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8-K - FORM 8-K - EMC CORP | d8k.htm |
EX-99.1 - PRESENTATION OF MR. JOSEPH M. TUCCI DATED FEBRUARY 8, 2011 - EMC CORP | dex991.htm |
David Goulden
Boston, Feb. 8, 2011
©
Copyright 2011 EMC Corporation. All rights reserved.
Exhibit 99.2
EMC
Strategic Forum |
©
Copyright 2011 EMC Corporation. All rights reserved.
Forward-Looking Statements and GAAP
Reconciliation
This presentation contains non-GAAP financial measures which include, but are
not limited to, non-GAAP Gross Margin, non-GAAP Operating Margin
Non-GAAP Net Income, non-GAAP EPS and Free Cash Flow. A reconciliation GAAP to
non-GAAP
results
to
GAAP
is
included
within
this
presentation
and
is
available
at
http://www.emc.com/about/investor-
relations/archived-events.htm. 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) 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 EMCs 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. |
©
Copyright 2011 EMC Corporation. All rights reserved.
Balancing Opportunities,
Driving Growth |
©
Copyright 2011 EMC Corporation. All rights reserved.
Refer to the schedules in the appendix for a complete reconciliation of GAAP to
non-GAAP Track Record of Success
2007
Revenue
$13.2B
Non-GAAP Gross Margin
55.8%
Non-GAAP Operating
Margin
17.7%
Non-GAAP Net Income
$1.9B
Non-GAAP EPS
$0.88
Free Cash Flow
$2.2B |
©
Copyright 2011 EMC Corporation. All rights reserved.
2007
2010
Revenue
$13.2B
$17.0B
Non-GAAP Gross Margin
55.8%
60.4%
Non-GAAP Operating
Margin
17.7%
22.0%
Non-GAAP Net Income
$1.9B
$2.7B
Non-GAAP EPS
$0.88
$1.26
Free Cash Flow
$2.2B
$3.4B
Refer to the schedules in the appendix for a complete reconciliation of GAAP to
non-GAAP Track Record of Success |
©
Copyright 2011 EMC Corporation. All rights reserved.
Gain
Share
2007
2010:
Financial Triple Play
Invest
for the
Future
Financial
Leverage |
2007
2010 Share Gain
©
Copyright 2011 EMC Corporation. All rights reserved. |
2007
2010 Investments
©
Copyright 2011 EMC Corporation. All rights reserved. |
2007
2010 Leverage
Refer to the schedules in the appendix for a complete reconciliation of GAAP to
non-GAAP ©
Copyright 2011 EMC Corporation. All rights reserved. |
©
Copyright 2011 EMC Corporation. All rights reserved.
Major Changes, Consistent Focus
Navigated changes in technology, use cases, and
customer needs
while maintaining our focus on managing
information in both physical and virtual
environments. |
©
Copyright 2011 EMC Corporation. All rights reserved.
Proven Management Process
Identify
Major
Opportunities
Invest
Accordingly
Achieve
Goals |
©
Copyright 2011 EMC Corporation. All rights reserved.
VMAX
Identified
need
for
a
new
type
of
high
end
Invested
in
a
virtual
matrix
architecture
Achieved
significant
share
gains |
©
Copyright 2011 EMC Corporation. All rights reserved.
Backup Recovery Systems
Identified
need for better backup
Invested
in next generation assets
Achieved
a $1B run rate ahead of plan
Avamar |
©
Copyright 2011 EMC Corporation. All rights reserved.
VNX
Identified
need
for
a
unified
family
Invested
in simple, efficient, powerful solution
Achieved
product optimized for file, block and
object |
©
Copyright 2011 EMC Corporation. All rights reserved.
VMware Integration
Identified
need
for
tighter
integration
Invested
in
data
protection,
ease
of
use,
performance and management
Achieved
market-leading 75 points of integration |
©
Copyright 2011 EMC Corporation. All rights reserved.
Customer Value
Identified
need to reduce COGS
Invested
in automation and common components
Achieved
significant gross margin improvements |
©
Copyright 2011 EMC Corporation. All rights reserved.
Operations
Identified
need
to
improve
operational
efficiency
Invested
in
new
capabilities
and
business
processes
Achieved
significant
operating
margin
improvements |
©
Copyright 2011 EMC Corporation. All rights reserved.
Success Factors
Balanced priorities of the triple play
Maintained singular focus on information
Applied proven management process to drive
change
and we are not standing still! |
©
Copyright 2011 EMC Corporation. All rights reserved.
Looking Forward |
IT
Spending Forecasts for 2011 (Jan. 11)
6.6%
3.9%
(Jan. 11)
6%
(Dec. 10)
(Jan. 11)
6.8%
6%
(Jan. 11)
4-5%
(Jan. 11)
(Dec. 10)
5.2%
(Dec. 10)
6%
©
Copyright 2011 EMC Corporation. All rights reserved. |
©
Copyright 2011 EMC Corporation. All rights reserved.
IT Spending Forecasts for 2011
(Jan. 11)
6.6%
3.9%
(Jan. 11)
6%
(Dec. 10)
(Jan. 11)
6.8%
6%
(Jan. 11)
4-5%
(Jan. 11)
(Dec. 10)
5.2%
(Dec. 10)
6%
EMCs
View
5-7% |
©
Copyright 2011 EMC Corporation. All rights reserved.
IT Spending Longer Term
Source: WW IT Spending Growth (Constant Currency)
IDC, 1/11
4-yr CAGR
(2010-2014)
6%
+7%
+7%
+6%
+6%
$ Billion
IT Spending
2010e
2011e
2012e
2013e
2014e |
©
Copyright 2011 EMC Corporation. All rights reserved.
2011 IT Spending Priorities
Barclays:
Biggest trends driving spend decisions
in 2011:
Pacific Crest:
CIOs
are more likely to increase
spending in the following areas: |
©
Copyright 2011 EMC Corporation. All rights reserved.
EMC TAM vs. IT Spending
(2010-2014)
10%
6%
EMC TAM
IT Spending
2010e
2011e
2012e
2013e
2014e
$ Billion
$ Billion
+6%
+10%
+11%
+10%
+9%
+7%
+6%
+7%
4-yr
CAGR
Sources: WW IT Spending Growth (Constant Currency) IDC, 1/11; EMC TAM EMC Strategic
Planning and Advisory Group EMC TAM includes: Storage, Virtualization, Security, Content Management, BI/DW Software, and IT Mgmt.
SW & Services |
©
Copyright 2011 EMC Corporation. All rights reserved.
Consolidated EMCs Cloud Credentials
Growth!!
Virtualization (VMware)
Information Storage
Information Protection
Information Security
Info Mgmt & Intelligence
Data center cloud OS
Management
Automation
Enterprise cloud middleware
Client device abstraction
For todays enterprise apps
For big data
applications
BURA for all apps in all environments
Protect and verify identities
Protect the data itself (at rest/ in motion)
Assure governance & compliance (biz & IT)
Unstructured data mgmt and flow
Structured/semi-structured data analytics
#1
New innovation, fastest growing
New innovation, fastest growing
#1/2
#1
#1
#1
#1
#1/2
#1
#3
New innovation, fastest growing |
©
Copyright 2011 EMC Corporation. All rights reserved.
Higher-Growth Emerging Opportunities
Next-generation BURA
Automated storage tiering
Security Compliance
Converged Infrastructure
Lower-end storage
Data Warehousing &
Analytics
Scale-out NAS & Object
Cloud Application Platforms
Virtual Storage
Cloud Client Access
Identified
Opportunities
and
Invested
in: |
©
Copyright 2011 EMC Corporation. All rights reserved.
Scale-out NAS
Identified
a
growing
need
for
big-data
storage
Invested
in
the
best
Scale-out
NAS
technology
Expect
to
achieve
high
growth
and
market
leadership |
©
Copyright 2011 EMC Corporation. All rights reserved.
Isilon
Helps Fill Out the Portfolio
Source: RBC Capital Markets and company data.
Note:
HDS
Scale-out
NAS
functionality
is
through
its
BlueArc
reseller
relationship
Storage Portfolio of OEMs |
©
Copyright 2011 EMC Corporation. All rights reserved.
Lower-end Storage
Identified
a
high-growth,
underserved
market
Invested
in
new
technology
and
distribution
model
Expect to achieve
high growth and market
leadership |
©
Copyright 2011 EMC Corporation. All rights reserved.
Expanding into Fastest-growing Segment
Open Networked Storage Price Bands
Source: IDC, Dec. 2010
5.34
5.34
6.07
6.07
14.8%
5.3%
6.95
6.95
4.74
4.74
4.00
4.00
<$25K
> $25K
CAGR
10
14
2010
2012
2013
2014
2011 |
©
Copyright 2011 EMC Corporation. All rights reserved.
Converged Infrastructure
Identified
need
to
make
getting
to
the
cloud
easier
Invested
in
unique
converged
product,
value
proposition and partnership
Expect
to
achieve
high
growth
and
market
leadership |
©
Copyright 2011 EMC Corporation. All rights reserved.
Converged Infrastructure
Surpassed business goals in 2010
Converged Infrastructure projected to be the
fastest-growing
segment
of
the
IT
Infrastructure
market
Innovation and market reach continually validated
by a growing partner and customer base |
©
Copyright 2011 EMC Corporation. All rights reserved.
Potential Revenue CAGR 2010-2014
20% or Greater
VMware
Data Computing
Division
Isilon/Atmos
BRS
VPLEX
VCE
1
10%
Symmetrix
Storage Services
IIG
10
19%
VNX/VNXe
EMC Consulting
RSA |
©
Copyright 2011 EMC Corporation. All rights reserved.
Impressive Performance
Revenue
Non-GAAP EPS¹
4-yr CAGR
(2007-2011e)
10%
13%
Refer
to
the
schedules
available
at
http://www.emc.com/about/investor-relations/archived-events.htm
for
a
complete
reconciliation
of
GAAP
to
non-GAAP
results |
©
Copyright 2011 EMC Corporation. All rights reserved.
Impressive Potential
Revenue
Non-GAAP EPS¹
4-yr CAGR
(2007-2011e)
10%
13%
Refer
to
the
schedules
available
at
http://www.emc.com/about/investor-relations/archived-events.htm
for
a
complete
reconciliation
of
GAAP to
non-GAAP results |
©
Copyright 2011 EMC Corporation. All rights reserved.
Impressive Potential
Revenue
Non-GAAP EPS¹
4-yr CAGR
(2007-2011e)
10%
13%
4-yr CAGR
(2010-2014p)
13%+
+
Refer
to
the
schedules
available
at
http://www.emc.com/about/investor-relations/archived-events.htm
for
a
complete
reconciliation
of
GAAP to
non-GAAP results |
©
Copyright 2011 EMC Corporation. All rights reserved.
The Time is Right
Right Opportunities
Right Products
Right Business Model
Triple play over the long term |
Use of Non-GAAP Financial Measures
This presentation and the accompanying schedules contain non-GAAP financial measures. These non-GAAP financial measures, which are used as measures of EMCs performance or liquidity, should be considered in addition to, not as a substitute for, measures of EMCs financial performance or liquidity prepared in accordance with GAAP. EMCs 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, certain items noted on each such specific schedule (including, where noted, amounts relating to restructuring and acquisition-related charges, special income tax charge, stock-based compensation expense, intangible asset amortization, restructuring charges and IPRD, tax benefits, and net gains on investments, including gain on the sale of VMware stock) are excluded from the non-GAAP financial measures.
EMCs management uses the non-GAAP financial measures in the accompanying schedules to gain an understanding of EMCs 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 segments financial goals. These non-GAAP financial measures are used by EMCs management in their financial and operating decision-making because management believes they reflect EMCs ongoing business in a manner that allows meaningful period-to-period comparisons. EMCs management believes that these non-GAAP financial measures provide useful information to investors and others (a) in understanding and evaluating EMCs 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 Companys current financial results with the Companys 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, 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 EMCs 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 EMCs financial results as determined in accordance with GAAP.
Reconciliation of GAAP to Non-GAAP
For the Twelve Months Ended December 31, 2007
(in thousands, except per share amounts)
GAAP | Restructuring charges and IPR&D |
Net Gains on investments, incl. gain on sale of VMware Stock |
Tax Benefits | Stock-based compensation |
Intangible amortization |
Non-GAAP | ||||||||||||||||||||||
Revenue |
13,230,205 | 13,230,205 | ||||||||||||||||||||||||||
COGS |
6,018,877 | (57,223 | ) | (119,948 | ) | 5,841,706 | ||||||||||||||||||||||
Gross Margin |
7,211,328 | 57,223 | 119,948 | 7,388,499 | ||||||||||||||||||||||||
Operating Expense |
5,472,076 | (34,901 | ) | (310,177 | ) | (84,849 | ) | 5,042,149 | ||||||||||||||||||||
Operating Income |
1,739,252 | 34,901 | 367,400 | 204,797 | 2,346,350 | |||||||||||||||||||||||
Other Income, net |
223,379 | (137,330 | ) | 86,049 | ||||||||||||||||||||||||
Income before provision for income taxes |
1,962,631 | 34,901 | (137,330 | ) | 367,400 | 204,797 | 2,432,399 | |||||||||||||||||||||
Income tax provision |
348,211 | 3,123 | (22,180 | ) | 19,912 | 87,054 | 72,019 | 508,139 | ||||||||||||||||||||
Net Income |
1,614,420 | 31,778 | (115,150 | ) | (19,912 | ) | 280,346 | 132,778 | 1,924,260 | |||||||||||||||||||
Less: Net income attributable to non-controlling interest in VMware Inc |
(15,455 | ) | (5,793 | ) | (868 | ) | (22,116 | ) | ||||||||||||||||||||
Net Income attributable to EMC Corporation |
1,598,965 | 31,778 | (115,150 | ) | (19,912 | ) | 274,553 | 131,910 | 1,902,144 | |||||||||||||||||||
Net income per weighted average share, diluted attributable to EMC Corporation common shareholders |
$ | 0.74 | 0.01 | (0.05 | ) | (0.01 | ) | 0.13 | 0.06 | $ | 0.88 | |||||||||||||||||
Weighted average shares, diluted |
2,157,873 | 2,157,873 | 2,157,873 | 2,157,873 | 2,157,873 | 2,157,873 | 2,157,873 | |||||||||||||||||||||
Gross Margin % of Revenue |
54.5 | % | 55.8 | % | ||||||||||||||||||||||||
Operating Margin % of Revenue |
13.1 | % | 17.7 | % |
Reconciliation of GAAP to Non-GAAP
For the Twelve Months Ended December 31, 2010
(in thousands, except per share amounts)
Unaudited
Revenue | Cost of Revenue |
Research and Development |
Selling, General and Administrative |
Restructuring and Acquisition- Related Charges |
Operating Income |
Other (Expense) Income, net |
Income Before Taxes |
Income Tax Provision |
Net Income |
Net Income Attributable to VMware |
Net Income Attributable to EMC |
Net
Income per Weighted Average Share, Basic |
Net
Income per Weighted Average Share, Diluted |
|||||||||||||||||||||||||||||||||||||||||||
EMC Consolidated GAAP |
$ | 17,015,126 | $ | 6,984,145 | $ | 1,888,015 | $ | 5,375,305 | $ | 84,375 | $ | 2,683,286 | $ | (75,303 | ) | $ | 2,607,983 | $ | 638,297 | $ | 1,969,686 | $ | (69,691 | ) | $ | 1,899,995 | $ | 0.924 | $ | 0.880 | ||||||||||||||||||||||||||
Restructuring and acquisition-related charges |
| | | | (84,375 | ) | 84,375 | | 84,375 | 10,721 | 73,654 | (1,636 | ) | 72,018 | $ | 0.035 | $ | 0.034 | ||||||||||||||||||||||||||||||||||||||
Special income tax charge |
| | | | | | | | (83,331 | ) | 83,331 | | 83,331 | $ | 0.041 | $ | 0.039 | |||||||||||||||||||||||||||||||||||||||
EMC Consolidated Adjusted (1) |
17,015,126 | 6,984,145 | 1,888,015 | 5,375,305 | | 2,767,661 | (75,303 | ) | 2,692,358 | 565,687 | 2,126,671 | (71,327 | ) | 2,055,344 | $ | 1.000 | $ | 0.953 | ||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense |
| (108,653 | ) | (258,746 | ) | (317,654 | ) | | 685,053 | 1,405 | 686,458 | 165,673 | 520,785 | (48,122 | ) | 472,663 | $ | 0.230 | $ | 0.220 | ||||||||||||||||||||||||||||||||||||
Intangible asset amortization |
| (131,760 | ) | (23,556 | ) | (129,966 | ) | | 285,282 | | 285,282 | 92,674 | 192,608 | (5,279 | ) | 187,329 | $ | 0.091 | $ | 0.087 | ||||||||||||||||||||||||||||||||||||
EMC Consolidated Non-GAAP (2) |
$ | 17,015,126 | $ | 6,743,732 | $ | 1,605,713 | $ | 4,927,685 | $ | | $ | 3,737,996 | $ | (73,898 | ) | $ | 3,664,098 | $ | 824,034 | $ | 2,840,064 | $ | (124,728 | ) | $ | 2,715,336 | $ | 1.321 | $ | 1.260 | ||||||||||||||||||||||||||
EMC Information Infrastructure GAAP |
$ | 14,164,393 | $ | 6,491,939 | $ | 1,244,057 | $ | 4,103,464 | $ | 80,877 | $ | 2,244,056 | $ | (58,713 | ) | $ | 2,185,343 | $ | 575,156 | $ | 1,610,187 | $ | | $ | 1,610,187 | $ | 0.783 | $ | 0.750 | |||||||||||||||||||||||||||
Restructuring and acquisition-related charges |
| | | | (80,877 | ) | 80,877 | | 80,877 | 15,736 | 65,141 | | 65,141 | $ | 0.032 | $ | 0.030 | |||||||||||||||||||||||||||||||||||||||
Special income tax charge |
| | | | | | | | (83,331 | ) | 83,331 | | 83,331 | $ | 0.041 | $ | 0.039 | |||||||||||||||||||||||||||||||||||||||
EMC Information Infrastructure Adjusted (3) |
14,164,393 | 6,491,939 | 1,244,057 | 4,103,464 | | 2,324,933 | (58,713 | ) | 2,266,220 | 507,561 | 1,758,659 | | 1,758,659 | $ | 0.855 | $ | 0.819 | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense |
| (70,160 | ) | (94,941 | ) | (210,530 | ) | | 375,631 | 1,273 | 376,904 | 103,303 | 273,601 | | 273,601 | $ | 0.133 | $ | 0.127 | |||||||||||||||||||||||||||||||||||||
Intangible asset amortization |
| (103,304 | ) | (21,202 | ) | (126,017 | ) | | 250,523 | | 250,523 | 84,937 | 165,586 | | 165,586 | $ | 0.081 | $ | 0.077 | |||||||||||||||||||||||||||||||||||||
EMC Information Infrastructure Non-GAAP (4) |
$ | 14,164,393 | $ | 6,318,475 | $ | 1,127,914 | $ | 3,766,917 | $ | | $ | 2,951,087 | $ | (57,440 | ) | $ | 2,893,647 | $ | 695,801 | $ | 2,197,846 | $ | | $ | 2,197,846 | $ | 1.069 | $ | 1.023 | |||||||||||||||||||||||||||
VMware standalone GAAP |
$ | 2,857,343 | $ | 493,715 | $ | 652,968 | $ | 1,282,667 | $ | | $ | 427,993 | $ | (11,618 | ) | $ | 416,375 | $ | 58,936 | $ | 357,439 | $ | | $ | 357,439 | $ | 0.174 | $ | 0.162 | |||||||||||||||||||||||||||
GAAP adjustments and eliminations |
(6,610 | ) | (1,509 | ) | (9,010 | ) | (10,826 | ) | 3,498 | 11,237 | (4,972 | ) | 6,265 | 4,205 | 2,060 | (69,691 | ) | (67,631 | ) | $ | (0.033 | ) | $ | (0.036 | ) | |||||||||||||||||||||||||||||||
VMware within EMC GAAP (5) |
2,850,733 | 492,206 | 643,958 | 1,271,841 | 3,498 | 439,230 | (16,590 | ) | 422,640 | 63,141 | 359,499 | (69,691 | ) | 289,808 | $ | 0.141 | $ | 0.131 | ||||||||||||||||||||||||||||||||||||||
Acquisition-related charges |
| | | | (3,498 | ) | 3,498 | | 3,498 | (5,015 | ) | 8,513 | (1,636 | ) | 6,877 | $ | 0.003 | $ | 0.003 | |||||||||||||||||||||||||||||||||||||
VMware within EMC Adjusted (6) |
2,850,733 | 492,206 | 643,958 | 1,271,841 | | 442,728 | (16,590 | ) | 426,138 | 58,126 | 368,012 | (71,327 | ) | 296,685 | $ | 0.144 | $ | 0.134 | ||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense |
| (38,493 | ) | (163,805 | ) | (107,124 | ) | | 309,422 | 132 | 309,554 | 62,370 | 247,184 | (48,122 | ) | 199,062 | $ | 0.097 | $ | 0.093 | ||||||||||||||||||||||||||||||||||||
Intangible asset amortization |
| (28,456 | ) | (2,354 | ) | (3,949 | ) | | 34,759 | | 34,759 | 7,737 | 27,022 | (5,279 | ) | 21,743 | $ | 0.011 | $ | 0.010 | ||||||||||||||||||||||||||||||||||||
VMware within EMC Non-GAAP (7) |
$ | 2,850,733 | $ | 425,257 | $ | 477,799 | $ | 1,160,768 | $ | | $ | 786,909 | $ | (16,458 | ) | $ | 770,451 | $ | 128,233 | $ | 642,218 | $ | (124,728 | ) | $ | 517,490 | $ | 0.252 | $ | 0.237 | ||||||||||||||||||||||||||
Wtd. Average Share O/S | 2,055,959 | 2,147,931 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of GAAP to Non-GAAP
For the Twelve Months Ended December 31, 2010
(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:
Revenue | Cost of Revenue |
Research and Development |
Selling, General and Administrative |
Restructuring and Acquisition- Related Charges |
Operating Income |
Other (Expense) Income, net |
Income Before Taxes |
Income Tax Provision |
Net Income |
Net Income Attributable to VMware |
Net Income Attributable to EMC |
Net
Income per Weighted Average Share, Basic |
Net
Income per Weighted Average Share, Diluted |
|||||||||||||||||||||||||||||||||||||||||||
Non-cash interest expense on convertible debt (8) |
$ | | $ | | $ | | $ | | $ | | $ | | $ | (105,654 | ) | $ | (105,654 | ) | $ | (36,850 | ) | $ | (68,804 | ) | $ | | $ | (68,804 | ) | $ | (0.034 | ) | $ | (0.032 | ) | |||||||||||||||||||||
Transition costs (9) |
| 2,275 | 5,079 | 29,836 | | (37,190 | ) | | (37,190 | ) | (10,085 | ) | (27,105 | ) | | (27,105 | ) | $ | (0.013 | ) | $ | (0.013 | ) | |||||||||||||||||||||||||||||||||
$ | | $ | 2,275 | $ | 5,079 | $ | 29,836 | $ | | $ | (37,190 | ) | $ | (105,654 | ) | $ | (142,844 | ) | $ | (46,935 | ) | $ | (95,909 | ) | $ | | $ | (95,909 | ) | $ | (0.047 | ) | $ | (0.045 | ) | |||||||||||||||||||||
(1) | Represents EMC Consolidated GAAP excluding restructuring, acquisition-related charges and special income tax charge. |
(2) | Represents EMC Consolidated Adjusted excluding stock-based compensation expense and intangible asset amortization. |
(3) | Represents EMC Information Infrastructure GAAP excluding restructuring, acquisition-related charges and special income tax charge. |
(4) | Represents EMC Information Infrastructure Adjusted excluding stock-based compensation expense and intangible asset amortization. |
(5) | Represents VMware within EMC GAAP. |
(6) | Represents VMware within EMC GAAP excluding acquisition-related charges. |
(7) | Represents VMware within EMC Adjusted excluding stock-based compensation expense and intangible asset amortization. |
(8) | Represents the non-cash interest charge associated with our convertible senior notes due 2011 and 2013 totaling $3,450 million. |
(9) | 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 EMCs Compounded Annual Growth Rate
Actual | Guidance | Guidance | ||||||||||
2007 | 2011 | CAGR | ||||||||||
GAAP diluted earnings per share |
$ | 0.74 | $ | 1.07 | 10 | % | ||||||
Restructuring and acquisitions-related charges |
0.01 | 0.03 | ||||||||||
Net gains on investments, incl. gain on sale of Vmware stock |
(0.05 | ) | ||||||||||
Tax benefits |
(0.01 | ) | ||||||||||
Stock-based compensation expense |
0.13 | 0.27 | ||||||||||
Intangible asset amortization |
0.06 | 0.09 | ||||||||||
Non-GAAP diluted earnings per share |
$ | 0.88 | $ | 1.46 | 13 | % |
Schedule may not add due to rounding
EMC Corporation
Reconciliation of Cash Flow from Operations to Free Cash Flow
(in thousands)
Unaudited
Twelve Months Ended | ||||||||
December 31, 2007 |
December 31, 2010 |
|||||||
EMC Consolidated |
||||||||
Cash flow from Operations |
$ | 3,126,602 | $ | 4,548,843 | ||||
Capital Expenditures |
699,038 | (745,412 | ) | |||||
Capitalized Software |
232,047 | (362,956 | ) | |||||
Free Cash Flow |
$ | 2,195,517 | $ | 3,440,475 |
EMC Corporation
Reconciliation of Cash Flow from Operations to Free Cash Flow
(in thousands)
The statements presented below are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not give effect to the potential impact of mergers, acquisitions, divestitures or business combinations that may be announced or closed after the date hereof. These statements supersede all prior statements regarding 2011 cash flow set forth in prior EMC news releases. All dollar amounts and percentages should be considered to be approximations.
2011 Outlook | ||||
EMC Consolidated |
||||
Cash flow from Operations |
$ | 5,340,000 | ||
Capital Expenditures |
900,000 | |||
Capitalized Software |
440,000 | |||
Free Cash Flow |
$ | 4,000,000 |