Highlights - Second-quarter consolidated revenue - $3.26 billion,
up 3% sequentially; GAAP net income attributable to EMC - $205.2
million, up 6% sequentially - Second-quarter GAAP EPS of $0.10 and
non-GAAP EPS of $0.18 - Sequential revenue growth across all major
geographies and business units within EMC Information
Infrastructure business - Year to date operating cash flow of $1.44
billion; free cash flow of approximately $1.1 billion - Record cash
and investments - $10 billion - Full-year 2009 business outlook -
consolidated revenue of $13.8 billion; GAAP EPS of $0.51 and
Non-GAAP EPS of $0.82 HOPKINTON, Mass., July 23
/PRNewswire-FirstCall/ -- EMC Corporation (NYSE: EMC), the world
leader in information infrastructure solutions, today reported
second-quarter 2009 revenue of $3.26 billion, an increase of 3%
sequentially and second-quarter GAAP net income attributable to EMC
of $205.2 million, an increase of 6% sequentially. A continued
focus on its technology leadership, global sales and service
execution and achieving maximum operating efficiencies contributed
to EMC's sequential revenue and profit growth. Second-quarter
consolidated revenue of $3.26 billion declined 11% compared with
the year-ago period or 8% adjusting for the impact from currency.
Second-quarter 2009 GAAP net income attributable to EMC was $205.2
million or $0.10 per diluted share, compared with $360.1 million or
$0.17 per diluted share for the second quarter of 2008.
Second-quarter 2009 non-GAAP(1) net income attributable to EMC was
$358.9 million or $0.18 per diluted share, compared with $494.4
million or $0.24 per diluted share for the second quarter of
2008.(2) In the second quarter, EMC generated operating cash flow
of $574 million, free cash flow of $400 million and ended the
quarter with record cash and investments of $10 billion. Year to
date EMC generated operating cash flow of $1.44 billion and free
cash flow of approximately $1.1 billion. Joe Tucci, EMC Chairman,
President and Chief Executive Officer, said, "This marks another
quarter of solid execution, and I am proud of the EMC and VMware
teams around the world that produced these results. We are focused
on four of the hottest and fastest-growing areas of IT spending -
next-generation fully virtualized data centers; cloud computing;
virtualized desktops and clients; and next-generation backup,
recovery and archive solutions. This, together with our market
leading products, solutions, services and proven go-to-market model
gives us confidence that EMC will continue to gain market share
this year. When IT markets resume to more normal spending rates, we
expect EMC will return to generating double-digit revenue growth."
David Goulden, EMC Executive Vice President and Chief Financial
Officer, said, "While global conditions remain challenging and our
full-year view of declining IT spending remains unchanged, EMC's
second-quarter financial performance reflects customers' budget
stabilization and improved business predictability. Continued focus
on helping customers address their most pressing IT priorities
helped EMC's Information Infrastructure business achieve balanced
sequential revenue growth across all major geographies and in every
business unit. Our sustained focus on cost containment and
operational efficiency helped drive sequential growth in our
Information Infrastructure gross and operating margins."
Second-Quarter Highlights EMC's Information Infrastructure business
revenue for the second quarter - comprising Information Storage,
RSA Security, and Content Management & Archiving - was $2.80
billion, an increase of 5% sequentially. The business was driven by
strong sequential growth of the company's market-leading EMC
CLARiiON mid-tier storage systems; EMC Celerra unified storage
systems; EMC's backup and recovery software; RSA information
security solutions; and EMC Global Services. During the quarter,
the business also benefited from new, industry-leading products,
technology integrations and product enhancements from across EMC's
Information Infrastructure portfolio. Second-quarter highlights
also included customer demand for EMC's: -- Market-leading
networked storage solutions that deliver unprecedented levels of
performance, scalability and efficiency, in particular EMC's
unified storage systems that connect to a variety of networks, its
next-generation high-end systems for virtual data centers and its
entire line of storage systems that leverage enterprise flash
drives. -- RSA security solutions helping customers solve their
most complex information security requirements while efficiently
running their security operations, with particular strength in the
quarter from the RSA security information and event management
solutions, RSA data loss prevention suite, and the RSA identity
protection and verification suite. -- Enterprise content management
and archiving solutions that help customers advance business
process and collaboration, while also driving efficiency,
information governance and compliance. -- Broad consulting and
professional services portfolio enabling customers to meet their
near-term cost containment, business agility and IT optimization
requirements, while supporting their longer-term strategies in
areas such as the next-generation virtual data center and cloud
computing. -- Expanding portfolio of increasingly strategic backup,
recovery and archive solutions that leverage data deduplication to
meet a variety of data protection requirements, maximize efficiency
of storage environments and help customers curb costs. EMC also
announced today the successful completion of its tender offer for
all outstanding shares of common stock of Data Domain, Inc., with
stockholders tendering approximately 90.3% of outstanding Data
Domain shares. Together with the 3.9% of outstanding Data Domain
shares EMC previously purchased, EMC now controls approximately
94.2% of Data Domain shares outstanding. EMC expects to effect a
second-step merger and close its acquisition of Data Domain today.
Upon completion of the acquisition, Data Domain will form the
foundation of a new, high-growth product division within EMC's
Information Storage business focused on the development and
delivery of next-generation disk-based backup, recovery and archive
solutions. For its quarter ending June 30, 2009, Data Domain
achieved consolidated revenues of nearly $86 million, an increase
of 40% compared with the year ago period. VMware (NYSE:VMW), which
is majority-owned by EMC, contributed second-quarter revenue of
$455 million. EMC consolidated second-quarter revenue from the
United States was $1.68 billion, up 3% sequentially, and
represented 52% of total second-quarter revenue. Revenue from EMC's
operations outside of the United States was $1.58 billion, up 4%
sequentially, and represented 48% of total second-quarter revenue.
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 business outlook and certain items impacting 2009 set
forth in prior EMC news releases. All dollar amounts and
percentages set forth below should be considered to be
approximations. -- Consolidated EMC revenues are expected to be
$13.8 billion in 2009, including $200 million of revenues from Data
Domain. Consolidated third-quarter revenues are expected to
increase 2% to 3% from the second quarter 2009 excluding revenues
from the acquisition of Data Domain, and are expected to increase
4% to 5% including revenues from the acquisition of Data Domain. --
Consolidated GAAP diluted earnings per share are expected to be
$0.51 in 2009, including the negative impact of a little less than
$0.02 per share from the acquisition of Data Domain. --
Consolidated non-GAAP diluted earnings per share, excluding the
impact of restructuring and acquisition-related charges,
stock-based compensation expense, intangible asset amortization and
a gain recognized from holdings in Data Domain common stock are
expected to be $0.82 in 2009. The acquisition of Data Domain is
expected to have a neutral impact on non-GAAP diluted EPS for the
full-year 2009. -- Consolidated restructuring and
acquisition-related charges, stock-based compensation expense and
intangible asset amortization are expected to be $0.04, $0.20 and
$0.08 per diluted share, respectively in 2009. Expected to offset
these charges is a $0.01 per diluted share gain recognized from
holdings in Data Domain common stock. -- Information storage GAAP
gross margins are expected to be 50% for the second half of 2009.
Excluding the impact of stock-based compensation expense, which
impacts gross margins by 0.6% and intangible asset amortization,
which impacts gross margins by 0.4%, information storage non-GAAP
gross margins are expected to be 51% for the second half of 2009.
-- The consolidated GAAP income tax rate is expected to be 17% in
2009. Excluding the impact of restructuring and acquisition-related
charges, stock-based compensation expense, intangible asset
amortization and gain recognized from holdings in Data Domain
common stock, which collectively impact the tax rate by 4%, the
consolidated non-GAAP income tax rate is expected to be 21% for
2009. -- In 2010, savings from cost reduction actions are expected
to reduce the company's 2008 cost base by $500 million. -- In 2010,
revenues from Data Domain and EMC Avamar products and services are
expected to exceed $1 billion. (1) Items excluded from the non-GAAP
results are stock-based compensation expense and intangible asset
amortization for the second quarters of 2009 and 2008 and
restructuring and other special charges for the second quarter of
2009. See attached schedules for reconciliation of GAAP to
non-GAAP. (2) The results for 2008 have been adjusted to give
effect to the adoption of Statement of Financial Accounting
Standards No. 160, "Non-controlling Interests in Consolidated
Financial Statements-An Amendment of ARB No. 51" and FASB Staff
Position No. APB 14-1, "Accounting for Convertible Debt Instruments
That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement)". EMC, Avamar, CLARiiON and Celerra are registered
trademarks of EMC Corporation. RSA is a registered trademark of RSA
Security Inc. VMware is a registered trademark of VMware, Inc. All
other trademarks used are the property of their respective owners.
Forward-Looking Statements This release contains "forward-looking
statements" as defined under the Federal Securities Laws. Actual
results could differ materially from those projected in the
forward-looking statements as a result of certain risk factors,
including but not limited to: (i) adverse changes in general
economic or market conditions; (ii) delays or reductions in
information technology spending; (iii) our ability to protect our
proprietary technology; (iv) risks associated with managing the
growth of our business, including risks associated with
acquisitions and investments and the challenges and costs of
integration, restructuring and achieving anticipated synergies; (v)
fluctuations in VMware, Inc.'s operating results and risks
associated with trading of VMware stock; (vi) competitive factors,
including but not limited to pricing pressures and new product
introductions; (vii) the relative and varying rates of product
price and component cost declines and the volume and mixture of
product and services revenues; (viii) component and product quality
and availability; (ix) the transition to new products, the
uncertainty of customer acceptance of new product offerings and
rapid technological and market change; (x) insufficient, excess or
obsolete inventory; (xi) war or acts of terrorism; (xii) the
ability to attract and retain highly qualified employees; (xiii)
fluctuating currency exchange rates; (xiv) litigation that we may
be involved in; 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 contains 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 stock-based compensation expense,
intangible asset amortization and restructuring and other special
charges) 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, 2009 2008 2009 2008 ----------------------
---------------------- (As Adjusted) (As Adjusted) Revenues:
Product sales $2,005,270 $2,461,651 $3,974,390 $4,802,081 Services
1,252,082 1,212,223 2,433,724 2,341,852 --------- ---------
--------- --------- 3,257,352 3,673,874 6,408,114 7,143,933 Cost
and expenses: Cost of product sales 1,057,205 1,119,553 2,070,535
2,194,136 Cost of services 456,369 525,751 910,546 1,011,832
Research and development 397,881 442,502 781,174 876,016 Selling,
general and administrative 1,051,204 1,135,674 2,075,977 2,217,889
In-process research and development - - - 79,204 Restructuring and
other special charges (credits) 33,234 - 48,806 (357) ---------
--------- --------- --------- Operating income 261,459 450,394
521,076 765,213 Investment income 31,343 58,730 71,187 135,870
Interest expense (44,158) (44,044) (89,701) (87,113) Other income
(expense), net 17 (2,811) (10,741) (7,574) --------- ---------
--------- --------- Income before tax 248,661 462,269 491,821
806,396 Income tax provision 38,045 94,432 75,860 180,751 ---------
--------- --------- --------- Net income 210,616 367,837 415,961
625,645 Less: Net income attributable to the non-controlling
interests in VMware, Inc. (5,384) (7,713) (16,660) (13,874)
--------- --------- --------- --------- Net income attributable to
EMC Corporation $205,232 $360,124 $399,301 $611,771 =========
========= ========= ========= Net income per weighted average
share, basic: common shareholders: $0.10 $0.18 $0.20 $0.30
========= ========= ========= ========= Net income per weighted
average share, diluted: common shareholders: $0.10 $0.17 $0.20
$0.29 ========= ========= ========= ========= Weighted average
shares, basic 2,011,508 2,057,766 2,010,147 2,066,470 Weighted
average shares, diluted 2,030,048 2,094,795 2,025,433 2,102,184
Reconciliation of GAAP to Non-GAAP For the Three Months Ended June
30, 2009 (in thousands, except per share amounts) Unaudited
Research Selling, Cost of and General and Revenue Revenue
Development Administrative ------- ------- -----------
-------------- ----------------------- EMC Consolidated GAAP
$3,257,352 $1,513,574 $397,881 $1,051,204 -----------------------
Restructuring and other special charges - - - - --------- ---------
--------- --------- ----------------------- EMC Consolidated
Adjusted (1) 3,257,352 1,513,574 397,881 1,051,204
----------------------- Stock-based compensation expense - (22,257)
(43,715) (55,912) Intangible asset amortization - (30,535) (3,221)
(25,656) --------- --------- --------- ---------
----------------------- EMC Consolidated Non-GAAP (2) $3,257,352
$1,460,782 $350,945 $969,636 ----------------------- =========
========= ========= ========= ----------------------- EMC
Information Infrastructure GAAP $2,802,239 $1,432,563 $277,756
$838,141 ----------------------- Restructuring and other special
charges - - - - --------- --------- --------- ---------
---------------------- EMC Information Infrastructure Adjusted (3)
2,802,239 1,432,563 277,756 838,141 ----------------------
Stock-based compensation expense - (15,224) (17,267) (34,665)
Intangible asset amortization - (27,778) (3,221) (25,144) ---------
--------- --------- --------- ---------------------- EMC
Information Infrastructure Non-GAAP (4) $2,802,239 $1,389,561
$257,268 $778,332 ---------------------- ========== ==========
========== ========== ---------------------- VMware standalone GAAP
$455,675 $81,146 $121,380 $215,150 ---------------------- GAAP
adjustments and eliminations (562) (135) (1,255) (2,087) ---------
--------- --------- --------- ---------------------- VMware within
EMC GAAP (5) 455,113 81,011 120,125 213,063 ----------------------
Stock-based Compensation expense - (7,033) (26,448) (21,247)
Intangible asset amortization - (2,757) - (512) --------- ---------
--------- --------- ---------------------- VMware within EMC
Non-GAAP (6) $455,113 $71,221 $93,677 $191,304
---------------------- ========== ========== ========== ==========
Restructuring and Other Other Income Special Operating Expense,
Before Charges Income net Taxes ------------- --------- --------
-------- ---------------------- EMC Consolidated GAAP $33,234
$261,459 $(12,798) $248,661 ---------------------- Restructuring
and other special charges (33,234) 33,234 - 33,234 ---------
--------- --------- --------- ---------------------- EMC
Consolidated Adjusted (1) - 294,693 (12,798) 281,895
---------------------- Stock-based compensation expense - 121,884 -
121,884 Intangible asset amortization - 59,412 - 59,412 ---------
--------- --------- --------- ---------------------- EMC
Consolidated Non-GAAP (2) $- $475,989 $(12,798) $463,191
---------------------- ========== ========== ========== ==========
---------------------- EMC Information Infrastructure GAAP $33,234
$220,545 $(12,818) $207,727 ---------------------- Restructuring
and other special charges (33,234) 33,234 - 33,234 ---------
--------- --------- --------- ---------------------- EMC
Information Infrastructure Adjusted (3) - 253,779 (12,818) 240,961
---------------------- Stock-based Compensation expense - 67,156 -
67,156 Intangible asset amortization - 56,143 - 56,143 ---------
--------- --------- --------- ---------------------- EMC
Information Infrastructure Non-GAAP (4) $- $377,078 $(12,818)
$364,260 ---------------------- ========== ========== ==========
========== ---------------------- VMware standalone GAAP $- $37,999
$872 $38,871 ---------------------- GAAP adjustments and
eliminations - 2,915 (852) 2,063 --------- --------- ---------
--------- ---------------------- VMware within EMC GAAP (5) -
40,914 20 40,934 ---------------------- Stock-based compensation
expense - 54,728 - 54,728 Intangible asset amortization - 3,269 -
3,269 --------- --------- --------- ---------
---------------------- VMware within EMC Non-GAAP (6) $- $98,911
$20 $98,931 ---------------------- ========== ========== ==========
========== Net Net Income Income Income Tax Net Attributable
Attributable Provision Income to VMware to EMC --------- ------
------------ ------------ ---------------------- EMC Consolidated
GAAP $38,045 $210,616 $(5,384) $205,232 ----------------------
Restructuring and other special charges 5,915 27,319 - 27,319
--------- --------- --------- --------- ---------------------- EMC
Consolidated Adjusted (1) 43,960 237,935 (5,384) 232,551
---------------------- Stock-based compensation expense 26,863
95,021 (7,324) 87,697 Intangible asset amortization 20,426 38,986
(350) 38,636 --------- --------- --------- ---------
---------------------- EMC Consolidated Non-GAAP (2) $91,249
$371,942 $(13,058) $358,884 ---------------------- ==========
========== ========== ========== ---------------------- EMC
Information Infrastructure GAAP $31,286 $176,441 $- $176,441
---------------------- Restructuring and other special charges
5,915 27,319 - 27,319 --------- --------- --------- ---------
---------------------- EMC Information Infrastructure Adjusted (3)
37,201 203,760 - 203,760 ---------------------- Stock-based
compensation expense 16,388 50,768 - 50,768 Intangible asset
amortization 19,272 36,871 - 36,871 --------- --------- ---------
--------- ---------------------- EMC Information Infrastructure
Non-GAAP (4) $72,861 $291,399 $- $291,399 ----------------------
========== ========== ========== ========== ----------------------
VMware standalone GAAP $6,336 $32,535 $- $ 32,535
---------------------- GAAP adjustments and eliminations 423 1,640
(5,384) (3,744) --------- --------- --------- ---------
---------------------- VMware within EMC GAAP (5) 6,759 34,175
(5,384) 28,791 ---------------------- Stock-based compensation
expense 10,475 44,253 (7,324) 36,929 Intangible asset amortization
1,154 2,115 (350) 1,765 --------- --------- --------- ---------
---------------------- VMware within EMC Non-GAAP (6) $18,388
$80,543 $(13,058) $67,485 ---------------------- ==========
========== ========== ========== Net Income Net Income per Weighted
per Weighted Average Share, Average Share, Basic Diluted
-------------- -------------- ---------------------- EMC
Consolidated GAAP $0.102 $0.101 ----------------------
Restructuring and other special charges $0.014 $0.013 ------ ------
---------------------- EMC Consolidated Adjusted (1) $0.116 $0.114
---------------------- Stock-based compensation expense $0.044
$0.043 Intangible asset amortization $0.019 $0.019 ------ ------
---------------------- EMC Consolidated Non-GAAP (2) $0.178 $0.177
---------------------- ====== ====== ---------------------- EMC
Information Infrastructure GAAP $0.088 $0.087
---------------------- Restructuring and other special charges
$0.014 $0.013 ------ ------ ---------------------- EMC Information
Infrastructure Adjusted (3) $0.101 $0.100 ----------------------
Stock-based compensation expense $0.025 $0.025 Intangible asset
amortization $0.018 $0.018 ------ ------ ---------------------- EMC
Information Infrastructure Non-GAAP (4) $0.145 $0.144
---------------------- ====== ====== ---------------------- VMware
standalone GAAP $0.016 $0.016 ---------------------- GAAP
adjustments and eliminations $(0.002) $(0.002) ------- -------
---------------------- VMware within EMC GAAP (5) $0.014 $0.014
---------------------- Stock-based compensation expense $0.018
$0.018 Intangible asset amortization $0.001 $0.001 ------ ------
---------------------- VMware within EMC Non-GAAP (6) $0.034 $0.033
---------------------- ====== ====== Wtd. Average Share O/S
2,011,508 2,030,048 ========= ========= Reconciliation of GAAP to
Non-GAAP For the Three Months Ended June 30, 2009 (in thousands,
except per share amounts) Unaudited (Continued) The following costs
are included in EMC Consolidated Non-GAAP and EMC Information
Infrastructure Non-GAAP results Research Selling, Cost of and
General and Revenue Revenue Development Administrative -------
------- ----------- -------------- Non-cash interest expense on
convertible debt (7) $- $- $- $- Transition costs (8) - 1,342 1,616
5,951 ------ ------ ------ ------ $- $1,342 $1,616 $5,951 ======
====== ====== ====== Restructuring and Other Other Income Special
Operating Expense, Before Charges Income net Taxes -------------
--------- -------- -------- Non-cash interest expense on
convertible debt (7) $- $- $(26,780) $(26,780) Transition costs (8)
- (8,909) - (8,909) ------ ------ ------ ------ $- $(8,909)
$(26,780) $(35,689) ====== ====== ======= ======= Net Net Income
Income Income Tax Net Attributable Attributable Provision Income to
VMware to EMC --------- ------ ------------ ------------ Non-cash
interest expense on convertible debt (7) $(8,385) $(18,395) $-
$(18,395) Transition costs (8) (2,341) (6,568) - $(6,568) ------
------ ------- ------- $(10,726) $(24,963) $- $(24,963) ========
======== ======== ======== Net Income Net Income per Weighted per
Weighted Average Share, Average Share, Basic Diluted --------------
-------------- Non-cash interest expense on convertible debt (7)
$(0.009) $(0.009) Transition costs (8) $(0.003) $(0.003) -------
------- $(0.012) $(0.012) ======= ======= (1) Represents EMC
Consolidated GAAP excluding restructuring and other special
charges. (2) Represents EMC Consolidated Adjusted excluding
stock-based compensation expense and intangible asset amortization.
(3) Represents EMC Information Infrastructure GAAP excluding
restructuring and other special charges. (4) Represents EMC
Information Infrastructure Adjusted excluding stock- based
compensation expense and intangible asset amortization. (5)
Represents VMware within EMC GAAP. (6) Represents VMware within EMC
excluding stock-based compensation expense and intangible asset
amortization. (7) Represents the non-cash interest charge
associated with our convertible senior notes due 2011 and 2013
totaling $3,450 million required to be recognized pursuant to FSP
14-1, "Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash
Settlement)". (8) Represents incremental costs incurred to
transform our current cost structure to a more streamlined cost
structure. Note: schedule may not add due to rounding
Reconciliation of GAAP to Non-GAAP For the Three Months Ended March
31, 2009 (in thousands, except per share amounts) Unaudited
Research Selling, Cost of and General and Revenue Revenue
Development Administrative ------- ------- -----------
-------------- EMC Consolidated GAAP $3,150,762 $1,467,507 $383,293
$1,024,773 Restructuring charge - - - - --------- ---------
--------- --------- EMC Consolidated Adjusted (1) 3,150,762
1,467,507 383,293 1,024,773 Stock-based compensation expense -
(19,894) (41,242) (51,511) Intangible asset amortization - (30,610)
(3,210) (25,368) --------- --------- --------- --------- EMC
Consolidated Non-GAAP (2) $3,150,762 $1,417,003 $338,841 $947,894
========== ========== ========== ========== EMC Information
Infrastructure GAAP $2,680,361 $1,392,825 $278,499 $823,249
Restructuring charge - - - - --------- --------- ---------
--------- EMC Information Infrastructure Adjusted (3) 2,680,361
1,392,825 278,499 823,249 Stock-based compensation expense -
(14,233) (17,312) (29,404) Intangible asset amortization - (27,853)
(3,210) (24,816) --------- --------- --------- --------- EMC
Information Infrastructure Non-GAAP (4) $2,680,361 $1,350,739
$257,977 $769,029 ========== ========== ========== ==========
VMware standalone GAAP $470,310 $75,003 $105,401 $203,003 GAAP
adjustments and eliminations 91 (321) (607) (1,479) ---------
--------- --------- --------- VMware within EMC GAAP (5) 470,401
74,682 104,794 201,524 Stock-based compensation expense - (5,661)
(23,930) (22,107) Intangible asset amortization - (2,757) - (552)
--------- --------- --------- --------- VMware within EMC Non-GAAP
(6) $470,401 $66,264 $80,864 $178,865 ========== ==========
========== ========== Other Income Restructuring Operating Expense,
Before Charge Income net Taxes ------------- --------- -------
------ EMC Consolidated GAAP $15,572 $259,617 $(16,457) $243,160
Restructuring charge (15,572) 15,572 - 15,572 --------- ---------
--------- --------- EMC Consolidated Adjusted (1) - 275,189
(16,457) 258,732 Stock-based compensation expense - 112,647 -
112,647 Intangible asset amortization - 59,188 - 59,188 ---------
--------- --------- --------- EMC Consolidated Non-GAAP (2) $-
$447,024 $(16,457) $430,567 ========== ========== ==========
========== EMC Information Infrastructure GAAP $15,572 $170,216
$(13,508) $156,708 Restructuring charge (15,572) 15,572 - 15,572
--------- --------- --------- --------- EMC Information
Infrastructure Adjusted (3) - 185,788 (13,508) 172,280 Stock-based
compensation expense - 60,949 - 60,949 Intangible asset
amortization - 55,879 - 55,879 --------- --------- ---------
--------- EMC Information Infrastructure Non-GAAP (4) $- $302,616
$(13,508) $289,108 ========== ========== ========== ==========
VMware standalone GAAP $- $86,903 $(1,436) $85,467 GAAP adjustments
and eliminations - 2,498 (1,513) 985 --------- --------- ---------
--------- VMware within EMC GAAP (5) - 89,401 (2,949) 86,452
Stock-based compensation expense - 51,698 - 51,698 Intangible asset
amortization - 3,309 - 3,309 --------- --------- ---------
--------- VMware within EMC Non-GAAP (6) $- $144,408 $(2,949)
$141,459 ========== ========== ========== ========== Income Net
Income Net Income Tax Net Attributable Attributable Provision
Income to VMware to EMC --------- ------ ------------ ------------
EMC Consolidated GAAP $37,815 $205,345 $(11,276) $194,069
Restructuring charge 6,115 9,457 - 9,457 --------- ---------
--------- --------- EMC Consolidated Adjusted (1) 43,930 214,802
(11,276) 203,526 Stock-based compensation expense 24,340 88,307
(6,672) 81,635 Intangible asset amortization 20,321 38,867 (345)
38,522 --------- --------- --------- --------- EMC Consolidated
Non-GAAP (2) $88,591 $341,976 $(18,293) $323,683 ==========
========== ========== ========== EMC Information Infrastructure
GAAP $22,081 $134,627 $- $134,627 Restructuring charge 6,115 9,457
- 9,457 --------- --------- --------- --------- EMC Information
Infrastructure Adjusted (3) 28,196 144,084 - 144,084 Stock-based
compensation expense 14,030 46,919 - 46,919 Intangible asset
amortization 19,153 36,726 - 36,726 --------- --------- ---------
--------- EMC Information Infrastructure Non-GAAP (4) $61,379
$227,729 - $227,729 ========== ========== ========== ==========
VMware standalone GAAP $15,532 $69,935 $- $69,935 GAAP adjustments
and eliminations 202 783 (11,276) (10,493) --------- ---------
--------- --------- VMware within EMC GAAP (5) 15,734 70,718
(11,276) 59,442 Stock-based compensation expense 10,310 41,388
(6,672) 34,716 Intangible asset amortization 1,168 2,141 (345)
1,796 --------- --------- --------- --------- VMware within EMC
Non-GAAP (6) $27,212 $114,247 $(18,293) $95,954 ==========
========== ========== ========== Net Income Net Income per Weighted
per Weighted Average Share, Average Share, Basic Diluted
------------- ------------- EMC Consolidated GAAP $0.097 $0.096
Restructuring charge $0.005 $0.005 ------ ------ EMC Consolidated
Adjusted (1) $0.101 $0.101 Stock-based compensation expense $0.041
$0.040 Intangible asset amortization $0.019 $0.019 ------ ------
EMC Consolidated Non-GAAP (2) $0.161 $0.160 ------------- ======
====== EMC Information Infrastructure GAAP $0.067 $0.067
Restructuring charge $0.005 $0.005 ------ ------ EMC Information
Infrastructure Adjusted (3) $0.072 $0.071 Stock-based compensation
expense $0.023 $0.023 Intangible asset amortization $0.018 $0.018
------ ------ EMC Information Infrastructure Non-GAAP (4) $0.113
$0.113 ====== ====== VMware standalone GAAP $0.035 $0.035 GAAP
adjustments and eliminations $(0.005) $(0.005) ------- -------
VMware within EMC GAAP (5) $0.030 $0.029 Stock-based compensation
expense $0.017 $0.017 Intangible asset amortization $0.001 $0.001
------ ------ VMware within EMC Non-GAAP (6) $0.048 $0.047
-------------- ====== ====== Wtd. Average Share O/S 2,008,915
2,021,062 ========= ========= Reconciliation of GAAP to Non-GAAP
For the Three Months Ended March 31, 2009 (in thousands, except per
share amounts) Unaudited (Continued) The following costs are
included in EMC Consolidated Non - GAAP and EMC Information
Infrastructure Non - GAAP results Research Selling, Cost of and
General and Revenue Revenue Development Administrative -------
------- ----------- -------------- Non - cash interest expense on
convertible debt (7) $- $- $- $- Transition costs (8) - 896 393
8,366 --- --- --- ----- $- $896 $393 $8,366 === ==== ==== ======
Other Income Restructuring Operating Expense, Before Charge Income
net Taxes ------------- --------- ------- ------ Non - cash
interest expense on convertible debt (7) $- $- $(26,299) $(26,299)
Transition costs (8) - (9,655) - (9,655) --- ------ --- ------ $-
$(9,655) $(26,299) $(35,954) === ======= ======== ======== Income
Net Income Net Income Tax Net Attributable Attributable Provision
Income to VMware to EMC --------- ------ ------------ ------------
Non - cash interest expense on convertible debt (7) $(8,234)
$(18,065) $- $(18,065) Transition costs (8) (3,346) (6,309) -
$(6,309) ------ ------ --- ------- $(11,580) $(24,374) $- $(24,374)
======== ======== == ======== Net Income Net Income per Weighted
per Weighted Average Share, Average Share, Basic Diluted
------------- ------------- Non - cash interest expense on
convertible debt (7) $(0.009) $(0.009) Transition costs (8)
$(0.003) $(0.003) ------- ------- $(0.012) $(0.012) ======= =======
(1) Represents EMC Consolidated GAAP excluding restructuring
charge. (2) Represents EMC Consolidated Adjusted excluding
stock-based compensation expense and intangible asset amortization.
(3) Represents EMC Information Infrastructure GAAP excluding
restructuring charge. (4) Represents EMC Information Infrastructure
Adjusted excluding stock-based compensation expense and intangible
asset amortization. (5) Represents VMware within EMC GAAP. (6)
Represents VMware within EMC excluding stock-based compensation
expense and intangible asset amortization. (7) Represents the
non-cash interest charge associated with our convertible senior
notes due 2011 and 2013 totaling $3,450 million required to be
recognized pursuant to FSP 14-1, "Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including
Partial Cash Settlement)". (8) Represents incremental costs
incurred to transform our current cost structure to a more
streamlined cost structure. Note: schedule may not add due to
rounding Reconciliation of GAAP to Non-GAAP For the Three Months
Ended June 30, 2008 (in thousands, except per share amounts)
Unaudited Research Selling, Cost of and General and Revenue Revenue
Development Administrative ------- ------- -----------
-------------- ---------------------- EMC Consolidated GAAP
$3,673,874 $1,645,304 $442,502 $1,135,674 ----------------------
Stock-based compensation expense - (19,058) (39,433) (61,829)
Intangible asset amortization - (39,268) (2,866) (26,743)
---------- ---------- -------- --------- ---------------------- EMC
Consolidated Non-GAAP (1) $3,673,874 $1,586,978 $400,203 $1,047,102
---------------------- ========== ========== ======== ==========
---------------------- EMC Information Infrastructure GAAP
$3,221,299 $1,564,859 $327,917 $937,000 ----------------------
Stock-based compensation expense - (12,486) (19,631) (43,307)
Intangible asset amortization - (36,974) (2,866) (25,198)
---------- ---------- -------- --------- --------------------- EMC
Information Infrastructure Non-GAAP (2) $3,221,299 $1,515,399
$305,420 $868,495 --------------------- ========== ==========
======== ========= ---------------------- VMware standalone GAAP
$456,128 $80,531 $114,128 $200,469 ---------------------- GAAP
adjustments and eliminations (3,553) (86) 457 (1,795) ----------
---------- -------- --------- --------------------- VMware within
EMC GAAP (3) 452,575 80,445 114,585 198,674 ---------------------
Stock-based compensation expense - (6,572) (19,802) (18,522)
Intangible asset amortization - (2,294) - (1,545) ----------
---------- -------- --------- --------------------- VMware within
EMC Non-GAAP (4) $452,575 $71,579 $94,783 $178,607
--------------------- ========== ========== ======== =========
Restructuring Other Income and Operating Income, Before IPR&D
Income net Taxes ---------- ---------- -------- ---------
---------------------- EMC Consolidated GAAP $- $450,394 $11,875
$462,269 ---------------------- Stock-based compensation expense -
120,320 - 120,320 Intangible asset amortization - 68,877 - 68,877
---------- ---------- -------- --------- ------------------- EMC
Consolidated Non-GAAP (1) $- $639,591 $11,875 $651,466
------------------- ========== ========== ======== =========
----------------------- EMC Information Infrastructure GAAP $-
$391,523 $8,313 $399,836 ----------------------- Stock-based
compensation expense - 75,424 - 75,424 Intangible asset
amortization - 65,038 - 65,038 ---------- ---------- --------
--------- ------------------- EMC Information Infrastructure
Non-GAAP (2) $- $531,985 $8,313 $540,298 -------------------
========== ========== ======== ========= ----------------------
VMware standalone GAAP $- $61,000 $3,101 $64,101
---------------------- GAAP adjustments and eliminations - (2,129)
461 (1,668) ---------- ---------- -------- ---------
------------------------- VMware within EMC GAAP (3) - 58,871 3,562
62,433 -------------------------- Stock-based compensation expense
- 44,896 - 44,896 Intangible asset amortization - 3,839 - 3,839
---------- ---------- -------- --------- ------------------- VMware
within EMC Non-GAAP (4) $- $107,606 $3,562 $111,168
------------------- ========== ========== ======== ========= Income
Net Net Tax Income Income Provision Net Attributable Attributable
(Benefit) Income to VMware to EMC ---------- ---------- --------
--------- ---------------------- EMC Consolidated GAAP $94,432
$367,837 $(7,713) $360,124 ---------------------- Stock-based
compensation expense 26,455 93,865 (5,043) 88,822 Intangible asset
amortization 23,045 45,832 (375) 45,457 ---------- ----------
-------- --------- ------------------- EMC Consolidated Non-GAAP
(1) $143,932 $507,534 $(13,131) $494,403 -------------------
========== ========== ======== ========= -------------------- EMC
Information Infrastructure GAAP $83,024 $316,812 $- $316,812
-------------------- Stock-based compensation expense 15,770 59,654
- 59,654 Intangible asset amortization 21,752 43,286 - 43,286
---------- ---------- -------- --------- ------------------- EMC
Information Infrastructure Non-GAAP (2) $120,546 $419,752 $-
$419,752 ------------------- ========== ========== ========
========= ---------------------- VMware standalone GAAP $11,765
$52,336 $- $52,336 ---------------------- GAAP adjustments and
eliminations (357) (1,311) (7,713) (9,024) ---------- ----------
-------- --------- ------------------------- VMware within EMC GAAP
(3) 11,408 51,025 (7,713) 43,312 --------------------------
Stock-based compensation expense 10,685 34,211 (5,043) 29,168
Intangible asset amortization 1,293 2,546 (375) 2,171 ----------
---------- -------- --------- ------------------- VMware within EMC
Non-GAAP (4) $23,386 $87,782 $(13,131) $74,651 -------------------
========== ========== ======== ========= Net Income Net Income per
Weighted per Weighted Average Share, Average Share, Basic Diluted
-------------- -------------- ---------------------- EMC
Consolidated GAAP $0.175 $0.171 ---------------------- Stock-based
compensation expense $0.043 $0.042 Intangible asset amortization
$0.022 $0.022 ------ ------ ---------------------------- EMC
Consolidated Non-GAAP (1) $0.240 $0.235
----------------------------- ====== ======
----------------------------------- EMC Information Infrastructure
GAAP $0.154 $0.151 ----------------------------------- Stock-based
compensation expense $0.029 $0.028 Intangible asset amortization
$0.021 $0.021 ------ ------ -------------------------------- EMC
Information Infrastructure Non-GAAP (2) $0.204 $0.200
-------------------------------- ====== ======
---------------------- VMware standalone GAAP $0.025 $0.025
---------------------- GAAP adjustments and eliminations $(0.004)
$(0.005) ------- ------- ------------------------- VMware within
EMC GAAP (3) $0.021 $0.020 -------------------------- Stock-based
compensation expense $0.014 $0.014 Intangible asset amortization
$0.001 $0.001 ------ ------ ----------------------------- VMware
within EMC Non-GAAP (4) $0.036 $0.035
------------------------------ ====== ====== Wtd. Average Share O/S
2,057,766 2,094,795 ========= ======== Reconciliation of GAAP to
Non-GAAP For the Three Months Ended June 30, 2008 (in thousands,
except per share amounts) Unaudited (Continued) The following costs
are included in EMC Consolidated Non-GAAP and EMC Information
Infrastructure Non-GAAP results Research Selling, Cost of and
General and Revenue Revenue Development Administrative -------
------- ----------- -------------- Non-cash interest expense on
convertible debt (5) $- $- $- $- Restructuring Other Income and
Operating Income, Before IPR&D Income net Taxes -------------
--------- -------- -------- Non-cash interest expense on
convertible debt (5) $- $- $(25,250) $(25,250) Net Net Income
Income Income Tax Net Attributable Attributable Provision Income to
VMware to EMC --------- ------ ------------ ------------ Non-cash
interest expense on convertible debt (5) $(7,906) $(17,344) $-
$(17,344) Net Income Net Income per Weighted per Weighted Average
Share, Average Share, Basic Diluted -------------- --------------
Non-cash interest expense on convertible debt (5) $(0.008) $(0.008)
(1) Represents EMC Consolidated GAAP excluding stock-based
compensation expense and intangible amortization. (2) Represents
EMC Information Infrastructure GAAP excluding stock-based
compensation expense and intangible amortization. (3) Represents
VMware within EMC GAAP. (4) Represents VMware within EMC excluding
stock-based compensation expense and intangible amortization. (5)
Represents the non-cash interest charge associated with our
convertible senior notes due 2011 and 2013 totaling $3,450 million
required to be recognized pursuant to FSP 14-1, "Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement)". Note: schedule may
not add due to rounding Reconciliation of GAAP to Non-GAAP For the
Three Months Ended March 31, 2008 (in thousands, except per share
amounts) Unaudited Research Selling, Cost of and General and
Revenue Revenue Development Administrative ------- -------
----------- -------------- EMC Consolidated GAAP $3,470,059
$1,560,664 $433,514 $1,082,215 IPR&D - - - - ----------
---------- -------- ---------- EMC Consolidated Adjusted (1)
3,470,059 1,560,664 433,514 1,082,215 Stock-based compensation
expense - (18,312) (38,825) (61,950) Intangible asset amortization
- (38,198) (3,011) (24,791) ---------- ---------- --------
---------- EMC Consolidated Non-GAAP (2) $3,470,059 $1,504,154
$391,678 $995,474 ========== ========== ======== ======== EMC
Information Infrastructure GAAP $3,031,889 $1,483,604 $315,428
$890,640 IPR&D - - - - ---------- ---------- --------
---------- EMC Information Infrastructure Adjusted (3) 3,031,889
1,483,604 315,428 890,640 Stock-based compensation expense -
(12,136) (17,912) (44,412) Intangible asset amortization - (35,888)
(3,011) (23,250) ---------- ---------- -------- ---------- EMC
Information Infrastructure Non-GAAP (4) $3,031,889 $1,435,580
$294,505 $822,978 ========== ========== ======== ======== VMware
standalone GAAP $438,175 $77,170 $119,255 $193,359 GAAP adjustments
and eliminations (5) (110) (1,169) (1,784) ---------- ----------
-------- ---------- VMware within EMC GAAP (5) 438,170 77,060
118,086 191,575 Stock-based compensation expense - (6,176) (20,913)
(17,538) Intangible asset amortization - (2,310) - (1,541)
---------- ---------- -------- ---------- VMware within EMC
Non-GAAP (6) $438,170 $68,574 $97,173 $172,496 ==========
========== ======== ======== Other Income Restructuring Operating
Income, Before and IPR&D Income net Taxes -------------
--------- ------ ------ EMC Consolidated GAAP $78,847 $314,819
$29,308 $344,127 IPR&D (79,204) 79,204 - 79,204 ----------
---------- -------- ---------- EMC Consolidated Adjusted (1) (357)
394,023 29,308 423,331 Stock-based compensation expense - 119,087 -
119,087 Intangible asset amortization - 66,000 - 66,000 ----------
---------- -------- ---------- EMC Consolidated Non-GAAP (2) $(357)
$579,110 $29,308 $608,418 ========== ========== ======== ========
EMC Information Infrastructure GAAP $78,847 $263,370 $26,669
$290,039 IPR&D (79,204) 79,204 - 79,204 ---------- ----------
-------- ---------- EMC Information Infrastructure Adjusted (3)
(357) 342,574 26,669 369,243 Stock-based compensation expense -
74,460 - 74,460 Intangible asset amortization - 62,149 - 62,149
---------- ---------- -------- ---------- EMC Information
Infrastructure Non-GAAP (4) $(357) $479,183 $26,669 $505,852
========== ========== ======== ======== VMware standalone GAAP $-
$48,391 $2,639 $51,030 GAAP adjustments and eliminations - 3,058 -
3,058 ---------- ---------- -------- ---------- VMware within EMC
GAAP (5) - 51,449 2,639 54,088 Stock-based compensation expense -
44,627 - 44,627 Intangible asset amortization - 3,851 - 3,851
---------- ---------- -------- ---------- VMware within EMC
Non-GAAP (6) $- $99,927 $2,639 $102,566 ========== ==========
======== ======== Income Net Income Net Income Tax Net Attributable
Attributable Provision Income to VMware to EMC --------- ------
------------ ------------ EMC Consolidated GAAP $86,319 $257,808
$(6,161) $251,647 IPR&D - 79,204 - 79,204 ---------- ----------
-------- ---------- EMC Consolidated Adjusted (1) 86,319 337,012
(6,161) 330,851 Stock-based compensation expense 27,831 91,256
(5,095) 86,161 Intangible asset amortization 22,533 43,467 (349)
43,118 ---------- ---------- -------- ---------- EMC Consolidated
Non-GAAP (2) $136,683 $471,735 $(11,605) $460,130 ==========
========== ======== ======== EMC Information Infrastructure GAAP
$77,600 $212,439 $- $212,439 IPR&D - 79,204 - 79,204 ----------
---------- -------- ---------- EMC Information Infrastructure
Adjusted (3) 77,600 291,643 - 291,643 Stock-based compensation
expense 18,834 55,626 - 55,626 Intangible asset amortization 21,122
41,027 - 41,027 ---------- ---------- -------- ---------- EMC
Information Infrastructure Non-GAAP (4) $117,557 $388,295 $-
$388,295 ========== ========== ======== ======== VMware standalone
GAAP $7,975 $43,055 $- $43,055 GAAP adjustments and eliminations
744 2,314 (6,161) (3,847) ---------- ---------- -------- ----------
VMware within EMC GAAP (5) 8,719 45,369 (6,161) 39,208 Stock-based
compensation expense 8,997 35,630 (5,095) 30,535 Intangible asset
amortization 1,411 2,440 (349) 2,091 ---------- ---------- --------
---------- VMware within EMC Non-GAAP (6) $19,126 $83,440 $(11,605)
$71,834 ========== ========== ======== ======== Net Income Net
Income per Weighted per Weighted Average Share, Average Share,
Basic Diluted ------------- ------------- EMC Consolidated GAAP
$0.121 $0.118 IPR&D $0.038 $0.038 ------ ------ EMC
Consolidated Adjusted (1) $0.159 $0.156 Stock-based compensation
expense $0.042 $0.041 Intangible asset amortization $0.021 $0.020
------ ------ EMC Consolidated Non- GAAP (2) $0.222 $0.217 ======
====== EMC Information Infrastructure GAAP $0.102 $0.101 IPR&D
$0.038 $0.038 ------ ------ EMC Information Infrastructure Adjusted
(3) $0.141 $0.138 Stock-based compensation expense $0.027 $0.026
Intangible asset amortization $0.020 $0.019 ------ ------ EMC
Information Infrastructure Non- GAAP (4) $0.187 $0.184 ======
====== VMware standalone GAAP $0.021 $0.020 GAAP adjustments and
eliminations $(0.002) $(0.003) ------- ------- VMware within EMC
GAAP (5) $0.019 $0.018 Stock-based compensation expense $0.015
$0.014 Intangible asset amortization $0.001 $0.001 ------ ------
VMware within EMC Non- GAAP (6) $0.035 $0.033 ====== ====== Wtd.
Average Share O/S 2,075,152 2,110,805 ========= =========
Reconciliation of GAAP to Non-GAAP For the Three Months Ended March
31, 2008 (in thousands, except per share amounts) Unaudited
(Continued) The following costs are included in EMC Consolidated
Non - GAAP and EMC Information Infrastructure Non - GAAP results
Research Selling, Cost of and General and Revenue Revenue
Development Administrative ------- ------- -----------
-------------- Non - cash interest expense on convertible debt (7)
$- $- $- $- Other Income Restructuring Operating Income, Before and
IPR&D Income net Taxes ------------- --------- ------ ------
Non - cash interest expense on convertible debt (7) $- $- $(25,027)
$(25,027) Income Net Income Net Income Tax Net Attributable
Attributable Provision Income to VMware to EMC --------- ------
------------ ------------ Non - cash interest expense on
convertible debt (7) $(7,836) $(17,191) $- $(17,191) Net Income Net
Income per Weighted per Weighted Average Share, Average Share,
Basic Diluted ------------- ------------- Non - cash interest
expense on convertible debt (7) $(0.008) $(0.008) (1) Represents
EMC Consolidated GAAP excluding IPR&D. (2) Represents EMC
Consolidated Adjusted excluding stock-based compensation expense
and intangible asset amortization. (3) Represents EMC Information
Infrastructure GAAP excluding IPR&D. (4) Represents EMC
Information Infrastructure Adjusted less stock-based compensation
expense and intangible asset amortization. (5) Represents VMware
within EMC GAAP. (6) Represents VMware within EMC excluding
stock-based compensation expense and intangible asset amortization.
(7) Represents the non-cash interest charge associated with our
convertible senior notes due 2011 and 2013 totaling $3,450 million
required to be recognized pursuant to FSP 14-1, "Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement)". Note: schedule may
not add due to rounding EMC CORPORATION Consolidated Balance Sheets
(in thousands, except per share amounts) Unaudited June 30,
December 31, 2009 2008 ------- ------- (As Adjusted) ASSETS Current
assets: Cash and cash equivalents $6,422,760 $5,843,685 Short-term
investments 835,490 963,292 Accounts and notes receivable, less
allowance for doubtful accounts of $52,761 and $48,080 1,855,986
2,252,640 Inventories 773,528 842,803 Deferred income taxes 457,193
477,101 Other current assets 341,305 285,508 ------- ------- Total
current assets 10,686,262 10,665,029 Long-term investments
2,765,946 2,370,493 Property, plant and equipment, net 2,229,053
2,223,007 Intangible assets, net 698,180 795,616 Goodwill, net
7,109,565 7,046,799 Other assets, net 998,326 773,631 -------
------- Total assets $24,487,332 $23,874,575 ===========
=========== LIABILITIES & SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable $697,389 $757,405 Accrued expenses
1,812,674 1,901,884 Securities lending payable 260,125 412,321
Income taxes payable - 136,802 Deferred revenue 2,137,173 2,010,024
--------- --------- Total current liabilities 4,907,361 5,218,436
Income taxes payable 226,517 255,182 Deferred revenue 1,208,825
1,182,360 Deferred income taxes 454,516 389,787 Long-term
convertible debt 3,045,022 2,991,943 Other liabilities 196,730
180,917 ------- ------- Total Liabilities 10,038,971 10,218,625
Commitments and contingencies EMC Corporation's Shareholders'
equity: Preferred stock, par value $.01; authorized 25,000 shares,
none outstanding - - Common stock, par value $.01; authorized
6,000,000 shares; issued 2,022,048 and 2,012,938 shares 20,220
20,129 Additional paid-in capital 3,105,717 2,817,054 Retained
earnings 11,070,513 10,671,212 Accumulated other comprehensive loss
(141,487) (179,952) -------- -------- Total EMC Corporation's
shareholders' equity 14,054,963 13,328,443 Non-controlling interest
in VMware, Inc. 393,398 327,507 ------- ------- Total shareholders'
equity 14,448,361 13,655,950 ---------- ---------- Total
liabilities and shareholders' equity $24,487,332 $23,874,575
=========== =========== EMC CORPORATION Consolidated Statements of
Cash Flows (in thousands) Unaudited Six Months Ended
---------------- June 30, June 30, 2009 2008 -------- -------- (As
Adjusted) Cash flows from operating activities: Cash received from
customers $6,951,380 $7,585,822 Cash paid to suppliers and
employees (5,348,576) (5,947,544) Dividends and interest received
73,448 135,058 Interest paid (35,900) (36,778) Income taxes paid
(202,273) (199,689) -------- -------- Net cash provided by
operating activities 1,438,079 1,536,869 --------- --------- Cash
flows from investing activities: Additions to property, plant and
equipment (205,512) (326,449) Capitalized software development
costs (151,774) (118,848) Purchases of short and long-term
available for sale securities (3,315,606) (1,005,655) Sales and
maturities of short and long-term available for sale securities
3,078,580 1,572,954 Purchase of Data Domain common stock (65,000) -
Acquisitions, net of cash acquired (98,860) (604,788) Increase in
strategic and other related investments (107,055) (3,060) -------
------ Net cash used in investing activities (865,227) (485,846)
-------- -------- Cash flows from financing activities: Issuance of
EMC's common stock from the exercise of stock options 84,028
156,220 Issuance of VMware's common stock from the exercise of
stock options 81,606 133,327 Repayments on securities lending
(152,196) - Repurchase of EMC's common stock - (686,950) Excess tax
benefits from stock-based compensation 6,715 88,613 Payment of
short and long-term obligations (19,364) (5,279) Proceeds from
short and long-term obligations 1,116 1,820 ------- -------- Net
cash used in financing activities 1,905 (312,249) ------- --------
Effect of exchange rate changes on cash 4,318 (1,638) ----- ------
Net increase in cash and cash equivalents 579,075 737,136 Cash and
cash equivalents at beginning of period 5,843,685 4,482,211
--------- --------- Cash and cash equivalents at end of period
$6,422,760 $5,219,347 ========== ========== Reconciliation of net
income to net cash provided by operating activities: Net income
$415,961 $625,645 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
509,066 517,692 Non-cash interest expense on convertible debt
53,079 50,277 Non-cash restructuring and in-process research and
development 9,300 80,970 Stock-based compensation expense 234,531
239,405 Increase in provision for doubtful accounts 7,219 8,576
Deferred income taxes, net 60,067 10,431 Excess tax benefits from
stock-based compensation (6,715) (88,613) Other 450 (5,123) Changes
in assets and liabilities, net of acquisitions: Accounts and notes
receivable 391,899 160,492 Inventories (9,910) 12,668 Other assets
(37,540) (35,719) Accounts payable (27,915) (61,343) Accrued
expenses (134,894) (248,139) Income taxes payable (186,480)
(32,677) Deferred revenue 144,148 272,821 Other liabilities 15,813
29,506 ------ ------ Net cash provided by operating activities
$1,438,079 $1,536,869 ========== ========== EMC Corporation
Reconciliation of Cash Flow from Operations to Free Cash Flow (in
thousands) Unaudited Three Months Ended Six Months Ended
------------------ ---------------- June 30, June 30, June 30, June
30, 2009 2008 2009 2008 ------- ------- -------- -------- EMC
Consolidated Cash flow from Operations $574,388 $618,577 $1,438,079
$1,536,869 Capital Expenditures (110,192) (179,937) (205,512)
(326,449) Capitalized Software (64,147) (64,527) (151,774)
(118,848) ------- ------- -------- -------- Free Cash Flow $400,049
$374,113 $1,080,793 $1,091,572 ======== ======== ==========
========== VMware within EMC Cash flow from Operations $225,351
$126,699 $466,294 $232,757 Capital Expenditures (23,323) (45,324)
(47,649) (86,343) Capitalized Software (14,745) (11,770) (44,680)
(15,934) ------- ------- ------- ------- Free Cash Flow $187,283
$69,605 $373,965 $130,480 ======== ======= ======== ======== EMC
Information Infrastructure Cash flow from Operations $349,037
$491,878 $971,785 $1,304,112 Capital Expenditures (86,869)
(134,613) (157,863) (240,106) Capitalized Software (49,402)
(52,757) (107,094) (102,914) ------- ------- -------- -------- Free
Cash Flow $212,766 $304,508 $706,828 $961,092 ======== ========
======== ======== Free cash flow for the three months ended June
30, 2009 includes intercompany tax payments of $85.4 million from
EMC Information Infrastructure to VMware within EMC. EMC
Corporation Reconciliation of EMC Information Storage Gross Margin
GAAP to Non-GAAP (In thousands) Unaudited Q1 '07 Q2 '07 Q3 '07 Q4
'07 ------ ------ ------ ------ EMC Information Storage Gross
Margin GAAP $1,174,130 $1,269,402 $1,327,380 $1,524,768 Less:
Stock- based compen- sation 12,755 11,516 9,530 8,853 Intangible
asset amorti- zation 8,343 8,352 8,885 9,727 ------ ------ ------
------ EMC Information Storage Gross Margin Non-GAAP $1,195,228
$1,289,270 $1,345,795 $1,543,348 ========== ========== ==========
========== Q1 '08 Q2 '08 Q3 '08 Q4 '08 ------ ------ ------ ------
EMC Information Storage Gross Margin GAAP $1,370,420 $1,455,853
$1,472,280 $1,571,111 Less: Stock- based compen- sation 10,131
10,406 13,060 13,877 Intangible asset amorti- zation 10,374 11,394
11,614 11,681 ------ ------ ------ ------ EMC Information Storage
Gross Margin Non-GAAP $1,390,925 $1,477,653 $1,496,954 $1,596,669
========== ========== ========== ========== Q1 '09 Q2 '09 ------
------ EMC Information Storage Gross Margin GAAP $1,108,748
$1,179,673 Less: Stock-based compensation 11,885 12,686 Intangible
asset amortization 8,217 8,167 ------ ------ EMC Information
Storage Gross Margin Non-GAAP $1,128,850 $1,200,526 ==========
========== EMC Corporation Reconciliation of Expected EMC
Information Infrastructure Gross Margin Percentage Second Half of
2009 EMC Information Infrastructure Gross Margin GAAP 50.0%
Stock-based compensation 0.6 Intangible asset amortization 0.4 ---
EMC Information Infrastructure Gross Margin Non-GAAP 51.0% ==== EMC
Corporation Supplemental Revenue Analysis (in thousands) Unaudited
Supplemental Revenue Data Q1 2008 Q2 2008 Q3 2008 Q4 2008 YTD 2008
---------- ---------- ---------- ---------- ----------- Information
Storage: Product Revenue $1,903,639 $2,018,026 $2,056,498
$2,285,366 $8,263,529 Services Revenue 808,190 855,221 851,825
853,539 3,368,775 ---------- ---------- ---------- ----------
----------- Total Information Storage Revenue $2,711,829 $2,873,247
$2,908,323 $3,138,905 $11,632,304 ========== ========== ==========
========== =========== Content Management and Archiving: Product
Revenue $61,128 $73,415 $62,576 $81,054 $278,173 Services Revenue
124,075 130,591 125,493 127,316 507,475 ---------- ----------
---------- ---------- ----------- Total Content Management and
Archiving Revenue $185,203 $204,006 $188,069 $208,370 $785,648
========== ========== ========== ========== =========== Security:
Product Revenue $81,683 $89,067 $88,779 $95,534 $355,063 Services
Revenue 53,174 54,979 58,561 59,498 226,212 ---------- ----------
---------- ---------- ----------- Total Security Revenue $134,857
$144,046 $147,340 $155,032 $581,275 ========== ==========
========== ========== =========== EMC Information Infrastructure:
Product Revenue $2,046,450 $2,180,508 $2,207,853 $2,461,954
$8,896,765 Services Revenue 985,439 1,040,791 1,035,879 1,040,353
4,102,462 ---------- ---------- ---------- ---------- -----------
Total EMC Information Infrastructure Revenue $3,031,889 $3,221,299
$3,243,732 $3,502,307 $12,999,227 ========== ========== ==========
========== =========== VMware: Product Revenue $293,980 $281,143
$285,088 $314,840 $1,175,051 Services Revenue 144,190 171,432
186,772 199,491 701,885 ---------- ---------- ---------- ----------
----------- Total VMware Revenue $438,170 $452,575 $471,860
$514,331 $1,876,936 ========== ========== ========== ==========
=========== Consolidated Revenues Product Revenue $2,340,430
$2,461,651 $2,492,941 $2,776,794 $10,071,816 Services Revenue
1,129,629 1,212,223 1,222,651 1,239,844 4,804,347 ----------
---------- ---------- ---------- ----------- Total Consolidated
Revenues $3,470,059 $3,673,874 $3,715,592 $4,016,638 $14,876,163
========== ========== ========== ========== =========== Percentage
impact to EMC revenue growth rate due to changes in exchange rates
from the prior year 2.3% 2.7% 1.2% (2.3)% 0.8% Q1 2009 Q2 2009
---------- ---------- Information Storage: Product Revenue
$1,572,408 $1,632,309 Services Revenue 790,932 842,558 ----------
---------- Total Information Storage Revenue $2,363,340 $2,474,867
========== ========== Content Management and Archiving: Product
Revenue $58,710 $60,792 Services Revenue 115,605 119,445 ----------
---------- Total Content Management and Archiving Revenue $174,315
$180,237 ========== ========== Security: Product Revenue $80,671
$84,080 Services Revenue 62,035 63,055 ---------- ---------- Total
Security Revenue $142,706 $147,135 ========== ========== EMC
Information Infrastructure: Product Revenue $1,711,789 $1,777,181
Services Revenue 968,572 1,025,058 ---------- ---------- Total EMC
Information Infrastructure Revenue $2,680,361 $2,802,239 ==========
========== VMware: Product Revenue $257,331 $228,089 Services
Revenue 213,070 227,024 ---------- ---------- Total VMware Revenue
$470,401 $455,113 ========== ========== Consolidated Revenues
Product Revenue $1,969,120 $2,005,270 Services Revenue 1,181,642
1,252,082 ---------- ---------- Total Consolidated Revenues
$3,150,762 $3,257,352 ========== ========== Percentage impact to
EMC revenue growth rate due to changes in exchange rates from the
prior year (3.5)% (3.7)% DATASOURCE: EMC Corporation CONTACT: Dave
Farmer of EMC, +1-508-293-7206, Web Site: http://www.emc.com/
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