EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

Contact:      Lesley Ogrodnick
     508-293-6961
     lesley.ogrodnick@emc.com

EMC REPORTS RECORD SECOND-QUARTER REVENUE AND PROFIT

 

Second-Quarter Highlights

 

   

Record Q2 consolidated revenue – up 20% year over year

 

   

Record Q2 GAAP net income – up 28% year over year

 

   

Record Q2 non-GAAP net income – up 33% year over year

 

   

Strong year-over-year percentage increases in non-GAAP gross and operating margins

 

   

All-time record consolidated quarterly revenue for EMC’s business operations outside of the United States

HOPKINTON, Mass. – July 20, 2011 – EMC Corporation (NYSE:EMC) today reported record financial results for the second quarter of 2011. Strong worldwide customer demand for EMC’s information infrastructure and virtual infrastructure products and services, balanced growth and continued outstanding execution contributed to EMC achieving record second-quarter consolidated revenue and net income. The results were also highlighted by strong year-over-year percentage increases in non-GAAP operating and gross margins and all-time record consolidated quarterly revenue for EMC’s business operations outside of the United States.

Second-quarter consolidated revenue was $4.85 billion, an increase of 20% compared with the year-ago quarter. Second-quarter GAAP net income attributable to EMC increased 28% year over year to $546 million. Second-quarter GAAP earnings per weighted average diluted share increased 20% year over year to $0.24. Non-GAAP1 net income attributable to EMC for the second quarter was $793 million, an increase of 33% compared with the year-ago quarter. Second-quarter non-GAAP1 earnings per weighted average diluted share were $0.35, an increase of 25% year over year.

EMC achieved year-to-date operating cash flow of $2.2 billion and free cash flow2 of $1.6 billion. The company ended the second quarter with $9.5 billion in cash and investments.

Joe Tucci, EMC Chairman and Chief Executive Officer, said, “Our record-setting performance during the quarter was marked by balanced growth, solid execution and significant technology innovation as customers around the world continue to embrace EMC’s cloud computing and Big Data strategies. It is our firm belief that this strategy is well-placed and underpinned with winning products and services and strategic partners. We remain confident in


our ability to continue delivering strong results this year and over the long term. Furthermore, we remain committed to investing heavily to extend our technology lead and help customers and service provider partners accelerate their IT and business model transformations.”

David Goulden, EMC Executive Vice President and Chief Financial Officer, said, “EMC’s second-quarter results are further evidence that our strategy is on target and that we continue to execute our financial ‘triple play’ – gaining market share, investing aggressively to take full advantage of the massive opportunities at the intersection of cloud computing and Big Data, and improving profitability. Our focus on providing technology and services that accelerate our customers’ journey to the cloud and enable them to leverage their data for more competitive advantage is resonating strongly in the market. Given the strong results we have achieved this year and the opportunity we see for the remainder of 2011, we are raising our financial outlook for the year. We now expect to exceed 2011 consolidated revenue of $19.8 billion, GAAP EPS of $1.07 and non-GAAP EPS of $1.48.”

Second-Quarter Highlights

Second-quarter highlights included double-digit revenue growth for EMC Information Storage business, which increased 19% year over year. EMC’s high-end EMC Symmetrix storage product portfolio, which includes the EMC Symmetrix VMAX, increased revenue 15% compared with the year-ago quarter, and EMC’s portfolio of mid-tier storage products3 grew revenue 27% year over year. Revenue from VMware (NYSE: VMW), which is majority-owned by EMC, increased 37% and revenue from EMC’s RSA Information Security business grew 13% year over year. Additional second-quarter highlights included strong revenue growth for the EMC VNX unified storage and the company’s backup and recovery solutions. EMC saw increasing customer demand for its Big Data technologies – product revenue from EMC Isilon, EMC Atmos and EMC Greenplum each doubled year over year. Further second-quarter highlights included continued customer demand for EMC’s broad consulting and professional services portfolio.

Also during the quarter, VCE, the Virtual Computing Environment Company formed by Cisco and EMC with investments from VMware and Intel, experienced continued momentum as demand from customers for best-of-breed converged infrastructure through the Vblock Infrastructure Platform grew. VCE’s year-to-date revenue for 2011 has already exceeded its full-year 2010 revenue amount.

EMC’s consolidated second-quarter revenue from the United States reached $2.5 billion, an increase of 17% year over year, representing 52% of consolidated second-quarter revenue. Revenue from EMC’s business operations outside of the United States hit an all-time record $2.3 billion, an increase of 25% year over year, representing 48% of consolidated second-quarter revenue. Within this, revenue increased 20%, 34% and 43% year over year, respectively, in EMC’s Europe, Middle East and Africa; Asia Pacific and Japan; and Latin America regions.


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 2011 financial results.

All dollar amounts and percentages set forth below should be considered to be approximations.

 

   

Consolidated revenues are expected to exceed $19.8 billion for 2011.

 

   

Consolidated GAAP operating income is expected to be 16% to 17% of revenues for 2011 and consolidated non-GAAP operating income is expected to be 23% to 24% of revenues for 2011. Excluded from consolidated non-GAAP operating income are restructuring and acquisition-related charges, stock-based compensation expense, intangible asset amortization and an RSA special charge, which account for 0.5%, 4%, 2% and 0.5% of revenues, respectively.

 

   

Total consolidated GAAP non-operating expense, which includes investment income, interest expense and other income and expense, is expected to be $119 million in 2011 and total consolidated non-GAAP non-operating expense is expected to be $175 million in 2011. Excluded from non-GAAP non-operating expense is a non-recurring gain on strategic investments of $56 million.

 

   

Consolidated GAAP net income is expected to exceed $2.44 billion in 2011 and consolidated non-GAAP net income is expected to exceed $3.35 billion in 2011. Excluded from consolidated non-GAAP net income are restructuring and acquisition-related charges, stock-based compensation expense, intangible asset amortization, a non-recurring gain on strategic investments and an RSA special charge, which account for $75 million, $600 million, $225 million, ($29 million) and $56 million, respectively.

 

   

Consolidated GAAP diluted earnings per share are expected to exceed $1.07 for 2011 and consolidated non-GAAP diluted earnings per share are expected to exceed $1.48 for 2011. Excluded from consolidated non-GAAP diluted earnings per share are restructuring and acquisition-related charges, stock-based compensation expense, intangible asset amortization, a non-recurring gain on strategic investments and an RSA special charge, which are expected to be $0.03, $0.27, $0.10, ($0.01) and $0.02 per diluted share, respectively.

 

   

The consolidated GAAP income tax rate is expected to be 21% for 2011. Excluding the impact of restructuring and acquisition-related charges, stock-based compensation expense, intangible asset amortization, a non-recurring gain on strategic investments and an RSA special charge, which collectively impact the tax rate by 1%, the consolidated non-GAAP income tax rate is expected to be 22% for 2011.

 

   

GAAP net income attributable to the non-controlling interest in VMware is expected to be $121 million and non-GAAP net income attributable to the non-controlling interest in VMware is expected to be $185 million for 2011. Excluded from non-GAAP net income


 

attributable to the non-controlling interest in VMware are acquisition-related charges, stock-based compensation expense, intangible asset amortization and a non-recurring gain on strategic investments which are expected to be $1 million, $60 million, $10 million and ($7 million), respectively. The incremental dilution attributable to the shares of VMware held by EMC is expected to be $16 million for 2011.

 

   

The weighted-average outstanding diluted shares are expected to be 2.265 billion for 2011.

 

   

Consolidated net cash provided by operating activities is expected to be $5.4 billion for 2011, and free cash flow is expected to be $4.0 billion in 2011. Excluded from free cash flow are $950 million of additions to property, plant and equipment and $450 million of capitalized software development costs.

 

   

EMC expects to repurchase $1.5 billion of the company’s stock in 2011.

Supporting Resources

 

   

EMC will host its second-quarter 2011 earnings conference call today at 8:30 a.m. ET, which will be available via webcast on EMC’s Investor Relations website at http://www.emc.com/ir.

 

   

Visit http://ir.vmware.com for more information about VMware’s second-quarter financial results.

About EMC

EMC Corporation is a global leader in enabling businesses and service providers to transform their operations and deliver IT as a service. Fundamental to this transformation is cloud computing. Through innovative products and services, EMC accelerates the journey to cloud computing, helping IT departments to store, manage, protect and analyze their most valuable asset — information — in a more agile, trusted and cost-efficient way. Additional information about EMC can be found at www.EMC.com.

# # #

 

¹ Items excluded from the non-GAAP results for the second quarters of 2011 and 2010 are amounts relating to restructuring and acquisition-related charges, stock-based compensation expense and intangible asset amortization. In addition, for the second quarter of 2011, a non-recurring gain on strategic investments and an RSA special charge are also excluded. See attached schedules for reconciliation of GAAP to non-GAAP.
² Free cash flow is a non-GAAP financial measure which is defined as net cash provided by operating activities, less additions to property, plant and equipment and capitalized software development costs. See attached schedules for a reconciliation of net cash provided by operating activities to free cash flow for the second quarters of 2011 and 2010.
3

EMC’s mid-tier storage products include EMC VNX, EMC CLARiiON, EMC Celerra, EMC Centera, EMC Data Domain, EMC Isilon, EMC Avamar and EMC Atmos hardware and software products.

EMC, Atmos, Avamar, Celerra, Centera, CLARiiON, Data Domain, Greenplum, Isilon, RSA, Symmetrix, Symmetrix VMAX, VNX and Vblock are either registered trademarks or trademarks of EMC Corporation in the United States and/or other countries.


VMware is a registered trademark or trademark of VMware, Inc. in the United States and/or other countries. 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) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (iv) competitive factors, including but not limited to pricing pressures and new product introductions; (v) component and product quality and availability; (vi) fluctuations in VMware, Inc.’s operating results and risks associated with trading of VMware stock; (vii) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (viii) 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; (ix) the ability to attract and retain highly qualified employees; (x) insufficient, excess or obsolete inventory; (xi) fluctuating currency exchange rates; (xii) threats and other disruptions to our secure data centers or networks; (xiii) our ability to protect our proprietary technology; (xiv) war or acts of terrorism; and (xv) 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, the accompanying schedules and the additional content that is available on EMC’s website contain 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 from time to time and 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 in this release.

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, where noted, amounts relating to restructuring and acquisition-related charges, stock-based compensation expense, intangible asset amortization, a non-recurring gain on strategic investments and an RSA special charge) 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     Six Months Ended  
     June 30,     June 30,     June 30,     June 30,  
     2011     2010     2011     2010  

Revenues:

        

Product sales

   $ 3,043,984      $ 2,553,316      $ 5,975,243      $ 5,032,033   

Services

     1,801,354        1,470,181        3,477,713        2,882,156   
                                
     4,845,338        4,023,497        9,452,956        7,914,189   

Cost and expenses:

        

Cost of product sales

     1,327,217        1,157,742        2,647,705        2,319,664   

Cost of services

     637,834        506,556        1,225,913        1,016,807   

Research and development

     538,891        477,725        1,040,999        912,658   

Selling, general and administrative

     1,575,689        1,283,651        3,071,620        2,544,935   

Restructuring and acquisition-related charges

     21,216        9,839        48,109        28,341   
                                

Operating income

     744,491        587,984        1,418,610        1,091,784   

Non-operating income (expense):

        

Investment income

     35,986        32,103        74,213        63,635   

Interest expense

     (46,476     (44,744     (91,455     (87,712

Other income (expense), net

     30,357        2,130        (12,817     (6,891
                                

Total non-operating income (expense)

     19,867        (10,511     (30,059     (30,968
                                

Income before provision for income taxes

     764,358        577,473        1,388,551        1,060,816   

Income tax provision

     172,731        136,976        294,370        232,629   
                                

Net income

     591,627        440,497        1,094,181        828,187   

Less: Net income attributable to the non-controlling interest in VMware, Inc.

     (45,133     (14,281     (70,539     (29,267
                                

Net income attributable to EMC Corporation

   $ 546,494      $ 426,216      $ 1,023,642      $ 798,920   
                                

Net income per weighted average share, basic attributable to EMC Corporation common shareholders

   $ 0.27      $ 0.21      $ 0.50      $ 0.39   
                                

Net income per weighted average share, diluted attributable to EMC Corporation common shareholders

   $ 0.24      $ 0.20      $ 0.45      $ 0.37   
                                

Weighted average shares, basic

     2,060,748        2,052,161        2,063,427        2,051,599   

Weighted average shares, diluted

     2,266,465        2,132,997        2,262,308        2,126,062   


Consolidated Balance Sheets

(in thousands, except per share amounts)

Unaudited

 

     June 30,
2011
    December 31,
2010
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 3,896,369      $ 4,119,138   

Short-term investments

     1,436,290        1,256,175   

Accounts and notes receivable, less allowance for doubtful accounts of $57,964 and $57,385

     2,620,448        2,569,523   

Inventories

     1,005,690        856,405   

Deferred income taxes

     634,183        609,832   

Other current assets

     640,430        372,249   
                

Total current assets

     10,233,410        9,783,322   

Long-term investments

     4,180,205        4,115,918   

Property, plant and equipment, net

     2,701,797        2,528,432   

Intangible assets, net

     1,872,226        1,624,267   

Goodwill

     12,108,156        11,772,650   

Other assets, net

     1,236,068        1,008,695   
                

Total assets

   $ 32,331,862      $ 30,833,284   
                

LIABILITIES & SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 983,589      $ 1,062,600   

Accrued expenses

     2,254,329        2,090,035   

Income taxes payable

     —          199,735   

Convertible debt

     3,271,865        3,214,771   

Deferred revenue

     3,205,297        2,810,873   
                

Total current liabilities

     9,715,080        9,378,014   

Income taxes payable

     254,902        265,549   

Deferred revenue

     2,204,553        1,853,263   

Deferred income taxes

     631,014        717,004   

Other liabilities

     257,151        217,449   
                

Total liabilities

     13,062,700        12,431,279   
                

Convertible debt

     175,907        235,229   

Commitments and contingencies

    

Shareholders’ equity:

    

Preferred stock, par value $0.01; authorized 25,000 shares; none outstanding

     —          —     

Common stock, par value $0.01; authorized 6,000,000 shares; issued 2,064,946 and 2,069,246 shares

     20,649        20,692   

Additional paid-in capital

     3,593,443        3,816,681   

Retained earnings

     14,682,926        13,659,284   

Accumulated other comprehensive loss, net

     (93,597     (92,617
                

Total EMC Corporation’s shareholders’ equity

     18,203,421        17,404,040   

Non-controlling interest in VMware, Inc.

     889,834        762,736   
                

Total shareholders’ equity

     19,093,255        18,166,776   
                

Total liabilities and shareholders’ equity

   $ 32,331,862      $ 30,833,284   
                


EMC CORPORATION

Consolidated Statements of Cash Flows

(in thousands)

Unaudited

 

     Six Months Ended  
     June 30,
2011
    June 30,
2010
 

Cash flows from operating activities:

    

Cash received from customers

   $ 10,176,306      $ 8,495,542   

Cash paid to suppliers and employees

     (7,621,684     (6,291,713

Dividends and interest received

     40,181        54,219   

Interest paid

     (40,811     (38,251

Income taxes paid

     (355,785     (145,591
                

Net cash provided by operating activities

     2,198,207        2,074,206   
                

Cash flows from investing activities:

    

Additions to property, plant and equipment

     (406,158     (301,192

Capitalized software development costs

     (231,561     (185,634

Purchases of short-  and long-term available-for-sale securities

     (3,249,888     (2,929,754

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

     2,413,493        1,244,979   

Maturities of short-  and long-term available-for-sale securities

     563,996        178,201   

Business acquisitions, net of cash acquired

     (437,102     (348,846

Increase in strategic and other related investments

     (312,302     (5,812

Purchase of leasehold interest

     (173,126     —     
                

Net cash used in investing activities

     (1,832,648     (2,348,058
                

Cash flows from financing activities:

    

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

     422,506        317,300   

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

     200,714        215,907   

EMC repurchase of EMC's common stock

     (1,099,997     (517,370

EMC purchase of VMware's common stock

     (99,930     (198,087

VMware repurchase of VMware's common stock

     (280,389     (144,500

Excess tax benefits from stock-based compensation

     252,124        111,807   

Payment of long-term and short-term obligations

     (549     (3,515

Proceeds from long-term and short-term obligations

     1,071        1,116   
                

Net cash used in financing activities

     (604,450     (217,342
                

Effect of exchange rate changes on cash and cash equivalents

     16,122        (26,493
                

Net decrease in cash and cash equivalents

     (222,769     (517,687

Cash and cash equivalents at beginning of period

     4,119,138        6,302,499   
                

Cash and cash equivalents at end of period

   $ 3,896,369      $ 5,784,812   
                

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

    

Net income

   $ 1,094,181      $ 828,187   

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

    

Depreciation and amortization

     689,075        566,439   

Non-cash interest expense on convertible debt

     51,799        52,172   

Non-cash restructuring and other special charges

     (524     999   

Stock-based compensation expense

     414,667        319,397   

Provision for doubtful accounts

     3,733        11,358   

Deferred income taxes, net

     (24,852     (101,930

Excess tax benefits from stock-based compensation

     (252,124     (111,807

Other

     (38,308     2,399   

Changes in assets and liabilities, net of acquisitions:

    

Accounts and notes receivable

     (21,617     163,646   

Inventories

     (258,959     13,598   

Other assets

     (114,971     (104,326

Accounts payable

     (79,995     (84,470

Accrued expenses

     13,718        (63,195

Income taxes payable

     (36,563     188,968   

Deferred revenue

     741,234        406,349   

Other liabilities

     17,713        (13,578
                

Net cash provided by operating activities

   $ 2,198,207      $ 2,074,206   
                


EMC Corporation

Reconciliation of GAAP to Non-GAAP*

(in thousands, except per share amounts)

Unaudited

 

     Q2 2011     Q2 2011
Diluted
Earnings
Per Share
    Q2 2010      Q2 2010
Diluted
Earnings
Per Share
 

Net Income Attributable to EMC GAAP

   $ 546,494      $ 0.239      $ 426,216       $ 0.199   

Stock-based compensation expense

     142,890        0.063        111,826         0.052   

Intangible asset amortization

     57,860        0.026        47,842         0.022   

Restructuring and acquisition-related charges

     18,638        0.008        10,372         0.005   

RSA special charge

     56,222        0.025        —           —     

Gain on strategic investment

     (28,938     (0.013     —           —     
                                 

Net Income Attributable to EMC Non-GAAP

   $ 793,166      $ 0.348      $ 596,256       $ 0.279   
                                 

Weighted Average Shares, Diluted

       2,266,465           2,132,997   

Incremental VMware Dilution

     $ 4,404         $ 2,055   

 

* Net of tax and non-controlling interest in VMware, Inc., except Weighted Average Shares, Diluted. See Income Tax Provision and Net Income Attributable to VMware lines in Supplemental Information schedules.

EMC Corporation

Reconciliation of GAAP to Non-GAAP

(in thousands)

Unaudited

 

     Six Months Ended  
     June 30,
2011
    June 30,
2010
 

Cash Flow from Operations

   $ 2,198,207      $ 2,074,206   

Capital Expenditures

     (406,158     (301,192

Capitalized Software

     (231,561     (185,634
                

Free Cash Flow

   $ 1,560,488      $ 1,587,380   
                

 


EMC Corporation

Reconciliation of GAAP to Non-GAAP

(in thousands)

Unaudited

 

     Q2 2011     Q2 2010  

Gross Margin GAAP

   $ 2,880,287      $ 2,359,199   

Stock-based compensation expense

     30,073        25,085   

Intangible asset amortization

     39,244        34,016   

Restructuring and acquisition-related charges

     —          —     

RSA special charge

     66,300        —     
                

Gross Margin Non-GAAP

   $ 3,015,904      $ 2,418,300   
                

Revenues

   $ 4,845,338      $ 4,023,497   

% GAAP

     59.4     58.6

% Non-GAAP

     62.2     60.1

 

     Q2 2011     Q2 2010  

Operating Margin GAAP

   $ 744,491      $ 587,984   

Stock-based compensation expense

     202,996        161,423   

Intangible asset amortization

     86,443        71,963   

Restructuring and acquisition-related charges

     21,216        9,839   

RSA special charge

     66,300        —     
                

Operating Margin Non-GAAP

   $ 1,121,446      $ 831,209   
                

Revenues

   $ 4,845,338      $ 4,023,497   

% GAAP

     15.4     14.6

% Non-GAAP

     23.1     20.7


Supplemental Information

For the Three Months Ended June 30, 2011

(in thousands)

Unaudited

 

     Stock-Based
Compensation
Expense
    Intangible Asset
Amortization
    Restructuring and
Acquisition-
Related Charges
    RSA Special
Charge
    Gain on Strategic
Investments
 

EMC Consolidated

          

Cost of Revenue

   $ (30,073   $ (39,244   $ —        $ (66,300   $ —     

Research and Development

     (75,769     (4,331     —          —          —     

Selling, General and Administrative

     (97,154     (42,868     —          —          —     

Restructuring and Acquisition-Related Charges

     —          —          (21,216     —          —     

Other Expense (Income), net

     2,479        —          —          —          (56,000

Income Tax Provision

     47,584        26,192        2,330        10,078        (19,600

Net Income Attributable to VMware

     (15,001     (2,391     (248     —          7,462   

EMC Information Infrastructure

          

Cost of Revenue

   $ (20,393   $ (27,584   $ —        $ (66,300   $ —     

Research and Development

     (29,695     (3,534     —          —          —     

Selling, General and Administrative

     (63,693     (40,406     —          —          —     

Restructuring and Acquisition-Related Charges

     —          —          (20,006     —          —     

Other Expense (Income), net

     2,479        —          —          —          —     

Income Tax Provision

     31,543        22,935        2,330        10,078        —     

Net Income Attributable to VMware

     —          —          —          —          —     

VMware within EMC

          

Cost of Revenue

   $ (9,680   $ (11,660   $ —        $ —        $ —     

Research and Development

     (46,074     (797     —          —          —     

Selling, General and Administrative

     (33,461     (2,462     —          —          —     

Restructuring and Acquisition-Related Charges

     —          —          (1,210     —          —     

Other Expense (Income), net

     —          —          —          —          (56,000

Income Tax Provision

     16,041        3,257        —          —          (19,600

Net Income Attributable to VMware

     (15,001     (2,391     (248     —          7,462   


Supplemental Information

For the Three Months Ended June 30, 2010

(in thousands)

Unaudited

 

     Stock-Based
Compensation
Expense
    Intangible Asset
Amortization
    Restructuring and
Acquisition-
Related Charges
 

EMC Consolidated

      

Cost of Revenue

   $ (25,085   $ (34,016   $ —     

Research and Development

     (61,349     (6,252     —     

Selling, General and Administrative

     (74,989     (31,695     —     

Restructuring and Acquisition-Related Charges

     —          —          (9,839

Other Expense, net

     298        —          —     

Income Tax Provision

     38,869        22,882        (1,700

Net Income Attributable to VMware

     (11,026     (1,239     (1,167

EMC Information Infrastructure

      

Cost of Revenue

   $ (16,622   $ (26,934   $ —     

Research and Development

     (22,037     (5,625     —     

Selling, General and Administrative

     (51,045     (31,059     —     

Restructuring and Acquisition-Related Charges

     —          —          (8,939

Other Expense, net

     224        —          —     

Income Tax Provision

     24,621        21,003        3,490   

Net Income Attributable to VMware

     —          —          —     

VMware within EMC

      

Cost of Revenue

   $ (8,463   $ (7,082   $ —     

Research and Development

     (39,312     (627     —     

Selling, General and Administrative

     (23,944     (636     —     

Restructuring and Acquisition-Related Charges

     —          —          (900

Other Expense, net

     74        —          —     

Income Tax Provision

     14,248        1,879        (5,190

Net Income Attributable to VMware

     (11,026     (1,239     (1,167


Supplemental Information

For the Three Months Ended June 30, 2011

(in thousands)

Unaudited

 

     VMware
Standalone
GAAP
     GAAP
Adjustments and
Eliminations
    VMware within
EMC

GAAP
 

Revenue

   $ 921,210       $ (372   $ 920,838   

Cost of Revenue

     152,475         1,330        153,805   
                         

Gross Margin

     768,735         (1,702     767,033   

Research and Development

     189,241         (2,032     187,209   

Selling, General and Administrative

     392,602         (1,840     390,762   

Restructuring and Acquisition-Related Charges

     —           1,210        1,210   
                         

Operating Income

     186,892         960        187,852   

Other Income (Expense), net

     59,382         (637     58,745   
                         

Income Before Taxes

     246,274         323        246,597   

Income Tax Provision

     26,116         5,695        31,811   
                         

Net Income

   $ 220,158         (5,372     214,786   
             

Net Income Attributable to VMware

        (45,133     (45,133
                   

Net Income Attributable to EMC

      $ (50,505   $ 169,653   
                   

Supplemental Information

For the Three Months Ended June 30, 2010

(in thousands)

Unaudited

 

     VMware
Standalone
GAAP
    GAAP
Adjustments and
Eliminations
    VMware within
EMC

GAAP
 

Revenue

   $ 673,904      $ (1,099   $ 672,805   

Cost of Revenue

     118,152        (92     118,060   
                        

Gross Margin

     555,752        (1,007     554,745   

Research and Development

     161,756        (1,578     160,178   

Selling, General and Administrative

     292,815        (2,481     290,334   

Restructuring and Acquisition-Related Charges

     —          900        900   
                        

Operating Income

     101,181        2,152        103,333   

Other Income (Expense), net

     (4,237     (767     (5,004
                        

Income Before Taxes

     96,944        1,385        98,329   

Income Tax Provision

     22,406        2,912        25,318   
                        

Net Income

   $ 74,538        (1,527     73,011   
            

Net Income Attributable to VMware

       (14,281     (14,281
                  

Net Income Attributable to EMC

     $ (15,808   $ 58,730   
                  


EMC Corporation

Supplemental

Revenue Analysis

(in thousands)

Unaudited

 

    Q1 2010     Q2 2010     Q3 2010     Q4 2010     FY 2010     Q1 2011     Q2 2011  

Storage:

             

Product Revenue

  $ 2,017,314      $ 2,076,855      $ 2,172,875      $ 2,557,243      $ 8,824,287      $ 2,381,891      $ 2,430,587   

Services Revenue

    901,781        922,067        966,414        1,084,564        3,874,826        1,048,406        1,128,477   
                                                       

Total Storage Revenue

  $ 2,919,095      $ 2,998,922      $ 3,139,289      $ 3,641,807      $ 12,699,113      $ 3,430,297      $ 3,559,064   
                                                       

Information Intelligence Group:

             

Product Revenue

  $ 63,662      $ 62,329      $ 59,078      $ 84,069      $ 269,138      $ 43,252      $ 46,341   

Services Revenue

    114,502        116,105        116,713        119,439        466,759        117,103        122,961   
                                                       

Total Information Intelligence Group Revenue

  $ 178,164      $ 178,434      $ 175,791      $ 203,508      $ 735,897      $ 160,355      $ 169,302   
                                                       

Security:

             

Product Revenue

  $ 85,814      $ 90,876      $ 102,442      $ 121,019      $ 400,151      $ 87,180      $ 102,273   

Services Revenue

    75,654        82,460        83,290        87,828        329,232        87,074        93,861   
                                                       

Total Security Revenue

  $ 161,468      $ 173,336      $ 185,732      $ 208,847      $ 729,383      $ 174,254      $ 196,134   
                                                       

EMC Information Infrastructure:

             

Product Revenue

  $ 2,166,790      $ 2,230,060      $ 2,334,395      $ 2,762,331      $ 9,493,576      $ 2,512,323      $ 2,579,201   

Services Revenue

    1,091,937        1,120,632        1,166,417        1,291,831        4,670,817        1,252,583        1,345,299   
                                                       

Total EMC Information Infrastructure Revenue

  $ 3,258,727      $ 3,350,692      $ 3,500,812      $ 4,054,162      $ 14,164,393      $ 3,764,906      $ 3,924,500   
                                                       

VMware:

             

Product Revenue

  $ 311,927      $ 323,256      $ 341,530      $ 422,568      $ 1,399,281      $ 418,936      $ 464,783   

Services Revenue

    320,038        349,549        369,929        411,936        1,451,452        423,776        456,055   
                                                       

Total VMware Revenue

  $ 631,965      $ 672,805      $ 711,459      $ 834,504      $ 2,850,733      $ 842,712      $ 920,838   
                                                       

Consolidated Revenues:

             

Product Revenue

  $ 2,478,717      $ 2,553,316      $ 2,675,925      $ 3,184,899      $ 10,892,857      $ 2,931,259      $ 3,043,984   

Services Revenue

    1,411,975        1,470,181        1,536,346        1,703,767        6,122,269        1,676,359        1,801,354   
                                                       

Total Consolidated Revenues

  $ 3,890,692      $ 4,023,497      $ 4,212,271      $ 4,888,666      $ 17,015,126      $ 4,607,618      $ 4,845,338   
                                                       

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

    2.4     0.0     (0.6 )%      (0.6 )%      0.2     1.1     3.4