EMC Reports Fourth Quarter Results; Revenue Up 18% Sequentially On Strong Customer Demand, Market Share Gains For CLARiiON CX Systems, Information Storage Software.Business Editors/High-Tech Writers HOPKINTON Hopkinton is the name of several towns in the United States:
EMC Corporation EMC Corporation (NYSE: EMC) is an American Fortune 500 and S&P 500 manufacturer of software and systems for information management and storage. It is headquartered in Hopkinton, Massachusetts, USA. (NYSE NYSE See: New York Stock Exchange :EMC (1) (EMC Corporation, Hopkinton, MA, www.emc.com) The leading supplier of storage products for midrange computers and mainframes. Founded in 1979 by Richard J. Egan and Roger Marino, EMC has developed advanced storage and retrieval technologies for the world's largest companies. ) today reported fourth quarter and full fiscal year results for 2002. The results included an 18% sequential One after the other in some consecutive order such as by name or number. revenue increase in the fourth quarter compared with the third quarter of 2002, led by strong customer demand for the new CLARiiON  This article or section is written like an .Please help [ rewrite this article] from a neutral point of view. Mark blatant advertising for , using . CX family of mid-tier networked storage systems and for EMC's industry-leading portfolio of information storage software products. Total consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenue for the fourth quarter was $1.49 billion, 18% higher than the $1.26 billion reported in the third quarter of 2002, and 2% lower than the $1.51 billion reported in the fourth quarter of 2001. Net loss for the fourth quarter, including an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other special charge of $117 million, was $64 million or $.03 per share, compared with a net loss of $70 million or $.03 per share in the fourth quarter of 2001. Net income for the fourth quarter of 2002, excluding the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. $117 million charge, was $53 million, or $.02 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Total consolidated revenue for the full 2002 fiscal year was $5.44 billion, compared with $7.09 billion for the full 2001 fiscal year. Net loss for the full 2002 fiscal year was $119 million or $.05 per share, compared with a net loss of $508 million or $.23 per share for the full 2001 fiscal year. Joe Tucci Tucci is a surname, and may refer to:
v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. networked storage strategy began to pay off. Each of our major businesses -information storage systems, software and services - achieved double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. sequential revenue growth. It's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have clear we gained market share, particularly in mid-tier storage and storage software. We are now approaching customers with our strongest and most complete product line ever, a lower cost structure, and a significantly improved go-to-market model. We expect to gain market share in all of our strategic segments and grow profitably throughout 2003." EMC's fourth-quarter results were marked by success in several strategic areas. Revenue from EMC's mid-tier CLARiiON products experienced strong double-digit growth in the fourth quarter compared with the third quarter of 2002. Revenue from information storage software grew 22% in the fourth quarter compared with the third quarter of 2002. EMC Centera Content Addressed Storage A storage technique from EMC for content that is in its final form (fixed content). CAS assigns an identifier to the files so they can be accessed no matter where they are located. systems, introduced in April 2002, significantly exceeded fourth-quarter revenue expectations, with well over one petabyte One quadrillion bytes (one trillion kilobytes). Also PB, Pbyte and P-byte. See peta, binary values and space/time. (unit) petabyte - 2^50 = 1,125,899,906,842,624 bytes = 1024 terabytes or roughly 10^15 bytes. 1024 petabytes is one exabyte. (1,000 terabytes) of Content Addressed Storage shipped during the quarter. Bill Teuber, EMC's Executive Vice President and Chief Financial Officer, said, "The balanced sequential revenue growth we achieved was encouraging. Healthy customer demand for our automated networked storage solutions helped increase our overall product volume, leading to a significant improvement in gross margins. Throughout 2002, we focused on controlling the controllable. Since we intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: our attack on costs six quarters ago, we have achieved an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. cost savings rate Savings rate Personal savings as a percentage of disposable personal income. of more than $1.25 billion, resulting in a quarterly break-even level of about $1.37 billion. In addition, we continued to strengthen the balance sheet during the year. Absent the $364 million we spent repurchasing our shares, cash and investments would have increased $966 million during 2002. We ended the year with cash and investments of $5.7 billion, or approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 60% of total assets." During the fourth quarter, EMC continued its most aggressive series of product roll-outs ever by delivering two new members of the powerful CLARiiON CX family of mid-tier networked storage systems; combining the functionality and availability found in EMC's high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. NAS (1) See network access server. (2) (Network Attached Storage) A specialized file server that connects to the network. A NAS device contains a slimmed-down operating system and a file system and processes only I/O requests by supporting the popular solutions with the cost advantages of CLARiiON into the EMC Celerra This article or section is written like an .Please help [ rewrite this article] from a neutral point of view. Mark blatant advertising for , using . NS600; and providing customers with NAS software solutions that enable organizations to centrally manage and automate To turn a set of manual steps into an operation that goes by itself. See automation. the movement of files and data across geographically ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge dispersed dis·perse v. dis·persed, dis·pers·ing, dis·pers·es v.tr. 1. a. To drive off or scatter in different directions: The police dispersed the crowd. b. locations with new EMC OnCourse software. EMC also expanded its alliance with Dell and jointly teamed with Microsoft (Microsoft Corporation, Redmond, WA, www.microsoft.com) The most successful and influential software company. Microsoft's software and Intel's hardware pioneered the PC and revolutionized the computer industry. to develop the largest Microsoft SQL Server A relational DBMS from Microsoft that is a major component of the Windows Server System. It is Microsoft's high-end client/server database and is closely integrated with Microsoft Visual Studio and the Microsoft Office System. (TM) storage area network (SAN) ever built; unveiled major advances in its WideSky Developers Suite; and outlined plans to drive standards-compliant Standards-compliant is a term often used in describing websites & user agents' (often web browsers) relative compliance with web standards proposed by the World Wide Web Consortium (W3C); also used for stressing out that one doesn't use proprietary methods or features. , open storage management solutions into real-world environments. EMC products, services and people were recognized during the fourth quarter for innovation, market leadership, and historic contributions. The readers of Intelligent Enterprise Magazine selected EMC ControlCenter as the world's best family of storage management software in the publication's annual "Intelligent Enterprise Reader's Choice Awards"; EMC Centera was named "Product of the Year" by the content collaboration Working together on a project. See collaborative software. magazine Transform Magazine, and received "Best of Show" honors at the BioIT BioIT Bioinformation Technology World Conference & Expo; EMC won the Software Technical Assistance Recognition (STAR) award for outstanding mission-critical support for the second year in a row; and EMC Executive Chairman Mike Ruettgers was inducted into the IT Industry Hall of Fame for transforming and revolutionizing the way businesses access, manage, share and protect digital information. Business Outlook The following statements are based on current expectations. These statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. , 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 here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . -- Revenue in the first quarter of 2003 is expected to be between $1.35 billion and $1.4 billion. -- Excluding any restructuring charges, earnings per share in the first quarter of 2003 is expected to be, at best, $.01 per diluted share. -- Additional improvements in the overall cost structure are expected during 2003, resulting in an expected break-even level under $1.3 billion by the end of Q2 of 2003. -- Excluding any restructuring charges, EMC expects to report net income for each quarter in 2003. -- EMC expects continued improvement in gross margins and operating margins during 2003, although quarterly margins may vary during the year based on volume. -- R&D investment for 2003 is expected to be slightly lower than the $781 million invested in 2002, as additional efficiencies are gained. -- Capital spending for 2003 is expected to be approximately the same to slightly down compared with the $391 million spent in 2002. -- The tax rate for 2003 is expected to be approximately 30%. 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 at www.EMC.com. EMC and CLARiiON are registered trademarks, and Celerra, Centera, OnCourse, ControlCenter and WideSky are trademarks of EMC Corporation. Other trademarks are the property of their respective owners. This release contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " 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) the transition to new products, the uncertainty of customer acceptance of new product offerings, and rapid technological and market change; (iv) insufficient in·suf·fi·cient adj. 1. Not sufficient. 2. Incapable of proper functioning. , excess or obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. ; (v) competitive factors, including but not limited to pricing pressures; (vi) component quality and availability; (vii) the relative and varying rates of product price and component cost declines; (viii) the ability to attract and retain highly qualified employees; (ix) fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. currency exchange rates; (x) risks associated with strategic investments and acquisitions; and (xi) other one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. events and other important factors disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). previously and from time to time in EMC's filings with the U.S. Securities and Exchange Commission.
EMC CORPORATION
Consolidated Statements of Operations
Three Months Ended December 31, 2002
(in thousands, except per share amounts)
(Unaudited)
GAAP Adjustments Adjusted
Revenues:
Net sales $1,148,807 $1,148,807
Services 340,591 340,591
1,489,398 1,489,398
Costs and expenses:
Cost of sales 721,599 (823)(1) 722,422
Cost of services 180,032 180,032
Research and development 186,796 186,796
Selling, general and
administrative 393,054 393,054
Restructuring and special
charges 150,402 150,402 (2) -
Operating income (loss) (142,485) (149,579) 7,094
Investment income 69,734 69,734
Interest expense (3,071) (3,071)
Other expense, net (16,436) (8,920)(2) (7,516)
Income (loss) before taxes (92,258) (158,499) 66,241
Income tax (benefit) provision (28,342) (41,844)(3) 13,502
Net income (loss) $(63,916) $(116,655) $52,739
Net income (loss) per weighted
average share, basic $(0.03) $(0.05) $0.02
Net income (loss) per weighted
average share, diluted $(0.03) $(0.05) $0.02
Weighted average shares,
basic 2,193,269 2,193,269
Weighted average shares,
diluted 2,193,269 2,197,485
As a % of total revenue:
Gross margin 39.5% 39.4%
Selling, general and
administrative 26.4% 26.4%
Research and development 12.5% 12.5%
Operating income (loss) -9.6% 0.5%
Net income (loss) -4.3% 3.5%
(1) Reversal of $823 of restructuring inventory provision taken in the
third quarter of 2001.
(2) Represents $159,322 Q4 '02 restructure and other special charges.
(3) Represents the tax impact of adjustments (1) and (2).
EMC CORPORATION
Consolidated Statements of
Operations
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
December December December December
31, 31, 31, 31,
2002 2001 (1) 2002 2001 (2)
Revenues:
Net sales $1,148,807 $1,196,548 $4,219,156 $5,915,695
Services 340,591 316,162 1,219,196 1,174,938
1,489,398 1,512,710 5,438,352 7,090,633
Cost and expenses:
Cost of sales 721,599 771,837 2,614,482 3,525,145
Cost of services 180,032 182,933 705,028 721,897
Research and
development 186,796 216,885 781,457 928,701
Selling, general and
administrative 393,054 492,963 1,680,814 2,214,223
Restructuring and
other special charges 150,402 - 150,402 398,508
Operating loss (142,485) (151,908) (493,831) (697,841)
Investment income 69,734 64,810 256,153 265,285
Interest expense (3,071) (810) (11,415) (11,338)
Other expense, net (16,436) (16,611) (47,394) (133,141)
Loss before taxes (92,258) (104,519) (296,487) (577,035)
Benefit for income taxes (28,342) (34,357) (177,781) (69,323)
Net loss $(63,916) $(70,162) $(118,706) $(507,712)
Net loss per weighted
average share, basic $(0.03) $(0.03) $(0.05) $(0.23)
Net loss per weighted
average share, diluted $(0.03) $(0.03) $(0.05) $(0.23)
Weighted average
shares, basic 2,193,269 2,220,054 2,206,294 2,211,273
Weighted average
shares, diluted 2,193,269 2,220,054 2,206,294 2,211,273
As a % of total revenue:
Gross margin 39.5% 36.9% 39.0% 40.1%
Selling, general and
administrative 26.4% 32.6% 30.9% 31.2%
Research and
development 12.5% 14.3% 14.4% 13.1%
Operating loss -9.6% -10.0% -9.1% -9.8%
Net loss -4.3% -4.6% -2.2% -7.2%
(1) Includes $8,746 of goodwill amortization classified in cost of
sales, $100 of goodwill amortization classified in cost of
services and $3,648 of goodwill amortization classified in
research and development that would have been excluded if
Statement of Financial Accounting Standards No. 142 "Goodwill and
Other Intangible Assets" was in effect in 2001. Excluding the
goodwill amortization would have resulted in an after-tax net loss
of $58,708 or $(0.03) per diluted share.
(2) Includes $42,109 of goodwill amortization classified in cost of
sales, $189 of goodwill amortization classified in cost of
services and $10,091 of goodwill amortization classified in
research and development that would have been excluded if
Statement of Financial Accounting Standards No. 142 "Goodwill and
Other Intangible Assets" was in effect in 2001. Excluding the
goodwill amortization would have resulted in an after-tax net loss
of $459,791 or $(0.21) per diluted share.
EMC CORPORATION
Consolidated Balance Sheets
(in thousands, except per share amounts)
(Unaudited)
December 31, December 31,
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $1,686,598 $2,129,019
Short-term investments 864,743 445,428
Accounts and notes receivable,
less allowance for doubtful
accounts of $50,551 and $36,169 881,325 1,348,569
Inventories 437,805 583,985
Deferred income taxes 250,197 287,597
Other current assets 96,580 128,644
Total current assets 4,217,248 4,923,242
Long-term investments 3,134,290 2,509,112
Property, plant and equipment, net 1,624,396 1,827,331
Intangible and other assets, net 570,587 583,110
Deferred income taxes 43,926 46,840
Total assets $9,590,447 $9,889,635
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of
long-term obligations $27,507 $56,677
Accounts payable 429,732 424,132
Accrued expenses 948,357 1,024,211
Income taxes payable 187,695 315,368
Deferred revenue 448,359 359,026
Total current liabilities 2,041,650 2,179,414
Deferred Revenue 156,412 10,237
Other Liabilities 166,383 99,164
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 2,235,930 and 2,221,442
shares 22,359 22,214
Additional paid-in capital 3,580,025 3,470,325
Deferred compensation (10,762) (29,209)
Retained earnings 4,070,049 4,188,755
Accumulated other comprehensive loss, net (53,488) (33,007)
Treasury stock, at cost; 50,555 and
1,060 shares (382,181) (18,258)
Total stockholders' equity 7,226,002 7,600,820
Total liabilities and stockholders'
equity $9,590,447 $9,889,635
EMC CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
For the Twelve Months
Ended
December 31, December 31,
2002 31, 2001
Cash flows from operating activities:
Net loss $(118,706) $(507,712)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 653,686 654,698
Noncash restructuring, inventory and other
special charges (reversals) (26,027) 449,364
Other than temporary declines in equity
investments 6,315 106,560
Amortization of deferred compensation 13,077 19,514
Provision for doubtful accounts 35,171 32,711
Deferred income taxes, net 74,088 (227,429)
Net loss on disposal of property, plant, and
equipment 26,405 2,282
Tax benefit from stock options exercised 34,291 137,901
Minority interest - 29
Changes in assets and liabilities:
Accounts and notes receivable 435,613 806,002
Inventories 240,377 127,581
Other assets 64,918 (19,303)
Accounts payable 4,240 (78,429)
Accrued expenses (74,886) 201,301
Income taxes payable (158,308) (157,007)
Deferred revenue 236,813 69,637
Other liabilities (1,333) 13,558
Net cash provided by operating
activities 1,445,734 1,631,258
Cash flows from investing activities:
Additions to property, plant and equipment (391,076) (889,309)
Proceeds from sales of property, plant and
equipment 6 17,310
Capitalized software development costs (126,678) (120,724)
Purchases of short and long-term available-
for-sale securities (8,437,486) (4,981,376)
Sales of short and long-term available-for-
sale securities 7,199,476 4,445,271
Maturity of short and long-term available-for-
sale securities 226,408 126,683
Purchase of other assets (25,050) -
Business acquisition, net of cash acquired (21,993) (111,455)
Net cash used by investing activities (1,576,393) (1,513,600)
Cash flows from financing activities:
Issuance of common stock 80,924 170,284
Purchase of treasury stock (363,923) (18,258)
Payment of long-term and short-term
obligations (29,694) (16,859)
Issuance of long-term and short-term
obligations 1,516 40,206
Cash portion of McDATA Corporation spin-off
dividend - (141,981)
Net cash provided (used) by financing
activities (311,177) 33,392
Effect of exchange rate changes on cash (585) (5,252)
Net increase (decrease) in cash and cash
equivalents (442,421) 145,798
Cash and cash equivalents at beginning of
period 2,129,019 1,983,221
Cash and cash equivalents at end of period $1,686,598 $2,129,019
Non-cash activity:
Exchange of net assets for equity investment $3,560 $-
Distribution of net assets in McData
Corporation dividend - 234,152
Issuance of capital lease obligations - 24,490
Options issued in business acquisitions - 1,050
EMC CORPORATION
Supplemental Schedule of Earnings Adjusted to Expense
Stock Options
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
December December December December
31, 31, 31, 31,
2002 2001 2002 2001
Net loss $(63,916) $(70,162) $(118,706) $(507,712)
Stock option expense (90,168) (97,820) (356,415) (335,703)
Adjusted net loss $(154,084) $(167,982) $(475,121) $(843,415)
Net loss per weighted
average share, basic
- as reported $(0.03) $(0.03) $(0.05) $(0.23)
Net loss per weighted
average share, diluted
- as reported $(0.03) $(0.03) $(0.05) $(0.23)
Adjusted net loss per
weighted average share,
basic $(0.07) $(0.08) $(0.22) $(0.38)
Adjusted net loss per
weighted average share,
diluted $(0.07) $(0.08) $(0.22) $(0.38)
EMC Corporation
Supplemental Financial Data
Revenue Analysis
(in thousands)
(Unaudited)
Revenue Components
Q1 2001 Q2 2001 Q3 2001 Q4 2001 YTD 2001
Storage Revenue
Information
Storage
Systems $1,564,312 $1,225,600 $675,591 $841,741 $4,307,244
Information
Storage
Software 467,519 497,538 242,521 352,444 1,560,022
Information
Storage
Services 231,986 231,995 236,734 271,559 972,274
Total Information
Storage
Revenues 2,263,817 1,955,133 1,154,846 1,465,744 6,839,540
Other
Businesses 80,978 65,722 57,427 46,966 251,093
Total
Consolidated
Revenues $2,344,795 $2,020,855 $1,212,273 $1,512,710 $7,090,633
Q1 2002 Q2 2002 Q3 2002 Q4 2002 YTD 2002
Storage Revenue
Information
Storage
Systems $741,578 $779,109 $662,417 $802,196 $2,985,300
Information
Storage
Software 282,323 320,568 283,591 346,611 1,233,093
Information
Storage
Services 238,530 251,148 279,217 309,472 1,078,367
Total Information
Storage
Revenues 1,262,431 1,350,825 1,225,225 1,458,279 5,296,760
Other
Businesses 39,547 36,713 34,213 31,119 141,592
Total
Consolidated
Revenues $1,301,978 $1,387,538 $1,259,438 $1,489,398 $5,438,352
Networked Storage Revenue
Q3 2001 Q4 2001
Networked Storage
Revenue, as previously
calculated $449,193 $682,443
Networked Storage Revenue,
revised $627,706 $847,413
Networked Storage Revenue,
revised, as a % of
Information Storage Systems
and Software Revenue 68% 71%
Q1 2002 Q2 2002 Q3 2002 Q4 2002
Networked Storage
Revenue, as previously
calculated $561,747 $597,323 N/A N/A
Networked Storage Revenue,
revised $749,346 $777,263 $689,205 $894,583
Networked Storage Revenue,
revised, as a % of
Information Storage Systems
and Software Revenue 73% 71% 73% 78%
Note: The revised networked storage revenue includes networked
information storage systems and software revenue not captured in
the previous calculation. The revised calculation includes units
sold into an existing networked environment, upgrades and
networked information storage systems and software sold through
channels to end customers.
Note: Amounts may not foot due to rounding
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