Segment Information

12 Months Ended

Dec. 31, 2011

Segment Information

S.       Segment Information

We manage our business in two broad categories: EMC Information Infrastructure and VMware Virtual Infrastructure. EMC Information Infrastructure operates in three segments: Information Storage, Information Intelligence Group and RSA Information Security, while VMware Virtual Infrastructure operates in a single segment. Our management measures are designed to assess performance of these operating segments excluding certain items. As a result, the corporate reconciling items are used to capture the items excluded from the segment operating performance measures, including stock-based compensation expense and acquisition-related intangible asset amortization expense. Additionally, in certain instances, restructuring and acquisition-related charges, transition costs and infrequently occurring charges, gains or losses are also excluded from the measures used by management in assessing segment performance. The VMware Virtual Infrastructure amounts represent the revenues and expenses of VMware as reflected within EMC's consolidated financial statements. Research and development expenses, SG&A, and other income associated with the EMC Information Infrastructure business are not allocated to the segments within the EMC Information Infrastructure business, as they are managed centrally at the business unit level. For the three segments within the EMC Information Infrastructure business, gross profit is the segment operating performance measure.       

During 2010, VMware acquired certain software product technology and expertise from the EMC Information Infrastructure segment's Ionix IT management business for cash consideration of $175.0 million. The acquisition of the Ionix net assets and expertise was accounted for as a business combination between entities under common control. During the years ended December 31, 2011 and 2010, VMware paid $14.4 million and $10.6 million, respectively, of contingent amounts to EMC. We did not revise our segment presentation for prior periods, as the historical impact of the acquired business was not material to the VMware Virtual Infrastructure segment.

Our segment information for the years ended 2011, 2010 and 2009 are as follows (tables in thousands, except percentages):

		EMC Information Infrastructure
2011:		Information Storage		Information Intelligence Group		RSA Information Security		EMC Information Infrastructure		VMware Virtual Infrastructure within EMC		Corp Reconciling Items		Consolidated
Revenues:
Product revenues	$	10,090,338	$	219,472	$	440,790	$	10,750,600	$	1,840,142	$	-	$	12,590,742
Services revenues		4,623,842		482,879		387,413		5,494,134		1,922,712		-		7,416,846
Total consolidated revenues		14,714,180		702,351		828,203		16,244,734		3,762,854		-		20,007,588
Cost of sales		6,414,305		250,995		357,669		7,022,969		533,329		282,348		7,838,646
Gross profit	$	8,299,875	$	451,356	$	470,534		9,221,765		3,229,525		(282,348)		12,168,942
Gross profit percentage		56.4%		64.3%		56.8%		56.8%		85.8%		-		60.8%
Research and development								1,239,333		587,902		322,552		2,149,787
Selling, general and administrative								4,392,205		1,480,792		606,385		6,479,382
Restructuring and acquisition-related charges								-		-		97,334		97,334
Total costs and expenses								5,631,538		2,068,694		1,026,271		8,726,503
Operating income								3,590,227		1,160,831		(1,308,619)		3,442,439
Other income (expense), net								(148,924)		6,734		(50,979)		(193,169)
Income before tax								3,441,303		1,167,565		(1,359,598)		3,249,270
Income tax provision								860,713		128,634		(348,962)		640,385
Net income								2,580,590		1,038,931		(1,010,636)		2,608,885
Net income attributable to the non-controlling interest in VMware, Inc.								-		(208,894)		61,346		(147,548)
Net income attributable to EMC Corporation							$	2,580,590	$	830,037	$	(949,290)	$	2,461,337

		EMC Information Infrastructure
2010:		Information Storage		Information Intelligence Group		RSA Information Security		EMC Information Infrastructure		VMware Virtual Infrastructure within EMC		Corp Reconciling Items		Consolidated
Revenues:
Product revenues	$	8,824,287	$	269,138	$	400,151	$	9,493,576	$	1,399,281	$	-	$	10,892,857
Services revenues		3,874,825		466,759		329,233		4,670,817		1,451,452		-		6,122,269
Total consolidated revenues		12,699,112		735,897		729,384		14,164,393		2,850,733		-		17,015,126
Cost of sales		5,836,382		258,239		221,579		6,316,200		425,257		242,688		6,984,145
Gross profit	$	6,862,730	$	477,658	$	507,805		7,848,193		2,425,476		(242,688)		10,030,981
Gross profit percentage		54.0%		64.9%		69.6%		55.4%		85.1%		-		59.0%
Research and development								1,122,835		477,799		287,381		1,888,015
Selling, general and administrative								3,737,081		1,160,768		477,456		5,375,305
Restructuring and acquisition-related charges								—		—		84,375		84,375
Total costs and expenses								4,859,916		1,638,567		849,212		7,347,695
Operating income								2,988,277		786,909		(1,091,900)		2,683,286
Other income (expense), net								48,214		(16,458)		(107,059)		(75,303)
Income before tax								3,036,491		770,451		(1,198,959)		2,607,983
Income tax provision								742,736		128,233		(232,672)		638,297
Net income								2,293,755		642,218		(966,287)		1,969,686
Net income attributable to the non-controlling interest in VMware, Inc.								—		(124,728)		55,037		(69,691)
Net income attributable to EMC Corporation							$	2,293,755	$	517,490	$	(911,250)	$	1,899,995

		EMC Information Infrastructure
2009:		Information Storage		Information Intelligence Group		RSA Information Security		EMC Information Infrastructure		VMware Virtual Infrastructure within EMC		Corp Reconciling Items		Consolidated
Revenues:
Product revenues	$	7,198,051	$	260,836	$	340,272	$	7,799,159	$	1,028,986	$	-	$	8,828,145
Services revenues		3,461,358		478,753		265,678		4,205,789		991,976		-		5,197,765
Total consolidated revenues		10,659,409		739,589		605,950		12,004,948		2,020,962		-		14,025,910
Cost of sales		5,256,682		274,763		186,462		5,717,907		316,278		246,826		6,281,011
Gross profit	$	5,402,727	$	464,826	$	419,488		6,287,041		1,704,684		(246,826)		7,744,899
Gross profit percentage		50.7%		62.8%		69.2%		52.4%		84.4%		-		55.2%
Research and development								1,022,147		369,514		235,848		1,627,509
Selling, general and administrative								3,258,055		842,097		495,473		4,595,625
Restructuring and acquisition-related charges								—		—		107,490		107,490
Total costs and expenses								4,280,202		1,211,611		838,811		6,330,624
Operating income								2,006,839		493,073		(1,085,637)		1,414,275
Other income (expense), net								52,325		(9,499)		(82,525)		(39,699)
Income before tax								2,059,164		483,574		(1,168,162)		1,374,576
Income tax provision								424,708		78,069		(250,002)		252,775
Net income								1,634,456		405,505		(918,160)		1,121,801
Net income attributable to the non-controlling interest in VMware, Inc.								—		(69,285)		35,561		(33,724)
Net income attributable to EMC Corporation							$	1,634,456	$	336,220	$	(882,599)	$	1,088,077

Our revenues are attributed to the geographic areas according to the location of the customers. Revenues by geographic area are included in the following table (table in thousands):

	2011		2010		2009
United States	$	10,549,594	$	9,152,363	$	7,384,308
Europe, Middle East and Africa		5,667,610		4,942,104		4,290,274
Asia Pacific		2,639,397		1,965,154		1,603,107
Latin America, Mexico and Canada		1,150,987		955,505		748,221
Total	$	20,007,588	$	17,015,126	$	14,025,910

No country other than the United States accounted for 10% or more of revenues in 2011, 2010 or 2009.

Long-lived assets, excluding financial instruments, deferred tax assets, goodwill and intangible assets, in the United States were $3,622.8 million at December 31, 2011 and $2,936.8 million at December 31, 2010. Internationally, long-lived assets, excluding financial instruments and deferred tax assets, were $616.5 million at December 31, 2011 and $600.3 million at December 31, 2010. No country other than the United States and Ireland accounted for 10% or more of total long-lived assets, excluding financial instruments and deferred tax assets, at December 31, 2011 or 2010.