EX-99.1 2 dex991.htm PRESS RELEASE OF EMC CORPORATION DATED JULY 24, 2007 Press Release of EMC Corporation dated July 24, 2007

Exhibit 99.1

 

Contact:    Michael Gallant
   508-293-6357
   gallant_michael@emc.com

FOR IMMEDIATE RELEASE

EMC REPORTS RECORD SECOND-QUARTER RESULTS

Balanced, Double-Digit Revenue Growth in Systems, Software and Services

and Across All Major Geographies

HOPKINTON, Mass.—July 24, 2007—EMC Corporation (NYSE:EMC), the world leader in information infrastructure solutions, today reported record second-quarter revenue and strong profit growth marked by double-digit revenue growth in its systems, software and services businesses and across all major geographies. EMC has now delivered double-digit top-line growth for 16 consecutive quarters.

Total consolidated revenue for the second quarter of 2007 was $3.12 billion, 21% higher than the $2.57 billion reported for the second quarter of 2006. GAAP net income for the second quarter of 2007 was $334.4 million or $0.16 per diluted share, 33% higher than the GAAP earnings per diluted share of $0.12 reported for the year-ago period. EMC generated strong operating cash flow of $622 million, an increase of 59%, and free cash flow of $422 million, an increase of 123%, compared with the same period a year ago.

Joe Tucci, EMC Chairman, President and Chief Executive Officer, said, “EMC executed well in the second quarter. Customers continued to choose EMC for the depth and breadth of our information infrastructure technologies and solutions, which translated into solid revenue growth that was well balanced across our systems, software and services businesses and all major geographies. Add to this the explosion of digital information and the positive 2007 IT spending outlook we see in all major geographies, and it is clear that we are in a sweet spot of the IT industry.”

Compared with the second quarter of 2006, EMC systems revenue increased 18% year-over-year, led by strong revenue growth from the company’s mid-range information storage products. EMC systems revenue represented 43% of total second-quarter revenue. Software license and maintenance revenue increased 27% year-over-year, led by strong customer demand for RSA’s security offerings and for VMware Virtual Infrastructure. Software license and maintenance revenue accounted for 41% of total revenue in the quarter. Professional services, systems maintenance and other services revenue grew by 18%, driven by double-digit services growth in all four major EMC business segments. Professional services, systems maintenance and other services represented 16% of total second-quarter revenue.

For the second-quarter of 2007, revenue from North America increased 20% compared with the same period a year ago and represented 58% of total reported revenue. Revenue from operations outside of North America grew 23% year-over-year, highlighted by double-digit year-over-year revenue growth in EMC’s major international regions: Europe, Middle East and Africa (EMEA); Latin America and Asia-Pacific and Japan (APJ). APJ, which experienced 32% revenue growth year-over-year, retained its distinction as EMC’s fastest-growing major international region for the second straight quarter.

David Goulden, EMC Executive Vice President and Chief Financial Officer, said, “Looking across our business, we remain pleased with our strong, balanced performance and the progress EMC is making towards its 2007 operational and financial goals. We believe we are now on track to exceed the annual targets we set in January, as we continue to execute on our plan to help customers address their information infrastructure requirements.”


Second-Quarter Highlights

EMC’s Information Storage business, which includes revenue from storage systems, information management, information protection and resource management software, and related customer and professional services, reached $2.5 billion, an increase of 12% compared with the year-ago quarter. The second-quarter momentum was led by double-digit year-over-year revenue growth in EMC CLARiiON networked storage systems and solid customer demand for EMC’s backup to disk offerings. EMC also announced deeper technology integration across its product portfolio, including EMC Avamar data protection software optimized with VMware and EMC Celerra, and EMC RecoverPoint replication technology with EMC Replication Manager software.

RSA Information Security revenues for the second quarter of 2007 grew 21% when compared with the results of the division’s constituent companies in the year-ago period and generated approximately $125 million in revenue. The information security business continued to do well during the quarter due to significant success in Payment Card Industry Data Security Standard (PCI DSS) initiatives and notable demand across multiple industries for stronger authentication requirements. Also during the quarter, the division experienced strong growth in alternative forms of authentication, which include software tokens and smart cards, as well as in its information and event management offerings, consumer-facing applications, and encryption and key management solutions.

EMC’s Content Management and Archiving business grew second-quarter revenue to $174 million, an increase of 5% year-over-year. In May 2007, EMC announced the availability of EMC Documentum TaskSpace — a new, highly configurable user interface for the next-generation EMC Documentum 6 enterprise content management (ECM) platform. Next week, EMC will formally announce the Documentum 6 platform, advancing EMC’s ability to lead the industry into the next generation of enterprise content management. In recognition of its ECM market presence, EMC was honored in the quarter with two marquis ECM industry awards: E-DOC magazine’s Readers’ Choice Award and the ECM Connection ACE Award. Last week EMC also announced that it has been positioned as a leader in the Forrester Wave: Business Process Management for Document Processes.

VMware, an EMC subsidiary, grew sales 89% year-over-year to $298 million during the second quarter as it continued to unlock the value of virtualization for existing and new customers around the world. During the quarter, the virtualization leader broadened its product portfolio with new releases of its award-winning virtual desktop software and continued to expand its network of technology and distribution partners. VMware recently announced that Intel Corporation, through its global investment arm, Intel Capital, has agreed to become an investor. The partial initial public offering (IPO) of VMware is expected to be completed this summer.


Business Outlook

The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially. These statements do not give effect to the potential impact of mergers, acquisitions, divestitures or business combinations that may be announced after the date hereof. These statements supersede all prior statements regarding business outlook set forth in prior EMC news releases.

 

   

Consolidated revenue for 2007 is expected to exceed $12.7 billion.

   

GAAP diluted earnings per share for 2007 are expected to exceed $0.64.

About EMC

EMC Corporation (NYSE: EMC) is the world’s leading developer and provider of information infrastructure technology and solutions that enable organizations of all sizes to transform the way they compete and create value from their information. Information about EMC’s products and services can be found at www.EMC.com.

EMC, Documentum, CLARiiON and Celerra are registered trademarks of EMC Corporation. VMware is a registered trademark of VMware, Inc. RSA is a registered trademark of RSA Security Inc. All other trademarks used are the property of their respective owners.

Forward-Looking Statements

This release contains “forward-looking statements” as defined under the Federal Securities Laws. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in information technology spending; (iii) risks associated with acquisitions and investments, including the challenges and costs of integration, restructuring and achieving anticipated synergies; (iv) risks associated with the VMware IPO, including the inability to manage successfully and complete the IPO, and risks associated with trading of VMware stock if the IPO is completed; (v) competitive factors, including but not limited to pricing pressures and new product introductions; (vi) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (vii) component and product quality and availability; (viii) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (ix) insufficient, excess or obsolete inventory; (x) war or acts of terrorism; (xi) the ability to attract and retain highly qualified employees; (xii) fluctuating currency exchange rates; and (xiii) other one-time events and other important factors disclosed previously and from time to time in EMC’s filings with the U.S. Securities and Exchange Commission. EMC disclaims any obligation to update any such forward-looking statements after the date of this release.

Use of Non-GAAP Financial Measures

This release contains non-GAAP financial measures. These non-GAAP financial measures, which are used as measures of EMC’s performance or liquidity, should be considered in addition to, not as a substitute for, measures of EMC’s financial performance or liquidity prepared in accordance with GAAP. EMC’s non-GAAP financial measures may be defined differently than similar terms used by other companies, and accordingly, care should be exercised in understanding how EMC defines its non-GAAP financial measures.

Where specified in the accompanying schedule entitled “Selected Non-GAAP Data For the Three Months Ended June 30, 2007,” stock option expense, restricted stock expense and intangible amortization are excluded from the non-GAAP financial measures. In addition, where specified in the accompanying schedule entitled “Selected Non-GAAP Data For the Three Months Ended June 30, 2006,” stock option expense, restricted stock expense, intangible amortization, in-process research and development and restructuring credits are excluded from the non-GAAP financial measures.

EMC’s management uses the non-GAAP financial measures in the accompanying schedules to gain an understanding of EMC’s comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects and excludes the above-listed expenses (stock option expense, restricted stock expense, intangible amortization, in-process research and development and restructuring credits) from its internal financial statements for purposes of its internal budgets and each reporting segment’s financial goals. These non-GAAP financial measures are used by EMC’s management in their financial and operating decision-making because management believes they reflect EMC’s ongoing business in a manner that allows meaningful period-to-period comparisons. EMC’s management believes that these non-GAAP financial measures provide useful information to investors and others (a) in understanding and evaluating EMC’s current operating performance and future prospects in the same manner as management does, if they so choose, and (b) in comparing in a consistent manner the Company’s current financial results with the Company’s past financial results.

This release also includes disclosures regarding free cash flow which is a non-GAAP financial measure. Free cash flow is defined as net cash provided by operating activities less additions to property, plant and equipment and capitalized software development costs. For the second quarter of 2007, free cash flow equals $422 million and is calculated as follows: net cash provided by operating activities (as defined by GAAP) of $622 million minus additions to property, plant and equipment of $154 million minus capitalized software development costs of $46 million. For the second quarter of 2006, free cash flow equals $189 million and is calculated as follows: net cash provided by operating activities (as defined by GAAP) of $392 million minus


additions to property, plant and equipment of $156 million minus capitalized software development costs of $47 million. EMC uses free cash flow, among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than capital expenditures and capitalized software development costs. Management believes that information regarding free cash flow provides investors with an important perspective on the cash available to make strategic acquisitions and investments, repurchase shares, service debt and fund ongoing operations. As free cash flow is not a measure of liquidity calculated in accordance with GAAP, free cash flow should be considered in addition to, but not as a substitute for, the analysis provided in the statement of cash flows.

All of the foregoing non-GAAP financial measures have limitations. Specifically, the non-GAAP financial measures that exclude stock option expense, restricted stock expense, intangible amortization, in-process research and development and restructuring credits, do not include all items of income and expense that affect EMC’s operations. Further, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and with respect to the non-GAAP financial measures that exclude stock-based compensation, intangible amortization and certain tax charges and benefits, do not reflect any benefit that such items may confer on EMC. Management compensates for these limitations by also considering EMC’s financial results as determined in accordance with GAAP.


EMC CORPORATION

Consolidated Income Statements

(in thousands, except per share amounts)

Unaudited

 

     Three Months Ended     Six Months Ended  
     June 30,
2007
    June 30,
2006
    June 30,
2007
    June 30,
2006
 

Revenues:

        

Product sales

   $ 2,222,355     $ 1,833,598     $ 4,334,781     $ 3,682,128  

Services

     902,317       740,925       1,764,896       1,443,082  
                                
     3,124,672       2,574,523       6,099,677       5,125,210  

Cost and expenses:

        

Cost of product sales

     1,036,242       884,741       2,074,720       1,802,638  

Cost of services

     387,617       331,790       754,204       631,237  

Research and development

     384,966       299,429       740,358       582,918  

Selling, general and administrative

     924,349       782,016       1,800,039       1,530,240  

In-process research and development

     —         12,410       —         12,410  

Restructuring credits

     —         (386 )     (2,670 )     (1,580 )
                                

Operating income

     391,498       264,523       733,026       567,347  

Investment income

     50,850       61,713       102,989       123,516  

Interest expense

     (18,136 )     (621 )     (36,429 )     (2,631 )

Other income, net

     2,968       479       7,808       3,195  
                                

Income before taxes

     427,180       326,094       807,394       691,427  

Income tax provision

     92,773       47,001       160,380       136,506  
                                

Income before cumulative effect of a change in accounting principle

     334,407       279,093       647,014       554,921  

Cumulative effect of a change in accounting principle, net of taxes of $107

     —         —         —         247  
                                

Net income

   $ 334,407     $ 279,093     $ 647,014     $ 555,168  
                                

Net income per weighted average share, basic:

        

Income before cumulative effect of a change in accounting principle

   $ 0.16     $ 0.12     $ 0.31     $ 0.24  

Cumulative effect of a change in accounting principle

     —         —         —         —    
                                

Net income

   $ 0.16     $ 0.12     $ 0.31     $ 0.24  
                                

Net income per weighted average share, diluted:

        

Income before cumulative effect of a change in accounting principle

   $ 0.16     $ 0.12     $ 0.30     $ 0.23  

Cumulative effect of a change in accounting principle

     —         —         —         —    
                                

Net income

   $ 0.16     $ 0.12     $ 0.30     $ 0.23  
                                

Weighted average shares, basic

     2,070,636       2,306,457       2,075,683       2,328,360  

Weighted average shares, diluted

     2,121,645       2,341,785       2,122,080       2,371,301  

As a % of total revenue:

        

Gross margin

     54.4 %     52.7 %     53.6 %     52.5 %

Selling, general and administrative

     29.6 %     30.4 %     29.5 %     29.9 %

Research and development

     12.3 %     11.6 %     12.1 %     11.4 %

Operating income

     12.5 %     10.3 %     12.0 %     11.1 %

Net income

     10.7 %     10.8 %     10.6 %     10.8 %

Note: The presentation of the results of operations for the six months ended June 30, 2006 has been revised to adjust the cumulative effect of the accounting change for the initial adoption of FAS No. 123R. The effect of this change was to increase net income by $3.6 million and decrease additional paid-in-capital at January 1, 2006 by the same amount.


EMC CORPORATION

Selected Non-GAAP Data

For the Three Months Ended June 30, 2007

(in thousands, except per share amounts)

Unaudited

 

     Costs and Expenses           
     Cost of
Revenue
    Research
and
Development
    Selling,
General and
Administrative
   

Operating

Income

    

GAAP

   $ 1,423,859     $ 384,966     $ 924,349     $ 391,498   

Adjustments to reconcile to Non-GAAP:

           

Stock Option Expense (1)

     (9,968 )     (14,937 )     (28,284 )     53,189   

Restricted Stock Expense (1)

     (3,481 )     (9,796 )     (20,740 )     34,017   

Intangible Amortization (2)

     (29,185 )     (2,167 )     (17,244 )     48,596   
                                 

Non-GAAP

   $ 1,381,225     $ 358,066     $ 858,081     $ 527,300   
                                 
     Income
Before Taxes
    Income Tax
Provision
    Net Income     Net Income per
Weighted Average
Share, Basic
   Net Income per
Weighted Average
Share, Diluted

GAAP

   $ 427,180     $ 92,773     $ 334,407     $ 0.16    $ 0.16

Adjustments to reconcile to Non-GAAP:

           

Stock Option Expense (1)

     53,189       12,382       40,807       0.02      0.02

Restricted Stock Expense (1)

     34,017       9,481       24,536       0.01      0.01

Intangible Amortization (2)

     48,596       17,108       31,488       0.02      0.01
                                     

Non-GAAP

   $ 562,982     $ 131,744     $ 431,238     $ 0.21    $ 0.20
                                     

 

(1) Represents equity compensation recognized pursuant to FAS No. 123R "Share-Based Payment".
(2) Represents amortization associated with intangible assets acquired in connection with business combinations.


EMC CORPORATION

Selected Non-GAAP Data

For the Three Months Ended June 30, 2006

(in thousands, except per share amounts)

Unaudited

 

     Costs and Expenses        
     Cost of
Revenue
    Research and
Development
    Selling, General
and
Administrative
    In-process
Research and
Development
    Restructuring
Credits
    Operating
Income
 

GAAP

   $ 1,216,531     $ 299,429     $ 782,016     $ 12,410     $ (386 )   $ 264,523  

Adjustments to reconcile to Non-GAAP:

            

Stock Option Expense (1)

     (14,225 )     (13,839 )     (37,114 )     —         —         65,178  

Restricted Stock Expense (1)

     (2,214 )     (11,996 )     (18,935 )     —         —         33,145  

Intangible Amortization (2)

     (21,853 )     (3,277 )     (10,594 )     —         —         35,724  

In-Process Research and Development (3)

     —         —         —         (12,410 )     —         12,410  

Restructuring Credits (4)

     —         —         —         —         386       (386 )
                                                

Non-GAAP

   $ 1,178,239     $ 270,317     $ 715,373     $ —       $ —       $ 410,594  
                                                
            
     Income
Before Taxes
    Income Tax
Provision
    Net Income     Net Income per
Weighted
Average Share,
Basic
    Net Income per
Weighted
Average Share,
Diluted
       

GAAP

   $ 326,094     $ 47,001     $ 279,093     $ 0.12     $ 0.12    

Adjustments to reconcile to Non-GAAP:

            

Stock Option Expense (1)

     65,178       10,133       55,045       0.02       0.02    

Restricted Stock Expense (1)

     33,145       9,355       23,790       0.01       0.01    

Intangible Amortization (2)

     35,724       12,551       23,173       0.01       0.01    

In-Process Research and Development (3)

     12,410       —         12,410       0.01       0.01    

Restructuring Credits (4)

     (386 )     33,266       (33,652 )     (0.01 )     (0.01 )  
                                          

Non-GAAP

   $ 472,165     $ 112,306     $ 359,859     $ 0.16     $ 0.15 #  
                                          

 

(1) Represents equity compensation recognized pursuant to Financial Accounting Board Standard No. 123R "Share-Based Payment".
(2) Represents amortization associated with intangible assets acquired in connection with business combinations.
(3) Represents in-process research and development associated with business combinations.
(4) Represent adjustment to prior years’ restructuring and the associated tax benefit.
# May not foot due to rounding.


EMC CORPORATION

Consolidated Balance Sheets

(in thousands, except per share amounts)

Unaudited

 

    

June 30,

2007

    December 31,
2006
 
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 3,154,095     $ 1,828,106  

Short-term investments

     1,436,863       1,521,925  

Accounts and notes receivable, less allowance for doubtful accounts of $32,415 and $39,509

     1,669,203       1,692,214  

Inventories

     823,281       834,800  

Deferred income taxes

     426,739       418,146  

Other current assets

     273,181       225,396  
                

Total current assets

     7,783,362       6,520,587  

Long-term investments

     1,343,998       2,246,290  

Property, plant and equipment, net

     2,081,447       2,035,559  

Deferred income taxes

     119,865       104,446  

Intangible assets, net

     949,421       1,003,549  

Other assets, net

     668,892       638,655  

Goodwill, net

     6,137,848       6,017,161  
                

Total assets

   $ 19,084,833     $ 18,566,247  
                
LIABILITIES & STOCKHOLDERS’ EQUITY     

Current liabilities:

    

Accounts payable

   $ 690,016     $ 680,263  

Accrued expenses

     1,511,337       1,592,022  

Income taxes payable

     69,872       63,806  

Deferred revenue

     1,458,542       1,325,671  
                

Total current liabilities

     3,729,767       3,661,762  

Income taxes payable

     231,000       219,342  

Deferred revenue

     912,990       780,124  

Long-term convertible debt

     3,450,000       3,450,000  

Other liabilities

     122,772       129,312  

Commitments and contingencies

    

Stockholders’ equity:

    

Series preferred stock, par value $.01; authorized 25,000 shares, none outstanding

     —         —    

Common stock, par value $.01; authorized 6,000,000 shares; issued 2,097,290 and 2,122,339 shares

     20,973       21,223  

Additional paid-in capital

     2,226,944       2,560,935  

Retained earnings

     8,451,635       7,798,112  

Accumulated other comprehensive loss

     (61,248 )     (54,563 )
                

Total stockholders’ equity

     10,638,304       10,325,707  
                

Total liabilities and stockholders’ equity

   $ 19,084,833     $ 18,566,247  
                

 


EMC CORPORATION

Consolidated Statements of Cash Flows

(in thousands)

Unaudited

 

     Six Months Ended  
     June 30, 2007     June 30, 2006  

Cash flows from operating activities:

    

Cash received from customers

   $ 6,391,546     $ 5,423,035  

Cash paid to suppliers and employees

     (4,930,350 )     (4,124,686 )

Dividends and interest received

     116,747       134,906  

Interest paid

     (38,854 )     (2,696 )

Income taxes paid

     (108,841 )     (401,357 )
                

Net cash provided by operating activities

     1,430,248       1,029,202  
                

Cash flows from investing activities:

    

Additions to property, plant and equipment

     (324,210 )     (316,120 )

Capitalized software development costs

     (98,046 )     (96,074 )

Purchases of short and long-term available for sale securities

     (3,165,846 )     (3,486,712 )

Sales and maturities of short and long-term available for sale securities

     4,148,396       3,752,790  

Business acquisitions, net of cash acquired

     (161,002 )     (296,730 )

Other

     (6,860 )     (13,910 )
                

Net cash provided by (used in) investing activities

     392,432       (456,756 )
                

Cash flows from financing activities:

    

Issuance of common stock

     355,324       129,897  

Repurchase of EMC common stock

     (878,226 )     (1,375,608 )

Excess tax benefits from stock based compensation

     32,684       9,727  

Payment of long-term and short-term obligations

     (4,263 )     (127,396 )

Proceeds from long-term and short-term obligations

     2,506       85  
                

Net cash used in financing activities

     (491,975 )     (1,363,295 )
                

Effect of exchange rate changes on cash

     (4,716 )     28,863  
                

Net increase (decrease) in cash and cash equivalents

     1,325,989       (761,986 )

Cash and cash equivalents at beginning of period

     1,828,106       2,322,370  
                

Cash and cash equivalents at end of period

   $ 3,154,095     $ 1,560,384  
                

Reconciliation of net income to net cash provided by operating activities:

    

Net income

   $ 647,014     $ 555,168  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Cumulative effect of a change in accounting principle

     —         (247 )

Depreciation and amortization

     438,260       364,641  

In-process research and development

     —         12,410  

Stock-based compensation expense

     170,553       201,938  

(Decrease) increase in provision for doubtful accounts

     (82 )     866  

Deferred income taxes, net

     (28,163 )     (67,065 )

Excess tax benefits from stock based compensation

     (32,684 )     (9,727 )

Other

     6,524       14,977  

Changes in assets and liabilities, net of acquisitions:

    

Accounts and notes receivable

     29,166       147,483  

Inventories

     39,897       (19,999 )

Other assets

     (79,042 )     (72,514 )

Accounts payable

     9,373       22,884  

Accrued expenses

     (105,797 )     (76,886 )

Income taxes payable

     79,731       (198,018 )

Deferred revenue

     262,784       149,476  

Other liabilities

     (7,286 )     3,815  
                

Net cash provided by operating activities

   $ 1,430,248     $ 1,029,202  
                

Non-cash activity:

    

— Issuance of stock options exchanged in business combinations

   $ 659     $ 7,500  
                

 


EMC Corporation

Supplemental Financial Data

Revenue Analysis

(in thousands)

Unaudited

Revenue Components

 

     Q1 2006     Q2 2006     Q3 2006     Q4 2006     YTD 2006     Q1 2007     Q2 2007     YTD 2007  
Revenues                 

Systems

   $ 1,226,928     $ 1,151,600     $ 1,299,321     $ 1,462,777     $ 5,140,626     $ 1,305,766     $ 1,354,438     $ 2,660,204  

Software:

                

Software License

     621,602       681,998       736,331       897,485       2,937,416       806,660       867,917       1,674,577  

Software Maintenance

     303,202       315,189       345,650       371,163       1,335,204       382,080       400,233       782,313  
                                                                

Total Software License & Maintenance

     924,804       997,187       1,081,981       1,268,648       4,272,620       1,188,740       1,268,150       2,456,890  

Professional, Systems Maintenance and Other Services

     396,081       423,525       431,989       481,471       1,733,066       478,972       500,798       979,770  
     2,547,813       2,572,312       2,813,291       3,212,896       11,146,312       2,973,478       3,123,386       6,096,864  

Other Businesses

     2,874       2,211       2,015       1,678       8,778       1,527       1,286       2,813  
                                                                
Total Consolidated Revenues    $ 2,550,687     $ 2,574,523     $ 2,815,306     $ 3,214,574     $ 11,155,090     $ 2,975,005     $ 3,124,672     $ 6,099,677  
                                                                

Percentage impact to EMC revenue growth rate due to changes in exchange rates from the prior year

     (2.1 )%     (1.1 )%     0.7 %     1.4 %     (0.2 )%     2.1 %     2.1 %     2.1 %


EMC Corporation

Supplemental Financial Data

Revenue Analysis

(in thousands)

Unaudited

Supplemental Revenue Data

 

     Q1 2006    Q2 2006    Q3 2006    Q4 2006    YTD 2006    Q1 2007    Q2 2007    YTD 2007

Storage Systems Revenue

   $ 1,222,624    $ 1,147,892    $ 1,295,524    $ 1,458,740    $ 5,124,780    $ 1,302,741    $ 1,347,357    $ 2,650,098

Storage Software License Revenue

     446,720      493,002      524,679      550,856      2,015,257      486,558      512,521      999,079

Storage Maintenance and Services Revenue

     583,010      610,015      619,496      656,020      2,468,541      637,629      668,140      1,305,769
                                                       

Total Storage Revenue

   $ 2,252,354    $ 2,250,909    $ 2,439,699    $ 2,665,616    $ 9,608,578    $ 2,426,928    $ 2,528,018    $ 4,954,946
                                                       

Content Management and Archiving Systems Revenue

   $ 4,304    $ 3,708    $ 87    $ 522    $ 8,621    $ 68    $ 1,708    $ 1,776

Content Management and Archiving Software License Revenue

     83,038      75,161      59,092      106,302      323,593      68,472      69,046      137,518

Content Management and Archiving Maintenance and Services Revenue

     79,978      87,253      90,173      96,172      353,576      103,658      102,848      206,506
                                                       

Total Content Management and Archiving Revenue

   $ 167,320    $ 166,122    $ 149,352    $ 202,996    $ 685,790    $ 172,198    $ 173,602    $ 345,800
                                                       

VMware Software License Revenue

   $ 91,844    $ 113,835    $ 125,476    $ 163,492    $ 494,647    $ 169,696    $ 205,050    $ 374,746

VMware Maintenance and Services Revenue

     39,169      43,657      63,024      68,539      214,389      86,322      93,047      179,369
                                                       

Total VMware Revenue

   $ 131,013    $ 157,492    $ 188,500    $ 232,031    $ 709,036    $ 256,018    $ 298,097    $ 554,115
                                                       

Security Systems Revenue

   $ —      $ —      $ 3,710    $ 3,515    $ 7,225    $ 2,958    $ 5,373    $ 8,331

Security Software License Revenue

     —        —        27,084      76,835      103,919      81,934      81,300      163,234

Security Maintenance and Services Revenue

     —        —        6,961      33,581      40,542      34,969      38,282      73,251
                                                       

Total Security Revenue

   $ —      $ —      $ 37,755    $ 113,931    $ 151,686    $ 119,861    $ 124,955    $ 244,816