EMC 8-K Emc Reports First Quarter Results

Exhibit 99.1

Contact:    Michael Gallant

508-293-6357

gallant_michael@emc.com

FOR IMMEDIATE RELEASE

EMC REPORTS FIRST QUARTER RESULTS

Revenue Up 6% Year Over Year, Profitability Significantly Improved

HOPKINTON, Mass. – April 16, 2003 – EMC Corporation (NYSE:EMC) today reported financial results for the first quarter of 2003. The results reflect strong customer adoption of EMC’s broad portfolio of automated networked storage solutions.

Total consolidated revenue for the first quarter was $1.38 billion, 6% higher than the $1.30 billion reported in the first quarter of 2002. Net income for the first quarter was $35 million or $.02 per diluted share, compared with a net loss of $77 million or $.03 per diluted share in the first quarter of 2002.

Joe Tucci, EMC’s President and CEO, said, “The product innovation engine at EMC is running in overdrive. We continue to earn the confidence of new and existing customers by delivering market-leading price/performance through the broadest portfolio of storage platforms, software and services in EMC’s history. As a result, I believe we again gained market share during the first quarter.”

EMC’s first-quarter results were marked by encouraging performance in several strategic areas. Revenue from EMC’s new Symmetrix DMX series of high-end networked storage systems, introduced on February 3, 2003, accounted for more than half of total Symmetrix systems sales. Revenue from EMC’s CLARiiON CX series of networked storage systems and software, introduced in the third quarter of 2002, continued to achieve strong growth. Revenue from information storage software grew 6% in the first quarter compared with the first quarter of 2002. Revenue from information storage services grew 28% in the first quarter compared with the first quarter of 2002. EMC Centera Content Addressed Storage (CAS) systems, introduced a year ago, continue to be EMC’s fastest-growing major product line. EMC shipped more than two petabytes (2,000 terabytes) of Centera systems in the first quarter.

Bill Teuber, EMC’s Executive Vice President and Chief Financial Officer, said, “We achieved significant improvement in our profitability due to the popularity of our new line of storage platforms, including the Symmetrix DMX and CLARiiON CX series, growth in storage services revenue, and a lowered cost structure. Over the past seven quarters, we have reduced our revenue break-even point by more than $2 billion on an annualized basis. During the first quarter, our continued attack on costs and improved margins enabled us to reach our targeted break-even level a full quarter ahead of schedule. With cash and investments at approximately $5.7 billion and virtually no debt, we have a solid financial foundation.”

For details on some of the many customers who chose to implement EMC Automated Networked Storage solutions during the first quarter, please see EMC’s separate customer news release issued today.

Besides the introduction of Symmetrix DMX and its record-breaking new Direct Matrix Architecture, other highlights of the first quarter included the introduction of the Symmetrix z8000 and CLARiiON with ATA networked storage systems; the introduction of EMC SAN Copy, enabling customers to centrally manage the movement and replication of data between current and legacy EMC CLARiiON and Symmetrix systems; and the broadening of EMC’s market reach through new and enhanced partner and channel relationships with Oracle, Lockheed Martin, GE Medical, Eastman Kodak, Iron Mountain and KVS Inc. Also during the quarter, EMC settled all pending patent infringement litigation with Hitachi and Hitachi Data Systems (HDS) and agreed to exchange application programming interfaces (APIs) with Hitachi, HDS and Veritas Software.

EMC Automated Networked Storage solutions have been recognized repeatedly since the start of the year for innovation and market leadership. EMC was the only company to achieve “leader” status in both the SAN and NAS markets in META Group’s recently released METAspectrum^SM. New market data released by IDC found that EMC gained market share in the fourth quarter of 2002 to finish the year as the revenue leader in both the networked storage (Open SAN + NAS) and External RAID systems markets. Analysts at Gartner Dataquest confirmed that EMC was the world’s leading supplier of storage management software in 2002, for the fourth straight year.

Business Outlook

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not include the potential impact of any mergers, acquisitions, divestitures or business combinations that may be completed after the date hereof.

· Revenue in the second quarter of 2003 is expected to be between $1.425 billion and $1.475 billion.

· EMC expects gross margins to be relatively flat in the second quarter of 2003 compared with the first quarter of 2003.

· Earnings per share for the second quarter of 2003 are expected to be $.03 per diluted share.

· EMC expects to report net income for each quarter in 2003.

· EMC expects continued improvement in operating margins during 2003 compared with 2002.

· The tax rate for the remainder of 2003 is expected to be approximately 32%.

About EMC

EMC Corporation is the world leader in information storage systems, software, networks and services, providing automated networked storage solutions that enable organizations of all sizes to better and more cost-effectively manage, protect and share their information. More information about EMC’s products and services can be found at www.EMC.com.

This release contains “forward-looking statements” as defined under the Federal Securities Laws. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in information technology spending; (iii) the transition to new products, the uncertainty of customer acceptance of new product offerings, and rapid technological and market change; (iv) insufficient, excess or obsolete inventory; (v) competitive factors, including but not limited to pricing pressures; (vi) component quality and availability; (vii) the relative and varying rates of product price and component cost declines; (viii) war or acts of terrorism; (ix) the ability to attract and retain highly qualified employees; (x) fluctuating currency exchange rates; (xi) risks associated with strategic investments and acquisitions; and (xii) other one-time events and other important factors disclosed previously and from time to time in EMC’s filings with the U.S. Securities and Exchange Commission.

EMC CORPORATION

Consolidated Statement of Income

Three Months Ended March 31, 2003

(in thousands, except per share amounts)

Unaudited

	GAAP			Adjustments			Adjusted (1)
Revenues:
Net sales	$	1,050,978					$	1,050,978
Services		333,173						333,173
		1,384,151						1,384,151
Costs and expenses:
Cost of sales		613,344						613,344
Cost of services		172,986						172,986
Research and development		180,414						180,414
Selling, general and administrative		384,551						384,551
Restructuring and other special charges		20,523		$	20,523	(2)		—
Operating income (loss)		12,333			(20,523	)		32,856
Investment income		53,137						53,137
Interest expense		(864	)					(864	)
Other expense, net		(5,710	)					(5,710	)
Income (loss) before taxes		58,896			(20,523	)		79,419
Income tax provision (benefit)		23,713			(1,683	)(3)		25,396
Net income (loss)	$	35,183		$	(18,840	)	$	54,023
Net income per weighted average share, basic	$	0.02					$	0.02
Net income per weighted average share, diluted	$	0.02					$	0.02
Weighted average shares, basic		2,186,771						2,186,771
Weighted average shares, diluted		2,199,955						2,199,955
As a % of total revenue:
Gross margin		43.2	%					43.2	%
Selling, general and administrative		27.8	%					27.8	%
Research and development		13.0	%					13.0	%
Operating income		0.9	%					2.4	%
Net income		2.5	%					3.9	%

(1) The adjusted column excludes restructuring and other special charges. The information presented is not prepared in accordance with generally accepted accounting principles (“GAAP”). Management uses these non-GAAP financial measures to gain an understanding of its comparative operating performance. Management believes that these measures provide useful information because they exclude activities that are not necessarily relevant to understand the company’s business.

(2) Represents additional severence and accelerated depreciation related to the Q4 ‘02 restructure charge.

(3) Represents the tax benefit of adjustment (2).

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EMC CORPORATION

Consolidated Statements of Operations

(in thousands, except per share amounts)

Unaudited

	Three Months Ended
	March 31, 2003			March 31, 2002
Revenues:
Net sales	$	1,050,978		$	1,024,623
Services		333,173			277,355
		1,384,151			1,301,978
Cost and expenses:
Cost of sales		613,344			634,599
Cost of services		172,986			166,334
Research and development		180,414			200,951
Selling, general and administrative		384,551			454,668
Restructuring and other special charges		20,523			—
Operating income (loss)		12,333			(154,574	)
Investment income		53,137			55,525
Interest expense		(864	)		(2,861	)
Other expense, net		(5,710	)		(7,890	)
Income (loss) before taxes		58,896			(109,800	)
Income tax provision (benefit)		23,713			(32,941	)
Net income (loss)	$	35,183		$	(76,859	)
Net income (loss) per weighted average share, basic	$	0.02		$	(0.03	)
Net income (loss) per weighted average share, diluted	$	0.02		$	(0.03	)
Weighted average shares, basic		2,186,771			2,221,685
Weighted average shares, diluted		2,199,955			2,221,685
As a % of total revenue:
Gross margin		43.2	%		38.5	%
Selling, general and administrative		27.8	%		34.9	%
Research and development		13.0	%		15.4	%
Operating income (loss)		0.9	%		–11.9	%
Net income (loss)		2.5	%		–5.9	%

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EMC CORPORATION

Consolidated Balance Sheets

(in thousands, except per share amounts)

Unaudited

	March 31, 2003			December 31, 2002
ASSETS
Current assets:
Cash and cash equivalents	$	1,494,285		$	1,686,598
Short-term investments		1,010,818			864,743
Accounts and notes receivable, less allowance for doubtful accounts of $47,913 and $50,551		789,858			881,325
Inventories		572,327			437,805
Deferred income taxes		255,978			250,197
Other current assets		79,531			96,580
Total current assets		4,202,797			4,217,248
Long-term investments		3,171,409			3,134,290
Property, plant and equipment, net		1,578,927			1,624,396
Intangible and other assets, net		382,444			365,557
Goodwill, net		205,030			205,030
Deferred income taxes		39,025			43,926
Total assets	$	9,579,632		$	9,590,447
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term obligations	$	21,950		$	27,507
Accounts payable		443,528			429,732
Accrued expenses		913,874			948,357
Income taxes payable		207,420			187,695
Deferred revenue		468,451			448,359
Total current liabilities		2,055,223			2,041,650
Deferred Revenue		203,198			156,412
Other Liabilities		58,023			166,383
Commitments and contingencies
Stockholders' equity:
Series preferred stock, par value $.01; authorized 25,000 shares, none outstanding		—			—
Common stock, par value $.01; authorized 6,000,000 shares; issued 2,237,652 and 2,235,930 shares		22,377			22,359
Additional paid-in capital		3,586,365			3,580,025
Deferred compensation		(8,750	)		(10,762	)
Retained earnings		4,105,232			4,070,049
Accumulated other comprehensive loss, net		(59,125	)		(53,488	)
Treasury stock, at cost; 50,655 and 50,555 shares		(382,911	)		(382,181	)
Total stockholders' equity		7,263,188			7,226,002
Total liabilities and stockholders' equity	$	9,579,632		$	9,590,447

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EMC CORPORATION

Consolidated Statements of Cash Flows

(in thousands)

Unaudited

	For the Three Months Ended
	March 31, 2003			March 31, 2002
Cash flows from operating activities:
Net income (loss)	$	35,183		$	(76,859	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		137,246			158,814
Non-cash restructuring, inventory and other special charges (reversals)		4,785			(28,071	)
Amortization of deferred compensation		2,547			4,267
Provision for doubtful accounts		5,225			20,275
Deferred income taxes, net		2,139			18,820
Other		(31	)		3,736
Changes in assets and liabilities:
Accounts and notes receivable		98,431			261,620
Inventories		(127,685	)		98,359
Other assets		(19,827	)		16,438
Accounts payable		20,813			12,475
Accrued expenses		(34,187	)		(96,587	)
Income taxes payable		19,725			(48,366	)
Deferred revenue		67,143			53,321
Other liabilities		(104,729	)		(10,355	)
Net cash provided by operating activities		106,778			387,887
Cash flows from investing activities:
Additions to property, plant and equipment		(77,005	)		(115,128	)
Capitalized software development costs		(26,649	)		(28,752	)
Purchases of short and long-term available for sale securities		(1,121,483	)		(3,836,705	)
Sales of short and long-term available for sale securities		914,300			3,197,647
Maturities of short and long-term available for sale securities		15,952			98,966
Net cash used in investing activities		(294,885	)		(683,972	)
Cash flows from financing activities:
Issuance of common stock		5,823			12,841
Purchase of treasury stock		(730	)		—
Payment of long-term and short-term obligations		(13,442	)		(6,211	)
Proceeds from long-term and short-term obligations		4,609			718
Net cash provided by (used in) financing activities		(3,740	)		7,348
Effect of exchange rate changes on cash		(466	)		(8,251	)
Net decrease in cash and cash equivalents		(192,313	)		(296,988	)
Cash and cash equivalents at beginning of period		1,686,598			2,129,019
Cash and cash equivalents at end of period	$	1,494,285		$	1,832,031

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EMC CORPORATION

Supplemental Schedule of Earnings Adjusted to Expense Stock Options

(in thousands, except per share amounts)

Unaudited

	Three Months Ended
	March 31, 2003			March 31, 2002
Net income (loss)	$	35,183		$	(76,859	)
Stock option expense		(93,633	)		(99,490	)
Adjusted net loss	$	(58,450	)	$	(176,349	)
Net income (loss) per weighted average share, basic—as reported	$	0.02		$	(0.03	)
Net income (loss) per weighted average share, diluted—as reported	$	0.02		$	(0.03	)
Adjusted net loss per weighted average share, basic	$	(0.03	)	$	(0.08	)
Adjusted net loss per weighted average share, diluted	$	(0.03	)	$	(0.08	)

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EMC Corporation

Supplemental Financial Data

Revenue Analysis

(in thousands)

Unaudited

	Revenue Components
	Q1 2002		Q2 2002		Q3 2002		Q4 2002		YTD 2002		Q1 2003
Storage Revenue
Information Storage Systems	$	741,578	$	779,109	$	662,417	$	802,196	$	2,985,300	$	752,387
Information Storage Software		282,323		320,568		283,591		346,611		1,233,093		298,591
Information Storage Services		238,530		251,148		279,217		309,472		1,078,367		306,025
Total Information Storage Revenues		1,262,431		1,350,825		1,225,225		1,458,279		5,296,760		1,357,003
Other Businesses		39,547		36,713		34,213		31,119		141,592		27,148
Total Consolidated Revenues	$	1,301,978	$	1,387,538	$	1,259,438	$	1,489,398	$	5,438,352	$	1,384,151
	Supplemental Revenue Data
Symmetrix Hardware and Software Revenue (a)											$	574,944
CLARiiON Hardware and Software Revenue (a)												217,896
Connectivity Revenue (b)												130,290
EMC-only Platform Software Revenue (c)												199,791
Multi-Platform Software Revenue (d)												98,800

(a) Includes hardware, hardware upgrades and platform software.

(b) Includes Connectrix fibre channel switch/director revenues and Celerra file server revenue, exclusive of disk revenue.

(c) Includes software products that only work with EMC arrays.

(d) Includes software products that are designed to manage heterogenous environments including EMC and non-EMC arrays.

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