Press Release

EMC Reports Strong Fourth Quarter Results

Revenue Up 25&#37 Year-to-Year as Customers Embrace EM' Broad Set of Information Lifecycle Management Solutions, both Documentum and LEGATO Achieve Record Results

Hopkinton, Mass., Thursday, January 22, 2004 - 

 

EMC Corporation (NYSE:EMC) today reported fourth-quarter and full fiscal year financial results for 2003, reflecting strong customer demand for the company's broad portfolio of systems, software and services for information lifecycle management.

Total consolidated revenue for EMC's fourth quarter was $1.86 billion, 25% higher than the $1.49 billion reported for the fourth quarter of 2002. Net income for the fourth quarter was $220 million or $.09 per diluted share, including a net benefit of $.01 resulting from certain income tax benefits, partially offset by restructuring and other special charges primarily related to the completed acquisitions of LEGATO Systems, Inc., and Documentum, Inc. This compares with a net loss of $64 million or ($.03) per share for the fourth quarter of 2002.

Total consolidated revenue for EMC's full 2003 fiscal year was $6.24 billion, 15% higher than the $5.44 billion reported for the full 2002 fiscal year. Net income for the full 2003 fiscal year was $496 million or $.22 per diluted share, compared with a net loss of $119 million or ($.05) per share for the full 2002 fiscal year.

Joe Tucci, EMC's President and CEO, said, "The strength of our broadened product portfolio, combined with outstanding execution and an improving global economy, made for a solid finish to 2003. Our information lifecycle management strategy is being well received by both long-standing and new customers who are grappling with the challenges of compliance, information protection and constrained budgets. EMC strengthened its market position and clearly gained share in 2003."

Tucci continued, "I could not be prouder of the EMC team. The impact of helping our customers control both their information and their costs is evident in today's results. Our innovation engine continued to run in overdrive throughout the year, enabling us to rapidly deliver new capabilities and functionality to our customers, who will reap even greater benefits from our aggressive product development in 2004."

EMC's revenue growth was strong across all major business segments and geographies in the fourth quarter. EMC Symmetrix, CLARiiON and Centera networked storage systems and core EMC software and services, which excludes revenue from LEGATO Software and Documentum, each experienced double-digit sequential revenue growth compared with the third quarter of 2003. Total CLARiiON revenue, which includes systems and related software, reached nearly $1 billion for the full year, continuing to rapidly gain share in the mid-tier storage market. Connectivity revenues also had double-digit sequential growth, stimulated by high demand for EMC's groundbreaking new NAS Gateway, the Celerra NS600G. Consolidated international revenue grew 33% compared to the same period a year ago, representing a record 43% of EMC's fourth quarter revenues.

Bill Teuber, EMC's Executive Vice President and Chief Financial Officer, said, "For the year we reached and exceeded every major financial goal we set at the start of 2003. We were increasingly profitable during each quarter of 2003 and grew revenues every quarter over the preceding one throughout the year. Our crisp execution translated into continued improvements in our cost structure and additional margin expansion. We ended the year with the strongest balance sheet in EMC's history with more than $6.9 billion in cash and investments."

During the fourth quarter, EMC completed the acquisitions of LEGATO Systems, Inc., on October 20, and Documentum, Inc., on December 18, significantly expanding the world's most comprehensive portfolio of information lifecycle management solutions. LEGATO and Documentum each achieved record revenue during the fourth quarter. LEGATO and Documentum revenue recognized after the respective closings of these acquisitions are included in EMC's fourth quarter and full fiscal year results.

EMC's market-leading Symmetrix DMX high-end storage systems were named "Product of the Year" for 2003 among all disk and disk subsystems by TechTarget's Storage magazine and Searchstorage.com. Among other highlights of the fourth quarter, EMC continued to broaden its product portfolio and gain industry-wide recognition for delivering innovation and award-winning service to customers around the globe. EMC unveiled a series of new mid-tier network-attached storage (NAS) systems, including the NS600G NAS Gateway and NetWin 200 systems. EMC's LEGATO Software division delivered enhancements to its RepliStor for Windows Storage Server solution, allowing for the support of many-to-one and one-to-many replication configurations for data consolidation on a Windows Storage Server. Both EMC and LEGATO were recognized by the Service and Support Professionals Association (SSPA) for outstanding customer support. DM Review magazine selected EMC as the Best Storage Solutions Provider for 2003, and Contingency Planning & Management (CPM) magazine inducted EMC into the CPM Hall of Fame for its contributions to business continuity.

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. These statements supersede all prior statements regarding Business Outlook set forth in prior EMC news releases.

  • Consolidated revenues for the first quarter of 2004 are expected to be approximately $1.8 billion to $1.835 billion.
  • Diluted earnings per share for the first quarter of 2004, excluding an approximate charge of $.01 associated with the acquisition of VMware, Inc, should be $.06. Including the charge, earnings per share should be $.05.
  • Consolidated revenues for 2004 are expected to grow at 25%+, slightly exceeding $7.8 billion.
  • Gross margins should slightly exceed 50% during some point prior to the fourth quarter of 2004, with some natural ebb and flow between quarters based on a variety of factors, including volume and mix.
  • Selling, general and administrative expenses, as a percentage of revenue, should be in the mid 20% range for 2004.
  • Research and development expenses, as a percentage of revenue, should be approximately 12% for 2004.
  • Amortization expense attributable to the LEGATO, Documentum and VMware acquisitions should be approximately $125 million for 2004.
  • Operating income, as a percentage of revenue, should reach the mid-teens by the fourth quarter of 2004.
  • Interest income is expected to be lower in 2004 compared with 2003.
  • The income tax rate, as a percentage of pre-tax income, is expected to be approximately 30% for 2004.
  • Excluding the impact of its stock buy-back program, EMC expects to have approximately 2.5 billion diluted shares outstanding for the full year 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.

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