EMC 2008 Annual Report Download - page 97

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
N. Stockholders' Equity
Net Income Per Share
The reconciliation from basic to diluted earnings per share for both the numerators and denominators is as follows (table in thousands):
2008 2007 2006
Numerator:
Net income, as reported—basic $1,345,567 $1,665,668 $1,227,601
Adjustment for interest expense on Documentum Notes, net of taxes — — 643
Incremental dilution from VMware (7,516) (4,756) —
Net income—diluted $1,338,051 $1,660,912 $1,228,244
Denominator:
Basic weighted average common shares outstanding 2,048,506 2,079,542 2,248,431
Weighted common stock equivalents 31,287 54,651 35,609
Assumed conversion of the Notes and Sold Warrants 60 23,680 —
Assumed conversion of Documentum Notes — — 2,264
Diluted weighted average shares outstanding 2,079,853 2,157,873 2,286,304
Options to acquire 144.2 million, 98.4 million and 213.1 million shares of common stock for the years ended December 31, 2008, 2007 and 2006,
respectively, were excluded from the calculation of diluted earnings per share because of their antidilutive effect primarily due to their exercise prices being
less than the average market price of common stock for the period. For the year ended December 31, 2008, no shares were potentially issuable under the Sold
Warrants because these instruments were not "in the money". For the year ended December 31, 2007, there were 20.6 million and 3.1 million shares
potentially issuable under the Notes and Sold Warrants, respectively. For the year ended December 31, 2006, there were no shares potentially issuable under
our Notes and Sold Warrants because these instruments were not "in the money". The effect of the Documentum Notes on the calculation of diluted net
income per weighted average share for the year ended December 31, 2006 was calculated using the "if converted" method. See Note D for further information
regarding the Notes, the Sold Warrants and the Documentum Notes. The incremental dilution from VMware represents the impact of VMware's dilutive
securities on EMC's consolidated diluted net income per share and is calculated by multiplying the difference between VMware's basic and diluted earnings
per share by the number of VMware shares owned by EMC.
Share Repurchase Program
On July 1, 2004, the Massachusetts Business Corporation Act (the "MBCA") became effective and eliminated treasury shares. Under the MBCA, shares
repurchased by Massachusetts corporations constitute authorized but unissued shares. As a result, all of our former treasury shares were automatically
converted to unissued shares on July 1, 2004 and have been accounted for as a reduction of common stock (at par value) and additional paid-in capital.
We utilize both authorized and unissued shares including repurchased shares, to satisfy all shares issued under our equity plans. Our Board of Directors
authorized the repurchase of 250.0 million shares of our common stock in April 2006 and an additional 250.0 million shares of our common stock in April
2008. Of the 500.0 million shares authorized for repurchase through December 31, 2008, we have repurchased 311.4 million shares at a total cost of
$4.2 billion, leaving a remaining balance of 188.6 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 million of the
net proceeds from the Notes.
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