Attached files
| file | filename |
|---|---|
| 8-K - 8-K - EMC CORP | a8-kforq42014.htm |
Exhibit 99.1
Press Contact: | Katryn McGaughey |
508-293-7717
katryn.mcgaughey@emc.com
EMC Reports Full-Year 2014 Financial Results, Record Fourth-Quarter Revenue
Highlights: | |
l | Record Q4 revenue of $7 billion, up 5% year over year |
l | Q4 GAAP EPS up 17% year over year; Q4 non-GAAP EPS up 15% year over year |
l | EMC Information Infrastructure, VMware and Pivotal Q4 revenue up 2%, 16% and 18% year over year, respectively |
l | Q4 revenue from Emerging Storage grew 40% year over year; Full-year 2014 revenue grew 52% year over year |
HOPKINTON, Mass. - January 29, 2015 - EMC Corporation (NYSE:EMC) today reported fourth-quarter and full-year 2014 financial results. Record fourth-quarter consolidated revenue was $7 billion, up 5% year over year. GAAP net income attributable to EMC was $1.15 billion, an increase of 12% compared with the year-ago quarter. GAAP earnings per weighted average diluted share was $0.56 in the fourth quarter, up 17% year over year. Non-GAAP1 net income attributable to EMC was $1.4 billion, an increase of 10% compared with the year-ago quarter. Non-GAAP1 earnings per weighted average diluted share was $0.69, up 15% compared with the year-ago quarter.
Full-year 2014 revenue was $24.4 billion, an increase of 5% year over year. GAAP net income attributable to EMC for 2014 was $2.7 billion, down 6% year over year, and GAAP earnings per weighted average diluted share was $1.32, down 1% year over year. Non-GAAP2 net income attributable to EMC for 2014 was $3.9 billion, an increase of 1% year over year, and non-GAAP2 earnings per weighted average diluted share was $1.90, an increase of 6% year over year.
For 2014, EMC generated $6.5 billion in operating cash flow and $5 billion in free cash flow3. The company closed 2014 with $14.7 billion in cash and investments. In the fourth quarter EMC repurchased approximately $1.6 billion worth of its common stock and returned approximately $240 million to shareholders via a quarterly dividend. Over the course of 2014 EMC returned $3.9 billion to shareholders through the repurchase of $3 billion worth of its common stock and approximately $900 million via quarterly dividends.
Joe Tucci, Chairman and CEO, said, “EMC demonstrated solid performance in the fourth quarter and over the course of 2014. Our strategy is working well despite a challenging and rapidly changing IT environment. The company stands at the forefront of our industry with a leading portfolio of solutions and services to help customers optimize their existing infrastructures and build new ones that take advantage of opportunities created by cloud, mobile, social and Big Data. We enter 2015 financially strong and well positioned to continue capturing greater market share.”
Zane Rowe, EMC CFO, said, “EMC is establishing a solid foundation for the future, while also delivering near-term growth as we transform our business. Thanks to the unified team effort, in 2014 EMC grew revenue and EPS, gained share, increased our dividend and accelerated our buyback program - returning
$3.9 billion to shareholders. Our strong operational results were impacted by currency fluctuations and EMC’s investments in high-growth businesses. While we expect these factors to continue to impact 2015 results, we remain focused on driving growth for shareholders and delivering best-in-class solutions for customers.”
David Goulden, CEO of EMC Information Infrastructure, said, “In 2014 EMC II invested aggressively in key technology areas, innovated across all businesses, and continued to extend our lead in slower-growing but massive storage markets while making enormous strides in faster-growing areas like all-flash, where we are also the market segment leader. We delivered new and differentiated solutions, like the Enterprise Hybrid Cloud solution to help customers bring cloud agility and flexibility to existing applications and a platform for rapid deployment of new applications - a key differentiator for EMC. We also continued our leadership in converged infrastructure, helping customers transform their IT infrastructure by significantly reducing time to deploy and cost to manage new IT infrastructure. Collectively, this will serve us well in 2015 and ensure our continued lead in information infrastructure well into the future.”
Fourth-Quarter and Full-Year 2014
• | EMC Information Infrastructure business fourth-quarter and full-year 2014 revenue were each up 2% year over year. Information Storage revenue in the fourth quarter grew 3% year over year and 2% for the full year. Emerging Storage4 revenue in the fourth quarter grew 40% year over year and 52% for the full-year 2014, achieving $2.3 billion in revenue over the course of 2014, with notably strong growth for EMC XtremIO, EMC ViPR, EMC Isilon and EMC ScaleIO. Within this, EMC XtremIO bookings more than doubled to nearly $300 million in the fourth quarter compared with the previous quarter, thereby securing a commanding lead over the all-flash array market segment. Unified and Backup and Recovery revenue grew in the fourth quarter and was up 4% for the full-year 2014. Within this, EMC VNX systems continue to do well, adding approximately 2,000 new customers in the fourth quarter, with the vast majority being new to EMC storage. RSA fourth-quarter revenue grew 4% year over year and grew 5% for 2014. Converged infrastructure offerings from VCE and VSPEX continued to drive revenue growth in the fourth quarter, with VCE adding a record number of new customers in the quarter. |
• | VMware continued its rapid growth trajectory with fourth-quarter and full-year 2014 revenue within EMC each up 16% year over year as customers continue investing in software-defined data center, hybrid cloud solutions and end-user computing. |
• | Pivotal grew fourth-quarter revenue 18% and full-year 2014 revenue 27% year over year, and remains the fastest growing of EMC’s federated businesses, benefiting from customers leveraging the portfolio to build third platform applications that are transforming their business. |
Global Highlights
EMC’s consolidated fourth-quarter revenue from North America grew 6% year over year, and within this revenue from the United States was up 7% year over year. Revenue from EMC’s Europe, Middle East and Africa region grew 6% year over year, Asia Pacific and Japan grew 2% year over year and Latin America grew 8% year over year. Revenue from the BRIC +13 markets grew 7% year over year in the fourth quarter.
Business Outlook
EMC’s business outlook reflects the negative impact of anticipated foreign currency fluctuations and the consolidation of VCE results. Further detail will be provided during today’s 8:30 a.m. ET live webcast for investors, which is available on the EMC Investor Relations website (http://www.emc.com/ir).
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 made by EMC regarding 2015 financial results.
All dollar amounts and percentages set forth below should be considered to be approximations.
• | Consolidated revenues are expected to be $26.1 billion for 2015. |
• | Consolidated GAAP operating income is expected to be 13.7% of revenues for 2015 and consolidated non-GAAP5 operating income is expected to be 21.4% of revenues for 2015. |
• | Consolidated GAAP earnings per weighted average diluted share are expected to be $1.27 for 2015 and consolidated non-GAAP5 earnings per weighted average diluted share are expected to be $1.98 for 2015. |
• | The consolidated GAAP income tax rate is expected to be 23.0% and the consolidated non-GAAP5 income tax rate is expected to be 23.6% for 2015. This assumes that the U.S. research and development tax credit is extended during 2015. |
• | The weighted average outstanding diluted shares are expected to be 1.96 billion for 2015. |
• | EMC expects to repurchase an aggregate of $3.0 billion of the company’s common stock in 2015. |
Resources
• | The fourth-quarter and full-year 2014 webcast will be available for replay on the EMC Investor Relations website at http://www.emc.com/ir |
• | EMC financial results are also available on the U.S. Securities and Exchange Commission website |
• | Visit http://ir.vmware.com for more detail on VMware’s fourth-quarter 2014 financial results |
• | Download the EMC Investor Relations App here |
• | Visit EMC Pulse for breaking product and technology news from EMC |
• | Visit EMC Reflections for executive insight on business and IT trends |
• | Connect with EMC via @EMCCorp, LinkedIn and Facebook |
About EMC
EMC Corporation is a global leader in enabling businesses and service providers to transform their operations and deliver IT as a service. Fundamental to this transformation is cloud computing. Through innovative products and services, EMC accelerates the journey to cloud computing, helping IT departments to store, manage, protect and analyze their most valuable asset - information - in a more agile, trusted and cost-efficient way. Additional information about EMC can be found at www.EMC.com.
# # #
1 Items excluded from the non-GAAP results for the fourth quarters of 2014 and 2013 are amounts relating to stock-based compensation expense, intangible asset amortization, restructuring charges, acquisition and other related charges, the reversal of the R&D tax credit for 2014, a gain on previously held interests in strategic investments and joint venture, the amortization of VMware’s capitalized software from prior periods and special tax items. See attached schedules for GAAP to non-GAAP reconciliations.
2 Items excluded from the non-GAAP results for the full years 2014 and 2013 are amounts relating to stock-based compensation expense, intangible asset amortization, restructuring charges, acquisition and other related charges, the R&D tax credit for 2012, a gain on previously held interests in strategic investments and joint venture, an impairment of strategic investment, VMware litigation and other contingencies, the amortization of VMware’s capitalized software from prior periods, special tax items and a net gain on the disposition of certain lines of business and other. See attached schedules for GAAP to non-GAAP reconciliations.
3 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 twelve months ended December 31, 2014 and 2013.
4 EMC’s Emerging Storage business primarily includes product and maintenance revenues from EMC Isilon, EMC Atmos, EMC VPLEX, EMC ViPR, EMC ScaleIO, EMC Elastic Cloud Storage Appliance, EMC RecoverPoint, Data Computing Appliance, ASD Suites and EMC vFlash and EMC XtremIO families.
5Items excluded from the non-GAAP business outlook for 2015 are amounts relating to stock-based compensation expense, intangible asset amortization, restructuring charges and acquisition and other related charges. A benefit for an R&D tax credit is included in the GAAP and non-GAAP business outlook for 2015. See attached schedules for GAAP to non-GAAP reconciliations.
EMC, Atmos, EMC RecoverPoint, Isilon, VNX, VPLEX, VSPEX, ViPR, ScaleIO and XtremIO are either 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.
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) 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 release.
Use of Non-GAAP Financial Measures
This release, 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 release.
Where specified in the accompanying schedules for various periods entitled "Reconciliation of GAAP to Non-GAAP," certain items noted on each such specific schedule (including, where noted, amounts relating to stock-based compensation expense, intangible asset amortization, restructuring charges, acquisition and other related charges, the reversal of the R&D tax credit for 2014, the R&D tax credit for 2012, a gain on previously held interests in strategic investments and joint venture, an impairment of strategic investment, VMware litigation and other contingencies, the amortization of VMware’s capitalized software from prior periods, special tax items and a net gain on the disposition of certain lines of business and other) 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 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 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, 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.
EMC CORPORATION
CONSOLIDATED INCOME STATEMENTS
(in millions, except per share amounts)
(unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenues: | ||||||||||||||||
Product sales | $ | 4,322 | $ | 4,155 | $ | 14,051 | $ | 13,690 | ||||||||
Services | 2,726 | 2,527 | 10,389 | 9,532 | ||||||||||||
7,048 | 6,682 | 24,440 | 23,222 | |||||||||||||
Cost and expenses: | ||||||||||||||||
Cost of product sales | 1,669 | 1,630 | 5,738 | 5,650 | ||||||||||||
Cost of services | 874 | 828 | 3,453 | 3,099 | ||||||||||||
Research and development | 752 | 705 | 2,991 | 2,761 | ||||||||||||
Selling, general and administrative | 2,131 | 2,029 | 7,982 | 7,338 | ||||||||||||
Restructuring and acquisition-related charges | 52 | 29 | 239 | 224 | ||||||||||||
Operating income | 1,570 | 1,461 | 4,037 | 4,150 | ||||||||||||
Non-operating income (expense): | ||||||||||||||||
Investment income | 24 | 35 | 123 | 128 | ||||||||||||
Interest expense | (39 | ) | (47 | ) | (147 | ) | (156 | ) | ||||||||
Other expense, net | (6 | ) | (61 | ) | (251 | ) | (257 | ) | ||||||||
Total non-operating income (expense) | (21 | ) | (73 | ) | (275 | ) | (285 | ) | ||||||||
Income before provision for income taxes | 1,549 | 1,388 | 3,762 | 3,865 | ||||||||||||
Income tax provision | 336 | 298 | 868 | 772 | ||||||||||||
Net income | 1,213 | 1,090 | 2,894 | 3,093 | ||||||||||||
Less: Net income attributable to the non-controlling interest in VMware, Inc. | (66 | ) | (68 | ) | (180 | ) | (204 | ) | ||||||||
Net income attributable to EMC Corporation | $ | 1,147 | $ | 1,022 | $ | 2,714 | $ | 2,889 | ||||||||
Net income per weighted average share, basic attributable to EMC Corporation common shareholders | $ | 0.57 | $ | 0.50 | $ | 1.34 | $ | 1.39 | ||||||||
Net income per weighted average share, diluted attributable to EMC Corporation common shareholders | $ | 0.56 | $ | 0.48 | $ | 1.32 | $ | 1.33 | ||||||||
Weighted average shares, basic | 2,014 | 2,034 | 2,028 | 2,074 | ||||||||||||
Weighted average shares, diluted | 2,038 | 2,114 | 2,059 | 2,160 | ||||||||||||
Cash dividends declared per common share | $ | 0.12 | $ | 0.10 | $ | 0.45 | $ | 0.30 | ||||||||
EMC CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
(unaudited)
December 31, | December 31, | |||||||
2014 | 2013 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 6,343 | $ | 7,891 | ||||
Short-term investments | 1,978 | 2,773 | ||||||
Accounts and notes receivable, less allowance for doubtful accounts of $72 and $62 | 4,413 | 3,861 | ||||||
Inventories | 1,276 | 1,334 | ||||||
Deferred income taxes | 1,070 | 912 | ||||||
Other current assets | 653 | 507 | ||||||
Total current assets | 15,733 | 17,278 | ||||||
Long-term investments | 6,334 | 6,924 | ||||||
Property, plant and equipment, net | 3,766 | 3,478 | ||||||
Intangible assets, net | 2,125 | 1,780 | ||||||
Goodwill | 16,134 | 14,424 | ||||||
Other assets, net | 1,793 | 1,965 | ||||||
Total assets | $ | 45,885 | $ | 45,849 | ||||
LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,696 | $ | 1,434 | ||||
Accrued expenses | 3,141 | 2,783 | ||||||
Notes converted and payable | — | 1,665 | ||||||
Income taxes payable | 852 | 639 | ||||||
Deferred revenue | 6,021 | 5,278 | ||||||
Total current liabilities | 11,710 | 11,799 | ||||||
Income taxes payable | 306 | 296 | ||||||
Deferred revenue | 4,144 | 3,701 | ||||||
Deferred income taxes | 274 | 421 | ||||||
Long-term debt | 5,495 | 5,494 | ||||||
Other liabilities | 431 | 352 | ||||||
Total liabilities | 22,360 | 22,063 | ||||||
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 1,985 and 2,020 shares | 20 | 20 | ||||||
Additional paid-in capital | — | 1,406 | ||||||
Retained earnings | 22,242 | 21,114 | ||||||
Accumulated other comprehensive loss, net | (366 | ) | (239 | ) | ||||
Total EMC Corporation's shareholders' equity | 21,896 | 22,301 | ||||||
Non-controlling interests | 1,629 | 1,485 | ||||||
Total shareholders' equity | 23,525 | 23,786 | ||||||
Total liabilities and shareholders' equity | $ | 45,885 | $ | 45,849 | ||||
EMC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Twelve Months Ended | |||||||||||
December 31, | December 31, | ||||||||||
2014 | 2013 | ||||||||||
Cash flows from operating activities: | |||||||||||
Cash received from customers | $ | 25,360 | $ | 24,319 | |||||||
Cash paid to suppliers and employees | (17,893 | ) | (16,708 | ) | |||||||
Dividends and interest received | 143 | 169 | |||||||||
Interest paid | (134 | ) | (96 | ) | |||||||
Income taxes paid | (953 | ) | (761 | ) | |||||||
Net cash provided by operating activities | 6,523 | 6,923 | |||||||||
Cash flows from investing activities: | |||||||||||
Additions to property, plant and equipment | (979 | ) | (943 | ) | |||||||
Capitalized software development costs | (509 | ) | (465 | ) | |||||||
Purchases of short- and long-term available-for-sale securities | (9,982 | ) | (11,250 | ) | |||||||
Sales of short- and long-term available-for-sale securities | 8,722 | 5,292 | |||||||||
Maturities of short- and long-term available-for-sale securities | 2,651 | 2,845 | |||||||||
Business acquisitions, net of cash acquired | (1,973 | ) | (770 | ) | |||||||
Purchases of strategic and other related investments | (144 | ) | (131 | ) | |||||||
Sales of strategic and other related investments | 101 | 35 | |||||||||
Joint venture funding | (360 | ) | (411 | ) | |||||||
Proceeds from divestiture of business | — | 38 | |||||||||
Increase in restricted cash | (78 | ) | — | ||||||||
Net cash used in investing activities | (2,551 | ) | (5,760 | ) | |||||||
Cash flows from financing activities: | |||||||||||
Proceeds from the issuance of EMC's common stock | 503 | 342 | |||||||||
Proceeds from the issuance of VMware's common stock | 164 | 197 | |||||||||
EMC repurchase of EMC's common stock | (2,969 | ) | (3,015 | ) | |||||||
EMC purchase of VMware's common stock | — | (160 | ) | ||||||||
VMware repurchase of VMware's common stock | (700 | ) | (508 | ) | |||||||
Excess tax benefits from stock-based compensation | 102 | 116 | |||||||||
Payment of long- and short-term obligations | (1,665 | ) | (46 | ) | |||||||
Proceeds from long- and short-term obligations | — | 5,460 | |||||||||
Contributions from non-controlling interests | 7 | 105 | |||||||||
Dividend payment | (879 | ) | (415 | ) | |||||||
Net cash (used in) provided by financing activities | (5,437 | ) | 2,076 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (83 | ) | (62 | ) | |||||||
Net (decrease) increase in cash and cash equivalents | (1,548 | ) | 3,177 | ||||||||
Cash and cash equivalents at beginning of period | 7,891 | 4,714 | |||||||||
Cash and cash equivalents at end of period | $ | 6,343 | $ | 7,891 | |||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||||||
Net income | $ | 2,894 | $ | 3,093 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 1,864 | 1,665 | |||||||||
Non-cash interest expense on debt | 1 | 62 | |||||||||
Non-cash restructuring and other special charges | 19 | 8 | |||||||||
Stock-based compensation expense | 1,031 | 935 | |||||||||
Provision for (recovery of) doubtful accounts | 10 | (1 | ) | ||||||||
Deferred income taxes, net | (396 | ) | (202 | ) | |||||||
Excess tax benefits from stock-based compensation | (102 | ) | (116 | ) | |||||||
Gain on previously held interests in strategic investments and joint venture | (101 | ) | — | ||||||||
Impairment of strategic investment | 33 | — | |||||||||
Other, net | 20 | 40 | |||||||||
Changes in assets and liabilities, net of acquisitions: | |||||||||||
Accounts and notes receivable | (309 | ) | (377 | ) | |||||||
Inventories | (149 | ) | (408 | ) | |||||||
Other assets | 345 | 269 | |||||||||
Accounts payable | 167 | 380 | |||||||||
Accrued expenses | (286 | ) | (162 | ) | |||||||
Income taxes payable | 314 | 222 | |||||||||
Deferred revenue | 1,126 | 1,475 | |||||||||
Other liabilities | 42 | 40 | |||||||||
Net cash provided by operating activities | $ | 6,523 | $ | 6,923 | |||||||
Reconciliation of GAAP to Non-GAAP*
(in millions, except per share amounts)
(unaudited)
Three Months Ended | |||||||||||||||
Diluted | Diluted | ||||||||||||||
December 31, | Earnings | December 31, | Earnings | ||||||||||||
2014 | Per Share | 2013 | Per Share | ||||||||||||
Net Income Attributable to EMC GAAP | $ | 1,147 | $ | 0.562 | $ | 1,022 | $ | 0.482 | |||||||
Stock-based compensation expense | 190 | 0.093 | 176 | 0.083 | |||||||||||
Intangible asset amortization | 68 | 0.034 | 62 | 0.030 | |||||||||||
Restructuring charges | 34 | 0.017 | 19 | 0.009 | |||||||||||
Acquisition and other related charges | 31 | 0.015 | — | — | |||||||||||
R&D tax credit | (32 | ) | (0.016 | ) | — | — | |||||||||
Gain on previously held interests in strategic investments and joint venture | (33 | ) | (0.016 | ) | — | — | |||||||||
Amortization of VMware's capitalized software from prior periods | — | — | 1 | — | |||||||||||
Special tax items | — | — | (4 | ) | (0.002 | ) | |||||||||
Net Income Attributable to EMC Non-GAAP | $ | 1,405 | $ | 0.689 | $ | 1,276 | $ | 0.602 | |||||||
Weighted average shares, diluted | 2,038 | 2,114 | |||||||||||||
Incremental VMware dilution | $ | 2 | $ | 2 | |||||||||||
Twelve Months Ended | |||||||||||||||
Diluted | Diluted | ||||||||||||||
December 31, | Earnings | December 31, | Earnings | ||||||||||||
2014 | Per Share | 2013 | Per Share | ||||||||||||
Net Income Attributable to EMC GAAP | $ | 2,714 | $ | 1.315 | $ | 2,889 | $ | 1.333 | |||||||
Stock-based compensation expense | 713 | 0.347 | 638 | 0.295 | |||||||||||
Intangible asset amortization | 263 | 0.128 | 257 | 0.118 | |||||||||||
Restructuring charges | 168 | 0.082 | 148 | 0.068 | |||||||||||
Acquisition and other related charges | 108 | 0.052 | 8 | 0.004 | |||||||||||
R&D tax credit | — | — | (61 | ) | (0.028 | ) | |||||||||
Gain on previously held interests in strategic investments and joint venture | (77 | ) | (0.038 | ) | — | — | |||||||||
Impairment of strategic investment | 23 | 0.011 | — | — | |||||||||||
VMware litigation and other contingencies | 7 | 0.003 | — | — | |||||||||||
Amortization of VMware's capitalized software from prior periods | — | — | 18 | 0.009 | |||||||||||
Special tax items | — | — | 19 | 0.009 | |||||||||||
Net gain on disposition of certain lines of business and other | — | — | (22 | ) | (0.010 | ) | |||||||||
Net Income Attributable to EMC Non-GAAP | $ | 3,919 | $ | 1.900 | $ | 3,894 | $ | 1.798 | |||||||
Weighted average shares, diluted | 2,059 | 2,160 | |||||||||||||
Incremental VMware dilution | $ | 7 | $ | 8 | |||||||||||
* | 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.
Reconciliation of GAAP to Non-GAAP
(in millions)
(unaudited)
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | December 31, | December 31, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Gross Margin GAAP | $ | 4,505 | $ | 4,224 | $ | 15,249 | $ | 14,473 | |||||||
Stock-based compensation expense | 39 | 32 | 146 | 124 | |||||||||||
Intangible asset amortization | 64 | 59 | 247 | 232 | |||||||||||
Amortization of VMware's capitalized software from prior periods | — | 1 | — | 34 | |||||||||||
Gross Margin Non-GAAP | $ | 4,608 | $ | 4,316 | $ | 15,642 | $ | 14,863 | |||||||
Revenues | $ | 7,048 | $ | 6,682 | $ | 24,440 | $ | 23,222 | |||||||
Gross Margin Percentages: | |||||||||||||||
GAAP | 63.9 | % | 63.2 | % | 62.4 | % | 62.3 | % | |||||||
Non-GAAP | 65.4 | % | 64.6 | % | 64.0 | % | 64.0 | % | |||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | December 31, | December 31, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Operating Margin GAAP | $ | 1,570 | $ | 1,461 | $ | 4,037 | $ | 4,150 | |||||||
Stock-based compensation expense | 260 | 239 | 1,020 | 935 | |||||||||||
Intangible asset amortization | 102 | 98 | 402 | 389 | |||||||||||
Restructuring charges | 47 | 27 | 226 | 212 | |||||||||||
Acquisition and other related charges | 56 | 2 | 186 | 12 | |||||||||||
Amortization of VMware's capitalized software from prior periods | — | 1 | — | 34 | |||||||||||
VMware litigation and other contingencies | — | — | 11 | — | |||||||||||
Operating Margin Non-GAAP | $ | 2,035 | $ | 1,828 | $ | 5,882 | $ | 5,732 | |||||||
Revenues | $ | 7,048 | $ | 6,682 | $ | 24,440 | $ | 23,222 | |||||||
Operating Margin Percentages: | |||||||||||||||
GAAP | 22.3 | % | 21.9 | % | 16.5 | % | 17.9 | % | |||||||
Non-GAAP | 28.9 | % | 27.4 | % | 24.1 | % | 24.7 | % | |||||||
Note: Schedules may not add or recalculate due to rounding.
Reconciliation of GAAP to Non-GAAP
(in millions)
(unaudited)
Three Months Ended December 31, 2014 | Twelve Months Ended December 31, 2014 | ||||||||||||||||||||
Income Before | Tax Provision | Tax | Income Before | Tax Provision | Tax | ||||||||||||||||
Tax | (Benefit) | Rate | Tax | (Benefit) | Rate | ||||||||||||||||
EMC Consolidated GAAP | $ | 1,549 | $ | 336 | 21.7 | % | $ | 3,762 | $ | 868 | 23.1 | % | |||||||||
Stock-based compensation expense | 260 | 49 | 18.7 | % | 1,021 | 224 | 22.0 | % | |||||||||||||
Intangible asset amortization | 102 | 28 | 27.8 | % | 402 | 118 | 29.2 | % | |||||||||||||
Restructuring charges | 47 | 12 | 25.8 | % | 226 | 56 | 24.6 | % | |||||||||||||
Acquisition and other related charges | 56 | 20 | 35.2 | % | 187 | 60 | 32.3 | % | |||||||||||||
R&D tax credit | — | 34 | N/A | — | — | N/A | |||||||||||||||
VMware litigation and other contingencies | — | — | N/A | 11 | 2 | 19.0 | % | ||||||||||||||
Gain on previously held interests in strategic investments and joint venture | (44 | ) | (11 | ) | 24.7 | % | (88 | ) | (11 | ) | 12.1 | % | |||||||||
Impairment of strategic investment | — | — | N/A | 33 | 10 | 28.8 | % | ||||||||||||||
EMC Consolidated Non-GAAP | $ | 1,970 | $ | 468 | 23.8 | % | $ | 5,554 | $ | 1,327 | 23.9 | % | |||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Cash Flow from Operations | $ | 2,231 | $ | 2,190 | $ | 6,523 | $ | 6,923 | ||||||||
Capital expenditures | (286 | ) | (270 | ) | (979 | ) | (943 | ) | ||||||||
Capitalized software development costs | (127 | ) | (123 | ) | (509 | ) | (465 | ) | ||||||||
Free Cash Flow | $ | 1,818 | $ | 1,797 | $ | 5,035 | $ | 5,515 | ||||||||
Note: Schedules may not add or recalculate due to rounding.
Reconciliation of GAAP to Non-GAAP
(in millions, except per share amounts)
(unaudited)
Twelve Months Ending December 31, | ||
2015 | ||
Operating Income as a % of Revenue - GAAP | 13.7 | % |
Stock-based compensation expense | 4.6 | % |
Intangible asset amortization | 1.5 | % |
Restructuring charges | 0.9 | % |
Acquisition and other related charges | 0.7 | % |
Operating Income as a % of Revenue - Non-GAAP | 21.4 | % |
Twelve Months Ending December 31, | |||
2015 | |||
Diluted Earnings Per Share - GAAP | $ | 1.27 | |
Stock-based compensation expense | 0.44 | ||
Intangible asset amortization | 0.14 | ||
Restructuring charges | 0.08 | ||
Acquisition and other related charges | 0.05 | ||
Diluted Earnings Per Share - Non-GAAP | $ | 1.98 | |
Twelve Months Ending December 31, | ||
2015 | ||
Tax Rate - GAAP | 23.0 | % |
Impact of stock-based compensation expense, intangible asset amortization, restructuring charges and acquisition and other related charges | 0.6 | % |
Tax Rate - Non-GAAP | 23.6 | % |
Impact of VCE Acquisition | Twelve Months Ending December 31, | ||
2015 | |||
Diluted Earnings Per Share - GAAP | $ | 0.06 | |
Stock-based compensation expense | (0.01 | ) | |
Intangible asset amortization | (0.01 | ) | |
Diluted Earnings Per Share - Non-GAAP | $ | 0.04 | |
Note: Schedules may not add or recalculate due to rounding.
Supplemental Information
For the Three Months Ended December 31, 2014
(in millions)
(unaudited)
Stock-Based Compensation Expense | Intangible Asset Amortization | Restructuring Charges | Acquisition and Other Related Charges | R&D Tax Credit | Gain on Previously Held Interests in Strategic Investments and Joint Venture | ||||||||||||||||||
EMC Consolidated | |||||||||||||||||||||||
Cost of revenue | $ | (39 | ) | $ | (64 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||
Research and development | (93 | ) | 4 | — | — | — | — | ||||||||||||||||
Selling, general and administrative | (128 | ) | (42 | ) | — | (51 | ) | — | — | ||||||||||||||
Restructuring and acquisition-related charges | — | — | (47 | ) | (5 | ) | — | — | |||||||||||||||
Non-operating (income) expense | — | — | — | — | — | (44 | ) | ||||||||||||||||
Income tax provision | 49 | 28 | 12 | 20 | 34 | (11 | ) | ||||||||||||||||
Net income attributable to VMware | (21 | ) | (6 | ) | (1 | ) | (5 | ) | 2 | — | |||||||||||||
EMC Information Infrastructure plus Pivotal | |||||||||||||||||||||||
Cost of revenue | $ | (27 | ) | $ | (35 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||
Research and development | (36 | ) | (1 | ) | — | — | — | — | |||||||||||||||
Selling, general and administrative | (66 | ) | (31 | ) | — | (10 | ) | — | — | ||||||||||||||
Restructuring and acquisition-related charges | — | — | (36 | ) | (3 | ) | — | — | |||||||||||||||
Non-operating (income) expense | — | — | — | — | — | (44 | ) | ||||||||||||||||
Income tax provision | 21 | 21 | 8 | 2 | 22 | (11 | ) | ||||||||||||||||
Net income attributable to VMware | — | — | — | — | — | — | |||||||||||||||||
VMware within EMC | |||||||||||||||||||||||
Cost of revenue | $ | (12 | ) | $ | (29 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||
Research and development | (57 | ) | 5 | — | — | — | — | ||||||||||||||||
Selling, general and administrative | (62 | ) | (11 | ) | — | (41 | ) | — | — | ||||||||||||||
Restructuring and acquisition-related charges | — | — | (11 | ) | (2 | ) | — | — | |||||||||||||||
Non-operating (income) expense | — | — | — | — | — | — | |||||||||||||||||
Income tax provision | 28 | 7 | 4 | 18 | 12 | — | |||||||||||||||||
Net income attributable to VMware | (21 | ) | (6 | ) | (1 | ) | (5 | ) | 2 | — | |||||||||||||
Supplemental Information
For the Three Months Ended December 31, 2013
(in millions)
(unaudited)
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 Items | ||||||||||||||||||
EMC Consolidated | |||||||||||||||||||||||
Cost of revenue | $ | (32 | ) | $ | (59 | ) | $ | — | $ | — | $ | (1 | ) | $ | — | ||||||||
Research and development | (94 | ) | (2 | ) | — | — | — | — | |||||||||||||||
Selling, general and administrative | (113 | ) | (37 | ) | — | — | — | — | |||||||||||||||
Restructuring and acquisition-related charges | — | — | (27 | ) | (2 | ) | — | — | |||||||||||||||
Non-operating (income) expense | — | — | — | — | — | — | |||||||||||||||||
Income tax provision | 41 | 32 | 8 | 2 | — | 5 | |||||||||||||||||
Net income attributable to VMware | (22 | ) | (4 | ) | — | — | — | 1 | |||||||||||||||
EMC Information Infrastructure plus Pivotal | |||||||||||||||||||||||
Cost of revenue | $ | (24 | ) | $ | (36 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||
Research and development | (32 | ) | (1 | ) | — | — | — | — | |||||||||||||||
Selling, general and administrative | (61 | ) | (36 | ) | — | — | — | — | |||||||||||||||
Restructuring and acquisition-related charges | — | — | (23 | ) | — | — | — | ||||||||||||||||
Non-operating (income) expense | — | — | — | — | — | — | |||||||||||||||||
Income tax provision | 28 | 27 | 4 | 1 | — | — | |||||||||||||||||
Net income attributable to VMware | — | — | — | — | — | — | |||||||||||||||||
VMware within EMC | |||||||||||||||||||||||
Cost of revenue | $ | (8 | ) | $ | (23 | ) | $ | — | $ | — | $ | (1 | ) | $ | — | ||||||||
Research and development | (62 | ) | (1 | ) | — | — | — | — | |||||||||||||||
Selling, general and administrative | (52 | ) | (1 | ) | — | — | — | — | |||||||||||||||
Restructuring and acquisition-related charges | — | — | (4 | ) | (2 | ) | — | — | |||||||||||||||
Non-operating (income) expense | — | — | — | — | — | — | |||||||||||||||||
Income tax provision | 13 | 5 | 4 | 1 | — | 5 | |||||||||||||||||
Net income attributable to VMware | (22 | ) | (4 | ) | — | — | — | 1 | |||||||||||||||
Supplemental Information
For the Twelve Months Ended December 31, 2014
(in millions)
(unaudited)
Stock-Based Compensation Expense | Intangible Asset Amortization | Restructuring Charges | Acquisition and Other Related Charges | Gain on Previously Held Interests in Strategic Investments and Joint Venture | Impairment of Strategic Investment | VMware Litigation and Other Contingencies | |||||||||||||||||||||
EMC Consolidated | |||||||||||||||||||||||||||
Cost of revenue | $ | (146 | ) | $ | (247 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Research and development | (382 | ) | (5 | ) | — | — | — | — | — | ||||||||||||||||||
Selling, general and administrative | (492 | ) | (150 | ) | — | (173 | ) | — | — | (11 | ) | ||||||||||||||||
Restructuring and acquisition-related charges | — | — | (226 | ) | (13 | ) | — | — | — | ||||||||||||||||||
Non-operating (income) expense | 1 | — | — | 1 | (88 | ) | 33 | — | |||||||||||||||||||
Income tax provision | 224 | 118 | 56 | 60 | (11 | ) | 10 | 2 | |||||||||||||||||||
Net income attributable to VMware | (84 | ) | (21 | ) | (2 | ) | (19 | ) | — | — | (2 | ) | |||||||||||||||
EMC Information Infrastructure plus Pivotal | |||||||||||||||||||||||||||
Cost of revenue | $ | (102 | ) | $ | (138 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Research and development | (138 | ) | (5 | ) | — | — | — | — | — | ||||||||||||||||||
Selling, general and administrative | (251 | ) | (122 | ) | — | (31 | ) | — | — | — | |||||||||||||||||
Restructuring and acquisition-related charges | — | — | (210 | ) | (6 | ) | — | — | — | ||||||||||||||||||
Non-operating (income) expense | 1 | — | — | — | (88 | ) | 33 | — | |||||||||||||||||||
Income tax provision | 111 | 84 | 50 | 4 | (11 | ) | 10 | — | |||||||||||||||||||
Net income attributable to VMware | — | — | — | — | — | — | — | ||||||||||||||||||||
VMware within EMC | |||||||||||||||||||||||||||
Cost of revenue | $ | (44 | ) | $ | (109 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Research and development | (244 | ) | — | — | — | — | — | — | |||||||||||||||||||
Selling, general and administrative | (241 | ) | (28 | ) | — | (142 | ) | — | — | (11 | ) | ||||||||||||||||
Restructuring and acquisition-related charges | — | — | (16 | ) | (7 | ) | — | — | — | ||||||||||||||||||
Non-operating (income) expense | — | — | — | 1 | — | — | — | ||||||||||||||||||||
Income tax provision | 113 | 34 | 6 | 56 | — | — | 2 | ||||||||||||||||||||
Net income attributable to VMware | (84 | ) | (21 | ) | (2 | ) | (19 | ) | — | — | (2 | ) | |||||||||||||||
Supplemental Information
For the Twelve Months Ended December 31, 2013
(in millions)
(unaudited)
Stock-Based Compensation Expense | Intangible Asset Amortization | Restructuring Charges | Acquisition and Other Related Charges | Amortization of VMware's Capitalized Software from Prior Periods | Net Gain on Disposition of Certain Lines of Business and Other | Special Tax Items | R&D Tax Credit | ||||||||||||||||||||||||
EMC Consolidated | |||||||||||||||||||||||||||||||
Cost of revenue | $ | (124 | ) | $ | (232 | ) | $ | — | $ | — | $ | (34 | ) | $ | — | $ | — | $ | — | ||||||||||||
Research and development | (357 | ) | (8 | ) | — | — | — | — | — | — | |||||||||||||||||||||
Selling, general and administrative | (454 | ) | (149 | ) | — | — | — | — | — | — | |||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | (212 | ) | (12 | ) | — | — | — | — | |||||||||||||||||||||
Non-operating (income) expense | 1 | — | — | — | — | (31 | ) | — | — | ||||||||||||||||||||||
Income tax provision | 225 | 117 | 54 | 3 | 11 | (3 | ) | (18 | ) | 67 | |||||||||||||||||||||
Net income attributable to VMware | (73 | ) | (15 | ) | (10 | ) | (1 | ) | (5 | ) | 6 | 1 | 6 | ||||||||||||||||||
EMC Information Infrastructure plus Pivotal | |||||||||||||||||||||||||||||||
Cost of revenue | $ | (88 | ) | $ | (141 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Research and development | (134 | ) | (5 | ) | — | — | — | — | — | — | |||||||||||||||||||||
Selling, general and administrative | (256 | ) | (142 | ) | — | — | — | — | — | — | |||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | (144 | ) | (7 | ) | — | — | — | — | |||||||||||||||||||||
Non-operating (income) expense | 1 | — | — | — | — | — | — | — | |||||||||||||||||||||||
Income tax provision | 128 | 95 | 31 | 2 | — | — | (23 | ) | 35 | ||||||||||||||||||||||
Net income attributable to VMware | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
VMware within EMC | |||||||||||||||||||||||||||||||
Cost of revenue | $ | (36 | ) | $ | (91 | ) | $ | — | $ | — | $ | (34 | ) | $ | — | $ | — | $ | — | ||||||||||||
Research and development | (223 | ) | (3 | ) | — | — | — | — | — | — | |||||||||||||||||||||
Selling, general and administrative | (198 | ) | (7 | ) | — | — | — | — | — | — | |||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | (68 | ) | (5 | ) | — | — | — | — | |||||||||||||||||||||
Non-operating (income) expense | — | — | — | — | — | (31 | ) | — | — | ||||||||||||||||||||||
Income tax provision | 97 | 22 | 23 | 1 | 11 | (3 | ) | 5 | 32 | ||||||||||||||||||||||
Net income attributable to VMware | (73 | ) | (15 | ) | (10 | ) | (1 | ) | (5 | ) | 6 | 1 | 6 | ||||||||||||||||||
Supplemental Information
For the Three Months Ended December 31, 2014
(in millions)
(unaudited)
VMware Standalone GAAP | GAAP Adjustments and Eliminations | VMware within EMC GAAP | |||||||||
Revenue | $ | 1,703 | $ | (16 | ) | $ | 1,687 | ||||
Cost of revenue | 254 | (6 | ) | 248 | |||||||
Gross margin | 1,449 | (10 | ) | 1,439 | |||||||
Research and development | 302 | (1 | ) | 301 | |||||||
Selling, general and administrative | 792 | (11 | ) | 781 | |||||||
Restructuring and acquisition-related charges | 11 | 2 | 13 | ||||||||
Operating income | 344 | — | 344 | ||||||||
Non-operating income (expense) | 14 | (1 | ) | 13 | |||||||
Income before taxes | 358 | (1 | ) | 357 | |||||||
Income tax provision | 32 | 10 | 42 | ||||||||
Net income | $ | 326 | (11 | ) | 315 | ||||||
Net income attributable to VMware | (66 | ) | (66 | ) | |||||||
Net income attributable to EMC | $ | (77 | ) | $ | 249 | ||||||
Supplemental Information
For the Three Months Ended December 31, 2013
(in millions)
(unaudited)
VMware Standalone GAAP | GAAP Adjustments and Eliminations | VMware within EMC GAAP | |||||||||
Revenue | $ | 1,483 | $ | (25 | ) | $ | 1,458 | ||||
Cost of revenue | 192 | — | 192 | ||||||||
Gross margin | 1,291 | (25 | ) | 1,266 | |||||||
Research and development | 284 | (1 | ) | 283 | |||||||
Selling, general and administrative | 629 | (4 | ) | 625 | |||||||
Restructuring and acquisition-related charges | 4 | 2 | 6 | ||||||||
Operating income | 374 | (22 | ) | 352 | |||||||
Non-operating income (expense) | 7 | — | 7 | ||||||||
Income before taxes | 381 | (22 | ) | 359 | |||||||
Income tax provision | 46 | (3 | ) | 43 | |||||||
Net income | $ | 335 | (19 | ) | 316 | ||||||
Net income attributable to VMware | (68 | ) | (68 | ) | |||||||
Net income attributable to EMC | $ | (87 | ) | $ | 248 | ||||||
Note: Schedules may not add due to rounding.
Supplemental Information
For the Twelve Months Ended December 31, 2014
(in millions)
(unaudited)
VMware Standalone GAAP | GAAP Adjustments and Eliminations | VMware within EMC GAAP | |||||||||
Revenue | $ | 6,035 | $ | (39 | ) | $ | 5,996 | ||||
Cost of revenue | 917 | (9 | ) | 908 | |||||||
Gross margin | 5,118 | (30 | ) | 5,088 | |||||||
Research and development | 1,239 | (8 | ) | 1,231 | |||||||
Selling, general and administrative | 2,836 | (24 | ) | 2,812 | |||||||
Restructuring and acquisition-related charges | 16 | 7 | 23 | ||||||||
Operating income | 1,027 | (5 | ) | 1,022 | |||||||
Non-operating income (expense) | 21 | 12 | 33 | ||||||||
Income before taxes | 1,048 | 7 | 1,055 | ||||||||
Income tax provision | 162 | 12 | 174 | ||||||||
Net income | $ | 886 | (5 | ) | 881 | ||||||
Net income attributable to VMware | (180 | ) | (180 | ) | |||||||
Net income attributable to EMC | $ | (185 | ) | $ | 701 | ||||||
Supplemental Information
For the Twelve Months Ended December 31, 2013
(in millions)
(unaudited)
VMware Standalone GAAP | GAAP Adjustments and Eliminations | VMware within EMC GAAP | |||||||||
Revenue | $ | 5,207 | $ | (60 | ) | $ | 5,147 | ||||
Cost of revenue | 730 | (12 | ) | 718 | |||||||
Gross margin | 4,477 | (48 | ) | 4,429 | |||||||
Research and development | 1,082 | (30 | ) | 1,052 | |||||||
Selling, general and administrative | 2,234 | (25 | ) | 2,209 | |||||||
Restructuring and acquisition-related charges | 68 | 5 | 73 | ||||||||
Operating income | 1,093 | 2 | 1,095 | ||||||||
Non-operating income (expense) | 54 | (2 | ) | 52 | |||||||
Income before taxes | 1,147 | — | 1,147 | ||||||||
Income tax provision | 133 | (4 | ) | 129 | |||||||
Net income | $ | 1,014 | 4 | 1,018 | |||||||
Net income attributable to VMware | (204 | ) | (204 | ) | |||||||
Net income attributable to EMC | $ | (200 | ) | $ | 814 | ||||||
Note: Schedules may not add due to rounding.
Segment Information
For the Three Months Ended December 31, 2014
(in millions)
(unaudited)
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Product revenues | $ | 3,338 | $ | 56 | $ | 139 | $ | 3,533 | $ | 21 | $ | 3,554 | |||||||||||
Services revenues | 1,497 | 118 | 148 | 1,763 | 44 | 1,807 | |||||||||||||||||
Total consolidated revenues | 4,835 | 174 | 287 | 5,296 | 65 | 5,361 | |||||||||||||||||
Gross profit | $ | 2,776 | $ | 117 | $ | 201 | 3,094 | 34 | 3,128 | ||||||||||||||
Gross profit percentage | 57.4 | % | 67.2 | % | 70.1 | % | 58.4 | % | 52.1 | % | 58.3 | % | |||||||||||
Research and development | 384 | 30 | 414 | ||||||||||||||||||||
Selling, general and administrative | 1,193 | 50 | 1,243 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total costs and expenses | 1,577 | 80 | 1,657 | ||||||||||||||||||||
Operating income (expense) | $ | 1,517 | $ | (46 | ) | $ | 1,471 | ||||||||||||||||
Operating margin percentage | 28.7 | % | (70.5 | )% | 27.4 | % | |||||||||||||||||
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corporate Reconciling Items | Consolidated | ||||||||||||
Revenues | |||||||||||||||
Product revenues | $ | 3,554 | $ | 768 | $ | — | $ | 4,322 | |||||||
Services revenues | 1,807 | 919 | — | 2,726 | |||||||||||
Total consolidated revenues | 5,361 | 1,687 | — | 7,048 | |||||||||||
Gross profit | $ | 3,128 | $ | 1,480 | $ | (103 | ) | $ | 4,505 | ||||||
Gross profit percentage | 58.3 | % | 87.8 | % | — | 63.9 | % | ||||||||
Research and development | 414 | 249 | 89 | 752 | |||||||||||
Selling, general and administrative | 1,243 | 667 | 221 | 2,131 | |||||||||||
Restructuring and acquisition-related charges | — | — | 52 | 52 | |||||||||||
Total costs and expenses | 1,657 | 916 | 362 | 2,935 | |||||||||||
Operating income (expense) | 1,471 | 564 | (465 | ) | 1,570 | ||||||||||
Operating margin percentage | 27.4 | % | 33.5 | % | — | 22.3 | % | ||||||||
Non-operating income (expense), net | (78 | ) | 13 | 44 | (21 | ) | |||||||||
Income tax provision | 357 | 111 | (132 | ) | 336 | ||||||||||
Net income | 1,036 | 466 | (289 | ) | 1,213 | ||||||||||
Net income attributable to the non-controlling interest in VMware, Inc. | — | (97 | ) | 31 | (66 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 1,036 | $ | 369 | $ | (258 | ) | $ | 1,147 | ||||||
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.
Segment Information
For the Three Months Ended December 31, 2013
(in millions)
(unaudited)
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Product revenues | $ | 3,260 | $ | 65 | $ | 136 | $ | 3,461 | $ | 18 | $ | 3,479 | |||||||||||
Services revenues | 1,445 | 124 | 139 | 1,708 | 37 | 1,745 | |||||||||||||||||
Total consolidated revenues | 4,705 | 189 | 275 | 5,169 | 55 | 5,224 | |||||||||||||||||
Gross profit | $ | 2,680 | $ | 129 | $ | 185 | 2,994 | 25 | 3,019 | ||||||||||||||
Gross profit percentage | 57.0 | % | 68.2 | % | 67.2 | % | 57.9 | % | 45.7 | % | 57.8 | % | |||||||||||
Research and development | 362 | 27 | 389 | ||||||||||||||||||||
Selling, general and administrative | 1,262 | 46 | 1,308 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total costs and expenses | 1,624 | 73 | 1,697 | ||||||||||||||||||||
Operating income (expense) | $ | 1,370 | $ | (48 | ) | $ | 1,322 | ||||||||||||||||
Operating margin percentage | 26.5 | % | (86.3 | )% | 25.3 | % | |||||||||||||||||
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corporate Reconciling Items | Consolidated | ||||||||||||
Revenues | |||||||||||||||
Product revenues | $ | 3,479 | $ | 676 | $ | — | $ | 4,155 | |||||||
Services revenues | 1,745 | 782 | — | 2,527 | |||||||||||
Total consolidated revenues | 5,224 | 1,458 | — | 6,682 | |||||||||||
Gross profit | $ | 3,019 | $ | 1,297 | $ | (92 | ) | $ | 4,224 | ||||||
Gross profit percentage | 57.8 | % | 89.1 | % | — | 63.2 | % | ||||||||
Research and development | 389 | 220 | 96 | 705 | |||||||||||
Selling, general and administrative | 1,308 | 571 | 150 | 2,029 | |||||||||||
Restructuring and acquisition-related charges | — | — | 29 | 29 | |||||||||||
Total costs and expenses | 1,697 | 791 | 275 | 2,763 | |||||||||||
Operating income (expense) | 1,322 | 506 | (367 | ) | 1,461 | ||||||||||
Operating margin percentage | 25.3 | % | 34.7 | % | — | 21.9 | % | ||||||||
Non-operating income (expense), net | (80 | ) | 7 | — | (73 | ) | |||||||||
Income tax provision | 316 | 70 | (88 | ) | 298 | ||||||||||
Net income | 926 | 443 | (279 | ) | 1,090 | ||||||||||
Net income attributable to the non-controlling interest in VMware, Inc. | — | (93 | ) | 25 | (68 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 926 | $ | 350 | $ | (254 | ) | $ | 1,022 | ||||||
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 Appliance 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.
Segment Information
For the Twelve Months Ended December 31, 2014
(in millions)
(unaudited)
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Product revenues | $ | 10,785 | $ | 164 | $ | 462 | $ | 11,411 | $ | 65 | $ | 11,476 | |||||||||||
Services revenues | 5,757 | 476 | 573 | 6,806 | 162 | 6,968 | |||||||||||||||||
Total consolidated revenues | 16,542 | 640 | 1,035 | 18,217 | 227 | 18,444 | |||||||||||||||||
Gross profit | $ | 9,180 | $ | 417 | $ | 698 | 10,295 | 106 | 10,401 | ||||||||||||||
Gross profit percentage | 55.5 | % | 65.2 | % | 67.4 | % | 56.5 | % | 46.5 | % | 56.4 | % | |||||||||||
Research and development | 1,489 | 128 | 1,617 | ||||||||||||||||||||
Selling, general and administrative | 4,583 | 183 | 4,766 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total costs and expenses | 6,072 | 311 | 6,383 | ||||||||||||||||||||
Operating income (expense) | $ | 4,223 | $ | (205 | ) | $ | 4,018 | ||||||||||||||||
Operating margin percentage | 23.2 | % | (90.6 | )% | 21.8 | % | |||||||||||||||||
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corporate Reconciling Items | Consolidated | ||||||||||||
Revenues | |||||||||||||||
Product revenues | $ | 11,476 | $ | 2,575 | $ | — | $ | 14,051 | |||||||
Services revenues | 6,968 | 3,421 | — | 10,389 | |||||||||||
Total consolidated revenues | 18,444 | 5,996 | — | 24,440 | |||||||||||
Gross profit | $ | 10,401 | $ | 5,241 | $ | (393 | ) | $ | 15,249 | ||||||
Gross profit percentage | 56.4 | % | 87.4 | % | — | 62.4 | % | ||||||||
Research and development | 1,617 | 987 | 387 | 2,991 | |||||||||||
Selling, general and administrative | 4,766 | 2,390 | 826 | 7,982 | |||||||||||
Restructuring and acquisition-related charges | — | — | 239 | 239 | |||||||||||
Total costs and expenses | 6,383 | 3,377 | 1,452 | 11,212 | |||||||||||
Operating income (expense) | 4,018 | 1,864 | (1,845 | ) | 4,037 | ||||||||||
Operating margin percentage | 21.8 | % | 31.1 | % | — | 16.5 | % | ||||||||
Non-operating income (expense), net | (362 | ) | 34 | 53 | (275 | ) | |||||||||
Income tax provision | 942 | 385 | (459 | ) | 868 | ||||||||||
Net income | 2,714 | 1,513 | (1,333 | ) | 2,894 | ||||||||||
Net income attributable to the non-controlling interest in VMware, Inc. | — | (308 | ) | 128 | (180 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 2,714 | $ | 1,205 | $ | (1,205 | ) | $ | 2,714 | ||||||
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.
Segment Information
For the Twelve Months Ended December 31, 2013
(in millions)
(unaudited)
EMC Information Infrastructure | |||||||||||||||||||||||
Information Storage | Information Intelligence Group | RSA Information Security | EMC Information Infrastructure | Pivotal | EMC Information Infrastructure plus Pivotal | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Product revenues | $ | 10,738 | $ | 180 | $ | 453 | $ | 11,371 | $ | 66 | $ | 11,437 | |||||||||||
Services revenues | 5,524 | 467 | 534 | 6,525 | 113 | 6,638 | |||||||||||||||||
Total consolidated revenues | 16,262 | 647 | 987 | 17,896 | 179 | 18,075 | |||||||||||||||||
Gross profit | $ | 9,109 | $ | 419 | $ | 655 | 10,183 | 91 | 10,274 | ||||||||||||||
Gross profit percentage | 56.0 | % | 64.8 | % | 66.4 | % | 56.9 | % | 50.7 | % | 56.8 | % | |||||||||||
Research and development | 1,461 | 109 | 1,570 | ||||||||||||||||||||
Selling, general and administrative | 4,571 | 161 | 4,732 | ||||||||||||||||||||
Restructuring and acquisition-related charges | — | — | — | ||||||||||||||||||||
Total costs and expenses | 6,032 | 270 | 6,302 | ||||||||||||||||||||
Operating income (expense) | $ | 4,151 | $ | (179 | ) | $ | 3,972 | ||||||||||||||||
Operating margin percentage | 23.2 | % | (100.3 | )% | 22.0 | % | |||||||||||||||||
EMC Information Infrastructure plus Pivotal | VMware Virtual Infrastructure within EMC | Corporate Reconciling Items | Consolidated | ||||||||||||
Revenues | |||||||||||||||
Product revenues | $ | 11,437 | $ | 2,253 | $ | — | $ | 13,690 | |||||||
Services revenues | 6,638 | 2,894 | — | 9,532 | |||||||||||
Total consolidated revenues | 18,075 | 5,147 | — | 23,222 | |||||||||||
Gross profit | $ | 10,274 | $ | 4,589 | $ | (390 | ) | $ | 14,473 | ||||||
Gross profit percentage | 56.8 | % | 89.2 | % | — | 62.3 | % | ||||||||
Research and development | 1,570 | 826 | 365 | 2,761 | |||||||||||
Selling, general and administrative | 4,732 | 2,003 | 603 | 7,338 | |||||||||||
Restructuring and acquisition-related charges | — | — | 224 | 224 | |||||||||||
Total costs and expenses | 6,302 | 2,829 | 1,192 | 10,323 | |||||||||||
Operating income (expense) | 3,972 | 1,760 | (1,582 | ) | 4,150 | ||||||||||
Operating margin percentage | 22.0 | % | 34.2 | % | — | 17.9 | % | ||||||||
Non-operating income (expense), net | (337 | ) | 22 | 30 | (285 | ) | |||||||||
Income tax provision | 911 | 317 | (456 | ) | 772 | ||||||||||
Net income | 2,724 | 1,465 | (1,096 | ) | 3,093 | ||||||||||
Net income attributable to the non-controlling interest in VMware, Inc. | — | (295 | ) | 91 | (204 | ) | |||||||||
Net income attributable to EMC Corporation | $ | 2,724 | $ | 1,170 | $ | (1,005 | ) | $ | 2,889 | ||||||
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 Appliance 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.
Supplemental Information
(in millions)
(unaudited)
Q1 2013 | Q2 2013 | Q3 2013 | Q4 2013 | FY 2013 | Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | FY 2014 | ||||||||||||||||||||||||||||||
Information Storage: | |||||||||||||||||||||||||||||||||||||||
Product Revenues | $ | 2,472 | $ | 2,577 | $ | 2,430 | $ | 3,260 | $ | 10,738 | $ | 2,302 | $ | 2,551 | $ | 2,595 | $ | 3,338 | $ | 10,785 | |||||||||||||||||||
Services Revenues | 1,326 | 1,377 | 1,376 | 1,445 | 5,524 | 1,378 | 1,425 | 1,456 | 1,497 | 5,757 | |||||||||||||||||||||||||||||
Total Information Storage Revenues | $ | 3,798 | $ | 3,954 | $ | 3,806 | $ | 4,705 | $ | 16,262 | $ | 3,680 | $ | 3,976 | $ | 4,051 | $ | 4,835 | $ | 16,542 | |||||||||||||||||||
Information Intelligence Group: | |||||||||||||||||||||||||||||||||||||||
Product Revenues | $ | 43 | $ | 39 | $ | 32 | $ | 65 | $ | 180 | $ | 35 | $ | 37 | $ | 36 | $ | 56 | $ | 164 | |||||||||||||||||||
Services Revenues | 112 | 113 | 117 | 124 | 467 | 119 | 121 | 118 | 118 | 476 | |||||||||||||||||||||||||||||
Total Information Intelligence Group Revenues | $ | 155 | $ | 152 | $ | 149 | $ | 189 | $ | 647 | $ | 154 | $ | 158 | $ | 154 | $ | 174 | $ | 640 | |||||||||||||||||||
RSA Information Security: | |||||||||||||||||||||||||||||||||||||||
Product Revenues | $ | 100 | $ | 98 | $ | 120 | $ | 136 | $ | 453 | $ | 104 | $ | 104 | $ | 114 | $ | 139 | $ | 462 | |||||||||||||||||||
Services Revenues | 133 | 130 | 132 | 139 | 534 | 140 | 139 | 147 | 148 | 573 | |||||||||||||||||||||||||||||
Total RSA Information Security Revenues | $ | 233 | $ | 228 | $ | 252 | $ | 275 | $ | 987 | $ | 244 | $ | 243 | $ | 261 | $ | 287 | $ | 1,035 | |||||||||||||||||||
EMC Information Infrastructure: | |||||||||||||||||||||||||||||||||||||||
Product Revenues | $ | 2,615 | $ | 2,714 | $ | 2,582 | $ | 3,461 | $ | 11,371 | $ | 2,441 | $ | 2,692 | $ | 2,745 | $ | 3,533 | $ | 11,411 | |||||||||||||||||||
Services Revenues | 1,571 | 1,620 | 1,625 | 1,708 | 6,525 | 1,637 | 1,685 | 1,721 | 1,763 | 6,806 | |||||||||||||||||||||||||||||
Total EMC Information Infrastructure Revenues | $ | 4,186 | $ | 4,334 | $ | 4,207 | $ | 5,169 | $ | 17,896 | $ | 4,078 | $ | 4,377 | $ | 4,466 | $ | 5,296 | $ | 18,217 | |||||||||||||||||||
Pivotal: | |||||||||||||||||||||||||||||||||||||||
Product Revenues | $ | 13 | $ | 15 | $ | 20 | $ | 18 | $ | 66 | $ | 11 | $ | 15 | $ | 17 | $ | 21 | $ | 65 | |||||||||||||||||||
Services Revenues | 22 | 27 | 27 | 37 | 113 | 38 | 39 | 41 | 44 | 162 | |||||||||||||||||||||||||||||
Total Pivotal Revenues | $ | 35 | $ | 42 | $ | 47 | $ | 55 | $ | 179 | $ | 49 | $ | 54 | $ | 58 | $ | 65 | $ | 227 | |||||||||||||||||||
VMware: | |||||||||||||||||||||||||||||||||||||||
Product Revenues | $ | 484 | $ | 529 | $ | 563 | $ | 676 | $ | 2,253 | $ | 556 | $ | 612 | $ | 638 | $ | 768 | $ | 2,575 | |||||||||||||||||||
Services Revenues | 682 | 709 | 722 | 782 | 2,894 | 796 | 837 | 870 | 919 | 3,421 | |||||||||||||||||||||||||||||
Total VMware Revenues | $ | 1,166 | $ | 1,238 | $ | 1,285 | $ | 1,458 | $ | 5,147 | $ | 1,352 | $ | 1,449 | $ | 1,508 | $ | 1,687 | $ | 5,996 | |||||||||||||||||||
Consolidated Revenues: | |||||||||||||||||||||||||||||||||||||||
Product Revenues | $ | 3,112 | $ | 3,258 | $ | 3,165 | $ | 4,155 | $ | 13,690 | $ | 3,008 | $ | 3,319 | $ | 3,400 | $ | 4,322 | $ | 14,051 | |||||||||||||||||||
Services Revenues | 2,275 | 2,356 | 2,374 | 2,527 | 9,532 | 2,471 | 2,561 | 2,632 | 2,726 | 10,389 | |||||||||||||||||||||||||||||
Total Consolidated Revenues | $ | 5,387 | $ | 5,614 | $ | 5,539 | $ | 6,682 | $ | 23,222 | $ | 5,479 | $ | 5,880 | $ | 6,032 | $ | 7,048 | $ | 24,440 | |||||||||||||||||||
Percentage impact to EMC revenues growth rate due to changes in exchange rates from the prior year | (0.5)% | (0.7)% | (0.8)% | (0.5)% | (0.6)% | (0.4)% | 0.5% | (0.1)% | (1.7)% | (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.