EMC 8-K Emc Reports Second Quarter Results

Exhibit 99.1

Contact: Michael Gallant 508-293-6357 gallant_michael@emc.com

EMC REPORTS SECOND QUARTER RESULTS

Revenue Up 7% Year Over Year, Earnings Per Share Exceeded Target

HOPKINTON, Mass. – July 16, 2003 – EMC Corporation (NYSE:EMC) today reported financial results for the second quarter of 2003, reflecting strong customer adoption of EMC’s information storage solutions in a challenging IT spending environment.

Total consolidated revenue for the second quarter was $1.48 billion, 7% higher than the $1.39 billion reported for the second quarter of 2002. Net income for the second quarter was $82 million or $.04 per diluted share, compared with net income of $1 million or $.00 per diluted share for the second quarter of 2002.

Joe Tucci, EMC’s President and CEO, said, “The two words that best describe EMC’s second-quarter performance are solid and balanced. Our automated networked storage strategy and strong execution are producing good results across all major segments of our business. We are experiencing the benefits of a completely refreshed product portfolio, broadened services offerings and an expanded distribution network. All signs point to additional EMC market share gains during the second quarter and we expect that to continue through the remainder of 2003.”

EMC’s second-quarter results were marked by sequential growth across all major segments of the business. Total information storage systems revenue, including EMC’s new Symmetrix DMX, CLARiiON CX and Centera networked information storage systems, grew 7% sequentially compared with the first quarter of 2003. Revenue from the new, highly acclaimed Symmetrix DMX series of high-end networked storage systems accelerated sharply and accounted for approximately 80% of total Symmetrix systems sales in the second quarter. Revenue from EMC’s industry-leading CLARiiON CX series again grew sequentially. Enthusiastic customer adoption of serial ATA technology, available on both CLARiiON and Centera systems, resulted in nearly 4.5 petabytes of ATA-based EMC storage shipped during the second quarter.

Total information storage software revenue grew 8% sequentially compared with the first quarter of 2003. Revenue from EMC’s open multi-platform software, which includes products developed under the AutoIS open software strategy, grew 11% sequentially compared with the first quarter of 2003, driven by demand for the EMC ControlCenter family of storage management software. Total information storage services revenue grew 7% sequentially, led by an increase in software maintenance and support and continued demand for EMC’s storage-focused professional services.

Bill Teuber, EMC’s Executive Vice President and Chief Financial Officer, said, “Our newly introduced products, broadened distribution channels, storage services offerings, and a

much leaner cost structure have all contributed to a significant improvement in our profitability over the last 12 months. With cash and investments growing by $385 million during the quarter, reaching approximately $6.1 billion and virtually no debt, we have significant resources for the future.”

In addition to broad customer acceptance of EMC’s recently introduced products, highlights of the second quarter included a groundbreaking new version of EMC’s popular PowerPath software, including the addition of integrated volume management, multi-vendor array support, and application availability features such as non-disruptive upgrades; the introduction of EMC Centera Compliance Edition, a specialized content addressed storage solution specifically designed to meet and exceed today’s strictest records retention regulations; additions to the EMC ControlCenter family of storage management software including new online access and subscription-based software, SAN Architect and AutoAdvice; the announcement of the EMC NetWin 200, the first in a new family of Windows^® Storage Server products; new and/or enhanced alliances with Cisco, Dell, Fujitsu Siemens, Microsoft, and MTI; a new multi-tiered channel partner program to strengthen EMC’s ties with the world’s leading storage resellers; and the acquisition of Astrum Software Corporation, a privately held supplier of storage resource management (SRM) software for multi-platform, mid-tier storage environments.

Also during the quarter, EMC Automated Networked Storage continued to be recognized for innovation and market leadership. The new CLARiiON CX series of networked storage systems received the MVP (Most Valuable Product) award at the 2003 Storage World Conference. New Gartner findings also confirmed that EMC was the world’s #1 storage systems and storage management software provider in 2002.*

Business Outlook

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. Except for the planned acquisition of LEGATO Systems, Inc., these statements do not include the potential impact of any mergers, acquisitions, divestitures or business combinations that may be completed after the date hereof. These statements supersede the Business Outlook set forth in EMC’s news release dated April 16, 2003, reporting financial results for the first quarter of 2003.

· Revenue in the third quarter of 2003 is expected to be between $1.45 billion and $1.50 billion.

· EMC expects gross and operating margins for the third quarter of 2003 to be relatively similar to those of the second quarter of 2003.

· Earnings per share for the third quarter of 2003 are expected to be $.04 per diluted share.

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

· EMC expects the acquisition of LEGATO to be slightly accretive to 2004 diluted earnings per share.

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 atwww.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) risks associated with strategic investments and acquisitions, including the challenges and costs of closing, integration, restructuring and achieving anticipated synergies associated with the announced plan to acquire LEGATO Systems, Inc.; (ii) adverse changes in general economic or market conditions; (iii) delays or reductions in information technology spending; (iv) the transition to new products, the uncertainty of customer acceptance of new product offerings, and rapid technological and market change; (v) insufficient, excess or obsolete inventory; (vi) competitive factors, including but not limited to pricing pressures; (vii) component quality and availability; (viii) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (ix) war or acts of terrorism; (x) the ability to attract and retain highly qualified employees; (xi) fluctuating currency exchange rates; 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 disclaims any obligation to update any such forward-looking statements after the date of this release.

* Gartner Dataquest “External Controller-Based Disk Storage Worldwide Market Share, 2002”, R. Cox, June 2003; Gartner Dataquest “2002 Storage Management Software Market Share”, C. DiCenzo. April 2003.

EMC CORPORATION

Consolidated Statements of Operations

(in thousands, except per share amounts)

Unaudited

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2003			2002			2003			2002
Revenues:
Net sales	$	1,125,063		$	1,099,671		$	2,176,041		$	2,124,294
Services		354,237			287,867			687,410			565,222
		1,479,300			1,387,538			2,863,451			2,689,516
Cost and expenses:
Cost of sales		660,735			653,263			1,274,079			1,287,862
Cost of services		174,483			177,874			347,469			344,208
Research and development		176,788			202,027			357,202			402,978
Selling, general and administrative		393,262			420,779			777,813			875,447
Restructuring and other special charges		3,566			—			24,089			—
Operating income (loss)		70,466			(66,405	)		82,799			(220,979	)
Investment income		51,186			57,823			104,323			113,348
Interest expense		(1,175	)		(2,720	)		(2,039	)		(5,581	)
Other expense, net		(274	)		(5,650	)		(5,984	)		(13,540	)
Income (loss) before taxes		120,203			(16,952	)		179,099			(126,752	)
Income tax provision (benefit)		38,464			(17,760	)		62,177			(50,701	)
Net income (loss)	$	81,739		$	808		$	116,922		$	(76,051	)
Net income (loss) per weighted average share, basic	$	0.04		$	0.00		$	0.05		$	(0.03	)
Net income (loss) per weighted average share, diluted	$	0.04		$	0.00		$	0.05		$	(0.03	)
Weighted average shares, basic		2,187,267			2,208,383			2,187,134			2,214,997
Weighted average shares, diluted		2,210,614			2,215,903			2,205,629			2,214,997
As a % of total revenue:
Gross margin		43.5	%		40.1	%		43.4	%		39.3	%
Selling, general and administrative		26.6	%		30.3	%		27.2	%		32.6	%
Research and development		12.0	%		14.6	%		12.5	%		15.0	%
Operating income (loss)		4.8	%		-4.8	%		2.9	%		-8.2	%
Net income (loss)		5.5	%		0.1	%		4.1	%		-2.8	%

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EMC CORPORATION

Consolidated Balance Sheets

(in thousands, except per share amounts)

Unaudited

	June 30,			December 31,
	2003			2002
ASSETS
Current assets:
Cash and cash equivalents	$	1,904,558		$	1,686,598
Short-term investments		969,477			864,743
Accounts and notes receivable, less allowance for doubtful accounts of $47,211 and $50,551		734,255			881,325
Inventories		523,148			437,805
Deferred income taxes		237,026			250,197
Other current assets		128,799			96,580
Total current assets		4,497,263			4,217,248
Long-term investments		3,187,505			3,134,290
Property, plant and equipment, net		1,577,440			1,624,396
Intangible and other assets, net		382,335			365,557
Goodwill, net		216,694			205,030
Deferred income taxes		67,316			43,926
Total assets	$	9,928,553		$	9,590,447
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term obligations	$	12,736		$	27,507
Accounts payable		376,880			429,732
Accrued expenses		878,096			948,357
Income taxes payable		438,393			187,695
Deferred revenue		499,157			448,359
Total current liabilities		2,205,262			2,041,650
Deferred revenue		277,694			156,412
Other liabilities		62,434			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 2,244,502 and 2,235,930 shares		22,445			22,359
Additional paid-in capital		3,622,568			3,580,025
Deferred compensation		(6,693	)		(10,762	)
Retained earnings		4,186,971			4,070,049
Accumulated other comprehensive loss, net		(59,217	)		(53,488	)
Treasury stock, at cost; 50,655 and 50,555 shares		(382,911	)		(382,181	)
Total stockholders' equity		7,383,163			7,226,002
Total liabilities and stockholders' equity	$	9,928,553		$	9,590,447

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EMC CORPORATION

Consolidated Statements of Cash Flows

(in thousands)

Unaudited

	For the Six Months Ended
	June 30, 2003			June 30, 2002
Cash flows from operating activities:
Net income (loss)	$	116,922		$	(76,051	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		265,670			334,782
Non-cash restructuring, inventory and other special charges (reversals)		5,732			(52,840	)
Amortization of deferred compensation		4,939			7,552
Provision for doubtful accounts		10,416			26,822
Deferred income taxes, net		41,943			40,286
Other		(2,240	)		36,138
Changes in assets and liabilities:
Accounts and notes receivable		153,492			300,956
Inventories		(65,916	)		188,791
Other assets		(63,392	)		36,910
Accounts payable		(56,049	)		1,901
Accrued expenses		(72,093	)		(132,376	)
Income taxes payable		198,397			4,639
Deferred revenue		173,488			107,678
Other liabilities		(99,889	)		(9,594	)
Net cash provided by operating activities		611,420			815,594
Cash flows from investing activities:
Additions to property, plant and equipment		(180,552	)		(218,836	)
Capitalized software development costs		(57,250	)		(64,261	)
Purchases of short and long-term available for sale securities		(2,529,704	)		(5,324,084	)
Sales of short and long-term available for sale securities		2,245,272			4,345,908
Maturities of short and long-term available for sale securities		111,289			121,646
Other		(7,626	)		—
Net cash used in investing activities		(418,571	)		(1,139,627	)
Cash flows from financing activities:
Issuance of common stock		41,760			43,030
Purchase of treasury stock		(730	)		(200,009	)
Payment of long-term and short-term obligations		(24,412	)		(8,895	)
Proceeds from long-term and short-term obligations		4,609			—
Net cash provided by (used in) financing activities		21,227			(165,874	)
Effect of exchange rate changes on cash		3,884			(6,758	)
Net increase (decrease) in cash and cash equivalents		217,960			(496,665	)
Cash and cash equivalents at beginning of period		1,686,598			2,129,019
Cash and cash equivalents at end of period	$	1,904,558		$	1,632,354

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EMC Corporation

Supplemental Financial Data

Revenue Analysis

(in thousands)

Unaudited

Revenue Components

	Q2 2002		Q3 2002		Q4 2002		YTD 2002		Q1 2003			Q2 2003			YTD 2003
Storage Revenue
Information Storage Systems	$	779,109	$	662,417	$	802,196	$	2,985,300	$	752,387		$	803,814		$	1,556,201
Information Storage Software		320,568		283,591		346,611		1,233,093		298,591			321,249			619,840
Information Storage Services		251,148		279,217		309,472		1,078,367		306,025			328,370			634,395
Total Information Storage Revenues		1,350,825		1,225,225		1,458,279		5,296,760		1,357,003			1,453,433			2,810,436
Other Businesses		36,713		34,213		31,119		141,592		27,148			25,867			53,015
Total Consolidated Revenues	$	1,387,538	$	1,259,438	$	1,489,398	$	5,438,352	$	1,384,151		$	1,479,300		$	2,863,451
Percentage impact to revenue from changes in exchange rates from the prior year										2.5	%		3.1	%
Supplemental Revenue Data
Symmetrix Hardware and Software Revenue (a)									$	574,944		$	618,297		$	1,193,241
CLARiiON Hardware and Software Revenue (a)										217,896			228,324			446,220
Connectivity Revenue (b)										130,290			136,578			266,868
EMC-only Platform Software Revenue (c)										199,791			211,461			411,252
Multi-Platform Software Revenue (d)										98,800			109,788			208,588

(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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EMC CORPORATION

Supplemental Schedule of Earnings Adjusted to Expense Stock Options

(in thousands, except per share amounts)

Unaudited

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2003			2002			2003			2002
Net income (loss)	$	81,739		$	808		$	116,922		$	(76,051	)
Stock option expense		(93,608	)		(92,051	)		(187,241	)		(191,541	)
Adjusted net loss	$	(11,869	)	$	(91,243	)	$	(70,319	)	$	(267,592	)
Net income (loss) per weighted average share, basic—as reported	$	0.04		$	0.00		$	0.05		$	(0.03	)
Net income (loss) per weighted average share, diluted—as reported	$	0.04		$	0.00		$	0.05		$	(0.03	)
Adjusted net loss per weighted average share, basic	$	(0.01	)	$	(0.04	)	$	(0.03	)	$	(0.12	)
Adjusted net loss per weighted average share, diluted	$	(0.01	)	$	(0.04	)	$	(0.03	)	$	(0.12	)

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