Shareholders' Equity

3 Months Ended

Mar. 31, 2015

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
	March 31, 2015			March 31, 2014
Numerator:
Net income attributable to EMC Corporation	$	252		$	392
Incremental dilution from VMware	(1		)	(2		)
Net income – dilution attributable to EMC Corporation	$	251		$	390
Denominator:
Weighted average shares, basic	1,974			2,029
Weighted common stock equivalents	22			26
Assumed conversion of the 2013 Notes and associated warrants	—			21
Weighted average shares, diluted	1,996			2,076

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 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 in 2012 and the remaining 109 million warrants were exercised between February 18, 2014 and March 17, 2014 and were settled with 29 million 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 months ended March 31, 2014.

Restricted stock awards, restricted stock units and options to acquire shares of our common stock in the amount of 1 million and 6 million for the three months ended March 31, 2015 and 2014, 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 and an additional 250 million shares of our common stock in December 2014. For the three months ended March 31, 2015, we spent $1.4 billion to repurchase 54 million shares of our common stock. Of the 500 million shares authorized for repurchase, we have repurchased 255 million shares at a total cost of $6.8 billion, leaving a remaining balance of 245 million shares authorized for future repurchases. 

VMware’s Board of Directors authorized the repurchase of $1.0 billion of VMware’s Class A common stock in August 2014 and an additional $1.0 billion of VMware’s Class A common stock in January 2015. All shares repurchased under VMware’s stock repurchase programs are retired. For the three months ended March 31, 2015, VMware spent $438 million to repurchase 5 million shares of their common stock. Of the $2.0 billion authorized for repurchase, VMware has a remaining balance of $1.5 billion authorized for future repurchases.

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 and in April 2014, our Board of Directors increased the dividend to $0.115 per share of common stock.

Our Board of Directors declared the following dividends during 2015 and 2014:

Declaration Date	Dividend Per Share		Record Date	Total Amount (in millions)		Payment Date
2015:
February 27, 2015	$	0.115	April 1, 2015	$	229	April 23, 2015
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
December 9, 2014	$	0.115	January 2, 2015	$	234	January 23, 2015

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), which is presented net of tax, for the three months ended March 31, 2015 and 2014 consist of the following (tables 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 2014(a)	$	(188	)	$	49		$	(100	)	$	(126	)	$	(1	)	$	(366	)
Other comprehensive income (loss) before reclassifications	(104		)	19			14			—			(1		)	(72		)
Net losses (gains) reclassified from accumulated other comprehensive income	—			(8		)	(11		)	—			—			(19		)
Net current period other comprehensive income (loss)	(104		)	11			3			—			(1		)	(91		)
Balance as of March 31, 2015(b)	$	(292	)	$	60		$	(97	)	$	(126	)	$	(2	)	$	(457	)

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(a) Net of taxes (benefits) of $31 million for unrealized net gains on investments, $(64) million for unrealized net losses on derivatives and $(70) million for actuarial net loss on pension plans.

(b) Net of taxes (benefits) of $38 million for unrealized net gains on investments, $(61) million for unrealized net losses on derivatives and $(70) million for actuarial net loss on pension plans.

	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	(4		)	24			(1		)	—			(1		)	18
Net losses (gains) reclassified from accumulated other comprehensive income	—			(5		)	(2		)	—			—			(7		)
Net current period other comprehensive income (loss)	(4		)	19			(3		)	—			(1		)	11
Balance as of March 31, 2014(b)	$	(57	)	$	50		$	(109	)	$	(110	)	$	(2	)	$	(228	)

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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 $29 million for unrealized net gains on investments, $(67) 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 months ended March 31, 2015 and 2014 are as follows (tables in millions):

	For the Three Months Ended
Accumulated Other Comprehensive Income Components	March 31, 2015			March 31, 2014			Impacted Line Item on Consolidated Income Statements
Net gain on investments:	$	14		$	8		Investment income
	(6		)	(3		)	Provision for income tax
Net of tax	$	8		$	5
Net gain on derivatives:
Foreign exchange contracts	$	20		$	1		Product sales revenue
Foreign exchange contracts	(3		)	1			Cost of product sales
Interest rate swap	(6		)	—			Other interest expense
Total net gain on derivatives before tax	11			2
	—			—			Provision for income tax
Net of tax	$	11		$	2