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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
S. Segment Information
We manage our business in two broad categories: EMC Information Infrastructure and VMware Virtual Infrastructure. EMC Information Infrastructure
operates in three segments: Information Storage, Content Management and Archiving and RSA Information Security, while VMware Virtual Infrastructure
operates in a single segment. Our management measures are designed to assess performance of these operating segments excluding certain items. As a result,
the corporate reconciling items are used to capture the items excluded from the segment operating performance measures, including stock-based
compensation expense and acquisition-related intangible asset amortization expense. Additionally, in certain instances, IPR&D charges, restructuring and
acquisition-related charges, transition costs and infrequently occurring gains or losses are also excluded from the measures used by management in assessing
segment performance. As a result of preparing separate financial statements for VMware's initial public offering in the third quarter of 2007, there have been
some adjustments to VMware's stand-alone consolidated financial statements that have been recorded in different periods by EMC and VMware. These
differences are not material to the consolidated financial statements and segment disclosures of EMC. The VMware Virtual Infrastructure amounts represent
the revenues and expenses of VMware as reflected within EMC's consolidated financial statements. Research and development expenses, SG&A, and other
income associated with the EMC Information Infrastructure business are not allocated to the segments within the EMC Information Infrastructure business, as
they are managed centrally at the business unit level. For the three segments within the EMC Information Infrastructure business, gross profit is the segment
operating performance measure.
Our segment information for the years ended 2009, 2008 and 2007 are as follows (tables in thousands, except percentages):
EMC Information Infrastructure
2009:
Information
Storage
Content
Management
and Archiving
RSA
Information
Security
EMC
Information
Infrastructure
VMware
Virtual
Infrastructure
within EMC
Corp
Reconciling
Items Consolidated
Revenues:
Product revenues $ 7,198,051 $ 260,836 $ 340,272 $ 7,799,159 $ 1,028,986 $ — $ 8,828,145
Services revenues 3,461,358 478,753 265,678 4,205,789 991,976 — 5,197,765
Total consolidated revenues 10,659,409 739,589 605,950 12,004,948 2,020,962 — 14,025,910
Cost of sales 5,256,682 274,763 186,462 5,717,907 316,278 246,826 6,281,011
Gross profit $ 5,402,727 $ 464,826 $ 419,488 6,287,041 1,704,684 (246,826) 7,744,899
Gross profit percentage 50.7% 62.8% 69.2% 52.4% 84.4% — 55.2%
Research and development 1,022,147 369,514 235,848 1,627,509
Selling, general and administrative 3,258,055 842,097 495,473 4,595,625
Restructuring and acquisition-related charges — — 107,490 107,490
Total costs and expenses 4,280,202 1,211,611 838,811 6,330,624
Operating income 2,006,839 493,073 (1,085,637) 1,414,275
Other income (expense), net 52,325 (9,499) (82,525) (39,699)
Income before tax 2,059,164 483,574 (1,168,162) 1,374,576
Income tax provision 424,708 78,069 (250,002) 252,775
Net income 1,634,456 405,505 (918,160) 1,121,801
Net income attributable to the non-controlling interest in VMware, Inc. — (69,285) 35,561 (33,724)
Net income attributable to EMC Corporation $ 1,634,456 $ 336,220 $ (882,599) $ 1,088,077
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