Segment Information

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segment Information

Segment Information

We manage the Company as three federated businesses: EMC Information Infrastructure, VMware Virtual Infrastructure and Pivotal. EMC Information Infrastructure operates in three segments: Information Storage, Information Intelligence Group and RSA Information Security while VMware Virtual Infrastructure and Pivotal each operate as single segments.

During the first quarter of 2014, the Information Storage segment acquired the Data Computing Appliance and implementation services businesses from the Pivotal segment. The acquisition of these businesses was accounted for as a business combination between entities under common control. We reflected the impact of the transaction on our segment for the first quarter of 2014 and included the financial results of the acquired businesses in the Information Storage segment and excluded these from the Pivotal segment. We recast the segment disclosures for the prior financial reporting period to present the impact of the transaction. None of the segment reclassifications impact EMC's previously reported consolidated financial statements.

Our management measures are designed to assess performance of these reporting segments excluding certain items. As a result, the corporate reconciling items are used to capture the items excluded from the segment operating performance measures, including stock-based compensation expense and acquisition-related intangible asset amortization expense. Additionally, in certain instances, infrequently occurring gains or losses are also excluded from the measures used by management in assessing segment performance. Research and development expenses, selling, general and administrative expenses and restructuring and acquisition-related charges associated with the EMC Information Infrastructure business are not allocated to the segments within the EMC Information Infrastructure business, as they are managed centrally at the EMC Information Infrastructure business level. EMC Information Infrastructure and Pivotal have not been allocated non-operating income (expense), net and income tax provision as these costs are managed centrally at the EMC corporate level. Accordingly, for the three segments within the EMC Information Infrastructure business, gross profit is the segment operating performance measure, while for Pivotal, operating income is the operating performance measure. The VMware Virtual Infrastructure within EMC amounts represent the revenues and expenses of VMware as reflected within EMC’s consolidated financial statements.

Our segment information for the three months ended March 31, 2014 and 2013 is as follows (tables in millions, except percentages):

	EMC Information Infrastructure
	Information Storage			Information Intelligence Group			RSA Information Security			EMC Information Infrastructure			Pivotal			EMC Information Infrastructure plus Pivotal
Three Months Ended:
March 31, 2014
Revenues:
Product revenues	$	2,302		$	35		$	104		$	2,441		$	11		$	2,452
Services revenues	1,378			119			140			1,637			38			1,675
Total consolidated revenues	3,680			154			244			4,078			49			4,127
Gross profit	$	1,976		$	99		$	162		$	2,237		$	19		$	2,256
Gross profit percentage	53.7		%	64.7		%	66.2		%	54.9		%	38.1		%	54.7		%
Research and development										377			31			408
Selling, general and administrative										1,102			41			1,143
Restructuring and acquisition-related charges										—			—			—
Total costs and expenses										1,479			72			1,551
Operating income (expense)										$	758		$	(53	)	$	705

	EMC Information Infrastructure plus Pivotal			VMware Virtual Infrastructure within EMC			Corp Reconciling Items			Consolidated
Three Months Ended
March 31, 2014
Revenues:
Product revenues	$	2,452		$	556		$	—		$	3,008
Services revenues	1,675			796			—			2,471
Total consolidated revenues	4,127			1,352			—			5,479
Gross profit	$	2,256		$	1,184		$	(93	)	$	3,347
Gross profit percentage	54.7		%	87.6		%	—			61.1		%
Research and development	408			229			94			731
Selling, general and administrative	1,143			537			172			1,852
Restructuring and acquisition-related charges	—			—			119			119
Total costs and expenses	1,551			766			385			2,702
Operating income (expense)	705			418			(478		)	645
Non-operating income (expense), net	(80		)	6			—			(74		)
Income tax provision (benefit)	170			83			(114		)	139
Net income	455			341			(364		)	432
Net income attributable to the non-controlling interest in VMware, Inc.	—			(68		)	28			(40		)
Net income attributable to EMC Corporation	$	455		$	273		$	(336	)	$	392

	EMC Information Infrastructure
	Information Storage			Information Intelligence Group			RSA Information Security			EMC Information Infrastructure			Pivotal			EMC Information Infrastructure plus Pivotal
Three Months Ended:
March 31, 2013
Revenues:
Product revenues	$	2,472		$	43		$	100		$	2,615		$	13		$	2,628
Services revenues	1,326			112			133			1,571			22			1,593
Total consolidated revenues	3,798			155			233			4,186			35			4,221
Gross profit	$	2,088		$	99		$	152		$	2,339		$	17		$	2,356
Gross profit percentage	55.0		%	63.6		%	65.4		%	55.9		%	48.3		%	55.8		%
Research and development										366			26			392
Selling, general and administrative										1,076			37			1,113
Restructuring and acquisition-related charges										—			—			—
Total costs and expenses										1,442			63			1,505
Operating income (expense)										$	897		$	(46	)	$	851

	EMC Information Infrastructure plus Pivotal			VMware Virtual Infrastructure within EMC			Corp Reconciling Items			Consolidated
Three Months Ended
March 31, 2013
Revenues:
Product revenues	$	2,628		$	484		$	—		$	3,112
Services revenues	1,593			682			—			2,275
Total consolidated revenues	4,221			1,166			—			5,387
Gross profit	$	2,356		$	1,042		$	(100	)	$	3,298
Gross profit percentage	55.8		%	89.3		%	—			61.2		%
Research and development	392			191			93			676
Selling, general and administrative	1,113			450			150			1,713
Restructuring and acquisition-related charges	—			—			148			148
Total costs and expenses	1,505			641			391			2,537
Operating income (expense)	851			401			(491		)	761
Non-operating income (expense), net	(74		)	4			—			(70		)
Income tax provision (benefit)	187			83			(194		)	76
Net income	590			322			(297		)	615
Net income attributable to the non-controlling interest in VMware, Inc.	—			(62		)	27			(35		)
Net income attributable to EMC Corporation	$	590		$	260		$	(270	)	$	580

Our revenues are attributed to the geographic areas according to the location of the customers. Revenues by geographic area are included in the following table (table in millions):

	For the Three Months Ended
	March 31, 2014		March 31, 2013
United States	$	2,835	$	2,832
Europe, Middle East and Africa	1,592		1,477
Asia Pacific and Japan	722		738
Latin America, Mexico and Canada	330		340
Total	$	5,479	$	5,387

No country other than the United States accounted for 10% or more of revenues during the three months ended March 31, 2014 or 2013.

Long-lived assets, excluding financial instruments, deferred tax assets, goodwill and intangible assets, in the United States were $4,480 million at March 31, 2014 and $4,433 million at December 31, 2013. Internationally, long-lived assets, excluding financial instruments, deferred tax assets, goodwill and intangible assets, were $961 million at March 31, 2014 and $877 million at December 31, 2013. No country other than the United States accounted for 10% or more of total long-lived assets, excluding financial instruments and deferred tax assets, at March 31, 2014 or December 31, 2013.