EMC CORPORATION Consolidated Income Statements (in thousands,
except per share amounts) Unaudited Three Months Ended Twelve
Months Ended ------------------------- -------------------------
December 31, December 31, December 31, December 31, 2007 2006 2007
2006 ------------------------- ------------------------- Revenues:
Product sales $2,744,311 $2,360,262 $9,411,976 $8,078,042 Services
1,086,463 854,312 3,818,229 3,077,048 -------------------------
------------------------- 3,830,774 3,214,574 13,230,205 11,155,090
Cost and expenses: Cost of product sales 1,227,607 1,111,861
4,359,041 3,906,771 Cost of services 484,236 364,588 1,659,836
1,335,120 Research and development 402,970 358,973 1,526,928
1,254,193 Selling, general and administrative 1,128,875 913,948
3,912,688 3,253,274 In-process research and development 350 - 1,150
35,410 Restructuring charges 34,551 166,923 31,310 162,564
------------------------- ------------------------- Operating
income 552,185 298,281 1,739,252 1,207,758 Net gain on investments,
including gain on sale of VMware stock - - 137,330 - Investment
income 79,083 50,273 249,264 224,949 Interest expense (18,489)
(25,685) (72,855) (34,123) Other income (expense), net 5,627
(10,814) 6,578 (8,566) -------------------------
------------------------- Income before taxes, minority interest
and cumulative effect of a change in accounting principle 618,406
312,055 2,059,569 1,390,018 Income tax provision (benefit) 81,676
(76,714) 378,446 162,664 -------------------------
------------------------- Income before minority interest and
cumulative effect of a change in accounting principle 536,730
388,769 1,681,123 1,227,354 Minority interest, net of taxes
(10,996) - (15,455) - -------------------------
------------------------- Income before cumulative effect of a
change in accounting principle 525,734 388,769 1,665,668 1,227,354
Cumulative effect of a change in accounting principle, net of taxes
of $107 - - - 247 -------------------------
------------------------- Net income $525,734 $388,769 $1,665,668
$1,227,601 ========================= ========================= Net
income per weighted average share, basic: Income before cumulative
effect of a change in accounting principle $0.25 $0.18 $0.80 $0.55
Cumulative effect of a change in accounting principle - - - -
------------------------- ------------------------- Net income
$0.25 $0.18 $0.80 $0.55 =========================
========================= Net income per weighted average share,
diluted: Income before cumulative effect of a change in accounting
principle $0.24 $0.18 $0.77 $0.54 Cumulative effect of a change in
accounting principle - - - - -------------------------
------------------------- Net income $0.24 $0.18 $0.77 $0.54
========================= ========================= Weighted
average shares, basic 2,086,259 2,124,625 2,079,542 2,248,431
Weighted average shares, diluted 2,210,008 2,164,518 2,157,873
2,286,304 Note: Prior periods have been adjusted to reclassify a
portion of the cumulative effect of adoption of FAS123R in Q1'06
from the income statement to stockholders' equity. This
reclassification results in an increase to net income in Q1'06 and
YTD 2006 of $3,619 and a corresponding decrease in additional
paid-in capital. Reconciliation of GAAP to Non-GAAP For the Three
Months Ended December 31, 2007 (in thousands, except per share
amounts) Unaudited Research Selling, Cost of and General and
Revenue Revenue Development Administrative ---------- ----------
---------- ---------- EMC Consolidated GAAP $3,830,774 $1,711,843
$402,970 $1,128,875 Restructuring charges and IPR&D - - - -
---------- ---------- ---------- ---------- EMC Consolidated
Adjusted (1) 3,830,774 1,711,843 402,970 1,128,875 Stock-based
compensation expense - (15,157) (30,837) (50,220) Intangible
amortization - (31,400) (4,871) (20,797) ---------- ----------
---------- ---------- EMC Consolidated Non-GAAP (2) $3,830,774
$1,665,286 $367,262 $1,057,858 ========== ========== ==========
========== EMC Information Infrastructure GAAP $3,418,367
$1,644,155 $309,541 $950,552 Restructuring charges and IPR&D -
- - - ---------- ---------- ---------- ---------- EMC Information
Infrastructure Adjusted (3) 3,418,367 1,644,155 309,541 950,552
Stock-based compensation expense - (10,557) (15,708) (35,362)
Intangible amortization - (26,011) (4,871) (19,628) ----------
---------- ---------- ---------- EMC Information Infrastructure
Non-GAAP (4) $3,418,367 $1,607,587 $288,962 $895,562 ==========
========== ========== ========== VMware standalone GAAP $412,475
$67,182 $91,562 $177,257 GAAP adjustments and eliminations (68) 506
1,867 1,066 ---------- ---------- ---------- ---------- VMware
within EMC 412,407 67,688 93,429 178,323 Stock-based compensation
expense - (4,600) (15,129) (14,858) Intangible amortization -
(5,389) - (1,169) ---------- ---------- ---------- ----------
VMware within EMC Non-GAAP (5) $412,407 $57,699 $78,300 $162,296
========== ========== ========== ========== Income Before Other
Taxes and Restructuring Operating Income, Minority and IPR&D
Income net Interest ---------- ---------- ---------- ---------- EMC
Consolidated GAAP $34,901 $552,185 $66,221 $618,406 Restructuring
charges and IPR&D (34,901) 34,901 - 34,901 ----------
---------- ---------- ---------- EMC Consolidated Adjusted (1) -
587,086 66,221 653,307 Stock-based compensation expense - 96,214 -
96,214 Intangible amortization - 57,068 - 57,068 ----------
---------- ---------- ---------- EMC Consolidated Non-GAAP (2) $-
$740,368 $66,221 $806,589 ========== ========== ==========
========== EMC Information Infrastructure GAAP $34,901 $479,218
$59,435 $538,653 Restructuring charges and IPR&D (34,901)
34,901 - 34,901 ---------- ---------- ---------- ---------- EMC
Information Infrastructure Adjusted (3) - 514,119 59,435 573,554
Stock-based compensation expense - 61,627 - 61,627 Intangible
amortization - 50,510 - 50,510 ---------- ---------- ----------
---------- EMC Information Infrastructure Non-GAAP (4) $- $626,256
$59,435 $685,691 ========== ========== ========== ========== VMware
standalone GAAP $- $76,474 $6,786 $83,260 GAAP adjustments and
eliminations - (3,507) - (3,507) ---------- ---------- ----------
---------- VMware within EMC - 72,967 6,786 79,753 Stock-based
compensation expense - 34,587 - 34,587 Intangible amortization -
6,558 - 6,558 ---------- ---------- ---------- ---------- VMware
within EMC Non-GAAP (5) $- $114,112 $6,786 $120,898 ==========
========== ========== ========== Income Before Income Tax Minority
Minority Provision Interest Interest Net Income ----------
---------- ---------- ---------- EMC Consolidated GAAP $81,676
$536,730 $(10,996) $525,734 Restructuring charges and IPR&D
3,123 31,778 - 31,778 ---------- ---------- ---------- ----------
EMC Consolidated Adjusted (1) 84,799 568,508 (10,996) 557,512
Stock-based compensation expense 17,719 78,495 (4,089) 74,406
Intangible amortization 19,955 37,113 (581) 36,532 ----------
---------- ---------- ---------- EMC Consolidated Non-GAAP (2)
$122,473 $684,116 $(15,665) $668,451 ========== ==========
========== ========== EMC Information Infrastructure GAAP $77,748
$460,905 $- $460,905 Restructuring charges and IPR&D 3,123
31,778 - 31,778 ---------- ---------- ---------- ---------- EMC
Information Infrastructure Adjusted (3) 80,871 492,683 - 492,683
Stock-based compensation expense 12,192 49,435 - 49,435 Intangible
amortization 17,524 32,986 - 32,986 ---------- ----------
---------- ---------- EMC Information Infrastructure Non-GAAP (4)
$110,587 $575,104 $- $575,104 ========== ========== ==========
========== VMware standalone GAAP $5,105 $78,155 $- $78,155 GAAP
adjustments and eliminations (1,177) (2,330) (10,996) (13,326)
---------- ---------- ---------- ---------- VMware within EMC 3,928
75,825 (10,996) 64,829 Stock-based compensation expense 5,527
29,060 (4,089) 24,971 Intangible amortization 2,431 4,127 (581)
3,546 ---------- ---------- ---------- ---------- VMware within EMC
Non-GAAP (5) $11,886 $109,012 $(15,665) $93,346 ==========
========== ========== ========== Net Income per Net Income per
Weighted Average Weighted Average Share, Basic Share, Diluted
----------- ----------- EMC Consolidated GAAP $0.252 $0.236
Restructuring charges and IPR&D $0.015 $0.014 -----------
----------- EMC Consolidated Adjusted (1) $0.267 $0.251 Stock-based
compensation expense $0.036 $0.034 Intangible amortization $0.018
$0.017 ----------- ----------- EMC Consolidated Non-GAAP (2) $0.320
$0.301 =========== =========== EMC Information Infrastructure GAAP
$0.221 $0.209 Restructuring charges and IPR&D $0.015 $0.014
----------- ----------- EMC Information Infrastructure Adjusted (3)
$0.236 $0.223 Stock-based compensation expense $0.024 $0.022
Intangible amortization $0.016 $0.015 ----------- ----------- EMC
Information Infrastructure Non-GAAP (4) $0.276 $0.260 ===========
=========== VMware standalone GAAP $0.037 $0.035 GAAP adjustments
and eliminations $(0.006) $(0.008) ----------- ----------- VMware
within EMC $0.031 $0.028 Stock-based compensation expense $0.012
$0.011 Intangible amortization $0.002 $0.002 -----------
----------- VMware within EMC Non-GAAP (5) $0.045 $0.041
=========== =========== Wtd. Average Share O/S 2,086,259 2,210,008
=========== =========== (1) Represents EMC Consolidated GAAP
excluding restructuring charges and IPR&D. (2) Represents EMC
Consolidated Adjusted excluding stock-based compensation expense
and intangible amortization. (3) Represents EMC Information
Infrastructure GAAP excluding restructuring charges and IPR&D.
(4) Represents EMC Information Infrastructure Adjusted less
stock-based compensation expense and intangible amortization. (5)
Represents VMware within EMC excluding stock-based compensation
expense and intangible amortization. Note: schedule may not add due
to rounding Reconciliation of GAAP to Non-GAAP For the Three Months
Ended December 31, 2006 (in thousands, except per share amounts)
Unaudited Research Selling, Cost of and General and Revenue Revenue
Development Administrative ---------- ---------- ----------
---------- EMC Consolidated GAAP $3,214,574 $1,476,449 $358,973
$913,948 Restructuring charges - - - - Tax benefits - - - -
---------- ---------- ---------- ---------- EMC Consolidated
Adjusted (1) 3,214,574 1,476,449 358,973 913,948 Stock-based
compensation expense - (16,914) (27,917) (54,345) Intangible
amortization - (27,757) (1,977) (13,931) ---------- ----------
---------- ---------- EMC Consolidated Non-GAAP (2) $3,214,574
$1,431,778 $329,079 $845,672 ========== ========== ==========
========== EMC Information Infrastructure GAAP $2,982,543
$1,437,056 $311,640 $807,555 Restructuring charges - - - - Tax
benefits - - - - ---------- ---------- ---------- ---------- EMC
Information Infrastructure Adjusted (3) 2,982,543 1,437,056 311,640
807,555 Stock-based compensation expense - (16,159) (18,915)
(47,896) Intangible amortization - (22,223) (1,977) (13,013)
---------- ---------- ---------- ---------- EMC Information
Infrastructure Non-GAAP (4) $2,982,543 $1,398,674 $290,748 $746,646
========== ========== ========== ========== VMware standalone GAAP
$229,581 $37,250 $50,131 $105,691 GAAP adjustments and eliminations
2,450 2,143 (2,798) 702 ---------- ---------- ---------- ----------
VMware within EMC 232,031 39,393 47,333 106,393 Stock-based
compensation expense - (755) (9,002) (6,449) Intangible
amortization - (5,534) - (918) ---------- ---------- ----------
---------- VMware within EMC Non-GAAP (5) $232,031 $33,104 $38,331
$99,026 ========== ========== ========== ========== Other Income
Restructuring Operating Income, Before and IPR&D Income net
Taxes ---------- ---------- ---------- ---------- EMC Consolidated
GAAP $166,923 $298,281 $13,774 $312,055 Restructuring charges
(166,923) 166,923 - 166,923 Tax benefits - - - - ----------
---------- ---------- ---------- EMC Consolidated Adjusted (1) -
465,204 13,774 478,978 Stock-based compensation expense - 99,176 -
99,176 Intangible amortization - 43,665 - 43,665 ----------
---------- ---------- ---------- EMC Consolidated Non-GAAP (2) $-
$608,045 $13,774 $621,819 ========== ========== ==========
========== EMC Information Infrastructure GAAP $166,923 $259,369
$12,527 $271,896 Restructuring charges (166,923) 166,923 - 166,923
Tax benefits - - - - ---------- ---------- ---------- ----------
EMC Information Infrastructure Adjusted (3) - 426,292 12,527
438,819 Stock-based compensation expense - 82,970 - 82,970
Intangible amortization - 37,213 - 37,213 ---------- ----------
---------- ---------- EMC Information Infrastructure Non-GAAP (4)
$- $546,475 $12,527 $559,002 ========== ========== ==========
========== VMware standalone GAAP $- $36,509 $1,234 $37,743 GAAP
adjustments and eliminations - 2,403 13 2,416 ---------- ----------
---------- ---------- VMware within EMC - 38,912 1,247 40,159
Stock-based compensation expense - 16,206 - 16,206 Intangible
amortization - 6,452 - 6,452 ---------- ---------- ----------
---------- VMware within EMC Non-GAAP (5) $- $61,570 $1,247 $62,817
========== ========== ========== ========== Net Income Net Income
per per Weighted Weighted Average Average Income Tax Share, Share,
Provision Net Income Basic Diluted ---------- ---------- ----------
---------- EMC Consolidated GAAP $(76,714) $388,769 $0.183 $0.180
Restructuring charges 37,833 129,090 $0.061 $0.060 Tax benefits
111,590 (111,590) $(0.053) $(0.052) ---------- ----------
---------- ---------- EMC Consolidated Adjusted (1) 72,709 406,269
$0.191 $0.188 Stock-based compensation expense 25,780 73,396 $0.035
$0.034 Intangible amortization 15,654 28,011 $0.013 $0.013
---------- ---------- ---------- ---------- EMC Consolidated
Non-GAAP (2) $114,143 $507,676 $0.239 $0.235 ========== ==========
========== ========== EMC Information Infrastructure GAAP $(84,039)
$355,935 $0.168 $0.164 Restructuring charges 37,833 129,090 $0.061
$0.060 Tax benefits 111,590 (111,590) $(0.053) $(0.052) ----------
---------- ---------- ---------- EMC Information Infrastructure
Adjusted (3) 65,384 373,435 $0.176 $0.173 Stock-based compensation
expense 21,887 61,083 $0.029 $0.028 Intangible amortization 13,202
24,011 $0.011 $0.011 ---------- ---------- ---------- ----------
EMC Information Infrastructure Non-GAAP (4) $100,473 $458,529
$0.216 $0.212 ========== ========== ========== ========== VMware
standalone GAAP $6,764 $30,979 $0.015 $0.014 GAAP adjustments and
eliminations 561 1,855 $0.001 $0.001 ---------- ----------
---------- ---------- VMware within EMC 7,325 32,834 $0.015 $0.015
Stock-based compensation expense 3,893 12,313 $0.006 $0.006
Intangible amortization 2,452 4,000 $0.002 $0.002 ----------
---------- ---------- ---------- VMware within EMC Non-GAAP (5)
$13,670 $49,147 $0.023 $0.023 ========== ========== ==========
========== Wtd. Average Share O/S 2,124,625 2,164,518 ==========
========== (1) Represents EMC Consolidated GAAP excluding
restructuring charges and special tax benefits. (2) Represents EMC
Consolidated Adjusted excluding stock-based compensation expense
and intangible amortization. (3) Represents EMC Information
Infrastructure GAAP excluding restructuring charges and special tax
benefits. (4) Represents EMC Information Infrastructure Adjusted
excluding stock- based compensation expense and intangible
amortization. (5) Represents VMware within EMC excluding
stock-based compensation expense and intangible amortization. Note:
schedule may not add due to rounding Reconciliation of GAAP to
Non-GAAP For the Year Ended December 31, 2007 (in thousands, except
per share amounts) Unaudited Research Selling, Cost of and General
and Revenue Revenue Development Administrative ----------
---------- ---------- ---------- EMC Consolidated GAAP $13,230,205
$6,018,877 $1,526,928 $3,912,688 Restructuring charges and
IPR&D - - - - Net gains on investments, including gain on sale
of VMware stock - - - - Tax benefits - - - - ---------- ----------
---------- ---------- EMC Consolidated Adjusted (1) 13,230,205
6,018,877 1,526,928 3,912,688 Stock-based compensation expense -
(57,223) (108,041) (202,136) Intangible amortization - (119,948)
(11,357) (73,492) ---------- ---------- ---------- ---------- EMC
Consolidated Non-GAAP (2) $13,230,205 $5,841,706 $1,407,530
$3,637,060 ========== ========== ========== ========== EMC
Information Infrastructure GAAP $11,909,392 $5,800,529 $1,228,810
$3,322,169 Restructuring charges and IPR&D - - - - Net gains on
investments, including gain on sale of VMware stock - - - - Tax
benefits - - - - ---------- ---------- ---------- ---------- EMC
Information Infrastructure Adjusted (3) 11,909,392 5,800,529
1,228,810 3,322,169 Stock-based compensation expense - (48,693)
(65,235) (159,531) Intangible amortization - (98,776) (11,357)
(68,923) ---------- ---------- ---------- ---------- EMC
Information Infrastructure Non-GAAP (4) $11,909,392 $5,653,060
$1,152,218 $3,093,715 ========== ========== ========== ==========
VMware standalone GAAP $1,325,811 $218,674 $285,941 $585,855 GAAP
adjustments and eliminations (4,998) (326) 12,177 4,664 ----------
---------- ---------- ---------- VMware within EMC 1,320,813
218,348 298,118 590,519 Stock-based compensation expense - (8,530)
(42,806) (42,605) Intangible amortization - (21,172) - (4,569)
---------- ---------- ---------- ---------- VMware within EMC
Non-GAAP (5) $1,320,813 $188,646 $255,312 $543,345 ==========
========== ========== ========== Income Restructuring Other Before
Taxes and Operating Income, and Minority IPR&D Income net
Interest ---------- ---------- ---------- ---------- EMC
Consolidated GAAP $32,460 $1,739,252 $320,317 $2,059,569
Restructuring charges and IPR&D (34,901) 34,901 - 34,901 Net
gains on investments, including gain on sale of VMware stock - -
(137,330) (137,330) Tax benefits - - - - ---------- ----------
---------- ---------- EMC Consolidated Adjusted (1) (2,441)
1,774,153 182,987 1,957,140 Stock-based compensation expense -
367,400 - 367,400 Intangible amortization - 204,797 - 204,797
---------- ---------- ---------- ---------- EMC Consolidated
Non-GAAP (2) $(2,441) $2,346,350 $182,987 $2,529,337 ==========
========== ========== ========== EMC Information Infrastructure
GAAP $32,460 $1,525,424 $315,180 $1,840,604 Restructuring charges
and IPR&D (34,901) 34,901 - 34,901 Net gains on investments,
including gain on sale of VMware stock - - (137,330) (137,330) Tax
benefits - - - - ---------- ---------- ---------- ---------- EMC
Information Infrastructure Adjusted (3) (2,441) 1,560,325 177,850
1,738,175 Stock-based compensation expense - 273,459 - 273,459
Intangible amortization - 179,056 - 179,056 ---------- ----------
---------- ---------- EMC Information Infrastructure Non-GAAP (4)
$(2,441) $2,012,840 $177,850 $2,190,690 ========== ==========
========== ========== VMware standalone GAAP $- $235,341 $5,137
$240,478 GAAP adjustments and eliminations - (21,513) - (21,513)
---------- ---------- ---------- ---------- VMware within EMC -
213,828 5,137 218,965 Stock-based compensation expense - 93,941 -
93,941 Intangible amortization - 25,741 - 25,741 ----------
---------- ---------- ---------- VMware within EMC Non-GAAP (5) $-
$333,510 $5,137 $338,647 ========== ========== ==========
========== Income Before Income Tax Minority Minority Provision
Interest Interest Net Income ---------- ---------- ----------
---------- EMC Consolidated GAAP $378,446 $1,681,123 $(15,455)
$1,665,668 Restructuring charges and IPR&D 3,123 31,778 -
31,778 Net gains on investments, including gain on sale of VMware
stock (22,180) (115,150) - (115,150) Tax benefits 19,912 (19,912) -
(19,912) ---------- ---------- ---------- ---------- EMC
Consolidated Adjusted (1) 379,301 1,577,839 (15,455) 1,562,384
Stock-based compensation expense 87,054 280,346 (5,793) 274,553
Intangible amortization 72,019 132,778 (868) 131,910 ----------
---------- ---------- ---------- EMC Consolidated Non-GAAP (2)
$538,374 $1,990,963 $(22,115) $1,968,848 ========== ==========
========== ========== EMC Information Infrastructure GAAP $361,419
$1,479,185 $- $1,479,185 Restructuring charges and IPR&D 3,123
31,778 - 31,778 Net gains on investments, including gain on sale of
VMware stock (22,180) (115,150) - (115,150) Tax benefits 19,912
(19,912) - (19,912) ---------- ---------- ---------- ---------- EMC
Information Infrastructure Adjusted (3) 362,274 1,375,901 -
1,375,901 Stock-based compensation expense 66,785 206,674 - 206,674
Intangible amortization 62,490 116,566 - 116,566 ----------
---------- ---------- ---------- EMC Information Infrastructure
Non-GAAP (4) $491,548 $1,699,142 $- $1,699,142 ==========
========== ========== ========== VMware standalone GAAP $22,341
$218,137 $- $218,137 GAAP adjustments and eliminations (5,314)
(16,199) (15,455) (31,654) ---------- ---------- ----------
---------- VMware within EMC 17,027 201,938 (15,455) 186,483
Stock-based compensation expense 20,269 73,672 (5,793) 67,879
Intangible amortization 9,529 16,212 (868) 15,344 ----------
---------- ---------- ---------- VMware within EMC Non-GAAP (5)
$46,825 $291,822 $(22,115) $269,706 ========== ==========
========== ========== Net Income per Net Income per Weighted
Average Weighted Average Share, Basic Share, Diluted -----------
----------- EMC Consolidated GAAP $0.801 $0.770 Restructuring
charges and IPR&D $0.015 $0.015 Net gains on investments,
including gain on sale of VMware stock $(0.055) $(0.053) Tax
benefits $(0.010) $(0.009) ----------- ----------- EMC Consolidated
Adjusted (1) $0.751 $0.722 Stock-based compensation expense $0.132
$0.127 Intangible amortization $0.063 $0.061 -----------
----------- EMC Consolidated Non-GAAP (2) $0.947 $0.910 ===========
=========== EMC Information Infrastructure GAAP $0.711 $0.685
Restructuring charges and IPR&D $0.015 $0.015 Net gains on
investments, including gain on sale of VMware stock $(0.055)
$(0.053) Tax benefits $(0.010) $(0.009) ----------- ----------- EMC
Information Infrastructure Adjusted (3) $0.662 $0.638 Stock-based
compensation expense $0.099 $0.096 Intangible amortization $0.056
$0.054 ----------- ----------- EMC Information Infrastructure
Non-GAAP (4) $0.817 $0.787 =========== =========== VMware
standalone GAAP $0.105 $0.101 GAAP adjustments and eliminations
$(0.015) $(0.017) ----------- ----------- VMware within EMC $0.090
$0.084 Stock-based compensation expense $0.033 $0.031 Intangible
amortization $0.007 $0.007 ----------- ----------- VMware within
EMC Non-GAAP (5) $0.130 $0.123 =========== =========== Wtd. Average
Share O/S 2,079,542 2,157,873 =========== =========== (1)
Represents EMC Consolidated GAAP excluding restructuring charges,
IPR&D, net gains on investments, including the gain on sale of
VMware stock and special tax benefits. (2) Represents EMC
Consolidated Adjusted excluding stock-based compensation expense
and intangible amortization. (3) Represents EMC Information
Infrastructure GAAP excluding restructuring charges, IPR&D, net
gains on investments, including the gain on sale of VMware stock
and special tax benefits. (4) Represents EMC Information
Infrastructure Adjusted less stock-based compensation expense and
intangible amortization. (5) Represents VMware within EMC excluding
stock-based compensation expense and intangible amortization. Note:
schedule may not add due to rounding Reconciliation of GAAP to
Non-GAAP For the Year Ended December 31, 2006 (in thousands, except
per share amounts) Unaudited Research Selling, Cost of and General
and Revenue Revenue Development Administrative ----------
---------- ---------- ---------- EMC Consolidated GAAP $11,155,090
$5,241,891 $1,254,193 $3,253,274 Restructuring charges and
IPR&D - - - - Tax benefits - - - - ---------- ----------
---------- ---------- EMC Consolidated Adjusted (1) 11,155,090
5,241,891 1,254,193 3,253,274 Stock-based compensation expense -
(66,288) (107,481) (224,918) Intangible amortization - (94,333)
(12,600) (46,091) ---------- ---------- ---------- ---------- EMC
Consolidated Non-GAAP (2) $11,155,090 $5,081,270 $1,134,112
$2,982,265 ========== ========== ========== ========== EMC
Information Infrastructure GAAP $10,446,054 $5,114,440 $1,110,661
$2,948,874 Restructuring charges and IPR&D - - - - Tax benefits
- - - - ---------- ---------- ---------- ---------- EMC Information
Infrastructure Adjusted (3) 10,446,054 5,114,440 1,110,661
2,948,874 Stock-based compensation expense - (63,805) (81,139)
(202,518) Intangible amortization - (72,491) (12,600) (42,411)
---------- ---------- ---------- ---------- EMC Information
Infrastructure Non-GAAP (4) $10,446,054 $4,978,144 $1,016,922
$2,703,945 ========== ========== ========== ========== VMware
standalone GAAP $703,904 $123,382 $148,254 $307,929 GAAP
adjustments and eliminations 5,132 4,069 (4,722) (3,529) ----------
---------- ---------- ---------- VMware within EMC GAAP 709,036
127,451 143,532 304,400 IPR&D - - - - ---------- ----------
---------- ---------- VMware within EMC Adjusted (5) 709,036
127,451 143,532 304,400 Stock-based compensation expense - (2,483)
(26,342) (22,400) Intangible amortization - (21,842) - (3,680)
---------- ---------- ---------- ---------- VMware within EMC
Non-GAAP (6) $709,036 $103,126 $117,190 $278,320 ==========
========== ========== ========== Other Income Restructuring
Operating Income, Before and IPR&D Income net Taxes ----------
---------- ---------- ---------- EMC Consolidated GAAP $197,974
$1,207,758 $182,260 $1,390,018 Restructuring charges and IPR&D
(201,947) 201,947 - 201,947 Tax benefits - - - - ----------
---------- ---------- ---------- EMC Consolidated Adjusted (1)
(3,973) 1,409,705 182,260 1,591,965 Stock-based compensation
expense - 398,687 - 398,687 Intangible amortization - 153,024 -
153,024 ---------- ---------- ---------- ---------- EMC
Consolidated Non-GAAP (2) $(3,973) $1,961,416 $182,260 $2,143,676
========== ========== ========== ========== EMC Information
Infrastructure GAAP $194,274 $1,077,805 $180,352 $1,258,157
Restructuring charges and IPR&D (198,247) 198,247 - 198,247 Tax
benefits - - - - ---------- ---------- ---------- ---------- EMC
Information Infrastructure Adjusted (3) (3,973) 1,276,052 180,352
1,456,404 Stock-based compensation expense - 347,462 - 347,462
Intangible amortization - 127,502 - 127,502 ---------- ----------
---------- ---------- EMC Information Infrastructure Non-GAAP (4)
$(3,973) $1,751,016 $180,352 $1,931,368 ========== ==========
========== ========== VMware standalone GAAP $3,700 $120,639 $1,908
$122,547 GAAP adjustments and eliminations - 9,314 - 9,314
---------- ---------- ---------- ---------- VMware within EMC GAAP
3,700 129,953 1,908 131,861 IPR&D (3,700) 3,700 - 3,700
---------- ---------- ---------- ---------- VMware within EMC
Adjusted (5) - 133,653 1,908 135,561 Stock-based compensation
expense - 51,225 - 51,225 Intangible amortization - 25,522 - 25,522
---------- ---------- ---------- ---------- VMware within EMC
Non-GAAP (6) $- $210,400 $1,908 $212,308 ========== ==========
========== ========== Cumulative Effect of a Change in Income Tax
Accounting Provision Principle Net Income ---------- ----------
---------- EMC Consolidated GAAP $162,664 $247 $1,227,601
Restructuring charges and IPR&D 37,833 - 164,114 Tax benefits
144,856 - (144,856) ---------- ---------- ---------- EMC
Consolidated Adjusted (1) 345,353 247 1,246,859 Stock-based
compensation expense 89,362 (247) 309,078 Intangible amortization
53,967 - 99,057 ---------- ---------- ---------- EMC Consolidated
Non-GAAP (2) $488,682 $- $1,654,994 ========== ==========
========== EMC Information Infrastructure GAAP $123,691 $72
$1,134,538 Restructuring charges and IPR&D 37,833 - 160,414 Tax
benefits 144,856 - (144,856) ---------- ---------- ---------- EMC
Information Infrastructure Adjusted (3) 306,380 72 1,150,096
Stock-based compensation expense 77,134 (72) 270,256 Intangible
amortization 44,269 - 83,233 ---------- ---------- ---------- EMC
Information Infrastructure Non-GAAP (4) $427,783 $- $1,503,585
========== ========= =========== VMware standalone GAAP $36,832
$175 $85,890 GAAP adjustments and eliminations 2,141 - 7,173
---------- ---------- ---------- VMware within EMC GAAP 38,973 175
93,063 IPR&D - - 3,700 ---------- ---------- ---------- VMware
within EMC Adjusted (5) 38,973 175 96,763 Stock-based compensation
expense 12,228 (175) 38,822 Intangible amortization 9,698 - 15,824
---------- ---------- ---------- VMware within EMC Non-GAAP (6)
$60,899 $- $151,409 ========== ========== ========== Net Income per
Net Income per Weighted Average Weighted Average Share, Basic
Share, Diluted ----------- ----------- EMC Consolidated GAAP $0.546
$0.537 Restructuring charges and IPR&D $0.073 $0.072 Tax
benefits $(0.064) $(0.063) ----------- ----------- EMC Consolidated
Adjusted (1) $0.555 $0.546 Stock-based compensation expense $0.137
$0.135 Intangible amortization $0.044 $0.043 -----------
----------- EMC Consolidated Non-GAAP (2) $0.736 $0.724 ===========
=========== EMC Information Infrastructure GAAP $0.505 $0.496
Restructuring charges and IPR&D $0.071 $0.070 Tax benefits
$(0.064) $(0.063) ----------- ----------- EMC Information
Infrastructure Adjusted (3) $0.512 $0.503 Stock-based compensation
expense $0.120 $0.118 Intangible amortization $0.037 $0.036
----------- ----------- EMC Information Infrastructure Non-GAAP (4)
$0.669 $0.658 =========== =========== VMware standalone GAAP $0.038
$0.038 GAAP adjustments and eliminations $0.003 $0.003 -----------
----------- VMware within EMC GAAP $0.041 $0.041 IPR&D $0.002
$0.002 ----------- ----------- VMware within EMC Adjusted (5)
$0.043 $0.042 Stock-based compensation expense $0.017 $0.017
Intangible amortization $0.007 $0.007 ----------- -----------
VMware within EMC Non-GAAP (6) $0.067 $0.066 ===========
=========== Wtd. Average Share O/S 2,248,431 2,286,304 ===========
=========== (1) Represents EMC Consolidated GAAP excluding
restructuring charges, IPR&D and special tax benefits. (2)
Represents EMC Consolidated Adjusted excluding stock-based
compensation expense and intangible amortization. (3) Represents
EMC Information Infrastructure GAAP excluding restructuring
charges, IPR&D and special tax benefits. (4) Represents EMC
Information Infrastructure Adjusted excluding stock- based
compensation expense and intangible amortization. (5) Represents
VMware within EMC GAAP excluding IPR&D. (6) Represents VMware
within EMC Adjusted excluding stock-based compensation expense and
intangible amortization. Note: schedule may not add due to rounding
EMC CORPORATION Consolidated Balance Sheets (in thousands, except
per share amounts) Unaudited December 31, December 31, 2007 2006
------------ ------------ ASSETS Current assets: Cash and cash
equivalents $4,482,211 $1,828,106 Short-term investments 1,644,703
1,521,925 Accounts and notes receivable, less allowance for
doubtful accounts of $34,389 and $39,509 2,307,512 1,692,214
Inventories 877,243 834,800 Deferred income taxes 475,544 418,146
Other current assets 265,889 225,396 ------------ ------------
Total current assets 10,053,102 6,520,587 Long-term investments
1,845,572 2,246,290 Property, plant and equipment, net 2,159,396
2,035,559 Deferred income taxes - 104,446 Intangible assets, net
940,077 1,003,549 Other assets, net 755,001 638,655 Goodwill, net
6,531,506 6,017,161 ------------ ------------ Total assets
$22,284,654 $18,566,247 ============ ============ LIABILITIES &
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $840,886
$680,263 Accrued expenses 1,696,309 1,592,022 Income taxes payable
146,104 63,806 Deferred revenue 1,724,909 1,325,671 ------------
------------ Total current liabilities 4,408,208 3,661,762 Income
taxes payable 246,951 219,342 Deferred revenue 1,053,394 780,124
Deferred income taxes 288,175 - Long-term convertible debt
3,450,000 3,450,000 Other liabilities 127,621 129,312 ------------
------------ Total Liabilities 9,574,349 8,240,540 Minority
interest(1) 188,988 - 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 2,102,187 and 2,122,339 shares
21,022 21,223 Additional paid-in capital 3,038,455 2,560,935
Retained earnings 9,470,289 7,798,112 Accumulated other
comprehensive loss (8,449) (54,563) ------------ ------------ Total
stockholders' equity 12,521,317 10,325,707 ------------
------------ Total liabilities and stockholders' equity $22,284,654
$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
Twelve Months Ended ------------------- December 31, December 31,
2007 2006 ------------ ------------ Cash flows from operating
activities: Cash received from customers $13,333,489 $11,167,249
Cash paid to suppliers and employees (10,182,600) (8,666,586)
Dividends and interest received 254,062 258,631 Interest paid
(76,025) (26,804) Income taxes paid (202,324) (592,066)
------------ ------------ Net cash provided by operating activities
3,126,602 2,140,424 ------------ ------------ Cash flows from
investing activities: Additions to property, plant and equipment
(699,038) (718,095) Capitalized software development costs
(232,047) (192,895) Purchases of short and long-term available for
sale securities (6,204,762) (6,611,698) Sales and maturities of
short and long-term available for sale securities 6,527,027
7,865,264 Proceeds from the sale of EMC's interest in VMware to
Cisco 150,000 - Business acquisitions, net of cash acquired
(692,003) (2,618,376) Other (12,074) (20,860) ------------
------------ Net cash used in investing activities (1,162,897)
(2,296,660) ------------ ------------ Cash flows from financing
activities: Issuance of common stock from the exercise of stock
options 782,449 257,789 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
(1,453,669) (3,655,404) Excess tax benefits from stock based
compensation 91,782 20,025 Payment of long-term and short-term
obligations (17,178) (2,331,587) Proceeds from long-term and short-
term obligations 19,815 5,654,004 Purchase of call options -
(669,076) Sale of warrants - 391,144 Debt issuance costs - (58,863)
------------ ------------ Net cash provided by (used in) financing
activities 679,492 (391,968) ------------ ------------ Effect of
exchange rate changes on cash 10,908 53,940 ------------
------------ Net increase (decrease) in cash and cash equivalents
2,654,105 (494,264) Cash and cash equivalents at beginning of
period 1,828,106 2,322,370 ------------ ------------ Cash and cash
equivalents at end of period $4,482,211 $1,828,106 ============
============ Reconciliation of net income to net cash provided by
operating activities: Net income $1,665,668 $1,227,601 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 15,455 - Net gain on investments,
including gain on sale of VMware stock (137,330) - Depreciation and
amortization 917,274 764,162 Non-cash restructuring and other
special charges 3,778 75,889 Stock-based compensation expense
367,404 398,687 Increase in provision for doubtful accounts 8,885
10,290 Deferred income taxes, net (68,397) (131,966) Excess tax
benefits from stock based compensation (91,782) (20,025) Other
3,850 27,271 Changes in assets and liabilities, net of
acquisitions: Accounts and notes receivable (576,422) (232,295)
Inventories 13,574 (69,567) Other assets (97,277) (31,822) Accounts
payable 155,296 59,631 Accrued expenses 35,934 133,856 Income taxes
payable 243,216 (297,936) Deferred revenue 670,820 234,164 Other
liabilities (3,344) (7,269) ------------ ------------ Net cash
provided by operating activities $3,126,602 $2,140,424 ============
============ EMC CORPORATION Reconciliation of Cash Flow from
Operations to Free Cash Flow (in thousands) Unaudited Q4 2006 Q4
2007 2006 2007 --------- --------- --------- --------- EMC
Consolidated: Cash flow from Operations $652,927 $978,709
$2,140,424 $3,126,602 Capital Expenditures (212,041) (197,576)
(718,095) (699,038) Capitalized Software (40,281) (68,697)
(192,895) (232,047) --------- --------- --------- --------- Free
Cash Flow $400,605 $712,436 $1,229,434 $2,195,517 VMware within
EMC: Cash flow from Operations $100,253 $84,134 $390,152 $615,465
Capital Expenditures (45,563) (45,101) (115,269) (204,141)
Capitalized Software (2,150) (14,877) (31,752) (48,022) ---------
--------- --------- --------- Free Cash Flow $52,540 $24,156
$243,131 $363,302 EMC Information Infrastructure: Cash flow from
Operations $552,674 $894,575 $1,750,272 $2,511,137 Capital
Expenditures (166,478) (152,475) (602,826) (494,897) Capitalized
Software (38,131) (53,820) (161,143) (184,025) --------- ---------
--------- --------- Free Cash Flow $348,065 $688,280 $986,303
$1,832,215 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
$109,744 for the quarter ended December 31, 2006, $103,596 for the
quarter ended December 31, 2007, $194,766 for the year ended
December 31, 2006 and $368,306 for the year ended December 31,
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 $290,861
for the quarter ended December 31, 2006, $608,840 for the quarter
ended December 31, 2007, $1,034,668 for the year ended December 31,
2006 and $1,827,211 for the year ended December 31, 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% Q4 2006 YTD 2006 -----------------------
Revenues Systems $1,462,777 $5,140,626 Software: Software License
897,485 2,937,416 Software Maintenance 371,163 1,335,204
----------------------- Total Software License & Maintenance
1,268,648 4,272,620 Professional, Systems Maintenance and Other
Services 481,471 1,733,066 3,212,896 11,146,312 Other Businesses
1,678 8,778 ----------------------- Total Consolidated Revenues
$3,214,574 $11,155,090 ======================= Percentage impact to
EMC revenue growth rate due to changes in exchange rates from the
prior year 1.4% (0.2)% Q1 2007 Q2 2007 Q3 2007
------------------------------------ Revenues Systems $1,305,766
$1,354,438 $1,411,367 Software: Software License 806,660 867,917
921,517 Software Maintenance 382,080 400,233 426,198
------------------------------------ Total Software License &
Maintenance 1,188,740 1,268,150 1,347,715 Professional, Systems
Maintenance and Other Services 478,972 500,798 539,609 2,973,478
3,123,386 3,298,691 Other Businesses 1,527 1,286 1,063
------------------------------------ Total Consolidated Revenues
$2,975,005 $3,124,672 $3,299,754
==================================== Percentage impact to EMC
revenue growth rate due to changes in exchange rates from the prior
year 2.1% 2.1% 1.8% Q4 2007 YTD 2007 -----------------------
Revenues Systems $1,688,565 $5,760,136 Software: Software License
1,055,746 3,651,840 Software Maintenance 472,264 1,680,775
----------------------- Total Software License & Maintenance
1,528,010 5,332,615 Professional, Systems Maintenance and Other
Services 613,095 2,132,474 3,829,670 13,225,225 Other Businesses
1,104 4,980 ----------------------- Total Consolidated Revenues
$3,830,774 $13,230,205 ======================= Percentage impact to
EMC revenue growth rate due to changes in exchange rates from the
prior year 3.2% 2.3% 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 ==================================== EMC Information
Infrastructure Systems Revenue $1,226,928 $1,151,600 $1,299,321 EMC
Information Infrastructure Software License Revenue 529,758 568,163
610,855 EMC Information Infrastructure Maintenance and Services
Revenue 662,988 697,268 716,630
------------------------------------ Total EMC Information
Infrastructure Revenue $2,419,674 $2,417,031 $2,626,806
==================================== 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
==================================== Q4 2006 YTD 2006
------------------------ Storage Systems Revenue $1,458,740
$5,124,780 Storage Software License Revenue 550,856 2,015,257
Storage Maintenance and Services Revenue 656,020 2,468,541
------------------------ Total Storage Revenue $2,665,616
$9,608,578 ======================== Content Management and
Archiving Systems Revenue $522 $8,621 Content Management and
Archiving Software License Revenue 106,302 323,593 Content
Management and Archiving Maintenance and Services Revenue 96,172
353,576 ------------------------ Total Content Management and
Archiving Revenue $202,996 $685,790 ========================
Security Systems Revenue $3,515 $7,225 Security Software License
Revenue 76,835 103,919 Security Maintenance and Services Revenue
33,581 40,542 ------------------------ Total Security Revenue
$113,931 $151,686 ======================== EMC Information
Infrastructure Systems Revenue $1,462,777 $5,140,626 EMC
Information Infrastructure Software License Revenue 733,993
2,442,769 EMC Information Infrastructure Maintenance and Services
Revenue 785,773 2,862,659 ------------------------ Total EMC
Information Infrastructure Revenue $2,982,543 $10,446,054
======================== VMware Software License Revenue $163,492
$494,647 VMware Maintenance and Services Revenue 68,539 214,389
------------------------ Total VMware Revenue $232,031 $709,036
======================== Q1 2007 Q2 2007 Q3 2007
------------------------------------ Storage Systems Revenue
$1,302,740 $1,347,357 $1,405,139 Storage Software License Revenue
486,558 512,521 515,056 Storage Maintenance and Services Revenue
637,630 668,140 703,092 ------------------------------------ Total
Storage Revenue $2,426,928 $2,528,018 $2,623,287
==================================== Content Management and
Archiving Systems Revenue $68 $1,708 $1,485 Content Management and
Archiving Software License Revenue 68,472 69,046 79,247 Content
Management and Archiving Maintenance and Services Revenue 103,658
102,848 108,580 ------------------------------------ Total Content
Management and Archiving Revenue $172,198 $173,602 $189,312
==================================== Security Systems Revenue
$2,958 $5,373 $4,743 Security Software License Revenue 81,934
81,300 82,979 Security Maintenance and Services Revenue 34,969
38,282 45,142 ------------------------------------ Total Security
Revenue $119,861 $124,955 $132,864
==================================== EMC Information Infrastructure
Systems Revenue $1,305,766 $1,354,438 $1,411,367 EMC Information
Infrastructure Software License Revenue 636,964 662,867 677,282 EMC
Information Infrastructure Maintenance and Services Revenue 776,257
809,270 856,814 ------------------------------------ Total EMC
Information Infrastructure Revenue $2,718,987 $2,826,575 $2,945,463
==================================== VMware Software License
Revenue $169,696 $205,050 $244,235 VMware Maintenance and Services
Revenue 86,322 93,047 110,056 ------------------------------------
Total VMware Revenue $256,018 $298,097 $354,291
==================================== Q4 2007 YTD 2007
------------------------ Storage Systems Revenue $1,682,395
$5,737,631 Storage Software License Revenue 561,622 2,075,757
Storage Maintenance and Services Revenue 788,630 2,797,492
------------------------ Total Storage Revenue $3,032,647
$10,610,880 ======================== Content Management and
Archiving Systems Revenue $2,157 $5,418 Content Management and
Archiving Software License Revenue 115,305 332,070 Content
Management and Archiving Maintenance and Services Revenue 120,664
435,750 ------------------------ Total Content Management and
Archiving Revenue $238,126 $773,238 ========================
Security Systems Revenue $4,013 $17,087 Security Software License
Revenue 94,604 340,817 Security Maintenance and Services Revenue
48,978 167,371 ------------------------ Total Security Revenue
$147,595 $525,275 ======================== EMC Information
Infrastructure Systems Revenue $1,688,565 $5,760,136 EMC
Information Infrastructure Software License Revenue 771,531
2,748,644 EMC Information Infrastructure Maintenance and Services
Revenue 958,272 3,400,613 ------------------------ Total EMC
Information Infrastructure Revenue $3,418,368 $11,909,393
======================== VMware Software License Revenue $284,215
$903,196 VMware Maintenance and Services Revenue 128,191 417,616
------------------------ Total VMware Revenue $412,406 $1,320,812
======================== DATASOURCE: EMC Corporation Web site:
http://www.emc.com/ http://ir.vmware.com/
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