Attached files
| file | filename |
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| 8-K - 8-K - EMC CORP | a8-kforq22013earnings.htm |
Exhibit 99.1
Contact: | Lesley Ogrodnick |
508-293-6961
lesley.ogrodnick@emc.com
EMC Reports Second-Quarter 2013 Financial Results
Highlights: | |
l | Record second-quarter consolidated revenue, net income and EPS |
l | Year-over-year revenue growth across EMC's three federated businesses - EMC Information Infrastructure, VMware and Pivotal |
l | Year-over-year revenue growth across U.S. and major global geographies, with strong revenue growth from BRIC+13 markets |
l | EMC reaffirms full-year 2013 business outlook for consolidated revenue, non-GAAP EPS and free cash flow |
HOPKINTON, Mass. - July 24, 2013 - EMC Corporation (NYSE:EMC) today reported quarterly financial results that were highlighted by record second-quarter consolidated revenue, net income and EPS. The company achieved year-over-year revenue growth across all three of its federated businesses, with continued steady growth from EMC Information Infrastructure, double-digit growth from Pivotal and accelerating double-digit growth from VMware.
Second-quarter consolidated revenue was $5.6 billion, an increase of 6% compared with the year-ago quarter. Second-quarter GAAP net income attributable to EMC was $701 million. Second-quarter GAAP earnings per weighted average diluted share increased 10% year over year to $0.32. Non-GAAP1 net income attributable to EMC was $907 million. Non-GAAP1 earnings per weighted average diluted share were $0.42, an increase of 8% year over year.
EMC generated year-to-date operating cash flow of $2.9 billion and free cash flow2 of $2.3 billion, and ended the second quarter with $17.6 billion in cash and investments.
Joe Tucci, EMC Chairman and Chief Executive Officer, said, “The strength and demand we saw during the quarter, despite a cautious IT spending environment, speaks to the soundness of our strategy, the value customers see in our federated business model, and the massive opportunity ahead in cloud computing, Big Data and trusted IT. EMC Information Infrastructure, VMware and Pivotal are positioned on the leading edge of these significant trends. Each business is focused on building its own unique technologies and independent partner ecosystems to offer customers greater choice. Collectively they add up to a very competitive technology stack that not only addresses our customers' top IT needs in 2013, but also their longer-term business transformation priorities.”
David Goulden, EMC President and Chief Operating Officer, said, “Our second-quarter results are further evidence that our business strategy is on target and that we continue to deliver our 'triple play'- to gain market share, reinvest for the future and deliver leverage. With another solid quarter behind us, we are reaffirming our full-year revenue, non-GAAP EPS and free cash flow goals. EMC's robust product roadmap, combined with the success we are seeing across our cloud, Big Data and trusted IT initiatives,
and the continued interest from customers in our market-leading technology, have us very energized and highly focused on seizing the opportunities that lie ahead.”
Second-Quarter Highlights
In the second quarter, EMC's Information Infrastructure business increased revenue 4% compared with the year-ago quarter. Second-quarter revenue from EMC's Information Storage business accelerated to 4% year over year. Highlights within this include: 39% year-over-year revenue growth from EMC's Emerging Storage business, 3 continued year-over-year revenue growth and market share gains from EMC's High-end Storage business, 4 and improved year-over-year revenue growth from EMC's Unified and Backup Recovery business.5 EMC's RSA Information Security business increased revenue 3% year over year, and EMC's Information Intelligence business continued to make progress during the quarter on its transition to more cloud-friendly offerings and vertical-based solutions.
VCE had an excellent second quarter as demand for Vblock systems showed strong year-over-year growth. Additionally, EMC's VSPEX reference architecture solutions continued to gain momentum with rapid adoption and increasing popularity with customers and among partners who have sold over 3,600 VSPEX solutions since their launch in April 2012.
In the second quarter, VMware (NYSE: VMW) achieved solid double-digit year-over-year revenue growth. The company continues to excel because it is uniquely positioned to help customers move from the client-server era to the mobile-cloud era of computing. As VMware helps customers bridge to this new world, it is empowering them to capture new levels of efficiency, control and agility.
On April 1, 2013, EMC and VMware formed a new company - Pivotal - which unites strategic technology, people and programs from EMC and VMware, including: Greenplum, Cloud Foundry, Spring, Cetas, Pivotal Labs, GemFire and other products from the VMware vFabric Suite. Pivotal also announced a strategic investment by General Electric Company (GE) of approximately $105 million in the company, representing a 10% equity stake. Pivotal made very good progress in its first quarter within the EMC federation, and is building a new platform comprising next-generation data fabrics, application fabrics and a cloud-independent platform as a service. In the second quarter, the company announced the first version of this platform for next-generation big and fast data applications, called “Pivotal One,” which will be launched before year end.
EMC's consolidated second-quarter revenue from the United States increased 4% year over year to $3.0 billion, representing 53% of consolidated second-quarter revenue. Revenue from EMC's business operations outside of the United States increased 8% year over year to $2.7 billion and represented 47% of consolidated second-quarter revenue. Within this, on a year-over-year basis, revenue from EMC's Europe, Middle East and Africa region grew 6%, revenue from EMC's Asia Pacific and Japan region increased 12%, and revenue from EMC's Latin American region grew 12%. Revenue from EMC's BRIC+13 markets increased 18% year over year.
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 made by EMC regarding 2013 financial results.
All dollar amounts and percentages set forth below should be considered to be approximations.
• | Consolidated revenues are expected to be $23.5 billion for 2013. |
• | Consolidated GAAP operating income is expected to be 18.5% of revenues for 2013 and consolidated non-GAAP operating income is expected to be 25.5% of revenues for 2013. Excluded from consolidated non-GAAP operating income are stock-based compensation expense, intangible asset amortization, restructuring and acquisition-related charges and the amortization of VMware's capitalized software from prior periods, which account for 4.3%, 1.6%, 1.0% and 0.1% of revenues, respectively. |
• | Total consolidated GAAP non-operating expense, which includes investment income, interest expense and other income and expense, is expected to be $331 million and consolidated non-GAAP non-operating expense is expected to be $350 million in 2013. Excluded from consolidated non-GAAP non-operating expense is a net gain on disposition of certain lines of business and other for ($19 million). |
• | Consolidated GAAP net income attributable to EMC is expected to be $3.0 billion in 2013 and consolidated non-GAAP net income attributable to EMC is expected to be $4.0 billion in 2013. Excluded from consolidated non-GAAP net income attributable to EMC are stock-based compensation expense, intangible asset amortization, restructuring and acquisition-related charges, the amortization of VMware's capitalized software from prior periods, the benefit of the 2012 R&D tax credit and a net gain on disposition of certain lines of business and other, which account for $675 million, $260 million, $170 million, $15 million, ($60 million) and ($11 million), respectively. |
• | Consolidated GAAP earnings per weighted average diluted share are expected to be $1.37 for 2013 and consolidated non-GAAP earnings per weighted average diluted share are expected to be $1.85 for 2013. Excluded from consolidated non-GAAP earnings per weighted average diluted share are stock-based compensation expense, intangible asset amortization, restructuring and acquisition-related charges, the amortization of VMware's capitalized software from prior periods, the benefit of the 2012 R&D tax credit and a net gain on disposition of certain lines of business and other, which account for $0.31, $0.12, $0.08, $0.01, ($0.03) and ($0.01) per weighted average diluted share, respectively. |
• | The consolidated GAAP income tax rate is expected to be 20.5% for 2013. Excluding the tax impact of stock-based compensation expense, intangible asset amortization, restructuring and acquisition-related charges, the amortization of VMware's capitalized software from prior periods, the benefit of the 2012 R&D tax credit and a net gain on disposition of certain lines of business and other, which collectively impact the tax rate by 3%, the consolidated non-GAAP income tax rate is expected to be 23.5% for 2013. |
• | GAAP net income attributable to the non-controlling interest in VMware is expected to be $190 million and non-GAAP net income attributable to the non-controlling interest in VMware is expected to be $285 million for 2013. Excluded from non-GAAP net income attributable to the non-controlling interest in VMware are stock-based compensation expense, intangible asset amortization, restructuring and acquisition-related charges, the amortization of VMware's capitalized software from prior periods, the benefit of the 2012 R&D tax credit and a net gain on disposition of certain lines of business and other, which account for $71 million, $15 million, $14 |
million, $4 million, ($6 million) and ($3 million), respectively. The incremental dilution attributable to the shares of VMware held by EMC is expected to be $10 million for 2013.
• | Consolidated net cash provided by operating activities is expected to be $6.8 billion for 2013 and free cash flow is expected to be $5.5 billion for 2013. Excluded from free cash flow are $900 million of additions to property, plant and equipment and $400 million of capitalized software development costs. |
• | The weighted average outstanding diluted shares are expected to be 2.17 billion for 2013. |
• | EMC expects to repurchase an aggregate of $3.5 billion of the company's common stock in 2013 and the first half of 2014. |
Supporting Resources
• | EMC will host its 2013 second-quarter earnings conference call today at 8:30 a.m. ET, which will be available via EMC's web site at http://www.emc.com/ir |
• | Additional information regarding EMC's financials, as well as a webcast of the conference call, will be available at 8:30 a.m. ET at http://www.emc.com/ir |
• | Visit http://ir.vmware.com for more information about VMware's second-quarter financial results |
• | Visit EMC Pulse, EMC's product and technology news blog. Connect with EMC via Twitter, Facebook, YouTube, and LinkedIn |
About EMC
EMC Corporation is a global leader in enabling businesses and service providers to transform their operations and deliver IT as a service. Fundamental to this transformation is cloud computing. Through innovative products and services, EMC accelerates the journey to cloud computing, helping IT departments to store, manage, protect and analyze their most valuable asset - information - in a more agile, trusted and cost-efficient way. Additional information about EMC can be found at www.EMC.com.
# # #
1 Items excluded from the non-GAAP results for the second quarters of 2013 and 2012 are amounts relating to stock-based compensation expense, intangible asset amortization, restructuring and acquisition-related charges, the amortization of VMware's capitalized software from prior periods, a net gain on the disposition of certain lines of business and other, an RSA special charge (release), loss on interest rate swaps and a gain on strategic investment. See attached schedules for GAAP to non-GAAP reconciliations.
2 Free cash flow is a non-GAAP financial measure which is defined as net cash provided by operating activities, less additions to property, plant and equipment and capitalized software development costs. See attached schedules for a reconciliation of net cash provided by operating activities to free cash flow for the six months ended June 30, 2013 and 2012.
3 EMC's Emerging Storage business primarily includes product and maintenance revenues from EMC Isilon, EMC Atmos, EMC VPLEX, EMC RecoverPoint, ASD Suites and EMC vFlash and EMC XtremIO families.
4 EMC's High-end Storage business primarily includes product and maintenance revenues from EMC Symmetrix.
5 EMC's Unified and Backup Recovery business primarily includes product and maintenance revenues from EMC VNX, EMC CLARiiON, EMC Celerra, EMC Avamar, EMC Data Domain, EMC NetWorker, EMC Disk Library, EMC Data Protection Advisor and EMC Mozy.
EMC, Atmos, Avamar, Celerra, CLARiiON, Data Domain, EMC RecoverPoint, Isilon, Mozy, Networker, RSA, Symmetrix, VPLEX, VNX, VSPEX, Vblock and XtremIO are either registered trademarks or trademarks of EMC Corporation in the United States and/or other countries. Cetas, Cloud Foundry, Gemfire, Greenplum, Pivotal, Pivotal Labs and Spring are registered trademarks or trademarks of GoPivotal, Inc. and VMware is a registered trademark or trademark of VMware, Inc. in the United States and/or other countries. All other trademarks used are the property of their respective owners.
Forward-Looking Statements
This release contains “forward-looking statements” as defined under the Federal Securities Laws. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in information technology spending; (iii) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (iv) competitive factors, including but not limited to pricing pressures and new product introductions; (v) component and product quality and availability; (vi) fluctuations in VMware, Inc.'s operating results and risks associated with trading of VMware stock; (vii) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (viii) risks associated with managing the growth of our business, including risks associated with acquisitions and investments and the challenges and costs of integration, restructuring and achieving anticipated synergies; (ix) the ability to attract and retain highly qualified employees; (x) insufficient, excess or obsolete inventory; (xi) fluctuating currency exchange rates; (xii) threats and other disruptions to our secure data centers or networks; (xiii) our ability to protect our proprietary technology; (xiv) war or acts of terrorism; and (xv) other one-time events and other important factors disclosed previously and from time to time in EMC's filings with the U.S. Securities and Exchange Commission. EMC disclaims any obligation to update any such forward-looking statements after the date of this release.
Use of Non-GAAP Financial Measures
This release, the accompanying schedules and the additional content that is available on EMC's website contain non-GAAP financial measures. These non-GAAP financial measures, which are used as measures of EMC's performance or liquidity, should be considered in addition to, not as a substitute for, measures of EMC's financial performance or liquidity prepared in accordance with GAAP. EMC's non-GAAP financial measures may be defined differently from time to time and may be defined differently than similar terms used by other companies, and accordingly, care should be exercised in understanding how EMC defines its non-GAAP financial measures in this release.
Where specified in the accompanying schedules for various periods entitled "Reconciliation of GAAP to Non-GAAP", certain items noted on each such specific schedule (including, where noted, amounts relating to stock-based compensation expense, intangible asset amortization, restructuring and acquisition-related charges, the amortization of VMware's capitalized software from prior periods, a net gain on disposition of certain lines of business and other, an RSA special charge (release), loss on interest rate swaps and a gain on strategic investment) 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 millions, except per share amounts)
(unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues: | ||||||||||||||||
Product sales | $ | 3,258 | $ | 3,179 | $ | 6,369 | $ | 6,248 | ||||||||
Services | 2,356 | 2,132 | 4,632 | 4,158 | ||||||||||||
5,614 | 5,311 | 11,001 | 10,406 | |||||||||||||
Cost and expenses: | ||||||||||||||||
Cost of product sales | 1,340 | 1,254 | 2,696 | 2,556 | ||||||||||||
Cost of services | 765 | 710 | 1,498 | 1,389 | ||||||||||||
Research and development | 695 | 655 | 1,370 | 1,244 | ||||||||||||
Selling, general and administrative | 1,785 | 1,717 | 3,499 | 3,367 | ||||||||||||
Restructuring and acquisition-related charges | 7 | 28 | 155 | 53 | ||||||||||||
Operating income | 1,022 | 947 | 1,783 | 1,797 | ||||||||||||
Non-operating income (expense): | ||||||||||||||||
Investment income | 34 | 26 | 67 | 55 | ||||||||||||
Interest expense | (31 | ) | (18 | ) | (51 | ) | (37 | ) | ||||||||
Other income (expense), net | (59 | ) | (51 | ) | (142 | ) | (95 | ) | ||||||||
Total non-operating income (expense) | (56 | ) | (43 | ) | (126 | ) | (77 | ) | ||||||||
Income before provision for income taxes | 966 | 904 | 1,657 | 1,720 | ||||||||||||
Income tax provision | 216 | 214 | 292 | 405 | ||||||||||||
Net income | 750 | 690 | 1,365 | 1,315 | ||||||||||||
Less: Net income attributable to the non-controlling interest in VMware, Inc. | (49 | ) | (40 | ) | (84 | ) | (79 | ) | ||||||||
Net income attributable to EMC Corporation | $ | 701 | $ | 650 | $ | 1,281 | $ | 1,236 | ||||||||
Net income per weighted average share, basic attributable to EMC Corporation common shareholders | $ | 0.34 | $ | 0.31 | $ | 0.61 | $ | 0.59 | ||||||||
Net income per weighted average share, diluted attributable to EMC Corporation common shareholders | $ | 0.32 | $ | 0.29 | $ | 0.59 | $ | 0.56 | ||||||||
Weighted average shares, basic | 2,092 | 2,096 | 2,097 | 2,082 | ||||||||||||
Weighted average shares, diluted | 2,174 | 2,208 | 2,181 | 2,205 | ||||||||||||
Cash dividends declared per common share | $ | 0.10 | $ | — | $ | 0.10 | $ | — | ||||||||
EMC CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
(unaudited)
June 30, | December 31, | |||||||
2013 | 2012 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 7,526 | $ | 4,714 | ||||
Short-term investments | 3,620 | 1,422 | ||||||
Accounts and notes receivable, less allowance for doubtful accounts of $64 and $68 | 3,204 | 3,433 | ||||||
Inventories | 1,233 | 1,201 | ||||||
Deferred income taxes | 940 | 942 | ||||||
Other current assets | 651 | 465 | ||||||
Total current assets | 17,174 | 12,177 | ||||||
Long-term investments | 6,430 | 5,260 | ||||||
Property, plant and equipment, net | 3,291 | 3,145 | ||||||
Intangible assets, net | 1,833 | 2,035 | ||||||
Goodwill | 13,994 | 13,840 | ||||||
Other assets, net | 1,676 | 1,612 | ||||||
Total assets | $ | 44,398 | $ | 38,069 | ||||
LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,013 | $ | 1,041 | ||||
Accrued expenses | 2,671 | 2,522 | ||||||
Income taxes payable | 159 | 514 | ||||||
Convertible debt | 1,669 | 1,652 | ||||||
Deferred revenue | 4,997 | 4,575 | ||||||
Total current liabilities | 10,509 | 10,304 | ||||||
Income taxes payable | 297 | 293 | ||||||
Deferred revenue | 3,276 | 2,976 | ||||||
Deferred income taxes | 516 | 575 | ||||||
Long-term debt | 5,493 | — | ||||||
Other liabilities | 349 | 339 | ||||||
Total liabilities | 20,440 | 14,487 | ||||||
Convertible debt | 26 | 58 | ||||||
Commitments and contingencies | ||||||||
Shareholders' equity: | ||||||||
Preferred stock, par value $0.01; authorized 25 shares; none outstanding | — | — | ||||||
Common stock, par value $0.01; authorized 6,000 shares; issued and outstanding 2,081 and 2,107 shares | 21 | 21 | ||||||
Additional paid-in capital | 2,946 | 3,691 | ||||||
Retained earnings | 19,922 | 18,853 | ||||||
Accumulated other comprehensive loss, net | (299 | ) | (208 | ) | ||||
Total EMC Corporation's shareholders' equity | 22,590 | 22,357 | ||||||
Non-controlling interests | 1,342 | 1,167 | ||||||
Total shareholders' equity | 23,932 | 23,524 | ||||||
Total liabilities and shareholders' equity | $ | 44,398 | $ | 38,069 | ||||
EMC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Six Months Ended | |||||||||||
June 30, | June 30, | ||||||||||
2013 | 2012 | ||||||||||
Cash flows from operating activities: | |||||||||||
Cash received from customers | $ | 12,007 | $ | 11,286 | |||||||
Cash paid to suppliers and employees | (8,485 | ) | (8,051 | ) | |||||||
Dividends and interest received | 79 | 14 | |||||||||
Interest paid | (18 | ) | (16 | ) | |||||||
Income taxes paid | (642 | ) | (308 | ) | |||||||
Net cash provided by operating activities | 2,941 | 2,925 | |||||||||
Cash flows from investing activities: | |||||||||||
Additions to property, plant and equipment | (437 | ) | (332 | ) | |||||||
Capitalized software development costs | (219 | ) | (207 | ) | |||||||
Purchases of short- and long-term available-for-sale securities | (6,456 | ) | (3,590 | ) | |||||||
Sales of short- and long-term available-for-sale securities | 2,394 | 2,455 | |||||||||
Maturities of short- and long-term available-for-sale securities | 564 | 583 | |||||||||
Business acquisitions, net of cash acquired | (207 | ) | (625 | ) | |||||||
Purchases of strategic and other related investments | (46 | ) | (16 | ) | |||||||
Sales of strategic and other related investments | — | 51 | |||||||||
Joint venture funding | (158 | ) | (107 | ) | |||||||
Proceeds from divestiture of businesses | 31 | — | |||||||||
Net cash used in investing activities | (4,534 | ) | (1,788 | ) | |||||||
Cash flows from financing activities: | |||||||||||
Proceeds from the issuance of EMC's common stock | 175 | 300 | |||||||||
Proceeds from the issuance of VMware's common stock | 115 | 144 | |||||||||
EMC repurchase of EMC's common stock | (991 | ) | (260 | ) | |||||||
EMC purchase of VMware's common stock | (160 | ) | (95 | ) | |||||||
VMware repurchase of VMware's common stock | (302 | ) | (178 | ) | |||||||
Excess tax benefits from stock-based compensation | 63 | 155 | |||||||||
Payment of long-term and short-term obligations | (21 | ) | (1,714 | ) | |||||||
Proceeds from long-term and short-term obligations | 5,463 | 3 | |||||||||
Interest rate contract settlement | — | (24 | ) | ||||||||
Third party contribution to Pivotal | 105 | — | |||||||||
Net cash provided by (used in) financing activities | 4,447 | (1,669 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (42 | ) | (10 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | 2,812 | (542 | ) | ||||||||
Cash and cash equivalents at beginning of period | 4,714 | 4,492 | |||||||||
Cash and cash equivalents at end of period | $ | 7,526 | $ | 3,950 | |||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||||||
Net income | $ | 1,365 | $ | 1,315 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 803 | 743 | |||||||||
Non-cash interest expense on debt | 24 | 20 | |||||||||
Non-cash restructuring and other special charges | 7 | 7 | |||||||||
Stock-based compensation expense | 441 | 423 | |||||||||
Provision for doubtful accounts | (3 | ) | 24 | ||||||||
Deferred income taxes, net | (55 | ) | (117 | ) | |||||||
Excess tax benefits from stock-based compensation | (63 | ) | (155 | ) | |||||||
Other, net | 11 | (37 | ) | ||||||||
Changes in assets and liabilities, net of acquisitions: | |||||||||||
Accounts and notes receivable | 243 | (24 | ) | ||||||||
Inventories | (178 | ) | (172 | ) | |||||||
Other assets | 119 | 28 | |||||||||
Accounts payable | (28 | ) | (69 | ) | |||||||
Accrued expenses | (211 | ) | (162 | ) | |||||||
Income taxes payable | (290 | ) | 214 | ||||||||
Deferred revenue | 766 | 880 | |||||||||
Other liabilities | (10 | ) | 7 | ||||||||
Net cash provided by operating activities | $ | 2,941 | $ | 2,925 | |||||||
Reconciliation of GAAP to Non-GAAP*
(in millions, except per share amounts)
(unaudited)
Three Months Ended | ||||||||||||||||
Diluted | Diluted | |||||||||||||||
June 30, | Earnings | June 30, | Earnings | |||||||||||||
2013 | Per Share | 2012 | Per Share | |||||||||||||
Net Income Attributable to EMC GAAP | $ | 701 | $ | 0.322 | $ | 650 | $ | 0.293 | ||||||||
Stock-based compensation expense | 140 | 0.065 | 154 | 0.070 | ||||||||||||
Intangible asset amortization | 65 | 0.030 | 57 | 0.026 | ||||||||||||
Restructuring and acquisition-related charges | 5 | 0.002 | 22 | 0.010 | ||||||||||||
Amortization of VMware's capitalized software from prior periods | 7 | 0.003 | 10 | 0.004 | ||||||||||||
RSA special charge (release) | — | — | (18 | ) | (0.008 | ) | ||||||||||
Loss on interest rate swaps | — | — | 24 | 0.011 | ||||||||||||
Gain on strategic investment | — | — | (32 | ) | (0.014 | ) | ||||||||||
Net gain on disposition of certain lines of business and other | (11 | ) | (0.005 | ) | — | — | — | |||||||||
Net Income Attributable to EMC Non-GAAP | $ | 907 | $ | 0.416 | $ | 867 | $ | 0.391 | ||||||||
Weighted average shares, diluted | 2,174 | 2,208 | ||||||||||||||
Incremental VMware dilution | $ | 2 | $ | 3 | ||||||||||||
* | Net of tax and non-controlling interest in VMware, Inc., except Weighted average shares, diluted. See Income Tax Provision and Net Income Attributable to VMware lines in Supplemental Information schedules. |
Note: Schedule may not add or recalculate due to rounding.
Reconciliation of GAAP to Non-GAAP
(in millions)
(unaudited)
Three Months Ended | ||||||||
June 30, | June 30, | |||||||
2013 | 2012 | |||||||
Gross Margin GAAP | $ | 3,509 | $ | 3,347 | ||||
Stock-based compensation expense | 30 | 31 | ||||||
Intangible asset amortization | 58 | 46 | ||||||
Amortization of VMware's capitalized software from prior periods | 12 | 18 | ||||||
RSA special charge (release) | — | (24 | ) | |||||
Gross Margin Non-GAAP | $ | 3,609 | $ | 3,418 | * | |||
Revenues | $ | 5,614 | $ | 5,311 | ||||
Gross Margin Percentages: | ||||||||
GAAP | 62.5 | % | 63.0 | % | ||||
Non-GAAP | 64.3 | % | 64.4 | % | * | |||
* Non-GAAP gross margin and gross margin percentage for the three months ended June 30, 2012 would have been $3,409 and 64.2%, respectively, if the one-time ($9) RSA special charge (release), which is included in our non-GAAP gross margin and gross margin percentage for the three months ended June 30, 2012, was excluded.
Three Months Ended | |||||||
June 30, | June 30, | ||||||
2013 | 2012 | ||||||
Operating Margin GAAP | $ | 1,022 | $ | 947 | |||
Stock-based compensation expense | 218 | 219 | |||||
Intangible asset amortization | 97 | 88 | |||||
Restructuring and acquisition-related charges | 7 | 28 | |||||
Amortization of VMware's capitalized software from prior periods | 12 | 18 | |||||
RSA special charge (release) | — | (24 | ) | ||||
Operating Margin Non-GAAP | $ | 1,356 | $ | 1,275 | |||
Revenues | $ | 5,614 | $ | 5,311 | |||
Operating Margin Percentages: | |||||||
GAAP | 18.2 | % | 17.8 | % | |||
Non-GAAP | 24.2 | % | 24.0 | % | |||
Note: Schedules may not add or recalculate due to rounding.
Reconciliation of GAAP to Non-GAAP
(in millions)
(unaudited)
Three Months Ended June 30, 2013 | ||||||||||
Income Before | Tax | Tax | ||||||||
Tax | Provision | Rate | ||||||||
EMC Consolidated GAAP | $ | 966 | $ | 216 | 22.4 | % | ||||
Stock-based compensation expense | 218 | 62 | 28.6 | % | ||||||
Intangible asset amortization | 97 | 28 | 28.7 | % | ||||||
Restructuring and acquisition-related charges | 7 | 2 | 22.8 | % | ||||||
Amortization of VMware's capitalized software from prior periods | 12 | 4 | 32.4 | % | ||||||
Net gain on disposition of certain lines of business and other | (19 | ) | (5 | ) | 24.8 | % | ||||
EMC Consolidated Non-GAAP | $ | 1,282 | $ | 308 | 24.0 | % | ||||
Six Months Ended | ||||||||
June 30, | June 30, | |||||||
2013 | 2012 | |||||||
Cash Flow from Operations | $ | 2,941 | $ | 2,925 | ||||
Capital expenditures | (437 | ) | (332 | ) | ||||
Capitalized software development costs | (219 | ) | (207 | ) | ||||
Free Cash Flow | $ | 2,285 | $ | 2,386 | ||||
Note: Schedules may not add or recalculate due to rounding.
Supplemental Information
For the Three Months Ended June 30, 2013
(in millions)
(unaudited)
Stock-Based Compensation Expense | Intangible Asset Amortization | Restructuring and Acquisition-Related Charges | Amortization of VMware's Capitalized Software from Prior Periods | Net Gain on Disposition of Certain Lines of Business and Other | |||||||||||||||
EMC Consolidated | |||||||||||||||||||
Cost of revenue | $ | (30 | ) | $ | (58 | ) | $ | — | $ | (12 | ) | $ | — | ||||||
Research and development | (83 | ) | (2 | ) | — | — | — | ||||||||||||
Selling, general and administrative | (105 | ) | (37 | ) | — | — | — | ||||||||||||
Restructuring and acquisition-related charges | — | — | (7 | ) | — | — | |||||||||||||
Non-operating (income) expense | — | — | — | — | (19 | ) | |||||||||||||
Income tax provision | 62 | 28 | 2 | 4 | (5 | ) | |||||||||||||
Net income attributable to VMware | (16 | ) | (4 | ) | — | (2 | ) | 3 | |||||||||||
EMC Information Infrastructure plus Pivotal | |||||||||||||||||||
Cost of revenue | $ | (21 | ) | $ | (35 | ) | $ | — | $ | — | $ | — | |||||||
Research and development | (32 | ) | (1 | ) | — | — | — | ||||||||||||
Selling, general and administrative | (60 | ) | (35 | ) | — | — | — | ||||||||||||
Restructuring and acquisition-related charges | — | — | (6 | ) | — | — | |||||||||||||
Non-operating (income) expense | — | — | — | — | — | ||||||||||||||
Income tax provision | 35 | 22 | 2 | — | — | ||||||||||||||
Net income attributable to VMware | — | — | — | — | — | ||||||||||||||
VMware within EMC | |||||||||||||||||||
Cost of revenue | $ | (9 | ) | $ | (23 | ) | $ | — | $ | (12 | ) | $ | — | ||||||
Research and development | (51 | ) | (1 | ) | — | — | — | ||||||||||||
Selling, general and administrative | (45 | ) | (2 | ) | — | — | — | ||||||||||||
Restructuring and acquisition-related charges | — | — | (1 | ) | — | — | |||||||||||||
Non-operating (income) expense | — | — | — | — | (19 | ) | |||||||||||||
Income tax provision | 27 | 6 | — | 4 | (5 | ) | |||||||||||||
Net income attributable to VMware | (16 | ) | (4 | ) | — | (2 | ) | 3 | |||||||||||
Supplemental Information
For the Three Months Ended June 30, 2012
(in millions)
(unaudited)
Stock-Based Compensation Expense | Intangible Asset Amortization | Restructuring and Acquisition-Related Charges | Amortization of VMware's Capitalized Software from Prior Periods | RSA Special (Charge) Release | Loss on Interest Rate Swaps | Gain on Strategic Investment | ||||||||||||||||||||||
EMC Consolidated | ||||||||||||||||||||||||||||
Cost of revenue | $ | (31 | ) | $ | (46 | ) | $ | — | $ | (18 | ) | $ | 24 | $ | — | $ | — | |||||||||||
Research and development | 80 | (3 | ) | — | — | — | — | — | ||||||||||||||||||||
Selling, general and administrative | 107 | (39 | ) | — | — | — | — | — | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | (28 | ) | — | — | — | — | ||||||||||||||||||||
Non-operating (income) expense | — | — | — | — | 446 | — | 39 | (32 | ) | |||||||||||||||||||
Income tax provision | 47 | 28 | 6 | 6 | (6 | ) | 15 | — | ||||||||||||||||||||
Net income attributable to VMware | (17 | ) | (3 | ) | — | (3 | ) | — | — | — | ||||||||||||||||||
EMC Information Infrastructure plus Pivotal | ||||||||||||||||||||||||||||
Cost of revenue | $ | (21 | ) | $ | (33 | ) | $ | — | $ | — | $ | 24 | $ | — | $ | — | ||||||||||||
Research and development | (36 | ) | (2 | ) | — | — | — | — | — | |||||||||||||||||||
Selling, general and administrative | (64 | ) | (37 | ) | — | — | — | — | — | |||||||||||||||||||
Restructuring and acquisition-related charges | — | — | (26 | ) | — | — | — | — | ||||||||||||||||||||
Non-operating (income) expense | — | — | — | — | — | 39 | (32 | ) | ||||||||||||||||||||
Income tax provision | 28 | 23 | 6 | — | (6 | ) | 15 | — | ||||||||||||||||||||
Net income attributable to VMware | — | — | — | — | — | — | — | |||||||||||||||||||||
VMware within EMC | ||||||||||||||||||||||||||||
Cost of revenue | $ | (10 | ) | $ | (13 | ) | $ | — | $ | (18 | ) | $ | — | $ | — | $ | — | |||||||||||
Research and development | (44 | ) | (1 | ) | — | — | — | — | — | |||||||||||||||||||
Selling, general and administrative | (43 | ) | (2 | ) | — | — | — | — | — | |||||||||||||||||||
Restructuring and acquisition-related charges | — | — | (2 | ) | — | — | — | — | ||||||||||||||||||||
Non-operating (income) expense | — | — | — | — | — | — | — | |||||||||||||||||||||
Income tax provision | 19 | 5 | — | 6 | — | — | — | |||||||||||||||||||||
Net income attributable to VMware | (17 | ) | (3 | ) | — | (3 | ) | — | — | — | ||||||||||||||||||
Supplemental Information
For the Three Months Ended June 30, 2013
(in millions)
(unaudited)
VMware Standalone GAAP | GAAP Adjustments and Eliminations | VMware within EMC GAAP | |||||||||
Revenue | $ | 1,243 | $ | (5 | ) | $ | 1,238 | ||||
Cost of revenue | 173 | 1 | 174 | ||||||||
Gross margin | 1,070 | (6 | ) | 1,064 | |||||||
Research and development | 261 | (2 | ) | 258 | |||||||
Selling, general and administrative | 538 | (2 | ) | 536 | |||||||
Restructuring and acquisition-related charges | 1 | 1 | 1 | ||||||||
Operating income | 270 | (1 | ) | 269 | |||||||
Non-operating income (expense) | 23 | (1 | ) | 22 | |||||||
Income before taxes | 293 | (3 | ) | 291 | |||||||
Income tax provision | 49 | 12 | 61 | ||||||||
Net income | $ | 244 | (15 | ) | 230 | ||||||
Net income attributable to VMware | (49 | ) | (49 | ) | |||||||
Net income attributable to EMC | $ | (63 | ) | $ | 181 | ||||||
Note: Schedule may not add due to rounding.
Supplemental Information
For the Three Months Ended June 30, 2012
(in millions)
(unaudited)
VMware Standalone GAAP | GAAP Adjustments and Eliminations | VMware within EMC GAAP | |||||||||
Revenue | $ | 1,123 | $ | (35 | ) | $ | 1,088 | ||||
Cost of revenue | 179 | (14 | ) | 165 | |||||||
Gross margin | 944 | (21 | ) | 923 | |||||||
Research and development | 249 | (26 | ) | 223 | |||||||
Selling, general and administrative | 483 | (19 | ) | 465 | |||||||
Restructuring and acquisition-related charges | — | 2 | 2 | ||||||||
Operating income | 212 | 22 | 234 | ||||||||
Non-operating income (expense) | 2 | 2 | 5 | ||||||||
Income before taxes | 214 | 25 | 239 | ||||||||
Income tax provision | 22 | (1 | ) | 22 | |||||||
Net income | $ | 192 | 25 | 217 | |||||||
Net income attributable to VMware | (40 | ) | (40 | ) | |||||||
Net income attributable to EMC | $ | (15 | ) | $ | 177 | ||||||
Note: Schedule may not add due to rounding.
Segment Information
For the Three Months Ended June 30, 2013
(in millions)
(unaudited)
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Product revenues | $ | 2,568 | $ | 39 | $ | 98 | $ | 2,705 | $ | 24 | $ | 2,729 | |||||||||||
Services revenues | 1,358 | 113 | 130 | 1,601 | 46 | 1,647 | |||||||||||||||||
Total consolidated revenues | 3,926 | 152 | 228 | 4,306 | 70 | 4,376 | |||||||||||||||||
Gross profit | $ | 2,230 | $ | 96 | $ | 148 | $ | 2,474 | $ | 26 | $ | 2,500 | |||||||||||
Gross profit percentage | 56.8 | % | 63.1 | % | 65.1 | % | 57.5 | % | 37.1 | % | 57.1 | % | |||||||||||
Research and development | 375 | 28 | 403 | ||||||||||||||||||||
Selling, general and administrative | 1,117 | 37 | 1,154 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total costs and expenses | 1,492 | 65 | 1,557 | ||||||||||||||||||||
Operating income | $ | 982 | $ | (39 | ) | $ | 943 | ||||||||||||||||
Operating margin percentage | 22.8 | % | (55.9 | )% | 21.6 | % | |||||||||||||||||
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corp Reconciling Items | Consolidated | ||||||||||||
Revenues: | |||||||||||||||
Product revenues | $ | 2,729 | $ | 529 | $ | — | $ | 3,258 | |||||||
Services revenues | 1,647 | 709 | — | 2,356 | |||||||||||
Total consolidated revenues | 4,376 | 1,238 | — | 5,614 | |||||||||||
Gross profit | $ | 2,500 | $ | 1,109 | $ | (100 | ) | $ | 3,509 | ||||||
Gross profit percentage | 57.1 | % | 89.6 | % | — | 62.5 | % | ||||||||
Research and development | 403 | 207 | 85 | 695 | |||||||||||
Selling, general and administrative | 1,154 | 489 | 142 | 1,785 | |||||||||||
Restructuring and acquisition-related charges | — | — | 7 | 7 | |||||||||||
Total costs and expenses | 1,557 | 696 | 234 | 2,487 | |||||||||||
Operating income | 943 | 413 | (334 | ) | 1,022 | ||||||||||
Operating margin percentage | 21.6 | % | 33.4 | % | — | 18.2 | % | ||||||||
Non-operating income (expense) | (77 | ) | 3 | 18 | (56 | ) | |||||||||
Income tax provision | 214 | 93 | (91 | ) | 216 | ||||||||||
Net income | 652 | 323 | (225 | ) | 750 | ||||||||||
Net income attributable to the non-controlling interest in VMware, Inc. | — | (68 | ) | 19 | (49 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 652 | $ | 255 | $ | (206 | ) | $ | 701 | ||||||
Note: This segment information is presented on a consistent basis with the presentation in our quarterly and annual filings with the SEC. This schedule may not recalculate due to rounding.
Segment Information
For the Three Months Ended March 31, 2013
(in millions)
(unaudited)
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Product revenues | $ | 2,461 | $ | 43 | $ | 100 | $ | 2,604 | $ | 24 | $ | 2,628 | |||||||||||
Services revenues | 1,303 | 112 | 133 | 1,548 | 45 | 1,593 | |||||||||||||||||
Total consolidated revenues | 3,764 | 155 | 233 | 4,152 | 69 | 4,221 | |||||||||||||||||
Gross profit | $ | 2,079 | $ | 99 | $ | 152 | $ | 2,330 | $ | 26 | $ | 2,356 | |||||||||||
Gross profit percentage | 55.2 | % | 63.6 | % | 65.4 | % | 56.1 | % | 38.3 | % | 55.8 | % | |||||||||||
Research and development | 364 | 28 | 392 | ||||||||||||||||||||
Selling, general and administrative | 1,075 | 38 | 1,113 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total costs and expenses | 1,439 | 66 | 1,505 | ||||||||||||||||||||
Operating income | $ | 891 | $ | (40 | ) | $ | 851 | ||||||||||||||||
Operating margin percentage | 21.4 | % | (57.8 | )% | 20.2 | % | |||||||||||||||||
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corp Reconciling Items | Consolidated | ||||||||||||
Revenues: | |||||||||||||||
Product revenues | $ | 2,628 | $ | 484 | $ | — | $ | 3,112 | |||||||
Services revenues | 1,593 | 682 | — | 2,275 | |||||||||||
Total consolidated revenues | 4,221 | 1,166 | — | 5,387 | |||||||||||
Gross profit | $ | 2,356 | $ | 1,042 | $ | (100 | ) | $ | 3,298 | ||||||
Gross profit percentage | 55.8 | % | 89.3 | % | — | 61.2 | % | ||||||||
Research and development | 392 | 191 | 93 | 676 | |||||||||||
Selling, general and administrative | 1,113 | 450 | 150 | 1,713 | |||||||||||
Restructuring and acquisition-related charges | — | — | 148 | 148 | |||||||||||
Total costs and expenses | 1,505 | 641 | 391 | 2,537 | |||||||||||
Operating income | 851 | 401 | (491 | ) | 761 | ||||||||||
Operating margin percentage | 20.2 | % | 34.4 | % | — | 14.1 | % | ||||||||
Non-operating income (expense) | (73 | ) | 4 | (1 | ) | (70 | ) | ||||||||
Income tax provision | 188 | 83 | (195 | ) | 76 | ||||||||||
Net income | 590 | 322 | (297 | ) | 615 | ||||||||||
Net income attributable to the non-controlling interest in VMware, Inc. | — | (62 | ) | 27 | (35 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 590 | $ | 260 | $ | (270 | ) | $ | 580 | ||||||
Note: This segment information is presented on a consistent basis with the presentation in our quarterly and annual filings with the SEC. The segment disclosures have been recast to separately present the operations of the Pivotal segment. None of the segment reclassifications impact EMC’s previously reported consolidated financial statements. This schedule may not recalculate due to rounding.
Segment Information
For the Three Months Ended December 31, 2012
(in millions)
(unaudited)
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Product revenues | $ | 2,925 | $ | 69 | $ | 106 | $ | 3,100 | $ | 39 | $ | 3,139 | |||||||||||
Services revenues | 1,338 | 115 | 128 | 1,581 | 58 | 1,639 | |||||||||||||||||
Total consolidated revenues | 4,263 | 184 | 234 | 4,681 | 97 | 4,778 | |||||||||||||||||
Gross profit | $ | 2,529 | $ | 132 | $ | 146 | $ | 2,807 | $ | 64 | $ | 2,871 | |||||||||||
Gross profit percentage | 59.3 | % | 72.1 | % | 62.3 | % | 60.0 | % | 65.5 | % | 60.1 | % | |||||||||||
Research and development | 355 | 32 | 387 | ||||||||||||||||||||
Selling, general and administrative | 1,212 | 43 | 1,255 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total costs and expenses | 1,567 | 75 | 1,642 | ||||||||||||||||||||
Operating income | $ | 1,240 | $ | (11 | ) | $ | 1,229 | ||||||||||||||||
Operating margin percentage | 26.5 | % | (11.3 | )% | 25.7 | % | |||||||||||||||||
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corp Reconciling Items | Consolidated | ||||||||||||
Revenues: | |||||||||||||||
Product revenues | $ | 3,139 | $ | 589 | $ | — | $ | 3,728 | |||||||
Services revenues | 1,639 | 663 | — | 2,302 | |||||||||||
Total consolidated revenues | 4,778 | 1,252 | — | 6,030 | |||||||||||
Gross profit | $ | 2,871 | $ | 1,119 | $ | (100 | ) | $ | 3,890 | ||||||
Gross profit percentage | 60.1 | % | 89.5 | % | — | 64.5 | % | ||||||||
Research and development | 387 | 183 | 93 | 663 | |||||||||||
Selling, general and administrative | 1,255 | 510 | 163 | 1,928 | |||||||||||
Restructuring and acquisition-related charges | — | — | 30 | 30 | |||||||||||
Total costs and expenses | 1,642 | 693 | 286 | 2,621 | |||||||||||
Operating income | 1,229 | 426 | (386 | ) | 1,269 | ||||||||||
Operating margin percentage | 25.7 | % | 34.1 | % | — | 21.0 | % | ||||||||
Non-operating income (expense) | (35 | ) | 7 | (2 | ) | (30 | ) | ||||||||
Income tax provision | 292 | 66 | (31 | ) | 327 | ||||||||||
Net income | 902 | 367 | (357 | ) | 912 | ||||||||||
Net income attributable to the non-controlling interest in VMware, Inc. | — | (75 | ) | 33 | (42 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 902 | $ | 292 | $ | (324 | ) | $ | 870 | ||||||
Note: This segment information is presented on a consistent basis with the presentation in our quarterly and annual filings with the SEC. The segment disclosures have been recast to separately present the operations of the Pivotal segment. None of the segment reclassifications impact EMC’s previously reported consolidated financial statements. This schedule may not recalculate due to rounding.
Segment Information
For the Three Months Ended September 30, 2012
(in millions)
(unaudited)
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Product revenues | $ | 2,421 | $ | 50 | $ | 106 | $ | 2,577 | $ | 23 | $ | 2,600 | |||||||||||
Services revenues | 1,305 | 108 | 121 | 1,534 | 43 | 1,577 | |||||||||||||||||
Total consolidated revenues | 3,726 | 158 | 227 | 4,111 | 66 | 4,177 | |||||||||||||||||
Gross profit | $ | 2,119 | $ | 108 | $ | 146 | $ | 2,373 | $ | 37 | $ | 2,410 | |||||||||||
Gross profit percentage | 56.9 | % | 68.1 | % | 64.2 | % | 57.7 | % | 55.6 | % | 57.7 | % | |||||||||||
Research and development | 356 | 31 | 387 | ||||||||||||||||||||
Selling, general and administrative | 1,079 | 38 | 1,117 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total costs and expenses | 1,435 | 69 | 1,504 | ||||||||||||||||||||
Operating income | $ | 938 | $ | (32 | ) | $ | 906 | ||||||||||||||||
22.8 | % | (48.4 | )% | 21.7 | % | ||||||||||||||||||
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corp Reconciling Items | Consolidated | ||||||||||||
Revenues: | |||||||||||||||
Product revenues | $ | 2,600 | $ | 485 | $ | — | $ | 3,085 | |||||||
Services revenues | 1,577 | 616 | — | 2,193 | |||||||||||
Total consolidated revenues | 4,177 | 1,101 | — | 5,278 | |||||||||||
Gross profit | $ | 2,410 | $ | 975 | $ | (97 | ) | $ | 3,288 | ||||||
Gross profit percentage | 57.7 | % | 88.6 | % | — | 62.3 | % | ||||||||
Research and development | 387 | 178 | 88 | 653 | |||||||||||
Selling, general and administrative | 1,117 | 421 | 171 | 1,709 | |||||||||||
Restructuring and acquisition-related charges | — | — | 27 | 27 | |||||||||||
Total costs and expenses | 1,504 | 599 | 286 | 2,389 | |||||||||||
Operating income | 906 | 376 | (383 | ) | 899 | ||||||||||
Operating margin percentage | 21.7 | % | 34.2 | % | — | 17.0 | % | ||||||||
Non-operating income (expense) | (63 | ) | 9 | (2 | ) | (56 | ) | ||||||||
Income tax provision | 202 | 86 | (103 | ) | 185 | ||||||||||
Net income | 641 | 299 | (282 | ) | 658 | ||||||||||
Net income attributable to the non-controlling interest in VMware, Inc. | — | (58 | ) | 26 | (32 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 641 | $ | 241 | $ | (256 | ) | $ | 626 | ||||||
Note: This segment information is presented on a consistent basis with the presentation in our quarterly and annual filings with the SEC. The segment disclosures have been recast to separately present the operations of the Pivotal segment. None of the segment reclassifications impact EMC’s previously reported consolidated financial statements. This schedule may not recalculate due to rounding.
Segment Information
For the Three Months Ended June 30, 2012
(in millions)
(unaudited)
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Product revenues | $ | 2,500 | $ | 45 | $ | 103 | $ | 2,648 | $ | 23 | $ | 2,671 | |||||||||||
Services revenues | 1,287 | 108 | 117 | 1,512 | 40 | 1,552 | |||||||||||||||||
Total consolidated revenues | 3,787 | 153 | 220 | 4,160 | 63 | 4,223 | |||||||||||||||||
Gross profit | $ | 2,164 | $ | 102 | $ | 179 | $ | 2,445 | $ | 33 | $ | 2,478 | |||||||||||
Gross profit percentage | 57.1 | % | 67.0 | % | 81.1 | % | 58.8 | % | 53.2 | % | 58.7 | % | |||||||||||
Research and development | 363 | 33 | 396 | ||||||||||||||||||||
Selling, general and administrative | 1,114 | 36 | 1,150 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total costs and expenses | 1,477 | 69 | 1,546 | ||||||||||||||||||||
Operating income | $ | 968 | $ | (36 | ) | $ | 932 | ||||||||||||||||
Operating margin percentage | 23.3 | % | (57.7 | )% | 22.1 | % | |||||||||||||||||
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corp Reconciling Items | Consolidated | ||||||||||||
Revenues: | |||||||||||||||
Product revenues | $ | 2,671 | $ | 508 | $ | — | $ | 3,179 | |||||||
Services revenues | 1,552 | 580 | — | 2,132 | |||||||||||
Total consolidated revenues | 4,223 | 1,088 | — | 5,311 | |||||||||||
Gross profit | $ | 2,478 | $ | 964 | $ | (95 | ) | $ | 3,347 | ||||||
Gross profit percentage | 58.7 | % | 88.5 | % | — | 63.0 | % | ||||||||
Research and development | 396 | 178 | 83 | 657 | |||||||||||
Selling, general and administrative | 1,150 | 418 | 147 | 1,715 | |||||||||||
Restructuring and acquisition-related charges | — | — | 28 | 28 | |||||||||||
Total costs and expenses | 1,546 | 596 | 258 | 2,400 | |||||||||||
Operating income | 932 | 368 | (353 | ) | 947 | ||||||||||
Operating margin percentage | 22.1 | % | 33.7 | % | — | 17.8 | % | ||||||||
Non-operating income (expense) | (40 | ) | 5 | (8 | ) | (43 | ) | ||||||||
Income tax provision | 265 | 52 | (103 | ) | 214 | ||||||||||
Net income | 627 | 321 | (258 | ) | 690 | ||||||||||
Net income attributable to the non-controlling interest in VMware, Inc. | — | (63 | ) | 23 | (40 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 627 | $ | 258 | $ | (235 | ) | $ | 650 | ||||||
Note: This segment information is presented on a consistent basis with the presentation in our quarterly and annual filings with the SEC. The segment disclosures have been recast to separately present the operations of the Pivotal segment. None of the segment reclassifications impact EMC’s previously reported consolidated financial statements. This schedule may not recalculate due to rounding.
Note: Gross profit and gross profit percentage for the three months ended June 30, 2012 for RSA Information Security, Total EMC Information Infrastructure and EMC Information Infrastructure plus Pivotal include the release of an RSA Special Charge of $24 which was excluded from our non-GAAP results. If the release of the RSA Special Charge were excluded from the segment information presented above, gross profit and gross profit percentage for the three months ended June 30, 2012 for RSA Information Security, Total EMC Information Infrastructure and EMC Information Infrastructure plus Pivotal would have been $155, $2,421, $2,454, 70.4%, 58.2%, and 58.1%, respectively, and operating income and operating margin percentage for the three months ended June 30, 2012 for Total EMC Information Infrastructure and EMC Information Infrastructure plus Pivotal would have been $944, $908, 22.7% and 21.5%, respectively.
Segment Information
For the Three Months Ended March 31, 2012
(in millions)
(unaudited)
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Product revenues | $ | 2,437 | $ | 37 | $ | 96 | $ | 2,570 | $ | 21 | $ | 2,591 | |||||||||||
Services revenues | 1,226 | 109 | 110 | 1,445 | 23 | 1,468 | |||||||||||||||||
Total consolidated revenues | 3,663 | 146 | 206 | 4,015 | 44 | 4,059 | |||||||||||||||||
Gross profit | $ | 2,046 | $ | 90 | $ | 133 | $ | 2,269 | $ | 19 | $ | 2,288 | |||||||||||
Gross profit percentage | 55.9 | % | 61.6 | % | 64.6 | % | 56.5 | % | 44.4 | % | 56.4 | % | |||||||||||
Research and development | 328 | 28 | 356 | ||||||||||||||||||||
Selling, general and administrative | 1,078 | 38 | 1,116 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total costs and expenses | 1,406 | 66 | 1,472 | ||||||||||||||||||||
Operating income | $ | 863 | $ | (47 | ) | $ | 816 | ||||||||||||||||
Operating margin percentage | 21.5 | % | (105.8 | )% | 20.1 | % | |||||||||||||||||
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corp Reconciling Items | Consolidated | ||||||||||||
Revenues: | |||||||||||||||
Product revenues | $ | 2,591 | $ | 478 | $ | — | $ | 3,069 | |||||||
Services revenues | 1,468 | 557 | — | 2,025 | |||||||||||
Total consolidated revenues | 4,059 | 1,035 | — | 5,094 | |||||||||||
Gross profit | $ | 2,288 | $ | 919 | $ | (94 | ) | $ | 3,113 | ||||||
Gross profit percentage | 56.4 | % | 88.7 | % | — | 61.1 | % | ||||||||
Research and development | 356 | 161 | 70 | 587 | |||||||||||
Selling, general and administrative | 1,116 | 390 | 145 | 1,651 | |||||||||||
Restructuring and acquisition-related charges | — | — | 26 | 26 | |||||||||||
Total costs and expenses | 1,472 | 551 | 241 | 2,264 | |||||||||||
Operating income | 816 | 368 | (335 | ) | 849 | ||||||||||
Operating margin percentage | 20.1 | % | 35.5 | % | — | 16.7 | % | ||||||||
Non-operating income (expense) | (38 | ) | 7 | (1 | ) | (32 | ) | ||||||||
Income tax provision | 209 | 68 | (86 | ) | 191 | ||||||||||
Net income | 569 | 307 | (250 | ) | 626 | ||||||||||
Net income attributable to the non-controlling interest in VMware, Inc. | — | (59 | ) | 20 | (39 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 569 | $ | 248 | $ | (230 | ) | $ | 587 | ||||||
Note: This segment information is presented on a consistent basis with the presentation in our quarterly and annual filings with the SEC. The segment disclosures have been recast to separately present the operations of the Pivotal segment. None of the segment reclassifications impact EMC’s previously reported consolidated financial statements. This schedule may not recalculate due to rounding.
Supplemental Information
(in millions)
(unaudited)
Q1 2012 | Q2 2012 | Q3 2012 | Q4 2012 | FY 2012 | Q1 2013 | Q2 2013 | Q2 2013 v Q2 2012 | Q2 2013 v Q1 2013 | |||||||||||||||||||||||||
Information Storage: | |||||||||||||||||||||||||||||||||
Product Revenue | $ | 2,437 | $ | 2,500 | $ | 2,421 | $ | 2,925 | $ | 10,283 | $ | 2,461 | $ | 2,568 | 3 | % | 4 | % | |||||||||||||||
Services Revenue | 1,226 | 1,287 | 1,305 | 1,338 | 5,157 | 1,303 | 1,358 | 5 | 4 | ||||||||||||||||||||||||
Total Information Storage Revenue | $ | 3,663 | $ | 3,787 | $ | 3,726 | $ | 4,263 | $ | 15,440 | $ | 3,764 | $ | 3,926 | 4 | % | 4 | % | |||||||||||||||
Information Intelligence Group: | |||||||||||||||||||||||||||||||||
Product Revenue | $ | 37 | $ | 45 | $ | 50 | $ | 69 | $ | 200 | $ | 43 | $ | 39 | (14 | )% | (11 | )% | |||||||||||||||
Services Revenue | 109 | 108 | 108 | 115 | 440 | 112 | 113 | 6 | 1 | ||||||||||||||||||||||||
Total Information Intelligence Group Revenue | $ | 146 | $ | 153 | $ | 158 | $ | 184 | $ | 640 | $ | 155 | $ | 152 | — | % | (2 | )% | |||||||||||||||
RSA Information Security: | |||||||||||||||||||||||||||||||||
Product Revenue | $ | 96 | $ | 103 | $ | 106 | $ | 106 | $ | 413 | $ | 100 | $ | 98 | (5 | )% | (2 | )% | |||||||||||||||
Services Revenue | 110 | 117 | 121 | 128 | 476 | 133 | 130 | 11 | (2 | ) | |||||||||||||||||||||||
Total RSA Information Security Revenue | $ | 206 | $ | 220 | $ | 227 | $ | 234 | $ | 889 | $ | 233 | $ | 228 | 3 | % | (2 | )% | |||||||||||||||
EMC Information Infrastructure: | |||||||||||||||||||||||||||||||||
Product Revenue | $ | 2,570 | $ | 2,648 | $ | 2,577 | $ | 3,100 | $ | 10,896 | $ | 2,604 | $ | 2,705 | 2 | % | 4 | % | |||||||||||||||
Services Revenue | 1,445 | 1,512 | 1,534 | 1,581 | 6,073 | 1,548 | 1,601 | 6 | 3 | ||||||||||||||||||||||||
Total EMC Information Infrastructure Revenue | $ | 4,015 | $ | 4,160 | $ | 4,111 | $ | 4,681 | $ | 16,969 | $ | 4,152 | $ | 4,306 | 4 | % | 4 | % | |||||||||||||||
Pivotal: | |||||||||||||||||||||||||||||||||
Product Revenue | $ | 21 | $ | 23 | $ | 23 | $ | 39 | $ | 106 | $ | 24 | $ | 24 | 4 | % | (2 | )% | |||||||||||||||
Services Revenue | 23 | 40 | 43 | 58 | 164 | 45 | 46 | 15 | 3 | ||||||||||||||||||||||||
Total Pivotal Revenue | $ | 44 | $ | 63 | $ | 66 | $ | 97 | $ | 270 | $ | 69 | $ | 70 | 11 | % | 1 | % | |||||||||||||||
VMware: | |||||||||||||||||||||||||||||||||
Product Revenue | $ | 478 | $ | 508 | $ | 485 | $ | 589 | $ | 2,058 | $ | 484 | $ | 529 | 4 | % | 9 | % | |||||||||||||||
Services Revenue | 557 | 580 | 616 | 663 | 2,417 | 682 | 709 | 22 | 4 | ||||||||||||||||||||||||
Total VMware Revenue | $ | 1,035 | $ | 1,088 | $ | 1,101 | $ | 1,252 | $ | 4,475 | $ | 1,166 | $ | 1,238 | 14 | % | 6 | % | |||||||||||||||
Consolidated Revenues: | |||||||||||||||||||||||||||||||||
Product Revenue | $ | 3,069 | $ | 3,179 | $ | 3,085 | $ | 3,728 | $ | 13,060 | $ | 3,112 | $ | 3,258 | 2 | % | 5 | % | |||||||||||||||
Services Revenue | 2,025 | 2,132 | 2,193 | 2,302 | 8,654 | 2,275 | 2,356 | 10 | 4 | ||||||||||||||||||||||||
Total Consolidated Revenues | $ | 5,094 | $ | 5,311 | $ | 5,278 | $ | 6,030 | $ | 21,714 | $ | 5,387 | $ | 5,614 | 6 | % | 4 | % | |||||||||||||||
Percentage impact to EMC revenue growth rate due to changes in exchange rates from the prior year | (0.5)% | (2.1)% | (1.5)% | (0.5)% | (1.1)% | (0.5)% | (0.7 | )% | |||||||||||||||||||||||||
Note: Schedule may not add or recalculate due to rounding.