FORM 10-Q |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Massachusetts | 04-2680009 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
176 South Street Hopkinton, Massachusetts (Address of principal executive offices) | 01748 (Zip Code) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Page No. | |
FACTORS THAT MAY AFFECT FUTURE RESULTS This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of the Federal securities laws, about our business and prospects. The forward-looking statements do not include the potential impact of any mergers, acquisitions, divestitures, securities offerings or business combinations that may be announced or closed after the date hereof. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “plans,” “intends,” “expects,” “goals” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Our future results may differ materially from our past results and from those projected in the forward-looking statements due to various uncertainties and risks, including those described in Item 1A of Part II (Risk Factors). The forward-looking statements speak only as of the date of this Quarterly Report and undue reliance should not be placed on these statements. We disclaim any obligation to update any forward-looking statements contained herein after the date of this Quarterly Report. |
June 30, 2013 | December 31, 2012 | ||||||
(unaudited) | |||||||
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 AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,013 | $ | 1,041 | |||
Accrued expenses | 2,671 | 2,522 | |||||
Income taxes payable | 159 | 514 | |||||
Convertible debt (See Note 4) | 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 (See Note 4) | 5,493 | — | |||||
Other liabilities | 349 | 339 | |||||
Total liabilities | 20,440 | 14,487 | |||||
Convertible debt (See Note 4) | 26 | 58 | |||||
Commitments and contingencies (See Note 14) | |||||||
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 2,080 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 |
For the Three Months Ended | For the Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 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 | ||||||||||||
Costs 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 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 | $ | — |
For the Three Months Ended | For the Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Net income | $ | 750 | $ | 690 | $ | 1,365 | $ | 1,315 | |||||||
Other comprehensive income (loss), net of taxes (benefits): | |||||||||||||||
Foreign currency translation adjustments | (25 | ) | (23 | ) | (56 | ) | (8 | ) | |||||||
Changes in market value of investments: | |||||||||||||||
Changes in unrealized gains (losses), net of taxes (benefits) of $(17), $11, $(15) and $27 | (30 | ) | 18 | (29 | ) | 44 | |||||||||
Reclassification adjustment for net losses (gains) realized in net income, net of benefits (taxes) of $(2), $0, $(5) and $(1) | (4 | ) | 1 | (8 | ) | (1 | ) | ||||||||
Net change in market value of investments | (34 | ) | 19 | (37 | ) | 43 | |||||||||
Changes in market value of derivatives: | |||||||||||||||
Changes in market value of derivatives, net of taxes (benefits) of $1, $(21), $2 and $(15) | 2 | (33 | ) | 8 | (23 | ) | |||||||||
Reclassification adjustment for net losses (gains) included in net income, net of benefits (taxes) of $0, $14, $(1) and $14 | (3 | ) | 19 | (8 | ) | 19 | |||||||||
Net change in the market value of derivatives | (1 | ) | (14 | ) | — | (4 | ) | ||||||||
Other comprehensive income (loss) | (60 | ) | (18 | ) | (93 | ) | 31 | ||||||||
Comprehensive income | 690 | 672 | 1,272 | 1,346 | |||||||||||
Less: Net income attributable to the non-controlling interest in VMware, Inc. | (49 | ) | (40 | ) | (84 | ) | (79 | ) | |||||||
Less: Other comprehensive income attributable to the non-controlling interest in VMware, Inc. | 2 | — | 2 | — | |||||||||||
Comprehensive income attributable to EMC Corporation | $ | 643 | $ | 632 | $ | 1,190 | $ | 1,267 |
EMC CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited) | |||||||
For the Six Months Ended | |||||||
June 30, 2013 | June 30, 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 (recovery of) 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 |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Non-controlling Interests | Shareholders’ Equity | |||||||||||||||||||||
Shares | Par Value | |||||||||||||||||||||||||
Balance, January 1, 2013 | 2,107 | $ | 21 | $ | 3,691 | $ | 18,853 | $ | (208 | ) | $ | 1,167 | $ | 23,524 | ||||||||||||
Stock issued through stock option and stock purchase plans | 11 | — | 175 | — | — | — | 175 | |||||||||||||||||||
Tax benefit from stock options exercised | — | — | 46 | — | — | — | 46 | |||||||||||||||||||
Restricted stock grants, cancellations and withholdings, net | 4 | — | (51 | ) | — | — | — | (51 | ) | |||||||||||||||||
Repurchase of common stock | (42 | ) | — | (1,000 | ) | — | — | — | (1,000 | ) | ||||||||||||||||
EMC purchase of VMware stock | — | — | (124 | ) | — | — | (26 | ) | (150 | ) | ||||||||||||||||
Stock-based compensation | — | — | 445 | — | — | — | 445 | |||||||||||||||||||
Cash dividends declared | — | — | — | (212 | ) | — | — | (212 | ) | |||||||||||||||||
Impact from equity transactions of non-controlling interests | — | — | (269 | ) | — | — | 119 | (150 | ) | |||||||||||||||||
Change in market value of investments | — | — | — | — | (35 | ) | (2 | ) | (37 | ) | ||||||||||||||||
Translation adjustment | — | — | — | — | (56 | ) | — | (56 | ) | |||||||||||||||||
Convertible debt conversions and warrant settlement | — | — | 1 | — | — | — | 1 | |||||||||||||||||||
Reclassification of convertible debt (to)/from mezzanine (Note 4) | — | — | 32 | — | — | — | 32 | |||||||||||||||||||
Net income | — | — | — | 1,281 | — | 84 | 1,365 | |||||||||||||||||||
Balance, June 30, 2013 | 2,080 | $ | 21 | $ | 2,946 | $ | 19,922 | $ | (299 | ) | $ | 1,342 | $ | 23,932 |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Non-controlling Interests | Shareholders’ Equity | |||||||||||||||||||||
Shares | Par Value | |||||||||||||||||||||||||
Balance, January 1, 2012 | 2,050 | $ | 21 | $ | 3,405 | $ | 16,121 | $ | (235 | ) | $ | 968 | $ | 20,280 | ||||||||||||
Stock issued through stock option and stock purchase plans | 22 | — | 300 | — | — | — | 300 | |||||||||||||||||||
Tax benefit from stock options exercised | — | — | 184 | — | — | — | 184 | |||||||||||||||||||
Restricted stock grants, cancellations and withholdings, net | 5 | — | (67 | ) | — | — | — | (67 | ) | |||||||||||||||||
Repurchase of common stock | (10 | ) | — | (260 | ) | — | — | — | (260 | ) | ||||||||||||||||
EMC purchase of VMware stock | — | — | (83 | ) | — | — | (12 | ) | (95 | ) | ||||||||||||||||
Stock options issued in business acquisitions | — | — | 1 | — | — | — | 1 | |||||||||||||||||||
Stock-based compensation | — | — | 425 | — | — | — | 425 | |||||||||||||||||||
Impact from equity transactions of VMware, Inc. | — | — | (172 | ) | — | — | 67 | (105 | ) | |||||||||||||||||
Change in market value of investments | — | — | — | — | 43 | — | 43 | |||||||||||||||||||
Change in market value of derivatives | — | — | — | — | (4 | ) | — | (4 | ) | |||||||||||||||||
Translation adjustment | — | — | — | — | (8 | ) | — | (8 | ) | |||||||||||||||||
Convertible debt conversions and warrant settlement | 32 | — | (1 | ) | — | — | — | (1 | ) | |||||||||||||||||
Reclassification of convertible debt (to)/from mezzanine (Note 4) | — | — | 31 | — | — | — | 31 | |||||||||||||||||||
Net income | — | — | — | 1,236 | — | 79 | 1,315 | |||||||||||||||||||
Balance, June 30, 2012 | 2,099 | $ | 21 | $ | 3,763 | $ | 17,357 | $ | (204 | ) | $ | 1,102 | $ | 22,039 |
For the Six Months Ended | |||||||
June 30, 2013 | June 30, 2012 | ||||||
Net income attributable to EMC Corporation | $ | 1,281 | $ | 1,236 | |||
Transfers (to) from the non-controlling interest in VMware, Inc.: | |||||||
Increase in EMC Corporation’s additional paid-in-capital for VMware’s equity issuances | 52 | 78 | |||||
Decrease in EMC Corporation’s additional paid-in-capital for VMware’s other equity activity | (321 | ) | (250 | ) | |||
Net transfers (to) from non-controlling interest | (269 | ) | (172 | ) | |||
Change from net income attributable to EMC Corporation and transfers from the non-controlling interest in VMware, Inc. | $ | 1,012 | $ | 1,064 |
June 30, 2013 | |||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Book Value | |||||||||
Purchased technology | $ | 2,236 | $ | (1,318 | ) | $ | 918 | ||||
Patents | 225 | (94 | ) | 131 | |||||||
Software licenses | 99 | (90 | ) | 9 | |||||||
Trademarks and tradenames | 171 | (110 | ) | 61 | |||||||
Customer relationships and customer lists | 1,359 | (790 | ) | 569 | |||||||
In-process research and development | 9 | — | 9 | ||||||||
Leasehold interest | 145 | (9 | ) | 136 | |||||||
Other | 26 | (26 | ) | — | |||||||
Total intangible assets, excluding goodwill | $ | 4,270 | $ | (2,437 | ) | $ | 1,833 |
December 31, 2012 | |||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Book Value | |||||||||
Purchased technology | $ | 2,233 | $ | (1,207 | ) | $ | 1,026 | ||||
Patents | 225 | (87 | ) | 138 | |||||||
Software licenses | 96 | (88 | ) | 8 | |||||||
Trademarks and tradenames | 173 | (102 | ) | 71 | |||||||
Customer relationships and customer lists | 1,378 | (724 | ) | 654 | |||||||
Leasehold interest | 145 | (7 | ) | 138 | |||||||
Other | 26 | (26 | ) | — | |||||||
Total intangible assets, excluding goodwill | $ | 4,276 | $ | (2,241 | ) | $ | 2,035 |
Six Months Ended June 30, 2013 | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | Pivotal | VMware Virtual Infrastructure | Total | ||||||||||||||||||
Balance, beginning of the period | $ | 7,442 | $ | 1,484 | $ | 2,022 | $ | — | $ | 2,892 | $ | 13,840 | |||||||||||
Goodwill resulting from acquisitions | 9 | 1 | — | — | 162 | 172 | |||||||||||||||||
Finalization of purchase price allocations and other, net | (1 | ) | — | (1 | ) | — | (16 | ) | (18 | ) | |||||||||||||
Goodwill transferred in formation of Pivotal | (112 | ) | — | — | 140 | (28 | ) | — | |||||||||||||||
Balance, end of the period | $ | 7,338 | $ | 1,485 | $ | 2,021 | $ | 140 | $ | 3,010 | $ | 13,994 |
Year Ended December 31, 2012 | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | Pivotal | VMware Virtual Infrastructure | Total | ||||||||||||||||||
Balance, beginning of the year | $ | 7,034 | $ | 1,469 | $ | 1,849 | $ | — | $ | 1,803 | $ | 12,155 | |||||||||||
Goodwill resulting from acquisitions | 438 | 15 | 179 | — | 1,092 | 1,724 | |||||||||||||||||
Finalization of purchase price allocations | (1 | ) | — | (6 | ) | — | (3 | ) | (10 | ) | |||||||||||||
Goodwill de-recognized in divestiture of business | (29 | ) | — | — | — | — | (29 | ) | |||||||||||||||
Balance, end of the year | $ | 7,442 | $ | 1,484 | $ | 2,022 | $ | — | $ | 2,892 | $ | 13,840 |
Senior Notes | Issued at Discount to Par | Carrying Value | |||||
$2.5 billion 1.875% Notes due 2018 | 99.943 | % | $ | 2,499 | |||
$2.0 billion 2.650% Notes due 2020 | 99.760 | % | $ | 1,995 | |||
$1.0 billion 3.375% Notes due 2023 | 99.925 | % | $ | 999 | |||
$ | 5,493 |
For the Three Months Ended | |||||||
June 30, 2013 | June 30, 2012 | ||||||
Contractual interest expense on the coupon | $ | 7 | $ | 7 | |||
Amortization of the discount component recognized as interest expense | 16 | 15 | |||||
Total interest expense on the convertible debt | $ | 23 | $ | 22 |
For the Six Months Ended | |||||||
June 30, 2013 | June 30, 2012 | ||||||
Contractual interest expense on the coupon | $ | 15 | $ | 15 | |||
Amortization of the discount component recognized as interest expense | 31 | 30 | |||||
Total interest expense on the convertible debt | $ | 46 | $ | 45 |
• | Level 1 – Quoted prices in active markets for identical assets or liabilities. |
• | Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
• | Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
June 30, 2013 | |||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized (Losses) | Aggregate Fair Value | ||||||||||||
U.S. government and agency obligations | $ | 4,570 | $ | 5 | $ | (5 | ) | $ | 4,570 | ||||||
U.S. corporate debt securities | 1,991 | 5 | (7 | ) | 1,989 | ||||||||||
High yield corporate debt securities | 499 | 15 | (8 | ) | 506 | ||||||||||
Asset-backed securities | 5 | — | — | 5 | |||||||||||
Municipal obligations | 957 | 2 | (2 | ) | 957 | ||||||||||
Auction rate securities | 72 | — | (4 | ) | 68 | ||||||||||
Foreign debt securities | 1,842 | 5 | (6 | ) | 1,841 | ||||||||||
Total fixed income securities | 9,936 | 32 | (32 | ) | 9,936 | ||||||||||
Publicly traded equity securities | 70 | 44 | — | 114 | |||||||||||
Total | $ | 10,006 | $ | 76 | $ | (32 | ) | $ | 10,050 |
December 31, 2012 | |||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized (Losses) | Aggregate Fair Value | ||||||||||||
U.S. government and agency obligations | $ | 2,191 | $ | 10 | $ | (1 | ) | $ | 2,200 | ||||||
U.S. corporate debt securities | 1,480 | 10 | — | 1,490 | |||||||||||
High yield corporate debt securities | 486 | 34 | (1 | ) | 519 | ||||||||||
Asset-backed securities | 2 | — | — | 2 | |||||||||||
Municipal obligations | 1,032 | 3 | — | 1,035 | |||||||||||
Auction rate securities | 74 | — | (4 | ) | 70 | ||||||||||
Foreign debt securities | 1,270 | 9 | — | 1,279 | |||||||||||
Total fixed income securities | 6,535 | 66 | (6 | ) | 6,595 | ||||||||||
Publicly traded equity securities | 47 | 41 | (1 | ) | 87 | ||||||||||
Total | $ | 6,582 | $ | 107 | $ | (7 | ) | $ | 6,682 |
June 30, 2013 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Cash | $ | 1,687 | $ | — | $ | — | $ | 1,687 | |||||||
Cash equivalents | 4,633 | 1,206 | — | 5,839 | |||||||||||
U.S. government and agency obligations | 2,358 | 2,212 | — | 4,570 | |||||||||||
U.S. corporate debt securities | — | 1,989 | — | 1,989 | |||||||||||
High yield corporate debt securities | — | 506 | — | 506 | |||||||||||
Asset-backed securities | — | 5 | — | 5 | |||||||||||
Municipal obligations | — | 957 | — | 957 | |||||||||||
Auction rate securities | — | — | 68 | 68 | |||||||||||
Foreign debt securities | — | 1,841 | — | 1,841 | |||||||||||
Publicly traded equity securities | 114 | — | — | 114 | |||||||||||
Total cash and investments | $ | 8,792 | $ | 8,716 | $ | 68 | $ | 17,576 | |||||||
Other items: | |||||||||||||||
Strategic investments held at cost | $ | — | $ | — | $ | 313 | $ | 313 | |||||||
Investment in joint venture | — | — | 34 | 34 | |||||||||||
Convertible debt | — | (2,519 | ) | — | (2,519 | ) | |||||||||
Long-term debt | — | (5,440 | ) | — | (5,440 | ) | |||||||||
Foreign exchange derivative assets | — | 40 | — | 40 | |||||||||||
Foreign exchange derivative liabilities | — | (32 | ) | — | (32 | ) | |||||||||
Commodity derivative liabilities | — | (1 | ) | — | (1 | ) |
December 31, 2012 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Cash | $ | 1,454 | $ | — | $ | — | $ | 1,454 | |||||||
Cash equivalents | 2,898 | 362 | — | 3,260 | |||||||||||
U.S. government and agency obligations | 1,327 | 873 | — | 2,200 | |||||||||||
U.S. corporate debt securities | — | 1,490 | — | 1,490 | |||||||||||
High yield corporate debt securities | — | 519 | — | 519 | |||||||||||
Asset-backed securities | — | 2 | — | 2 | |||||||||||
Municipal obligations | — | 1,035 | — | 1,035 | |||||||||||
Auction rate securities | — | — | 70 | 70 | |||||||||||
Foreign debt securities | — | 1,279 | — | 1,279 | |||||||||||
Publicly traded equity securities | 87 | — | — | 87 | |||||||||||
Total cash and investments | $ | 5,766 | $ | 5,560 | $ | 70 | $ | 11,396 | |||||||
Other items: | |||||||||||||||
Strategic investments held at cost | $ | — | $ | — | $ | 352 | $ | 352 | |||||||
Investment in joint venture | — | — | 33 | 33 | |||||||||||
Convertible debt | — | (2,666 | ) | — | (2,666 | ) | |||||||||
Foreign exchange derivative assets | — | 30 | — | 30 | |||||||||||
Foreign exchange derivative liabilities | — | (35 | ) | — | (35 | ) | |||||||||
Commodity derivative liabilities | — | (1 | ) | — | (1 | ) |
For the Three Months Ended | For the Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Balance, beginning of the period | $ | 68 | $ | 79 | $ | 70 | $ | 75 | |||||||
Calls at par value | — | — | (1 | ) | — | ||||||||||
Other-than-temporary impairment loss | — | (2 | ) | (1 | ) | (2 | ) | ||||||||
(Increase) decrease in previously recognized unrealized losses included in other comprehensive income | — | (3 | ) | — | 1 | ||||||||||
Balance, end of the period | $ | 68 | $ | 74 | $ | 68 | $ | 74 |
June 30, 2013 | |||||||
Three Months Ended | Six Months Ended | ||||||
Balance, beginning of the period | $ | 33 | $ | 33 | |||
Realized gain included in other income (expense) | 1 | 1 | |||||
Balance, end of period | $ | 34 | $ | 34 |
Less Than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||
U.S. government and agency obligations | $ | 2,181 | $ | (5 | ) | $ | 8 | $ | — | $ | 2,189 | $ | (5 | ) | |||||||||
U.S. corporate debt securities | 1,100 | (7 | ) | — | — | 1,100 | (7 | ) | |||||||||||||||
High yield corporate debt securities | 200 | (8 | ) | — | — | 200 | (8 | ) | |||||||||||||||
Asset-backed securities | 4 | — | — | — | 4 | — | |||||||||||||||||
Municipal obligations | 342 | (2 | ) | 10 | — | 352 | (2 | ) | |||||||||||||||
Auction rate securities | — | — | 68 | (4 | ) | 68 | (4 | ) | |||||||||||||||
Foreign debt securities | 879 | (6 | ) | — | — | 879 | (6 | ) | |||||||||||||||
Total | $ | 4,706 | $ | (28 | ) | $ | 86 | $ | (4 | ) | $ | 4,792 | $ | (32 | ) |
June 30, 2013 | |||||||
Amortized Cost Basis | Aggregate Fair Value | ||||||
Due within one year | $ | 3,617 | $ | 3,620 | |||
Due after 1 year through 5 years | 5,341 | 5,339 | |||||
Due after 5 years through 10 years | 490 | 494 | |||||
Due after 10 years | 488 | 483 | |||||
Total | $ | 9,936 | $ | 9,936 |
June 30, 2013 | December 31, 2012 | ||||||
Work-in-process | $ | 757 | $ | 606 | |||
Finished goods | 476 | 595 | |||||
$ | 1,233 | $ | 1,201 |
Year | Contractual Amounts Due Under Leases | ||
Due within one year | $ | 103 | |
Due within two years | 69 | ||
Due within three years | 58 | ||
Thereafter | 1 | ||
Total | 231 | ||
Less amounts representing interest | (5 | ) | |
Present value | 226 | ||
Current portion (included in accounts and notes receivable) | 100 | ||
Long-term portion (included in other assets, net) | $ | 126 |
For the Six Months Ended | |||||||
June 30, 2013 | June 30, 2012 | ||||||
Balance, beginning of the period | $ | 17 | $ | 24 | |||
Recoveries | (9 | ) | (13 | ) | |||
Provisions | 3 | 6 | |||||
Balance, end of the period | $ | 11 | $ | 17 |
June 30, 2013 | December 31, 2012 | ||||||
Furniture and fixtures | $ | 209 | $ | 197 | |||
Equipment and software | 5,636 | 5,345 | |||||
Buildings and improvements | 1,955 | 1,873 | |||||
Land | 121 | 121 | |||||
Building construction in progress | 250 | 197 | |||||
8,171 | 7,733 | ||||||
Accumulated depreciation | (4,880 | ) | (4,588 | ) | |||
$ | 3,291 | $ | 3,145 |
June 30, 2013 | December 31, 2012 | ||||||
Salaries and benefits | $ | 932 | $ | 1,018 | |||
Product warranties | 291 | 278 | |||||
Dividends payable (see Note 12) | 212 | — | |||||
Partner rebates | 179 | 187 | |||||
Restructuring, current (See Note 13) | 88 | 76 | |||||
Derivatives | 32 | 40 | |||||
Other | 937 | 923 | |||||
$ | 2,671 | $ | 2,522 |
For the Three Months Ended | For the Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Balance, beginning of the period | $ | 283 | $ | 263 | $ | 278 | $ | 255 | |||||||
Provision | 51 | 40 | 96 | 88 | |||||||||||
Amounts charged to the accrual | (43 | ) | (41 | ) | (83 | ) | (81 | ) | |||||||
Balance, end of the period | $ | 291 | $ | 262 | $ | 291 | $ | 262 |
For the Three Months Ended | For the Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Numerator: | |||||||||||||||
Net income attributable to EMC Corporation | $ | 701 | $ | 650 | $ | 1,281 | $ | 1,236 | |||||||
Incremental dilution from VMware | (2 | ) | (3 | ) | (3 | ) | (5 | ) | |||||||
Net income – dilution attributable to EMC Corporation | $ | 699 | $ | 647 | $ | 1,278 | $ | 1,231 | |||||||
Denominator: | |||||||||||||||
Weighted average shares, basic | 2,092 | 2,096 | 2,097 | 2,082 | |||||||||||
Weighted common stock equivalents | 29 | 42 | 30 | 44 | |||||||||||
Assumed conversion of the 2013 Notes and associated warrants | 53 | 70 | 54 | 79 | |||||||||||
Weighted average shares, diluted | 2,174 | 2,208 | 2,181 | 2,205 |
Foreign Currency Translation Adjustments | Unrealized Net Gains on Investments | Unrealized Net Losses on Derivatives | Recognition of Actuarial Net Loss from Pension and Other Postretirement Plans | Accumulated Other Comprehensive Income Attributable to the Non-controlling Interest in VMware, Inc. | Total | ||||||||||||||||||
Balance as of December 31, 2012(a) | $ | (9 | ) | $ | 64 | $ | (109 | ) | $ | (153 | ) | $ | (1 | ) | $ | (208 | ) | ||||||
Other comprehensive income (loss) before reclassifications | (56 | ) | (29 | ) | 8 | — | 2 | (75 | ) | ||||||||||||||
Net losses (gains) reclassified from accumulated other comprehensive income | — | (8 | ) | (8 | ) | — | — | (16 | ) | ||||||||||||||
Net current period other comprehensive income (loss) | (56 | ) | (37 | ) | — | — | 2 | (91 | ) | ||||||||||||||
Balance at June 30, 2013(b) | $ | (65 | ) | $ | 27 | $ | (109 | ) | $ | (153 | ) | $ | 1 | $ | (299 | ) |
(a) | Net of taxes (benefits) of $37 million for unrealized net gains on investments, $(67) million for unrealized net losses on derivatives and $(87) million for actuarial net loss on pension plans. |
(b) | Net of taxes (benefits) of $17 million for unrealized net gains on investments, $(66) million for unrealized net losses on derivatives and $(87) million for actuarial net loss on pension plans. |
Accumulated Other Comprehensive Income Components | Amount Reclassified from Accumulated Other Comprehensive Income | Impacted Line Item on Consolidated Income Statements | ||||
For the three months ended June 30, 2013: | ||||||
Net gain on investments: | $ | 6 | Investment income | |||
(2 | ) | Provision for income tax | ||||
Net of tax | $ | 4 | ||||
Net gain on derivatives: | ||||||
Foreign exchange contracts | $ | 6 | Product sales revenue | |||
Foreign exchange contracts | (3 | ) | Cost of product sales | |||
Total net gain on derivatives before tax | 3 | |||||
— | Provision for income tax | |||||
Net of tax | $ | 3 |
Accumulated Other Comprehensive Income Components | Amount Reclassified from Accumulated Other Comprehensive Income | Impacted Line Item on Consolidated Income Statements | ||||
For the six months ended June 30, 2013: | ||||||
Net gain on investments: | $ | 13 | Investment income | |||
(5 | ) | Provision for income tax | ||||
Net of tax | $ | 8 | ||||
Net gain on derivatives: | ||||||
Foreign exchange contracts | $ | 16 | Product sales revenue | |||
Foreign exchange contracts | (6 | ) | Cost of product sales | |||
Total net gain on derivatives before tax | 10 | |||||
(2 | ) | Provision for income tax | ||||
Net of tax | $ | 8 |
2013 EMC Programs | |||||||||||||||
Category | Balance as of March 31, 2013 | 2013 Charges | Utilization | Balance as of June 30, 2013 | |||||||||||
Workforce reductions | $ | 66 | $ | 2 | $ | (23 | ) | $ | 45 | ||||||
Consolidation of excess facilities and other contractual obligations | — | 3 | (1 | ) | 2 | ||||||||||
Total | $ | 66 | $ | 5 | $ | (24 | ) | $ | 47 |
2013 VMware Programs | |||||||||||||||
Category | Balance as of March 31, 2013 | 2013 Charges | Utilization | Balance as of June 30, 2013 | |||||||||||
Workforce reductions | $ | 26 | $ | 2 | $ | (26 | ) | $ | 2 | ||||||
Consolidation of excess facilities and other contractual obligations | — | — | — | — | |||||||||||
Total | $ | 26 | $ | 2 | $ | (26 | ) | $ | 2 |
Other EMC Programs | |||||||||||||||
Category | Balance as of March 31, 2013 | Adjustments to the Provision | Utilization | Balance as of June 30, 2013 | |||||||||||
Workforce reductions | $ | 46 | $ | (3 | ) | $ | (14 | ) | $ | 29 | |||||
Consolidation of excess facilities and other contractual obligations | 30 | 2 | (5 | ) | 27 | ||||||||||
Total | $ | 76 | $ | (1 | ) | $ | (19 | ) | $ | 56 |
2013 EMC Programs | |||||||||||||||
Category | Balance as of December 31, 2012 | 2013 Charges | Utilization | Balance as of June 30, 2013 | |||||||||||
Workforce reductions | $ | — | $ | 81 | $ | (36 | ) | $ | 45 | ||||||
Consolidation of excess facilities and other contractual obligations | — | 3 | (1 | ) | 2 | ||||||||||
Total | $ | — | $ | 84 | $ | (37 | ) | $ | 47 |
2013 VMware Programs | |||||||||||||||
Category | Balance as of December 31, 2012 | 2013 Charges | Utilization | Balance as of June 30, 2013 | |||||||||||
Workforce reductions | $ | — | $ | 56 | $ | (54 | ) | $ | 2 | ||||||
Consolidation of excess facilities and other contractual obligations | — | — | — | — | |||||||||||
Total | $ | — | $ | 56 | $ | (54 | ) | $ | 2 |
Other EMC Programs | |||||||||||||||
Category | Balance as of December 31, 2012 | Adjustments to the Provision | Utilization | Balance as of June 30, 2013 | |||||||||||
Workforce reductions | $ | 63 | $ | (8 | ) | $ | (26 | ) | $ | 29 | |||||
Consolidation of excess facilities and other contractual obligations | 28 | 9 | (10 | ) | 27 | ||||||||||
Total | $ | 91 | $ | 1 | $ | (36 | ) | $ | 56 |
2012 EMC Programs | |||||||||||||||
Category | Balance as of March 31, 2012 | 2012 Charges | Utilization | Balance as of June 30, 2012 | |||||||||||
Workforce reductions | $ | 20 | $ | 23 | $ | (9 | ) | $ | 34 | ||||||
Consolidation of excess facilities and other contractual obligations | 1 | 4 | (2 | ) | 3 | ||||||||||
Total | $ | 21 | $ | 27 | $ | (11 | ) | $ | 37 |
Other EMC Programs | |||||||||||||||
Category | Balance as of March 31, 2012 | Adjustments to the Provision | Utilization | Balance as of June 30, 2012 | |||||||||||
Workforce reductions | $ | 31 | $ | (3 | ) | $ | (8 | ) | $ | 20 | |||||
Consolidation of excess facilities and other contractual obligations | 28 | — | (2 | ) | 26 | ||||||||||
Total | $ | 59 | $ | (3 | ) | $ | (10 | ) | $ | 46 |
2012 EMC Programs | |||||||||||||||
Category | Balance as of December 31, 2011 | 2012 Charges | Utilization | Balance as of June 30, 2012 | |||||||||||
Workforce reductions | $ | — | $ | 46 | $ | (12 | ) | $ | 34 | ||||||
Consolidation of excess facilities and other contractual obligations | — | 5 | (2 | ) | 3 | ||||||||||
Total | $ | — | $ | 51 | $ | (14 | ) | $ | 37 |
Other EMC Programs | |||||||||||||||
Category | Balance as of December 31, 2011 | Adjustments to the Provision | Utilization | Balance as of June 30, 2012 | |||||||||||
Workforce reductions | $ | 50 | $ | (6 | ) | $ | (24 | ) | $ | 20 | |||||
Consolidation of excess facilities and other contractual obligations | 30 | 3 | (7 | ) | 26 | ||||||||||
Total | $ | 80 | $ | (3 | ) | $ | (31 | ) | $ | 46 |
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Three Months Ended: | |||||||||||||||||||||||
June 30, 2013 | |||||||||||||||||||||||
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 |
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corp Reconciling Items | Consolidated | ||||||||||||
Three Months Ended: | |||||||||||||||
June 30, 2013 | |||||||||||||||
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 | ||||||||||
Non-operating income (expense), net | (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 |
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Three Months Ended: | |||||||||||||||||||||||
June 30, 2012 | |||||||||||||||||||||||
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 |
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corp Reconciling Items | Consolidated | ||||||||||||
Three Months Ended: | |||||||||||||||
June 30, 2012 | |||||||||||||||
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 | 81 | 655 | |||||||||||
Selling, general and administrative | 1,150 | 418 | 149 | 1,717 | |||||||||||
Restructuring and acquisition-related charges | — | — | 28 | 28 | |||||||||||
Total costs and expenses | 1,546 | 596 | 258 | 2,400 | |||||||||||
Operating income | 932 | 368 | (353 | ) | 947 | ||||||||||
Non-operating income (expense), net | (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 |
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Six Months Ended: | |||||||||||||||||||||||
June 30, 2013 | |||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Product revenues | $ | 5,028 | $ | 82 | $ | 198 | $ | 5,308 | $ | 48 | $ | 5,356 | |||||||||||
Services revenues | 2,662 | 226 | 262 | 3,150 | 91 | 3,241 | |||||||||||||||||
Total consolidated revenues | 7,690 | 308 | 460 | 8,458 | 139 | 8,597 | |||||||||||||||||
Gross profit | $ | 4,309 | $ | 195 | $ | 301 | $ | 4,805 | $ | 52 | $ | 4,857 | |||||||||||
Gross profit percentage | 56.0 | % | 63.4 | % | 65.2 | % | 56.8 | % | 37.7 | % | 56.5 | % | |||||||||||
Research and development | 739 | 56 | 795 | ||||||||||||||||||||
Selling, general and administrative | 2,193 | 75 | 2,268 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total costs and expenses | 2,932 | 131 | 3,063 | ||||||||||||||||||||
Operating income | $ | 1,873 | $ | (79 | ) | $ | 1,794 |
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corp Reconciling Items | Consolidated | ||||||||||||
Six Months Ended: | |||||||||||||||
June 30, 2013 | |||||||||||||||
Revenues: | |||||||||||||||
Product revenues | $ | 5,356 | $ | 1,013 | $ | — | $ | 6,369 | |||||||
Services revenues | 3,241 | 1,391 | — | 4,632 | |||||||||||
Total consolidated revenues | 8,597 | 2,404 | — | 11,001 | |||||||||||
Gross profit | $ | 4,857 | $ | 2,150 | $ | (200 | ) | $ | 6,807 | ||||||
Gross profit percentage | 56.5 | % | 89.4 | % | — | 61.9 | % | ||||||||
Research and development | 795 | 397 | 178 | 1,370 | |||||||||||
Selling, general and administrative | 2,268 | 939 | 292 | 3,499 | |||||||||||
Restructuring and acquisition-related charges | — | — | 155 | 155 | |||||||||||
Total costs and expenses | 3,063 | 1,336 | 625 | 5,024 | |||||||||||
Operating income | 1,794 | 814 | (825 | ) | 1,783 | ||||||||||
Non-operating income (expense), net | (150 | ) | 7 | 17 | (126 | ) | |||||||||
Income tax provision | 402 | 176 | (286 | ) | 292 | ||||||||||
Net income | 1,242 | 645 | (522 | ) | 1,365 | ||||||||||
Net income attributable to the non-controlling interest in VMware, Inc. | — | (130 | ) | 46 | (84 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 1,242 | $ | 515 | $ | (476 | ) | $ | 1,281 |
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Six Months Ended: | |||||||||||||||||||||||
June 30, 2012 | |||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Product revenues | $ | 4,937 | $ | 82 | $ | 199 | $ | 5,218 | $ | 44 | $ | 5,262 | |||||||||||
Services revenues | 2,513 | 217 | 228 | 2,958 | 63 | 3,021 | |||||||||||||||||
Total consolidated revenues | 7,450 | 299 | 427 | 8,176 | 107 | 8,283 | |||||||||||||||||
Gross profit | $ | 4,210 | $ | 192 | $ | 312 | $ | 4,714 | $ | 53 | $ | 4,767 | |||||||||||
Gross profit percentage | 56.5 | % | 64.3 | % | 73.1 | % | 57.7 | % | 49.5 | % | 57.6 | % | |||||||||||
Research and development | 691 | 61 | 752 | ||||||||||||||||||||
Selling, general and administrative | 2,191 | 75 | 2,266 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total costs and expenses | 2,882 | 136 | 3,018 | ||||||||||||||||||||
Operating income | $ | 1,832 | $ | (83 | ) | $ | 1,749 |
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corp Reconciling Items | Consolidated | ||||||||||||
Six Months Ended: | |||||||||||||||
June 30, 2012 | |||||||||||||||
Revenues: | |||||||||||||||
Product revenues | $ | 5,262 | $ | 986 | $ | — | $ | 6,248 | |||||||
Services revenues | 3,021 | 1,137 | — | 4,158 | |||||||||||
Total consolidated revenues | 8,283 | 2,123 | — | 10,406 | |||||||||||
Gross profit | $ | 4,767 | $ | 1,882 | $ | (188 | ) | $ | 6,461 | ||||||
Gross profit percentage | 57.6 | % | 88.6 | % | — | 62.1 | % | ||||||||
Research and development | 752 | 339 | 153 | 1,244 | |||||||||||
Selling, general and administrative | 2,266 | 809 | 292 | 3,367 | |||||||||||
Restructuring and acquisition-related charges | — | — | 53 | 53 | |||||||||||
Total costs and expenses | 3,018 | 1,148 | 498 | 4,664 | |||||||||||
Operating income | 1,749 | 734 | (686 | ) | 1,797 | ||||||||||
Non-operating income (expense), net | (78 | ) | 12 | (11 | ) | (77 | ) | ||||||||
Income tax provision | 474 | 118 | (187 | ) | 405 | ||||||||||
Net income | 1,197 | 628 | (510 | ) | 1,315 | ||||||||||
Net income attributable to the non-controlling interest in VMware, Inc. | — | (122 | ) | 43 | (79 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 1,197 | $ | 506 | $ | (467 | ) | $ | 1,236 |
For the Three Months Ended | For the Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
United States | $ | 2,963 | $ | 2,857 | $ | 5,795 | $ | 5,490 | |||||||
Europe, Middle East and Africa | 1,486 | 1,400 | 2,963 | 2,865 | |||||||||||
Asia Pacific and Japan | 835 | 748 | 1,573 | 1,459 | |||||||||||
Latin America, Mexico and Canada | 330 | 306 | 670 | 592 | |||||||||||
Total | $ | 5,614 | $ | 5,311 | $ | 11,001 | $ | 10,406 |
Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
This Management’s Discussion and Analysis (“MD&A”) of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and notes thereto which appear elsewhere in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements and should also be read in conjunction with the risk factors set forth in Item 1A of Part II. The forward-looking statements do not include the potential impact of any mergers, acquisitions, divestitures, securities offerings or business combinations that may be announced or closed after the date hereof. |
For the Three Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | $ Change | % Change | |||||||||||
Information Storage | $ | 3,926 | $ | 3,787 | $ | 139 | 4 | % | ||||||
Information Intelligence Group | 152 | 153 | — | — | ||||||||||
RSA Information Security | 228 | 220 | 7 | 3 | ||||||||||
Pivotal | 70 | 63 | 7 | 11 | ||||||||||
VMware Virtual Infrastructure | 1,238 | 1,088 | 150 | 14 | ||||||||||
Total revenues | $ | 5,614 | $ | 5,311 | $ | 303 | 6 | % |
For the Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | $ Change | % Change | |||||||||||
Information Storage | $ | 7,690 | $ | 7,450 | $ | 240 | 3 | % | ||||||
Information Intelligence Group | 308 | 299 | 10 | 3 | ||||||||||
RSA Information Security | 460 | 427 | 33 | 8 | ||||||||||
Pivotal | 139 | 107 | 32 | 30 | ||||||||||
VMware Virtual Infrastructure | 2,404 | 2,123 | 281 | 13 | ||||||||||
Total revenues | $ | 11,001 | $ | 10,406 | $ | 595 | 6 | % |
For the Three Months Ended | |||||||||||
June 30, 2013 | June 30, 2012 | % Change | |||||||||
United States | $ | 2,963 | $ | 2,857 | 4 | % | |||||
Europe, Middle East and Africa | 1,486 | 1,400 | 6 | ||||||||
Asia Pacific and Japan | 835 | 748 | 12 | ||||||||
Latin America, Mexico and Canada | 330 | 306 | 8 | ||||||||
Total revenues | $ | 5,614 | $ | 5,311 | 6 | % |
For the Six Months Ended | |||||||||||
June 30, 2013 | June 30, 2012 | % Change | |||||||||
United States | $ | 5,795 | $ | 5,490 | 6 | % | |||||
Europe, Middle East and Africa | 2,963 | 2,865 | 3 | ||||||||
Asia Pacific and Japan | 1,573 | 1,459 | 8 | ||||||||
Latin America, Mexico and Canada | 670 | 592 | 13 | ||||||||
Total revenues | $ | 11,001 | $ | 10,406 | 6 | % |
For the Three Months Ended | |||||||||||||||
June 30, 2013 | June 30, 2012 | $ Change | % Change | ||||||||||||
Cost of revenue: | |||||||||||||||
Information Storage | $ | 1,696 | $ | 1,623 | $ | 73 | 4 | % | |||||||
Information Intelligence Group | 56 | 51 | 6 | 11 | |||||||||||
RSA Information Security | 80 | 41 | 38 | 91 | |||||||||||
Pivotal | 44 | 30 | 14 | 49 | |||||||||||
VMware Virtual Infrastructure | 129 | 124 | 5 | 4 | |||||||||||
Corporate reconciling items | 100 | 95 | 5 | 6 | |||||||||||
Total cost of revenue | 2,105 | 1,964 | 141 | 7 | |||||||||||
Gross margins: | |||||||||||||||
Information Storage | 2,230 | 2,164 | 66 | 3 | |||||||||||
Information Intelligence Group | 96 | 102 | (6 | ) | (6 | ) | |||||||||
RSA Information Security | 148 | 179 | (31 | ) | (17 | ) | |||||||||
Pivotal | 26 | 33 | (7 | ) | (22 | ) | |||||||||
VMware Virtual Infrastructure | 1,109 | 964 | 145 | 15 | |||||||||||
Corporate reconciling items | (100 | ) | (95 | ) | (5 | ) | 6 | ||||||||
Total gross margin | 3,509 | 3,347 | 162 | 5 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development(1) | 695 | 655 | 39 | 6 | |||||||||||
Selling, general and administrative(2) | 1,785 | 1,717 | 68 | 4 | |||||||||||
Restructuring and acquisition-related charges | 7 | 28 | (21 | ) | (75 | ) | |||||||||
Total operating expenses | 2,487 | 2,400 | 87 | 4 | |||||||||||
Operating income | 1,022 | 947 | 75 | 8 | |||||||||||
Investment income, interest expense and other expenses, net | (56 | ) | (43 | ) | (13 | ) | 29 | ||||||||
Income before income taxes | 966 | 904 | 62 | 7 | |||||||||||
Income tax provision | 216 | 214 | 2 | 1 | |||||||||||
Net income | 750 | 690 | 60 | 9 | |||||||||||
Less: Net income attributable to the non-controlling interest in VMware, Inc. | (49 | ) | (40 | ) | (9 | ) | 22 | ||||||||
Net income attributable to EMC Corporation | $ | 701 | $ | 650 | $ | 51 | 8 | % |
For the Six Months Ended | |||||||||||||||
June 30, 2013 | June 30, 2012 | $ Change | % Change | ||||||||||||
Cost of revenue: | |||||||||||||||
Information Storage | $ | 3,381 | $ | 3,241 | $ | 141 | 4 | % | |||||||
Information Intelligence Group | 113 | 106 | 7 | 6 | |||||||||||
RSA Information Security | 160 | 115 | 45 | 39 | |||||||||||
Pivotal | 86 | 54 | 32 | 60 | |||||||||||
VMware Virtual Infrastructure | 254 | 241 | 13 | 5 | |||||||||||
Corporate reconciling items | 200 | 188 | 12 | 6 | |||||||||||
Total cost of revenue | 4,194 | 3,945 | 249 | 6 | |||||||||||
Gross margins: | |||||||||||||||
Information Storage | 4,309 | 4,210 | 99 | 2 | |||||||||||
Information Intelligence Group | 195 | 192 | 3 | 2 | |||||||||||
RSA Information Security | 301 | 312 | (12 | ) | (4 | ) | |||||||||
Pivotal | 52 | 53 | (1 | ) | (1 | ) | |||||||||
VMware Virtual Infrastructure | 2,150 | 1,882 | 269 | 14 | |||||||||||
Corporate reconciling items | (200 | ) | (188 | ) | (12 | ) | 6 | ||||||||
Total gross margin | 6,807 | 6,461 | 346 | 5 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development(3) | 1,370 | 1,244 | 126 | 10 | |||||||||||
Selling, general and administrative(4) | 3,499 | 3,367 | 133 | 4 | |||||||||||
Restructuring and acquisition-related charges | 155 | 53 | 101 | 189 | |||||||||||
Total operating expenses | 5,024 | 4,664 | 360 | 8 | |||||||||||
Operating income | 1,783 | 1,797 | (14 | ) | (1 | ) | |||||||||
Investment income, interest expense and other expenses, net | (126 | ) | (77 | ) | (49 | ) | 65 | ||||||||
Income before income taxes | 1,657 | 1,720 | (63 | ) | (4 | ) | |||||||||
Income tax provision | 292 | 405 | (113 | ) | (28 | ) | |||||||||
Net income | 1,365 | 1,315 | 50 | 4 | |||||||||||
Less: Net income attributable to the non-controlling interest in VMware, Inc. | (84 | ) | (79 | ) | (5 | ) | 6 | ||||||||
Net income attributable to EMC Corporation | $ | 1,281 | $ | 1,236 | $ | 45 | 4 | % |
(1) | Amount includes corporate reconciling items of $85 million and $81 million for the three months ended June 30, 2013 and 2012, respectively. |
(2) | Amount includes corporate reconciling items of $142 million and $149 million for the three months ended June 30, 2013 and 2012, respectively. |
(3) | Amount includes corporate reconciling items of $178 million and $153 million for the six months ended June 30, 2013 and 2012, respectively. |
(4) | Amount includes corporate reconciling items of $292 million and $292 million for the six months ended June 30, 2013 and 2012, respectively. |
For the Three Months Ended | |||||||
June 30, 2013 | June 30, 2012 | ||||||
Gross margin | $ | 3,609 | $ | 3,418 | |||
Gross margin percentage | 64.3 | % | 64.4 | % | |||
Operating income | 1,356 | 1,275 | |||||
Operating margin percentage | 24.2 | % | 24.0 | % | |||
Income tax provision | 308 | 310 | |||||
Net income attributable to EMC | 907 | 867 | |||||
Diluted earnings per share attributable to EMC | $ | 0.42 | $ | 0.39 |
For the Three Months Ended June 30, 2013 | |||||||||||||||||||||||||||
GAAP | Stock-based compensation | 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 | Non-GAAP | |||||||||||||||||||||
Gross margin | $ | 3,509 | $ | 30 | $ | 58 | $ | — | $ | 12 | $ | — | $ | 3,609 | |||||||||||||
Operating income | 1,022 | 218 | 97 | 7 | 12 | — | 1,356 | ||||||||||||||||||||
Income tax provision | 216 | 62 | 28 | 2 | 4 | (5 | ) | 308 | |||||||||||||||||||
Net income attributable to EMC | 701 | 140 | 65 | 5 | 7 | (11 | ) | 907 | |||||||||||||||||||
Diluted earnings per share attributable to EMC | $ | 0.32 | $ | 0.07 | $ | 0.03 | $ | — | $ | — | $ | — | $ | 0.42 |
For the Three Months Ended June 30, 2012 | |||||||||||||||||||||||||||||||||||
GAAP | Stock-based compensation | 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 | Non-GAAP | |||||||||||||||||||||||||||
Gross margin | $ | 3,347 | $ | 31 | $ | 46 | $ | — | $ | 18 | $ | (24 | ) | $ | — | $ | — | $ | 3,418 | ||||||||||||||||
Operating income | 947 | 219 | 88 | 28 | 18 | (24 | ) | — | — | 1,275 | |||||||||||||||||||||||||
Income tax provision | 214 | 47 | 28 | 6 | 6 | (6 | ) | 15 | — | 310 | |||||||||||||||||||||||||
Net income attributable to EMC | 650 | 154 | 57 | 22 | 10 | (18 | ) | 24 | (32 | ) | 867 | ||||||||||||||||||||||||
Diluted earnings per share attributable to EMC | $ | 0.29 | $ | 0.07 | $ | 0.03 | $ | 0.01 | $ | — | $ | (0.01 | ) | $ | 0.01 | $ | (0.01 | ) | $ | 0.39 |
For the Six Months Ended | |||||||
June 30, 2013 | June 30, 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 |
• | general economic conditions in their domestic and international markets and the effect that these conditions have on VMware’s customers’ capital budgets and the availability of funding for software purchases; |
• | fluctuations in demand, adoption rates, sales cycles and pricing levels for VMware’s products and services; |
• | fluctuations in foreign currency exchange rates; |
• | changes in customers’ budgets for information technology purchases and in the timing of their purchasing decisions; |
• | the timing of recognizing revenues in any given quarter, which, as a result of software revenue recognition policies, can be affected by a number of factors, including product announcements, beta programs and product promotions that can cause revenue recognition of certain orders to be deferred until future products to which customers are entitled become available; |
• | the sale of VMware’s products and services in the timeframes anticipated, including the number and size of orders in each quarter; |
• | VMware’s ability to develop, introduce and ship in a timely manner new products and services and enhancements that meet customer demand, certification requirements and technical requirements; |
• | VMware's ability to compete effectively; |
• | the introduction of new pricing and packaging models for VMware’s product offerings; |
• | the timing of the announcement or release of upgrades or new products by VMware or by its competitors; |
• | VMware’s ability to maintain scalable internal systems for reporting, order processing, license fulfillment, product delivery, purchasing, billing and general accounting, among other functions; |
• | VMware’s ability to control costs, including its operating expenses; |
• | changes to VMware’s effective tax rate; |
• | the increasing scale of VMware’s business and its effect on VMware’s ability to maintain historical rates of growth; |
• | VMware’s ability to attract and retain highly skilled employees, particularly those with relevant experience in software development and sales; |
• | VMware’s ability to conform to emerging industry standards and to technological developments by its competitors and customers; |
• | renewal rates and the amounts of the renewals for enterprise license agreements, or ELA’s, as original ELA terms expire; |
• | the timing and amount of software development costs that may be capitalized beginning when technological feasibility has been established and ending when the product is available for general release; |
• | unplanned events that could affect market perception of the quality or cost-effectiveness of VMware’s products and solutions; and |
• | the recoverability of benefits from goodwill and acquired intangible assets, and the potential impairment of these assets. |
• | the announcement of acquisitions, new products, services or technological innovations by us or our competitors; |
• | quarterly variations in our operating results; |
• | changes in revenue or earnings estimates by the investment community; and |
• | speculation in the press or investment community. |
• | the trading price for VMware Class A common stock; |
• | actions taken or statements made by us, VMware, or others concerning our relationship with VMware; and |
• | factors impacting the performance of VMware, including those discussed in the prior risk factor. |
• | the difficulty in forecasting customer preferences or demand accurately; |
• | the inability to expand production capacity to meet demand for new products; |
• | the inability to successfully manage the interoperability and transition from older products; |
• | the impact of customers’ demand for new products on the products being replaced, thereby causing a decline in sales of existing products and an excessive, obsolete supply of inventory; and |
• | delays in initial shipments of new products. |
• | retaining and hiring, as required, the appropriate number of qualified employees; |
• | managing, protecting and enhancing, as appropriate, our infrastructure, including but not limited to, our information systems (and such systems’ ability to protect confidential information residing on the systems) and internal controls; |
• | accurately forecasting revenues; |
• | training our sales force to sell effectively, given the breadth of our offerings; |
• | successfully integrating new acquisitions; |
• | managing inventory levels, including minimizing excess and obsolete inventory, while maintaining sufficient inventory to meet customer demands; |
• | controlling expenses; |
• | managing our manufacturing capacity, real estate facilities and other assets; |
• | meeting our sustainability goals; and |
• | executing on our plans. |
• | the relative dollar amount of our product and services offerings in relation to many of our customers’ budgets, resulting in long lead times for customers’ budgetary approval, which tends to be given late in a quarter; |
• | the tendency of customers to wait until late in a quarter to commit to purchase in the hope of obtaining more favorable pricing from one or more competitors seeking their business; |
• | the fourth-quarter influence of customers spending their remaining capital budget authorization prior to new budget constraints in the first nine months of the following year; and |
• | seasonal influences. |
• | we assemble our products on the basis of our forecast of near-term demand and maintain inventory in advance of receipt of firm orders from customers; |
• | we generally ship products shortly after receipt of the order; and |
• | customers may generally reschedule or cancel orders with little or no penalty. |
• | changes in foreign currency exchange rates; |
• | changes in a specific country’s or region’s economic conditions; |
• | political or social unrest; |
• | trade restrictions; |
• | import or export licensing requirements; |
• | the overlap of different tax structures or changes in international tax laws; |
• | changes in regulatory requirements; |
• | difficulties in staffing and managing international operations; |
• | stringent privacy policies in some foreign countries; |
• | compliance with a variety of foreign laws and regulations; and |
• | longer payment cycles in certain countries. |
• | the effect of the acquisition on our financial and strategic position and reputation; |
• | the failure of an acquired business to further our strategies; |
• | the failure of the acquisition to result in expected benefits, which may include benefits relating to enhanced revenues, technology, human resources, cost savings, operating efficiencies and other synergies; |
• | the difficulty and cost of integrating the acquired business, including costs and delays in implementing common systems and procedures and costs and delays caused by communication difficulties or geographic distances between the two companies’ sites; |
• | the assumption of known or unknown liabilities of the acquired business, including litigation-related liability; |
• | the potential impairment of acquired assets; |
• | the lack of experience in new markets, products or technologies or the initial dependence on unfamiliar supply or distribution partners; |
• | the diversion of our management’s attention from other business concerns; |
• | the impairment of relationships with customers or suppliers of the acquired business or our customers or suppliers; |
• | the recoverability of benefits from goodwill and intangible assets and the potential impairment of these assets; |
• | the potential loss of key employees of the acquired company; and |
• | the potential incompatibility of business cultures. |
Period | Total Number of Shares Purchased(1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||
April 1, 2013 – April 30, 2013 | 6,369 | $ | 22.25 | 6,298 | 258,160 | |||||||
May 1, 2013 – May 31, 2013 | 3,076 | 23.36 | 2,865 | 255,295 | ||||||||
June 1, 2013 – June 30, 2013 | 19,711 | 24.60 | 19,711 | 235,584 | ||||||||
Total | 29,156 | (2) | $ | 23.96 | 28,874 | 235,584 |
(1) | Except as noted in note (2), all shares were purchased in open-market transactions pursuant to our previously announced authorizations by our Board of Directors in April 2008 to repurchase 250.0 million shares of our common stock and in February 2013 to repurchase an additional 250.0 million shares of our common stock. These repurchase authorizations do not have a fixed termination date. |
(2) | Includes an aggregate of 281,700 shares withheld from employees for the payment of taxes. |
(a) | Exhibits |
Date: August 2, 2013 | EMC CORPORATION | ||
By: | /s/ David I. Goulden | ||
David I. Goulden | |||
President and Chief Operating Officer | |||
(Principal Financial Officer) |
3.1 | Restated Articles of Organization of EMC Corporation. (1) | |
3.2 | Amended and Restated Bylaws of EMC Corporation. (1) | |
4.1 | Form of Stock Certificate. (2) | |
4.2 | Indenture with Wells Fargo Bank, N.A., as trustee, dated as of November 17, 2006. (3) | |
4.3 | Registration Rights Agreement with Goldman, Sachs & Co., Lehman Brothers Inc. and Citigroup Global Markets Inc., dated as of November 17, 2006. (3) | |
4.4 | Underwriting Agreement, dated as of June 3, 2013, by and among the Company, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several underwriters named therein. (4) | |
4.5 | Indenture, dated as of June 6, 2013, by and between the Company and Wells Fargo Bank, National Association, as Trustee. (4) | |
31.1 | Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) | |
31.2 | Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) | |
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith) | |
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith) | |
101.INS* | XBRL Instance Document. (filed herewith) | |
101.SCH* | XBRL Taxonomy Extension Schema. (filed herewith) | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase. (filed herewith) | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase. (filed herewith) | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase. (filed herewith) | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase. (filed herewith) |
* | Pursuant to Rule 406T of Regulation S-T, these interactive data files shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing. |
(1) | Incorporated by reference to EMC Corporation’s Quarterly Report on Form 10-Q filed May 3, 2013 (No. 1-9853). |
(2) | Incorporated by reference to EMC Corporation’s Annual Report on Form 10-K filed February 29, 2008 (No. 1-9853). |
(3) | Incorporated by reference to EMC Corporation’s Current Report on Form 8-K filed November 17, 2006 (No. 1-9853). |
(4) | Incorporated by reference to EMC Corporation’s Current Report on Form 8-K filed June 6, 2013 (No. 1-9853). |
1. | I have reviewed this Quarterly Report on Form 10-Q of EMC Corporation (“the Registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and |
5. | The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. |
Date: August 2, 2013 | /s/ Joseph M. Tucci |
1. | I have reviewed this Quarterly Report on Form 10-Q of EMC Corporation (“the Registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and |
5. | The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. |
Date: August 2, 2013 | /s/ David I. Goulden |
(1) | The Quarterly Report on Form 10-Q of EMC Corporation for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of EMC Corporation. |
(1) | The Quarterly Report on Form 10-Q of EMC Corporation for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of EMC Corporation. |
Joint Ventures
|
6 Months Ended |
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Jun. 30, 2013
|
|
Equity Method Investments and Joint Ventures [Abstract] | |
Joint Ventures | Joint Ventures We make investments in joint ventures. For each joint venture investment, we consider the facts and circumstances in order to determine whether it qualifies for cost accounting, equity accounting, fair value method accounting or whether it should be consolidated. In 2009, Cisco and EMC formed VCE Company LLC (“VCE”), with investments from VMware and Intel. VCE, through Vblock infrastructure platforms, delivers an integrated IT offering that combines network, computing, storage, management, security and virtualization technologies for converged infrastructures and cloud based computing models. As of June 30, 2013, we have contributed $854 million in funding and $15 million in stock-based compensation to VCE since inception and own approximately 58% of VCE’s outstanding equity. We consider VCE a variable interest entity. Authoritative guidance related to variable interest entities states that the primary beneficiary of a variable interest entity must have both of the following characteristics: (a) the power to direct the activities of a variable interest entity that most significantly will impact the entity’s economic performance; and (b) the obligation to absorb losses that could be potentially significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. Since the power to direct the activities of VCE which most significantly impact its economic performance are determined by its board of directors, which is comprised of equal representation of EMC and Cisco, and all significant decisions require the approval of the minority shareholders, we have determined we are not the primary beneficiary, and as such we account for the investment under the equity method. Our portion of VCE’s gains and losses is recognized in other expense, net, in the consolidated income statements. Our consolidated share of VCE’s losses, based upon our portion of the overall funding, was approximately 63% for the three and six months ended June 30, 2013 and 2012. As of June 30, 2013, we have recorded net accumulated losses from VCE of $638 million since inception, of which $71 million and $140 million were recorded in the three and six months ending June 30, 2013, respectively, and $60 million and $115 million were recorded in the three and six months ended June 30, 2012, respectively. We recognized $102 million and $176 million in revenue from sales of product and services to VCE during the three and six months ended June 30, 2013, respectively, and $75 million and $146 million for the three and six months ended June 30, 2012, respectively. We perform certain administrative services, pursuant to an administrative services agreement, on behalf of VCE and we pay certain operating expenses on behalf of VCE. Accordingly, we had a receivable from VCE related to the administrative services agreement of $39 million and $44 million as of June 30, 2013 and December 31, 2012, respectively, included in other current assets in the consolidated balance sheets. |
Allowance for Credit Losses (Detail) (USD $)
In Millions, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Financing Receivable, Allowance for Credit Losses [Roll Forward] | ||
Balance, beginning of the period | $ 17 | $ 24 |
Recoveries | (9) | (13) |
Provisions | 3 | 6 |
Balance, end of the period | $ 11 | $ 17 |
Non-controlling Interest in VMware, Inc.
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-controlling Interest in VMware, Inc. | Non-controlling Interests The non-controlling interests’ share of equity in VMware is reflected as non-controlling interests in the accompanying consolidated balance sheets and was $1,237 million and $1,167 million as of June 30, 2013 and December 31, 2012, respectively. At June 30, 2013, EMC held approximately 97% of the combined voting power of VMware’s outstanding common stock and approximately 80% of the economic interest in VMware. The effect of changes in our ownership interest in VMware on our equity was as follows (table in millions):
The non-controlling interests' share of equity in Pivotal is reflected as a component of the non-controlling interests in the accompanying consolidated balance sheets as $105 million and $0 million at June 30, 2013 and December 31, 2012, respectively. At June 30, 2013, EMC consolidated held approximately 84% of the economic interest in Pivotal. GE's interest in Pivotal is in the form of a preferred equity instrument. Consequently, there is no net income attributable to non-controlling interest related to Pivotal on the consolidated income statements. Additionally, due to the terms of the preferred instrument, GE's non-controlling interest on the consolidated balance sheets is generally not impacted by Pivotal's equity related activity. The preferred equity instrument is convertible into common shares at GE’s election at any time. |
Basis of Presentation Basis of Presentation (Policies)
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6 Months Ended |
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Jun. 30, 2013
|
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Accounting Policies [Abstract] | |
Nature of Operations [Policy Text Block] | Company EMC Corporation (“EMC”) and its subsidiaries develop, deliver and support the Information Technology (“IT”) industry’s broadest range of information infrastructure and virtual infrastructure technologies, solutions and services. EMC’s Information Infrastructure business provides a foundation for organizations to store, manage, protect, analyze and secure their vast and ever-increasing quantities of information, improve business agility, lower cost of ownership and enhance their competitive advantage within traditional data centers, virtual data centers and cloud-based IT infrastructures. EMC’s Information Infrastructure business comprises three segments – Information Storage, RSA Information Security and Information Intelligence Group. EMC's GoPivotal, Inc. ("Pivotal") business was formed in the second quarter of 2013. Pivotal unites strategic technology, people and programs from EMC and VMware, Inc. ("VMware"), including Greenplum, Cloud Foundry, Spring, Cetas, Pivotal Labs, GemFire and other products from the VMware vFabric Suite. Pivotal is building a new platform comprising next-generation data fabrics, application fabrics and a cloud-independent platform as a service ("PaaS"). EMC’s VMware Virtual Infrastructure business, which is represented by EMC’s majority equity stake in VMware, is the leader in virtualization infrastructure solutions utilized by organizations to help them transform the way they build, deliver and consume IT resources. VMware’s virtualization infrastructure solutions, which include a suite of products designed to deliver a software-defined data center, run on industry-standard desktop computers and servers and support a wide range of operating system and application environments, as well as networking and storage infrastructures. |
General | General The accompanying interim consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These consolidated financial statements include the accounts of EMC, its wholly owned subsidiaries, as well as Pivotal and VMware, companies majority-owned by EMC. All intercompany transactions have been eliminated. Certain information and footnote disclosures normally included in our annual consolidated financial statements have been condensed or omitted. Accordingly, these interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2012 which are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2013. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for any future period or the entire fiscal year. The interim consolidated financial statements, in the opinion of management, reflect all adjustments necessary to fairly state the results as of and for the three- and six-month periods ended June 30, 2013 and 2012. |
Net Income Per Share | Net Income Per Share Basic net income per weighted average share has been computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income per weighted average share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares consist of stock options, restricted stock and restricted stock units, our $1.725 billion 1.75% convertible senior notes due 2013 ("2013 Notes") and associated warrants. Additionally, for purposes of calculating diluted net income per weighted average share, net income is adjusted for the difference between VMware’s reported diluted and basic net income per weighted average share, if any, multiplied by the number of shares of VMware held by EMC. |
Adjustments for Immaterial Prior Period Accounting Error | Reclassifications Certain prior year amounts have been reclassified to conform with the current year's presentation. During the second quarter of 2013, EMC and VMware combined certain operations to form Pivotal, with a cash investment from General Electric Company ("GE"). Pivotal is considered a separate reportable segment. We have recast the segment disclosures for the prior financial reporting periods to separately present the operations of the Pivotal segment. None of the segment reclassifications impact EMC's previously reported consolidated financial statements. See Note 15 for further discussion of the segment reclassifications. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2013, the Financial Accounting Standards Board ("FASB") issued guidance that requires a parent company to release any related cumulative translation adjustment into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. This new guidance is effective beginning after December 15, 2013. We do not anticipate that the adoption of this new guidance will have a material impact on our consolidated financial position, results of operations or cash flows. |
Segment Information Segment information (Detail) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Revenues: | ||||
Product sales revenue | $ 3,258,000,000 | $ 3,179,000,000 | $ 6,369,000,000 | $ 6,248,000,000 |
Services revenues | 2,356,000,000 | 2,132,000,000 | 4,632,000,000 | 4,158,000,000 |
Total consolidated revenues | 5,614,000,000 | 5,311,000,000 | 11,001,000,000 | 10,406,000,000 |
Gross profit | 3,509,000,000 | 3,347,000,000 | 6,807,000,000 | 6,461,000,000 |
Gross profit percentage | 62.50% | 63.00% | 61.90% | 62.10% |
Research and development | 695,000,000 | 655,000,000 | 1,370,000,000 | 1,244,000,000 |
Selling, general and administrative | 1,785,000,000 | 1,717,000,000 | 3,499,000,000 | 3,367,000,000 |
Restructuring and Acquisition-related Charges | 7,000,000 | 28,000,000 | 155,000,000 | 53,000,000 |
Total costs and expenses | 2,487,000,000 | 2,400,000,000 | 5,024,000,000 | 4,664,000,000 |
Operating income | 1,022,000,000 | 947,000,000 | 1,783,000,000 | 1,797,000,000 |
Other income (expense), net | (56,000,000) | (43,000,000) | (126,000,000) | (77,000,000) |
Income before provision for income taxes | 966,000,000 | 904,000,000 | 1,657,000,000 | 1,720,000,000 |
Provision for income tax | 216,000,000 | 214,000,000 | 292,000,000 | 405,000,000 |
Net income | 750,000,000 | 690,000,000 | 1,365,000,000 | 1,315,000,000 |
Less: Net income attributable to the non-controlling interest in VMware, Inc. | (49,000,000) | (40,000,000) | (84,000,000) | (79,000,000) |
Net income attributable to EMC Corporation | 701,000,000 | 650,000,000 | 1,281,000,000 | 1,236,000,000 |
Information Storage
|
||||
Revenues: | ||||
Product sales revenue | 2,568,000,000 | 2,500,000,000 | 5,028,000,000 | 4,937,000,000 |
Services revenues | 1,358,000,000 | 1,287,000,000 | 2,662,000,000 | 2,513,000,000 |
Total consolidated revenues | 3,926,000,000 | 3,787,000,000 | 7,690,000,000 | 7,450,000,000 |
Gross profit | 2,230,000,000 | 2,164,000,000 | 4,309,000,000 | 4,210,000,000 |
Gross profit percentage | 56.80% | 57.10% | 56.00% | 56.50% |
Information Intelligence Group
|
||||
Revenues: | ||||
Product sales revenue | 39,000,000 | 45,000,000 | 82,000,000 | 82,000,000 |
Services revenues | 113,000,000 | 108,000,000 | 226,000,000 | 217,000,000 |
Total consolidated revenues | 152,000,000 | 153,000,000 | 308,000,000 | 299,000,000 |
Gross profit | 96,000,000 | 102,000,000 | 195,000,000 | 192,000,000 |
Gross profit percentage | 63.10% | 67.00% | 63.40% | 64.30% |
RSA Information Security
|
||||
Revenues: | ||||
Product sales revenue | 98,000,000 | 103,000,000 | 198,000,000 | 199,000,000 |
Services revenues | 130,000,000 | 117,000,000 | 262,000,000 | 228,000,000 |
Total consolidated revenues | 228,000,000 | 220,000,000 | 460,000,000 | 427,000,000 |
Gross profit | 148,000,000 | 179,000,000 | 301,000,000 | 312,000,000 |
Gross profit percentage | 65.10% | 81.10% | 65.20% | 73.10% |
EMC Information Infrastructure
|
||||
Revenues: | ||||
Product sales revenue | 2,705,000,000 | 2,648,000,000 | 5,308,000,000 | 5,218,000,000 |
Services revenues | 1,601,000,000 | 1,512,000,000 | 3,150,000,000 | 2,958,000,000 |
Total consolidated revenues | 4,306,000,000 | 4,160,000,000 | 8,458,000,000 | 8,176,000,000 |
Gross profit | 2,474,000,000 | 2,445,000,000 | 4,805,000,000 | 4,714,000,000 |
Gross profit percentage | 57.50% | 58.80% | 56.80% | 57.70% |
Research and development | 375,000,000 | 363,000,000 | 739,000,000 | 691,000,000 |
Selling, general and administrative | 1,117,000,000 | 1,114,000,000 | 2,193,000,000 | 2,191,000,000 |
Restructuring and Acquisition-related Charges | 0 | 0 | 0 | 0 |
Total costs and expenses | 1,492,000,000 | 1,477,000,000 | 2,932,000,000 | 2,882,000,000 |
Operating income | 982,000,000 | 968,000,000 | 1,873,000,000 | 1,832,000,000 |
EMC Information Infrastructure Plus Pivotal [Member]
|
||||
Revenues: | ||||
Product sales revenue | 2,729,000,000 | 2,671,000,000 | 5,356,000,000 | 5,262,000,000 |
Services revenues | 1,647,000,000 | 1,552,000,000 | 3,241,000,000 | 3,021,000,000 |
Total consolidated revenues | 4,376,000,000 | 4,223,000,000 | 8,597,000,000 | 8,283,000,000 |
Gross profit | 2,500,000,000 | 2,478,000,000 | 4,857,000,000 | 4,767,000,000 |
Gross profit percentage | 57.10% | 58.70% | 56.50% | 57.60% |
Research and development | 403,000,000 | 396,000,000 | 795,000,000 | 752,000,000 |
Selling, general and administrative | 1,154,000,000 | 1,150,000,000 | 2,268,000,000 | 2,266,000,000 |
Restructuring and Acquisition-related Charges | 0 | 0 | 0 | 0 |
Total costs and expenses | 1,557,000,000 | 1,546,000,000 | 3,063,000,000 | 3,018,000,000 |
Operating income | 943,000,000 | 932,000,000 | 1,794,000,000 | 1,749,000,000 |
Other income (expense), net | (77,000,000) | (40,000,000) | (150,000,000) | (78,000,000) |
Provision for income tax | 214,000,000 | 265,000,000 | 402,000,000 | 474,000,000 |
Net income | 652,000,000 | 627,000,000 | 1,242,000,000 | 1,197,000,000 |
Less: Net income attributable to the non-controlling interest in VMware, Inc. | 0 | 0 | 0 | 0 |
Net income attributable to EMC Corporation | 652,000,000 | 627,000,000 | 1,242,000,000 | 1,197,000,000 |
VMware Virtual Infrastructure Within EMC
|
||||
Revenues: | ||||
Product sales revenue | 529,000,000 | 508,000,000 | 1,013,000,000 | 986,000,000 |
Services revenues | 709,000,000 | 580,000,000 | 1,391,000,000 | 1,137,000,000 |
Total consolidated revenues | 1,238,000,000 | 1,088,000,000 | 2,404,000,000 | 2,123,000,000 |
Gross profit | 1,109,000,000 | 964,000,000 | 2,150,000,000 | 1,882,000,000 |
Gross profit percentage | 89.60% | 88.50% | 89.40% | 88.60% |
Research and development | 207,000,000 | 178,000,000 | 397,000,000 | 339,000,000 |
Selling, general and administrative | 489,000,000 | 418,000,000 | 939,000,000 | 809,000,000 |
Restructuring and Acquisition-related Charges | 0 | 0 | 0 | 0 |
Total costs and expenses | 696,000,000 | 596,000,000 | 1,336,000,000 | 1,148,000,000 |
Operating income | 413,000,000 | 368,000,000 | 814,000,000 | 734,000,000 |
Other income (expense), net | 3,000,000 | 5,000,000 | 7,000,000 | 12,000,000 |
Provision for income tax | 93,000,000 | 52,000,000 | 176,000,000 | 118,000,000 |
Net income | 323,000,000 | 321,000,000 | 645,000,000 | 628,000,000 |
Less: Net income attributable to the non-controlling interest in VMware, Inc. | 68,000,000 | 63,000,000 | 130,000,000 | 122,000,000 |
Net income attributable to EMC Corporation | 255,000,000 | 258,000,000 | 515,000,000 | 506,000,000 |
Corp Reconciling Items [Member]
|
||||
Revenues: | ||||
Product sales revenue | 0 | 0 | 0 | 0 |
Services revenues | 0 | 0 | 0 | 0 |
Total consolidated revenues | 0 | 0 | ||
Gross profit | (100,000,000) | (95,000,000) | (200,000,000) | (188,000,000) |
Gross profit percentage | 0.00% | |||
Research and development | 85,000,000 | 81,000,000 | 178,000,000 | 153,000,000 |
Selling, general and administrative | 142,000,000 | 149,000,000 | 292,000,000 | 292,000,000 |
Restructuring and Acquisition-related Charges | 7,000,000 | 28,000,000 | 155,000,000 | 53,000,000 |
Total costs and expenses | 234,000,000 | 258,000,000 | 625,000,000 | 498,000,000 |
Operating income | (334,000,000) | (353,000,000) | (825,000,000) | (686,000,000) |
Other income (expense), net | 18,000,000 | (8,000,000) | 17,000,000 | (11,000,000) |
Provision for income tax | (91,000,000) | (103,000,000) | (286,000,000) | (187,000,000) |
Net income | (225,000,000) | (258,000,000) | (522,000,000) | (510,000,000) |
Less: Net income attributable to the non-controlling interest in VMware, Inc. | 19,000,000 | (23,000,000) | (46,000,000) | (43,000,000) |
Net income attributable to EMC Corporation | (206,000,000) | (235,000,000) | (476,000,000) | (467,000,000) |
Pivotal
|
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Revenues: | ||||
Product sales revenue | 24,000,000 | 23,000,000 | 48,000,000 | 44,000,000 |
Services revenues | 46,000,000 | 40,000,000 | 91,000,000 | 63,000,000 |
Total consolidated revenues | 70,000,000 | 63,000,000 | 139,000,000 | 107,000,000 |
Gross profit | 26,000,000 | 33,000,000 | 52,000,000 | 53,000,000 |
Gross profit percentage | 37.10% | 53.20% | 37.70% | 49.50% |
Research and development | 28,000,000 | 33,000,000 | 56,000,000 | 61,000,000 |
Selling, general and administrative | 37,000,000 | 36,000,000 | 75,000,000 | 75,000,000 |
Restructuring and Acquisition-related Charges | 0 | 0 | 0 | 0 |
Total costs and expenses | 65,000,000 | 69,000,000 | 131,000,000 | 136,000,000 |
Operating income | $ (39,000,000) | $ (36,000,000) | $ (79,000,000) | $ (83,000,000) |
Joint Ventures (Detail) (USD $)
In Millions, unless otherwise specified |
6 Months Ended | 3 Months Ended | 6 Months Ended | 66 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
LenovoEMC
|
Jun. 30, 2013
VCE Company LLC
|
Jun. 30, 2012
VCE Company LLC
|
Jun. 30, 2013
VCE Company LLC
|
Jun. 30, 2012
VCE Company LLC
|
Jun. 30, 2013
VCE Company LLC
|
Jun. 30, 2013
Other Assets, Net
VCE Company LLC
|
Dec. 31, 2012
Other Assets, Net
VCE Company LLC
|
|
Schedule of Equity Method Investments [Line Items] | ||||||||||
Accumulated stock-based compensation contributed to joint venture | $ 15 | |||||||||
Consolidated ownership perentage of outstanding equity | 58.00% | 58.00% | 58.00% | |||||||
Capital contribution | 158 | 107 | 854 | |||||||
Consolidated share of losses | 63.20% | |||||||||
Loss From VCE | 71 | 60 | 140 | 115 | 638 | |||||
Revenue recognized from sales to VCE | 102 | 75 | 176 | 146 | ||||||
Receivable from joint venture | $ 39 | $ 44 | ||||||||
Joint Venture, Ownership Interest Percentage | 49.00% |
Accrued Expenses
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Jun. 30, 2013
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | Accrued Expenses Accrued expenses consist of (table in millions):
Product Warranties Systems sales include a standard product warranty. At the time of the sale, we accrue for systems’ warranty costs. The initial systems’ warranty accrual is based upon our historical experience, expected future costs and specific identification of systems’ requirements. Upon sale or expiration of the initial warranty, we may sell additional maintenance contracts to our customers. Revenue from these additional maintenance contracts is included in deferred revenue and recognized ratably over the service period. The following represents the activity in our warranty accrual for the three and six months ended June 30, 2013 and 2012 (table in millions):
The provision includes amounts accrued for systems at the time of shipment, adjustments for changes in estimated costs for warranties on systems shipped in the period and changes in estimated costs for warranties on systems shipped in prior periods. It is not practicable to determine the amounts applicable to each of the components. |
Changes In Fair Value of Level 3 Financial Assets (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
LenovoEMC
|
||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance, beginning of the period | $ 33 | $ 33 | ||
Realized gain (loss) included in other income (expense) | 1 | 1 | ||
Balance, end of the period | 34 | 34 | ||
Auction Rate Securities
|
||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance, beginning of the period | 68 | 79 | 70 | 75 |
Calls at par value | 0 | 0 | 1 | 0 |
Other than Temporary Impairment Losses, Investments | 0 | (2) | 1 | 2 |
(Increase) decrease in previously recognized unrealized losses included in other comprehensive income | 0 | (3) | 0 | 1 |
Balance, end of the period | $ 68 | $ 74 | $ 68 | $ 74 |
Components of Accrued Expenses (Detail) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
|
Mar. 31, 2013
|
Dec. 31, 2012
|
Jun. 30, 2012
|
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|---|---|---|---|
Payables and Accruals [Abstract] | ||||||
Salaries and benefits | $ 932 | $ 1,018 | ||||
Product warranties | 291 | 283 | 278 | 262 | 263 | 255 |
Dividends Payable | 212 | 0 | ||||
Partner rebates | 179 | 187 | ||||
Restructuring, current (see Note 13) | 88 | 76 | ||||
Derivatives | 32 | 40 | ||||
Other | 937 | 923 | ||||
Accrued Liabilities, Current, Total | $ 2,671 | $ 2,522 |
Effect of Changes in Ownership Interest in VMware on Equity (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Noncontrolling Interest [Line Items] | ||||
Net income attributable to EMC Corporation | $ 701 | $ 650 | $ 1,281 | $ 1,236 |
VMware
|
||||
Noncontrolling Interest [Line Items] | ||||
Net income attributable to EMC Corporation | 1,281 | 1,236 | ||
Increase in EMC Corporation’s additional paid-in-capital for VMware’s equity issuances | 52 | 78 | ||
Decrease in EMC Corporation’s additional paid-in-capital for VMware’s other equity activity | (321) | (250) | ||
Net transfers (to) from non-controlling interest | (269) | (172) | ||
Change from net income attributable to EMC Corporation and transfers from the non-controlling interest in VMware, Inc. | $ 1,012 | $ 1,064 |
Debt (Tables)
|
3 Months Ended | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Key Components of Convertible Debt | Our long-term debt as of June 30, 2013 was as follows (dollars in millions):
|
The following tables represent the key components of our interest expense on convertible debt (tables in millions):
|
Business Combinations, Intangibles and Goodwill (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination, Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, Excluding Goodwill | Intangible Assets Intangible assets, excluding goodwill, as of June 30, 2013 and December 31, 2012 consist of (tables in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Amount of Goodwill | Goodwill Changes in the carrying amount of goodwill, net, on a consolidated basis and by segment, for the six months ended June 30, 2013 and the year ended December 31, 2012 consist of (tables in millions):
|
Restructuring and Acquisition-Related Charges (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity for the Restructuring Programs | The activity for the restructuring programs is presented below (tables in millions): Three Months Ended June 30, 2013:
Six Months Ended June 30, 2013:
Three Months Ended June 30, 2012:
Six Months Ended June 30, 2012:
|
Property, Plant and Equipment (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Property, Plant and Equipment | Property, plant and equipment consist of (table in millions):
|
Restructuring and Acquisition-Related Charges - Additional information (Detail) (USD $)
|
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
VMware
|
Jun. 30, 2013
VMware
|
Jun. 30, 2013
Restructuring 2013 Programs
Positions
|
Jun. 30, 2013
Restructuring 2013 Programs
|
Dec. 31, 2013
Restructuring 2013 Programs
|
Jun. 30, 2013
Restructuring 2013 Programs
VMware
|
Mar. 31, 2013
Restructuring 2013 Programs
VMware
|
Jun. 30, 2013
Restructuring 2013 Programs
VMware
|
Dec. 31, 2013
Restructuring 2013 Programs
VMware
Positions
|
Jun. 30, 2012
Restructuring 2012 Programs
Positions
|
Mar. 31, 2012
Restructuring 2012 Programs
Positions
|
Dec. 31, 2012
Restructuring 2012 Programs
Positions
|
Dec. 31, 2013
Consolidation of excess facilities and other contractual obligations
|
Jun. 30, 2013
Consolidation of excess facilities and other contractual obligations
Restructuring 2013 Programs
VMware
|
Jun. 30, 2013
Consolidation of excess facilities and other contractual obligations
Restructuring 2013 Programs
VMware
|
Jun. 30, 2013
Workforce reductions
Restructuring 2013 Programs
VMware
|
Jun. 30, 2013
Workforce reductions
Restructuring 2013 Programs
VMware
|
Dec. 31, 2013
Minimum
Restructuring 2013 Programs
VMware
|
Dec. 31, 2013
Minimum
Consolidation of excess facilities and other contractual obligations
Restructuring 2013 Programs
VMware
|
Dec. 31, 2013
Minimum
Workforce reductions
Restructuring 2013 Programs
VMware
|
Dec. 31, 2013
Maximum
Restructuring 2013 Programs
VMware
|
Dec. 31, 2013
Maximum
Consolidation of excess facilities and other contractual obligations
Restructuring 2013 Programs
VMware
|
Dec. 31, 2013
Maximum
Workforce reductions
Restructuring 2013 Programs
VMware
|
|
Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||||||||||
Gain (Loss) on Disposition of Assets | $ 32,000,000 | ||||||||||||||||||||||||||
Restructuring and acquisition-related charges | 7,000,000 | 28,000,000 | 155,000,000 | 53,000,000 | |||||||||||||||||||||||
Assets Held-for-sale, Current | 19,000,000 | 19,000,000 | |||||||||||||||||||||||||
Restructuring charges | 4,000,000 | 24,000,000 | 85,000,000 | 48,000,000 | 2,000,000 | 56,000,000 | 2,000,000 | 56,000,000 | 0 | 0 | 2,000,000 | 56,000,000 | |||||||||||||||
Asset Impairment Charges | 1,000,000 | 10,000,000 | |||||||||||||||||||||||||
Acquisition-related charges | 0 | 4,000,000 | 3,000,000 | 5,000,000 | 0 | 1,000,000 | |||||||||||||||||||||
Restructuring and Related Cost, Number of Positions Eliminated | 1,000 | 750 | 279 | 298 | 1,163 | ||||||||||||||||||||||
Restructuring and Related Cost, Expected Cost | 80,000,000 | 20,000,000 | 55,000,000 | 25,000,000 | 60,000,000 | ||||||||||||||||||||||
Restructuring and Related Cost, Expected Cost, to be Settled with Cash | 73,000,000 | 50,000,000 | 60,000,000 | ||||||||||||||||||||||||
Lease termination costs for facilities | 5,000,000 | 4,000,000 | 12,000,000 | 8,000,000 | |||||||||||||||||||||||
Date of completion of workforce reduction and/or consolidation of facilities | within a year of the start of each program | by the end of 2013 | through the end of 2013 | 2013 | 2015 | ||||||||||||||||||||||
Liabilities of Disposal Group, Including Discontinued Operation, Current | $ 21,000,000 | $ 21,000,000 |
Reclassification Out of Accumulated Other Comprehensive Income (Details) (USD $)
|
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Dec. 31, 2012
Accumulated Net Unrealized Investment Gain (Loss)
|
Jun. 30, 2013
Accumulated Net Unrealized Investment Gain (Loss)
|
Dec. 31, 2012
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
|
Jun. 30, 2013
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
|
Dec. 31, 2012
Accumulated Defined Benefit Plans Adjustment
|
Jun. 30, 2013
Accumulated Defined Benefit Plans Adjustment
|
Jun. 30, 2013
Reclassification Out of Accumulated Other Comprehensive Income
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
|
Jun. 30, 2013
Reclassification Out of Accumulated Other Comprehensive Income
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
|
Jun. 30, 2013
Foreign Exchange Contract
Reclassification Out of Accumulated Other Comprehensive Income
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
|
Jun. 30, 2013
Foreign Exchange Contract
Reclassification Out of Accumulated Other Comprehensive Income
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
|
Jun. 30, 2013
Unrealized Gain (Loss)
Reclassification Out of Accumulated Other Comprehensive Income
Accumulated Net Unrealized Investment Gain (Loss)
|
Jun. 30, 2013
Unrealized Gain (Loss)
Reclassification Out of Accumulated Other Comprehensive Income
Accumulated Net Unrealized Investment Gain (Loss)
|
Jun. 30, 2013
Unrealized Gain on Investments
Reclassification Out of Accumulated Other Comprehensive Income
Accumulated Net Unrealized Investment Gain (Loss)
|
Jun. 30, 2013
Unrealized Gain on Investments
Reclassification Out of Accumulated Other Comprehensive Income
Accumulated Net Unrealized Investment Gain (Loss)
|
|
Reclassification out of Accumulated Other Comprehensive Income | ||||||||||||||||||
Investment income | $ 34,000,000 | $ 26,000,000 | $ 67,000,000 | $ 55,000,000 | $ 6,000,000 | $ 13,000,000 | ||||||||||||
Total net gain on derivatives before tax | 3,000,000 | 10,000,000 | ||||||||||||||||
Net of tax | 3,000,000 | 8,000,000 | 4,000,000 | 8,000,000 | ||||||||||||||
Product sales revenue | 3,258,000,000 | 3,179,000,000 | 6,369,000,000 | 6,248,000,000 | 6,000,000 | 16,000,000 | ||||||||||||
Cost of product sales | 1,340,000,000 | 1,254,000,000 | 2,696,000,000 | 2,556,000,000 | 3,000,000 | (6,000,000) | ||||||||||||
Provision for income tax | $ (216,000,000) | $ (214,000,000) | $ (292,000,000) | $ (405,000,000) | $ (37,000,000) | $ (17,000,000) | $ 67,000,000 | $ 66,000,000 | $ 87,000,000 | $ 87,000,000 | $ 0 | $ (2,000,000) | $ (2,000,000) | $ 5,000,000 |
Key Components of Convertible Debt (Detail) (Convertible Senior Notes 2011 and 2013, USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Convertible Senior Notes 2011 and 2013
|
||||
Debt Instrument [Line Items] | ||||
Contractual interest expense on the coupon | $ 7 | $ 7 | $ 15 | $ 15 |
Amortization of the discount component recognized as interest expense | 16 | 15 | 31 | 30 |
Total interest expense on the convertible debt | $ 23 | $ 22 | $ 46 | $ 45 |
Non-controlling Interest in VMware, Inc. (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of Changes in Ownership Interest in VMware on Equity | The effect of changes in our ownership interest in VMware on our equity was as follows (table in millions):
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Changes in unrealized gains (losses) - taxes (benefits) | $ (17) | $ 11 | $ (15) | $ 27 |
Reclassification adjustment for net losses (gains) realized in net income - benefits (taxes) | (2) | 0 | 5 | 1 |
Changes in market value of derivatives - taxes (benefits) | 1 | (21) | 2 | (15) |
Reclassification adjustment for net losses (gains) realized in net income - benefits (taxes) | $ 0 | $ 14 | $ 1 | $ (14) |
Business Combinations, Intangibles and Goodwill
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Jun. 30, 2013
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Business Combination, Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations, Intangibles and Goodwill | Business Combinations, Intangibles and Goodwill During the three and six months ended June 30, 2013, EMC acquired two companies. We acquired substantially all of the outstanding capital stock of Adaptivity, Inc., a provider of software solutions that automate and accelerate enterprise IT migration to the Cloud which complements and expands our Information Storage segment. We also acquired all of the outstanding capital stock of Sitrof Technologies, a document management consultancy provider which complements and expands our Information Intelligence Group segment. Additionally, during the six months ended June 30, 2013, VMware acquired Virsto Software, a provider of software that optimizes storage performance and utilization in virtual environments. The aggregate consideration for these three acquisitions was $207 million, net of cash acquired. The consideration paid was allocated to the fair value of the assets acquired and liabilities assumed based on estimated fair values as of the respective acquisition dates. The aggregate allocation to goodwill, intangibles and net liabilities was approximately $172 million, $43 million and $8 million, respectively. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized. The results of these acquisitions have been included in the consolidated financial statements from the date of purchase. Pro forma results of operations have not been presented as the results of the acquired companies were not material to our consolidated results of operations for the three and six months ended June 30, 2013 or 2012. Intangible Assets Intangible assets, excluding goodwill, as of June 30, 2013 and December 31, 2012 consist of (tables in millions):
Goodwill Changes in the carrying amount of goodwill, net, on a consolidated basis and by segment, for the six months ended June 30, 2013 and the year ended December 31, 2012 consist of (tables in millions):
During the second quarter of 2013, EMC and VMware formed Pivotal, with an investment from GE. As Pivotal is considered a separate reportable segment, the transfer of goodwill from the Information Storage and VMware Virtual Infrastructure segments to the newly formed Pivotal segment is shown in the current period rollforward. The amount of transferred goodwill was determined using the relative fair value method. See Note 15 for further discussion of the segment reclassifications. |
Basis of Presentation
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6 Months Ended |
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Jun. 30, 2013
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Company EMC Corporation (“EMC”) and its subsidiaries develop, deliver and support the Information Technology (“IT”) industry’s broadest range of information infrastructure and virtual infrastructure technologies, solutions and services. EMC’s Information Infrastructure business provides a foundation for organizations to store, manage, protect, analyze and secure their vast and ever-increasing quantities of information, improve business agility, lower cost of ownership and enhance their competitive advantage within traditional data centers, virtual data centers and cloud-based IT infrastructures. EMC’s Information Infrastructure business comprises three segments – Information Storage, RSA Information Security and Information Intelligence Group. EMC's GoPivotal, Inc. ("Pivotal") business was formed in the second quarter of 2013. Pivotal unites strategic technology, people and programs from EMC and VMware, Inc. ("VMware"), including Greenplum, Cloud Foundry, Spring, Cetas, Pivotal Labs, GemFire and other products from the VMware vFabric Suite. Pivotal is building a new platform comprising next-generation data fabrics, application fabrics and a cloud-independent platform as a service ("PaaS"). EMC’s VMware Virtual Infrastructure business, which is represented by EMC’s majority equity stake in VMware, is the leader in virtualization infrastructure solutions utilized by organizations to help them transform the way they build, deliver and consume IT resources. VMware’s virtualization infrastructure solutions, which include a suite of products designed to deliver a software-defined data center, run on industry-standard desktop computers and servers and support a wide range of operating system and application environments, as well as networking and storage infrastructures. General The accompanying interim consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These consolidated financial statements include the accounts of EMC, its wholly owned subsidiaries, as well as Pivotal and VMware, companies majority-owned by EMC. All intercompany transactions have been eliminated. Certain information and footnote disclosures normally included in our annual consolidated financial statements have been condensed or omitted. Accordingly, these interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2012 which are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2013. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for any future period or the entire fiscal year. The interim consolidated financial statements, in the opinion of management, reflect all adjustments necessary to fairly state the results as of and for the three- and six-month periods ended June 30, 2013 and 2012. Net Income Per Share Basic net income per weighted average share has been computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income per weighted average share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares consist of stock options, restricted stock and restricted stock units, our $1.725 billion 1.75% convertible senior notes due 2013 ("2013 Notes") and associated warrants. Additionally, for purposes of calculating diluted net income per weighted average share, net income is adjusted for the difference between VMware’s reported diluted and basic net income per weighted average share, if any, multiplied by the number of shares of VMware held by EMC. Reclassifications Certain prior year amounts have been reclassified to conform with the current year's presentation. During the second quarter of 2013, EMC and VMware combined certain operations to form Pivotal, with a cash investment from General Electric Company ("GE"). Pivotal is considered a separate reportable segment. We have recast the segment disclosures for the prior financial reporting periods to separately present the operations of the Pivotal segment. None of the segment reclassifications impact EMC's previously reported consolidated financial statements. See Note 15 for further discussion of the segment reclassifications. Recent Accounting Pronouncements In March 2013, the Financial Accounting Standards Board ("FASB") issued guidance that requires a parent company to release any related cumulative translation adjustment into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. This new guidance is effective beginning after December 15, 2013. We do not anticipate that the adoption of this new guidance will have a material impact on our consolidated financial position, results of operations or cash flows. |
Fair Value of Financial Assets and Liabilities (Tables)
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Composition of Investments |
The following tables summarize the composition of our short- and long-term investments at June 30, 2013 and December 31, 2012 (tables in millions):
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Fair Value Hierarchy For Financial Assets And Liabilities Measured At Fair Value | The following tables represent our fair value hierarchy for our financial assets and liabilities measured at fair value as of June 30, 2013 and December 31, 2012 (tables in millions):
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Changes in Fair Value of Level 3 Financial Assets | The following table provides a summary of changes in fair value of our Level 3 auction rate securities for the three and six months ended June 30, 2013 and 2012 (table in millions):
The following table provides a summary of changes in fair value of our LenovoEMC joint venture for the three and six months ended June 30, 2013 (table in millions):
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Unrealized Losses on Investments by Investment Category and Length of Time in Continuous Unrealized Loss Position | Unrealized losses on investments at June 30, 2013 by investment category and length of time the investment has been in a continuous unrealized loss position are as follows (table in millions):
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Contractual Maturities of Investments | The contractual maturities of fixed income securities held at June 30, 2013 are as follows (table in millions):
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