EMC Reports Its First Billion-Dollar Quarter, Marked by Higher Growth Rates and Profit Margins; Total Revenue Rose 37%, Net Income Up 52% In Record Third Quarter; Software Revenue Increases 136
HOPKINTON, Mass.--(BUSINESS WIRE)--Oct. 20, 1998--EMC
Corporation, (NYSE:EMC) the world's leading supplier of enterprise
storage systems and software, today reported record company results
for the third quarter of 1998, achieving its first billion-dollar
quarter in total revenue and increasing its growth rate and profit
margins.
Revenue for the third quarter was $1,002,541,000, up 37% from the
third quarter of 1997. On a diluted basis, earnings per share were
$0.38 in the quarter, up 52% compared with the $0.25 per share of the
year-ago quarter, on net income of $201,290,000, up 52% compared with
the third quarter of 1997. Revenue from EMC's growing portfolio of
enterprise storage software products increased 136% compared with the
third quarter of 1997, to $117,541,000.
Michael C. Ruettgers, EMC President and CEO, said, "In many ways,
the third quarter marks EMC's most impressive quarter to date. We have
again achieved a higher revenue growth rate and improved
profitability. Our 52% growth in quarterly net income is one of the
highest rates for EMC in recent years, and our 20% net profit margin
represents our highest quarterly return on sales this decade.These
results demonstrate the benefits of sustained technology leadership,
tight business management, and the constant value we deliver to our
customers. Our customers continue to view EMC Enterprise Storage as a
strategic element of their information infrastructure, even in times
of economic uncertainty. EMC will continue to invest in initiatives
that will contribute to long-term growth and market-leading
performance."
"Our strength is underlined by those product areas that are most
important to our future growth," Ruettgers continued. "In revenue from
enterprise storage software, we are on track to meet our aggressive
goal of $400 million for 1998. In systems with Fibre Channel
connectivity, our revenue grew to $199 million in the third quarter.
Growth in these areas is a strong indication that customers are
sharing our view of EMC Enterprise Storage as an investment in the
core infrastructure required for success in the information age."
Highlights of the third quarter included the acquisition of
Conley Corporation, a software company specializing in several
important technologies expected to contribute to the development and
deployment of EMC Enterprise Storage Networks; and the acquisition of
Millennia III, Inc., a professional services firm. Also during the
quarter, database software leader Oracle named EMC as the first
storage company to become a Global Alliance Partner; and EMC was named
one of the "World's 100 Best-Managed Companies" by INDUSTRY WEEK
magazine.
EMC Corporation, a Fortune 500 company based in Hopkinton,
Massachusetts, is the world's technology and market leader in the
rapidly growing market for intelligent enterprise storage systems,
software and services. The company's products store, retrieve, manage,
protect and share information from all major computing environments,
including UNIX, Windows NT and mainframe platforms. The company has
offices worldwide, trades on the New York Stock Exchange under the
symbol EMC, and is a component of the S&P 500 Index. For further
information about EMC and its storage solutions, EMC's corporate Web
site can be accessed at emc.com.
This release contains statements about future growth that are
"forward-looking statements" under the Federal Securities Laws. Actual
results could vary materially. Factors that could cause actual results
to vary materially include, but are not limited to: component quality
and availability, delays in the development of new technology and the
transition to new products, the uneven pattern of quarterly results,
changes in business conditions, changes and competitive factors in the
computer storage market, changes in EMC's sales strategy and product
development plans, competitive pricing pressures, fluctuating currency
exchange rates, the relative and varying rates of product price and
component cost declines, deterioration or termination of the
agreements with certain of the company's OEMs or resellers, risks
associated with acquisitions, Year 2000 issues, other one-time events
and other important factors disclosed previously and from time to time
in EMC's filings at the U. S. Securities and Exchange Commission.
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EMC CORPORATION
(in thousands, except per share data)
(unaudited)
Three Months Ended
STATEMENTS OF OPERATIONS September 30, September 30,
1998 1997
Revenues:
Net sales $ 945,806 $ 713,949
Service and rental 56,735 18,621
1,002,541 732,570
Cost and expenses:
Cost of sales and service 478,187 391,278
Research and development 80,422 56,531
Selling, general and
administrative 193,068 122,093
Operating income 250,864 162,668
Investment income 25,765 20,708
Interest expense (4,862) (4,706)
Other income/ (expense), net (3,380) (294)
Income before taxes 268,387 178,376
Provision for income taxes 67,097 45,754
Net income $ 201,290 $ 132,622
Net income per weighted
average share, basic $ 0.40 $ 0.27
Net income per weighted
average share, diluted $ 0.38 $ 0.25
Weighted average
shares, basic 501,111 494,667
Weighted average
shares, diluted 540,299 531,352
As a % of total revenue:
Gross margin 52.3% 46.6%
Selling, general and
administrative 19.3% 16.7%
Research and development 8.0% 7.7%
Operating income 25.0% 22.2%
Net income 20.1% 18.1%
EMC CORPORATION
(in thousands, except per share amounts)
(unaudited)
Nine Months Ended
STATEMENTS OF OPERATIONS September 30, September 30,
1998 1997
Revenues:
Net sales $ 2,670,561 $ 2,009,360
Service and rental 112,333 55,108
2,782,894 2,064,468
Cost and expenses:
Cost of sales and service 1,376,803 1,111,808
Research and development 220,325 158,068
Selling, general and
administrative 523,917 334,357
Operating income 661,849 460,235
Investment income 72,226 49,804
Interest expense (14,591) (10,748)
Other income/ (expense), net (3,616) 1,434
Income before taxes 715,868 500,725
Provision for income taxes 178,967 128,436
Net income $ 536,901 $ 372,289
Net income per weighted
average share, basic $ 1.08 $ 0.76
Net income per weighted
average share, diluted $ 1.01 $ 0.72
Weighted average
shares, basic 499,006 492,936
Weighted average
shares, diluted 537,944 523,271
As a % of total revenue:
Gross margin 50.5% 46.1%
Selling, general and
administrative 18.8% 16.2%
Research and development 7.9% 7.7%
Operating income 23.8% 22.3%
Net income 19.3% 18.0%
EMC CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
September 30, December 31,
1998 1997
Assets:
Cash and short-term
investments $1,350,680 $1,373,857
Accounts receivable 837,647 788,869
Inventories 521,745 404,660
Other current assets 107,275 59,640
Total current assets 2,817,347 2,627,026
Long-term investments 575,982 276,776
Property, plant and equipment 584,575 396,511
Other assets 277,365 189,796
Total assets $4,255,269 $3,490,109
Liabilities and equity:
Current liabilities $ 630,694 $ 505,870
Deferred income taxes 49,414 45,353
Long-term obligations:
Convertible subordinated notes 517,500 517,500
Other long-term liabilities 23,344 45,085
Stockholders' equity 3,034,317 2,376,301
Total liabilities and equity $4,255,269 $3,490,109
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CONTACT:
EMC Corporation
Mark Fredrickson, 508-435-1000 X77137
fredrickson_mark@emc.com
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