Tuesday April 20, 7:01 am Eastern Time
Company Press Release
EMC Reports Revenue Up 36%, Net Income Up 51% in First Quarter
Sharply Higher Demand Seen as Customers Build Internet Infrastructures Around EMC Enterprise Storage
HOPKINTON, Mass.--(BUSINESS WIRE)--April 20, 1999--EMC Corporation (NYSE:EMC - news), the world's leading provider of enterprise storage systems, software and services, today reported strong increases in net income and revenue for the first quarter of 1999.
Revenue for the first quarter was $1.13 billion, 36% higher than the first quarter of 1998. Net income for the quarter was $221 million, up 51% compared with the first quarter of 1998. On a diluted basis, earnings per share were $0.41 in the quarter, compared with $0.28 in the first quarter of 1998.
Michael C. Ruettgers, EMC President and CEO, said, ''We are delighted to report that, for the eighth consecutive quarter, both revenue and net income grew by more than 30% on a year-to-year basis. Our 51% increase in net income reflects continued gross margin expansion resulting from the dramatic growth of our software revenue.''
''We understand there are concerns throughout the information technology industry about the potential impact of the Year 2000 date change on IT spending patterns later this year,'' Ruettgers continued. ''EMC tracks customer spending plans very closely through extensive formal surveys and constant customer dialogue. The evidence we have collected in recent months points to continued robust demand throughout the year, and indicates that there will not be a slowdown in spending for EMC storage products during 1999. We are reiterating our previous forecast of greater than 30% growth in both revenue and net income for 1999. The explosion of both online and traditional data, and its increasing relevance to an organization's ability to conduct business and grow, shows no sign of diminishing. ''
''The opportunity ahead for EMC has never been greater,'' continued Ruettgers. ''Every major trend in information technology creates more information. Every mouseclick on the Internet retrieves or creates data. The need to store and access it day and night is making EMC Enterprise Storage a must-have foundation for any major information infrastructure. We believe we are still at the beginning of the demand that the new Internet economy will generate for enterprise storage.''
EMC's leadership in Fibre Channel connectivity continued to expand during the first quarter. Revenue from Fibre Channel-attached systems was nearly $280 million in the quarter, double the year-ago level. EMC has now shipped more than $1.1 billion in Symmetrix Enterprise Storage systems with Fibre Channel connectivity since first offering this technology in late 1997.
Highlights of the first quarter included the introduction of the EMC Enterprise Storage Network (ESN), the world's first integrated, enterprise-class storage network solution, including the EMC Connectrix system and management software, new larger-capacity Symmetrix Enterprise Storage systems, and ESN Professional Services.
Also during the quarter, EMC announced a 2-for-1 stock split, subject to stockholder approval of an increase in the number of shares of authorized common stock at the Company's Annual Meeting of Shareholders to be held May 5, 1999; EMC formed the FibreAlliance, a group of leading providers of Fibre Channel-based products working together to develop and implement common methods for managing heterogeneous storage networks based on Fibre Channel technology; EMC and IBM announced a technology and business alliance that expands an existing relationship; and EMC was named one of America's five best performing companies by both BUSINESS WEEK and BARRON'S.
EMC Corporation, 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.
EMC and Symmetrix are registered trademarks and Connectrix, EMC Enterprise Storage, and EMC Enterprise Storage Network are trademarks of EMC Corporation.
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) component quality and availability; (ii) delays in the development of new technology and the transition to new products; (iii) competitive factors, including but not limited to pricing pressures, in the computer storage market; (iv) the relative and varying rates of product price and component cost declines; (v) economic trends in various geographic markets and fluctuating currency exchange rates; (vi) deterioration or termination of the agreements with certain of the Company's OEMs or resellers; (vii) the uneven pattern of quarterly sales; (viii) risks associated with acquisitions; (ix) Year 2000 issues; and (x) 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 Statements of Income
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31 March 31,
1999 1998
Revenues:
Net sales $ 1,055,546 $ 805,933
Service and rental 72,409 22,418
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1,127,955 828,351
Costs and expenses:
Cost of sales and service 527,409 431,136
Research and development 100,722 65,675
Selling, general and
administrative 224,599 153,496
Operating income 275,225 178,044
Investment income 25,582 22,507
Interest expense (5,194) (4,730)
Other income/(expense), net (1,378) (1,001)
Income before taxes 294,235 194,820
Income tax provision 73,559 48,705
Net income $ 220,676 $ 146,115
Net income per weighted
average share, basic $ 0.44 $ 0.29
Net income per weighted
average share, diluted $ 0.41 $ 0.28
Weighted average
shares, basic 504,477 497,234
Weighted average
shares, diluted 545,646 535,120
As a % of total revenue:
Gross margin 53.2% 48.0%
Selling, general and
administrative 19.9% 18.5%
Research and development 8.9% 7.9%
Operating income 24.4% 21.5%
Net income 19.6% 17.6%
EMC CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
March 31, December 31,
1999 1998
Assets:
Cash and short-term investments $1,511,169 $1,530,475
Accounts receivable 983,739 984,412
Inventories 526,624 485,844
Other current assets 123,492 104,082
Total current assets 3,145,024 3,104,813
Long-term investments 763,964 562,360
Property, plant and equipment 666,379 637,534
Other assets 283,261 263,864
Total assets $4,858,628 $4,568,571
Liabilities and equity:
Current liabilities $ 707,989 $ 653,193
Deferred income taxes 49,433 50,591
Long-term obligations:
Convertible subordinated notes 491,841 517,500
Other long-term liabilities 15,282 23,151
Stockholders' equity 3,594,083 3,324,136
Total liabilities and equity $4,858,628 $4,568,571
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Contact:
EMC Corporation
Mark Fredrickson, 508/435-1000
fredrickson_mark@emc.com
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