EMC 2006 Annual Report Download - page 34

Table of Contents
respectively, in income taxes. The cash paid for income taxes in 2006 includes $125.9 associated with the repatriation of funds under the AJCA. The annual
increases were due to a combination of higher pre-tax income and a reduction in the amount of net operating losses available to reduce our taxable income.
Cash used for investing activities was $2,296.7, $611.7 and $2,064.7 in 2006, 2005 and 2004, respectively. Cash paid for business acquisitions, net of
cash acquired was $2,618.4, $683.7 and $590.4, in 2006, 2005 and 2004, respectively. Capital additions were $718.1, $601.1 and $371.4 in 2006, 2005 and
2004, respectively. The increases in capital spending in 2006 compared to 2005 and 2005 compared to 2004 was attributable to various IT initiatives to further
integrate our acquisitions, to enable us to more effectively service our growing customer base and to support the overall growth of the business. Capitalized
software development costs were $192.9, $167.1 and $166.3 in 2006, 2005 and 2004, respectively. Software development costs increased from 2005 to 2006
due to increased development efforts across all of our segments. Net sales (purchases) and maturities of investments were $1,253.6, $868.4 and $(858.1) in
2006, 2005 and 2004, respectively. This activity varies from year to year based upon our cash collections, cash requirements and maturity dates of our
investments.
Cash used for financing activities was $392.0, $743.6 and $323.8 in 2006, 2005 and 2004, respectively. Our Board of Directors has authorized the
repurchase of 500.0 million shares of our common stock. In 2006, we repurchased 227.3 million shares of our common stock. Of the 500.0 million shares
authorized for repurchase, we have cumulatively repurchased 359.8 million shares at a total cost of $4,389.0, leaving a remaining balance of 140.2 million
shares authorized for future repurchases. In 2006, the Board also authorized a one-time repurchase of up to 100.0 million shares in conjunction with our
issuance of the Notes. Of this amount, 75.0 million shares were repurchased using $945.8 of the net proceeds from the Notes. We spent $3,655.4, $1,003.4
and $545.7 on such repurchases in 2006, 2005 and 2004, respectively. We plan to spend at least $1,000.0 on common stock repurchases during 2007;
however, the number of shares purchased and timing of our purchases will be dependent upon a number of factors, including the price of our stock, market
conditions, our cash position and alternative demands for our cash resources. We generated $257.8, $263.3 and $230.0 in 2006, 2005 and 2004, respectively,
from the exercise of stock options. Proceeds from short- and long-term obligations were $5,654.0, $0.2 and $0.1 in 2006, 2005 and 2004, respectively. In
September 2006, we borrowed $2,200.0 under a six-month unsecured credit facility to finance the acquisition of RSA. In November 2006, we also closed the
sale of the 2011 Notes and the 2013 Notes for an aggregate amount of $3,450.0. Total payments of short- and long-term obligations were $2,331.6, $3.7 and
$8.2 in 2006, 2005 and 2004, respectively. The increase in total payments in 2006 compared to 2005 and 2004 was primarily attributable to $2,200.0 to repay
in full the outstanding indebtedness under our six-month unsecured credit facility which was used to finance the acquisition of RSA and $126.1 paid to
redeem the outstanding principal balance of the Documentum Notes.
In November 2006, we issued our 2011 Notes and 2013 Notes for total gross proceeds of $3,450.0. The Notes are senior unsecured obligations and rank
equally with all other existing and future senior unsecured debt. The Notes are structurally subordinated to all liabilities of our subsidiaries and are effectively
subordinated to our secured indebtedness. As of December 31, 2006, the aggregate amount of liabilities of our subsidiaries was approximately $2,200.0,
excluding intercompany liabilities. Holders may convert their Notes at their option on any day prior to the close of business on the scheduled trading day
immediately preceding (i) September 1, 2011, with respect to the 2011 Notes, and (ii) September 1, 2013, with respect to the 2013 Notes, in each case only
under the following circumstances: (1) during the five business-day period after any five consecutive trading-day period (the "measurement period") in which
the price per Note of the applicable series for each day of that measurement period was less than 98% of the product of the last reported sale price of our
common stock and the conversion rate on each such day; (2) during any calendar quarter, if the last reported sale price of our common stock for 20 or more
trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the
applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; or (3) upon the occurrence of certain events
specified in the Notes. Additionally, the Notes will become convertible during the last three months prior to the respective maturities of the 2011 Notes and
the 2013 Notes.
Upon conversion, we will pay cash up to the principal amount of the Notes converted. With respect to any conversion value in excess of the principal
amount of the Notes converted, we have the option to settle the excess with cash, shares of our common stock, or a combination of cash and shares of our
common stock based on a daily conversion value, determined in accordance with the indenture, calculated on a proportionate basis for each day of the
relevant 20-day observation period. The initial conversion rate for the Notes will be 62.1978 shares of our common stock per one thousand dollars of principal
amount of Notes, which represents a 27.5 percent conversion premium from the date the Notes were issued and is equivalent to a conversion price of
approximately $16.08 per share of our common stock. The conversion price is subject to adjustment in some events as set forth in the indenture. In addition, if
a "fundamental change" (as defined in the indenture) occurs prior to the maturity date, we will in some cases increase the conversion rate for a holder of Notes
that elects to convert its Notes in connection with such fundamental change.
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