EMC 2010 Annual Report Download - page 27

Table of Contents
Revenues increased in 2010 compared to 2009 in all of our markets due to greater demand for our products and services offerings. Revenues decreased
in 2009 in all of our markets, with the exception of Latin America, Mexico and Canada, due to the challenging global economic environment and resulting
negative impact in customers' IT purchases. Revenues increased in Latin America, Mexico and Canada primarily due to increased demand for our offerings.
Changes in exchange rates contributed 0.2% to the overall revenue increase in 2010 compared to 2009. The impact of the change in rates was most
significant in the Asia Pacific markets, primarily Australia and Japan, Canada and Brazil, partially offset by the Euro and the pound sterling. Changes in
exchange rates negatively impacted revenue growth by 1.4% in 2009. The impact of the change in rates in 2009 was most significant in the European market,
primarily Germany, France, Italy and the United Kingdom.
Costs and Expenses
The following table presents our costs and expenses, other income and net income attributable to EMC Corporation.
Percentage Change
2010 2009 2008 2010 vs 2009 2009 vs 2008
Cost of revenue:
Information Storage $ 5,836.4 $ 5,256.7 $ 5,670.1 11.0% (7.3)%
Information Intelligence Group 258.2 274.8 305.6 (6.0) (10.1)
RSA Information Security 221.6 186.5 170.6 18.8 9.3
VMware Virtual Infrastructure 425.3 316.3 268.7 34.5 17.7
Corporate reconciling items 242.7 246.8 238.7 (1.7) 3.4
Total cost of revenue 6,984.1 6,281.0 6,653.8 11.2 (5.6)
Gross margins:
Information Storage 6,862.7 5,402.7 5,962.2 27.0 (9.4)
Information Intelligence Group 477.7 464.8 480.0 2.8 (3.2)
RSA Information Security 507.8 419.5 410.7 21.0 2.1
VMware Virtual Infrastructure 2,425.5 1,704.7 1,608.2 42.3 6.0
Corporate reconciling items (242.7) (246.8) (238.7) (1.7) 3.4
Total gross margin 10,031.0 7,744.9 8,222.4 29.5 (5.8)
Operating expenses:
Research and development(1) 1,888.0 1,627.5 1,721.3 16.0 (5.4)
Selling, general and administrative(2) 5,375.3 4,595.6 4,601.6 17.0 (0.1)
In-process research and development — — 85.8 — (100.0)
Restructuring and acquisition-related charges 84.4 107.5 244.7 (21.5) (56.1)
Total operating expenses 7,347.7 6,330.6 6,653.4 16.1 (4.9)
Operating income 2,683.3 1,414.3 1,568.9 89.7 (9.9)
Investment income, interest expense and other expenses (75.3) (39.7) 31.3 89.7 (226.8)
Income before income taxes 2,608.0 1,374.6 1,600.2 89.7 (14.1)
Income tax provision 638.3 252.8 280.4 152.5 (9.8)
Net income 1,969.7 1,121.8 1,319.8 75.6 (15.0)
Less: Net income attributable to the non-controlling interest in VMware, Inc. (69.7) (33.7) (44.7) 106.8 (24.6)
Net income attributable to EMC Corporation $ 1,900.0 $ 1,088.1 $ 1,275.1 74.6% (14.7)%
(1) Amount includes corporate reconciling items of $287.4, $235.8 and $175.4 for the years ended December 31, 2010, 2009 and 2008, respectively.
(2) Amount includes corporate reconciling items of $477.5, $495.5 and $367.2 for the years ended December 31, 2010, 2009 and 2008, respectively.
Gross Margins
Our gross margin percentages were 59.0%, 55.2% and 55.3% in 2010, 2009 and 2008, respectively. The increase in the gross margin percentage in
2010 compared to 2009 was attributable to the Information Storage segment, which increased overall gross margins by 189 basis points, the VMware Virtual
Infrastructure segment, which increased overall gross margins by 161 basis points, the RSA Information Security segment, which increased overall gross
margins by 11 basis points and the Information Intelligence Group segment, which increased overall gross margins by 10 basis points. Also contributing to the
increased overall
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