EMC 8-K Emc Reports Second Quarter Results

EXHIBIT 99.1

	Contact:	Greg Eden
		508-293-7195
FOR IMMEDIATE RELEASE		eden_greg@emc.com

EMC REPORTS SECOND QUARTER RESULTS

Revenue Increased 33%; Fourth Consecutive Quarter of Double-Digit Revenue Growth

HOPKINTON, Mass. – July 20, 2004 – EMC Corporation (NYSE:EMC) today reported financial results for the second quarter of 2004, achieving its fourth consecutive quarter of double-digit year-over-year revenue growth and more than doubling net income compared with the year-ago period.

Total consolidated revenue for EMC’s second quarter was $1.97 billion, 33% higher than the $1.48 billion reported for the second quarter of 2003. Net income for the quarter was $193 million or $.08 per diluted share, 136% higher than the $82 million or $.04 per diluted share reported for the second quarter of 2003.

Joe Tucci, EMC’s President and CEO, said, “I was pleased with our overall execution and financial results in the second quarter. Clearly the highlight of the quarter was our strong double-digit year-over-year revenue growth and resulting market-share gains in each of our business lines. The main driver of this growth was strong execution of our information lifecycle management strategy and solutions, which are enjoying an excellent reception from our customers and the overall IT marketplace.

“I continue to believe the overall market environment for storage and information management technology is rich with opportunity yet challenging, as customers continue to demand more from IT providers. They are looking for broader ‘best of breed’ solution sets and better service and support, and they are uncompromising when it comes to improving the total cost of ownership and overall returns on their IT investments. We think our strategy and our portfolio are very well suited for this challenge.”

Core EMC revenue, which excludes product and service revenue from EMC’s Documentum, LEGATO Software and VMware businesses, grew 19% compared with the second quarter of 2003. Core EMC international revenue grew 24%, with double-digit revenue growth in each major geography including Europe, Asia and Latin America.

Bill Teuber, EMC’s Executive Vice President and Chief Financial Officer, said, “Our extensive product and services portfolio and expanded market reach helped us to achieve our financial goals in the second quarter. We continued to drive revenue growth, improve gross margins and increase cash flow, while improving operating income to more than 12% of revenues — putting us squarely on track to reach our mid-teens operating margin goal by the end of the year.”

Second Quarter Highlights

EMC systems revenue grew 16% compared with the year-ago quarter as customers around the world aligned the value of their information to the appropriate platform within EMC’s expanded family of tiered information storage. EMC’s systems business in the quarter was led by EMC CLARiiON and EMC Celerra NAS platforms, which both had revenue growth of more than 40% compared with the year-ago quarter.

EMC software revenue increased 64% compared with the same period a year ago, buoyed by strong double-digit growth from sales of EMC’s core storage software and the impact of the Documentum, LEGATO Software and VMware acquisitions. LEGATO Software delivered a record second quarter, driven by a 20% year-over-year increase in software license sales. Documentum also achieved double-digit year-over-year growth, with revenues increasing 14%.

VMware delivered record quarterly revenues in its second quarter as a separate subsidiary of EMC, as organizations turned to the virtual infrastructure software leader to virtualize industry-standard servers and desktops throughout the enterprise.

EMC services revenue grew 45% compared with the year-ago quarter, driven by increased software maintenance revenue, customer demand for information lifecycle management solutions and the impact of EMC’s recent acquisitions.

EMC expanded its market reach through major new and enhanced partner agreements during the quarter. EMC announced it will resell Advanced Digital Information Corporation’s (ADIC) tape library solutions to broaden its lineup of tiered networked storage; Langchao Electronic Information Industry Corp., Ltd., a leading server vendor in China, agreed to OEM the entire line of EMC CLARiiON products; Dell added EMC’s LEGATO backup and replication software to its storage management offering; and VMware strengthened its relationships with systems vendors IBM and HP.

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. The Business Outlook set forth in EMC’s news releases dated January 22, 2004, April 15, 2004, and June 10, 2004, still represents EMC’s current expectations unless specifically superceded by these or previously issued statements:

· Consolidated revenues for the third quarter of 2004 are expected to be around $2.0 billion.

· Diluted earnings per share for the third quarter of 2004 are expected to be $0.08 to $0.09.

· Research and development expenses, as a percentage of revenue, are expected to be around 11% for 2004.

About EMC

EMC Corporation (NYSE: EMC) is the world leader in products, services and solutions for information storage and management that help organizations extract the maximum value from their information, at the lowest total cost, across every point in the information lifecycle. Information about EMC’s products and services can be found at www.EMC.com.

EMC, Documentum, LEGATO and VMware are registered trademarks and EMC CLARiiON and EMC Celerra are trademarks of EMC Corporation. All other trademarks are the property of their respective owners.

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) risks associated with acquisitions and investments, including the challenges and costs of integration, restructuring and achieving anticipated synergies associated with the acquisitions of LEGATO Systems, Inc., Documentum, Inc. and VMware, Inc.; (iv) competitive factors, including but not limited to pricing pressures; (v) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (vi) component quality and availability; (vii) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (viii) insufficient, excess or obsolete inventory; (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.

EMC CORPORATION

Consolidated Statements of Income

(in thousands, except per share amounts)

Unaudited

	Three Months Ended						Six Months Ended
	June 30, 2004			June 30, 2003			June 30, 2004			June 30, 2003
Revenues:
Product sales	$	1,455,779		$	1,125,063		$	2,834,375		$	2,176,041
Services		515,405			354,237			1,008,438			687,410
		1,971,184			1,479,300			3,842,813			2,863,451
Costs and expenses:
Cost of product sales		738,899			660,735			1,444,845			1,274,079
Cost of services		234,360			174,483			462,374			347,469
Research and development		205,107			176,788			409,703			357,202
Selling, general and administrative		548,859			393,262			1,083,484			777,813
Restructuring and other special charges		4,460			3,566			32,688			24,089
Operating income		239,499			70,466			409,719			82,799
Investment income		36,007			51,186			77,037			104,323
Interest expense		(1,722	)		(1,175	)		(3,695	)		(2,039	)
Other expense, net		(2,195	)		(274	)		(7,972	)		(5,984	)
Income before taxes		271,589			120,203			475,089			179,099
Income tax provision		78,785			38,464			142,480			62,177
Net income	$	192,804		$	81,739		$	332,609		$	116,922
Net income per weighted average share, basic	$	0.08		$	0.04		$	0.14		$	0.05
Net income per weighted average share, diluted	$	0.08		$	0.04		$	0.14		$	0.05
Weighted average shares, basic		2,403,786			2,187,267			2,409,690			2,187,134
Weighted average shares, diluted		2,445,902			2,210,614			2,452,049			2,205,629
As a % of total revenue:
Gross margin		50.6	%		43.5	%		50.4	%		43.4	%
Selling, general and administrative		27.8	%		26.6	%		28.2	%		27.2	%
Research and development		10.4	%		12.0	%		10.7	%		12.5	%
Operating income		12.2	%		4.8	%		10.7	%		2.9	%
Net income		9.8	%		5.5	%		8.7	%		4.1	%

EMC CORPORATION

Consolidated Balance Sheets

(in thousands, except per share amounts)

Unaudited

	June 30, 2004			December 31, 2003
ASSETS
Current assets:
Cash and cash equivalents	$	1,562,577		$	1,869,426
Short-term investments		726,488			928,248
Accounts and notes receivable, less allowance for doubtful accounts of $41,587 and $39,482		962,155			952,421
Inventories		544,023			514,015
Deferred income taxes		299,578			271,746
Other current assets		135,646			151,448
Total current assets		4,230,467			4,687,304
Long-term investments		4,421,072			4,109,911
Property, plant and equipment, net		1,583,240			1,610,182
Intangible assets, net		537,444			475,295
Other assets, net		481,038			426,472
Goodwill, net		3,212,258			2,711,677
Deferred income taxes		23,913			72,019
Total assets	$	14,489,432		$	14,092,860
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and current portion of long-term obligations	$	4,103		$	7,104
Accounts payable		433,805			414,251
Accrued expenses		952,823			1,009,696
Income taxes payable		471,374			436,434
Deferred revenue		848,046			679,044
Total current liabilities		2,710,151			2,546,529
Deferred revenue		529,655			451,296
Long-term convertible debt		129,209			129,966
Other liabilities		88,415			80,348
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 2,493,371 and 2,476,821 shares		24,934			24,768
Additional paid-in capital		7,094,609			6,894,823
Deferred compensation		(121,352	)		(94,068	)
Retained earnings		4,898,766			4,566,157
Accumulated other comprehensive income (loss), net		(46,156	)		2,197
Treasury stock, at cost; 88,699 and 62,082 shares		(818,799	)		(509,156	)
Total stockholders’ equity		11,032,002			10,884,721
Total liabilities and stockholders’ equity	$	14,489,432		$	14,092,860

EMC CORPORATION

Consolidated Statements of Cash Flows

(in thousands)

Unaudited

	For the Six Months Ended
	June 30, 2004			June 30, 2003
Cash flows from operating activities:
Net income	$	332,609		$	116,922
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		297,111			265,670
Non-cash restructuring and other special charges		17,051			5,732
Amortization of deferred compensation		26,465			4,939
Provision for doubtful accounts		3,106			10,416
Deferred income taxes, net		40,129			41,943
Tax benefit from stock options exercised		24,122			—
Other		(987	)		(2,240	)
Changes in assets and liabilities, net of acquisitions:
Accounts and notes receivable		1,153			153,492
Inventories		(21,371	)		(65,916	)
Other assets		3,655			(63,392	)
Accounts payable		15,570			(56,049	)
Accrued expenses		(64,858	)		(72,093	)
Income taxes payable		24,097			198,397
Deferred revenue		183,083			173,488
Other liabilities		3,727			(99,889	)
Net cash provided by operating activities		884,662			611,420
Cash flows from investing activities:
Additions to property, plant and equipment		(174,465	)		(180,552	)
Capitalized software development costs		(86,374	)		(57,250	)
Purchases of short and long-term available for sale securities		(3,296,873	)		(2,529,704	)
Sales of short and long-term available for sale securities		3,072,175			2,245,272
Maturities of short and long-term available for sale securities		60,333			111,289
Business acquisition, net of cash acquired		(537,701	)		—
Other		(22,506	)		(7,626	)
Net cash used in investing activities		(985,411	)		(418,571	)
Cash flows from financing activities:
Issuance of common stock		106,188			41,760
Purchase of treasury stock		(309,643	)		(730	)
Payment of long-term and short-term obligations		(3,088	)		(24,412	)
Proceeds from long-term and short-term obligations		—			4,609
Net cash (used in) provided by financing activities		(206,543	)		21,227
Effect of exchange rate changes on cash		443			3,884
Net (decrease) increase in cash and cash equivalents		(306,849	)		217,960
Cash and cash equivalents at beginning of period		1,869,426			1,686,598
Cash and cash equivalents at end of period	$	1,562,577		$	1,904,558

EMC Corporation

Supplemental Financial Data

Revenue Analysis

(in thousands)

Unaudited

Revenue Components

	Q1 2003			Q2 2003			Q3 2003			Q4 2003			YTD 2003			Q1 2004			Q2 2004			YTD 2004
Revenues
Systems	$	752,387		$	803,814		$	801,075		$	957,411		$	3,314,687		$	894,956		$	930,230		$	1,825,186
Software		298,591			321,249			344,584			444,443			1,408,867			483,640			525,549			1,009,189
Services		306,025			328,370			341,113			438,235			1,413,743			473,155			498,449			971,604
		1,357,003			1,453,433			1,486,772			1,840,089			6,137,297			1,851,751			1,954,228			3,805,979
Other Businesses		27,148			25,867			24,075			22,421			99,511			19,878			16,956			36,834
Total Consolidated Revenues	$	1,384,151		$	1,479,300		$	1,510,847		$	1,862,510		$	6,236,808		$	1,871,629		$	1,971,184		$	3,842,813
Percentage impact to EMC revenue growth rate due to changes in exchange rates from the prior year		2.5	%		3.1	%		2.9	%		5.1	%		3.7	%		5.9	%		3.9	%		4.8	%

EMC Corporation

Supplemental Financial Data

Revenue Analysis

(in thousands)

Unaudited

Supplemental Revenue Data

	Q1 2003		Q2 2003		Q3 2003		Q4 2003		YTD 2003		Q1 2004		Q2 2004		YTD 2004
Symmetrix Hardware and Software Revenue ( a )	$	574,944	$	618,297	$	624,847	$	732,371	$	2,550,459	$	671,838	$	650,181	$	1,322,019
CLARiiON Hardware and Software Revenue ( a )		217,896		228,324		227,595		269,572		943,387		284,615		326,086		610,701
Connectivity Revenue ( b )		130,290		136,578		136,637		161,478		564,983		143,516		164,326		307,842
EMC-only Platform Software Revenue ( c )		199,791		211,461		228,994		251,452		891,698		251,135		263,168		514,303
Multi-Platform Software Revenue: ( d )		98,800		109,788		115,590		192,991		517,169		232,505		262,381		494,886
EMC							$	127,693			$	125,316	$	147,941	$	273,257
Legato								40,409				36,849		41,719		78,568
Documentum								24,889				37,188		33,890		71,078
VMware								—				33,152		38,831		71,983
Total Multi-Platform Software Revenue							$	192,991			$	232,505	$	262,381	$	494,886
Software Maintenance Revenue							$	138,508			$	176,102	$	189,947	$	366,049
Total Software License and Maintenance Revenue							$	582,951			$	659,742	$	715,496	$	1,375,238
Legato Software and Services Revenue							$	77,299			$	83,001	$	86,305	$	169,306
Documentum Software and Services Revenue							$	30,731			$	81,000	$	77,961	$	158,961
VMware Software and Services Revenue											$	39,294	$	47,198	$	86,492

( 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 whose operation requires the EMC platform operating environments.

( d ) Includes software products whose operation does not require the EMC platform operating environments.

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, 2004			June 30, 2003			June 30, 2004			June 30, 2003
Net income	$	192,804		$	81,739		$	332,609		$	116,922
Stock option expense		(96,266	)		(93,608	)		(184,056	)		(187,241	)
Adjusted net income (loss)	$	96,538		$	(11,869	)	$	148,553		$	(70,319	)
Net income per weighted average share, basic - as reported	$	0.08		$	0.04		$	0.14		$	0.05
Net income per weighted average share, diluted - as reported	$	0.08		$	0.04		$	0.14		$	0.05
Adjusted net income (loss) per weighted average share, basic	$	0.04		$	(0.01	)	$	0.06		$	(0.03	)
Adjusted net income (loss) per weighted average share, diluted	$	0.04		$	(0.01	)	$	0.06		$	(0.03	)