EMC 2011 Annual Report Download - page 36

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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, 2011
GAAP
Stock-based
compensation
Intangible
asset
amortization
Restructuring
and
acquisition-
related
charges
RSA special
charge
Gain on
strategic
investments
Special tax
charge Non-GAAP
Gross margin $ 3,523.3 $ 31.7 $ 40.8 $ — $ — $ — $ — $ 3,595.8
Operating income 1,138.8 213.9 86.2 28.9 — — — 1,467.8
Income tax provision 174.9 47.6 27.3 3.7 — — — 253.4
Net income attributable to EMC 832.0 151.8 56.1 25.2 — — — 1,065.2
Diluted earnings per share attributable to EMC $ 0.38 $ 0.07 $ 0.03 $ 0.01 $ — $ — $ — $ 0.49
For the Three Months Ended December 31, 2010
GAAP
Stock-based
compensation
Intangible
asset
amortization
Restructuring
and
acquisition-
related
charges
RSA special
charge
Gain on
strategic
investments
Special tax
charge Non-GAAP
Gross margin $ 2,966.3 $ 28.9 $ 33.2 $ — $ — $ — $ — $ 3,028.4
Operating income 943.7 185.4 70.4 43.5 — — — 1,243.0
Income tax provision 257.0 45.2 24.1 6.8 — — (83.3) 249.8
Net income attributable to EMC 628.6 126.9 44.6 36.7 — — 83.3 920.1
Diluted earnings per share attributable to EMC $ 0.29 $ 0.06 $ 0.02 $ 0.02 $ — $ — $ 0.04 $ 0.42
For the Year Ended December 31, 2011
GAAP
Stock-based
compensation
Intangible
asset
amortization
Restructuring
and
acquisition-
related
charges
RSA special
charge
Gain on
strategic
investments
Special tax
charge Non-GAAP
Gross margin $ 12,168.9 $ 123.7 $ 157.2 $ — $ 66.3 $ — $ — $ 12,516.1
Operating income 3,442.4 836.2 341.8 97.3 66.3 — — 4,784.0
Income tax provision 640.4 194.6 107.9 15.9 10.1 (19.6) — 949.3
Net income attributable to EMC 2,461.3 587.0 223.9 80.9 56.2 (28.9) — 3,380.5
Diluted earnings per share attributable to EMC $ 1.10 $ 0.26 $ 0.10 $ 0.04 $ 0.03 $ (0.01) $ — $ 1.51
For the Year Ended December 31, 2010
GAAP
Stock-based
compensation
Intangible
asset
amortization
Restructuring
and
acquisition-
related
charges
RSA special
charge
Gain on
strategic
investments
Special tax
charge Non-GAAP
Gross margin $ 10,031.0 $ 108.7 $ 131.8 $ — $ — $ — $ — $ 10,271.4
Operating income 2,683.3 685.1 285.3 84.4 — — — 3,738.0
Income tax provision 638.3 165.7 92.7 10.7 — — (83.3) 824.0
Net income attributable to EMC 1,900.0 472.7 187.3 72.0 — — 83.3 2,715.3
Diluted earnings per share attributable to EMC $ 0.88 $ 0.22 $ 0.09 $ 0.03 $ — $ — $ 0.04 $ 1.26
We also monitor our ability to generate free cash flow in relationship to our non-GAAP net income attributable to EMC over comparable periods. For
the year ended December 31, 2011, our free cash flow was $4,425.1, an increase of 28.6% compared to the free cash flow generated for the year ended
December 31, 2010. The free cash flow for the twelve months ended December 31, 2011 exceeded our non-GAAP net income attributable to EMC by
$1,044.6. 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.
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