HOPKINTON, Mass., July 23 /PRNewswire-FirstCall/ -- EMC Corporation (EMC), the world leader in information infrastructure solutions, today announced record second-quarter revenue results and its 20th consecutive quarter of double-digit year-over-year revenue growth. The company achieved balanced execution with double-digit revenue growth in systems, software and services and across all of its major business segments and geographies. EMC's total consolidated revenue for the second quarter of 2008 was $3.67 billion, an increase of 18% over the $3.12 billion reported for the second quarter of 2007.
Second-quarter GAAP net income was $377.5 million or $0.18 per diluted share. Non-GAAP second-quarter net income, which excludes stock-based compensation and intangible amortization, was $511.7 million or $0.24 per diluted share, 20% higher than the non-GAAP earnings per diluted share of $0.20 for the year-ago period.
Joe Tucci, EMC Chairman, President and Chief Executive Officer, said, "EMC demonstrated solid second-quarter performance. I'm proud that we've achieved 20 consecutive quarters, or half a decade, of consecutive double-digit revenue growth. Very few companies, particularly of our size, can make that claim. Our focus on information infrastructure and virtual infrastructure is paying off and is the driving force behind our strong financial position, our successful business model and our competitive advantage."
Tucci added, "Despite continued economic uncertainty at the macro level, we believe spending on information infrastructure and virtual infrastructure technologies and solutions will continue to grow, driven largely by the need to manage the ever-expanding volume of information efficiently, securely and cost effectively. The challenge of dealing with this information overload is leading to a set of needs that EMC -- our people, technology, services, and partners -- is uniquely able to address."
From a geographic perspective, revenue from the United States increased 10% compared with the same period a year ago. Revenue from operations outside of the United States grew 27% year over year and represented a record 48% of total second-quarter revenue. Revenue from EMC's Europe, Middle East & Africa (EMEA) region increased 27%, Asia-Pacific & Japan (APJ) revenue increased 27%, and Latin America revenue increased 24%, each compared with the year-ago quarter.
David Goulden, EMC Executive Vice President and Chief Financial Officer, said, "I am pleased with EMC's execution and solid performance in the second quarter. We achieved strong top-line and bottom-line growth and ended the quarter with a record $8.1 billion in cash and investments. As one of the most trusted technology partners in IT, we believe we are well positioned strategically and operationally for ongoing success."
Second-Quarter Highlights
Revenue from EMC's Information Storage business, which includes revenue from storage systems, storage software and related customer and professional services, reached $2.87 billion, an increase of 14% compared with the year-ago period. Growth in the Information Storage business reflects continued worldwide demand for EMC's networked storage solutions, with particularly strong traction from faster-growing international regions, EMC's mid-range storage systems connected to IP networks, and the company's professional consulting and implementation services. In the high-end of the market, second-quarter revenue from EMC Symmetrix networked storage products increased 10% year over year, driven by continued customer demand for large-scale enterprise consolidation and improved energy efficiency. In the mid-range, EMC Celerra network-attached storage products continued to experience strong revenue growth, increasing more than 50% year over year. Also during the quarter, the business benefited from innovative technologies and features introduced this year, including new solid state drives that use flash memory, virtual provisioning for simplified storage provisioning and increased system utilization, and data de-duplication for improved backup efficiency.
EMC's Content Management and Archiving business increased second-quarter revenue 18% year over year to $204 million. Growth in the business was led by customer demand for EMC's solutions for effective transactional content management that advance collaboration, compliance and risk-management initiatives, as well as improve business processes and increase productivity. This week, EMC announced the Documentum 6.5 platform, offering customers even more advanced enterprise content management (ECM) capabilities that blend the ease of use of Web 2.0 applications while minimizing the associated risk. With Documentum 6.5, organizations can leverage newer technologies, such as Web 2.0, improve the existing content applications already in use, and power all of these with a more scalable and secure ECM platform than ever before available.
For the second quarter of 2008, revenue from RSA, The Security Division of EMC, grew 15% year over year, reaching $144 million and benefiting from strength in areas such as data loss prevention (DLP), identity protection & verification, and security information & event management. During the quarter, the division made available key advancements to its DLP suite through important new capabilities and launched a comprehensive Identity Assurance solution that enables trusted identities to freely and securely interact with systems and access information. These additions support EMC's Information Risk Management strategy, which allows customers to effectively recognize, assess and mitigate the risk to their information at any point in its lifecycle. Organizations continue to choose RSA's comprehensive portfolio of security products and services to meet key compliance requirements around data security, security information management and data loss prevention more efficiently and holistically.
VMware (VMW), which is majority-owned by EMC, contributed second- quarter revenues of $453 million, an increase of 52% compared to the year-ago quarter. VMware is the global leader in virtualization solutions from the desktop to the datacenter. Customers of all sizes rely on VMware to reduce capital and operating expenses, ensure business continuity, strengthen security and be more energy efficient. Visit http://ir.vmware.com for more information about the virtualization software leader's second-quarter financial results.
"EMC has amassed the broadest, most innovative and most integrated product portfolio in company history. The rapid pace at which we're able to deliver new technologies and features to market makes EMC's portfolio even more compelling," continued Goulden. "Customers need help keeping up with information as it continues to grow at nearly 60% per year. EMC's unique ability to help solve all their information management challenges is a powerful competitive advantage."
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 exceed $15 billion in 2008.
-- Consolidated GAAP diluted earnings per share (including the $79.2 million non-cash charge for in-process research and development (IPR&D) in the first quarter of 2008) are expected to be $0.74 in 2008.
-- Consolidated non-GAAP diluted earnings per share (excluding the $79.2 million non-cash charge for IPR&D in the first quarter of 2008) are expected to be $0.78 in 2008.
-- Consolidated non-GAAP diluted earnings per share (excluding the $79.2 million non-cash charge for IPR&D in the first quarter of 2008, the impact of stock-based compensation and intangible asset amortization) are expected to be $1.04 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.
-- Consolidated GAAP tax rate for 2008 is expected to be 20% and the non- GAAP tax rate to be 22%. The tax impact of IPR&D, stock-based compensation and intangible asset amortization is expected to be 2%.
About EMC
EMC Corporation (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, Symmetrix, Celerra and Documentum are registered trademarks 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; 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, where noted, amounts relating to 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 Six Months Ended
---------------------- ----------------------
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
---------------------- ----------------------
Revenues:
Product sales $2,461,651 $2,222,355 $4,802,081 $4,334,781
Services 1,212,223 902,317 2,341,852 1,764,896
---------------------- ----------------------
3,673,874 3,124,672 7,143,933 6,099,677
Cost and expenses:
Cost of product sales 1,119,553 1,036,242 2,194,136 2,074,720
Cost of services 525,751 387,617 1,011,832 754,204
Research and development 442,502 384,966 876,016 740,358
Selling, general and
administrative 1,135,674 924,349 2,217,889 1,800,039
In-process research and
development - - 79,204 -
Restructuring credits - - (357) (2,670)
---------------------- ----------------------
Operating income 450,394 391,498 765,213 733,026
Investment income 58,730 50,850 135,870 102,989
Interest expense (18,794) (18,136) (36,836) (36,429)
Other (expense) income,
net (2,811) 2,968 (7,574) 7,808
---------------------- ----------------------
Income before taxes and
minority interest 487,519 427,180 856,673 807,394
Income tax provision 102,338 92,773 196,493 160,380
---------------------- ----------------------
Income before minority
interest 385,181 334,407 660,180 647,014
Minority interest in
VMware, net of taxes (7,713) - (13,874) -
---------------------- ----------------------
Net income $377,468 $334,407 $646,306 $647,014
====================== ======================
Net income per weighted
average share, basic: $0.18 $0.16 $0.31 $0.31
====================== ======================
Net income per weighted
average share, diluted: $0.18 $0.16 $0.31 $0.30
====================== ======================
Weighted average shares,
basic 2,057,766 2,070,636 2,066,470 2,075,683
Weighted average shares,
diluted 2,094,795 2,121,645 2,102,184 2,122,080
As a % of total revenue:
Gross margin 55.2% 54.4% 55.1% 53.6%
Selling, general and
administrative 30.9% 29.6% 31.0% 29.5%
Research and development 12.0% 12.3% 12.3% 12.1%
Operating income 12.3% 12.5% 10.7% 12.0%
Net income 10.3% 10.7% 9.0% 10.6%
Reconciliation of GAAP to Non-GAAP
For the Three Months Ended June 30, 2008
(in thousands, except per share amounts)
Unaudited
Selling,
Cost of Research and General and Operating
Revenue Revenue Development Administrative Income
---------- ---------- --------- ---------- ---------
EMC
Consolidated
GAAP $3,673,874 $1,645,304 $442,502 $1,135,674 $450,394
Stock-based
compensation
expense - (19,058) (39,433) (61,829) 120,320
Intangible
amortization - (39,268) (2,866) (26,743) 68,877
---------- ---------- --------- ---------- ---------
EMC
Consolidated
Non-GAAP (1) $3,673,874 $1,586,978 $400,203 $1,047,102 $639,591
========== =========== ========= =========== =========
EMC Information
Infrastructure
GAAP $3,221,299 $1,564,859 $327,917 $937,000 $391,523
Stock-based
compensation
expense - (12,486) (19,631) (43,307) 75,424
Intangible
amortization - (36,974) (2,866) (25,198) 65,038
--------- ---------- --------- ----------- ---------
EMC Information
Infrastructure
Non-GAAP (2) $3,221,299 $1,515,399 $305,420 $868,495 $531,985
=========== ========= ======== ========== =========
VMware
standalone
GAAP $456,128 $80,531 $114,128 $200,469 $61,000
GAAP adjustments
and
eliminations (3,553) (86) 457 (1,795) (2,129)
---------- ---------- --------- ---------- ---------
VMware within
EMC 452,575 80,445 114,585 198,674 58,871
Stock-based
compensation
expense - (6,572) (19,802) (18,522) 44,896
Intangible
amortization - (2,294) - (1,545) 3,839
---------- ---------- --------- --------- ---------
VMware within
EMC Non-GAAP
(3) $452,575 $71,579 $94,783 $178,607 $107,606
=========== ========== ========= ========== ==========
Income
Before Income
Taxes and Before
Other Income, Minority Income Tax Minority Minority
net Interest Provision Interest Interest
---------- ----------- ----------- --------- ---------
EMC Consolidated
GAAP $37,125 $487,519 $102,338 $385,181 $(7,713)
Stock-based
compensation
expense - 120,320 26,455 93,865 (5,043)
Intangible
amortization - 68,877 23,045 45,832 (375)
---------- ----------- ----------- --------- ---------
EMC Consolidated
Non-GAAP (1) $37,125 $676,716 $151,838 $524,878 $(13,131)
========== =========== =========== ========= =========
EMC Information
Infrastructure
GAAP $33,563 $425,086 $90,930 $334,156 $-
Stock-based
compensation
expense - 75,424 15,770 59,654 -
Intangible
amortization - 65,038 21,752 43,286 -
---------- ---------- ----------- --------- ---------
EMC Information
Infrastructure
Non-GAAP (2) $33,563 $565,548 $128,452 $437,096 $-
=========== ========== =========== ========= =========
VMware standalone
GAAP $3,101 $64,101 $11,765 $52,336 $-
GAAP adjustments
and eliminations 461 (1,668) (357) (1,311) (7,713)
----------- ---------- ---------- --------- ---------
VMware within
EMC 3,562 62,433 11,408 51,025 (7,713)
Stock-based
compensation
expense - 44,896 10,685 34,211 (5,043)
Intangible
amortization - 3,839 1,293 2,546 (375)
------------ ----------- ---------- ---------- ----------
VMware within EMC
Non-GAAP (3) $3,562 $111,168 $23,386 $87,782 $(13,131)
============ =========== ========== ========== =========
Net Income Net Income
per Weighted per Weighted
Average Average
Net Share, Share,
Income Basic Diluted
---------- ---------- ----------
EMC Consolidated GAAP $377,468 $0.183 $0.179
Stock-based compensation expense 88,822 $0.043 $0.042
Intangible amortization 45,457 $0.022 $0.022
---------- ---------- ----------
EMC Consolidated Non-GAAP (1) $511,747 $0.249 $0.243
========== ========== ==========
EMC Information Infrastructure GAAP $334,156 $0.162 $0.160
Stock-based compensation expense 59,654 $0.029 $0.028
Intangible amortization 43,286 $0.021 $0.021
---------- ---------- ----------
EMC Information Infrastructure
Non-GAAP (2) $437,096 $0.212 $0.209
========== ========== ==========
VMware standalone GAAP $52,336 $0.025 $0.025
GAAP adjustments and eliminations (9,024) $(0.004) $(0.005)
---------- ---------- ----------
VMware within EMC 43,312 $0.021 $0.020
Stock-based compensation expense 29,168 $0.014 $0.014
Intangible amortization 2,171 $0.001 $0.001
---------- ---------- ----------
VMware within EMC Non-GAAP (3) $74,651 $0.036 $0.035
========== ========== ==========
Wtd. Average Share O/S 2,057,766 2,094,795
============ ===========
(1) Represents EMC Consolidated GAAP excluding stock-based compensation
expense and intangible amortization.
(2) Represents EMC Information Infrastructure GAAP excluding stock-based
compensation expense and intangible amortization.
(3) 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 June 30, 2007
(in thousands, except per share amounts)
Unaudited
Selling,
Cost of Research and General and Operating
Revenue Revenue Development Administrative Income
---------- ---------- --------- ----------- ---------
EMC
Consolidated
GAAP $3,124,672 $1,423,859 $384,966 $924,349 $391,498
Stock-based
compensation
expense - (13,449) (24,733) (49,024) 87,206
Intangible
amortization - (29,185) (2,167) (17,244) 48,596
---------- ---------- --------- ----------- ---------
EMC
Consolidated
Non-GAAP (1) $3,124,672 $1,381,225 $358,066 $858,081 $527,300
========== ========= ========== ========= ========
EMC Information
Infrastructure
GAAP $2,826,575 $1,374,377 $314,019 $792,161 $346,018
Stock-based
compensation
expense - (12,456) (16,481) (42,296) 71,233
Intangible
amortization - (23,970) (2,167) (16,171) 42,308
---------- ---------- --------- --------- --------
EMC Information
Infrastructure
Non-GAAP (2) $2,826,575 $1,337,951 $295,371 $733,694 $459,559
=========== ========== ========= ========= =========
VMware
standalone
GAAP $296,825 $48,817 $71,581 $129,692 $46,735
GAAP adjustments
and eliminations 1,272 665 (634) 2,496 (1,255)
---------- ---------- --------- ----------- --------
VMware within
EMC 298,097 49,482 70,947 132,188 45,480
Stock-based
compensation
expense - (993) (8,252) (6,728) 15,973
Intangible
amortization - (5,215) - (1,073) 6,288
----------- -------- -------- -------- --------
VMware within
EMC Non-GAAP
(3) $298,097 $43,274 $62,695 $124,387 $67,741
=========== ========= ========= ========= ========
Other Income
Income, Before Income Tax Net
net Taxes Provision Income
------- -------- -------- --------
EMC Consolidated GAAP $35,682 $427,180 $92,773 $334,407
Stock-based compensation expense - 87,206 21,863 65,343
Intangible amortization - 48,596 17,108 31,488
------- -------- -------- --------
EMC Consolidated Non-GAAP (1) $35,682 $562,982 $131,744 $431,238
======= ======== ======== ========
EMC Information Infrastructure
GAAP $41,195 $387,213 $85,845 $301,368
Stock-based compensation expense - 71,233 17,054 54,179
Intangible amortization - 42,308 14,781 27,527
------- -------- -------- --------
EMC Information Infrastructure
Non-GAAP (2) $41,195 $500,754 $117,680 $383,074
======= ======== ======== ========
VMware standalone GAAP $(5,223) $41,512 $7,288 $34,224
GAAP adjustments and eliminations (290) (1,545) (360) (1,185)
------- -------- -------- --------
VMware within EMC (5,513) 39,967 6,928 33,039
Stock-based compensation expense - 15,973 4,809 11,164
Intangible amortization - 6,288 2,327 3,961
------- -------- -------- --------
VMware within EMC Non-GAAP (3) $(5,513) $62,228 $14,064 $48,164
======= ======== ======== ========
Net Income Net Income
per Weighted per Weighted
Average Share, Average Share,
Basic Diluted
-------- --------
EMC Consolidated GAAP $0.161 $0.158
Stock-based compensation expense $0.032 $0.031
Intangible amortization $0.015 $0.015
-------- --------
EMC Consolidated Non-GAAP (1) $0.208 $0.203
======== ========
EMC Information Infrastructure GAAP $0.146 $0.142
Stock-based compensation expense $0.026 $0.026
Intangible amortization $0.013 $0.013
-------- --------
EMC Information Infrastructure Non-GAAP (2) $0.185 $0.181
======== ========
VMware standalone GAAP $0.017 $0.016
GAAP adjustments and eliminations $(0.001) $(0.001)
-------- --------
VMware within EMC $0.016 $0.016
Stock-based compensation expense $0.005 $0.005
Intangible amortization $0.002 $0.002
-------- --------
VMware within EMC Non-GAAP (3) $0.023 $0.023
======== ========
Wtd. Average Share O/S 2,070,636 2,121,645
======== ========
(1) Represents EMC Consolidated GAAP excluding stock-based compensation
expense and intangible amortization.
(2) Represents EMC Information Infrastructure GAAP excluding stock-based
compensation expense and intangible amortization.
(3) Represents VMware within EMC 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
June 30, December 31,
2008 2007
--------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $5,219,347 $4,482,211
Short-term investments 642,598 1,644,703
Accounts and notes receivable,
less allowance for doubtful
accounts of $34,302 and $34,389 2,190,188 2,307,512
Inventories 972,032 877,243
Deferred income taxes 475,820 475,544
Other current assets 308,782 265,889
--------------- --------------
Total current assets 9,808,767 10,053,102
Long-term investments 2,267,398 1,825,572
Property, plant and equipment, net 2,168,760 2,159,396
Intangible assets, net 921,720 940,077
Other assets, net 791,172 775,001
Goodwill, net 6,918,935 6,531,506
--------------- --------------
Total assets $22,876,752 $22,284,654
=============== ==============
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $825,531 $840,886
Accrued expenses 1,586,963 1,696,309
Income taxes payable 19,303 146,104
Deferred revenue 1,946,033 1,724,909
------------- -------------
Total current liabilities 4,377,830 4,408,208
Income taxes payable 284,025 246,951
Deferred revenue 1,127,045 1,053,394
Deferred income taxes 274,885 288,175
Long-term convertible debt 3,450,000 3,450,000
Other liabilities 158,347 127,621
------------- --------------
Total Liabilities 9,672,132 9,574,349
Minority interest in VMware 263,566 188,988
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 2,070,529 and 2,102,187
shares 20,705 21,022
Additional paid-in capital 2,829,211 3,038,455
Retained earnings 10,116,595 9,470,289
Accumulated other comprehensive
loss (25,457) (8,449)
------------- -------------
Total stockholders' equity 12,941,054 12,521,317
------------- -------------
Total liabilities and
stockholders' equity $22,876,752 $22,284,654
============= =============
EMC CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Six Months Ended
----------------
June 30, 2008 June 30, 2007
Cash flows from operating activities: ------------- -------------
Cash received from customers $7,585,822 $6,391,546
Cash paid to suppliers and employees (5,947,544) (4,930,350)
Dividends and interest received 135,058 116,747
Interest paid (36,778) (38,854)
Income taxes paid (199,689) (108,841)
------------ ------------
Net cash provided by operating
activities 1,536,869 1,430,248
------------ ------------
Cash flows from investing activities:
Additions to property, plant and
equipment (326,449) (324,210)
Capitalized software development
costs (118,848) (98,046)
Purchases of short and long-term
available for sale securities (1,005,655) (3,165,846)
Sales and maturities of short and
long-term available for sale
securities 1,572,954 4,148,396
Acquisitions, net of cash acquired (604,788) (161,002)
Other (3,060) (6,860)
------------- -----------
Net cash (used in) provided by
investing activities (485,846) 392,432
------------- -----------
Cash flows from financing activities:
Issuance of common stock from the
exercise of stock options 156,220 355,324
Issuance of VMware's common stock
from the exercise of stock options 133,327 -
Repurchase of EMC common stock (686,950) (878,226)
Excess tax benefits from stock-based
compensation 88,613 32,684
Payment of short and long-term
obligations (5,279) (4,263)
Proceeds from short and long-term
obligations 1,820 2,506
------------- ------------
Net cash used in financing
activities (312,249) (491,975)
------------- ------------
Effect of exchange rate changes on
cash (1,638) (4,716)
------------- ------------
Net increase in cash and cash
equivalents 737,136 1,325,989
Cash and cash equivalents at beginning
of period 4,482,211 1,828,106
------------- ------------
Cash and cash equivalents at end of
period $5,219,347 $3,154,095
============== ============
Reconciliation of net income to net
cash provided
by operating activities:
Net income $646,306 $647,014
Adjustments to reconcile net income to
net cash provided by operating activities:
Minority interest in subsidiary 13,874 -
Depreciation and amortization 517,692 438,260
Non-cash restructuring and other
special charges 80,970 -
Stock-based compensation expense 239,405 170,553
Increase (decrease) in provision for
doubtful accounts 8,576 (82)
Deferred income taxes, net 26,173 (28,163)
Excess tax benefits from stock-based
compensation (88,613) (32,684)
Other (5,123) 6,524
Changes in assets and liabilities,
net of acquisitions:
Accounts and notes receivable 160,492 29,166
Inventories 12,668 39,897
Other assets (35,719) (79,042)
Accounts payable (61,343) 9,373
Accrued expenses (248,139) (105,797)
Income taxes payable (32,677) 79,731
Deferred revenue 272,821 262,784
Other liabilities 29,506 (7,286)
------------- ------------
Net cash provided by operating
activities $1,536,869 $1,430,248
============= ============
EMC Corporation
Reconciliation of Cash Flow from Operations to Free Cash Flow
(in thousands)
Unaudited
Three Months Ended Six Months Ended
------------------- -------------------
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
------------------- --------------------
EMC Consolidated
Cash flow from Operations $618,577 $621,565 $1,536,869 $1,430,248
Capital Expenditures (179,937) (153,684) (326,449) (324,210)
Capitalized Software (64,527) (46,126) (118,848) (98,046)
------------------- ---------------------
Free Cash Flow $374,113 $421,755 $1,091,572 $1,007,992
=================== ======================
VMware within EMC
Cash flow from Operations $161,419 $116,217 $267,477 $252,635
Capital Expenditures (45,324) (62,921) (86,343) (110,738)
Capitalized Software (11,770) (3,872) (15,934) (10,831)
------------------- ---------------------
Free Cash Flow $104,325 $49,424 $165,200 $131,066
=================== ======================
EMC Information Infrastructure
Cash flow from Operations $457,158 $505,348 $1,269,392 $1,177,613
Capital Expenditures (134,613) (90,763) (240,106) (213,472)
Capitalized Software (52,757) (42,254) (102,914) (87,215)
------------------- ---------------------
Free Cash Flow $269,788 $372,331 $926,372 $876,926
=================== ======================
EMC Corporation
Supplemental Revenue Analysis
(in thousands)
Unaudited
Revenue Components
Q1 2007 Q2 2007 Q3 2007 Q4 2007 2007
---------------------------------------------------------
Consolidated Revenues
Systems $1,305,766 $1,354,438 $1,411,367 $1,688,565 $5,760,136
Software:
Software License 806,660 867,917 921,517 1,055,746 3,651,840
Software
Maintenance 382,080 400,233 426,198 472,264 1,680,775
---------------------------------------------------------
Total Software
License &
Maintenance 1,188,740 1,268,150 1,347,715 1,528,010 5,332,615
Other Services 480,499 502,084 540,672 614,199 2,137,454
---------------------------------------------------------
Total Consolidated
Revenues $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% 2.1% 1.8% 3.2% 2.3%
Q1 2008 Q2 2008 YTD 2008
-----------------------------------------
Consolidated Revenues
Systems $1,440,123 $1,528,012 $2,968,135
Software:
Software License 900,307 933,639 1,833,946
Software Maintenance 506,218 524,725 1,030,943
-----------------------------------------
Total Software License &
Maintenance 1,406,525 1,458,364 2,864,889
Other Services 623,411 687,498 1,310,909
-----------------------------------------
Total Consolidated Revenues $3,470,059 $3,673,874 $7,143,933
=========================================
Percentage impact to EMC
revenue growth rate
due to changes in exchange
rates from the prior year 2.3% 2.7% 2.5%
EMC Corporation
Supplemental
Revenue Analysis
(in thousands)
Unaudited
Supplemental Revenue Data
Q1 2007 Q2 2007 Q3 2007 Q4 2007 2007
-------------------------------------------------------
Storage Systems
Revenue $1,302,740 $1,347,357 $1,405,139 $1,682,395 $5,737,631
Storage Software:
Storage Software
License 486,558 512,521 515,056 561,622 2,075,757
Storage Software
Maintenance 234,796 242,940 252,642 271,848 1,002,226
-------------------------------------------------------
Total Storage
Software
License &
Maintenance 721,354 755,461 767,698 833,470 3,077,983
Storage Other
Services 402,834 425,200 450,450 516,782 1,795,266
-------------------------------------------------------
Total Storage
Revenue $2,426,928 $2,528,018 $2,623,287 $3,032,647 $10,610,880
=======================================================
Content Management
and Archiving
Systems Revenue $68 $1,708 $1,485 $2,157 $5,418
Content Management
and Archiving
Software:
Content Management
and Archiving
Software
License 68,472 69,046 79,247 115,305 332,070
Content Management
and Archiving
Software
Maintenance 60,339 60,416 61,595 70,590 252,940
-------------------------------------------------------
Total Content
Management and
Archiving
Software
License &
Maintenance 128,811 129,462 140,842 185,895 585,010
Content Management
and Archiving
Other Services 43,319 42,432 46,985 50,074 182,810
-------------------------------------------------------
Total Content
Management and
Archiving
Revenue $172,198 $173,602 $189,312 $238,126 $773,238
=======================================================
Security Systems
Revenue $2,958 $5,373 $4,743 $4,013 $17,087
Security Software:
Security Software
License 81,934 81,300 82,979 94,604 340,817
Security Software
Maintenance 21,627 23,392 25,126 27,752 97,897
-------------------------------------------------------
Total Security
Software License &
Maintenance 103,561 104,692 108,105 122,356 438,714
Security Other
Services 13,342 14,890 20,016 21,226 69,474
-------------------------------------------------------
Total Security
Revenue $119,861 $124,955 $132,864 $147,595 $525,275
=======================================================
EMC Information
Infrastructure
Systems
Revenue $1,305,766 $1,354,438 $1,411,367 $1,688,565 $5,760,136
EMC Information
Infrastructure
Software:
EMC Information
Infrastructure
Software
License 636,964 662,867 677,282 771,531 2,748,644
EMC Information
Infrastructure
Software
Maintenance 316,762 326,748 339,363 370,190 1,353,063
-------------------------------------------------------
Total EMC
Information
Infrastructure
Software
License &
Maintenance 953,726 989,615 1,016,645 1,141,721 4,101,707
EMC Information
Infrastructure
Other
Services 459,495 482,522 517,451 588,082 2,047,550
-------------------------------------------------------
Total EMC
Information
Infrastructure
Revenue $2,718,987 $2,826,575 $2,945,463 $3,418,368 $11,909,393
=========================================================
VMware Software:
VMware Software
License $169,696 $205,050 $244,235 $284,215 $903,196
VMware Software
Maintenance 65,318 73,485 86,835 102,074 327,712
--------------------------------------------------------
Total VMware
Software License
& Maintenance 235,014 278,535 331,070 386,289 1,230,908
VMware Other
Services 21,004 19,562 23,221 26,117 89,904
--------------------------------------------------------
Total VMware
Revenue $256,018 $298,097 $354,291 $412,406 $1,320,812
========================================================
Q1 2008 Q2 2008 YTD 2008
----------------------------------
Storage Systems Revenue $1,433,190 $1,523,695 $2,956,885
Storage Software:
Storage Software License 470,449 494,331 964,780
Storage Software
Maintenance 291,556 283,292 574,848
----------------------------------
Total Storage Software License &
Maintenance 762,005 777,623 1,539,628
Storage Other Services 516,634 571,929 1,088,563
----------------------------------
Total Storage Revenue $2,711,829 $2,873,247 $5,585,076
===================================
Content Management and Archiving
Systems Revenue $2,521 $138 $2,659
Content Management and Archiving
Software:
Content Management and
Archiving Software
License 58,607 73,277 131,884
Content Management and
Archiving Software
Maintenance 73,758 75,660 149,418
----------------------------------
Total Content Management and
Archiving Software License &
Maintenance 132,365 148,937 281,302
Content Management and Archiving
Other Services 50,317 54,931 105,248
----------------------------------
Total Content Management and Archiving
Revenue $185,203 $204,006 $389,209
==================================
Security Systems Revenue $4,412 $4,179 $8,591
Security Software:
Security Software License 77,271 84,888 162,159
Security Software
Maintenance 28,785 30,108 58,893
----------------------------------
Total Security Software License &
Maintenance 106,056 114,996 221,052
Security Other Services 24,389 24,871 49,260
----------------------------------
Total Security Revenue $134,857 $144,046 $278,903
==================================
EMC Information Infrastructure
Systems Revenue $1,440,123 $1,528,012 $2,968,135
EMC Information Infrastructure
Software:
EMC Information
Infrastructure Software
License 606,327 652,496 1,258,823
EMC Information
Infrastructure Software
Maintenance 394,099 389,060 783,159
----------------------------------
Total EMC Information Infrastructure
Software License & Maintenance 1,000,426 1,041,556 2,041,982
EMC Information Infrastructure Other
Services 591,340 651,731 1,243,071
----------------------------------
Total EMC Information Infrastructure
Revenue $3,031,889 $3,221,299 $6,253,188
==================================
VMware Software:
VMware Software License $293,980 $281,143 $575,123
VMware Software
Maintenance 112,119 135,665 247,784
----------------------------------
Total VMware Software License &
Maintenance 406,099 416,808 822,907
VMware Other Services 32,071 35,767 67,838
----------------------------------
Total VMware Revenue $438,170 $452,575 $890,745
==================================
SOURCE EMC Corporation
|
