Shareholders' Equity

9 Months Ended

Sep. 30, 2014

Stockholders' Equity Note [Abstract]

Shareholders' Equity

Shareholders’ Equity

The reconciliation from basic to diluted earnings per share for both the numerators and denominators is as follows (table in millions):

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
Numerator:
Net income attributable to EMC Corporation	$	587		$	586		$	1,568		$	1,867
Incremental dilution from VMware	(1		)	(2		)	(4		)	(5		)
Net income – dilution attributable to EMC Corporation	$	586		$	584		$	1,564		$	1,862
Denominator:
Weighted average shares, basic	2,032			2,069			2,033			2,088
Weighted common stock equivalents	25			29			26			29
Assumed conversion of the 2013 Notes and associated warrants	—			67			6			59
Weighted average shares, diluted	2,057			2,165			2,065			2,176

Due to the cash settlement feature of the principal amount of the 2013 Notes, we only included the impact of the premium feature in our diluted earnings per share calculation when the 2013 Notes were convertible due to maturity or when the average stock price exceeded the conversion price of the 2013 Notes.

Concurrent with the issuance of the 2011 Notes and 2013 Notes, we also entered into separate transactions in which we sold warrants to acquire, subject to customary anti-dilution adjustments, approximately 215 million shares of our common stock at an exercise price of approximately $19.55 per share of our common stock. Approximately half of the associated warrants were exercised during the year ended December 31, 2012. The remaining 109 million warrants were exercised between February 18, 2014 and March 17, 2014. These warrants were settled with shares of our common stock. As such, we included the impact of the remaining outstanding sold warrants in our diluted earnings per share calculation during the three and nine months ended September 30, 2013 as the average stock price exceeded the exercise price, and during the nine months ended September 30, 2014 for the period the warrants were outstanding.

There were minimal antidilutive restricted stock awards, restricted stock units and options to acquire shares of our common stock excluded from the calculation of diluted earnings per share for the three months ended September 30, 2014. Restricted stock awards, restricted stock units and options to acquire shares of our common stock in the amount of 3 million for the nine months ended September 30, 2014, and 1 million and 3 million for the three and nine months ended September 30, 2013, respectively, were excluded from the calculation of diluted earnings per share because they were antidilutive. The incremental dilution from VMware represents the impact of VMware’s dilutive securities on EMC’s consolidated diluted net income per share and is calculated by multiplying the difference between VMware’s basic and diluted earnings per share by the number of VMware shares owned by EMC.

Repurchase of Common Stock

We utilize both authorized and unissued shares (including repurchased shares) for all issuances under our equity plans. Our Board of Directors authorized the repurchase of 250 million shares of our common stock in February 2013. For the nine months ended September 30, 2014, we spent $1.4 billion to repurchase 52 million shares of our common stock. Of the 250 million shares authorized for repurchase, we have repurchased 146 million shares at a total cost of $3.7 billion, leaving a remaining balance of 104 million shares authorized for future repurchases.  We plan to spend up to $6.0 billion in the repurchase of shares during the two years ending December 31, 2014. This includes $3.0 billion spent during the year ended December 31, 2013 and $3.0 billion to be spent during the year ending December 31, 2014.

Cash Dividend on Common Stock

In May 2013, our Board of Directors approved the initiation of a quarterly cash dividend to EMC shareholders of $0.10 per share of common stock. On April 17, 2014, our Board of Directors approved an increase in the quarterly cash dividend paid to EMC shareholders to $0.115 per share of common stock.

Our Board of Directors declared the following dividends during the periods presented:

Declaration Date	Dividend Per Share		Record Date	Total Amount (in millions)		Payment Date
Nine Months ended September 30, 2014:
February 6, 2014	$	0.10	April 1, 2014	$	209	April 23, 2014
April 17, 2014	$	0.115	July 1, 2014	$	237	July 23, 2014
July 30, 2014	$	0.115	October 1, 2014	$	239	October 23, 2014
Nine Months ended September 30, 2013:
May 30, 2013	$	0.10	July 1, 2013	$	212	July 23, 2013
August 1, 2013	$	0.10	October 1, 2013	$	210	October 23, 2013

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), which is presented net of tax, consist of the following (table in millions):

	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 2013(a)	$	(53	)	$	31		$	(106	)	$	(110	)	$	(1	)	$	(239	)
Other comprehensive income (loss) before reclassifications	(57		)	107			11			2			—			63
Net losses (gains) reclassified from accumulated other comprehensive income	—			(19		)	(2		)	(1		)	—			(22		)
Net current period other comprehensive income (loss)	(57		)	88			9			1			—			41
Balance as of September 30, 2014(b)	$	(110	)	$	119		$	(97	)	$	(109	)	$	(1	)	$	(198	)

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(a) Net of taxes (benefits) of $18 million for unrealized net gains on investments, $(66) million for unrealized net losses on derivatives and $(61) million for actuarial net loss on pension plans.

(b) Net of taxes (benefits) of $72 million for unrealized net gains on investments, $(63) million for unrealized net losses on derivatives and $(61) million for actuarial net loss on pension plans.

The amounts reclassified out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2014 are as follows (tables in millions):

Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Impacted Line Item on Consolidated Income Statements
For the Three Months Ended September 30, 2014:
Net gain on investments:	$	13		Investment income
	(5		)	Provision for income tax
Net of tax	$	8
Net gain on derivatives:
Foreign exchange contracts	$	12		Product sales revenue
Foreign exchange contracts	(7		)	Cost of product sales
Interest rate swap	(6		)	Other interest expense
Total net gain on derivatives before tax	(1		)
	$	—		Provision for income tax
Net of tax	$	(1	)
Net gains from pension and other postretirement plans	$	1		Selling, general and administrative expense
	—			Provision for income tax
Net of tax	$	1

Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Impacted Line Item on Consolidated Income Statements
For the Nine Months Ended September 30, 2014:
Net gain on investments:	$	30		Investment income
	(11		)	Provision for income tax
Net of tax	$	19
Net gain on derivatives:
Foreign exchange contracts	$	15		Product sales revenue
Foreign exchange contracts	(7		)	Cost of product sales
Interest rate swap	(6		)	Other interest expense
Total net gain on derivatives before tax	2
	$	—		Provision for income tax
Net of tax	$	2
Net gains from pension and other postretirement plans	$	1		Selling, general and administrative expense
	—			Provision for income tax
Net of tax	$	1