EMC Reports First-Quarter 2009 Financial Results
First-Quarter 2009 Highlights
- Consolidated revenue
- GAAP net income attributable to EMC
- Strong operating cash flow
- Record cash and investments
First-quarter consolidated revenue of
Tucci continued, “Looking ahead, EMC will advance our place among our customers’ most strategic IT providers as they take advantage of trends shaping the future of IT such as the virtual data center and cloud computing. As a technology-driven company, we will continue to use our financial strength to remain aggressive with R&D, extend our technology leadership, forge even tighter and deeper strategic alliances and deliver customers even more advanced solutions and services for their most strategic IT initiatives.”
Goulden continued, “We are taking additional near-term cost reduction actions that will save EMC an additional
EMC’s best estimate is that 2009 global IT spending will decline as a percentage in the very-high-single-digit to very-low-double-digit range compared with 2008. EMC also expects second-quarter 2009 global IT spending will probably be flat compared with the first quarter of 2009, and the second half of 2009 will be stronger than the first half of the year.
First-Quarter Highlights
EMC’s Information Infrastructure business revenue for the first quarter – comprising Information Storage, RSA Security, and Content Management & Archiving – was
- Industry-leading networked storage solutions, in particular EMC’s unified storage systems that connect to a variety of networks and the company’s high-end and midrange storage systems with solid state drives that use flash memory.
- Expansive portfolio of industry-leading backup, recovery and archive solutions that leverage data deduplication to meet their data protection requirements, reduce cost and mitigate risk.
- RSA security solutions helping customers solve their most complex information security challenges, with particular strength in the quarter from the RSA security information and event management solutions, and the RSA identity protection and verification suite.
- Broad consulting and professional services portfolio helping customers meet their near-term cost containment requirements while supporting their longer-term objectives, such as consolidation and virtualization.
- Solutions for effective content management that advance collaboration, business process and IT efficiency and compliance.
VMware (NYSE: VMW), which is majority-owned by EMC, contributed first-quarter revenue of
EMC consolidated first-quarter revenue from
Certain Items Impacting 2009
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. The items set forth under “Certain Items Impacting 2009″ in EMC’s news release dated
All dollar amounts and percentages set forth below should be considered to be approximations.
The following items are expected to impact EMC’s 2009 results:
- In 2009, savings from cost reduction actions are expected to reduce the company’s 2008 cost base by
$450 million , up$100 million from the company’s previous estimate of$350 million . The savings are expected to be weighted toward the latter half of 2009. - Due to pressure on IT spending, EMC anticipates lower gross and operating margins for 2009 compared with 2008.
- Operating profitability should show signs of improvement from first-quarter 2009 levels in the second half of 2009.
- VMware’s contributions to consolidated diluted earnings per share are expected to be
$0.02 lower in the second quarter of 2009 compared with the first quarter of 2009.
Due to the current macro-economic conditions and limited visibility, EMC is not offering revenue, EPS or other financial outlook at this time.
Supporting Resources
- EMC will host its 2009 first-quarter earnings conference call today at
8:30 a.m. ET , which will be available on EMC’s web site at http://www.emc.com/about/investor-relations/index.htm
- Additional information regarding EMC’s financials, as well as a webcast of the conference call, will be available at
8:30 a.m. ET at http://www.emc.com/about/investor-relations/index.htm
- Visit http://ir.vmware.com for more information about VMware’s first-quarter financial results
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.
(1) Items excluded from the non-GAAP results are stock-based compensation and intangible asset amortization for the first quarters of 2009 and 2008, a restructuring charge for the first quarter of 2009 and an in-process research and development charge for the first quarter of 2008. See attached schedules for reconciliation of GAAP to non-GAAP.
(2) The results for 2008 have been adjusted to give effect to the adoption of Statement of Financial Accounting Standards No. 160, “Non-controlling Interests in Consolidated Financial Statements-An Amendment of ARB No. 51″ and FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”.
EMC is a registered trademark of EMC Corporation. RSA is a registered trademark of RSA Security Inc. VMware is a registered trademark of VMware, 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; (xiv) litigation that we may be involved in; 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. Statements in this release regarding market conditions are based on current expectations. These statements are forward-looking, and actual results may differ materially. EMC disclaims any obligation to update any forward-looking statements in this release 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 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 stock-based compensation expense, intangible asset amortization, restructuring charges and IPR&D charges) 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
------------------
March 31, March 31,
2009 2008
---- ----
Revenues:
Product sales $1,969,120 $2,340,430
Services 1,181,642 1,129,629
--------- ---------
3,150,762 3,470,059
Cost and expenses:
Cost of product sales 1,013,330 1,074,583
Cost of services 454,177 486,081
Research and development 383,293 433,514
Selling, general and administrative 1,024,773 1,082,215
In-process research and development - 79,204
Restructuring charge (credit) 15,572 (357)
------ ----
Operating income 259,617 314,819
Investment income 39,844 77,140
Interest expense (45,543) (43,069)
Other expense, net (10,758) (4,763)
------- ------
Income before tax 243,160 344,127
Income tax provision 37,815 86,319
------ ------
Net income 205,345 257,808
Less: Net income attributable to
the non-controlling interests
in VMware, Inc. (11,276) (6,161)
------- ------
Net income attributable to EMC
Corporation $194,069 $251,647
======== ========
Net income per weighted average share,
basic attributable to EMC Corporation
common stockholders $0.10 $0.12
===== =====
Net income per weighted average share,
diluted attributable to EMC Corporation
common stockholders $0.10 $0.12
===== =====
Weighted average shares, basic 2,008,915 2,075,152
Weighted average shares, diluted 2,021,062 2,110,805
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended March 31, 2009
(in thousands, except per share amounts)
Unaudited
Research Selling,
Cost of and General and
Revenue Revenue Development Administrative
------- ------- ----------- --------------
-------------
EMC Consolidated
GAAP $3,150,762 $1,467,507 $383,293 $1,024,773
-------------
Restructuring
charge - - - -
--- --- --- ---
---------------
EMC Consolidated
Adjusted (1) 3,150,762 1,467,507 383,293 1,024,773
----------------
Stock-based
compensation
expense - (19,894) (41,242) (51,511)
Intangible
amortization - (30,610) (3,210) (25,368)
--- ------- ------ -------
------------
EMC
Consolidated
Non-GAAP (2) $3,150,762 $1,417,003 $338,841 $947,894
------------- ========== ========== ======== ========
--------------------
EMC Information
Infrastructure GAAP $2,680,361 $1,392,825 $278,499 $823,249
--------------------
Restructuring
charge - - - -
--- --- --- ---
--------------
EMC Information
Infrastructure
Adjusted (3) 2,680,361 1,392,825 278,499 823,249
---------------
Stock-based
compensation
expense - (14,233) (17,312) (29,404)
Intangible
amortization - (27,853) (3,210) (24,816)
--- ------- ------ -------
--------------
EMC Information
Infrastructure
Non-GAAP (4) $2,680,361 $1,350,739 $257,977 $769,029
--------------- ========== ========== ======== ========
----------------
VMware
standalone GAAP $470,310 $75,003 $105,401 $203,003
----------------
GAAP
adjustments
and
eliminations 91 (321) (607) (1,479)
--- ---- ---- ------
----------
VMware
within EMC
GAAP (5) 470,401 74,682 104,794 201,524
-----------
Stock-based
compensation
expense - (5,661) (23,930) (22,107)
Intangible
amortization - (2,757) - (552)
--- ------ --- ----
------------
VMware within
EMC Non-GAAP (6) $470,401 $66,264 $80,864 $178,865
------------- ======== ======= ======= ========
Other Income
Restructuring Operating Expense, Before
Charge Income net Taxes
------------- --------- -------- --------
----------------------
EMC Consolidated GAAP $15,572 $259,617 $(16,457) $243,160
----------------------
Restructuring charge (15,572) 15,572 - 15,572
------- ------ --- ------
---------------
EMC Consolidated
Adjusted (1) - 275,189 (16,457) 258,732
----------------
Stock-based
compensation
expense - 112,647 - 112,647
Intangible amortization - 59,188 - 59,188
--- ------ --- ------
----------------------------
EMC Consolidated Non-GAAP (2) $- $447,024 $(16,457) $430,567
---------------------------- === ======== ======== ========
--------------------
EMC Information
Infrastructure GAAP $15,572 $170,216 $(13,508) $156,708
--------------------
Restructuring charge (15,572) 15,572 - 15,572
------- ------ --- ------
--------------
EMC Information
Infrastructure
Adjusted (3) - 185,788 (13,508) 172,280
---------------
Stock-based
compensation
expense - 60,949 - 60,949
Intangible amortization - 55,879 - 55,879
--- ------ --- ------
--------------
EMC Information
Infrastructure
Non-GAAP (4) $- $302,616 $(13,508) $289,108
--------------- === ======== ======== ========
----------------------
VMware standalone GAAP $- $86,903 $(1,436) $85,467
----------------------
GAAP adjustments
and eliminations - 2,498 (1,513) 985
--- ----- ------ ---
-------------
VMware within
EMC GAAP (5) - 89,401 (2,949) 86,452
-------------
Stock-based
compensation
expense - 51,698 - 51,698
Intangible amortization - 3,309 - 3,309
--- ----- --- -----
------------
VMware
within EMC
Non-GAAP (6) $- $144,408 $(2,949) $141,459
------------- === ======== ======= ========
Net Net
Income Income Income
Tax Net Attributable Attributable
Provision Income to VMware to EMC
--------- ------ ------------- -------------
----------------------
EMC Consolidated GAAP $37,815 $205,345 $(11,276) $194,069
----------------------
Restructuring charge 6,115 9,457 - 9,457
----- ----- --- -----
---------------
EMC Consolidated
Adjusted (1) 43,930 214,802 (11,276) 203,526
----------------
Stock-based compensation
expense 24,340 88,307 (6,672) 81,635
Intangible amortization 20,321 38,867 (345) 38,522
------ ------ ---- ------
---------------
EMC Consolidated
Non-GAAP (2) $88,591 $341,976 $(18,293) $323,683
---------------- ======= ======== ======== ========
--------------------
EMC Information
Infrastructure GAAP $22,081 $134,627 $- $134,627
--------------------
Restructuring charge 6,115 9,457 - 9,457
----- ----- --- -----
--------------
EMC Information
Infrastructure
Adjusted (3) 28,196 144,084 - 144,084
---------------
Stock-based
compensation
expense 14,030 46,919 - 46,919
Intangible
amortization 19,153 36,726 - 36,726
------ ------ --- ------
--------------
EMC Information
Infrastructure
Non-GAAP (4) $61,379 $227,729 - $227,729
--------------- ======= ======== === ========
-----------
VMware
standalone
GAAP $15,532 $69,935 $- $69,935
-----------
GAAP adjustments and
eliminations 202 783 (11,276) (10,493)
--- --- ------- -------
--------
VMware within
EMC GAAP (5) 15,734 70,718 (11,276) 59,442
---------
Stock-based
compensation
expense 10,310 41,388 (6,672) 34,716
Intangible
amortization 1,168 2,141 (345) 1,796
----- ----- ---- -----
-------------
VMware within
EMC Non-GAAP (6) $27,212 $114,247 $(18,293) $95,954
---------------- ======= ======== ======== =======
Net Income Net Income
per Weighted per Weighted
Average Share, Average Share,
Basic Diluted
-------------- --------------
----------------------
EMC Consolidated GAAP $0.097 $0.096
----------------------
Restructuring charge $0.005 $0.005
------ ------
----------------------------
EMC Consolidated Adjusted (1) $0.101 $0.101
-----------------------------
Stock-based compensation expense $0.041 $0.040
Intangible amortization $0.019 $0.019
------ ------
----------------------------
EMC Consolidated Non-GAAP (2) $0.161 $0.160
----------------------------- ====== ======
-----------------------------------
EMC Information Infrastructure GAAP $0.067 $0.067
-----------------------------------
Restructuring charge $0.005 $0.005
------ ------
-----------------------------
EMC Information Infrastructure
Adjusted (3) $0.072 $0.071
------------------------------
Stock-based compensation expense $0.023 $0.023
Intangible amortization $0.018 $0.018
------ ------
-----------------------------
EMC Information Infrastructure
Non-GAAP (4) $0.113 $0.113
------------------------------ ====== ======
----------------------
VMware standalone GAAP $0.035 $0.035
----------------------
GAAP adjustments and eliminations $(0.005) $(0.005)
------- -------
-------------------------
VMware within EMC GAAP (5) $0.030 $0.029
--------------------------
Stock-based compensation expense $0.017 $0.017
Intangible amortization $0.001 $0.001
------ ------
-----------------------------
VMware within EMC Non-GAAP (6) $0.048 $0.047
----------------------------- ====== ======
Wtd. Average Share O/S 2,008,915 2,021,062
========= =========
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended March 31, 2009
(in thousands, except per share amounts)
Unaudited
(Continued)
The following costs are included in EMC Consolidated Non-GAAP and EMC
Information Infrastructure Non-GAAP results
Selling,
Research General
Cost of and and
Revenue Revenue Development Administrative
------- ------- ----------- --------------
Non - cash
interest expense on
convertible debt (7) $- $- $- $-
Transition costs (8) - 896 393 8,366
--- --- --- -----
$- $896 $393 $8,366
=== ==== ==== ======
Income
Restructuring Operating Other expense, Before
Charge Income net Taxes
------------- --------- -------------- --------
Non - cash
interest expense on
convertible debt (7) $- $- $(26,299) $(26,299)
Transition costs (8) - (9,655) - (9,655)
--- ------ --- ------
$- $(9,655) $(26,299) $(35,954)
=== ======= ======== ========
Income Net Income Net Income
Tax Net Attributable Attributable
Provision Income to VMware to EMC
--------- ------ ------------ ------------
Non - cash
interest expense on
convertible debt (7) $(8,234) $(18,065) $- $(18,065)
Transition costs (8) (3,346) (6,309) - $(6,309)
------ ------ --- -------
$(11,580) $(24,374) $- $(24,374)
======== ======== === ========
Net Income Net Income
per Weighted per Weighted
Average Average
Share, Share,
Basic Diluted
------------ ------------
Non - cash interest expense on convertible debt (7) $(0.009) $(0.009)
Transition costs (8) $(0.003) $(0.003)
------- -------
$(0.012) $(0.012)
======= =======
(1) Represents EMC Consolidated GAAP excluding restructuring charge.
(2) Represents EMC Consolidated Adjusted excluding stock-based
compensation expense and intangible amortization.
(3) Represents EMC Information Infrastructure GAAP excluding restructuring
charge.
(4) Represents EMC Information Infrastructure Adjusted excluding stock-
based compensation expense and intangible amortization.
(5) Represents VMware within EMC GAAP.
(6) Represents VMware within EMC excluding stock-based compensation
expense and intangible amortization.
(7) Represents the non-cash interest charge associated with our
convertible senior notes due 2011 and 2013 totalling $3,450 million
required to be recognized pursuant to FSP 14-1, "Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement)".
(8) Represents incremental costs incurred to transform our current cost
structure to a more streamlined cost structure.
Note: schedule may not add due to rounding
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended March 31, 2008
(in thousands, except per share amounts)
Unaudited
Selling,
Cost of Research and General and
Revenue Revenue Development Administrative
------- ------- ------------ --------------
----------------
EMC Consolidated
GAAP $3,470,059 $1,560,664 $433,514 $1,082,215
----------------
IPR&D - - - -
--- --- --- ---
---------------
EMC Consolidated
Adjusted (1) 3,470,059 1,560,664 433,514 1,082,215
----------------
Stock-based
compensation
expense - (18,312) (38,825) (61,950)
Intangible
amortization - (38,198) (3,011) (24,791)
--- ------- ------ -------
---------------
EMC Consolidated
Non-GAAP (2) $3,470,059 $1,504,154 $391,678 $995,474
---------------- ========== ========== ======== ========
---------------
EMC Information
Infrastructure
GAAP $3,031,889 $1,483,604 $315,428 $890,640
---------------
IPR&D - - - -
--- --- --- ---
--------------
EMC Information
Infrastructure
Adjusted (3) 3,031,889 1,483,604 315,428 890,640
---------------
Stock-based
compensation
expense - (12,136) (17,912) (44,412)
Intangible
amortization - (35,888) (3,011) (23,250)
--- ------- ------ -------
--------------
EMC Information
Infrastructure
Non-GAAP (4) $3,031,889 $1,435,580 $294,505 $822,978
--------------- ========== ========== ======== ========
-----------------
VMware standalone
GAAP $438,175 $77,170 $119,255 $193,359
-----------------
GAAP adjustments
and eliminations (5) (110) (1,169) (1,784)
--- ---- ------ ------
-------------
VMware within
EMC GAAP (5) 438,170 77,060 118,086 191,575
-------------
Stock-based
compensation
expense - (6,176) (20,913) (17,538)
Intangible
amortization - (2,310) - (1,541)
--- ------ --- ------
----------------
VMware within EMC
Non-GAAP (6) $438,170 $68,574 $97,173 $172,496
----------------- ======== ======= ======= ========
Restructuring Operating Other Income, Income Before
and IPR&D Income net Taxes
------------- --------- ------------- -------------
----------------
EMC Consolidated
GAAP $78,847 $314,819 $29,308 $344,127
-------------
IPR&D (79,204) 79,204 - 79,204
------- ------ --- ------
---------------
EMC Consolidated
Adjusted (1) (357) 394,023 29,308 423,331
----------------
Stock-based
compensation
expense - 119,087 - 119,087
Intangible
amortization - 66,000 - 66,000
--- ------ --- ------
----------------
EMC Consolidated
Non-GAAP (2) $(357) $579,110 $29,308 $608,418
---------------- ===== ======== ======= ========
---------------
EMC Information
Infrastructure
GAAP $78,847 $263,370 $26,669 $290,039
---------------
IPR&D (79,204) 79,204 - 79,204
------- ------ --- ------
--------------
EMC Information
Infrastructure
Adjusted (3) (357) 342,574 26,669 369,243
---------------
Stock-based compensation
expense - 74,460 - 74,460
Intangible
amortization - 62,149 - 62,149
--- ------ --- ------
--------------
EMC Information
Infrastructure
Non-GAAP (4) $(357) $479,183 $26,669 $505,852
--------------- ===== ======== ======= ========
----------------------
VMware standalone GAAP $- $48,391 $2,639 $51,030
----------------------
GAAP adjustments
and eliminations - 3,058 - 3,058
--- ----- --- -----
--------------------------
VMware within EMC GAAP (5) - 51,449 2,639 54,088
--------------------------
Stock-based
compensation
expense - 44,627 - 44,627
Intangible
amortization - 3,851 - 3,851
--- ----- --- -----
-----------------
VMware within
EMC Non-GAAP (6) $- $99,927 $2,639 $102,566
----------------- === ======= ====== ========
Net Net
Income Income
Income Tax Net Attributable Attributable
Provision Income to VMware to EMC
---------- ------ ------------ ------------
-------------
EMC
Consolidated
GAAP $86,319 $257,808 $(6,161) $251,647
-------------
IPR&D - 79,204 - 79,204
--- ------ --- ------
---------------
EMC Consolidated
Adjusted (1) 86,319 337,012 (6,161) 330,851
----------------
Stock-based
compensation
expense 27,831 91,256 (5,095) 86,161
Intangible
amortization 22,533 43,467 (349) 43,118
------ ------ ---- ------
---------------
EMC Consolidated
Non-GAAP (2) $136,683 $471,735 $(11,605) $460,130
---------------- ======== ======== ======== ========
--------------------
EMC Information
Infrastructure GAAP $77,600 $212,439 $- $212,439
--------------------
IPR&D - 79,204 - 79,204
--- ------ --- ------
--------------
EMC Information
Infrastructure
Adjusted (3) 77,600 291,643 - 291,643
---------------
Stock-based compensation
expense 18,834 55,626 - 55,626
Intangible amortization 21,122 41,027 - 41,027
------ ------ --- ------
--------------
EMC Information
Infrastructure
Non-GAAP (4) $117,557 $388,295 $- $388,295
--------------- ======== ======== === ========
----------------
VMware standalone GAAP $7,975 $43,055 $- $43,055
----------------
GAAP adjustments
and eliminations 744 2,314 (6,161) (3,847)
--- ----- ------ ------
-------------
VMware within
EMC GAAP (5) 8,719 45,369 (6,161) 39,208
-------------
Stock-based compensation
expense 8,997 35,630 (5,095) 30,535
Intangible amortization 1,411 2,440 (349) 2,091
----- ----- ---- -----
----------------
VMware within
EMC Non-GAAP (6) $19,126 $83,440 $(11,605) $71,834
---------------- ======= ======= ======== =======
Net Income per Net Income per
Weighted Average Weighted Average
Share, Basic Share, Diluted
---------------- ----------------
----------------------
EMC Consolidated GAAP $0.121 $0.118
----------------------
IPR&D $0.038 $0.038
------ ------
----------------------------
EMC Consolidated Adjusted (1) $0.159 $0.156
-----------------------------
Stock-based compensation expense $0.042 $0.041
Intangible amortization $0.021 $0.020
------ ------
----------------------------
EMC Consolidated Non-GAAP (2) $0.222 $0.217
----------------------------- ====== ======
-----------------------------------
EMC Information Infrastructure GAAP $0.102 $0.101
-----------------------------------
IPR&D $0.038 $0.038
------ ------
------------------------------
EMC Information Infrastructure
Adjusted (3) $0.141 $0.138
------------------------------
Stock-based compensation expense $0.027 $0.026
Intangible amortization $0.020 $0.019
------ ------
------------------------------
EMC Information Infrastructure
Non-GAAP (4) $0.187 $0.184
------------------------------ ====== ======
----------------------
VMware standalone GAAP $0.021 $0.020
----------------------
GAAP adjustments and eliminations $(0.002) $(0.003)
------- -------
--------------------------
VMware within EMC GAAP (5) $0.019 $0.018
--------------------------
Stock-based compensation expense $0.015 $0.014
Intangible amortization $0.001 $0.001
------ ------
------------------------------
VMware within EMC Non-GAAP (6) $0.035 $0.033
------------------------------ ====== ======
Wtd. Average Share O/S 2,075,152 2,110,805
========= =========
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended March 31, 2008
(in thousands, except per share amounts)
Unaudited
(Continued)
The following costs are included in EMC Consolidated Non-GAAP
and EMC Information Infrastructure Non-GAAP results
Selling,
Cost of Research and General and
Revenue Revenue Development Administrative
------- ------- ------------ --------------
Non - cash
interest expense on
convertible debt (7) $- $- $- $-
Other Income
Restructuring Operating Income, Before
and IPR&D Income net Taxes
------------- --------- ------- ------
Non - cash
interest expense on
convertible debt (7) $- $- $(25,027) $(25,027)
Net Income Net Income
Income Tax Attributable Attributable
Provision Net Income to VMware to EMC
---------- ---------- ------------ ------------
Non - cash
interest expense on
convertible debt (7) $(7,836) $(17,191) $- $(17,191)
Net Income Net Income
per Weighted per Weighted
Average Average
Share, Share,
Basic Diluted
------------ ------------
Non - cash interest expense on convertible debt (7) $(0.008) $(0.008)
(1) Represents EMC Consolidated GAAP excluding IPR&D.
(2) Represents EMC Consolidated Adjusted excluding stock-based
compensation expense and intangible amortization.
(3) Represents EMC Information Infrastructure GAAP excluding IPR&D.
(4) Represents EMC Information Infrastructure Adjusted less stock-based
compensation expense and intangible amortization.
(5) Represents VMware within EMC GAAP.
(6) Represents VMware within EMC excluding stock-based compensation
expense and intangible amortization.
(7) Represents the non-cash interest charge associated with our
convertible senior notes due 2011 and 2013 totalling $3,450 million
required to be recognized pursuant to FSP 14-1, "Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement)".
Note: schedule may not add due to rounding
EMC CORPORATION
Consolidated Balance Sheets
(in thousands, except per share amounts)
Unaudited
March 31, December 31,
2009 2008
---- ----
ASSETS
Current assets:
Cash and cash equivalents $6,323,452 $5,843,685
Short-term investments 928,277 963,292
Accounts and notes receivable,
less allowance for doubtful
accounts of $51,875 and
$48,080 1,700,096 2,252,640
Inventories 820,504 842,803
Deferred income taxes 511,680 477,101
Other current assets 312,152 285,508
------- -------
Total current assets 10,596,161 10,665,029
Long-term investments 2,533,237 2,370,493
Property, plant and equipment, net 2,192,096 2,223,007
Intangible assets, net 738,259 795,616
Other assets, net 799,873 773,631
Goodwill, net 7,042,473 7,046,799
--------- ---------
Total assets $23,902,099 $23,874,575
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $657,793 $757,405
Accrued expenses 1,712,979 1,901,884
Securities lending payable 347,142 412,321
Income taxes payable 33,815 136,802
Deferred revenue 2,139,253 2,010,024
--------- ---------
Total current
liabilities 4,890,982 5,218,436
Income taxes payable 244,849 255,182
Deferred revenue 1,210,207 1,182,360
Deferred income taxes 430,110 389,787
Long-term convertible debt 3,018,242 2,991,943
Other liabilities 184,034 180,917
------- -------
Total liabilities 9,978,424 10,218,625
Commitments and contingencies
EMC Corporation's
stockholders' equity:
Preferred stock, par value $.01;
authorized 25,000 shares, none
outstanding - -
Common stock, par value
$.01; authorized 6,000,000
shares; issued 2,013,003
and 2,012,938 shares 20,130 20,129
Additional paid-in capital 2,889,879 2,817,054
Retained earnings 10,865,281 10,671,212
Accumulated other comprehensive
loss (200,459) (179,952)
-------- --------
Total EMC Corporation's
stockholders' equity 13,574,831 13,328,443
Non-controlling interest in
VMware, Inc. 348,844 327,507
------- -------
Total stockholders' equity 13,923,675 13,655,950
Total liabilities and
stockholders' equity $23,902,099 $23,874,575
=========== ===========
EMC CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Three Months Ended
------------------
March 31, March 31,
2009 2008
--------- ---------
Cash flows from operating activities:
Cash received from customers $3,860,223 $4,066,805
Cash paid to suppliers and employees (2,877,408) (3,056,784)
Dividends and interest received 46,656 77,958
Interest paid (4,007) (2,865)
Income taxes paid (161,773) (166,822)
-------- --------
Net cash provided by operating
activities 863,691 918,292
------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (95,320) (146,512)
Capitalized software development costs (87,627) (54,321)
Purchases of short and long-term
available for sale securities (2,277,512) (608,819)
Sales and maturities of short and long-
term available for sale securities 2,169,095 1,196,985
Acquisitions, net of cash acquired - (337,809)
Other (906) (3,030)
---- ------
Net cash (used in) provided by
investing activities (292,270) 46,494
-------- ------
Cash flows from financing activities:
Issuance of EMC's common stock from
the exercise of stock options 8,637 27,397
Issuance of VMware's common stock from the
exercise of stock options 4,503 23,669
Payments on securities lending (65,179) -
Repurchase of EMC's common stock - (557,244)
Excess tax benefits from stock-based
compensation 776 28,511
Payment of short and long-term obligations (19,257) (3,782)
Proceeds from short and long-term obligations 1,038 1,114
----- -----
Net cash used in financing activities (69,482) (480,335)
------- --------
------- ------
Effect of exchange rate changes on cash (22,172) 11,784
------- ------
Net increase in cash and cash equivalents 479,767 496,235
Cash and cash equivalents at beginning of
period 5,843,685 4,482,211
--------- ---------
Cash and cash equivalents at end of period $6,323,452 $4,978,446
========== ==========
Reconciliation of net income to net cash
provided by operating activities:
Net income attributable to EMC Corporation $194,069 $251,647
Adjustments to reconcile net income to net
cash provided by operating activities:
Net income attributable to non-controlling
interest in VMware, Inc. 11,276 6,161
Depreciation and amortization 255,798 254,619
Non-cash interest expense on convertible debt 26,299 25,027
Non-cash restructuring and in-process
research and development 2,072 80,970
Stock-based compensation expense 112,647 119,087
Increase in provision for doubtful accounts 5,388 3,975
Deferred income taxes, net (4,527) (34,492)
Excess tax benefits from stock-based
compensation (776) (28,511)
Other 795 (4,887)
Changes in assets and liabilities,
net of acquisitions:
Accounts and notes receivable 550,917 416,788
Inventories (2,226) (28,174)
Other assets (22,271) (78,881)
Accounts payable (80,021) 27,501
Accrued expenses (222,591) (253,761)
Income taxes payable (119,431) (46,545)
Deferred revenue 153,156 175,983
Other liabilities 3,117 31,785
----- ------
Net cash provided by operating
activities $863,691 $918,292
======== ========
EMC Corporation
Reconciliation of Cash Flow from
Operations to Free Cash Flow
(in thousands)
Unaudited
Three Months Ended
------------------
March 31, March 31,
2009 2008
---- ----
EMC Consolidated
Cash flow from Operations $863,691 $918,292
Capital Expenditures (95,320) (146,512)
Capitalized Software (87,627) (54,321)
------- -------
Free Cash Flow $680,744 $717,459
======== ========
VMware within EMC
Cash flow from Operations $240,943 $106,058
Capital Expenditures (24,326) (41,019)
Capitalized Software (29,935) (4,164)
------- ------
Free Cash Flow $186,682 $60,875
======== =======
EMC Information Infrastructure
Cash flow from Operations $622,748 $812,234
Capital Expenditures (70,994) (105,493)
Capitalized Software (57,692) (50,157)
------- -------
Free Cash Flow $494,062 $656,584
======== ========
EMC Corporation
Reconciliation of EMC Information Storage Gross Margin GAAP to Non-GAAP
(In thousands)
Unaudited
Q1 '07 Q2 '07 Q3 '07 Q4 '07
EMC Information Storage ---------- ---------- ---------- ----------
Gross Margin GAAP $1,174,130 $1,269,402 $1,327,380 $1,524,768
Less: Stock-based
compensation 12,755 11,516 9,530 8,853
Intangible
amortization 8,343 8,352 8,885 9,727
---------- ---------- ---------- ----------
EMC Information Storage
Gross Margin Non-GAAP $1,195,228 $1,289,270 $1,345,795 $1,543,348
========== ========== ========== ==========
Q1 '08 Q2 '08 Q3 '08 Q4 '08
EMC Information Storage ---------- ---------- ---------- ----------
Gross Margin GAAP $1,370,420 $1,455,853 $1,472,280 $1,571,111
Less: Stock-based
compensation 10,131 10,406 13,060 13,877
Intangible
amortization 10,374 11,394 11,614 11,681
---------- ---------- ---------- ----------
EMC Information Storage
Gross Margin Non-GAAP $1,390,925 $1,477,653 $1,496,954 $1,596,669
========== ========== ========== ==========
Q1 '09
EMC Information Storage ----------
Gross Margin GAAP $1,108,748
Less: Stock-based
compensation 11,885
Intangible
amortization 8,217
----------
EMC Information Storage
Gross Margin Non-GAAP $1,128,850
==========
EMC Corporation
Supplemental
Revenue Analysis
(in thousands)
Unaudited
Supplemental Revenue Data
Q1 2008 Q2 2008 Q3 2008 Q4 2008
----------- ----------- ----------- -----------
Storage:
Product Revenue $1,903,639 $2,018,026 $2,056,498 $2,285,366
Services Revenue 808,190 855,221 851,825 853,539
---------- ---------- ---------- ----------
Total Storage
Revenue $2,711,829 $2,873,247 $2,908,323 $3,138,905
========== ========== ========== ==========
Content Management
and Archiving:
Product Revenue $61,128 $73,415 $62,576 $81,054
Services Revenue 124,075 130,591 125,493 127,316
-------- -------- -------- --------
Total Content
Management and
Archiving Revenue $185,203 $204,006 $188,069 $208,370
======== ======== ======== ========
Security:
Product Revenue $81,683 $89,067 $88,779 $95,534
Services Revenue 53,174 54,979 58,561 59,498
-------- -------- -------- --------
Total Security
Revenue $134,857 $144,046 $147,340 $155,032
======== ======== ======== ========
EMC Information
Infrastructure:
Product Revenue $2,046,450 $2,180,508 $2,207,853 $2,461,954
Services Revenue 985,439 1,040,791 1,035,879 1,040,353
---------- ---------- ---------- ----------
Total EMC
Information
Infrastructure
Revenue $3,031,889 $3,221,299 $3,243,732 $3,502,307
========== ========== ========== ==========
VMware:
Product Revenue 293,980 281,143 285,088 314,840
Services Revenue 144,190 171,432 186,772 199,491
-------- -------- -------- --------
Total VMware
Revenue $438,170 $452,575 $471,860 $514,331
======== ======== ======== ========
YTD 2008 Q1 2009
------------ -----------
Storage:
Product Revenue $8,263,529 $1,572,408
Services Revenue 3,368,775 790,932
----------- ----------
Total Storage
Revenue $11,632,304 $2,363,340
=========== ==========
Content Management
and Archiving:
Product Revenue $278,173 $58,710
Services Revenue 507,475 115,605
-------- --------
Total Content
Management and
Archiving Revenue $785,648 $174,315
======== ========
Security:
Product Revenue $355,063 $80,671
Services Revenue 226,212 62,035
-------- --------
Total Security
Revenue $581,275 $142,706
======== ========
EMC Information
Infrastructure:
Product Revenue $8,896,765 $1,711,789
Services Revenue 4,102,462 968,572
----------- ----------
Total EMC
Information
Infrastructure
Revenue $12,999,227 $2,680,361
=========== ==========
VMware:
Product Revenue 1,175,051 $257,331
Services Revenue 701,885 213,070
---------- --------
Total VMware
Revenue $1,876,936 $470,401
========== ========
Q1 Q2 Q3 Q4
2008 2008 2008 2008
------- ------- ------- -------
Consolidated Revenues
Product Revenue $2,340,430 $2,461,651 $2,492,941 $2,776,794
Services Revenue 1,129,629 1,212,223 1,222,651 1,239,844
---------- ---------- ---------- ----------
Total Consolidated
Revenues $3,470,059 $3,673,874 $3,715,592 $4,016,638
========== ========== ========== ==========
Percentage impact
to EMC revenue
growth rate due
to changes in
exchange rates
from the prior year 2.3% 2.7% 1.2% (2.3)%
YTD Q1
2008 2009
------- -------
Consolidated Revenues
Product Revenue $10,071,816 $1,969,120
Services Revenue 4,804,347 1,181,642
----------- ----------
Total Consolidated
Revenues $14,876,163 $3,150,762
=========== ==========
Percentage impact to EMC
revenue growth rate due
to changes in exchange
rates from the prior year 0.8% (3.5)%
To view additional financial schedules, click here
SOURCE EMC Corporation