Name: EMC Corp. (NYSE:EMC) | Cash Flow Statement
Creator: Stock Analysis on Net

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

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EMC Corp., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
Net income	2,172)	2,894)	3,093)	2,886)	2,609)
Depreciation and amortization	1,907)	1,864)	1,665)	1,528)	1,422)
Non-cash interest expense on debt	—)	1)	62)	46)	103)
Non-cash restructuring and other special charges	40)	19)	8)	13)	(1)
Stock-based compensation expense	1,091)	1,031)	935)	895)	823)
Provision for (recovery of) doubtful accounts	55)	10)	(1)	39)	20)
Deferred income taxes, net	(235)	(396)	(202)	(118)	(19)
Excess tax benefits from stock-based compensation	(55)	(102)	(116)	(261)	(362)
Gain on previously held interests in strategic investments and joint venture	—)	(101)	—)	(32)	—)
Impairment of strategic investment	—)	33)	—)	—)	—)
Other, net	6)	20)	40)	20)	5)
Accounts and notes receivable	385)	(309)	(377)	(535)	(392)
Inventories	(196)	(149)	(408)	(459)	(393)
Other assets	47)	345)	269)	174)	(62)
Accounts payable	(75)	167)	380)	89)	35)
Accrued expenses	(333)	(286)	(162)	(64)	158)
Income taxes payable	(53)	314)	222)	661)	337)
Deferred revenue	596)	1,126)	1,475)	1,367)	1,509)
Other liabilities	34)	42)	40)	11)	(121)
Changes in assets and liabilities, net of acquisitions	405)	1,250)	1,439)	1,244)	1,071)
Adjustments to reconcile net income to net cash provided by operating activities	3,214)	3,629)	3,830)	3,376)	3,060)
Net cash provided by operating activities	5,386)	6,523)	6,923)	6,262)	5,669)
Additions to property, plant and equipment	(902)	(979)	(943)	(819)	(801)
Capitalized software development costs	(567)	(509)	(465)	(419)	(442)
Purchases of short- and long-term available-for-sale securities	(7,252)	(9,982)	(11,250)	(6,347)	(7,180)
Sales of short- and long-term available-for-sale securities	5,205)	8,722)	5,292)	4,983)	5,121)
Maturities of short- and long-term available-for-sale securities	1,970)	2,651)	2,845)	1,049)	1,130)
Business acquisitions, net of cash acquired	(1,336)	(1,973)	(770)	(2,136)	(537)
Purchases of strategic and other related investments	(182)	(144)	(131)	(117)	(329)
Sales of strategic and other related investments	235)	101)	35)	71)	29)
Joint venture funding	—)	(360)	(411)	(228)	(383)
Proceeds from divestiture of business	—)	—)	38)	58)	—)
(Increase) decrease in restricted cash	75)	(78)	—)	—)	—)
Purchase of leasehold interest	—)	—)	—)	—)	(151)
Net cash used in investing activities	(2,754)	(2,551)	(5,760)	(3,905)	(3,544)
Proceeds from the issuance of EMC’s common stock	322)	503)	342)	560)	673)
Proceeds from the issuance of VMware’s common stock	126)	164)	197)	253)	338)
EMC repurchase of EMC’s common stock	(2,063)	(2,969)	(3,015)	(685)	(2,000)
EMC purchase of VMware’s common stock	—)	—)	(160)	(290)	(400)
VMware repurchase of VMware’s common stock	(1,125)	(700)	(508)	(468)	(526)
Excess tax benefits from stock-based compensation	55)	102)	116)	261)	362)
Payment of long-term and short-term obligations	—)	(1,665)	(46)	(1,715)	(27)
Net proceeds from the issuance of long-term and short-term obligations	1,295)	—)	5,460)	5)	3)
Contributions from non-controlling interests	5)	7)	105)	—)	—)
Interest rate contracts settlement	—)	—)	—)	(70)	(141)
Dividend payment	(907)	(879)	(415)	—)	—)
Net cash provided by (used in) financing activities	(2,292)	(5,437)	2,076)	(2,149)	(1,719)
Effect of exchange rate changes on cash and cash equivalents	(134)	(83)	(62)	15)	5)
Net increase (decrease) in cash and cash equivalents	206)	(1,548)	3,177)	223)	412)
Cash and cash equivalents at beginning of period	6,343)	7,891)	4,714)	4,531)	4,119)
Cash and cash equivalents at end of period	6,549)	6,343)	7,891)	4,754)	4,531)

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).

The financial trajectory from 2011 to 2015 reveals a period of volatility in cash generation and allocation, characterized by strong but eventually declining operating cash flows, aggressive investment in acquisitions and securities, and a shifting approach to shareholder returns.

Operating Cash Flow Trends: Net cash provided by operating activities exhibited a growth trend from 2011 to 2013, peaking at 6,923 million US dollars, before declining to 5,386 million US dollars by 2015. This decline correlates with a reduction in net income, which fell from a peak of 3,093 million US dollars in 2013 to 2,172 million US dollars in 2015. Non-cash adjustments remained a significant driver of operating cash, with depreciation and amortization increasing steadily from 1,422 million US dollars in 2011 to 1,907 million US dollars in 2015, and stock-based compensation expenses rising from 823 million US dollars to 1,091 million US dollars over the same period. A notable contraction occurred in deferred revenue, which dropped sharply to 596 million US dollars in 2015 from levels consistently above 1,100 million US dollars in previous years, indicating a potential shift in revenue recognition or a decrease in advance payments from customers.
Investing Activity Analysis: Investing activities consistently resulted in net cash outflows, with the highest deficit occurring in 2013 at 5,760 million US dollars. Capital expenditures, including additions to property, plant, and equipment and capitalized software development, remained relatively stable, totaling approximately 1.2 billion to 1.5 billion US dollars annually. Significant volatility is observed in the management of available-for-sale securities, characterized by a massive purchase of 11,250 million US dollars in 2013 and a substantial liquidation of 8,722 million US dollars in 2014. Strategic growth was pursued through business acquisitions, with peak outflows of 2,136 million US dollars in 2012 and 1,973 million US dollars in 2014.
Financing Activity and Capital Structure: Financing activities were predominantly cash-consumptive, except for 2013. Shareholder returns were prioritized through aggressive common stock repurchases; EMC's own repurchases peaked at 3,015 million US dollars in 2013, while VMware's repurchases trended upward, reaching 1,125 million US dollars in 2015. Dividend payments were introduced in 2013 at 415 million US dollars and grew consistently to 907 million US dollars by 2015. Debt management showed a cyclical pattern of large repayments in 2012 and 2014, offset by a major issuance of 5,460 million US dollars in 2013 and a further 1,295 million US dollars in 2015.

The overall liquidity position remained robust, with cash and cash equivalents ending the period at 6,549 million US dollars, up from 4,531 million US dollars in 2011. The company successfully leveraged its operating cash flows and strategic debt issuance in 2013 to fund a combination of aggressive share buybacks, increased dividend distributions, and strategic acquisitions.

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