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)) |
EMC CORPORATION | |
By: | /s/ Zane C. Rowe |
Zane C. Rowe | |
Executive Vice President and Chief Financial Officer |
Exhibit No. | Description |
99.1 | Press release from EMC Corporation dated July 22, 2015 |
Press Contact: | Katryn McGaughey |
Second-Quarter 2015 Summary: | |
l | GAAP revenue up 2% year over year, non-GAAP revenue up 3% (up 8% on a constant currency basis) year over year |
l | GAAP revenue was reduced by the amount of a VMware settlement with the Department of Justice (“DOJ”) and the General Service Administration (“GSA”), which was entered into and paid in cash by VMware in the second quarter |
l | GAAP and non-GAAP EPS of $0.25 and $0.43, respectively |
l | EMC Information Infrastructure revenue up 1% year over year (up 6% on a constant currency basis); Emerging Storage revenue up 49% year over year - led by XtremIO, Isilon and Software-Defined Storage - reached nearly a $3 billion revenue run-rate |
l | Full-year 2015 outlook now: GAAP revenues of $25.2 billion and non-GAAP revenues of $25.3 billion; GAAP EPS of $1.17 and non-GAAP EPS of $1.87 |
• | EMC Information Infrastructure: Second-quarter revenue was up 1% year over year and up 6% on a constant currency basis2. Information Storage revenue in the second quarter was up 1% year over year and up 6% on a constant currency basis2. Emerging Storage4 revenue was up 49% year over year in the second quarter, led by XtremIO, Isilon and Software-Defined Storage. Within Emerging Storage, XtremIO revenue growth exceeded 300% year over year, and remains the all-flash array market segment leader. Within the Converged Infrastructure business, Vblock and Vblock-related revenue had greater than 30% growth year over year. |
• | Pivotal: Second-quarter revenue was up 18% year over year and up 19% on a constant currency basis2. Pivotal continues its transition to a subscription business model, more commonly measured by annual recurring revenue (ARR)6, which in the second quarter was approximately $60 million, up almost 60% quarter over quarter. Pivotal is achieving significant momentum as enterprise customers leverage the Pivotal portfolio for their digital transformation journey. |
• | VMware: Second-quarter 2015 GAAP revenue was up 4% year over year, non-GAAP revenue was up 10% (up 13% on a constant currency basis2) year over year. VMware continues to diversify its business by expanding its portfolio of products to enable the software-defined enterprise, making progress on its strategic initiatives focused on the software-defined data center, hybrid cloud solutions, business mobility and end-user computing. |
• | Consolidated GAAP revenues are expected to be $25.2 billion for 2015 and consolidated non-GAAP5 revenues are expected to be $25.3 billion for 2015. |
• | Consolidated GAAP operating income is expected to be 12.8% of revenues for 2015 and consolidated non-GAAP5 operating income is expected to be 20.7% of non-GAAP revenues for 2015. |
• | Consolidated GAAP earnings per weighted average diluted share are expected to be $1.17 for 2015 and consolidated non-GAAP5 earnings per weighted average diluted share are expected to be $1.87 for 2015. |
• | The consolidated GAAP income tax rate is expected to be 22.5% and the consolidated non-GAAP5 income tax rate is expected to be 23.6% for 2015. This assumes that the U.S. research and development tax credit is enacted during 2015. |
• | Consolidated net cash provided by operating activities is expected to be $5.5 billion for 2015 and free cash flow3 is expected to be $4 billion for 2015. |
• | The weighted average outstanding diluted shares are expected to be 1.96 billion for 2015. |
• | EMC expects to repurchase an aggregate of $3.0 billion of the company’s common stock in 2015. |
• | To access today’s webcast at 8:30 a.m. ET, visit the EMC Investor Relations website |
• | A replay of today’s webcast will be available here |
• | EMC financial results are available on the U.S. Securities and Exchange Commission website |
• | Visit the VMware Investor Relations website for more detail on its second-quarter results |
• | Download the EMC Investor Relations app here |
• | Connect with EMC on Twitter (@EMCCorp and @EMC_News), LinkedIn, Facebook and SocialSphere |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenues: | ||||||||||||||||
Product sales | $ | 3,225 | $ | 3,319 | $ | 6,130 | $ | 6,327 | ||||||||
Services | 2,772 | 2,561 | 5,480 | 5,032 | ||||||||||||
5,997 | 5,880 | 11,610 | 11,359 | |||||||||||||
Cost and expenses: | ||||||||||||||||
Cost of product sales | 1,433 | 1,372 | 2,762 | 2,668 | ||||||||||||
Cost of services | 977 | 854 | 1,922 | 1,690 | ||||||||||||
Research and development | 782 | 740 | 1,570 | 1,472 | ||||||||||||
Selling, general and administrative | 2,102 | 2,010 | 4,139 | 3,861 | ||||||||||||
Restructuring and acquisition-related charges | 23 | 30 | 158 | 149 | ||||||||||||
Operating income | 680 | 874 | 1,059 | 1,519 | ||||||||||||
Non-operating income (expense): | ||||||||||||||||
Investment income | 26 | 35 | 51 | 71 | ||||||||||||
Interest expense | (41 | ) | (34 | ) | (81 | ) | (68 | ) | ||||||||
Other income (expense), net | 24 | (66 | ) | 34 | (142 | ) | ||||||||||
Total non-operating income (expense) | 9 | (65 | ) | 4 | (139 | ) | ||||||||||
Income before provision for income taxes | 689 | 809 | 1,063 | 1,380 | ||||||||||||
Income tax provision | 170 | 187 | 252 | 326 | ||||||||||||
Net income | 519 | 622 | 811 | 1,054 | ||||||||||||
Less: Net income attributable to the non-controlling interests in VMware, Inc. | (32 | ) | (33 | ) | (72 | ) | (74 | ) | ||||||||
Net income attributable to EMC Corporation | $ | 487 | $ | 589 | $ | 739 | $ | 980 | ||||||||
Net income per weighted average share, basic attributable to EMC Corporation common shareholders | $ | 0.25 | $ | 0.29 | $ | 0.38 | $ | 0.48 | ||||||||
Net income per weighted average share, diluted attributable to EMC Corporation common shareholders | $ | 0.25 | $ | 0.28 | $ | 0.37 | $ | 0.47 | ||||||||
Weighted average shares, basic | 1,927 | 2,037 | 1,950 | 2,033 | ||||||||||||
Weighted average shares, diluted | 1,947 | 2,064 | 1,971 | 2,070 | ||||||||||||
Cash dividends declared per common share | $ | 0.12 | $ | 0.12 | $ | 0.23 | $ | 0.22 |
June 30, | December 31, | |||||||
2015 | 2014 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 5,803 | $ | 6,343 | ||||
Short-term investments | 1,939 | 1,978 | ||||||
Accounts and notes receivable, less allowance for doubtful accounts of $71 and $72 | 3,345 | 4,413 | ||||||
Inventories | 1,224 | 1,276 | ||||||
Deferred income taxes | 1,061 | 1,070 | ||||||
Other current assets | 715 | 653 | ||||||
Total current assets | 14,087 | 15,733 | ||||||
Long-term investments | 7,041 | 6,334 | ||||||
Property, plant and equipment, net | 3,788 | 3,766 | ||||||
Intangible assets, net | 1,953 | 2,125 | ||||||
Goodwill | 16,185 | 16,134 | ||||||
Other assets, net | 1,813 | 1,767 | ||||||
Total assets | $ | 44,867 | $ | 45,859 | ||||
LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,219 | $ | 1,696 | ||||
Accrued expenses | 2,823 | 3,141 | ||||||
Income taxes payable | 160 | 852 | ||||||
Short-term debt | 1,948 | — | ||||||
Deferred revenue | 6,357 | 6,021 | ||||||
Total current liabilities | 12,507 | 11,710 | ||||||
Income taxes payable | 318 | 306 | ||||||
Deferred revenue | 4,344 | 4,144 | ||||||
Deferred income taxes | 230 | 274 | ||||||
Long-term debt | 5,472 | 5,469 | ||||||
Other liabilities | 434 | 431 | ||||||
Total liabilities | 23,305 | 22,334 | ||||||
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 1,925 and 1,985 shares | 19 | 20 | ||||||
Additional paid-in capital | — | — | ||||||
Retained earnings | 20,516 | 22,242 | ||||||
Accumulated other comprehensive loss, net | (458 | ) | (366 | ) | ||||
Total EMC Corporation's shareholders' equity | 20,077 | 21,896 | ||||||
Non-controlling interests | 1,485 | 1,629 | ||||||
Total shareholders' equity | 21,562 | 23,525 | ||||||
Total liabilities and shareholders' equity | $ | 44,867 | $ | 45,859 |
Six Months Ended | |||||||||||
June 30, | June 30, | ||||||||||
2015 | 2014 | ||||||||||
Cash flows from operating activities: | |||||||||||
Cash received from customers | $ | 13,137 | $ | 12,644 | |||||||
Cash paid to suppliers and employees | (10,076 | ) | (9,320 | ) | |||||||
Dividends and interest received | 68 | 97 | |||||||||
Interest paid | (67 | ) | — | ||||||||
Income taxes paid | (949 | ) | (829 | ) | |||||||
Net cash provided by operating activities | 2,113 | 2,592 | |||||||||
Cash flows from investing activities: | |||||||||||
Additions to property, plant and equipment | (449 | ) | (472 | ) | |||||||
Capitalized software development costs | (262 | ) | (245 | ) | |||||||
Purchases of short- and long-term available-for-sale securities | (4,212 | ) | (5,765 | ) | |||||||
Sales of short- and long-term available-for-sale securities | 2,667 | 4,974 | |||||||||
Maturities of short- and long-term available-for-sale securities | 913 | 1,716 | |||||||||
Business acquisitions, net of cash acquired | (61 | ) | (1,694 | ) | |||||||
Purchases of strategic and other related investments | (160 | ) | (83 | ) | |||||||
Sales of strategic and other related investments | 109 | 10 | |||||||||
Joint venture funding | — | (63 | ) | ||||||||
Increase in restricted cash | — | (76 | ) | ||||||||
Net cash used in investing activities | (1,455 | ) | (1,698 | ) | |||||||
Cash flows from financing activities: | |||||||||||
Proceeds from the issuance of EMC's common stock | 170 | 234 | |||||||||
Proceeds from the issuance of VMware's common stock | 69 | 99 | |||||||||
EMC repurchase of EMC's common stock | (2,063 | ) | (994 | ) | |||||||
VMware repurchase of VMware's common stock | (850 | ) | (407 | ) | |||||||
Excess tax benefits from stock-based compensation | 54 | 45 | |||||||||
Payment of long- and short-term obligations | — | (1,665 | ) | ||||||||
Net proceeds from the issuance of short-term obligations | 1,948 | — | |||||||||
Dividend payment | (456 | ) | (407 | ) | |||||||
Contributions from non-controlling interests | 4 | — | |||||||||
Net cash used in financing activities | (1,124 | ) | (3,095 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (74 | ) | (3 | ) | |||||||
Net decrease in cash and cash equivalents | (540 | ) | (2,204 | ) | |||||||
Cash and cash equivalents at beginning of period | 6,343 | 7,891 | |||||||||
Cash and cash equivalents at end of period | $ | 5,803 | $ | 5,687 | |||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||||||
Net income | $ | 811 | $ | 1,054 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 942 | 903 | |||||||||
Non-cash restructuring and other special charges | 13 | 9 | |||||||||
Stock-based compensation expense | 502 | 498 | |||||||||
Provision for doubtful accounts | 25 | 2 | |||||||||
Deferred income taxes, net | (48 | ) | (168 | ) | |||||||
Excess tax benefits from stock-based compensation | (54 | ) | (45 | ) | |||||||
Gain on previously held interests in strategic investments | — | (45 | ) | ||||||||
Impairment of strategic investment | — | 33 |
Other, net | 18 | 23 | |||||||||
Changes in assets and liabilities, net of acquisitions: | |||||||||||
Accounts and notes receivable | 1,017 | 549 | |||||||||
Inventories | (45 | ) | (183 | ) | |||||||
Other assets | (3 | ) | 96 | ||||||||
Accounts payable | (443 | ) | (241 | ) | |||||||
Accrued expenses | (480 | ) | (279 | ) | |||||||
Income taxes payable | (650 | ) | (336 | ) | |||||||
Deferred revenue | 509 | 701 | |||||||||
Other liabilities | (1 | ) | 21 | ||||||||
Net cash provided by operating activities | $ | 2,113 | $ | 2,592 |
Three Months Ended | |||||||||||||||
Diluted | Diluted | ||||||||||||||
June 30, | Earnings | June 30, | Earnings | ||||||||||||
2015 | Per Share | 2014 | Per Share | ||||||||||||
Net Income Attributable to EMC - GAAP | $ | 487 | $ | 0.249 | $ | 589 | $ | 0.285 | |||||||
Stock-based compensation expense | 181 | 0.094 | 180 | 0.087 | |||||||||||
Intangible asset amortization | 66 | 0.034 | 65 | 0.032 | |||||||||||
Restructuring charges | 16 | 0.008 | 22 | 0.011 | |||||||||||
Acquisition and other related charges | 29 | 0.010 | 29 | 0.014 | |||||||||||
R&D tax credit | 12 | 0.006 | 12 | 0.006 | |||||||||||
Fair value adjustment on asset held for sale | 12 | 0.006 | — | — | |||||||||||
VMware GSA settlement | 42 | 0.021 | — | — | |||||||||||
Gain on previously held interests in strategic investments | — | — | (45 | ) | (0.022 | ) | |||||||||
Impairment of strategic investment | — | — | 24 | 0.011 | |||||||||||
VMware litigation and other contingencies | — | — | 6 | 0.003 | |||||||||||
Net Income Attributable to EMC - Non-GAAP | $ | 845 | $ | 0.433 | $ | 882 | $ | 0.427 | |||||||
Weighted average shares, diluted | 1,947 | 2,064 | |||||||||||||
Incremental VMware dilution | $ | 1 | $ | 1 |
* | Net of tax and non-controlling interests in VMware, Inc., except weighted average shares, diluted. See Income Tax Provision and Net Income Attributable to VMware lines in Supplemental Information schedules. |
Three Months Ended | |||||||
June 30, | June 30, | ||||||
2015 | 2014 | ||||||
Consolidated Revenue - GAAP | $ | 5,997 | $ | 5,880 | |||
VMware GSA settlement | 76 | — | |||||
Consolidated Revenue - Non-GAAP | $ | 6,073 | $ | 5,880 |
Three Months Ended | |||||||
June 30, | June 30, | ||||||
2015 | 2014 | ||||||
Gross Margin - GAAP | $ | 3,587 | $ | 3,654 | |||
Stock-based compensation expense | 37 | 37 | |||||
Intangible asset amortization | 62 | 61 | |||||
VMware GSA settlement | 76 | — | |||||
Gross Margin - Non-GAAP | $ | 3,762 | $ | 3,752 | |||
Revenues: | |||||||
GAAP | $ | 5,997 | $ | 5,880 | |||
Non-GAAP | $ | 6,073 | $ | 5,880 | |||
Gross Margin Percentages: | |||||||
GAAP | 59.8 | % | 62.1 | % | |||
Non-GAAP | 61.9 | % | 63.8 | % |
Three Months Ended | |||||||
June 30, | June 30, | ||||||
2015 | 2014 | ||||||
Operating Margin - GAAP | $ | 680 | $ | 874 | |||
Stock-based compensation expense | 258 | 262 | |||||
Intangible asset amortization | 100 | 100 | |||||
Restructuring charges | 21 | 28 | |||||
Acquisition and other related charges | 49 | 52 | |||||
VMware litigation and other contingencies | — | 11 | |||||
VMware GSA settlement | 70 | — | |||||
Operating Margin - Non-GAAP | $ | 1,178 | $ | 1,327 | |||
Revenues: | |||||||
GAAP | $ | 5,997 | $ | 5,880 | |||
Non-GAAP | $ | 6,073 | $ | 5,880 | |||
Operating Margin Percentages: | |||||||
GAAP | 11.3 | % | 14.9 | % | |||
Non-GAAP | 19.4 | % | 22.6 | % |
Three Months Ended June 30, 2015 | ||||||||||
Income Before | Tax Provision | Tax | ||||||||
Tax | (Benefit) | Rate | ||||||||
EMC Consolidated - GAAP | $ | 689 | $ | 170 | 24.6 | % | ||||
Stock-based compensation expense | 258 | 58 | 22.6 | % | ||||||
Intangible asset amortization | 100 | 29 | 29.1 | % | ||||||
Restructuring charges | 21 | 5 | 26.4 | % | ||||||
Acquisition and other related charges | 49 | 15 | 31.4 | % | ||||||
R&D tax credit | — | (13 | ) | N/A | ||||||
Fair value adjustment on asset held for sale | 20 | 8 | 38.0 | % | ||||||
VMware GSA settlement | 70 | 18 | 25.5 | % | ||||||
EMC Consolidated - Non-GAAP | $ | 1,207 | $ | 290 | 24.0 | % |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Cash Flow from Operations | $ | 1,033 | $ | 1,253 | $ | 2,113 | $ | 2,592 | |||||||
Capital expenditures | (252 | ) | (196 | ) | (449 | ) | (472 | ) | |||||||
Capitalized software development costs | (134 | ) | (127 | ) | (262 | ) | (245 | ) | |||||||
Free Cash Flow | $ | 647 | $ | 930 | $ | 1,402 | $ | 1,875 |
Information Storage | EMC Information Infrastructure | Pivotal | VMware Virtual Infrastructure | EMC Consolidated | |||||||||||
Revenue growth - GAAP | 1 | % | 1 | % | 18 | % | 4 | % | 2 | % | |||||
Impact of VMware GSA settlement | — | — | — | 6 | 1 | ||||||||||
Revenue growth - Non-GAAP | 1 | % | 1 | % | 18 | % | 10 | % | 3 | % | |||||
Impact of currency | 5 | 5 | 1 | 4 | 4 | ||||||||||
Revenue growth on a constant currency basis | 6 | % | 6 | % | 19 | % | 13 | % | 8 | % |
Europe, Middle East and Africa | Asia Pacific and Japan | Latin America | North America | |||||||||
Revenue growth - GAAP | (3 | )% | (1 | )% | (15 | )% | 6 | % | ||||
Impact of VMware GSA settlement | — | — | — | 3 | ||||||||
Revenue growth - Non-GAAP | (3 | )% | (1 | )% | (15 | )% | 9 | % | ||||
Impact of currency | 11 | 6 | 11 | — | ||||||||
Revenue growth on a constant currency basis | 8 | % | 5 | % | (4 | )% | 9 | % |
Twelve Months Ending December 31, | |||
2015 | |||
Consolidated Revenue - GAAP | $ | 25.2 | |
VMware GSA settlement | 0.1 | ||
Consolidated Revenue - Non-GAAP | $ | 25.3 |
Twelve Months Ending December 31, | ||
2015 | ||
Operating Income as a % of Revenue - GAAP | 12.8 | % |
Stock-based compensation expense | 4.4 | |
Intangible asset amortization | 1.5 | |
Restructuring charges | 0.9 | |
Acquisition and other related charges | 0.7 | |
One-time items | 0.4 | |
Operating Income as a % of Revenue - Non-GAAP | 20.7 | % |
Twelve Months Ending December 31, | |||
2015 | |||
Diluted Earnings Per Share - GAAP | $ | 1.17 | |
Stock-based compensation expense | 0.42 | ||
Intangible asset amortization | 0.13 | ||
Restructuring charges | 0.08 | ||
Acquisition and other related charges | 0.05 | ||
One-time items | 0.02 | ||
Diluted Earnings Per Share - Non-GAAP | $ | 1.87 |
Twelve Months Ending December 31, | ||
2015 | ||
Tax Rate - GAAP | 22.5 | % |
Impact of stock-based compensation expense, intangible asset amortization, restructuring charges and acquisition and other related charges | 1.1 | |
Tax Rate - Non-GAAP | 23.6 | % |
Twelve Months Ending December 31, | |||
2015 | |||
Cash Flow from Operations | $ | 5.5 | |
Cash expenditures | (1.0 | ) | |
Capitalized software development costs | (0.5 | ) | |
Free Cash Flow | $ | 4.0 |
Stock-Based Compensation Expense | Intangible Asset Amortization | Restructuring Charges | Acquisition and Other Related Charges | R&D Tax Credit | Fair Value Adjustment on Asset Held for Sale | VMware GSA Settlement | |||||||||||||||||||||
EMC Consolidated | |||||||||||||||||||||||||||
Revenue | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 76 | |||||||||||||
Cost of revenue | (37 | ) | (62 | ) | — | — | — | — | — | ||||||||||||||||||
Research and development | (91 | ) | (1 | ) | — | — | — | — | — | ||||||||||||||||||
Selling, general and administrative | (130 | ) | (37 | ) | — | (47 | ) | — | — | 6 | |||||||||||||||||
Restructuring and acquisition-related charges | — | — | (21 | ) | (2 | ) | — | — | — | ||||||||||||||||||
Non-operating (income) expense | — | — | — | — | — | 20 | — | ||||||||||||||||||||
Income tax provision (benefit) | 58 | 29 | 5 | 15 | (13 | ) | 8 | 18 | |||||||||||||||||||
Net income attributable to VMware | (19 | ) | (5 | ) | — | (5 | ) | (1 | ) | — | (10 | ) | |||||||||||||||
EMC Information Infrastructure plus Pivotal | |||||||||||||||||||||||||||
Revenue | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Cost of revenue | (27 | ) | (33 | ) | — | — | — | — | — | ||||||||||||||||||
Research and development | (38 | ) | (1 | ) | — | — | — | — | — | ||||||||||||||||||
Selling, general and administrative | (70 | ) | (30 | ) | — | (5 | ) | — | — | — | |||||||||||||||||
Restructuring and acquisition-related charges | — | — | (23 | ) | (2 | ) | — | — | — | ||||||||||||||||||
Non-operating (income) expense | — | — | — | — | — | 20 | — | ||||||||||||||||||||
Income tax provision (benefit) | 33 | 20 | 6 | — | (7 | ) | 8 | — | |||||||||||||||||||
Net income attributable to VMware | — | — | — | — | — | — | — | ||||||||||||||||||||
VMware within EMC | |||||||||||||||||||||||||||
Revenue | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 76 | |||||||||||||
Cost of revenue | (10 | ) | (29 | ) | — | — | — | — | — | ||||||||||||||||||
Research and development | (53 | ) | — | — | — | — | — | — | |||||||||||||||||||
Selling, general and administrative | (60 | ) | (7 | ) | — | (42 | ) | — | — | 6 | |||||||||||||||||
Restructuring and acquisition-related charges | — | — | 2 | — | — | — | — | ||||||||||||||||||||
Non-operating (income) expense | — | — | — | — | — | — | — | ||||||||||||||||||||
Income tax provision (benefit) | 25 | 9 | (1 | ) | 15 | (6 | ) | — | 18 | ||||||||||||||||||
Net income attributable to VMware | (19 | ) | (5 | ) | — | (5 | ) | (1 | ) | — | (10 | ) |
Stock-Based Compensation Expense | Intangible Asset Amortization | Restructuring Charges | Acquisition and Other Related Charges | R&D Tax Credit | Gain on Previously Held Interests in Strategic Investments | Impairment of Strategic Investment | VMware Litigation and Other Contingencies | ||||||||||||||||||||||||
EMC Consolidated | |||||||||||||||||||||||||||||||
Cost of revenue | $ | (37 | ) | $ | (61 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Research and development | (100 | ) | (3 | ) | — | — | — | — | — | — | |||||||||||||||||||||
Selling, general and administrative | (125 | ) | (36 | ) | — | (50 | ) | — | — | — | (11 | ) | |||||||||||||||||||
Restructuring and acquisition-related charges | — | — | (28 | ) | (2 | ) | — | — | — | — | |||||||||||||||||||||
Non-operating (income) expense | — | — | — | 1 | — | (45 | ) | 33 | — | ||||||||||||||||||||||
Income tax provision (benefit) | 59 | 30 | 6 | 18 | (13 | ) | — | 9 | 4 | ||||||||||||||||||||||
Net income attributable to VMware | (23 | ) | (5 | ) | — | (6 | ) | (1 | ) | — | — | (1 | ) | ||||||||||||||||||
EMC Information Infrastructure plus Pivotal | |||||||||||||||||||||||||||||||
Cost of revenue | $ | (25 | ) | $ | (34 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Research and development | (34 | ) | (1 | ) | — | — | — | — | — | — | |||||||||||||||||||||
Selling, general and administrative | (64 | ) | (30 | ) | — | (8 | ) | — | — | — | — | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | (29 | ) | (2 | ) | — | — | — | — | |||||||||||||||||||||
Non-operating (income) expense | — | — | — | — | — | (45 | ) | 33 | — | ||||||||||||||||||||||
Income tax provision (benefit) | 31 | 21 | 6 | 2 | (9 | ) | — | 9 | — | ||||||||||||||||||||||
Net income attributable to VMware | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
VMware within EMC | |||||||||||||||||||||||||||||||
Cost of revenue | $ | (12 | ) | $ | (27 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Research and development | (66 | ) | (2 | ) | — | — | — | — | — | — | |||||||||||||||||||||
Selling, general and administrative | (61 | ) | (6 | ) | — | (42 | ) | — | — | — | (11 | ) | |||||||||||||||||||
Restructuring and acquisition-related charges | — | — | 1 | — | — | — | — | — | |||||||||||||||||||||||
Non-operating (income) expense | — | — | — | 1 | — | — | — | — | |||||||||||||||||||||||
Income tax provision (benefit) | 28 | 9 | — | 16 | (4 | ) | — | — | 4 | ||||||||||||||||||||||
Net income attributable to VMware | (23 | ) | (5 | ) | — | (6 | ) | (1 | ) | — | — | (1 | ) |
VMware Standalone GAAP | GAAP Adjustments and Eliminations | VMware within EMC GAAP | |||||||||
Revenue | $ | 1,521 | $ | (9 | ) | $ | 1,512 | ||||
Cost of revenue | 250 | (4 | ) | 246 | |||||||
Gross margin | 1,271 | (5 | ) | 1,266 | |||||||
Research and development | 322 | (2 | ) | 320 | |||||||
Selling, general and administrative | 745 | (2 | ) | 743 | |||||||
Restructuring and acquisition-related charges | (2 | ) | — | (2 | ) | ||||||
Operating income | 206 | (1 | ) | 205 | |||||||
Non-operating income (expense) | 7 | 4 | 11 | ||||||||
Income before taxes | 213 | 3 | 216 | ||||||||
Income tax provision (benefit) | 41 | 6 | 47 | ||||||||
Net income | $ | 172 | (3 | ) | 169 | ||||||
Net income attributable to VMware | (32 | ) | (32 | ) | |||||||
Net income attributable to EMC | $ | (35 | ) | $ | 137 |
VMware Standalone GAAP | GAAP Adjustments and Eliminations | VMware within EMC GAAP | |||||||||
Revenue | $ | 1,457 | $ | (8 | ) | $ | 1,449 | ||||
Cost of revenue | 218 | (2 | ) | 216 | |||||||
Gross margin | 1,239 | (6 | ) | 1,233 | |||||||
Research and development | 317 | (3 | ) | 314 | |||||||
Selling, general and administrative | 723 | (1 | ) | 722 | |||||||
Restructuring and acquisition-related charges | (1 | ) | — | (1 | ) | ||||||
Operating income | 200 | (2 | ) | 198 | |||||||
Non-operating income (expense) | 2 | 5 | 7 | ||||||||
Income before taxes | 202 | 3 | 205 | ||||||||
Income tax provision (benefit) | 35 | 3 | 38 | ||||||||
Net income | $ | 167 | — | 167 | |||||||
Net income attributable to VMware | (33 | ) | (33 | ) | |||||||
Net income attributable to EMC | $ | (33 | ) | $ | 134 |
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Enterprise Content Division | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Product revenues | $ | 2,509 | $ | 40 | $ | 97 | $ | 2,646 | $ | 20 | $ | 2,666 | |||||||||||
Services revenues | 1,519 | 115 | 141 | 1,775 | 44 | 1,819 | |||||||||||||||||
Total consolidated revenues | 4,028 | 155 | 238 | 4,421 | 64 | 4,485 | |||||||||||||||||
Gross profit | $ | 2,092 | $ | 105 | $ | 158 | 2,355 | 26 | 2,381 | ||||||||||||||
Gross profit percentage | 51.9 | % | 67.8 | % | 66.6 | % | 53.3 | % | 40.0 | % | 53.1 | % | |||||||||||
Research and development | 398 | 25 | 423 | ||||||||||||||||||||
Selling, general and administrative | 1,201 | 53 | 1,254 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total operating expenses | 1,599 | 78 | 1,677 | ||||||||||||||||||||
Operating income (expense) | $ | 756 | $ | (52 | ) | $ | 704 | ||||||||||||||||
Operating margin percentage | 17.1 | % | (80.5 | )% | 15.7 | % |
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure | Corporate Reconciling Items | Consolidated | ||||||||||||
Revenues | |||||||||||||||
Product revenues | $ | 2,666 | $ | 635 | $ | (76 | ) | $ | 3,225 | ||||||
Services revenues | 1,819 | 953 | — | 2,772 | |||||||||||
Total consolidated revenues | 4,485 | 1,588 | (76 | ) | 5,997 | ||||||||||
Gross profit | $ | 2,381 | $ | 1,381 | $ | (175 | ) | $ | 3,587 | ||||||
Gross profit percentage | 53.1 | % | 87.0 | % | — | 59.8 | % | ||||||||
Research and development | 423 | 267 | 92 | 782 | |||||||||||
Selling, general and administrative | 1,254 | 640 | 208 | 2,102 | |||||||||||
Restructuring and acquisition-related charges | — | — | 23 | 23 | |||||||||||
Total operating expenses | 1,677 | 907 | 323 | 2,907 | |||||||||||
Operating income (expense) | 704 | 474 | (498 | ) | 680 | ||||||||||
Operating margin percentage | 15.7 | % | 29.8 | % | — | 11.3 | % | ||||||||
Non-operating income (expense), net | 18 | 11 | (20 | ) | 9 | ||||||||||
Income tax provision (benefit) | 183 | 107 | (120 | ) | 170 | ||||||||||
Net income | 539 | 378 | (398 | ) | 519 | ||||||||||
Net income attributable to the non-controlling interests in VMware, Inc. | — | (72 | ) | 40 | (32 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 539 | $ | 306 | $ | (358 | ) | $ | 487 |
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Enterprise Content Division | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Product revenues | $ | 2,551 | $ | 37 | $ | 104 | $ | 2,692 | $ | 15 | $ | 2,707 | |||||||||||
Services revenues | 1,425 | 121 | 139 | 1,685 | 39 | 1,724 | |||||||||||||||||
Total consolidated revenues | 3,976 | 158 | 243 | 4,377 | 54 | 4,431 | |||||||||||||||||
Gross profit | $ | 2,192 | $ | 100 | $ | 162 | 2,454 | 26 | 2,480 | ||||||||||||||
Gross profit percentage | 55.1 | % | 63.2 | % | 66.7 | % | 56.1 | % | 47.2 | % | 55.9 | % | |||||||||||
Research and development | 358 | 33 | 391 | ||||||||||||||||||||
Selling, general and administrative | 1,140 | 46 | 1,186 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total operating expenses | 1,498 | 79 | 1,577 | ||||||||||||||||||||
Operating income (expense) | $ | 956 | $ | (53 | ) | $ | 903 | ||||||||||||||||
Operating margin percentage | 21.9 | % | (99.4 | )% | 20.4 | % |
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure | Corporate Reconciling Items | Consolidated | ||||||||||||
Revenues | |||||||||||||||
Product revenues | $ | 2,707 | $ | 612 | $ | — | $ | 3,319 | |||||||
Services revenues | 1,724 | 837 | — | 2,561 | |||||||||||
Total consolidated revenues | 4,431 | 1,449 | — | 5,880 | |||||||||||
Gross profit | $ | 2,480 | $ | 1,272 | $ | (98 | ) | $ | 3,654 | ||||||
Gross profit percentage | 55.9 | % | 87.8 | % | — | 62.1 | % | ||||||||
Research and development | 391 | 246 | 103 | 740 | |||||||||||
Selling, general and administrative | 1,186 | 602 | 222 | 2,010 | |||||||||||
Restructuring and acquisition-related charges | — | — | 30 | 30 | |||||||||||
Total operating expenses | 1,577 | 848 | 355 | 2,780 | |||||||||||
Operating income (expense) | 903 | 424 | (453 | ) | 874 | ||||||||||
Operating margin percentage | 20.4 | % | 29.3 | % | — | 14.9 | % | ||||||||
Non-operating income (expense), net | (84 | ) | 8 | 11 | (65 | ) | |||||||||
Income tax provision (benefit) | 209 | 91 | (113 | ) | 187 | ||||||||||
Net income | 610 | 341 | (329 | ) | 622 | ||||||||||
Net income attributable to the non-controlling interests in VMware, Inc. | — | (69 | ) | 36 | (33 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 610 | $ | 272 | $ | (293 | ) | $ | 589 |
Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | FY 2014 | Q1 2015 | Q2 2015 | |||||||||||||||||||||
Information Storage: | |||||||||||||||||||||||||||
Product Revenues | $ | 2,302 | $ | 2,551 | $ | 2,595 | $ | 3,338 | $ | 10,785 | $ | 2,179 | $ | 2,509 | |||||||||||||
Services Revenues | 1,378 | 1,425 | 1,456 | 1,497 | 5,757 | 1,484 | 1,519 | ||||||||||||||||||||
Total Information Storage Revenues | $ | 3,680 | $ | 3,976 | $ | 4,051 | $ | 4,835 | $ | 16,542 | $ | 3,663 | $ | 4,028 | |||||||||||||
Enterprise Content Division: | |||||||||||||||||||||||||||
Product Revenues | $ | 35 | $ | 37 | $ | 36 | $ | 56 | $ | 164 | $ | 27 | $ | 40 | |||||||||||||
Services Revenues | 119 | 121 | 118 | 118 | 476 | 111 | 115 | ||||||||||||||||||||
Total Enterprise Content Division Revenues | $ | 154 | $ | 158 | $ | 154 | $ | 174 | $ | 640 | $ | 138 | $ | 155 | |||||||||||||
RSA Information Security: | |||||||||||||||||||||||||||
Product Revenues | $ | 104 | $ | 104 | $ | 114 | $ | 139 | $ | 462 | $ | 100 | $ | 97 | |||||||||||||
Services Revenues | 140 | 139 | 147 | 148 | 573 | 148 | 141 | ||||||||||||||||||||
Total RSA Information Security Revenues | $ | 244 | $ | 243 | $ | 261 | $ | 287 | $ | 1,035 | $ | 248 | $ | 238 | |||||||||||||
EMC Information Infrastructure: | |||||||||||||||||||||||||||
Product Revenues | $ | 2,441 | $ | 2,692 | $ | 2,745 | $ | 3,533 | $ | 11,411 | $ | 2,306 | $ | 2,646 | |||||||||||||
Services Revenues | 1,637 | 1,685 | 1,721 | 1,763 | 6,806 | 1,743 | 1,775 | ||||||||||||||||||||
Total EMC Information Infrastructure Revenues | $ | 4,078 | $ | 4,377 | $ | 4,466 | $ | 5,296 | $ | 18,217 | $ | 4,049 | $ | 4,421 | |||||||||||||
Pivotal: | |||||||||||||||||||||||||||
Product Revenues | $ | 11 | $ | 15 | $ | 17 | $ | 21 | $ | 65 | $ | 16 | $ | 20 | |||||||||||||
Services Revenues | 38 | 39 | 41 | 44 | 162 | 38 | 44 | ||||||||||||||||||||
Total Pivotal Revenues | $ | 49 | $ | 54 | $ | 58 | $ | 65 | $ | 227 | $ | 54 | $ | 64 | |||||||||||||
VMware Virtual Infrastructure Revenues: | |||||||||||||||||||||||||||
Product Revenues | $ | 556 | $ | 612 | $ | 638 | $ | 768 | $ | 2,575 | $ | 583 | $ | 635 | |||||||||||||
Services Revenues | 796 | 837 | 870 | 919 | 3,421 | 927 | 953 | ||||||||||||||||||||
Total VMware Virtual Infrastructure Revenues | $ | 1,352 | $ | 1,449 | $ | 1,508 | $ | 1,687 | $ | 5,996 | $ | 1,510 | $ | 1,588 | |||||||||||||
Corporate Reconciling Items | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (76 | ) | ||||||||||||
Consolidated Revenues: | |||||||||||||||||||||||||||
Product Revenues | $ | 3,008 | $ | 3,319 | $ | 3,400 | $ | 4,322 | $ | 14,051 | $ | 2,905 | $ | 3,225 | |||||||||||||
Services Revenues | 2,471 | 2,561 | 2,632 | 2,726 | 10,389 | 2,708 | 2,772 | ||||||||||||||||||||
Total Consolidated Revenues | $ | 5,479 | $ | 5,880 | $ | 6,032 | $ | 7,048 | $ | 24,440 | $ | 5,613 | $ | 5,997 | |||||||||||||
Percentage impact to EMC revenues growth rate due to changes in exchange rates from the prior year | (0.4)% | 0.5% | (0.1)% | (1.7)% | (0.5)% | (3.1)% | (4.4)% |