EMC 2009 Annual Report Download - page 32

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Table of Contents
The effective tax rate increased from 2008 to 2009 by 0.9%, from 17.5% to 18.4%. This increase was principally attributable to the reorganization of
RSA and Data Domain in 2009, which was partially offset by incremental benefits from the resolution of uncertain tax positions inclusive of the expiration of
statutes of limitation. The effective tax rates for 2007 and 2008 were relatively constant.
Non-controlling Interest in VMware, Inc.
The net income attributable to the non-controlling interest in VMware was $33.7, $44.7 and $15.5 in 2009, 2008 and 2007, respectively. VMware's
reported net income was $197.1, $290.1 and $218.1 in 2009, 2008 and 2007, respectively. The weighted average non-controlling interest in VMware was
approximately 17.0%, 15.0% and 7.0% in 2009, 2008 and 2007, respectively.
Financial Condition
Cash provided by operating activities was $3,334.4, $3,565.1 and $3,126.6 in 2009, 2008 and 2007, respectively. Cash received from customers was
$14,647.7, $15,378.1 and $13,333.5 in 2009, 2008 and 2007, respectively. In 2009, the decrease in cash received from customers was attributable to a
reduction in sales volume. In 2008, the increase in cash received from customers was attributable to higher sales volume. Cash paid to suppliers and
employees was $11,032.9, $11,747.0 and $10,182.6 in 2009, 2008 and 2007, respectively. In 2009, the decrease was attributable to a reduction in purchases
associated with a reduction in sales volume and a decrease in compensation costs. In 2008, the increase was partially attributable to higher headcount due to
the growth of the business, as well as continued acquisition activity. Total headcount was approximately 43,200, 42,100 and 37,700 at December 31, 2009,
2008 and 2007, respectively. Cash received from dividends and interest was $109.5, $240.0 and $254.1 in 2009, 2008 and 2007, respectively. In 2009, 2008
and 2007, we paid $316.5, $232.3 and $202.3, respectively, in income taxes. These payments are comprised of estimated taxes for the current year, extension
payments for the prior year and refunds or payments associated with income tax filings and tax audits.
Cash used in investing activities was $3,095.5, $1,614.9 and $1,162.9 in 2009, 2008 and 2007, respectively. Cash used for acquisitions, strategic and
other related investments were $2,847.1, $731.0 and $704.1 in 2009, 2008 and 2007, respectively. In 2009, net of cash and investments acquired, we acquired
Data Domain for $1,933.9 and VMware acquired SpringSource for $356.3. Capital additions were $411.6, $695.9 and $699.0 in 2009, 2008 and 2007,
respectively. The lower level of capital additions in 2009 was due to lower spending on infrastructure as part of our cost savings initiatives. Capitalized
software development costs were $304.5, $295.0 and $232.0 in 2009, 2008 and 2007, respectively. Net sales of investments were $466.6, $75.1 and $322.3 in
2009, 2008 and 2007, respectively. This activity varies from period to period based upon our cash collections, cash requirements and maturity dates of our
investments.
Cash provided by (used in) financing activities was $211.9, $(534.0) and $679.5 in 2009, 2008 and 2007, respectively. In 2008 and 2007, we spent
$1,489.5 and $1,453.7 to repurchase 112.2 million and 89.4 million shares of our common stock, respectively. We made no share repurchases in 2009. We
plan to spend approximately $1,000.0 on common stock repurchases during 2010; 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 $594.0, $431.2 and $785.2 in 2009, 2008 and 2007, respectively, from the exercise of stock options. Stock options exercises from VMware's
stock option grants contributed $227.7 and $190.1 in 2009 and 2008, respectively. In 2009, we satisfied our commitment under our securities lending program
by repaying $412.3. During 2007, we received proceeds from the sale of VMware's Class A common stock in its IPO and to Intel of $1,253.5.
We have a credit line of $50.0 in the United States. As of December 31, 2009, we had no borrowings outstanding on the line of credit. We have long-
term debt with a face value of $3,450, of which $1,725 is due 2011 and $1,725 is due 2013. The aggregate amount of liabilities of our subsidiaries is
approximately $3,990.9.
At December 31, 2009, our total cash, cash equivalents, and short-term and long-term investments were $9,387.7. This balance includes approximately
$2,775.2 held by EMC in overseas entities and $2,486.5 held by VMware.
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