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Table of Contents
The reconciliation of the above financial measures from GAAP to non-GAAP is as follows:
For the Three Months Ended December 31, 2010
GAAP
Provision
for
litigation
Gain on
strategic
investments
Restructuring
and
acquisition-
related
charges
Special
tax charge
Stock-based
compensation
Intangible
asset
amortization Non-GAAP
Gross margin $ 2,966.3 $ — $ — $ — $ — $ 28.9 $ 33.2 $ 3,028.4
Operating income 943.7 — — 43.5 — 185.4 70.4 1,243.0
Income tax provision 257.0 — — 6.8 (83.3) 45.2 24.1 249.8
Net income attributable to EMC 628.6 — — 36.7 83.3 126.9 44.6 920.1
Diluted earnings per share attributable to EMC $ 0.29 $ — $ — $ 0.02 $ 0.04 $ 0.06 $ 0.02 $ 0.42
For the Three Months Ended December 31, 2009
GAAP
Provision
for
litigation
Gain on
strategic
investments
Restructuring
and
acquisition-
related
charges
Special
tax charge
Stock-based
compensation
Intangible
asset
amortization Non-GAAP
Gross margin $ 2,377.6 $ — $ — $ — $ — $ 30.1 $ 36.5 $ 2,444.3
Operating income 587.6 57.5 — 23.9 — 181.6 65.9 916.5
Income tax provision 156.3 5.2 — 9.1 (60.7) 36.8 21.4 168.2
Net income attributable to EMC 390.6 52.3 — 14.6 60.7 133.2 44.0 695.5
Diluted earnings per share attributable to EMC $ 0.19 $ 0.03 $ — $ 0.01 $ 0.03 $ 0.06 $ 0.02 $ 0.33
For the Year Ended December 31, 2010
GAAP
Provision
for
litigation
Gain on
strategic
investments
Restructuring
and
acquisition-
related
charges
Special
tax charge
Stock-based
compensation
Intangible
asset
amortization Non-GAAP
Gross margin $ 10,031.0 $ — $ — $ — $ — $ 108.7 $ 131.8 $ 10,271.4
Operating income 2,683.3 — — 84.4 — 685.1 285.3 3,738.0
Income tax provision 638.3 — — 10.7 (83.3) 165.7 92.7 824.0
Net income attributable to EMC 1,900.0 — — 72.0 83.3 472.7 187.3 2,715.3
Diluted earnings per share attributable to EMC $ 0.88 $ — $ — $ 0.03 $ 0.04 $ 0.22 $ 0.09 $ 1.26
For the Year Ended December 31, 2009
GAAP
Provision
for
litigation
Gain on
strategic
investments
Restructuring
and
acquisition-
related
charges
Special
tax charge
Stock-based
compensation
Intangible
asset
amortization Non-GAAP
Gross margin $ 7,744.9 $ — $ — $ 12.5 $ — $ 99.4 $ 131.8 $ 7,988.5
Operating income 1,414.3 57.5 — 120.0 — 605.7 247.8 2,445.2
Income tax provision 252.8 5.2 — 35.9 (60.7) 135.1 83.8 452.1
Net income attributable to EMC 1,088.1 52.3 (24.8) 83.8 60.7 435.8 162.4 1,858.4
Diluted earnings per share attributable to EMC $ 0.53 $ 0.03 $ (0.01) $ 0.04 $ 0.03 $ 0.21 $ 0.08 $ 0.90
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 statements of cash flows.
33