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.

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 analysis of the annual financial data reveals several notable trends in the company’s financial performance and position over the five-year period ending December 31, 2015.

Profitability: Net income displayed an increasing trend from 2011 to 2013, rising from $2,609 million to $3,093 million, followed by a decline in the subsequent two years, ending at $2,172 million in 2015. This pattern suggests improved profitability initially, followed by a weakening performance in the last two years.
Non-cash Expenses: Depreciation and amortization consistently increased each year, growing from $1,422 million in 2011 to $1,907 million in 2015, reflecting ongoing investment in capital assets or underlying asset base growth. Stock-based compensation also rose steadily from $823 million to $1,091 million, which may imply increasing employee compensation expenses linked to equity awards.; Non-cash restructuring and special charges spiked significantly in 2015 to $40 million from a comparatively low base in prior years, indicating possible organizational changes or cost restructuring activities during that year.
Tax and Valuation Adjustments: Deferred income taxes showed an increasing negative balance peaking in 2014 at -$396 million before improving slightly in 2015. Excess tax benefits from stock-based compensation correspondingly decreased notably over the period, consistent with the rising stock-based compensation expense.; There were occasional impairments and gains related to strategic investments, including a $33 million impairment charge in 2014 and variable gains or losses in select years, signaling periodic adjustments in investment valuations.
Working Capital Elements: Accounts receivable and inventories mostly decreased their negative adjustments over the period, though they remained significant. Accounts payable showed fluctuating changes, peaking at a $380 million increase in 2013 but turning negative by 2015. Accrued expenses and income taxes payable similarly shifted from positive to negative adjustments, reflecting changes in the company’s short-term liabilities and tax positions.; Deferred revenue decreased substantially from $1,509 million in 2011 to $596 million in 2015, which might indicate either lower advance billings or changes in revenue recognition patterns.
Cash Flow from Operations: Adjustments to reconcile net income to cash flows from operating activities increased from $3,060 million in 2011 to a peak of $3,830 million in 2013, followed by a decline. Net cash provided by operating activities grew steadily from $5,669 million in 2011 to $6,923 million in 2013 but decreased thereafter, falling to $5,386 million in 2015. This trend indicates strong operational cash generation early in the period with a tapering in later years.
Investing Activities: Capital expenditures for property, plant, and equipment climbed slightly until 2014, then decreased marginally in 2015 but remained near $900 million annually. Capitalized software development costs also rose gradually, reaching $567 million by 2015.; Purchases of available-for-sale securities were significant across all years, peaking at over $11 billion in 2013, partially offset by sales and maturities. Business acquisitions were irregular but sizable, with large outflows especially in 2012 and 2014, reflecting an active acquisition strategy during the period.; Overall, net cash used in investing activities peaked in 2013 at $5,760 million, falling sharply to approximately $2,500-$2,700 million annually in 2014 and 2015, indicating a reduction in investment or divestiture activities towards the end of the period.
Financing Activities: Net cash flows from financing activities were negative in most years except 2013. The company engaged heavily in share repurchases, especially EMC’s repurchase of its common stock, which was largest in 2013 ($3,015 million) and remained substantial thereafter.; Proceeds from the issuance of common stock showed a declining trend, consistent with decreasing stock issuance activities. Dividend payments started in 2013 and rose in subsequent years, signaling a shift toward rewarding shareholders through dividends.; Issuance and repayment of debt displayed variability, with a large net issuance in 2013 but lower activity in other years.
Liquidity: Cash and cash equivalents grew from 2011 through 2013, with a notable increase of $3,177 million in 2013, then declined sharply in 2014 before stabilizing slightly in 2015. Exchange rate changes negatively impacted cash especially in 2014 and 2015, reducing cash balances.

In summary, the company exhibited strong but fluctuating profitability and operational cash flow generation with heavy investment and acquisition activity early in the period, moderating in later years. The reduction in deferred revenue and fluctuating working capital components indicate changes in operational dynamics. Financing activities reflected return of capital to shareholders through buybacks and dividends, with intermittent debt activity. Liquidity remained adequate despite volatility, supported by operational cash flows.

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EMC Corp. (NYSE:EMC)

Cash Flow Statement