Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

EMC Corp., consolidated income statement

US$ in millions

12 months ended:	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
Product sales	13,514)	14,051)	13,690)	13,061)	12,591)
Services	11,190)	10,389)	9,532)	8,653)	7,417)
Revenues	24,704)	24,440)	23,222)	21,714)	20,008)
Cost of product sales	(5,809)	(5,738)	(5,650)	(5,258)	(5,320)
Cost of services	(3,904)	(3,453)	(3,099)	(2,817)	(2,519)
Cost of revenues	(9,713)	(9,191)	(8,749)	(8,076)	(7,839)
Gross profit	14,991)	15,249)	14,473)	13,638)	12,169)
Research and development	(3,167)	(2,991)	(2,761)	(2,560)	(2,150)
Selling, general and administrative	(8,533)	(7,982)	(7,338)	(7,004)	(6,479)
Restructuring and acquisition-related charges	(450)	(239)	(224)	(111)	(97)
Operating income	2,841)	4,037)	4,150)	3,964)	3,442)
Investment income	94)	123)	128)	115)	129)
Interest expense	(164)	(147)	(156)	(79)	(170)
Other income (expense), net	111)	(251)	(257)	(196)	(152)
Non-operating income (expense)	41)	(275)	(285)	(160)	(193)
Income before provision for income taxes	2,882)	3,762)	3,865)	3,804)	3,249)
Income tax provision	(710)	(868)	(772)	(918)	(640)
Net income	2,172)	2,894)	3,093)	2,886)	2,609)
Net income attributable to the non-controlling interests	(182)	(180)	(204)	(153)	(148)
Net income attributable to EMC Corporation	1,990)	2,714)	2,889)	2,733)	2,461)

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

Revenue Trends: Revenues showed a steady increase from US$ 20.0 billion in 2011 to US$ 24.7 billion in 2015. Product sales increased from US$ 12.6 billion in 2011 to a peak of US$ 14.1 billion in 2014 but declined slightly to US$ 13.5 billion in 2015. Meanwhile, services continually grew each year from US$ 7.4 billion in 2011 to US$ 11.2 billion in 2015, indicating a progressive shift or expansion in service offerings.
Cost Analysis: The cost of product sales increased gradually from US$ 5.3 billion to US$ 5.8 billion over the five years, with a relatively stable upward trend. The cost of services rose more substantially, from US$ 2.5 billion in 2011 to nearly US$ 3.9 billion in 2015, reflecting the significant growth in service revenues. Consequently, total cost of revenues increased from US$ 7.8 billion in 2011 to US$ 9.7 billion in 2015, representing the company’s rising expenditure to support revenue growth.
Profitability: Gross profit exhibited growth from US$ 12.2 billion in 2011 to US$ 15.2 billion in 2014, followed by a slight drop to US$ 15.0 billion in 2015. This mirrors the revenue pattern, with the decline likely related to the reduction in product sales. Operating income increased from US$ 3.4 billion in 2011 to a peak of US$ 4.2 billion in 2013, then declined sharply to US$ 2.8 billion by 2015. This decline in operating income during 2014-2015 coincides with increased restructuring and acquisition-related charges, which nearly quintupled to US$ 450 million in 2015, and rising selling, general, and administrative expenses.
Expenses: Research and development expenses steadily increased from US$ 2.2 billion in 2011 to US$ 3.2 billion in 2015, indicating continuous investment in innovation. Selling, general, and administrative expenses rose consistently from US$ 6.5 billion to US$ 8.5 billion over the same period, suggesting expanding operational costs. The significant increase in restructuring and acquisition-related charges between 2013 and 2015 signals notable corporate restructuring or acquisition activities impacting income.
Non-operating and Other Income: Investment income remained relatively stable around US$ 100-130 million yearly, while interest expense fluctuated without a clear trend, indicating variable debt servicing costs. Other income (expense), net, improved markedly in 2015, moving from consistent negative amounts to a positive US$ 111 million, which contributed to a positive total non-operating income of US$ 41 million in 2015, after several years of negative figures.
Net Income and Taxation: Net income increased from US$ 2.6 billion in 2011 to a high of US$ 3.1 billion in 2013, then declined to US$ 2.2 billion in 2015. The net income attributable to the corporation followed a similar pattern. Income tax provision fluctuated but exhibited a general increase until 2012 before declining towards 2015. The decline in net income after 2013 reflects the combined effects of higher expenses, increased charges, and a reduction in operating income, despite relatively stable tax rates.
Summary: Overall, the data reflects growth in total revenues driven primarily by expanding services, with product sales stabilizing and slightly declining in the last year. Costs and expenses grew consistently, particularly within services and administrative functions. Although gross profit remained robust, increased restructuring charges and rising operational costs exerted downward pressure on operating income and net income starting in 2014. The company appears to be investing heavily in research and development and undergoing structural changes impacting profitability. The positive shift in non-operating income in 2015 helped partially offset these challenges, but net income still experienced a notable decline.

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EMC Corp. (NYSE:EMC)

Income Statement