EMC 2008 Annual Report Download - page 29

Table of Contents
Revenue increased in 2008 and 2007 in all of our markets due to greater demand for our products and services. Changes in exchange rates had a
favorable impact on revenue growth of 0.8% and 2.3% in 2008 and 2007, respectively. The impact of the change in rates in both periods was most significant
in the European market, primarily: Germany, France, Italy and the United Kingdom; and Japan.
Costs and expenses
The following table presents our costs and expenses, other income and net income. For segment reporting purposes, stock-based compensation and
acquisition-related intangible asset amortization are considered corporate reconciling items and are not allocated among our various operating segments in
preparing the segment operating performance measures utilized by our chief operating decision maker.
Percentage Change
2008 2007 2006 2008 vs 2007 2007 vs 2006
Cost of revenue:
Information Storage $5,670.1 $5,237.2 $4,714.7 8.3% 11.1%
Content Management and Archiving 305.6 271.5 225.8 12.6 20.2
RSA Information Security 170.6 144.4 37.7 18.1 283.0
VMware Virtual Infrastructure 268.7 188.6 103.1 42.5 82.9
Corporate reconciling items 238.7 177.2 160.6 34.7 10.3
Total cost of revenue 6,653.8 6,018.9 5,241.9 10.5 14.8
Gross margins:
Information Storage 5,962.2 5,373.6 4,893.9 11.0 9.8
Content Management and Archiving 480.0 501.8 460.0 (4.3) 9.1
RSA Information Security 410.7 380.9 114.0 7.8 234.1
VMware Virtual Infrastructure 1,608.2 1,132.2 605.9 42.0 86.9
Corporate reconciling items (238.7) (177.2) (160.6) 34.7 10.3
Total gross margin 8,222.4 7,211.3 5,913.2 14.0 22.0
Operating expenses:
Research and development(1) 1,721.3 1,526.9 1,254.2 12.7 21.7
Selling, general and administrative(2) 4,601.6 3,912.7 3,253.3 17.6 20.3
In-process research and development 85.8 1.2 35.4 7,050.0 (96.6)
Restructuring charges 244.7 31.3 162.6 681.8 (80.8)
Total operating expenses 6,653.4 5,472.1 4,705.4 21.6 16.3
Operating income 1,568.9 1,739.3 1,207.8 (9.8) 44.0
Investment income, interest expense and other expenses(3) 133.9 320.3 182.3 (58.2) 75.7
Income before taxes, cumulative effect of a change in accounting principle and minority interest 1,702.8 2,059.6 1,390.0 (17.3) 48.2
Provision for income taxes 312.5 378.4 162.7 (17.4) 132.6
Minority interest (44.7) (15.5) — 188.4 NM
Cumulative effect of a change in accounting principle — — (0.2) — NM
Net income $1,345.6 $1,665.7 $1,227.6 (19.2)% 35.7%
Amount includes corporate reconciling items of $175.4, $119.4 and $120.1 for the year ended December 31, 2008, 2007 and 2006, respectively.
Amount includes corporate reconciling items of $367.2, $275.6 and $271.0 for the year ended December 31, 2008, 2007 and 2006, respectively.
Amount includes gain of $148.6 on sale of VMware stock to Cisco in 2007.
NM — not measurable
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