FORM 8-K |
Massachusetts | 1-9853 | 04-2680009 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
176 South Street Hopkinton, Massachusetts (Address of principal executive offices) | 01748 (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
99.1 | Press release from EMC Corporation dated October 22, 2013 |
EMC CORPORATION | |
By: | /s/ David I. Goulden |
David I. Goulden | |
President and Chief Operating Officer |
Exhibit No. | Description |
99.1 | Press release from EMC Corporation dated October 22, 2013 |
Contact: | Lesley Ogrodnick |
Highlights: | |
l | Consolidated revenue up 5% year over year |
l | Year-over-year revenue growth across EMC's three federated businesses - EMC Information Infrastructure, VMware and Pivotal |
l | Year-over-year revenue growth across all four major global geographies, with strong revenue growth from BRIC+13 markets |
l | Strong year-over-year increase in operating and free cash flow |
• | Consolidated revenues are expected to be $23.25 billion for 2013. |
• | Consolidated GAAP operating income is expected to be 18.0% of revenues for 2013 and consolidated non-GAAP operating income is expected to be 25.0% of revenues for 2013. Excluded from consolidated non-GAAP operating income are stock-based compensation expense, intangible |
• | Total consolidated GAAP non-operating expense, which includes investment income, interest expense and other income and expense, is expected to be $319 million and consolidated non-GAAP non-operating expense is expected to be $350 million in 2013. Excluded from consolidated non-GAAP non-operating expense is a net gain on disposition of certain lines of business and other for ($31 million). |
• | Consolidated GAAP net income attributable to EMC is expected to be $2.9 billion in 2013 and consolidated non-GAAP net income attributable to EMC is expected to be $3.9 billion in 2013. Excluded from consolidated non-GAAP net income attributable to EMC are stock-based compensation expense, intangible asset amortization, restructuring and acquisition-related charges, the amortization of VMware's capitalized software from prior periods, the benefit of the 2012 R&D tax credit, special tax charges and a net gain on disposition of certain lines of business and other, which account for $630 million, $260 million, $170 million, $15 million, ($60 million), $23 million and ($22 million), respectively. |
• | Consolidated GAAP earnings per weighted average diluted share are expected to be $1.33 for 2013 and consolidated non-GAAP earnings per weighted average diluted share are expected to be $1.80 for 2013. Excluded from consolidated non-GAAP earnings per weighted average diluted share are stock-based compensation expense, intangible asset amortization, restructuring and acquisition-related charges, the amortization of VMware's capitalized software from prior periods, the benefit of the 2012 R&D tax credit, special tax charges and a net gain on disposition of certain lines of business and other, which account for $0.29, $0.12, $0.08, $0.01, ($0.03), $0.01 and ($0.01) per weighted average diluted share, respectively. |
• | The consolidated GAAP income tax rate is expected to be 20.5% for 2013. Excluding the tax impact of stock-based compensation expense, intangible asset amortization, restructuring and acquisition-related charges, the amortization of VMware's capitalized software from prior periods, the benefit of the 2012 R&D tax credit, special tax charges and net gain on disposition of certain lines of business and other, which collectively impact the tax rate by 3%, the consolidated non-GAAP income tax rate is expected to be 23.5% for 2013. |
• | GAAP net income attributable to the non-controlling interest in VMware is expected to be $195 million for 2013 and non-GAAP net income attributable to the non-controlling interest in VMware is expected to be $285 million for 2013. Excluded from non-GAAP net income attributable to the non-controlling interest in VMware are stock-based compensation expense, intangible asset amortization, restructuring and acquisition-related charges, the amortization of VMware's capitalized software from prior periods, the benefit of the 2012 R&D tax credit and a net gain on disposition of certain lines of business and other, which account for $70 million, $15 million, $13 million, $4 million, ($6 million) and ($6 million), respectively. The incremental dilution attributable to the shares of VMware held by EMC is expected to be $10 million for 2013. |
• | Consolidated net cash provided by operating activities is expected to be $6.8 billion for 2013 and free cash flow is expected to be $5.5 billion for 2013. Excluded from free cash flow are $900 million of additions to property, plant and equipment and $400 million of capitalized software development costs. |
• | The weighted average outstanding diluted shares are expected to be 2.16 billion for 2013. |
• | EMC expects to repurchase an aggregate of $3.5 billion of the company’s common stock in 2013 and the first half of 2014. |
• | EMC will host its 2013 third-quarter earnings conference call today at 8:30 a.m. ET, which will be available via EMC’s web site at http://www.emc.com/ir |
• | Additional information regarding EMC’s financials, as well as a webcast of the conference call, will be available at 8:30 a.m. ET at http://www.emc.com/ir |
• | Visit http://ir.vmware.com for more information about VMware’s third-quarter financial results |
• | Visit EMC Pulse, EMC’s product and technology news blog, and EMC Reflections. Connect with EMC via Twitter, Facebook, YouTube, and LinkedIn |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues: | ||||||||||||||||
Product sales | $ | 3,165 | $ | 3,084 | $ | 9,535 | $ | 9,332 | ||||||||
Services | 2,374 | 2,194 | 7,005 | 6,352 | ||||||||||||
5,539 | 5,278 | 16,540 | 15,684 | |||||||||||||
Cost and expenses: | ||||||||||||||||
Cost of product sales | 1,324 | 1,292 | 4,020 | 3,849 | ||||||||||||
Cost of services | 773 | 698 | 2,271 | 2,087 | ||||||||||||
Research and development | 686 | 653 | 2,056 | 1,896 | ||||||||||||
Selling, general and administrative | 1,809 | 1,709 | 5,308 | 5,076 | ||||||||||||
Restructuring and acquisition-related charges | 40 | 27 | 195 | 81 | ||||||||||||
Operating income | 907 | 899 | 2,690 | 2,695 | ||||||||||||
Non-operating income (expense): | ||||||||||||||||
Investment income | 26 | 29 | 93 | 85 | ||||||||||||
Interest expense | (58 | ) | (21 | ) | (109 | ) | (58 | ) | ||||||||
Other income (expense), net | (55 | ) | (63 | ) | (197 | ) | (158 | ) | ||||||||
Total non-operating income (expense) | (87 | ) | (55 | ) | (213 | ) | (131 | ) | ||||||||
Income before provision for income taxes | 820 | 844 | 2,477 | 2,564 | ||||||||||||
Income tax provision | 181 | 185 | 474 | 590 | ||||||||||||
Net income | 639 | 659 | 2,003 | 1,974 | ||||||||||||
Less: Net income attributable to the non-controlling interest in VMware, Inc. | (53 | ) | (33 | ) | (136 | ) | (111 | ) | ||||||||
Net income attributable to EMC Corporation | $ | 586 | $ | 626 | $ | 1,867 | $ | 1,863 | ||||||||
Net income per weighted average share, basic attributable to EMC Corporation common shareholders | $ | 0.28 | $ | 0.30 | $ | 0.89 | $ | 0.89 | ||||||||
Net income per weighted average share, diluted attributable to EMC Corporation common shareholders | $ | 0.27 | $ | 0.28 | $ | 0.86 | $ | 0.84 | ||||||||
Weighted average shares, basic | 2,069 | 2,104 | 2,088 | 2,090 | ||||||||||||
Weighted average shares, diluted | 2,165 | 2,210 | 2,176 | 2,207 | ||||||||||||
Cash dividends declared per common share | $ | 0.10 | $ | — | $ | 0.20 | $ | — |
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 7,155 | $ | 4,714 | ||||
Short-term investments | 3,442 | 1,422 | ||||||
Accounts and notes receivable, less allowance for doubtful accounts of $63 and $68 | 2,934 | 3,433 | ||||||
Inventories | 1,375 | 1,201 | ||||||
Deferred income taxes | 986 | 942 | ||||||
Other current assets | 555 | 465 | ||||||
Total current assets | 16,447 | 12,177 | ||||||
Long-term investments | 6,869 | 5,260 | ||||||
Property, plant and equipment, net | 3,373 | 3,145 | ||||||
Intangible assets, net | 1,831 | 2,035 | ||||||
Goodwill | 14,306 | 13,840 | ||||||
Other assets, net | 1,776 | 1,612 | ||||||
Total assets | $ | 44,602 | $ | 38,069 | ||||
LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,108 | $ | 1,041 | ||||
Accrued expenses | 2,699 | 2,522 | ||||||
Income taxes payable | 201 | 514 | ||||||
Convertible debt | 1,658 | 1,652 | ||||||
Deferred revenue | 5,093 | 4,575 | ||||||
Total current liabilities | 10,759 | 10,304 | ||||||
Income taxes payable | 310 | 293 | ||||||
Deferred revenue | 3,416 | 2,976 | ||||||
Deferred income taxes | 505 | 575 | ||||||
Long-term debt | 5,493 | — | ||||||
Other liabilities | 365 | 339 | ||||||
Total liabilities | 20,848 | 14,487 | ||||||
Convertible debt | 9 | 58 | ||||||
Commitments and contingencies | ||||||||
Shareholders' equity: | ||||||||
Preferred stock, par value $0.01; authorized 25 shares; none outstanding | — | — | ||||||
Common stock, par value $0.01; authorized 6,000 shares; issued and outstanding 2,058 and 2,107 shares | 21 | 21 | ||||||
Additional paid-in capital | 2,394 | 3,691 | ||||||
Retained earnings | 20,298 | 18,853 | ||||||
Accumulated other comprehensive loss, net | (291 | ) | (208 | ) | ||||
Total EMC Corporation's shareholders' equity | 22,422 | 22,357 | ||||||
Non-controlling interests | 1,323 | 1,167 | ||||||
Total shareholders' equity | 23,745 | 23,524 | ||||||
Total liabilities and shareholders' equity | $ | 44,602 | $ | 38,069 |
Nine Months Ended | |||||||||||
September 30, | September 30, | ||||||||||
2013 | 2012 | ||||||||||
Cash flows from operating activities: | |||||||||||
Cash received from customers | $ | 18,065 | $ | 16,557 | |||||||
Cash paid to suppliers and employees | (12,740 | ) | (11,951 | ) | |||||||
Dividends and interest received | 118 | 65 | |||||||||
Interest paid | (19 | ) | (17 | ) | |||||||
Income taxes paid | (691 | ) | (291 | ) | |||||||
Net cash provided by operating activities | 4,733 | 4,363 | |||||||||
Cash flows from investing activities: | |||||||||||
Additions to property, plant and equipment | (673 | ) | (523 | ) | |||||||
Capitalized software development costs | (342 | ) | (316 | ) | |||||||
Purchases of short- and long-term available-for-sale securities | (8,630 | ) | (5,012 | ) | |||||||
Sales of short- and long-term available-for-sale securities | 3,540 | 4,154 | |||||||||
Maturities of short- and long-term available-for-sale securities | 1,386 | 844 | |||||||||
Business acquisitions, net of cash acquired | (616 | ) | (1,878 | ) | |||||||
Purchases of strategic and other related investments | (109 | ) | (62 | ) | |||||||
Sales of strategic and other related investments | 10 | 79 | |||||||||
Joint venture funding | (268 | ) | (218 | ) | |||||||
Proceeds from divestiture of businesses | 38 | — | |||||||||
Net cash used in investing activities | (5,664 | ) | (2,932 | ) | |||||||
Cash flows from financing activities: | |||||||||||
Proceeds from the issuance of EMC's common stock | 302 | 388 | |||||||||
Proceeds from the issuance of VMware's common stock | 185 | 214 | |||||||||
EMC repurchase of EMC's common stock | (1,965 | ) | (380 | ) | |||||||
EMC purchase of VMware's common stock | (160 | ) | (132 | ) | |||||||
VMware repurchase of VMware's common stock | (392 | ) | (307 | ) | |||||||
Excess tax benefits from stock-based compensation | 102 | 212 | |||||||||
Payment of long-term and short-term obligations | (14 | ) | (1,714 | ) | |||||||
Proceeds from long-term and short-term obligations | 5,460 | 4 | |||||||||
Interest rate contract settlement | — | (70 | ) | ||||||||
Dividend payment | (209 | ) | — | ||||||||
Third party contribution to Pivotal | 105 | — | |||||||||
Net cash provided by (used in) financing activities | 3,414 | (1,785 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (42 | ) | (18 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | 2,441 | (372 | ) | ||||||||
Cash and cash equivalents at beginning of period | 4,714 | 4,492 | |||||||||
Cash and cash equivalents at end of period | $ | 7,155 | $ | 4,120 | |||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||||||
Net income | $ | 2,003 | $ | 1,974 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 1,215 | 1,128 | |||||||||
Non-cash interest expense on debt | 82 | 34 | |||||||||
Non-cash restructuring and other special charges | 10 | 9 | |||||||||
Stock-based compensation expense | 700 | 659 | |||||||||
Provision for (recovery of) doubtful accounts | (2 | ) | 21 | ||||||||
Deferred income taxes, net | (31 | ) | (73 | ) |
Excess tax benefits from stock-based compensation | (102 | ) | (212 | ) | |||||||
Other, net | 23 | (20 | ) | ||||||||
Changes in assets and liabilities, net of acquisitions: | |||||||||||
Accounts and notes receivable | 521 | (207 | ) | ||||||||
Inventories | (382 | ) | (337 | ) | |||||||
Other assets | 122 | 63 | |||||||||
Accounts payable | 45 | 119 | |||||||||
Accrued expenses | (321 | ) | (226 | ) | |||||||
Income taxes payable | (176 | ) | 372 | ||||||||
Deferred revenue | 1,006 | 1,059 | |||||||||
Other liabilities | 20 | — | |||||||||
Net cash provided by operating activities | $ | 4,733 | $ | 4,363 |
Three Months Ended | |||||||||||||||
Diluted | Diluted | ||||||||||||||
September 30, | Earnings | September 30, | Earnings | ||||||||||||
2013 | Per Share | 2012 | Per Share | ||||||||||||
Net Income Attributable to EMC GAAP | $ | 586 | $ | 0.270 | $ | 626 | $ | 0.283 | |||||||
Stock-based compensation expense | 163 | 0.075 | 164 | 0.074 | |||||||||||
Intangible asset amortization | 66 | 0.030 | 60 | 0.027 | |||||||||||
Restructuring and acquisition-related charges | 29 | 0.013 | 24 | 0.011 | |||||||||||
Amortization of VMware's capitalized software from prior periods | 4 | 0.002 | 7 | 0.003 | |||||||||||
Special tax charges | 23 | 0.011 | — | — | |||||||||||
Net gain on disposition of certain lines of business and other | (11 | ) | (0.005 | ) | — | — | |||||||||
Net Income Attributable to EMC Non-GAAP | $ | 860 | $ | 0.397 | $ | 881 | $ | 0.398 | |||||||
Weighted average shares, diluted | 2,165 | 2,210 | |||||||||||||
Incremental VMware dilution | $ | 2 | $ | 2 |
* | Net of tax and non-controlling interest in VMware, Inc., except Weighted average shares, diluted. See Income Tax Provision and Net Income Attributable to VMware lines in Supplemental Information schedules. |
EMC Consolidated | ||
Revenue growth - GAAP | 5 | % |
Impact of currency | 1 | % |
Revenue growth on a constant currency basis | 6 | % |
Three Months Ended | |||||||
September 30, | September 30, | ||||||
2013 | 2012 | ||||||
Gross Margin GAAP | $ | 3,442 | $ | 3,288 | |||
Stock-based compensation expense | 32 | 33 | |||||
Intangible asset amortization | 58 | 51 | |||||
Restructuring and acquisition related charges | — | — | |||||
Amortization of VMware's capitalized software from prior periods | 8 | 13 | |||||
Gross Margin Non-GAAP | $ | 3,540 | $ | 3,385 | |||
Revenues | $ | 5,539 | $ | 5,278 | |||
Gross Margin Percentages: | |||||||
GAAP | 62.1 | % | 62.3 | % | |||
Non-GAAP | 63.9 | % | 64.1 | % |
Three Months Ended | |||||||
September 30, | September 30, | ||||||
2013 | 2012 | ||||||
Operating Margin GAAP | $ | 907 | $ | 899 | |||
Stock-based compensation expense | 244 | 250 | |||||
Intangible asset amortization | 97 | 93 | |||||
Restructuring and acquisition-related charges | 40 | 27 | |||||
Amortization of VMware's capitalized software from prior periods | 8 | 13 | |||||
Operating Margin Non-GAAP | $ | 1,296 | $ | 1,282 | |||
Revenues | $ | 5,539 | $ | 5,278 | |||
Operating Margin Percentages: | |||||||
GAAP | 16.4 | % | 17.0 | % | |||
Non-GAAP | 23.4 | % | 24.3 | % |
Three Months Ended September 30, 2013 | ||||||||||
Income Before | Tax | Tax | ||||||||
Tax | Provision | Rate | ||||||||
EMC Consolidated GAAP | $ | 820 | $ | 181 | 22.1 | % | ||||
Stock-based compensation expense | 244 | 64 | 26.0 | % | ||||||
Intangible asset amortization | 97 | 27 | 27.6 | % | ||||||
Restructuring and acquisition-related charges | 40 | 10 | 29.0 | % | ||||||
Amortization of VMware's capitalized software from prior periods | 8 | 2 | 32.4 | % | ||||||
Special tax charges | — | (23 | ) | — | % | |||||
Net gain on disposition of certain lines of business and other | (12 | ) | 2 | (17.9 | )% | |||||
EMC Consolidated Non-GAAP | $ | 1,197 | $ | 263 | 22.0 | % |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Cash Flow from Operations | $ | 1,793 | $ | 1,438 | $ | 4,733 | $ | 4,363 | ||||||||
Capital expenditures | (236 | ) | (191 | ) | (673 | ) | (523 | ) | ||||||||
Capitalized software development costs | (123 | ) | (110 | ) | (342 | ) | (316 | ) | ||||||||
Free Cash Flow | $ | 1,434 | $ | 1,137 | $ | 3,718 | $ | 3,524 |
Stock-Based Compensation Expense | Intangible Asset Amortization | Restructuring and Acquisition-Related Charges | Amortization of VMware's Capitalized Software from Prior Periods | Special Tax Charges | Net Gain on Disposition of Certain Lines of Business and Other | ||||||||||||||||||
EMC Consolidated | |||||||||||||||||||||||
Cost of revenue | $ | (32 | ) | $ | (58 | ) | $ | — | $ | (8 | ) | $ | — | $ | — | ||||||||
Research and development | (90 | ) | (2 | ) | — | — | — | — | |||||||||||||||
Selling, general and administrative | (122 | ) | (37 | ) | — | — | — | — | |||||||||||||||
Restructuring and acquisition-related charges | — | — | (40 | ) | — | — | — | ||||||||||||||||
Non-operating (income) expense | — | — | — | — | — | (12 | ) | ||||||||||||||||
Income tax provision | 64 | 27 | 10 | 2 | (23 | ) | 2 | ||||||||||||||||
Net income attributable to VMware | (17 | ) | (4 | ) | (1 | ) | (2 | ) | — | 3 | |||||||||||||
EMC Information Infrastructure plus Pivotal | |||||||||||||||||||||||
Cost of revenue | $ | (23 | ) | $ | (36 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||
Research and development | (38 | ) | (1 | ) | — | — | — | — | |||||||||||||||
Selling, general and administrative | (69 | ) | (36 | ) | — | — | — | — | |||||||||||||||
Restructuring and acquisition-related charges | — | — | (34 | ) | — | — | — | ||||||||||||||||
Non-operating (income) expense | — | — | — | — | — | — | |||||||||||||||||
Income tax provision | 37 | 23 | 9 | — | 23 | — | |||||||||||||||||
Net income attributable to VMware | — | — | — | — | — | — | |||||||||||||||||
VMware within EMC | |||||||||||||||||||||||
Cost of revenue | $ | (9 | ) | $ | (22 | ) | $ | — | $ | (8 | ) | $ | — | $ | — | ||||||||
Research and development | (52 | ) | (1 | ) | — | — | — | — | |||||||||||||||
Selling, general and administrative | (53 | ) | (1 | ) | — | — | — | — | |||||||||||||||
Restructuring and acquisition-related charges | — | — | (6 | ) | — | — | — | ||||||||||||||||
Non-operating (income) expense | — | — | — | — | — | (12 | ) | ||||||||||||||||
Income tax provision | 27 | 4 | 1 | 2 | — | 2 | |||||||||||||||||
Net income attributable to VMware | (17 | ) | (4 | ) | (1 | ) | (2 | ) | — | 3 |
Stock-Based Compensation Expense | Intangible Asset Amortization | Restructuring and Acquisition-Related Charges | Amortization of VMware's Capitalized Software from Prior Periods | ||||||||||||
EMC Consolidated | |||||||||||||||
Cost of revenue | $ | (33 | ) | $ | (51 | ) | $ | — | $ | (13 | ) | ||||
Research and development | 85 | (3 | ) | — | — | ||||||||||
Selling, general and administrative | (132 | ) | (39 | ) | — | — | |||||||||
Restructuring and acquisition-related charges | — | — | (27 | ) | — | ||||||||||
Non-operating (income) expense | (1 | ) | — | — | — | ||||||||||
Income tax provision | 67 | 30 | 3 | 4 | |||||||||||
Net income attributable to VMware | (20 | ) | (3 | ) | — | (2 | ) | ||||||||
EMC Information Infrastructure plus Pivotal | |||||||||||||||
Cost of revenue | $ | (22 | ) | $ | (33 | ) | $ | — | $ | — | |||||
Research and development | (29 | ) | (2 | ) | — | — | |||||||||
Selling, general and administrative | (70 | ) | (36 | ) | — | — | |||||||||
Restructuring and acquisition-related charges | — | — | (25 | ) | — | ||||||||||
Non-operating (income) expense | (1 | ) | — | — | — | ||||||||||
Income tax provision | 28 | 25 | 3 | — | |||||||||||
Net income attributable to VMware | — | — | — | — | |||||||||||
VMware within EMC | |||||||||||||||
Cost of revenue | $ | (11 | ) | $ | (18 | ) | $ | — | $ | (13 | ) | ||||
Research and development | (56 | ) | (1 | ) | — | — | |||||||||
Selling, general and administrative | (62 | ) | (3 | ) | — | — | |||||||||
Restructuring and acquisition-related charges | — | — | (2 | ) | — | ||||||||||
Non-operating (income) expense | — | — | — | — | |||||||||||
Income tax provision | 39 | 5 | — | 4 | |||||||||||
Net income attributable to VMware | (20 | ) | (3 | ) | — | (2 | ) |
VMware Standalone GAAP | GAAP Adjustments and Eliminations | VMware within EMC GAAP | |||||||||
Revenue | $ | 1,289 | $ | (4 | ) | $ | 1,285 | ||||
Cost of revenue | 183 | — | 183 | ||||||||
Gross margin | 1,106 | (4 | ) | 1,102 | |||||||
Research and development | 266 | (5 | ) | 261 | |||||||
Selling, general and administrative | 552 | (3 | ) | 549 | |||||||
Restructuring and acquisition-related charges | 1 | 5 | 6 | ||||||||
Operating income | 287 | (1 | ) | 286 | |||||||
Non-operating income (expense) | 21 | (1 | ) | 20 | |||||||
Income before taxes | 308 | (2 | ) | 306 | |||||||
Income tax provision | 47 | (14 | ) | 33 | |||||||
Net income | $ | 261 | 12 | 273 | |||||||
Net income attributable to VMware | (53 | ) | (53 | ) | |||||||
Net income attributable to EMC | $ | (41 | ) | $ | 220 |
VMware Standalone GAAP | GAAP Adjustments and Eliminations | VMware within EMC GAAP | |||||||||
Revenue | $ | 1,134 | $ | (33 | ) | $ | 1,101 | ||||
Cost of revenue | 179 | (13 | ) | 166 | |||||||
Gross margin | 955 | (20 | ) | 935 | |||||||
Research and development | 260 | (25 | ) | 235 | |||||||
Selling, general and administrative | 505 | (19 | ) | 486 | |||||||
Restructuring and acquisition-related charges | — | 2 | 2 | ||||||||
Operating income | 190 | 22 | 212 | ||||||||
Non-operating income (expense) | 5 | 3 | 8 | ||||||||
Income before taxes | 195 | 25 | 220 | ||||||||
Income tax provision | 38 | (1 | ) | 37 | |||||||
Net income | $ | 157 | 26 | 183 | |||||||
Net income attributable to VMware | (33 | ) | (33 | ) | |||||||
Net income attributable to EMC | $ | (6 | ) | $ | 150 |
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Product revenues | $ | 2,415 | $ | 32 | $ | 120 | $ | 2,567 | $ | 35 | $ | 2,602 | |||||||||||
Services revenues | 1,358 | 117 | 132 | 1,607 | 45 | 1,652 | |||||||||||||||||
Total consolidated revenues | 3,773 | 149 | 252 | 4,174 | 80 | 4,254 | |||||||||||||||||
Gross profit | $ | 2,101 | $ | 94 | $ | 170 | 2,365 | 34 | 2,399 | ||||||||||||||
Gross profit percentage | 55.7 | % | 63.3 | % | 67.6 | % | 56.6 | % | 42.6 | % | 56.4 | % | |||||||||||
Research and development | 354 | 32 | 386 | ||||||||||||||||||||
Selling, general and administrative | 1,114 | 43 | 1,157 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total costs and expenses | 1,468 | 75 | 1,543 | ||||||||||||||||||||
Operating income | $ | 897 | $ | (41 | ) | $ | 856 | ||||||||||||||||
Operating margin percentage | 21.5 | % | (51.1 | )% | 20.1 | % |
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corp Reconciling Items | Consolidated | ||||||||||||
Revenues: | |||||||||||||||
Product revenues | $ | 2,602 | $ | 563 | $ | — | $ | 3,165 | |||||||
Services revenues | 1,652 | 722 | — | 2,374 | |||||||||||
Total consolidated revenues | 4,254 | 1,285 | — | 5,539 | |||||||||||
Gross profit | $ | 2,399 | $ | 1,141 | $ | (98 | ) | $ | 3,442 | ||||||
Gross profit percentage | 56.4 | % | 88.8 | % | — | 62.1 | % | ||||||||
Research and development | 386 | 208 | 92 | 686 | |||||||||||
Selling, general and administrative | 1,157 | 493 | 159 | 1,809 | |||||||||||
Restructuring and acquisition-related charges | — | — | 40 | 40 | |||||||||||
Total costs and expenses | 1,543 | 701 | 291 | 2,535 | |||||||||||
Operating income | 856 | 440 | (389 | ) | 907 | ||||||||||
Operating margin percentage | 20.1 | % | 34.2 | % | — | 16.4 | % | ||||||||
Non-operating income (expense) | (106 | ) | 7 | 12 | (87 | ) | |||||||||
Income tax provision | 193 | 70 | (82 | ) | 181 | ||||||||||
Net income | 557 | 377 | (295 | ) | 639 | ||||||||||
Net income attributable to the non-controlling interest in VMware, Inc. | — | (74 | ) | 21 | (53 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 557 | $ | 303 | $ | (274 | ) | $ | 586 |
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Product revenues | $ | 2,420 | $ | 50 | $ | 106 | $ | 2,576 | $ | 23 | $ | 2,599 | |||||||||||
Services revenues | 1,306 | 108 | 121 | 1,535 | 43 | 1,578 | |||||||||||||||||
Total consolidated revenues | 3,726 | 158 | 227 | 4,111 | 66 | 4,177 | |||||||||||||||||
Gross profit | $ | 2,119 | $ | 108 | $ | 146 | 2,373 | 37 | 2,410 | ||||||||||||||
Gross profit percentage | 56.9 | % | 68.1 | % | 64.2 | % | 57.7 | % | 55.6 | % | 57.7 | % | |||||||||||
Research and development | 356 | 31 | 387 | ||||||||||||||||||||
Selling, general and administrative | 1,079 | 38 | 1,117 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total costs and expenses | 1,435 | 69 | 1,504 | ||||||||||||||||||||
Operating income | $ | 938 | $ | (32 | ) | $ | 906 | ||||||||||||||||
22.8 | % | (48.4 | )% | 21.7 | % |
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corp Reconciling Items | Consolidated | ||||||||||||
Revenues: | |||||||||||||||
Product revenues | $ | 2,599 | $ | 485 | $ | — | $ | 3,084 | |||||||
Services revenues | 1,578 | 616 | — | 2,194 | |||||||||||
Total consolidated revenues | 4,177 | 1,101 | — | 5,278 | |||||||||||
Gross profit | $ | 2,410 | $ | 975 | $ | (97 | ) | $ | 3,288 | ||||||
Gross profit percentage | 57.7 | % | 88.6 | % | — | 62.3 | % | ||||||||
Research and development | 387 | 178 | 88 | 653 | |||||||||||
Selling, general and administrative | 1,117 | 421 | 171 | 1,709 | |||||||||||
Restructuring and acquisition-related charges | — | — | 27 | 27 | |||||||||||
Total costs and expenses | 1,504 | 599 | 286 | 2,389 | |||||||||||
Operating income | 906 | 376 | (383 | ) | 899 | ||||||||||
Operating margin percentage | 21.7 | % | 34.2 | % | — | 17.0 | % | ||||||||
Non-operating income (expense) | (63 | ) | 9 | (1 | ) | (55 | ) | ||||||||
Income tax provision | 202 | 87 | (104 | ) | 185 | ||||||||||
Net income | 641 | 298 | (280 | ) | 659 | ||||||||||
Net income attributable to the non-controlling interest in VMware, Inc. | — | (58 | ) | 25 | (33 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 641 | $ | 240 | $ | (255 | ) | $ | 626 |
Q1 2012 | Q2 2012 | Q3 2012 | Q4 2012 | FY 2012 | Q1 2013 | Q2 2013 | Q3 2013 | ||||||||||||||||||||||||
Information Storage: | |||||||||||||||||||||||||||||||
Product Revenue | $ | 2,437 | $ | 2,500 | $ | 2,420 | $ | 2,925 | $ | 10,283 | $ | 2,461 | $ | 2,568 | $ | 2,415 | |||||||||||||||
Services Revenue | 1,226 | 1,287 | 1,306 | 1,338 | 5,157 | 1,303 | 1,358 | 1,358 | |||||||||||||||||||||||
Total Information Storage Revenue | $ | 3,663 | $ | 3,787 | $ | 3,726 | $ | 4,263 | $ | 15,440 | $ | 3,764 | $ | 3,926 | $ | 3,773 | |||||||||||||||
Information Intelligence Group: | |||||||||||||||||||||||||||||||
Product Revenue | $ | 37 | $ | 45 | $ | 50 | $ | 69 | $ | 200 | $ | 43 | $ | 39 | $ | 32 | |||||||||||||||
Services Revenue | 109 | 108 | 108 | 115 | 440 | 112 | 113 | 117 | |||||||||||||||||||||||
Total Information Intelligence Group Revenue | $ | 146 | $ | 153 | $ | 158 | $ | 184 | $ | 640 | $ | 155 | $ | 152 | $ | 149 | |||||||||||||||
RSA Information Security: | |||||||||||||||||||||||||||||||
Product Revenue | $ | 96 | $ | 103 | $ | 106 | $ | 106 | $ | 413 | $ | 100 | $ | 98 | $ | 120 | |||||||||||||||
Services Revenue | 110 | 117 | 121 | 128 | 476 | 133 | 130 | 132 | |||||||||||||||||||||||
Total RSA Information Security Revenue | $ | 206 | $ | 220 | $ | 227 | $ | 234 | $ | 889 | $ | 233 | $ | 228 | $ | 252 | |||||||||||||||
EMC Information Infrastructure: | |||||||||||||||||||||||||||||||
Product Revenue | $ | 2,570 | $ | 2,648 | $ | 2,576 | $ | 3,100 | $ | 10,896 | $ | 2,604 | $ | 2,705 | $ | 2,567 | |||||||||||||||
Services Revenue | 1,445 | 1,512 | 1,535 | 1,581 | 6,073 | 1,548 | 1,601 | 1,607 | |||||||||||||||||||||||
Total EMC Information Infrastructure Revenue | $ | 4,015 | $ | 4,160 | $ | 4,111 | $ | 4,681 | $ | 16,969 | $ | 4,152 | $ | 4,306 | $ | 4,174 | |||||||||||||||
Pivotal: | |||||||||||||||||||||||||||||||
Product Revenue | $ | 21 | $ | 23 | $ | 23 | $ | 39 | $ | 106 | $ | 24 | $ | 24 | $ | 35 | |||||||||||||||
Services Revenue | 23 | 40 | 43 | 58 | 164 | 45 | 46 | 45 | |||||||||||||||||||||||
Total Pivotal Revenue | $ | 44 | $ | 63 | $ | 66 | $ | 97 | $ | 270 | $ | 69 | $ | 70 | $ | 80 | |||||||||||||||
VMware: | |||||||||||||||||||||||||||||||
Product Revenue | $ | 478 | $ | 508 | $ | 485 | $ | 589 | $ | 2,058 | $ | 484 | $ | 529 | $ | 563 | |||||||||||||||
Services Revenue | 557 | 580 | 616 | 663 | 2,417 | 682 | 709 | 722 | |||||||||||||||||||||||
Total VMware Revenue | $ | 1,035 | $ | 1,088 | $ | 1,101 | $ | 1,252 | $ | 4,475 | $ | 1,166 | $ | 1,238 | $ | 1,285 | |||||||||||||||
Consolidated Revenues: | |||||||||||||||||||||||||||||||
Product Revenue | $ | 3,069 | $ | 3,179 | $ | 3,084 | $ | 3,728 | $ | 13,060 | $ | 3,112 | $ | 3,258 | $ | 3,165 | |||||||||||||||
Services Revenue | 2,025 | 2,132 | 2,194 | 2,302 | 8,654 | 2,275 | 2,356 | 2,374 | |||||||||||||||||||||||
Total Consolidated Revenues | $ | 5,094 | $ | 5,311 | $ | 5,278 | $ | 6,030 | $ | 21,714 | $ | 5,387 | $ | 5,614 | $ | 5,539 | |||||||||||||||
Percentage impact to EMC revenue growth rate due to changes in exchange rates from the prior year | (0.5)% | (2.1)% | (1.5)% | (0.5)% | (1.1)% | (0.5)% | (0.7 | )% | (0.8 | )% |