EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

  Contact:  

Michael Gallant

508-293-6357

gallant_michael@emc.com

FOR IMMEDIATE RELEASE

 

EMC POSTS RECORD FOURTH-QUARTER AND

FULL-YEAR FINANCIAL RESULTS

 

  •  

Fourth-Quarter Revenue of $3.83 Billion, up 19% Year-over-Year

  •  

Fourth-Quarter GAAP EPS of $ 0.24, up 33% Year-over-Year

  •  

Fourth-Quarter Operating Cash flow of $979 Million, up 50% Year-over-Year

  •  

Record Full-Year Revenue of $13.23 Billion, up 19% Year-over-Year

HOPKINTON, Mass. – Jan. 29, 2008 – EMC Corporation (NYSE:EMC), the world leader in information infrastructure solutions, today announced all-time record fourth-quarter and full-year revenue and strong year-over-year growth in profit, earnings per share and operating cash flow. EMC’s 18th consecutive quarter of double-digit year-over-year revenue growth was highlighted by balanced, double-digit revenue growth across the company’s Information Storage, Content Management & Archiving, RSA Information Security, and VMware Virtual Infrastructure business lines and its four major geographies.

Total consolidated revenue for the fourth quarter of 2007 was a record $3.83 billion, an increase of 19% over the $3.21 billion reported for the fourth quarter of 2006. GAAP net income for the fourth quarter of 2007 was $525.7 million or $0.24 per diluted share, 33% higher than the GAAP $0.18 earnings per diluted share reported for the year-ago period. During the quarter, EMC generated operating cash flow of $979 million, an increase of 50% compared with the same period a year ago and free cash flow of $712 million, an increase of 78% year-over-year.

Total consolidated revenue for EMC’s full 2007 fiscal year was a record $13.23 billion, 19% higher than the $11.16 billion reported for the full 2006 fiscal year. GAAP net income for 2007 was $1.67 billion or $0.77 per diluted share, 43% higher than the GAAP earnings per diluted share of $0.54 reported for 2006.

Joe Tucci, EMC Chairman, President and Chief Executive Officer, said, “2007 was truly a breakout year for EMC. We exceeded all of the aggressive financial targets we set out to achieve at the beginning of the year. The highly successful partial IPO of VMware clearly met its key goals. And we further organized around our ‘One EMC’ initiative to interlock and drive more technology and product integrations across our Information Storage, Content Management and Archiving, and RSA Information Security business units, making it much easier for our customers and partners to do business with EMC.”

Commenting further, Tucci said, “Looking forward, EMC has never been better positioned to continue to grow and gain market share. We have the best product line-up in our history with a very favorable product cycle, and our proven go-to-market model is firmly in place. EMC is well positioned in the areas where IT spending will grow the fastest this year. Finally, our focus on innovation and R&D is enabling us to tackle emerging customer priorities such as Web 2.0, virtualization, compliance and new online methods for purchasing and consuming software.”

During the fourth quarter, EMC systems revenue increased 15% compared with the same period a year ago and represented 44% of total fourth-quarter revenue. Software license and maintenance revenue increased 20% year-over-year and accounted for 40% of total fourth-quarter revenue. Professional services, systems maintenance and other services revenue grew by 27% year-over-year and represented 16% of total fourth-quarter revenue. Revenue from North America increased 16% compared with the same period a year ago and represented 55% of total fourth-quarter revenue. Revenue from operations outside of North America grew 23% year-over-year, driven by double-digit revenue growth in EMC’s Europe, Middle East and Africa (EMEA), Asia-Pacific and Japan (APJ) and Latin America regions.

David Goulden, EMC Executive Vice President and Chief Financial Officer, said, “We exceeded our growth, profitability and free cash flow targets for the fourth quarter and for the year. By investing in our go-to-market model and worldwide market presence, strengthening our product portfolio, and expanding our strategic partnerships around the world, we enter 2008 with an even stronger foundation for continued financial success and market share gains.”

Fourth-Quarter Highlights

EMC’s Information Storage business, which includes revenue from storage systems, storage software and related customer and professional services, reached $3.03 billion, an increase of 14% compared with the year-ago period. Growth in the Information Storage business reflects continued global demand for EMC Symmetrix, EMC CLARiiON, and EMC Celerra networked storage systems. Strong customer demand for IP storage solutions, next-generation backup and recovery capabilities, file-based virtualization, and model-based resource management also helped to drive strong year-over-year information storage revenue growth.

EMC’s Content Management and Archiving business posted double-digit revenue growth, increasing fourth-quarter revenue 17% year-over-year to $238 million. On a year-over-year basis, new license revenue increased 8% and maintenance and professional services revenue was up 25%. Growth in the Content Management and Archiving business reflects strong global demand for EMC’s enterprise content management and archiving solutions to drive business efficiency, compliance and risk mitigation across the information infrastructure, and demand for EMC’s Documentum 6 platform, which gives organizations of various sizes and across industries a robust, unified repository for managing, storing, securing, and delivering increasing amounts of unstructured content.

RSA Information Security revenues for the fourth quarter of 2007 grew 30% year-over-year, reaching $148 million. This growth was primarily driven by RSA’s key management and its consumer-facing applications, as well as its compliance and security information and event management (SIEM) solutions. During the quarter, the division continued to see success with its holistic, information-centric approach to information security and risk management and its unparalleled breadth of solutions that address customers’ key areas of information security and its management across the information infrastructure.

VMware (NYSE: VMW), which is majority-owned by EMC, had fourth-quarter revenues of $412 million, an increase of approximately 80% compared to the year-ago quarter. VMware is the global leader in virtualization solutions from the desktop to the datacenter. More than 100,000 customers rely on VMware to reduce capital and operating expenses, ensure business continuity, strengthen security and go green. VMware is based in Palo Alto, California. Visit http://ir.vmware.com for more information about the virtualization software leader’s fourth-quarter financial results.

2007 Highlights

EMC had double-digit revenue growth across its systems, software and services offerings in 2007. Systems revenue grew 12% during the year to $5.76 billion, driven by the introduction of new models and enhancements to EMC’s entire line of networked storage platforms. Software license and maintenance revenue grew 25% to $5.33 billion, and professional services, systems maintenance and other services revenue grew 23% in 2007 to $2.13 billion. For the year, systems revenue represented 44% of EMC’s annual revenue, software license and maintenance represented 40% and professional services and systems maintenance represented 16% of annual revenue.

EMC’s Information Infrastructure business revenues, which comprise EMC’s Information Storage, Content Management and Archiving and RSA Information Security business revenues, were $11.9 billion and grew 14% in 2007. EMC’s Information Storage business annual revenue increased 10% in 2007 to $10.61 billion compared to 2006. Annual revenue for EMC’s Content Management and Archiving business grew 13% year-over-year to $773 million and, on a comparable basis, annual revenue for the RSA Information Security division grew 24% to $525 million.

Total consolidated revenue for EMC’s full 2007 fiscal year, which includes EMC’s Information Infrastructure and VMware Virtual Infrastructure businesses, was a record $13.23 billion, 19% higher than the $11.16 billion reported for the full 2006 fiscal year.

For the year, revenue from EMC’s North America geography increased 17% compared with 2006 and represented 57% of total annual revenue. Revenue from operations outside of North America grew 22% year-over-year. All four of EMC’s major geographies posted double-digit year-over-year revenue growth, including EMC’s Asia Pacific and Japan geography which emerged as the company’s fastest-growing geography for 2007.

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 or closed after the date hereof. These statements supersede all prior statements regarding business outlook set forth in prior EMC news releases.

All dollar amounts and percentages in the business outlook should be considered to be approximations.

 

  •  

Consolidated EMC revenues are expected to grow 13% to $15 billion in 2008. Within the consolidated revenues:

 

  ¡  

EMC’s Information Infrastructure’s revenues are expected to grow 9% to $13 billion in 2008.

 

  ¡  

VMware’s revenues are expected to grow 50% in 2008.

 

  •  

Consolidated GAAP diluted earnings per share are expected to be $0.78 in 2008.

 

  ¡  

EMC Information Infrastructure’s contribution to diluted earnings per share is expected to be $0.68 in 2008.

 

  ¡  

VMware’s contribution to diluted earnings per share is expected to be $0.10 in 2008.

 

  •  

Consolidated non-GAAP diluted earnings per share are expected to grow 14% to $1.04 in 2008. Non-GAAP diluted earnings per share exclude the impact of stock-based compensation and intangible asset amortization.

 

  ¡  

EMC Information Infrastructure’s contribution to non-GAAP diluted earnings per share is expected to grow 11% to $0.88 in 2008.

 

  ¡  

VMware’s contribution to non-GAAP diluted earnings per share is expected to grow 33% to $0.16 in 2008.

 

  •  

Consolidated stock-based compensation expense is expected to be $0.18 per diluted share in 2008 and the amortization of intangible assets is expected to be $0.08 per diluted share in 2008. Within these consolidated expenses:

 

  ¡  

EMC Information Infrastructure’s stock-based compensation expense is expected to be $0.12 per diluted share in 2008 and amortization of intangible assets is expected to be $.08 per diluted share in 2008.

 

  ¡  

VMware’s stock-based compensation expense is expected to be $0.06 per diluted share in 2008 and amortization of intangible assets to be less than $0.01 per diluted share in 2008.

 

  •  

Consolidated GAAP tax rate for 2008 is expected to be 20% and the non-GAAP tax rate to be 22%. The tax impact of stock-based compensation and intangible asset amortization is expected to be 2% on the 2008 tax rate.

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, Celerra and Symmetrix 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) our ability to protect our proprietary technology; (iv) risks associated with managing the growth of our business, including risks associated with acquisitions and investments and the challenges and costs of integration, restructuring and achieving anticipated synergies; (v) fluctuations in VMware, Inc.’s operating results and risks associated with trading of VMware stock; (vi) competitive factors, including but not limited to pricing pressures and new product introductions; (vii) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (viii) component and product quality and availability; (ix) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (x) insufficient, excess or obsolete inventory; (xi) war or acts of terrorism; (xii) the ability to attract and retain highly qualified employees; (xiii) fluctuating currency exchange rates; and (xiv) 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 schedules for various periods entitled “Reconciliation of GAAP to Non-GAAP,” certain items noted on each such specific schedule (including, for certain time periods where noted, amounts relating to tax benefits, net gains on investments, including gain on sale of VMware stock, restructuring and IPR&D charges, stock-based compensation expense and intangible amortization) 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 items 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. 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 the items noted above 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 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     Twelve Months Ended  
     December 31,
2007		     December 31,
2006		     December 31,
2007		     December 31,
2006		  

Revenues:

         

Product sales

    $ 2,744,311     $ 2,360,262     $ 9,411,976     $ 8,078,042  

Services

      1,086,463       854,312       3,818,229       3,077,048  
                                
     3,830,774       3,214,574       13,230,205       11,155,090  

Cost and expenses:

         

Cost of product sales

      1,227,607       1,111,861       4,359,041       3,906,771  

Cost of services

      484,236       364,588       1,659,836       1,335,120  

Research and development

      402,970       358,973       1,526,928       1,254,193  

Selling, general and administrative

      1,128,875       913,948       3,912,688       3,253,274  

In-process research and development

      350       —         1,150       35,410  

Restructuring charges

      34,551       166,923       31,310       162,564  
                                

Operating income

      552,185       298,281       1,739,252       1,207,758  

Net gain on investments, including gain on sale of VMware stock

      —         —         137,330       —    

Investment income

      79,083       50,273       249,264       224,949  

Interest expense

      (18,489 )     (25,685 )     (72,855 )     (34,123 )

Other income (expense), net

      5,627       (10,814 )     6,578       (8,566 )
                                

Income before taxes, minority interest and cumulative effect of a change in accounting principle

      618,406       312,055       2,059,569       1,390,018  

Income tax provision (benefit)

      81,676       (76,714 )     378,446       162,664  
                                

Income before minority interest and cumulative effect of a change in accounting principle

      536,730       388,769       1,681,123       1,227,354  

Minority interest, net of taxes

      (10,996 )     —         (15,455 )     —    
                                

Income before cumulative effect of a change in accounting principle

      525,734       388,769       1,665,668       1,227,354  

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

      —         —         —         247  
                                

Net income

    $ 525,734     $ 388,769     $ 1,665,668     $ 1,227,601  
                                

Net income per weighted average share, basic:

         

Income before cumulative effect of a change in accounting principle

    $ 0.25     $ 0.18     $ 0.80     $ 0.55  

Cumulative effect of a change in accounting principle

      —         —         —         —    
                                

Net income

    $ 0.25     $ 0.18     $ 0.80     $ 0.55  
                                

Net income per weighted average share, diluted:

         

Income before cumulative effect of a change in accounting principle

    $ 0.24     $ 0.18     $ 0.77     $ 0.54  

Cumulative effect of a change in accounting principle

      —         —         —         —    
                                

Net income

    $ 0.24     $ 0.18     $ 0.77     $ 0.54  
                                

Weighted average shares, basic

      2,086,259       2,124,625       2,079,542       2,248,431  

Weighted average shares, diluted

      2,210,008       2,164,518       2,157,873       2,286,304  

Note: Prior periods have been adjusted to reclassify a portion of the cumulative effect of adoption of FAS123R in Q1'06 from the income statement to stockholders' equity. This reclassification results in an increase to net income in Q1'06 and YTD 2006 of $3,619 and a corresponding decrease in additional paid-in capital.

Reconciliation of GAAP to Non-GAAP

For the Three Months Ended December 31, 2007

(in thousands, except per share amounts)

Unaudited

 

     Revenue     Cost of
Revenue		     Research
and
Development		     Selling,
General and
Administrative		     Restructuring
and IPR&D		     Operating
Income		     Other
Income,
net		    Income
Before
Taxes
and
Minority
Interest		     Income
Tax
Provision		     Income
Before
Minority
Interest		     Minority
Interest		     Net
Income		     Net
Income
per
Weighted
Average
Share,
Basic		     Net
Income
per
Weighted
Average
Share,
Diluted		  

EMC Consolidated GAAP

    $ 3,830,774     $ 1,711,843     $ 402,970     $ 1,128,875     $ 34,901     $ 552,185     $ 66,221    $ 618,406     $ 81,676     $ 536,730     $ (10,996 )   $ 525,734     $ 0.252     $ 0.236  

Restructuring charges and IPR&D

      —         —         —         —         (34,901 )     34,901       —        34,901       3,123       31,778       —         31,778     $ 0.015     $ 0.014  
                                                                                                               

EMC Consolidated Adjusted (1)

      3,830,774       1,711,843       402,970       1,128,875       —         587,086       66,221      653,307       84,799       568,508       (10,996 )     557,512     $ 0.267     $ 0.251  

Stock-based compensation expense

      —         (15,157 )     (30,837 )     (50,220 )     —         96,214       —        96,214       17,719       78,495       (4,089 )     74,406     $ 0.036     $ 0.034  

Intangible amortization

      —         (31,400 )     (4,871 )     (20,797 )     —         57,068       —        57,068       19,955       37,113       (581 )     36,532     $ 0.018     $ 0.017  
                                                                                                               

EMC Consolidated Non-GAAP (2)

    $ 3,830,774     $ 1,665,286     $ 367,262     $ 1,057,858     $ —       $ 740,368     $ 66,221    $ 806,589     $ 122,473     $ 684,116     $ (15,665 )   $ 668,451     $ 0.320     $ 0.301  
                                                                                                               

EMC Information Infrastructure GAAP

    $ 3,418,367     $ 1,644,155     $ 309,541     $ 950,552     $ 34,901     $ 479,218     $ 59,435    $ 538,653     $ 77,748     $ 460,905     $ —       $ 460,905     $ 0.221     $ 0.209  

Restructuring charges and IPR&D

      —         —         —         —         (34,901 )     34,901       —        34,901       3,123       31,778       —         31,778     $ 0.015     $ 0.014  
                                                                                                               

EMC Information Infrastructure Adjusted (3)

      3,418,367       1,644,155       309,541       950,552       —         514,119       59,435      573,554       80,871       492,683       —         492,683     $ 0.236     $ 0.223  

Stock-based compensation expense

      —         (10,557 )     (15,708 )     (35,362 )     —         61,627       —        61,627       12,192       49,435       —         49,435     $ 0.024     $ 0.022  

Intangible amortization

      —         (26,011 )     (4,871 )     (19,628 )     —         50,510       —        50,510       17,524       32,986       —         32,986     $ 0.016     $ 0.015  
                                                                                                               

EMC Information Infrastructure Non-GAAP (4)

    $ 3,418,367     $ 1,607,587     $ 288,962     $ 895,562     $ —       $ 626,256     $ 59,435    $ 685,691     $ 110,587     $ 575,104     $ —       $ 575,104     $ 0.276     $ 0.260  
                                                                                                               

VMware standalone GAAP

    $ 412,475     $ 67,182     $ 91,562     $ 177,257     $ —       $ 76,474     $ 6,786    $ 83,260     $ 5,105     $ 78,155     $ —       $ 78,155     $ 0.037     $ 0.035  

GAAP adjustments and eliminations

      (68 )     506       1,867       1,066       —         (3,507 )     —        (3,507 )     (1,177 )     (2,330 )     (10,996 )     (13,326 )   $ (0.006 )   $ (0.008 )
                                                                                                               

VMware within EMC

      412,407       67,688       93,429       178,323       —         72,967       6,786      79,753       3,928       75,825       (10,996 )     64,829     $ 0.031     $ 0.028  

Stock-based compensation expense

      —         (4,600 )     (15,129 )     (14,858 )     —         34,587       —        34,587       5,527       29,060       (4,089 )     24,971     $ 0.012     $ 0.011  

Intangible amortization

      —         (5,389 )     —         (1,169 )     —         6,558       —        6,558       2,431       4,127       (581 )     3,546     $ 0.002     $ 0.002  
                                                                                                               

VMware within EMC Non-GAAP (5)

    $ 412,407     $ 57,699     $ 78,300     $ 162,296     $ —       $ 114,112     $ 6,786    $ 120,898     $ 11,886     $ 109,012     $ (15,665 )   $ 93,346     $ 0.045     $ 0.041  
                                                                                                               
                     

 

Wtd. Average Share O/S

 

     2,086,259       2,210,008  
                                         

 

(1) Represents EMC Consolidated GAAP excluding restructuring charges and IPR&D.
(2) Represents EMC Consolidated Adjusted excluding stock-based compensation expense and intangible amortization.
(3) Represents EMC Information Infrastructure GAAP excluding restructuring charges and IPR&D.
(4) Represents EMC Information Infrastructure Adjusted less stock-based compensation expense and intangible amortization.
(5) Represents VMware within EMC excluding stock-based compensation expense and intangible amortization.

Note: schedule may not add due to rounding

Reconciliation of GAAP to Non-GAAP

For the Three Months Ended December 31, 2006

(in thousands, except per share amounts)

Unaudited

 

     Revenue    Cost of
Revenue		     Research
and
Development		     Selling,
General and
Administrative		     Restructuring
and IPR&D		     Operating
Income		    Other
Income,
net		    Income
Before
Taxes		    Income
Tax
Provision		     Net
Income		     Net
Income
per
Weighted
Average
Share,
Basic		     Net
Income
per
Weighted
Average
Share,
Diluted		  

EMC Consolidated GAAP

    $ 3,214,574    $ 1,476,449     $ 358,973     $ 913,948     $ 166,923     $ 298,281    $ 13,774    $ 312,055    $ (76,714 )   $ 388,769     $ 0.183     $ 0.180  

Restructuring charges

      —        —         —         —         (166,923 )     166,923      —        166,923      37,833       129,090     $ 0.061     $ 0.060  

Tax benefits

      —        —         —         —         —         —        —        —        111,590       (111,590 )   $ (0.053 )   $ (0.052 )
                                                                                            

EMC Consolidated Adjusted (1)

      3,214,574      1,476,449       358,973       913,948       —         465,204      13,774      478,978      72,709       406,269     $ 0.191     $ 0.188  

Stock-based compensation expense

      —        (16,914 )     (27,917 )     (54,345 )     —         99,176      —        99,176      25,780       73,396     $ 0.035     $ 0.034  

Intangible amortization

      —        (27,757 )     (1,977 )     (13,931 )     —         43,665      —        43,665      15,654       28,011     $ 0.013     $ 0.013  
                                                                                            

EMC Consolidated Non-GAAP (2)

    $ 3,214,574    $ 1,431,778     $ 329,079     $ 845,672     $ —       $ 608,045    $ 13,774    $ 621,819    $ 114,143     $ 507,676     $ 0.239     $ 0.235  
                                                                                            

EMC Information Infrastructure GAAP

    $ 2,982,543    $ 1,437,056     $ 311,640     $ 807,555     $ 166,923     $ 259,369    $ 12,527    $ 271,896    $ (84,039 )   $ 355,935     $ 0.168     $ 0.164  

Restructuring charges

      —        —         —         —         (166,923 )     166,923      —        166,923      37,833       129,090     $ 0.061     $ 0.060  

Tax benefits

      —        —         —         —         —         —        —        —        111,590       (111,590 )   $ (0.053 )   $ (0.052 )
                                                                                            

EMC Information Infrastructure Adjusted (3)

      2,982,543      1,437,056       311,640       807,555       —         426,292      12,527      438,819      65,384       373,435     $ 0.176     $ 0.173  

Stock-based compensation expense

      —        (16,159 )     (18,915 )     (47,896 )     —         82,970      —        82,970      21,887       61,083     $ 0.029     $ 0.028  

Intangible amortization

      —        (22,223 )     (1,977 )     (13,013 )     —         37,213      —        37,213      13,202       24,011     $ 0.011     $ 0.011  
                                                                                            

EMC Information Infrastructure Non-GAAP (4)

    $ 2,982,543    $ 1,398,674     $ 290,748     $ 746,646     $ —       $ 546,475    $ 12,527    $ 559,002    $ 100,473     $ 458,529     $ 0.216     $ 0.212  
                                                                                            

VMware standalone GAAP

    $ 229,581    $ 37,250     $ 50,131     $ 105,691     $ —       $ 36,509    $ 1,234    $ 37,743    $ 6,764     $ 30,979     $ 0.015     $ 0.014  

GAAP adjustments and eliminations

      2,450      2,143       (2,798 )     702       —         2,403      13      2,416      561       1,855     $ 0.001     $ 0.001  
                                                                                            

VMware within EMC

      232,031      39,393       47,333       106,393       —         38,912      1,247      40,159      7,325       32,834     $ 0.015     $ 0.015  

Stock-based compensation expense

      —        (755 )     (9,002 )     (6,449 )     —         16,206      —        16,206      3,893       12,313     $ 0.006     $ 0.006  

Intangible amortization

      —        (5,534 )     —         (918 )     —         6,452      —        6,452      2,452       4,000     $ 0.002     $ 0.002  
                                                                                            

VMware within EMC Non-GAAP (5)

    $ 232,031    $ 33,104     $ 38,331     $ 99,026     $ —       $ 61,570    $ 1,247    $ 62,817    $ 13,670     $ 49,147     $ 0.023     $ 0.023  
                                                                                            
                   

 

Wtd. Average Share O/S

 

     2,124,625       2,164,518  
                                        

 

(1) Represents EMC Consolidated GAAP excluding restructuring charges and special tax benefits.
(2) Represents EMC Consolidated Adjusted excluding stock-based compensation expense and intangible amortization.
(3) Represents EMC Information Infrastructure GAAP excluding restructuring charges and special tax benefits.
(4) Represents EMC Information Infrastructure Adjusted excluding stock-based compensation expense and intangible amortization.
(5) Represents VMware within EMC excluding stock-based compensation expense and intangible amortization.

Note: schedule may not add due to rounding

Reconciliation of GAAP to Non-GAAP

For the Year Ended December 31, 2007

(in thousands, except per share amounts)

Unaudited

 

     Revenue     Cost of
Revenue		     Research
and
Development		     Selling,
General and
Administrative		     Restructuring
and IPR&D		     Operating
Income		     Other
Income,
net		     Income
Before
Taxes and
Minority
Interest		     Income
Tax
Provision		     Income
Before
Minority
Interest		     Minority
Interest		     Net
Income		     Net
Income
per
Weighted
Average
Share,
Basic		     Net
Income
per
Weighted
Average
Share,
Diluted		  

EMC Consolidated GAAP

    $ 13,230,205     $ 6,018,877     $ 1,526,928     $ 3,912,688     $ 32,460     $ 1,739,252     $ 320,317     $ 2,059,569     $ 378,446     $ 1,681,123     $ (15,455 )   $ 1,665,668     $ 0.801     $ 0.770  

Restructuring charges and IPR&D

      —         —         —         —         (34,901 )     34,901       —         34,901       3,123       31,778       —         31,778     $ 0.015     $ 0.015  

Net gains on investments, including gain on sale of VMware stock

      —         —         —         —         —         —         (137,330 )     (137,330 )     (22,180 )     (115,150 )     —         (115,150 )   $ (0.055 )   $ (0.053 )

Tax benefits

      —         —         —         —         —         —         —         —         19,912       (19,912 )     —         (19,912 )   $ (0.010 )   $ (0.009 )
                                                                                                                

EMC Consolidated Adjusted (1)

      13,230,205       6,018,877       1,526,928       3,912,688       (2,441 )     1,774,153       182,987       1,957,140       379,301       1,577,839       (15,455 )     1,562,384     $ 0.751     $ 0.722  

Stock-based compensation expense

      —         (57,223 )     (108,041 )     (202,136 )     —         367,400       —         367,400       87,054       280,346       (5,793 )     274,553     $ 0.132     $ 0.127  

Intangible amortization

      —         (119,948 )     (11,357 )     (73,492 )     —         204,797       —         204,797       72,019       132,778       (868 )     131,910     $ 0.063     $ 0.061  
                                                                                                                

EMC Consolidated Non-GAAP (2)

    $ 13,230,205     $ 5,841,706     $ 1,407,530     $ 3,637,060     $ (2,441 )   $ 2,346,350     $ 182,987     $ 2,529,337     $ 538,374     $ 1,990,963     $ (22,115 )   $ 1,968,848     $ 0.947     $ 0.910  
                                                                                                                

EMC Information Infrastructure GAAP

    $ 11,909,392     $ 5,800,529     $ 1,228,810     $ 3,322,169     $ 32,460     $ 1,525,424     $ 315,180     $ 1,840,604     $ 361,419     $ 1,479,185     $ —       $ 1,479,185     $ 0.711     $ 0.685  

Restructuring charges and IPR&D

      —         —         —         —         (34,901 )     34,901       —         34,901       3,123       31,778       —         31,778     $ 0.015     $ 0.015  

Net gains on investments, including gain on sale of VMware stock

      —         —         —         —         —         —         (137,330 )     (137,330 )     (22,180 )     (115,150 )     —         (115,150 )   $ (0.055 )   $ (0.053 )

Tax benefits

      —         —         —         —         —         —         —         —         19,912       (19,912 )     —         (19,912 )   $ (0.010 )   $ (0.009 )
                                                                                                                

EMC Information Infrastructure Adjusted (3)

      11,909,392       5,800,529       1,228,810       3,322,169       (2,441 )     1,560,325       177,850       1,738,175       362,274       1,375,901       —         1,375,901     $ 0.662     $ 0.638  

Stock-based compensation expense

      —         (48,693 )     (65,235 )     (159,531 )     —         273,459       —         273,459       66,785       206,674       —         206,674     $ 0.099     $ 0.096  

Intangible amortization

      —         (98,776 )     (11,357 )     (68,923 )     —         179,056       —         179,056       62,490       116,566       —         116,566     $ 0.056     $ 0.054  
                                                                                                                

EMC Information Infrastructure Non-GAAP (4)

    $ 11,909,392     $ 5,653,060     $ 1,152,218     $ 3,093,715     $ (2,441 )   $ 2,012,840     $ 177,850     $ 2,190,690     $ 491,548     $ 1,699,142     $ —       $ 1,699,142     $ 0.817     $ 0.787  
                                                                                                                

VMware standalone GAAP

    $ 1,325,811     $ 218,674     $ 285,941     $ 585,855     $ —       $ 235,341     $ 5,137     $ 240,478     $ 22,341     $ 218,137     $ —       $ 218,137     $ 0.105     $ 0.101  

GAAP adjustments and eliminations

      (4,998 )     (326 )     12,177       4,664       —         (21,513 )     —         (21,513 )     (5,314 )     (16,199 )     (15,455 )     (31,654 )   $ (0.015 )   $ (0.017 )
                                                                                                                

VMware within EMC

      1,320,813       218,348       298,118       590,519       —         213,828       5,137       218,965       17,027       201,938       (15,455 )     186,483     $ 0.090     $ 0.084  

Stock-based compensation expense

      —         (8,530 )     (42,806 )     (42,605 )     —         93,941       —         93,941       20,269       73,672       (5,793 )     67,879     $ 0.033     $ 0.031  

Intangible amortization

      —         (21,172 )     —         (4,569 )     —         25,741       —         25,741       9,529       16,212       (868 )     15,344     $ 0.007     $ 0.007  
                                                                                                                

VMware within EMC Non-GAAP (5)

    $ 1,320,813     $ 188,646     $ 255,312     $ 543,345     $ —       $ 333,510     $ 5,137     $ 338,647     $ 46,825     $ 291,822     $ (22,115 )   $ 269,706     $ 0.130     $ 0.123  
                                                                                                                
                    

 

Wtd. Average Share O/S

 

     2,079,542       2,157,873  
                                        

 

(1) Represents EMC Consolidated GAAP excluding restructuring charges, IPR&D, net gains on investments, including the gain on sale of VMware stock and special tax benefits.
(2) Represents EMC Consolidated Adjusted excluding stock-based compensation expense and intangible amortization.
(3) Represents EMC Information Infrastructure GAAP excluding restructuring charges, IPR&D, net gains on investments, including the gain on sale of VMware stock and special tax benefits.
(4) Represents EMC Information Infrastructure Adjusted less stock-based compensation expense and intangible amortization.
(5) Represents VMware within EMC excluding stock-based compensation expense and intangible amortization.

Note: schedule may not add due to rounding

Reconciliation of GAAP to Non-GAAP

For the Year Ended December 31, 2006

(in thousands, except per share amounts)

Unaudited

 

     Revenue    Cost of
Revenue		     Research
and
Development		     Selling,
General and
Administrative		     Restructuring
and IPR&D		     Operating
Income		    Other
Income,
net		    Income
Before
Taxes		    Income
Tax
Provision		    Cumulative
Effect of a
Change in
Accounting
Principle		     Net
Income		     Net
Income
per
Weighted
Average
Share,
Basic		     Net
Income
per
Weighted
Average
Share,
Diluted		  

EMC Consolidated GAAP

    $ 11,155,090    $ 5,241,891     $ 1,254,193     $ 3,253,274     $ 197,974     $ 1,207,758    $ 182,260    $ 1,390,018    $ 162,664    $ 247     $ 1,227,601     $ 0.546     $ 0.537  

Restructuring charges and IPR&D

      —        —         —         —         (201,947 )     201,947      —        201,947      37,833      —         164,114     $ 0.073     $ 0.072  

Tax benefits

      —        —         —         —         —         —        —        —        144,856      —         (144,856 )   $ (0.064 )   $ (0.063 )
                                                                                                   

EMC Consolidated Adjusted (1)

      11,155,090      5,241,891       1,254,193       3,253,274       (3,973 )     1,409,705      182,260      1,591,965      345,353      247       1,246,859     $ 0.555     $ 0.546  

Stock-based compensation expense

      —        (66,288 )     (107,481 )     (224,918 )     —         398,687      —        398,687      89,362      (247 )     309,078     $ 0.137     $ 0.135  

Intangible amortization

      —        (94,333 )     (12,600 )     (46,091 )     —         153,024      —        153,024      53,967      —         99,057     $ 0.044     $ 0.043  
                                                                                                   

EMC Consolidated Non-GAAP (2)

    $ 11,155,090    $ 5,081,270     $ 1,134,112     $ 2,982,265     $ (3,973 )   $ 1,961,416    $ 182,260    $ 2,143,676    $ 488,682    $ —       $ 1,654,994     $ 0.736     $ 0.724  
                                                                                                   

EMC Information Infrastructure GAAP

    $ 10,446,054    $ 5,114,440     $ 1,110,661     $ 2,948,874     $ 194,274     $ 1,077,805    $ 180,352    $ 1,258,157    $ 123,691    $ 72     $ 1,134,538     $ 0.505     $ 0.496  

Restructuring charges and IPR&D

      —        —         —         —         (198,247 )     198,247      —        198,247      37,833      —         160,414     $ 0.071     $ 0.070  

Tax benefits

      —        —         —         —         —         —        —        —        144,856      —         (144,856 )   $ (0.064 )   $ (0.063 )
                                                                                                   

EMC Information Infrastructure Adjusted (3)

      10,446,054      5,114,440       1,110,661       2,948,874       (3,973 )     1,276,052      180,352      1,456,404      306,380      72       1,150,096     $ 0.512     $ 0.503  

Stock-based compensation expense

      —        (63,805 )     (81,139 )     (202,518 )     —         347,462      —        347,462      77,134      (72 )     270,256     $ 0.120     $ 0.118  

Intangible amortization

      —        (72,491 )     (12,600 )     (42,411 )     —         127,502      —        127,502      44,269      —         83,233     $ 0.037     $ 0.036  
                                                                                                   

EMC Information Infrastructure Non-GAAP (4)

    $ 10,446,054    $ 4,978,144     $ 1,016,922     $ 2,703,945     $ (3,973 )   $ 1,751,016    $ 180,352    $ 1,931,368    $ 427,783    $ —       $ 1,503,585     $ 0.669     $ 0.658  
                                                                                                   

VMware standalone GAAP

    $ 703,904    $ 123,382     $ 148,254     $ 307,929     $ 3,700     $ 120,639    $ 1,908    $ 122,547    $ 36,832    $ 175     $ 85,890     $ 0.038     $ 0.038  

GAAP adjustments and eliminations

      5,132      4,069       (4,722 )     (3,529 )     —         9,314      —        9,314      2,141      —         7,173     $ 0.003     $ 0.003  
                                                                                                   

VMware within EMC GAAP

      709,036      127,451       143,532       304,400       3,700       129,953      1,908      131,861      38,973      175       93,063     $ 0.041     $ 0.041  

IPR&D

      —        —         —         —         (3,700 )     3,700      —        3,700      —        —         3,700     $ 0.002     $ 0.002  
                                                                                                   

VMware within EMC Adjusted (5)

      709,036      127,451       143,532       304,400       —         133,653      1,908      135,561      38,973      175       96,763     $ 0.043     $ 0.042  

Stock-based compensation expense

      —        (2,483 )     (26,342 )     (22,400 )     —         51,225      —        51,225      12,228      (175 )     38,822     $ 0.017     $ 0.017  

Intangible amortization

      —        (21,842 )     —         (3,680 )     —         25,522      —        25,522      9,698      —         15,824     $ 0.007     $ 0.007  
                                                                                                   

VMware within EMC Non-GAAP (6)

    $ 709,036    $ 103,126     $ 117,190     $ 278,320     $ —       $ 210,400    $ 1,908    $ 212,308    $ 60,899    $ —       $ 151,409     $ 0.067     $ 0.066  
                                                                                                   
                         Wtd. Average Share O/S       2,248,431       2,286,304  
                                           

 

(1) Represents EMC Consolidated GAAP excluding restructuring charges, IPR&D and special tax benefits.
(2) Represents EMC Consolidated Adjusted excluding stock-based compensation expense and intangible amortization.
(3) Represents EMC Information Infrastructure GAAP excluding restructuring charges, IPR&D and special tax benefits.
(4) Represents EMC Information Infrastructure Adjusted excluding stock-based compensation expense and intangible amortization.
(5) Represents VMware within EMC GAAP excluding IPR&D.
(6) Represents VMware within EMC Adjusted excluding stock-based compensation expense and intangible amortization.

Note: schedule may not add due to rounding

EMC CORPORATION

Consolidated Balance Sheets

(in thousands, except per share amounts)

Unaudited

 

     December 31,
2007		     December 31,
2006		  

ASSETS

     

Current assets:

     

Cash and cash equivalents

    $ 4,482,211     $ 1,828,106  

Short-term investments

      1,644,703       1,521,925  

Accounts and notes receivable, less allowance for doubtful accounts of $34,389 and $39,509

      2,307,512       1,692,214  

Inventories

      877,243       834,800  

Deferred income taxes

      475,544       418,146  

Other current assets

      265,889       225,396  
                

Total current assets

      10,053,102       6,520,587  

Long-term investments

      1,845,572       2,246,290  

Property, plant and equipment, net

      2,159,396       2,035,559  

Deferred income taxes

      —         104,446  

Intangible assets, net

      940,077       1,003,549  

Other assets, net

      755,001       638,655  

Goodwill, net

      6,531,506       6,017,161  
                

Total assets

    $ 22,284,654     $ 18,566,247  
                

LIABILITIES & STOCKHOLDERS' EQUITY

     

Current liabilities:

     

Accounts payable

    $ 840,886     $ 680,263  

Accrued expenses

      1,696,309       1,592,022  

Income taxes payable

      146,104       63,806  

Deferred revenue

      1,724,909       1,325,671  
                

Total current liabilities

      4,408,208       3,661,762  

Income taxes payable

      246,951       219,342  

Deferred revenue

      1,053,394       780,124  

Deferred income taxes

      288,175       —    

Long-term convertible debt

      3,450,000       3,450,000  

Other liabilities

      127,621       129,312  
                

Total Liabilities

      9,574,349       8,240,540  

Minority interest(1)

      188,988       —    

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 2,102,187 and 2,122,339 shares

      21,022       21,223  

Additional paid-in capital

      3,038,455       2,560,935  

Retained earnings

      9,470,289       7,798,112  

Accumulated other comprehensive loss

      (8,449 )     (54,563 )
                

Total stockholders' equity

      12,521,317       10,325,707  
                

Total liabilities and stockholders' equity

    $ 22,284,654     $ 18,566,247  
                

 

(1) Represents minority interest in the stockholders' equity of VMware which equaled approximately 14% of VMware's stockholders' equity.

 

EMC CORPORATION

Consolidated Statements of Cash Flows

(in thousands)

Unaudited

 

     Twelve Months Ended  
     December 31,
2007		     December 31,
2006		  

Cash flows from operating activities:

     

Cash received from customers

    $ 13,333,489     $ 11,167,249  

Cash paid to suppliers and employees

      (10,182,600 )     (8,666,586 )

Dividends and interest received

      254,062       258,631  

Interest paid

      (76,025 )     (26,804 )

Income taxes paid

      (202,324 )     (592,066 )
                

Net cash provided by operating activities

      3,126,602       2,140,424  
                

Cash flows from investing activities:

     

Additions to property, plant and equipment

      (699,038 )     (718,095 )

Capitalized software development costs

      (232,047 )     (192,895 )

Purchases of short and long-term available for sale securities

      (6,204,762 )     (6,611,698 )

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

      6,527,027       7,865,264  

Proceeds from the sale of EMC's interest in VMware to Cisco

      150,000       —    

Business acquisitions, net of cash acquired

      (692,003 )     (2,618,376 )

Other

      (12,074 )     (20,860 )
                

Net cash used in investing activities

      (1,162,897 )     (2,296,660 )
                

Cash flows from financing activities:

     

Issuance of common stock from the exercise of stock options

      782,449       257,789  

Proceeds from the sale of VMware's common stock

      1,253,533       —    

Issuance of VMware's common stock from the exercise of stock options

      2,760       —    

Repurchase of EMC common stock

      (1,453,669 )     (3,655,404 )

Excess tax benefits from stock based compensation

      91,782       20,025  

Payment of long-term and short-term obligations

      (17,178 )     (2,331,587 )

Proceeds from long-term and short-term obligations

      19,815       5,654,004  

Purchase of call options

      —         (669,076 )

Sale of warrants

      —         391,144  

Debt issuance costs

      —         (58,863 )
                

Net cash provided by (used in) financing activities

      679,492       (391,968 )
                

Effect of exchange rate changes on cash

      10,908       53,940  
                

Net increase (decrease) in cash and cash equivalents

      2,654,105       (494,264 )

Cash and cash equivalents at beginning of period

      1,828,106       2,322,370  
                

Cash and cash equivalents at end of period

    $ 4,482,211     $ 1,828,106  
                

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

     

Net income

    $ 1,665,668     $ 1,227,601  

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

     

Cumulative effect of a change in accounting principle

      —         (247 )

Minority interest in VMware

      15,455       —    

Net gain on investments, including gain on sale of VMware stock

      (137,330 )     —    

Depreciation and amortization

      917,274       764,162  

Non-cash restructuring and other special charges

      3,778       75,889  

Stock-based compensation expense

      367,404       398,687  

Increase in provision for doubtful accounts

      8,885       10,290  

Deferred income taxes, net

      (68,397 )     (131,966 )

Excess tax benefits from stock based compensation

      (91,782 )     (20,025 )

Other

      3,850       27,271  

Changes in assets and liabilities, net of acquisitions:

     

Accounts and notes receivable

      (576,422 )     (232,295 )

Inventories

      13,574       (69,567 )

Other assets

      (97,277 )     (31,822 )

Accounts payable

      155,296       59,631  

Accrued expenses

      35,934       133,856  

Income taxes payable

      243,216       (297,936 )

Deferred revenue

      670,820       234,164  

Other liabilities

      (3,344 )     (7,269 )
                

Net cash provided by operating activities

    $ 3,126,602     $ 2,140,424  
                

EMC CORPORATION

Reconciliation of Cash Flow from Operations to Free Cash Flow

(in thousands)

Unaudited

 

     Q4 2006     Q4 2007     2006     2007  

EMC Consolidated:

         

Cash flow from Operations

    $ 652,927     $ 978,709     $ 2,140,424     $ 3,126,602  

Capital Expenditures

      (212,041 )     (197,576 )     (718,095 )     (699,038 )

Capitalized Software

      (40,281 )     (68,697 )     (192,895 )     (232,047 )
                                

Free Cash Flow

    $ 400,605     $ 712,436     $ 1,229,434     $ 2,195,517  

VMware within EMC:

         

Cash flow from Operations

    $ 100,253     $ 84,134     $ 390,152     $ 615,465  

Capital Expenditures

      (45,563 )     (45,101 )     (115,269 )     (204,141 )

Capitalized Software

      (2,150 )     (14,877 )     (31,752 )     (48,022 )
                                

Free Cash Flow

    $ 52,540     $ 24,156     $ 243,131     $ 363,302  

EMC Information Infrastructure:

         

Cash flow from Operations

    $ 552,674     $ 894,575     $ 1,750,272     $ 2,511,137  

Capital Expenditures

      (166,478 )     (152,475 )     (602,826 )     (494,897 )

Capitalized Software

      (38,131 )     (53,820 )     (161,143 )     (184,025 )
                                

Free Cash Flow

    $ 348,065     $ 688,280     $ 986,303     $ 1,832,215  

Free cash flow for VMware and EMC excludes the change in the intercompany due to/due from balances. Additionally, capital expenditures for VMware's headquarters facilities which were reimbursed by EMC during 2006 and 2007 have been classified as VMware capital expenditures as incurred. Including the change in the intercompany due to/due from balances and excluding capital expenditures for VMware's headquarters facilities as VMware expenditures as incurred results in free cash flow for VMware of $109,744 for the quarter ended December 31, 2006, $103,596 for the quarter ended December 31, 2007, $194,766 for the year ended December 31, 2006 and $368,306 for the year ended December 31, 2007. Including the change in the intercompany due to/due from balances and excluding capital expenditures for VMware's headquarters facilities as VMware expenditures as incurred results in free cash flow for EMC Information Infrastructure of $290,861 for the quarter ended December 31, 2006, $608,840 for the quarter ended December 31, 2007, $1,034,668 for the year ended December 31, 2006 and $1,827,211 for the year ended December 31, 2007.

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     Q3 2007     Q4 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     $ 1,411,367     $ 1,688,565     $ 5,760,136  

Software:

                     

Software License

      621,602       681,998       736,331       897,485       2,937,416       806,660       867,917       921,517       1,055,746       3,651,840  

Software Maintenance

      303,202       315,189       345,650       371,163       1,335,204       382,080       400,233       426,198       472,264       1,680,775  
                

Total Software License & Maintenance

      924,804       997,187       1,081,981       1,268,648       4,272,620       1,188,740       1,268,150       1,347,715       1,528,010       5,332,615  

Professional, Systems Maintenance and Other Services

      396,081       423,525       431,989       481,471       1,733,066       478,972       500,798       539,609       613,095       2,132,474  
     2,547,813       2,572,312       2,813,291       3,212,896       11,146,312       2,973,478       3,123,386       3,298,691       3,829,670       13,225,225  

Other Businesses

      2,874       2,211       2,015       1,678       8,778       1,527       1,286       1,063       1,104       4,980  
                

Total Consolidated Revenues

    $ 2,550,687     $ 2,574,523     $ 2,815,306     $ 3,214,574     $ 11,155,090     $ 2,975,005     $ 3,124,672     $ 3,299,754     $ 3,830,774     $ 13,230,205  
                

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 %     1.8 %     3.2 %     2.3 %

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    Q3 2007    Q4 2007    YTD 2007     
             

Storage Systems Revenue

    $ 1,222,624    $ 1,147,892    $ 1,295,524    $ 1,458,740    $ 5,124,780       $ 1,302,740    $ 1,347,357    $ 1,405,139    $ 1,682,395    $ 5,737,631   

Storage Software License Revenue

      446,720      493,002      524,679      550,856      2,015,257         486,558      512,521      515,056      561,622      2,075,757   

Storage Maintenance and Services Revenue

      583,010      610,015      619,496      656,020      2,468,541         637,630      668,140      703,092      788,630      2,797,492   
             

Total Storage Revenue

    $ 2,252,354    $ 2,250,909    $ 2,439,699    $ 2,665,616    $ 9,608,578       $ 2,426,928    $ 2,528,018    $ 2,623,287    $ 3,032,647    $ 10,610,880   
             

Content Management and Archiving Systems Revenue

    $ 4,304    $ 3,708    $ 87    $ 522    $ 8,621       $ 68    $ 1,708    $ 1,485    $ 2,157    $ 5,418   

Content Management and Archiving Software License Revenue

      83,038      75,161      59,092      106,302      323,593         68,472      69,046      79,247      115,305      332,070   

Content Management and Archiving Maintenance and Services Revenue

      79,978      87,253      90,173      96,172      353,576         103,658      102,848      108,580      120,664      435,750   
             

Total Content Management and Archiving Revenue

    $ 167,320    $ 166,122    $ 149,352    $ 202,996    $ 685,790       $ 172,198    $ 173,602    $ 189,312    $ 238,126    $ 773,238   
             

Security Systems Revenue

    $ —      $ —      $ 3,710    $ 3,515    $ 7,225       $ 2,958    $ 5,373    $ 4,743    $ 4,013    $ 17,087   

Security Software License Revenue

      —        —        27,084      76,835      103,919         81,934      81,300      82,979      94,604      340,817   

Security Maintenance and Services Revenue

      —        —        6,961      33,581      40,542         34,969      38,282      45,142      48,978      167,371   
             

Total Security Revenue

    $ —      $ —      $ 37,755    $ 113,931    $ 151,686       $ 119,861    $ 124,955    $ 132,864    $ 147,595    $ 525,275   
             

EMC Information Infrastructure Systems Revenue

    $ 1,226,928    $ 1,151,600    $ 1,299,321    $ 1,462,777    $ 5,140,626       $ 1,305,766    $ 1,354,438    $ 1,411,367    $ 1,688,565    $ 5,760,136   

EMC Information Infrastructure Software License Revenue

      529,758      568,163      610,855      733,993      2,442,769         636,964      662,867      677,282      771,531      2,748,644   

EMC Information Infrastructure Maintenance and Services Revenue

      662,988      697,268      716,630      785,773      2,862,659         776,257      809,270      856,814      958,272      3,400,613   
             

Total EMC Information Infrastructure Revenue

    $ 2,419,674    $ 2,417,031    $ 2,626,806    $ 2,982,543    $ 10,446,054       $ 2,718,987    $ 2,826,575    $ 2,945,463    $ 3,418,368    $ 11,909,393   
             

VMware Software License Revenue

    $ 91,844    $ 113,835    $ 125,476    $ 163,492    $ 494,647       $ 169,696    $ 205,050    $ 244,235    $ 284,215    $ 903,196   

VMware Maintenance and Services Revenue

      39,169      43,657      63,024      68,539      214,389         86,322      93,047      110,056      128,191      417,616   
             

Total VMware Revenue

    $ 131,013    $ 157,492    $ 188,500    $ 232,031    $ 709,036       $ 256,018    $ 298,097    $ 354,291    $ 412,406    $ 1,320,812