 Content
Management and Archiving maintenance and services revenue 79,978
87,253 90,173 ------------------------------------ Total Content
Management and Archiving revenue $167,320 $166,122 $149,352
==================================== Security systems revenue $- $-
$3,710 Security software license revenue - - 27,084 Security
maintenance and services revenue - - 6,961
------------------------------------ Total Security revenue $- $-
$37,755 ==================================== VMware software
license revenue $91,844 $113,835 $125,476 VMware maintenance and
services revenue 39,169 43,657 63,024
------------------------------------ Total VMware revenue $131,013
$157,492 $188,500 ==================================== Supplemental
Revenue Data YTD 2006 Q4 2006 2006
------------------------------------ Storage systems revenue
$3,666,040 $1,458,740 $5,124,780 Storage software license revenue
1,464,401 550,856 2,015,257 Storage maintenance and services
revenue 1,812,521 656,020 2,468,541
------------------------------------ Total Storage revenue
$6,942,962 $2,665,616 $9,608,578
==================================== Content Management and
Archiving systems revenue $8,099 $522 $8,621 Content Management and
Archiving Software license revenue 217,291 106,302 323,593 Content
Management and Archiving maintenance and services revenue 257,404
96,172 353,576 ------------------------------------ Total Content
Management and Archiving revenue $482,794 $202,996 $685,790
==================================== Security systems revenue
$3,710 $3,515 $7,225 Security software license revenue 27,084
76,835 103,919 Security maintenance and services revenue 6,961
33,581 40,542 ------------------------------------ Total Security
revenue $37,755 $113,931 $151,686
==================================== VMware software license
revenue $331,155 $163,492 $494,647 VMware maintenance and services
revenue 145,850 68,539 214,389 ------------------------------------
Total VMware revenue $477,005 $232,031 $709,036
==================================== Q1 2007 Q2 2007 Q3 2007 YTD
2007 ------------------------------------------------- Storage
systems revenue $1,302,741 $1,347,357 $1,405,139 $4,055,237 Storage
software license revenue 486,558 512,521 515,056 1,514,135 Storage
maintenance and services revenue 637,629 668,140 703,092 2,008,861
------------------------------------------------- Total Storage
revenue $2,426,928 $2,528,018 $2,623,287 $7,578,233
================================================= Content
Management and Archiving systems revenue $68 $1,708 $1,485 $3,261
Content Management and Archiving Software license revenue 68,472
69,046 79,247 216,765 Content Management and Archiving maintenance
and services revenue 103,658 102,848 108,580 315,086
------------------------------------------------- Total Content
Management and Archiving revenue $172,198 $173,602 $189,312
$535,112 ================================================= Security
systems revenue $2,958 $5,373 $4,743 $13,074 Security software
license revenue 81,934 81,300 82,979 246,213 Security maintenance
and services revenue 34,969 38,282 45,142 118,393
------------------------------------------------- Total Security
revenue $119,861 $124,955 $132,864 $377,680
================================================= VMware software
license revenue $169,696 $205,050 $244,235 $618,981 VMware
maintenance and services revenue 86,322 93,047 110,056 289,425
------------------------------------------------- Total VMware
revenue $256,018 $298,097 $354,291 $908,406
================================================= DATASOURCE: EMC
Corporation
Copyright
