EMC Q3 2014
Financial Results
Tony Takazawa
Vice President, Global Investor Relations
October 22, 2014
© Copyright 2014 EMC Corporation. All rights reserved.
1
Forward-Looking Statements
This presentation 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 presentation.
This presentation contains non-GAAP financial measures which include, but are not limited to, non-GAAP Gross Margin, nonGAAP Operating Margin, non-GAAP EPS, non-GAAP Net Income, Free Cash Flow and Non-GAAP Income Tax Rate. A
reconciliation to GAAP is included within this presentation and in the Current Report on Form 8-K furnished by EMC on
October 22, 2014 which can be found at www.EMC.com or www.sec.gov.
© Copyright 2014 EMC Corporation. All rights reserved.
2
Joe Tucci
Chairman and CEO, EMC Corporation
© Copyright 2014 EMC Corporation. All rights reserved.
3
Zane Rowe
CFO, EMC Corporation
© Copyright 2014 EMC Corporation. All rights reserved.
4
David Goulden
CEO, EMC Information Infrastructure
© Copyright 2014 EMC Corporation. All rights reserved.
5
EMC Consolidated Results
Consolidated Revenue
Non-GAAP EPS
© Copyright 2014 EMC Corporation. All rights reserved.
Q3’14
Growth Y/Y
$6.03B
9%
$0.44
10%
Refer to the the Appendix for a complete reconciliation of GAAP to non-GAAP.
6
EMC Federation
Q3’14
Growth Y/Y
Consolidated Revenue
$6.03B
9%
Information Infrastructure
$4.47B
6%
VMware
$1.51B
17%
Pivotal
$0.06B
24%
Note:
Figures may not foot due to rounding
VMware results are within EMC
© Copyright 2014 EMC Corporation. All rights reserved.
7
EMC Consolidated Revenue Results
Q3’14
Growth Y/Y
North America
$3.34B
8%
EMEA
$1.67B
15%
APJ
$0.82B
4%
Latin America
$0.20B
1%
Consolidated
$6.03B
9%
BRIC + 13
9%
Note: Figures may not foot due to rounding
© Copyright 2014 EMC Corporation. All rights reserved.
8
Consolidated Non-GAAP EPS Results Y/Y
+$0.11
-$0.07
-$0.01
-$0.01
+$0.02
$0.44
Non-Operating
Expense
Tax Rate
Sharecount
Q3'14
$0.40
Q3'13
Gross Profit
© Copyright 2014 EMC Corporation. All rights reserved.
Operating Expense
Refer to the the Appendix for a complete reconciliation of GAAP to non-GAAP.
9
Free Cash Flow, Cash Use & Cash Balance
Q3’14 FCF
Cash & Investments Balance*
Cash Use
VMware
Domestic
$2.1B
Q3’14
EMC Repurchase – EMC Shares**
EMC Repurchase – VMW Shares
$380M
VMware
International
$5.0B
EMC ex. VMware
Domestic
$3.6B
-
VMware Purchase – VMware Shares
$43M
Acquisitions, Net of Cash Acquired
$78M
EMC ex. VMware
International
$4.7B
EMC Consolidated $15.4B
**Note: Total amount: $375M, Paid in cash: $380M
Note: 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 three and nine months ended September 30, 2014 and 2013.
© Copyright 2014 EMC Corporation. All rights reserved.
$1.3B
*Note: Figures may not foot due to rounding
Refer to the the Appendix for a complete reconciliation of GAAP to non-GAAP.
10
A Unique Federation Of Companies
ENTERPRISE MOBILITY
SOFTWARE-DEFINED DATA CENTER
INFORMATION INFRASTRUCTURE
CONVERGED INFRASTRUCTURE
© Copyright 2014 EMC Corporation. All rights reserved.
ADVANCED SECURITY
BIG DATA SOLUTIONS
PLATFORM AS A SERVICE
AGILE APPLICATION DEVELOPMENT
Partners
vCloud
vCloud
Air
Hybrid
Service
SERVICE PROVIDER
ENTERPRISE DATA CENTER
Delivering The Software-Defined Enterprise. Solutions & Choice.
11
EMC Information Infrastructure Revenue
Q3’14
Growth Y/Y
$4.47B
6%
High-End
$0.98B
-7%
Unified & Backup/Recovery
$1.57B
6%
Emerging Storage
$0.58B
47%
Storage – Other & PS
$0.93B
4%
RSA
$0.26B
4%
IIG
$0.15B
3%
EMC Information Infrastructure
Note: Figures may not foot due to rounding
© Copyright 2014 EMC Corporation. All rights reserved.
12
EMC Federation Wins - Q3 Examples
Customer
Federation Solution
Dutch Bank
Solution: On-Prem Cloud
Federation Businesses: EMC, VMware, RSA, Pivotal
National Healthcare Provider
Solution: Big Data and Hybrid Cloud
Federation Businesses: EMC, VMware, Pivotal
Canadian Oil Company
Solution: Hybrid Cloud
Federation Businesses: EMC, VMware, VCE
U.S. Industrial
Solution: Big Data
Federation Businesses: EMC, Pivotal
Saudi Arabian Mobile Provider
Solution: Big Data
Federation Businesses: EMC, VMware, VCE
Korean Electronics Company
Solution: Cloud/VDI
Federation Businesses: EMC, VMware
Chinese Service Provider
Solution: On-Prem Cloud
Federation Businesses: EMC, VMware
U.S. Investment Company
Solution: Hybrid Cloud
Federation Businesses: EMC, VMware
Midwestern State
Solution: Cloud
Federation Businesses: EMC, VMware
© Copyright 2014 EMC Corporation. All rights reserved.
13
Customer Focused Solutions
Proven & Tested In Joint Federation Labs
Next Gen Apps
PLATFORM
AS A SERVICE
Traditional
Applications
VIRTUAL
WORKSPACE
SECURITY
ANALYTICS
Hybrid Cloud
Partners
BUSINESS
DATA LAKE
vCloud Air
SOFTWARE-DEFINED
DATA CENTER
Converged Infrastructure
© Copyright 2014 EMC Corporation. All rights reserved.
14
EMC 2014 Non-GAAP Business Outlook
2014
Revenue
$24.5B
Operating Income (% of Revenue)
24.0%
Income Tax Rate
23.5%
Weighted Average Shares, Diluted
2.06B
EPS
$1.90
Note: All dollar amounts and percentages presented on this slide should be considered to be approximations.
© Copyright 2014 EMC Corporation. All rights reserved.
Refer to the the Appendix for a complete reconciliation of GAAP to non-GAAP.
15
Q&A
© Copyright 2014 EMC Corporation. All rights reserved.
16
Appendix
© Copyright 2014 EMC Corporation. All rights reserved.
17
EMC Federation Wins - Q3 Additional Examples
Customer
Federation Solution
National Utility
Solution: ITaaS
Federation Businesses: EMC, VMware
Global Electronics Manufacturer
Solution: Big Data/VDI
Federation Businesses: EMC, VMware
International Bank
Solution: ITaaS/VDI
Federation Businesses: EMC, VMware
International Telco
Solution: Big Data/PaaS
Federation Businesses: EMC, Pivotal
International Telco
Solution: Cloud
Federation Businesses: EMC, VMware
© Copyright 2014 EMC Corporation. All rights reserved.
18
Capital Allocation

Expect to return over $7B during course of 2013 and 2014
– Initiated a quarterly dividend of $0.10/share in Q2 2013. Raised dividend by 15%
starting July, 2014.
– Plan to repurchase $6B of EMC shares over 2 years ending 12/31/2014
▪
▪

Long term intention to return ~50% of EMC (ex. VMW) FCF to shareholders
through combination of dividends and buybacks
–
–

Total buyback of $3B in 2013
Total buyback of $3B for 2014
25%-30% of EMC (ex. VMW) FCF returned to shareholders via buybacks
20%-25% of EMC (ex. VMW) FCF returned to shareholders via dividend
Cash returns to shareholders grow along with EMC (ex. VMW) FCF
© Copyright 2014 EMC Corporation. All rights reserved.
19
Supplemental Storage Revenue
Q3’14
Q3’13
High-End
$0.98B
$1.05B
Unified & Backup/Recovery
$1.57B
$1.47B
Emerging Storage
$0.58B
$0.39B
Other Storage
$0.45B
$0.42B
Storage PS
$0.48B
$0.47B
Note: During the first quarter of 2014, EMC acquired Pivotal's Data Computing Appliance and implementation services. The results of the acquired
businesses have been adjusted in this presentation to be included in the Information Storage segment and excluded from the Pivotal segment as if
the transaction had occurred retroactively. None of the segment reclassifications impact EMC’s previously reported consolidated financial
statements.
© Copyright 2014 EMC Corporation. All rights reserved.
20
VMware Incremental Dilution
(
)
VMware
Basic EPS
VMware
Diluted EPS
VMware Net Income
VMware Net Income
VMware Weighted
Average Shares, Basic
VMware Weighted
Average Shares, Diluted
X
VMware Shares
Owned by EMC
VMware
Incremental
Dilution
For illustrative purposes only.
© Copyright 2014 EMC Corporation. All rights reserved.
21
Use of Non-GAAP financial measures
This presentation, 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 presentation.
Where specified in the accompanying schedules for various periods entitled "Reconciliation of GAAP to Non-GAAP," (a) certain items noted on each such specific schedule
(including, where noted, amounts relating to stock-based compensation expense, intangible asset amortization, restructuring charges, acquisition and other related
charges, the amortization of VMware’s capitalized software from prior periods, a net gain on the disposition of certain lines of business and other, special tax charges, a
gain on previously held interests in strategic investments, an impairment of strategic investment and a VMware litigation and other contingencies charge are excluded from
the non-GAAP financial measures and (b) the benefit of the R&D tax credit for 2014 is included in the non-GAAP financial measures for the third quarter of 2014 as if the
credit had been extended.
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 includes the benefit of the R&D tax credit in, 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 presentation 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, pay dividends, 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.
© Copyright 2014 EMC Corporation. All rights reserved.
22
Trademarks
EMC, RSA, VSPEX and XtremIO are registered trademarks or trademarks of EMC Corporation
in the United States and/or other countries. All other trademarks used are the property of
their respective owners.
© Copyright 2014 EMC Corporation. All rights reserved.
23
EMC CORPORATION
Consolidated Income Statements
(in millions, except per share amounts)
(unaudited)
Three Months Ended
September 30, September 30,
2014
2013
Revenues:
Product sales
Services
$
Cost and expenses:
Cost of product sales
Cost of services
Research and development
Selling, general and administrative
Restructuring and acquisition-related charges
Operating income
3,400
2,632
6,032
$
1,400
889
767
1,990
39
947
Non-operating income (expense):
Investment income
Interest expense
Other expense, net
Total non-operating income (expense)
3,165
2,374
5,539
Nine Months Ended
September 30, September 30,
2014
2013
$
1,324
773
686
1,809
40
907
9,728
7,663
17,391
$
4,068
2,579
2,239
5,852
187
2,466
9,535
7,005
16,540
4,020
2,271
2,056
5,308
195
2,690
29
(40)
(103)
(114)
26
(58)
(55)
(87)
100
(108)
(245)
(253)
93
(109)
(197)
(213)
Income before provision for income taxes
Income tax provision
833
206
820
181
2,213
532
2,477
474
Net income
Less: Net income attributable to the non-controlling interest in VMware, Inc.
627
(40)
639
(53)
1,681
(113)
2,003
(136)
Net income attributable to EMC Corporation
$
587
$
586
$
1,568
$
1,867
Net income per weighted average share, basic attributable to EMC Corporation
common shareholders
$
0.29
$
0.28
$
0.77
$
0.89
Net income per weighted average share, diluted attributable to EMC Corporation
common shareholders
$
0.28
$
0.27
$
0.76
$
0.86
Weighted average shares, basic
Weighted average shares, diluted
Cash dividends declared per common share
2,032
2,057
$
0.12
2,069
2,165
$
0.10
2,033
2,065
$
0.33
2,088
2,176
$
0.20
EMC CORPORATION
Consolidated Balance Sheets
(in millions, except per share amounts)
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Accounts and notes receivable, less allowance
for doubtful accounts of $68 and $62
Inventories
Deferred income taxes
Other current assets
Total current assets
Long-term investments
Property, plant and equipment, net
Intangible assets, net
Goodwill
Other assets, net
Total assets
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
Accrued expenses
Notes converted and payable
Income taxes payable
Deferred revenue
Total current liabilities
Income taxes payable
Deferred revenue
Deferred income taxes
Long-term debt
Other liabilities
Total liabilities
Commitments and contingencies
Shareholders' equity:
Preferred stock, par value $0.01; authorized 25
shares; none outstanding
Common stock, par value $0.01; authorized 6,000
shares; issued and outstanding 2,035 and 2,020 shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss, net
Total EMC Corporation's shareholders' equity
Non-controlling interests
Total shareholders' equity
Total liabilities and shareholders' equity
September 30,
2014
December 31,
2013
$
$
$
$
$
6,055
2,092
3,185
1,390
970
727
14,419
7,233
3,629
2,069
15,859
1,819
45,028
1,109
2,884
448
5,694
10,135
289
4,072
363
5,494
384
20,737
$
$
7,891
2,773
3,861
1,334
912
507
17,278
6,924
3,478
1,780
14,424
1,965
45,849
1,434
2,783
1,665
639
5,278
11,799
296
3,701
421
5,494
352
22,063
-
-
20
850
21,997
(198)
22,669
1,622
24,291
45,028
20
1,406
21,114
(239)
22,301
1,485
23,786
45,849
$
EMC CORPORATION
Consolidated Statements of Cash Flows
(in millions)
(unaudited)
Nine Months Ended
September 30,
September 30,
2014
2013
Cash flows from operating activities:
Cash received from customers
Cash paid to suppliers and employees
Dividends and interest received
Interest paid
Income taxes paid
Net cash provided by operating activities
$
19,005
(13,868)
119
(67)
(897)
4,292
$
18,065
(12,740)
118
(19)
(691)
4,733
Cash flows from investing activities:
Additions to property, plant and equipment
Capitalized software development costs
Purchases of short- and long-term available-for-sale securities
Sales of short- and long-term available-for-sale securities
Maturities of short- and long-term available-for-sale securities
Business acquisitions, net of cash acquired
Purchases of strategic and other related investments
Sales of strategic and other related investments
Joint venture funding
Proceeds from divestiture of business
Increase in restricted cash
Net cash used in investing activities
(693)
(382)
(7,989)
6,396
2,135
(1,771)
(101)
38
(163)
(76)
(2,606)
(673)
(342)
(8,630)
3,540
1,386
(616)
(109)
10
(268)
38
(5,664)
Cash flows from financing activities:
Proceeds from the issuance of EMC's common stock
Proceeds from the issuance of VMware's common stock
EMC repurchase of EMC's common stock
EMC purchase of VMware's common stock
VMware repurchase of VMware's common stock
Excess tax benefits from stock-based compensation
Payment of long- and short-term obligations
Proceeds from long- and short-term obligations
Contributions from non-controlling interests
Dividend payment
Net cash (used in) provided by financing activities
445
158
(1,374)
(450)
85
(1,665)
7
(644)
(3,438)
302
185
(1,965)
(160)
(392)
102
(14)
5,460
105
(209)
3,414
(84)
(42)
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
(1,836)
7,891
6,055
$
2,441
4,714
7,155
$
1,681
$
2,003
Reconciliation of net income to net cash provided
by operating activities:
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization
Non-cash interest expense on debt
Non-cash restructuring and other special charges
Stock-based compensation expense
Provision for (recovery of) doubtful accounts
Deferred income taxes, net
Excess tax benefits from stock-based compensation
Gain on previously held interests in strategic investments
Impairment of strategic investment
Other, net
Changes in assets and liabilities, net of acquisitions:
Accounts and notes receivable
Inventories
Other assets
Accounts payable
Accrued expenses
Income taxes payable
Deferred revenue
Other liabilities
Net cash provided by operating activities
$
1,370
14
770
11
(246)
(85)
(45)
33
20
1,215
82
10
700
(2)
(31)
(102)
23
756
(252)
169
(304)
(234)
(122)
730
26
4,292
521
(382)
122
45
(321)
(176)
1,006
20
4,733
$
Reconciliation of GAAP to Non-GAAP*
(in millions, except per share amounts)
(unaudited)
Three Months Ended
Diluted
Earnings
September 30,
Per Share
2013
September 30,
2014
Net Income Attributable to EMC GAAP
$
Stock-based compensation expense
Intangible asset amortization
Restructuring charges
Acquisition and other related charges
Amortization of VMware's capitalized software from prior periods
Special tax charges
Net gain on disposition of certain lines of business and other
VMware litigation and other contingencies
R&D tax credit
Net Income Attributable to EMC Non-GAAP
587
$
174
67
27
35
2
11
$
903
Weighted average shares, diluted
Incremental VMware dilution
0.285
$
0.085
0.032
0.013
0.017
0.001
0.005
$
0.438
$
2,057
1
586
$
Stock-based compensation expense
Intangible asset amortization
Restructuring charges
Acquisition and other related charges
Gain on previously held interests in strategic investments
Impairment of strategic investment
VMware litigation and other contingencies
R&D tax credit
Net Income Attributable to EMC Non-GAAP
Weighted average shares, diluted
Incremental VMware dilution
1,568
$
524
193
133
78
(45)
24
7
32
$
2,514
$
860
0.757
0.253
0.094
0.065
0.037
(0.022)
0.011
0.003
0.015
$
1.215
$
2,065
4
* 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.
Note: Schedules may not add or recalculate due to rounding.
$
163
66
24
5
4
23
(11)
-
Nine Months Ended
Diluted
September 30,
Earnings
2014
Per Share
Net Income Attributable to EMC GAAP
Diluted
Earnings
Per Share
0.270
0.075
0.030
0.011
0.002
0.002
0.011
(0.005)
$
0.397
$
2,165
2
Reconciliation of GAAP to Non-GAAP
(in millions)
(unaudited)
Three Months Ended
September 30,
September 30,
2014
2013
Gross Margin GAAP
$
Stock-based compensation expense
Intangible asset amortization
Amortization of VMware's capitalized software from prior periods
3,743
$
37
62
-
3,442
32
58
8
Gross Margin Non-GAAP
$
3,842
$
3,540
Revenues
$
6,032
$
5,539
Gross Margin Percentages:
GAAP
Non-GAAP
62.0%
63.7%
62.1%
63.9%
Three Months Ended
September 30,
September 30,
2014
2013
Operating Margin GAAP
$
Stock-based compensation expense
Intangible asset amortization
Restructuring charges
Acquisition and other related charges
Amortization of VMware's capitalized software from prior periods
947
$
255
102
37
55
-
907
244
97
35
5
8
Operating Margin Non-GAAP
$
1,396
$
1,296
Revenues
$
6,032
$
5,539
Operating Margin Percentages:
GAAP
Non-GAAP
Note: Schedules may not add or recalculate due to rounding.
15.7%
23.1%
16.4%
23.4%
Reconciliation of GAAP to Non-GAAP
(in millions)
(unaudited)
Three Months Ended September 30, 2014
Income Before
Tax Provision
Tax
Tax
(Benefit)
Rate
EMC Consolidated GAAP
$
Stock-based compensation expense
Intangible asset amortization
Restructuring charges
Acquisition and other related charges
R&D tax credit
VMware litigation and other contingencies
EMC Consolidated Non-GAAP
Cash Flow from Operations
Capital expenditures
Capitalized software development costs
Free Cash Flow
Note: Schedules may not add or recalculate due to rounding.
833
$
255
102
37
55
$
1,282
$
206
24.7%
60
30
9
15
(12)
(2)
23.2%
29.8%
23.7%
28.0%
N/A
N/A
306
23.9%
Three Months Ended
September 30,
September 30,
2013
2014
Nine Months Ended
September 30,
September 30,
2014
2013
$
$
$
1,701
(222)
(137)
1,342
$
$
1,793
(236)
(123)
1,434
$
4,292
(693)
(382)
3,217
$
$
4,733
(673)
(342)
3,718
Reconciliation of GAAP to Non-GAAP
(in millions, except per share amounts)
(unaudited)
Twelve
Months Ending
December 31,
2014
Operating Income as a % of Revenue - GAAP
16.5%
Stock-based compensation expense
Intangible asset amortization
Restructuring charges
Acquisition and other related charges
4.3%
1.6%
0.8%
0.8%
Operating Income as a % of Revenue - Non-GAAP
24.0%
Twelve
Months Ending
December 31,
2014
Diluted Earnings Per Share - GAAP
$
Stock-based compensation expense
Intangible asset amortization
Restructuring charges
Acquisition and other related charges
One-time items
Diluted Earnings Per Share - Non-GAAP
1.29
0.36
0.13
0.08
0.05
(0.01)
$
1.90
Twelve
Months Ending
December 31,
2014
Tax Rate - GAAP
23.0%
Impact of stock-based compensation expense,
intangible asset amortization, restructuring charges,
acquisition and other related charges and one-time
items
0.5%
Tax Rate - Non-GAAP
23.5%
Twelve
Months Ending
December 31,
2014
Cash Flow from Operations
$
Capital expenditures
Capitalized software development costs
Free Cash Flow
6,800
(950)
(500)
$
5,350
Supplemental Information
For the Three Months Ended September 30, 2014
(in millions)
(unaudited)
Stock-Based
Compensation
Expense
Intangible Asset
Amortization
Acquisition and
Other Related
Charges
Restructuring
Charges
R&D Tax Credit
VMware Litigation
and Other
Contingencies
EMC Consolidated
Cost of revenue
$
Research and development
Selling, general and administrative
(37)
$
(62)
$
-
$
$
-
$
-
(96)
(3)
-
-
-
-
(122)
(37)
-
(53)
-
-
(2)
-
-
-
-
Restructuring and acquisition-related charges
-
-
(37)
Non-operating (income) expense
-
-
-
Income tax provision (benefit)
Net income attributable to VMware
-
-
60
30
9
15
(12)
(21)
(5)
(1)
(5)
(1)
(2)
-
EMC Information Infrastructure plus Pivotal
Cost of revenue
$
(25)
$
(34)
$
-
$
-
$
-
$
-
Research and development
(35)
(1)
-
-
-
-
Selling, general and administrative
(62)
(31)
-
(12)
-
-
Restructuring and acquisition-related charges
-
-
(31)
(2)
-
-
Non-operating (income) expense
-
-
-
-
-
Income tax provision (benefit)
31
Net income attributable to VMware
21
-
7
-
-
-
(8)
-
-
-
-
VMware within EMC
Cost of revenue
$
(12)
$
(28)
$
-
$
-
$
-
$
-
Research and development
(61)
(2)
-
-
-
-
Selling, general and administrative
(60)
(6)
-
(41)
-
-
Restructuring and acquisition-related charges
-
-
-
-
-
Non-operating (income) expense
-
-
-
-
-
Income tax provision (benefit)
Net income attributable to VMware
(6)
-
29
9
2
15
(4)
(21)
(5)
(1)
(5)
(1)
(2)
-
Supplemental Information
For the Three Months Ended September 30, 2013
(in millions)
(unaudited)
Stock-Based
Compensation
Expense
Intangible Asset
Amortization
Acquisition and
Other Related
Charges
Restructuring
Charges
Amortization of
VMware's
Capitalized
Software from Prior
Periods
Special Tax
Charges
Net Gain on
Disposition of
Certain Lines of
Business and
Other
EMC Consolidated
Cost of revenue
$
Research and development
Selling, general and administrative
(32)
$
(58)
$
-
$
$
(8)
$
-
$
-
(2)
-
-
-
-
-
(122)
(37)
-
-
-
-
-
-
-
-
-
-
(12)
Restructuring and acquisition-related charges
-
-
(35)
Non-operating (income) expense
-
-
-
Income tax provision (benefit)
Net income attributable to VMware
-
(90)
(5)
-
64
27
10
-
2
(17)
(4)
(1)
-
(2)
(23)
2
-
3
EMC Information Infrastructure plus Pivotal
Cost of revenue
$
Research and development
(23)
$
(36)
$
-
$
-
(38)
(1)
-
-
Selling, general and administrative
(69)
(36)
-
-
Restructuring and acquisition-related charges
-
-
(30)
Non-operating (income) expense
-
-
-
Income tax provision (benefit)
37
Net income attributable to VMware
23
-
-
-
$
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(23)
-
-
-
-
-
(4)
9
-
$
VMware within EMC
Cost of revenue
$
(9)
$
(22)
$
-
$
-
$
(8)
$
-
$
-
Research and development
(52)
(1)
-
-
-
-
-
Selling, general and administrative
(53)
(1)
-
-
-
-
-
Restructuring and acquisition-related charges
-
-
-
-
-
Non-operating (income) expense
-
-
-
-
(12)
Income tax provision (benefit)
Net income attributable to VMware
(5)
-
(1)
-
27
4
1
-
2
-
2
(17)
(4)
(1)
-
(2)
-
3
Supplemental Information
For the Three Months Ended September 30, 2014
(in millions)
(unaudited)
VMware
Standalone
GAAP
Revenues
Cost of revenue
Gross margin
Research and development
Selling, general and administrative
Restructuring and acquisition-related charges
Operating income
Non-operating income (expense)
Income before taxes
Income tax provision (benefit)
Net income
Net income attributable to VMware
Net income attributable to EMC
$
$
1,515
242
1,273
327
698
6
242
2
244
50
194
GAAP Adjustments
and Eliminations
VMware within EMC
GAAP
$
$
(7)
2
(9)
(1)
(5)
(3)
4
1
-
$
1
(40)
(39)
$
1,508
244
1,264
326
693
6
239
6
245
50
195
(40)
155
Supplemental Information
For the Three Months Ended September 30, 2013
(in millions)
(unaudited)
VMware
Standalone
GAAP
Revenues
Cost of revenue
Gross margin
Research and development
Selling, general and administrative
Restructuring and acquisition-related charges
Operating income
Non-operating income (expense)
Income before taxes
Income tax provision (benefit)
Net income
Net income attributable to VMware
Net income attributable to EMC
Note: Schedules may not add due to rounding.
$
$
1,289
183
1,106
266
552
1
287
21
308
47
261
GAAP Adjustments
and Eliminations
VMware within EMC
GAAP
$
$
(4)
-
$
$
(4)
(5)
(3)
5
(1)
(1)
(2)
(14)
12
(53)
(41)
$
$
1,285
183
1,102
261
549
6
286
20
306
33
273
(53)
220
Segment Information
For the Three Months Ended September 30, 2014
(in millions)
(unaudited)
EMC Information Infrastructure
Information
RSA
Information
Intelligence
Information
Storage
Group
Security
Revenues
Product revenues
Services revenues
Total consolidated revenues
Gross profit
Gross profit percentage
$
$
2,595
1,456
4,051
$
2,238
$
55.2%
36
118
154
$
100
$
65.2%
114
147
261
EMC
Information
Infrastructure
$
173
2,511
66.3%
56.2%
Research and development
Selling, general and administrative
Restructuring and acquisition-related charges
Total costs and expenses
Operating income (expense)
Operating margin percentage
2,745
1,721
4,466
Pivotal
$
993
22.2%
17
41
58
$
27
46.9%
372
1,146
1,518
$
EMC
Information
Infrastructure
plus
Pivotal
33
46
79
$
(52)
(89.7)%
Non-operating income (expense), net
Income tax provision (benefit)
Net income
Net income attributable to the non-controlling
interest in VMware, Inc.
Net income attributable to EMC Corporation
Note: This segment information is presented on a consistent basis with the presentation in our quarterly and annual filings with the SEC. This schedule may
not recalculate due to rounding.
2,762
1,762
4,524
VMware
Virtual
Infrastructure
within EMC
$
$
-
Consolidated
$
3,400
2,632
6,032
2,538
1,304
(99)
3,743
56.1%
86.5%
-
62.0%
405
1,192
1,597
263
586
849
99
212
39
350
767
1,990
39
2,796
941
20.8%
455
30.2%
(449)
-
947
15.7%
(120)
207
614
6
99
362
(100)
(349)
(114)
206
627
(73)
33
(40)
$
638
870
1,508
Corporate
Reconciling
Items
614
$
289
$
(316)
$
587
Segment Information
For the Three Months Ended September 30, 2013
(in millions)
(unaudited)
EMC Information Infrastructure
Information
RSA
Information
Intelligence
Information
Storage
Group
Security
Revenues
Product revenues
Services revenues
Total consolidated revenues
Gross profit
Gross profit percentage
$
$
2,430
1,376
3,806
$
2,106
$
55.3%
32
117
149
$
94
$
63.3%
120
132
252
EMC
Information
Infrastructure
$
170
2,370
67.6%
56.3%
Research and development
Selling, general and administrative
Restructuring and acquisition-related charges
Total costs and expenses
Operating income (expense)
Operating margin percentage
2,582
1,625
4,207
Pivotal
$
899
21.4%
20
27
47
$
29
61.0%
356
1,115
1,471
$
EMC
Information
Infrastructure
plus
Pivotal
30
42
72
$
(43)
(92.9%)
Non-operating income (expense), net
Income tax provision (benefit)
Net income
Net income attributable to the non-controlling
interest in VMware, Inc.
Net income attributable to EMC Corporation
Note: This segment information is presented on a consistent basis with the presentation in our quarterly and annual filings with the SEC. The segment
disclosures have been recast to reflect the Information Storage acquisition of the Data Computing Applicance and implementation services businesses from
the Pivotal segment during the first quarter of 2014. None of the segment reclassifications impact EMC’s previously reported consolidated financial
statements. This schedule may not recalculate due to rounding.
2,602
1,652
4,254
VMware
Virtual
Infrastructure
within EMC
$
$
-
Consolidated
$
3,165
2,374
5,539
2,399
1,141
(98)
3,442
56.4%
88.8%
-
62.1%
386
1,157
1,543
208
493
701
92
159
40
291
686
1,809
40
2,535
856
20.1%
440
34.2%
(389)
-
907
16.4%
(106)
193
557
7
70
377
12
(82)
(295)
(87)
181
639
(74)
21
(53)
$
563
722
1,285
Corporate
Reconciling
Items
557
$
303
$
(274)
$
586
Supplemental Information
(in millions)
(unaudited)
Q1 2013
Information Storage:
Product Revenues
Services Revenues
Total Information Storage Revenues
Information Intelligence Group:
Product Revenues
Services Revenues
Total Information Intelligence Group Revenues
RSA Information Security:
Product Revenues
Services Revenues
Total RSA Information Security Revenues
EMC Information Infrastructure:
Product Revenues
Services Revenues
Total EMC Information Infrastructure Revenues
Pivotal:
Product Revenues
Services Revenues
Total Pivotal Revenues
VMware:
Product Revenues
Services Revenues
Total VMware Revenues
Consolidated Revenues:
Product Revenues
Services Revenues
Total Consolidated Revenues
Percentage impact to EMC revenue growth rate
due to changes in exchange rates from the prior year
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Q2 2013
2,472
1,326
3,798
$
43
112
155
$
100
133
233
$
2,615
1,571
4,186
$
13
22
35
$
$
$
$
$
$
484
682
1,166
$
3,112
2,275
5,387
$
(0.5)%
$
$
Q3 2013
2,577
1,377
3,954
$
39
113
152
$
98
130
228
$
2,714
1,620
4,334
$
15
27
42
$
$
$
$
$
$
529
709
1,238
$
3,258
2,356
5,614
$
(0.7)%
$
$
Q4 2013
2,430
1,376
3,806
$
32
117
149
$
120
132
252
$
2,582
1,625
4,207
$
20
27
47
$
$
$
$
$
$
563
722
1,285
$
3,165
2,374
5,539
$
(0.8)%
$
$
FY 2013
3,260
1,445
4,705
$
65
124
189
$
136
139
275
$
3,461
1,708
5,169
$
18
37
55
$
$
$
$
$
$
676
782
1,458
$
4,155
2,527
6,682
$
(0.5)%
$
$
Q1 2014
10,738
5,524
16,262
$
180
467
647
$
453
534
987
$
11,371
6,525
17,896
$
66
113
179
$
$
$
$
$
$
2,253
2,894
5,147
$
13,690
9,532
23,222
$
(0.6)%
$
$
Q2 2014
2,302
1,378
3,680
$
35
119
154
$
104
140
244
$
2,441
1,637
4,078
$
11
38
49
$
$
$
$
$
$
3,008
2,471
5,479
$
(0.4)%
2,551
1,425
3,976
$
37
121
158
$
104
139
243
$
2,692
1,685
4,377
$
15
39
54
$
$
556
796
1,352
$
$
Q3 2014
$
$
$
$
$
612
837
1,449
$
3,319
2,561
5,880
$
0.5%
Note: During the first quarter of 2014, EMC acquired Pivotal's Data Computing Appliance and implementation services. The results of the acquired businesses have been adjusted in this
presentation to be included in the Information Storage segment and excluded from the Pivotal segment as if the transaction had occurred retroactively. None of the segment reclassifications
impact EMC’s previously reported consolidated financial statements. This schedule may not recalculate due to rounding.
$
$
2,595
1,456
4,051
36
118
154
114
147
261
2,745
1,721
4,466
17
41
58
638
870
1,508
3,400
2,632
6,032
(0.1)%