EMC Posts Record First-Quarter Revenue

HOPKINTON, Mass., April 23 /PRNewswire-FirstCall/ -- EMC Corporation , the world leader in information infrastructure solutions, today announced all-time record first-quarter revenue and its 19th consecutive quarter of double-digit year-over-year revenue growth. EMC's total consolidated revenue for the first quarter of 2008 was $3.47 billion, an increase of 17% over the $2.98 billion reported for the first quarter of 2007.

First-quarter GAAP net income was $268.8 million, or $0.13 per diluted share, which included a $79.2 million non-cash charge for in-process research and development (IPR&D) resulting from acquisitions completed during the quarter. Excluding this charge, net income was $348.0 million or $0.16 per diluted share. Non-GAAP first-quarter net income, which excludes the IPR&D charge and other items(1), was $477.3 million or $0.23 per diluted share, 28% higher than the non-GAAP earnings per diluted share of $0.18 for the year-ago period.

During the quarter, EMC generated operating cash flow of $918.3 million, an increase of 14% compared with the same period a year ago, and free cash flow of $717.5 million, an increase of 22% year-over-year.

Joe Tucci, EMC Chairman, President and Chief Executive Officer, said, "EMC is off to a solid start to the year, and we remain on track to achieve the 2008 financial targets we set for the business at the beginning of the year. We entered the year with the strongest and most diversified product, solutions and services portfolio in our history. From the consumer to the small- and medium-sized business and up through the enterprise, we are delivering to the market high-quality, innovative IT solutions faster than ever before. These offerings remain squarely aligned with top CIO spending priorities and are optimized to help businesses manage their information and drive IT efficiency throughout their organizations."

"Looking ahead, EMC's growth opportunities are many as we continue to aggressively strengthen our core business, grow into new and adjacent markets and expand our presence around the globe," Tucci added. "The power of our technology portfolio positions us well to extend our leadership and continue gaining share."

Compared with the first quarter of 2007, EMC systems revenue increased 10% and represented 41% of total first-quarter revenue. Software license and maintenance revenue increased 18% and accounted for 41% of total revenue. Other services revenue grew 30% and represented 18% of total revenue.

From a geographic perspective, revenue from North America increased 14% compared with the same period a year ago and represented 57% of total first- quarter revenue. Revenue from operations outside of North America grew 21% year-over-year, driven by double-digit revenue growth in each of EMC's Europe, Middle East and Africa (EMEA), Asia-Pacific and Japan (APJ) and Latin America regions.

David Goulden, EMC Executive Vice President and Chief Financial Officer, said, "EMC demonstrated strong revenue growth and operating performance. Our focus on investing in and delivering the right solutions to the right markets continues as the driving force behind our successful and diversified business model. This focus will serve EMC, our customers and shareholders well as we not only sustain but extend our market and technology leadership."

In the first quarter, EMC continued to return value to shareholders by leveraging its strong cash position, spending approximately $557.2 million to repurchase approximately 36 million shares of EMC. This completed the company's $2 billion share repurchase plan it embarked upon in January 2007. In addition, EMC recently increased its share repurchase authorization by 250 million shares.

First-Quarter Highlights

Revenue from EMC's Information Storage business, which includes revenue from storage systems, storage software and related customer and professional services, reached $2.71 billion, an increase of 12% compared with the year-ago period. Growth in the Information Storage business was driven by strong demand for EMC's storage products and professional services portfolio across all major geographies. EMC Symmetrix revenue increased 8%, EMC CLARiiON revenue increased 19% and EMC Celerra network-attached storage revenue increased more than 50%, each compared with the year-ago quarter. During the quarter, EMC continued to expand its storage portfolio with new products and capabilities that provide customers with ease-of-use, proven reliability and information storage innovation. For example, EMC became the first enterprise storage vendor to integrate flash-based solid state drives (SSDs) into its core product portfolio, enabling Symmetrix DMX-4 customers to achieve unprecedented performance and energy efficiency.

EMC's Content Management and Archiving business increased first-quarter revenue 8% year-over-year to $185.2 million. Organizations around the world continued to choose EMC's enterprise content management and archiving solutions to effectively manage their growing volumes of unstructured data, while improving business efficiencies, increasing productivity, and meeting compliance and risk mitigation requirements. Also during the first quarter, EMC's Content Management and Archiving business captured several honors, including an ACE award from ECM Connection at the AIIM International Conference.

For the first quarter of 2008, revenue from RSA, The Security Division of EMC, grew 13% year-over-year, reaching $134.9 million. This growth was driven primarily by global demand for the division's risk-based authentication solutions, anti-fraud services, and security information and event management solutions. Companies across industries and around the world continued to choose the powerful portfolio of RSA security products and services to address their critical requirements around data security, security information management and data loss prevention, and to drive business acceleration and innovation across their organizations.

VMware , which is majority-owned by EMC, had first-quarter revenues of $438.2 million, an increase of approximately 71% compared to the year-ago quarter. VMware is the global leader in virtualization solutions from the desktop to the datacenter. Customers of all sizes rely on VMware to reduce capital and operating expenses, ensure business continuity, strengthen security and be more energy efficient. With 2007 revenues of $1.32 billion, more than 100,000 customers, and nearly 14,000 partners, VMware is one of the fastest growing public software companies. Visit http://ir.vmware.com/ for more information about the virtualization software leader's first-quarter financial results.

About EMC

EMC Corporation is the world's leading developer and provider of information infrastructure technology and solutions that enable organizations of all sizes to transform the way they compete and create value from their information. Information about EMC's products and services can be found at http://www.emc.com/.

(1) Other items excluded are stock-based compensation, intangible amortization and a tax benefit recognized in the first quarter of 2007. See attached schedules for reconciliation of GAAP to non-GAAP.

EMC, Documentum, CLARiiON, Celerra and Symmetrix are registered trademarks of EMC Corporation. Symmetrix DMX is a trademark of EMC Corporation. VMware is a registered trademark of VMware, Inc. RSA is a registered trademark of RSA Security Inc. All other trademarks used are the property of their respective owners.

Forward-Looking Statements

This release contains "forward-looking statements" as defined under the Federal Securities Laws. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in information technology spending; (iii) our ability to protect our proprietary technology; (iv) risks associated with managing the growth of our business, including risks associated with acquisitions and investments and the challenges and costs of integration, restructuring and achieving anticipated synergies; (v) fluctuations in VMware, Inc.'s operating results and risks associated with trading of VMware stock; (vi) competitive factors, including but not limited to pricing pressures and new product introductions; (vii) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (viii) component and product quality and availability; (ix) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (x) insufficient, excess or obsolete inventory; (xi) war or acts of terrorism; (xii) the ability to attract and retain highly qualified employees; (xiii) fluctuating currency exchange rates; and (xiv) other one- time events and other important factors disclosed previously and from time to time in EMC's filings with the U.S. Securities and Exchange Commission. EMC disclaims any obligation to update any such forward-looking statements after the date of this release.

Use of Non-GAAP Financial Measures

This release contains non-GAAP financial measures. These non-GAAP financial measures, which are used as measures of EMC's performance or liquidity, should be considered in addition to, not as a substitute for, measures of EMC's financial performance or liquidity prepared in accordance with GAAP. EMC's non-GAAP financial measures may be defined differently than similar terms used by other companies, and accordingly, care should be exercised in understanding how EMC defines its non-GAAP financial measures.

Where specified in the accompanying schedules for various periods entitled "Reconciliation of GAAP to Non-GAAP," certain items noted on each such specific schedule (including, where noted, amounts relating to tax benefits, in-process research and development charges, stock-based compensation expense and intangible amortization) are excluded from the non-GAAP financial measures.

EMC's management uses the non-GAAP financial measures in the accompanying schedules to gain an understanding of EMC's comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects and excludes the above-listed items from its internal financial statements for purposes of its internal budgets and each reporting segment's financial goals. These non-GAAP financial measures are used by EMC's management in their financial and operating decision-making because management believes they reflect EMC's ongoing business in a manner that allows meaningful period-to-period comparisons. EMC's management believes that these non-GAAP financial measures provide useful information to investors and others (a) in understanding and evaluating EMC's current operating performance and future prospects in the same manner as management does, if they so choose, and (b) in comparing in a consistent manner the Company's current financial results with the Company's past financial results.

This release also includes disclosures regarding free cash flow which is a non-GAAP financial measure. Free cash flow is defined as net cash provided by operating activities less additions to property, plant and equipment and capitalized software development costs. EMC uses free cash flow, among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than capital expenditures and capitalized software development costs. Management believes that information regarding free cash flow provides investors with an important perspective on the cash available to make strategic acquisitions and investments, repurchase shares, service debt and fund ongoing operations. As free cash flow is not a measure of liquidity calculated in accordance with GAAP, free cash flow should be considered in addition to, but not as a substitute for, the analysis provided in the statement of cash flows.

All of the foregoing non-GAAP financial measures have limitations. Specifically, the non-GAAP financial measures that exclude the items noted above do not include all items of income and expense that affect EMC's operations. Further, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and do not reflect any benefit that such items may confer on EMC. Management compensates for these limitations by also considering EMC's financial results as determined in accordance with GAAP.

EMC CORPORATION Consolidated Income Statements (in thousands, except per share amounts) Unaudited Three Months Ended ------------------------------ March 31, March 31, 2008 2007 ------------------------------ Revenues: Product sales $2,340,430 $2,112,426 Services 1,129,629 862,579 ------------------------------ 3,470,059 2,975,005 Cost and expenses: Cost of product sales 1,074,583 1,038,478 Cost of services 486,081 366,587 Research and development 433,514 355,392 Selling, general and administrative 1,082,215 875,690 In-process research and development 79,204 - Restructuring credits (357) (2,670) ------------------------------ Operating income 314,819 341,528 Investment income 77,140 52,139 Interest expense (18,042) (18,293) Other (expense) income, net (4,763) 4,840 ------------------------------ Income before taxes and minority interest 369,154 380,214 Income tax provision 94,155 67,607 ------------------------------ Income before minority interest 274,999 312,607 Minority interest, net of taxes (6,161) - ------------------------------ Net income $268,838 $312,607 ============================== Net income per weighted average share, basic: $0.13 $0.15 ============================== Net income per weighted average share, diluted: $0.13 $0.15 ============================== Weighted average shares, basic 2,075,152 2,080,039 Weighted average shares, diluted 2,110,805 2,121,826 Reconciliation of GAAP to Non-GAAP For the Three Months Ended March 31, 2008 (in thousands, except per share amounts) Unaudited Research Selling, Cost of and General and Revenue Revenue Development Administrative ----------- ---------- ----------- -------------- EMC Consolidated GAAP $3,470,059 $1,560,664 $433,514 $1,082,215 IPR&D - - - - ----------- ---------- ----------- -------------- EMC Consolidated Adjusted (1) 3,470,059 1,560,664 433,514 1,082,215 Stock-based compensation expense - (18,312) (38,825) (61,950) Intangible amortization - (38,198) (3,011) (24,791) ----------- ---------- ----------- -------------- EMC Consolidated Non-GAAP (2) $3,470,059 $1,504,154 $391,678 $995,474 =========== ========== =========== ============== EMC Information Infrastructure GAAP $3,031,889 $1,483,604 $315,428 $890,640 IPR&D - - - - ----------- ---------- ----------- -------------- EMC Information Infrastructure Adjusted (3) 3,031,889 1,483,604 315,428 890,640 Stock-based compensation expense - (12,136) (17,912) (44,412) Intangible amortization - (35,888) (3,011) (23,250) ----------- ---------- ----------- -------------- EMC Information Infrastructure Non-GAAP (4) $3,031,889 $1,435,580 $294,505 $822,978 =========== ========== =========== ============== VMware standalone GAAP $438,175 $77,170 $119,255 $193,359 GAAP adjustments and eliminations (5) (110) (1,169) (1,784) ----------- ---------- ----------- -------------- VMware within EMC 438,170 77,060 118,086 191,575 Stock-based compensation expense - (6,176) (20,913) (17,538) Intangible amortization - (2,310) - (1,541) ----------- ---------- ----------- -------------- VMware within EMC Non-GAAP (5) $438,170 $68,574 $97,173 $172,496 =========== ========== =========== ============== Income Before Other Taxes and Restructuring Operating Income, Minority and IPR&D Income net Interest ----------- ---------- ---------- ------------ EMC Consolidated GAAP $78,847 $314,819 $54,335 $369,154 IPR&D (79,204) 79,204 - 79,204 ----------- ---------- ---------- ------------ EMC Consolidated Adjusted (1) (357) 394,023 54,335 448,358 Stock-based compensation expense - 119,087 - 119,087 Intangible amortization - 66,000 - 66,000 ----------- ---------- ---------- ------------ EMC Consolidated Non-GAAP (2) $(357) $579,110 $54,335 $633,445 =========== ========== ========== ============ EMC Information Infrastructure GAAP $78,847 $263,370 $51,696 $315,066 IPR&D (79,204) 79,204 - 79,204 ----------- ---------- ---------- ------------ EMC Information Infrastructure Adjusted (3) (357) 342,574 51,696 394,270 Stock-based compensation expense - 74,460 - 74,460 Intangible amortization - 62,149 - 62,149 ----------- ---------- ---------- ------------ EMC Information Infrastructure Non-GAAP (4) $(357) $479,183 $51,696 $530,879 =========== ========== ========== ============ VMware standalone GAAP $- $48,391 $2,639 $51,030 GAAP adjustments and eliminations - 3,058 - 3,058 ----------- ---------- ---------- ------------ VMware within EMC - 51,449 2,639 54,088 Stock-based compensation expense - 44,627 - 44,627 Intangible amortization - 3,851 - 3,851 ----------- ---------- ---------- ------------ VMware within EMC Non-GAAP (5) $- $99,927 $2,639 $102,566 =========== ========== ========== ============ Income Before Income Tax Minority Minority Provision Interest Interest Net Income ----------- ---------- ---------- ------------ EMC Consolidated GAAP $94,155 $274,999 $(6,161) $268,838 IPR&D - 79,204 - 79,204 ----------- ---------- ---------- ------------ EMC Consolidated Adjusted (1) 94,155 354,203 (6,161) 348,042 Stock-based compensation expense 27,831 91,256 (5,095) 86,161 Intangible amortization 22,533 43,467 (349) 43,118 ----------- ---------- ---------- ------------ EMC Consolidated Non-GAAP (2) $144,519 $488,926 $(11,605) $477,321 =========== ========== ========== ============ EMC Information Infrastructure GAAP $85,436 $229,630 $- $229,630 IPR&D - 79,204 - 79,204 ----------- ---------- ---------- ------------ EMC Information Infrastructure Adjusted (3) 85,436 308,834 - 308,834 Stock-based compensation expense 18,834 55,626 - 55,626 Intangible amortization 21,122 41,027 - 41,027 ----------- ---------- ---------- ------------ EMC Information Infrastructure Non-GAAP (4) $125,393 $405,486 $- $405,486 =========== ========== ========== ============ VMware standalone GAAP $7,975 $43,055 $- $43,055 GAAP adjustments and eliminations 744 2,314 (6,161) (3,847) ----------- ---------- ---------- ------------ VMware within EMC 8,719 45,369 (6,161) 39,208 Stock-based compensation expense 8,997 35,630 (5,095) 30,535 Intangible amortization 1,411 2,440 (349) 2,091 ----------- ---------- ---------- ------------ VMware within EMC Non-GAAP (5) $19,126 $83,440 $(11,605) $71,834 =========== ========== ========== ============ Net Income per Net Income per Weighted Average Weighted Average Share, Basic Share, Diluted ----------- ----------- EMC Consolidated GAAP $0.130 $0.127 IPR&D $0.038 $0.038 ----------- ----------- EMC Consolidated Adjusted (1) $0.168 $0.164 Stock-based compensation expense $0.042 $0.041 Intangible amortization $0.021 $0.020 ----------- ----------- EMC Consolidated Non-GAAP (2) $0.230 $0.225 =========== =========== EMC Information Infrastructure GAAP $0.111 $0.109 IPR&D $0.038 $0.038 ----------- ----------- EMC Information Infrastructure Adjusted (3) $0.149 $0.146 Stock-based compensation expense $0.027 $0.026 Intangible amortization $0.020 $0.019 ----------- ----------- EMC Information Infrastructure Non- GAAP (4) $0.195 $0.192 =========== =========== VMware standalone GAAP $0.021 $0.020 GAAP adjustments and eliminations $(0.002) $(0.003) ----------- ----------- VMware within EMC $0.019 $0.018 Stock-based compensation expense $0.015 $0.014 Intangible amortization $0.001 $0.001 ----------- ----------- VMware within EMC Non-GAAP (5) $0.035 $0.033 =========== =========== Wtd. Average Share O/S 2,075,152 2,110,805 =========== =========== (1) Represents EMC Consolidated GAAP excluding IPR&D. (2) Represents EMC Consolidated Adjusted excluding stock-based compensation expense and intangible amortization. (3) Represents EMC Information Infrastructure GAAP excluding IPR&D. (4) Represents EMC Information Infrastructure Adjusted less stock-based compensation expense and intangible amortization. (5) Represents VMware within EMC excluding stock-based compensation expense and intangible amortization. Note: schedule may not add due to rounding Reconciliation of GAAP to Non-GAAP For the Three Months Ended March 31, 2007 (in thousands, except per share amounts) Unaudited Research Selling, Cost of and General and Revenue Revenue Development Administrative ----------- ---------- ----------- -------------- EMC Consolidated GAAP $2,975,005 $1,405,065 $355,392 $875,690 Tax benefits - - - - ----------- ---------- ----------- -------------- EMC Consolidated Adjusted (1) 2,975,005 1,405,065 355,392 875,690 Stock-based compensation expense - (13,558) (23,442) (46,347) Intangible amortization - (29,007) (2,113) (17,123) ----------- ---------- ----------- -------------- EMC Consolidated Non-GAAP (2) $2,975,005 $1,362,500 $329,837 $812,220 =========== ========== =========== ============== EMC Information Infrastructure GAAP $2,718,987 $1,362,538 $289,490 $761,257 Tax benefits - - - - ----------- ---------- ----------- -------------- EMC Information Infrastructure Adjusted (3) 2,718,987 1,362,538 289,490 761,257 Stock-based compensation expense - (13,028) (17,050) (41,625) Intangible amortization - (23,792) (2,113) (16,053) ----------- ---------- ----------- -------------- EMC Information Infrastructure Non-GAAP (4) $2,718,987 $1,325,718 $270,327 $703,579 =========== ========== =========== ============== VMware standalone GAAP $258,695 $44,024 $54,958 $113,331 GAAP adjustments and eliminations (2,677) (1,497) 10,944 1,102 ----------- ---------- ----------- -------------- VMware within EMC 256,018 42,527 65,902 114,433 Stock-based compensation expense - (530) (6,392) (4,722) Intangible amortization - (5,215) - (1,070) ----------- ---------- ----------- -------------- VMware within EMC Non-GAAP (5) $256,018 $36,782 $59,510 $108,641 =========== ========== =========== ============== Other Income Restructuring Operating Income, Before and IPR&D Income net Taxes ----------- ---------- ---------- ------------ EMC Consolidated GAAP $(2,670) $341,528 $38,686 $380,214 Tax benefits - - - - ----------- ---------- ---------- ------------ EMC Consolidated Adjusted (1) (2,670) 341,528 38,686 380,214 Stock-based compensation expense - 83,347 - 83,347 Intangible amortization - 48,243 - 48,243 ----------- ---------- ---------- ------------ EMC Consolidated Non-GAAP (2) $(2,670) $473,118 $38,686 $511,804 =========== ========== ========== ============ EMC Information Infrastructure GAAP $(2,670) $308,372 $35,360 $343,732 Tax benefits - - - - ----------- ---------- ---------- ------------ EMC Information Infrastructure Adjusted (3) (2,670) 308,372 35,360 343,732 Stock-based compensation expense - 71,703 - 71,703 Intangible amortization - 41,958 - 41,958 ----------- ---------- ---------- ------------ EMC Information Infrastructure Non-GAAP (4) $(2,670) $422,033 $35,360 $457,393 =========== ========== ========== ============ VMware standalone GAAP $- $46,382 $3,036 $49,418 GAAP adjustments and eliminations - (13,226) 290 (12,936) ----------- ---------- ---------- ------------ VMware within EMC - 33,156 3,326 36,482 Stock-based compensation expense - 11,644 - 11,644 Intangible amortization - 6,285 - 6,285 ----------- ---------- ---------- ------------ VMware within EMC Non-GAAP (5) $- $51,085 $3,326 $54,411 =========== ========== ========== ============ Net Income Net Income per per Weighted Weighted Average Average Income Tax Share, Share, Provision Net Income Basic Diluted ----------- ---------- ---------- ------------ EMC Consolidated GAAP $67,607 $312,607 $0.150 $0.147 Tax benefits 19,912 (19,912) $(0.010) $(0.009) ----------- ---------- ---------- ------------ EMC Consolidated Adjusted (1) 87,519 292,695 $0.141 $0.138 Stock-based compensation expense 22,725 60,622 $0.029 $0.029 Intangible amortization 17,040 31,203 $0.015 $0.015 ----------- ---------- ---------- ------------ EMC Consolidated Non-GAAP (2) $127,284 $384,520 $0.185 $0.181 =========== ========== ========== ============ EMC Information Infrastructure GAAP $62,240 $281,492 $0.135 $0.133 Tax benefits 19,912 (19,912) $(0.010) $(0.009) ----------- ---------- ---------- ------------ EMC Information Infrastructure Adjusted (3) 82,152 261,580 $0.126 $0.123 Stock-based compensation expense 19,801 51,902 $0.025 $0.024 Intangible amortization 14,715 27,243 $0.013 $0.013 ----------- ---------- ---------- ------------ EMC Information Infrastructure Non-GAAP (4) $116,667 $340,726 $0.164 $0.161 =========== ========== ========== ============ VMware standalone GAAP $8,338 $41,080 $0.020 $0.019 GAAP adjustments and eliminations (2,971) (9,965) $(0.005) $(0.005) ----------- ---------- ---------- ------------ VMware within EMC 5,367 31,115 $0.015 $0.015 Stock-based compensation expense 2,924 8,720 $0.004 $0.004 Intangible amortization 2,325 3,960 $0.002 $0.002 ----------- ---------- ---------- ------------ VMware within EMC Non-GAAP (5) $10,617 $43,794 $0.021 $0.021 =========== ========== ========== ============ Wtd. Average Share O/S 2,080,039 2,121,826 ========== ============ (1) Represents EMC Consolidated GAAP excluding special tax benefits. (2) Represents EMC Consolidated Adjusted excluding stock-based compensation expense and intangible amortization. (3) Represents EMC Information Infrastructure GAAP excluding special tax benefits. (4) Represents EMC Information Infrastructure Adjusted excluding stock- based compensation expense and intangible amortization. (5) Represents VMware within EMC excluding stock-based compensation expense and intangible amortization. Note: schedule may not add due to rounding EMC CORPORATION Consolidated Balance Sheets (in thousands, except per share amounts) Unaudited March 31, December 31, 2008 2007 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $4,978,446 $4,482,211 Short-term investments 635,056 1,644,703 Accounts and notes receivable, less allowance for doubtful accounts of $33,732 and $34,389 1,897,712 2,307,512 Inventories 953,085 877,243 Deferred income taxes 515,122 475,544 Other current assets 330,673 265,889 ------------ ------------ Total current assets 9,310,094 10,053,102 Long-term investments 2,246,942 1,845,572 Property, plant and equipment, net 2,141,922 2,159,396 Intangible assets, net 939,204 940,077 Other assets, net 803,190 755,001 Goodwill, net 6,774,690 6,531,506 ------------ ------------ Total assets $22,216,042 $22,284,654 ============ ============ LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $881,481 $840,886 Accrued expenses 1,540,050 1,696,309 Income taxes payable 82,110 146,104 Deferred revenue 1,818,956 1,724,909 ------------ ------------ Total current liabilities 4,322,597 4,408,208 Income taxes payable 259,117 246,951 Deferred revenue 1,153,674 1,053,394 Deferred income taxes 286,843 288,175 Long-term convertible debt 3,450,000 3,450,000 Other liabilities 159,446 127,621 ------------ ------------ Total Liabilities 9,631,677 9,574,349 Minority interest 209,959 188,988 Commitments and contingencies Stockholders' equity: Series preferred stock, par value $.01; authorized 25,000 shares, none outstanding - - Common stock, par value $.01; authorized 6,000,000 shares; issued 2,067,237 and 2,102,187 shares 20,672 21,022 Additional paid-in capital 2,617,571 3,038,455 Retained earnings 9,739,127 9,470,289 Accumulated other comprehensive loss (2,964) (8,449) ------------ ------------ Total stockholders' equity 12,374,406 12,521,317 ------------ ------------ Total liabilities and stockholders' equity $22,216,042 $22,284,654 ============ ============ EMC CORPORATION Consolidated Statements of Cash Flows (in thousands) Unaudited Three Months Ended ------------------ March 31, 2008 March 31, 2007 -------------- -------------- Cash flows from operating activities: Cash received from customers $4,066,805 $3,298,580 Cash paid to suppliers and employees (3,027,739) (2,471,509) Dividends and interest received 77,958 57,824 Interest paid (2,865) (3,201) Income taxes paid (195,867) (73,011) ----------- ----------- Net cash provided by operating activities 918,292 808,683 ----------- ----------- Cash flows from investing activities: Additions to property, plant and equipment (146,512) (170,526) Capitalized software development costs (54,321) (51,920) Purchases of short and long-term available for sale securities (608,819) (1,891,806) Sales and maturities of short and long-term available for sale securities 1,196,985 2,192,202 Acquisitions, net of cash acquired (337,809) (3,261) Other (3,030) (860) ----------- ----------- Net cash provided by investing activities 46,494 73,829 ----------- ----------- Cash flows from financing activities: Issuance of common stock from the exercise of stock options 27,397 103,312 Issuance of VMware's common stock from the exercise of stock options 23,669 - Repurchase of EMC common stock (557,244) (488,662) Excess tax benefits from stock based compensation 28,511 12,812 Payment of short and long-term obligations (3,782) (620) Proceeds from short and long-term obligations 1,114 2,229 ----------- ----------- Net cash used in financing activities (480,335) (370,929) ----------- ----------- Effect of exchange rate changes on cash 11,784 7,685 ----------- ----------- Net increase in cash and cash equivalents 496,235 519,268 Cash and cash equivalents at beginning of period 4,482,211 1,828,106 ----------- ----------- Cash and cash equivalents at end of period $4,978,446 $2,347,374 =========== =========== Reconciliation of net income to net cash provided by operating activities: Net income $268,838 $312,607 Adjustments to reconcile net income to net cash provided by operating activities: Minority interest in subsidiary 6,161 - Depreciation and amortization 254,619 212,848 Non-cash restructuring and other special charges 80,970 - Stock-based compensation expense 119,087 83,347 Increase/(decrease) in provision for doubtful accounts 3,975 (787) Deferred income taxes, net (26,656) (457) Excess tax benefits from stock based compensation (28,511) (12,812) Other (4,887) 1,980 Changes in assets and liabilities, net of acquisitions: Accounts and notes receivable 416,788 142,873 Inventories (28,174) 18,302 Other assets (78,881) (11,068) Accounts payable 27,501 45,685 Accrued expenses (253,761) (150,962) Income taxes payable (46,545) (4,952) Deferred revenue 175,983 181,489 Other liabilities 31,785 (9,410) ----------- ----------- Net cash provided by operating activities $918,292 $808,683 =========== =========== EMC CORPORATION Reconciliation of Cash Flow from Operations to Free Cash Flow (in thousands) Unaudited Q1 2008 Q1 2007 --------- --------- EMC Consolidated: Cash flows from Operations $918,292 $808,683 Capital Expenditures (146,512) (170,526) Capitalized Software (54,321) (51,920) --------- --------- Free Cash Flow $717,459 $586,237 VMware within EMC: Cash flows from Operations $106,058 $136,418 Capital Expenditures (41,019) (47,817) Capitalized Software (4,164) (6,959) --------- --------- Free Cash Flow $60,875 $81,642 EMC Information Infrastructure: Cash flows from Operations $812,234 $672,265 Capital Expenditures (105,493) (122,709) Capitalized Software (50,157) (44,961) --------- --------- Free Cash Flow $656,584 $504,595

Cash flows from operations, capital expenditures and free cash flow for VMware within EMC and EMC Information Infrastructure have been adjusted to exclude the impact of purchases of equipment by VMware from EMC which have been recorded as capital expenditures by VMware on a stand-alone basis but are eliminated in consolidation. Additionally, cash flow from operations, capital expenditures and free cash flow for VMware within EMC and EMC Information Infrastructure have been adjusted for VMware's capital expenditures for its headquarters facilities which were reimbursed by EMC during Q1 2007. Also, cash flows from operations and free cash flow for VMware within EMC have been adjusted for shares repurchased for tax withholdings on the vesting of restricted stock which have been recorded by VMware on a stand-alone basis as a financing activity but as an operating activity in consolidation. Had these items not been adjusted, cash flows from operations, capital expenditures and free cash flow for VMware within EMC would have been $133,180, $49,022 and $79,994, for Q1 2008 and $104,902, $16,584 and $81,646 for Q1 2007.

EMC Corporation Supplemental Revenue Analysis (in thousands) Unaudited Revenue Components Q1 2007 Q2 2007 Q3 2007 Q4 2007 ---------------------------------------------- Consolidated Revenues Systems $1,305,766 $1,354,438 $1,411,367 $1,688,565 Software: Software License 806,660 867,917 921,517 1,055,746 Software Maintenance 382,080 400,233 426,198 472,264 ---------------------------------------------- Total Software License & Maintenance 1,188,740 1,268,150 1,347,715 1,528,010 Other Services 480,499 502,084 540,672 614,199 ---------------------------------------------- Total Consolidated Revenues $2,975,005 $3,124,672 $3,299,754 $3,830,774 ============================================== Percentage impact to EMC revenue growth rate due to changes in exchange rates from the prior year 2.1% 2.1% 1.8% 3.2% YTD 2007 Q1 2008 ---------- ---------- Consolidated Revenues Systems $5,760,136 $1,440,123 Software: Software License 3,651,840 900,307 Software Maintenance 1,680,775 506,218 ---------- ---------- Total Software License & Maintenance 5,332,615 1,406,525 Other Services 2,137,454 623,411 ---------- ---------- Total Consolidated Revenues $13,230,205 $3,470,059 ========== ========== Percentage impact to EMC revenue growth rate due to changes in exchange rates from the prior year 2.3% 2.3% EMC Corporation Supplemental Revenue Analysis (in thousands) Unaudited Supplemental Revenue Data Q1 2007 Q2 2007 Q3 2007 Q4 2007 ---------------------------------------------- Storage Systems Revenue $1,302,740 $1,347,357 $1,405,139 $1,682,395 Storage Software: Storage Software License 486,558 512,521 515,056 561,622 Storage Software Maintenance 234,796 242,940 252,642 271,848 ---------------------------------------------- Total Storage Software License & Maintenance 721,354 755,461 767,698 833,470 Storage Other Services 402,834 425,200 450,450 516,782 ---------------------------------------------- Total Storage Revenue $2,426,928 $2,528,018 $2,623,287 $3,032,647 ============================================== Content Management and Archiving Systems Revenue $68 $1,708 $1,485 $2,157 Content Management and Archiving Software: Content Management and Archiving Software License 68,472 69,046 79,247 115,305 Content Management and Archiving Software Maintenance 60,339 60,416 61,595 70,590 ---------------------------------------------- Total Content Management and Archiving Software License & Maintenance 128,811 129,462 140,842 185,895 Content Management and Archiving Other Services 43,319 42,432 46,985 50,074 ---------------------------------------------- Total Content Management and Archiving Revenue $172,198 $173,602 $189,312 $238,126 ============================================== Security Systems Revenue $2,958 $5,373 $4,743 $4,013 Security Software: Security Software License 81,934 81,300 82,979 94,604 Security Software Maintenance 21,627 23,392 25,126 27,752 ---------------------------------------------- Total Security Software License & Maintenance 103,561 104,692 108,105 122,356 Security Other Services 13,342 14,890 20,016 21,226 ---------------------------------------------- Total Security Revenue $119,861 $124,955 $132,864 $147,595 ============================================== EMC Information Infrastructure Systems Revenue $1,305,766 $1,354,438 $1,411,367 $1,688,565 EMC Information Infrastructure Software: EMC Information Infrastructure Software License 636,964 662,867 677,282 771,531 EMC Information Infrastructure Software Maintenance 316,762 326,748 339,363 370,190 ---------------------------------------------- Total EMC Information Infrastructure Software License & Maintenance 953,726 989,615 1,016,645 1,141,721 EMC Information Infrastructure Other Services 459,495 482,522 517,451 588,082 ---------------------------------------------- Total EMC Information Infrastructure Revenue $2,718,987 $2,826,575 $2,945,463 $3,418,368 ============================================== VMware Software: VMware Software License $169,696 $205,050 $244,235 $284,215 VMware Software Maintenance 65,318 73,485 86,835 102,074 ---------------------------------------------- Total VMware Software License & Maintenance 235,014 278,535 331,070 386,289 VMware Other Services 21,004 19,562 23,221 26,117 ---------------------------------------------- Total VMware Revenue $256,018 $298,097 $354,291 $412,406 ============================================== YTD 2007 Q1 2008 ---------- ---------- Storage Systems Revenue $5,737,631 $1,433,190 Storage Software: Storage Software License 2,075,757 470,449 Storage Software Maintenance 1,002,226 291,556 ---------- ---------- Total Storage Software License & Maintenance 3,077,983 762,005 Storage Other Services 1,795,266 516,634 ---------- ---------- Total Storage Revenue $10,610,880 $2,711,829 ========== ========== Content Management and Archiving Systems Revenue $5,418 $2,521 Content Management and Archiving Software: Content Management and Archiving Software License 332,070 58,607 Content Management and Archiving Software Maintenance 252,940 73,758 ---------- ---------- Total Content Management and Archiving Software License & Maintenance 585,010 132,365 Content Management and Archiving Other Services 182,810 50,317 ---------- ---------- Total Content Management and Archiving Revenue $773,238 $185,203 ========== ========== Security Systems Revenue $17,087 $4,412 Security Software: Security Software License 340,817 77,271 Security Software Maintenance 97,897 28,785 ---------- ---------- Total Security Software License & Maintenance 438,714 106,056 Security Other Services 69,474 24,389 ---------- ---------- Total Security Revenue $525,275 $134,857 ========== ========== EMC Information Infrastructure Systems Revenue $5,760,136 $1,440,123 EMC Information Infrastructure Software: EMC Information Infrastructure Software License 2,748,644 606,327 EMC Information Infrastructure Software Maintenance 1,353,063 394,099 ---------- ---------- Total EMC Information Infrastructure Software License & Maintenance 4,101,707 1,000,426 EMC Information Infrastructure Other Services 2,047,550 591,340 ---------- ---------- Total EMC Information Infrastructure Revenue $11,909,393 $3,031,889 ========== ========== VMware Software: VMware Software License $903,196 $293,980 VMware Software Maintenance 327,712 112,119 ---------- ---------- Total VMware Software License & Maintenance 1,230,908 406,099 VMware Other Services 89,904 32,071 ---------- ---------- Total VMware Revenue $1,320,812 $438,170 ========== ==========