EMC CORP - 10-K Annual Report

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

176 South Street
Hopkinton, Massachusetts 01748
(Address of principal executive offices, including zip code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ý No o

The aggregate market value of voting stock held by non-affiliates of the registrant was $22,900,069,174 based upon the closing price on the New York Stock Exchange on the last business day of the registrant's most recently completed second fiscal quarter (June 30, 2003).

The number of shares of the registrant's Common Stock, par value $.01 per share, outstanding as of January 31, 2004 was 2,418,445,555.

Information required in response to Part III of Form 10-K (Items 10, 11, 12, 13 and 14) is hereby incorporated by reference to the specified portions of the registrant's Proxy Statement for the Annual Meeting of Stockholders to be held on May 5, 2004.

		Page No.
PART I
ITEM 1.	Business	1
ITEM 2.	Properties	11
ITEM 3.	Legal Proceedings	12
ITEM 4.	Submission of Matters to a Vote Of Security Holders	12
PART II
ITEM 5.	Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16
ITEM 6.	Selected Consolidated Financial Data	17
ITEM 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	47
ITEM 8.	Financial Statements and Supplementary Data	49
ITEM 9.	Changes In and Disagreements With Accountants On Accounting and Financial Disclosure	100
ITEM 9A.	Controls and Procedures	100
PART III
ITEM 10.	Directors and Executive Officers of the Registrant	100
ITEM 11.	Executive Compensation	100
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	100
ITEM 13.	Certain Relationships and Related Transactions	100
ITEM 14.	Principal Accountant Fees and Services	100
PART IV
ITEM 15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	101
Signatures	102

This Annual Report on Form 10-K contains forward-looking statements, within the meaning of the Federal securities laws, about our business and prospects, including without limitation statements regarding the following for 2004: our expected revenues, gross margin percentages, research and development expenses and selling, general and administrative expenses as a percentage of revenues, investment income, income tax rate and depreciation and amortization expenses. The forward-looking statements do not include the potential impact of any mergers, acquisitions, divestitures or business combinations that may be completed after the date hereof. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes," "plans," "intends," "expects," "intends," "goals" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Our future results may differ materially from our past results and from those projected in the forward-looking statements due to various uncertainties and risks, including those described in the section of this report titled "Management's Discussion and Analysis of Financial Condition and Results of Operations–Factors That May Affect Future Results." We disclaim any obligation to update any forward-looking statements contained herein after the date of this Annual Report.

EMC Corporation and its subsidiaries design, manufacture, market and support a wide range of networked storage products and information storage and management software that are designed to enable organizations of all sizes to extract the maximum value from their information, at the lowest total cost, across every point in the information lifecycle. We also offer extensive services for information storage and management. Our strategy and vision is to focus on the management of information across its entire lifecycle from creation and use to archive and disposal. By doing so, we help customers improve the utilization of their information technology (IT) assets, simplify and automate the management of their information, provide cost-effective business continuity and ensure easier compliance with government and industry regulations and corporate governance requirements. Our best-of-breed technology and depth of services expertise are focused on helping customers implement information lifecycle management.

The customers for our products are located worldwide and represent a cross-section of industries and government agencies. Our customers use our products and services in conjunction with a variety of computing platforms, storage systems and software applications that support key business processes, including transaction processing, enterprise resource planning, customer relationship management, data warehousing, electronic commerce, content management, business intelligence and web hosting. Our products enable them to consolidate, network and generate value from their digital information across heterogeneous storage systems, switches, hubs, servers and software.

We believe that our products and services enable our customers to realize higher returns on information and achieve competitive advantages.

We were incorporated in Massachusetts in 1979. Our corporate headquarters are located at 176 South Street, Hopkinton, Massachusetts.

Our principal segments consist of information storage products, Documentum products and services, LEGATO products and services and information storage services. We established our

Documentum and LEGATO products and services segments in 2003 as a result of our acquisitions of LEGATO Systems, Inc. ("LEGATO") in October 2003 and Documentum, Inc. ("Documentum") in December 2003.

Information storage products are comprised of information storage systems and information storage software.

We offer a wide range of information storage systems to meet the specific needs of our customers in terms of performance, functionality, availability and cost, whether in a Storage Area Network (SAN), Networked Attached Storage (NAS), Content Address Storage (CAS) or direct attached storage environment. Our product portfolio ranges from the CLARiiON CX300 up to the Symmetrix DMX3000. At their respective price points, we believe that our networked information storage systems offer the highest levels of functionality, performance and availability in the information storage market.

Our CLARiiON family of networked storage systems is based on a modular design, providing for flexible levels of functionality, performance and availability. In 2003, we began to offer these systems with integrated ATA and Fibre Channel disk drives. Through the integration of both Fibre Channel and ATA drives, our CLARiiON networked storage systems give customers more choices, enabling them to meet differing performance requirements at varying price points. It also enables them to bring more of their offline, tape-based data online to improve accessibility and extend its useful life.

In February 2004, we introduced a complete new line of our CLARiiON CX series, including the CLARiiON CX300, CX500 and CX700. These systems offer customers higher performance at the same price as previous CLARiiON models and new, cost-effective replication options.

Our operating software for CLARiiON is FLARE, which provides capabilities for managing, protecting and replicating information while improving total system availability within the CLARiiON environment. We intend to continue to enhance our CLARiiON family of systems with additional features and capabilities.

In 2003, we introduced a complete new line of Symmetrix systems, the Symmetrix DMX series. The Symmetrix DMX series is based upon our Direct Matrix Architecture that enables us to significantly and cost-effectively increase performance, availability and functionality. All of our Symmetrix DMX systems operate in conjunction with our multi-platform storage management and infrastructure software products. The Symmetrix DMX series includes:

In February 2004, we introduced Symmetrix DMX-2 technology for our 1000, 2000 and 3000 models, which offers customers up to 30% more performance than identically configured Symmetrix DMX systems.

Our operating software for Symmetrix is Enginuity, which delivers advanced functionality in areas such as performance management; data integrity; system availability; security; and information protection, replication and sharing within the Symmetrix environment. We intend to continue to enhance our Symmetrix family of systems with additional features and capabilities.

We offer a range of products designed specifically for the NAS environment, including:

Our Celerra products allow users of an Internet Protocol (IP) network to store, access and update files. Our operating software for Celerra is Data Access in Real Time (DART), designed exclusively for high performance network files access.

We intend to continue to enhance our NetWin and Celerra families of systems with additional features and capabilities.

We offer the Centera CAS product to meet the requirements of "fixed content." We define fixed content as information whose value lies in part on its unchanging nature, such as digital x-rays and other medical records, movies, check images and e-mail correspondence. Our operating software for Centera, CentraStar, incorporates content addressing intelligence that calculates a unique address derived from the content of every stored object. Centera eliminates the need for applications to be aware of the physical location of information, regardless of scale, from single-digit terabytes to petabytes, thereby simplifying the task of having applications access and manage huge numbers of objects. Centera ensures verifiable accuracy of the content for data integrity, authentication and other purposes.

In April 2003, we introduced a new specialized CAS solution, the Centera Compliance Edition (CE), which provides secure, online storage optimized for long-term retention and instant retrieval of regulated digital assets. Features of Centera CE include retention enforcement, enhanced disposition or "shredding," and application access security.

In February 2004, we introduced enhancements to Centera, including mainframe connectivity and improved performance and data replication speeds.

Centera is integrated by third parties with their applications and generally sold as part of a joint solution. As of December 31, 2003, we had more than 250 partners in the Centera developers program and more than 90 applications available to be used with Centera.

We intend to continue to enhance and improve our Centera system with additional features and capabilities, as well as add new partners to expand the number of applications integrated with Centera.

Our Connectrix family includes high-end directors as well as departmental switches. These Fibre Channel-based systems significantly increase the connectivity between servers and storage systems in a SAN and provide the ability to centralize monitoring and control of information in a SAN. Our Connectrix family of directors and switches are manufactured for us by third-party original equipment manufacturers ("OEMs").

We intend to continue to enhance our Connectrix family of switches and directors with additional features and capabilities.

Revenue from information storage systems represented approximately 53%, 55% and 61% of revenues in 2003, 2002 and 2001, respectively.

We offer highly innovative software that provides customers with superior information management, sharing and protection capabilities. Our information storage software includes:

Our platform-based software generally controls and enables functions that take place within the EMC system, such as replication, optimization and data movement. Examples of such software include TimeFinder, Symmetrix Remote Data Facility (SRDF), Navisphere, SnapView, MirrorView and Symmetrix Optimizer. In 2003, we introduced:

We are the leading supplier of platform-based software in areas such as local and remote replication, which customers use to protect and share data. We intend to continue to enhance our platform-based software with additional features and capabilities.

Our multi-platform storage software strategy focuses on the automation, simplification and openness of heterogeneous storage software infrastructures. Our multi-platform storage management and infrastructure software provides management and other capabilities for multi-vendor storage

infrastructures. These products, which are designed to operate either with or without EMC storage systems, include:

We intend to continue to enhance our multi-platform storage management and infrastructure software with additional features and capabilities, introduce new multi-platform storage management and infrastructure software products and broaden the scope of our multi-platform storage management and infrastructure software products to manage additional non-EMC products.

We actively participate in the development of standards through our work with and support for the Storage Network Industry Association (SNIA) and other organizations. In 2003, through our work with SNIA, we performed the underlying work to make all of our information storage products compliant with the emerging Storage Management Initiative specifications.

We also exchange technology and application programming interfaces (APIs) with other companies to improve heterogeneous management of storage and networked resources in a networked storage environment. In 2003, we agreed to exchange APIs with IBM Corporation, Veritas Software Corporation and Hitachi, Ltd.

Through our multi-year investments in interoperability testing capabilities, open standards, software APIs and cooperative service agreements, we believe that we lead the industry in delivering multi-platform, dependable storage solutions for customers.

Revenues from information storage software represented approximately 22%, 23% and 22% of revenues in 2003, 2002 and 2001, respectively. Our information storage software revenues exclude revenue from our Documentum and LEGATO products and services segments.

Our Documentum products and services segment includes multi-platform software and services sold by Documentum, a division of EMC. Documentum's enterprise content management software enables organizations to proactively and collaboratively manage their unstructured content, from documents, records and e-mail, to web pages, graphics and audio/video files. Documentum's software and services help companies manage all enterprise content in one tightly integrated system, including new services for collaboration, enterprise report management, scanning/imaging and records management. Documentum's primary products include Enterprise Content Management (ECM) Platform, Collaboration, Web Content Management, Content Management for Portals, Enterprise Document Management, Digital Asset Management, Enterprise Records Management, Compliance and eRoom Enterprise.

We intend to continue to enhance our software products in this segment with additional features and capabilities and introduce new software products.

Revenues from Documentum products and services represented less than 1% of revenues in 2003. We established this segment as a result of our acquisition of Documentum in December 2003.

Our LEGATO products and services segment includes multi-platform software and services sold by LEGATO Software, a division of EMC. LEGATO Software's information protection, automated availability and information access software manage and protect data, assure availability of applications and provide immediate access to information. LEGATO Software's software and services are aimed at helping organizations simplify management and control of information, while enabling business continuity and compliance at the lowest total cost of ownership. LEGATO Software's primary products include NetWorker, DiskXtender, Co-StandbyServer AAdvanced, AAM, RepliStor, ApplicationXtender and EmailXtender.

We intend to continue to enhance our software products in this segment with additional features and capabilities and introduce new software products.

Revenues from LEGATO products and services represented approximately 1% of revenues in 2003. We established this segment as a result of our acquisition of LEGATO in October 2003.

Our Services organization includes Technology Solutions, Customer Service and Customer Education, to help customers plan, build and manage an integrated IT infrastructure to more cost-effectively manage and protect their information throughout its lifecycle. With a worldwide staff of approximately 7,000 professionals, EMC Services, together with our global Authorized Services Network partners, provide consulting, assessments, implementations, integration, operations management, day-to-day support, maintenance, education and training to our customers.

Our Technology Solutions organization provides a full range of storage services designed to help organizations simplify and manage their information assets. It includes our Information Solutions Consulting (ISC) organization, which provides a full range of storage consulting services. Areas of focus include networked storage, storage management and strategy, data migration, business continuity and project management. Our consultants, technology experts and Authorized Service Network partners deliver to customers operational, financial and business impact analyses, and design, integrate and implement information storage infrastructures.

Our Customer Service organization supports our information lifecycle management solutions at worldwide customer sites 24 hours a day, seven days a week, 365 days a year. This is delivered through a combination of remote and onsite service, direct through us and our global Authorized Services Network partners. Automated remote support features designed into our information storage systems enable Customer Service personnel to continuously monitor, diagnose and resolve issues, wherever the product is located, often without the need for onsite service. Other remote support capabilities are also provided on certain of our software products.

To ensure that customers with multi-vendor storage network environments receive the highest level of support and the fastest issue resolution possible, we have, as of December 31, 2003, entered into cooperative support agreements with more than 250 vendors, including systems, software and services companies.

Our Customer Education organization delivers instruction on our technology, our products and storage management job functions as part of the EMC Proven Professional Certification program. Courses and the certification program are available to our employees, customers, prospects and partners. Training is worldwide in scope and employs e-learning and geographically dispersed classrooms, labs and testing centers.

Revenue from information storage services represented approximately 22%, 20% and 14% of revenues in 2003, 2002 and 2001, respectively.

Following our acquisition of Data General Corporation in 1999, we sold AViiON server products. In 2001, as part of our restructuring program, we stopped selling such products. However, we continue to support AViiON servers.

Revenue from other businesses represented approximately 2%, 2% and 4% of revenues in 2003, 2002 and 2001, respectively.

In January 2004, we acquired VMware, Inc. ("VMware"), a virtual computing software company. VMware's technology enables multiple operating systems, including Microsoft Windows and Linux, to run simultaneously and independently on the same Intel-based server or workstation and move live applications across systems without any business disruption. We expect that our acquisition of VMware will play a key role in our strategy to help customers use virtualization technologies across their heterogeneous IT infrastructure to create a single pool of available storage and computing resources. This "virtual information infrastructure" will enable organizations to dynamically configure and reconfigure their compute and storage environment without any downtime, as their business needs change.

During 2003, we focused primarily on the information storage and management markets. These markets consist of both Global 2000 and small and medium-sized businesses.

We market our products through multiple distribution channels. We have a direct sales presence throughout North America, Latin America, Europe, the Middle East, South Africa and the Asia Pacific region. We also have agreements in place with many distributors, systems integrators, resellers and OEMs in certain areas of the world. These agreements, subject to certain terms and conditions, enable these companies to market and resell certain of our systems and software. In 2003, we expanded our distribution capabilities through both new and enhanced partner and channel relationships. Also in 2003, as a result of our acquisitions of LEGATO and Documentum, we established additional distribution relationships.

We have technology alliances with leading software, networking and services companies. We intend to continue to form additional alliances. Our strategy is to work closely with these and other companies to provide added value to our customers by integrating our solutions with software and networking applications that customers rely on to manage their day-to-day business operations. In 2003, we extended our strategic business and technology partnership with Microsoft Corporation to include integration of Windows storage technologies, new marketing and sales initiatives and new service and support agreements. We also expanded our existing relationship with Cisco Systems, Inc. to deliver next generation SAN switching technology.

Our information storage systems are assembled and tested primarily at our facilities in the United States and Ireland. See "Properties." We work closely with our suppliers to design, assemble and test product components in accordance with production standards and quality controls established by us. Our software products are designed, developed and tested primarily at our facilities in the United States and abroad. The products are tested to meet quality standards established by us.

We employ a company-wide Total Quality Management and Continuous Improvement philosophy and have adopted Six Sigma and other quality methodologies to ensure that the quality of our designs, manufacturing, test processes and supplier relationships follow the same methodologies. Our manufacturing and test facilities in Massachusetts, North Carolina and Ireland are certified to ISO 9001, the International Standard for quality management systems. We also hold 14 additional certifications worldwide covering ISO 9001, the ISO 14001 Environmental Management System Standard and Support Center Practices (SCP) certification for our customer support centers. These internationally recognized endorsements of ongoing quality management represent the highest levels of certifications available.

We purchase many sophisticated components and products from one or a limited number of qualified suppliers, including some of our competitors. Our products utilize industry-standard and semi-custom components and subsystems. Among the most important components that we use are disk drives, high density memory components and power supplies. While such components are generally available, we have experienced delivery delays from time to time because of high industry demand or the inability of some vendors to consistently meet our quality or delivery requirements.

We continually enhance our existing products and develop new products to meet changing customer requirements. In 2003, 2002 and 2001, our research and development expenses totaled $718.5 million, $781.5 million and $928.7 million, respectively. We support our research and development efforts through state-of-the art development labs worldwide, including in Massachusetts, California, Maryland, North Carolina, Belgium, India and Ireland.

We manufacture our systems on the basis of our forecast of near-term demand and maintain inventory in advance of receipt of firm orders from customers. We configure to customer specifications and generally ship systems shortly after receipt of the order. Customers may reschedule or cancel orders with little or no penalty. For these reasons, we believe that our backlog at any particular time is not meaningful because it is not necessarily indicative of future sales levels.

We compete with many companies in the markets we serve, certain of which offer a broad spectrum of IT products and services and others which offer specific information storage or management products or services. We believe that most of these companies compete based on their market presence, products, services or price. Certain of these companies also compete by offering storage-related products or services, together with other IT products or services, at minimal or no additional cost in order to preserve or gain market share.

We believe that we have a number of competitive advantages over these companies, including product, distribution and service. We believe the advantages in our products include quality, breadth of offerings, performance, functionality, scalability, availability, interoperability, connectivity, time to market enhancements and total value of ownership. We believe our advantages in distribution include the world's largest storage-focused direct sales force and our broad network of channel partners. We believe our advantages in service include our ability to provide our customers a full range of expertise before, during and after their purchase of information lifecycle management solutions from us or other storage vendors.

Although we do not consider our business to be highly seasonal, we generally experience the greatest demand for our products and services in the last quarter of the year.

We generally rely on patent, copyright, trademark and trade secret laws and contract rights to establish and maintain our proprietary rights in our technology and products. While our intellectual property rights are important to our success, we believe that our business as a whole is not materially dependent on any particular patent, trademark, license or other intellectual property right.

We have been granted or own by assignment approximately 860 patents issued by, and have over 700 patent applications pending with, the U.S. Patent and Trademark Office, as well as a corresponding number of international patents and patent applications. While the duration of our patents varies, we believe that the duration of our patents is adequate relative to the expected lives of our products.

We have used, registered or applied to register certain trademarks and copyrights in the United States and in other countries. We also license certain technology from third parties for use in our products and processes and license certain of our technology to third parties.

As of December 31, 2003, we had approximately 20,000 employees worldwide. None of our domestic employees are represented by a labor union, and we have never suffered an interruption of business as a result of a labor dispute. We consider our relations with our employees to be good.

Financial Information About Segments, Foreign and Domestic Operations and Export Sales

We operate in five business segments: information storage products, Documentum products and services, LEGATO products and services, information storage services and other businesses. Sales and marketing operations outside the United States are conducted through sales subsidiaries and branches located principally in Europe, Latin America and the Asia Pacific region. We have three primary manufacturing facilities: one in Massachusetts, which manufactures Symmetrix and Celerra systems for the North American markets; one in Ireland, which manufactures Symmetrix, CLARiiON and Celerra systems for markets outside of North America; and one in North Carolina, which manufactures CLARiiON systems for the North American markets and NetWin and Centera systems for worldwide

markets. See Note Q to our Consolidated Financial Statements for information about revenues by segment and geographic area.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are made available free of charge on or through our website at www.emc.com as soon as reasonably practicable after such reports are filed with, or furnished to, the Securities and Exchange Commission (the "SEC"). Copies of our (i) Corporate Governance Guidelines, (ii) charters for the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee and (iii) Business Conduct Guidelines (code of business conduct and ethics) are available at www.emc.com/about/governance. Copies will also be provided to any stockholder upon written request to EMC Corporation, Investor Relations, 176 South Street, Hopkinton, MA 01748 or by contacting EMC Investor Relations at 508-293-6313. None of the information posted on our website is incorporated by reference into this Annual Report.

* Of the total square feet owned and leased, approximately 2,300,000 square feet was vacant and 517,000 square feet was leased or subleased to non-EMC businesses.

We also own land in Massachusetts and Ireland for possible future expansion purposes. We believe our existing facilities are suitable and adequate for our present purposes. For further information regarding our lease obligations, see Note M to our Consolidated Financial Statements.

The portion of our business utilizing our manufacturing facilities is reported in our information storage products segment. All segments of our business generally utilize our other facilities.

On September 30, 2002, Hewlett-Packard Company ("HP") filed a complaint against us in the United States Federal District Court for the Northern District of California alleging that certain of our products infringe seven HP patents. HP seeks a permanent injunction as well as unspecified monetary damages for patent infringement. We believe that HP's claims are without merit. On July 21, 2003, we answered the complaint and filed counterclaims alleging that certain HP products infringe six EMC patents. EMC seeks a permanent injunction as well as unspecified monetary damages for patent infringement.

On September 30, 2002, EMC filed a complaint against HP in the United States Federal District Court in Worcester, Massachusetts. The complaint alleged that certain HP products infringe six EMC patents. The suit sought a permanent injunction as well as unspecified monetary damages for patent infringement. On June 20, 2003, the parties filed a joint motion to dismiss the suit without prejudice, and thereafter, the suit was dismissed by the court.

We are a party (either as plaintiff or defendant) to various other patent litigation matters, including certain matters which we assumed in connection with our acquisitions of LEGATO and VMware.

We are a party to other litigation which we consider routine and incidental to our business. Management does not expect the results of any of these actions to have a material adverse effect on our business, results of operations or financial condition.

No matter was submitted to a vote of our stockholders during the fourth quarter of 2003.

Name	Age	Position
Michael C. Ruettgers	61	Chairman of the Board of Directors
Joseph M. Tucci	56	President, Chief Executive Officer and Director
David G. DeWalt	39	Executive Vice President and President of Documentum Division
David A. Donatelli	38	Executive Vice President, Storage Platforms Operations
Howard D. Elias	47	Executive Vice President, Corporate Marketing and Office of Technology
David I. Goulden	44	Executive Vice President, Customer Solutions and Marketing and New Business Development
Frank M. Hauck	44	Executive Vice President, Customer Operations
Mark S. Lewis	41	Executive Vice President, Open Software Operations
Erez Ofer	41	Executive Vice President, Technology Strategy
William J. Teuber, Jr.	52	Executive Vice President and Chief Financial Officer
David B. Wright	54	Executive Vice President and President of LEGATO Software Division
Paul T. Dacier	46	Senior Vice President and General Counsel

Michael C. Ruettgers has been our Chairman of the Board of Directors since January 2004 and has been a Director since May 1992. From January 2001 to December 2003, Mr. Ruettgers served as Executive Chairman of the Board of Directors. Mr. Ruettgers served as our Chief Executive Officer from January 1992 to January 2001, President from January 1990 to January 2000, Chief Operating Officer from October 1989 to January 1990 and as Executive Vice President, Operations, from July 1988 to October 1989. Mr. Ruettgers is also a director of Raytheon Company, a global technology and electronics company.

Joseph M. Tucci has been our Chief Executive Officer and a Director since January 2001 and has served as our President since January 2000. He also served as Chief Operating Officer from January 2000 to January 2001. Prior to joining EMC, Mr. Tucci served as Deputy Chief Executive Officer of Getronics N.V., an information technology services company, from June 1999 through December 1999 and as Chairman of the Board and Chief Executive Officer of Wang Global, an information technology services company, from December 1993 to June 1999. Getronics acquired Wang Global in June 1999. Mr. Tucci joined Wang Global in 1990 as its Executive Vice President, Operations. Mr. Tucci is also a director of Paychex, Inc., a provider of payroll, human resources and benefits outsourcing solutions.

David G. DeWalt has been our Executive Vice President and President of our Documentum Division since December 2003. Prior to joining EMC, Mr. DeWalt served as President and Chief Executive Officer of Documentum, Inc. from July 2001 to December 2003, Executive Vice President and Chief Operating Officer, from October 2000 to July 2001 and Executive Vice President and General Manager, eBusiness Unit, from August 1999 to October 2000. Prior to joining Documentum in 1999, Mr. DeWalt was the Founding Principal and Vice President of Eventus Software, a web content software company, from August 1997 to December 1998. Following Eventus' 1998 acquisition by Segue Software, an e-business software company, Mr. DeWalt served as Vice President, North American sales for Segue.

David A. Donatelli has been our Executive Vice President, Storage Platforms Operations, since November 2001. Mr. Donatelli served as Senior Vice President, Corporate Marketing and New Business Development, from April 2001 to November 2001, Senior Vice President, New Business Development, from February 2000 to April 2001 and as Vice President, New Business Development,

from April 1999 to February 2000. He has also held a number of other executive positions since he joined EMC in 1987, including serving as Vice President, General Manager of our EDM business from September 1996 to April 1999 and as Vice President of Global Alliances from February 1996 to November 1998.

Howard D. Elias has been our Executive Vice President, Corporate Marketing and Office of Technology since November 2003. Prior to joining EMC as Executive Vice President, New Ventures, in October 2003, Mr. Elias served as Senior Vice President of Business Management and Operations in the Enterprise Systems Group at Hewlett-Packard Company, a provider of information technology products, services and solutions for enterprise customers, from May 2003 to August 2003 and Senior Vice President and General Manager of Network Storage Solutions from May 2002 to April 2003. Prior to Hewlett-Packard's acquisition of Compaq Computer Corporation, Mr. Elias served as Senior Vice President and General Manager of Compaq's Business Critical Server Group from January 2001 to April 2002. He served as Vice President and General Manager in the Storage Products Division of Compaq from 1998 to 2000.

David I. Goulden has been our Executive Vice President, Customer Solutions and Marketing and New Business Development since November 2003. Mr. Goulden served as Executive Vice President, Global Marketing and New Business Development from July 2002 to November 2003. Prior to joining EMC, Mr. Goulden served as a member of the Board of Management, President and Chief Operating Officer for the Americas and Asia Pacific of Getronics N.V., an information technology services company, from April 2000 to July 2002, as President and Chief Operating Officer for the Americas of Getronics from June 1999 to April 2000, and in a number of executive positions at Wang Global, an information technology services company, from September 1990 to June 1999. Getronics acquired Wang Global in June 1999.

Frank M. Hauck has been our Executive Vice President, Customer Operations, since November 2001. Mr. Hauck served as Executive Vice President, Global Sales and Services, from April 2001 to November 2001 and as Executive Vice President, Products and Offerings, from June 2000 to April 2001. He served as Senior Vice President and Chief Information Officer from January 2000 to June 2000, as Senior Vice President, Business Integration, from July 1999 to January 2000, and as Senior Vice President, Customer Service, from November 1997 to July 1999. Mr. Hauck has also held a number of other executive positions since he joined EMC in 1990.

Mark S. Lewis has been our Executive Vice President, Open Software Operations, since July 2003. Mr. Lewis served as Executive Vice President, New Ventures and Chief Technology Officer from July 2002 to July 2003. Prior to joining EMC, Mr. Lewis served as Vice President of Worldwide Marketing and Solutions in the Network Storage Solutions Group at Hewlett-Packard Company, a provider of information technology products, services and solutions for enterprise customers. Prior to Hewlett-Packard's acquisition of Compaq Computer Corporation, Mr. Lewis served as Vice President and General Manager of Compaq's Enterprise Storage Group from January 2001 to April 2002. Prior to joining Compaq, Mr. Lewis spent fourteen years at Digital Equipment Corporation, where he helped develop the StorageWorks product line.

Erez Ofer has been our Executive Vice President, Technology Strategy, since July 2003. Mr. Ofer served as Executive Vice President, Open Software Operations, from November 2001 to July 2003, Senior Vice President and Chief Software Architect from June 2000 to November 2001 and as Vice President, Open Systems Development, from September 1998 to June 2000. He also served as Principal Design Engineer from 1995 to September 1998. Mr. Ofer has also held a number of other engineering positions since he joined EMC in 1993.

William J. Teuber, Jr. has been our Executive Vice President and Chief Financial Officer since November 2001. Mr. Teuber served as Senior Vice President and Chief Financial Officer from February 2000 to November 2001. Mr. Teuber served as Vice President and Chief Financial Officer

from February 1997 to February 2000. He also served as Vice President and Controller from August 1995 to February 1997.

David B. Wright has been our Executive Vice President and President of our LEGATO Software division since October 2003. Prior to joining EMC, Mr. Wright served as Chairman of the Board of Directors of LEGATO Systems, Inc. from March 2001 to October 2003 and as President and Chief Executive Officer from October 2000 to October 2003. Prior to joining LEGATO in 2000, Mr. Wright spent thirteen years at Amdahl Corporation, where he held a variety of positions, including President and Chief Executive Officer from 1997 to 2000.

Paul T. Dacier has been our Senior Vice President and General Counsel since February 2000. Mr. Dacier served as Vice President and General Counsel from February 1993 to February 2000 and as General Counsel of EMC from March 1990 to February 1993.

Our President is elected annually to serve until the first meeting of the Board of Directors following the next annual meeting of stockholders and until such person's successor is elected and qualified.

EMC², EMC, AAM, ApplicationXtender, CLARiiON, Celerra, Centera, CentraStar, Connectrix, Co-Standby Server AAdvanced, Direct Matrix Architecture, DiskXtender, DMX, Documentum, EDM, EmailXtender, EMC ControlCenter, EMC Developers Program, EMC Proven, EMC Snap, Enginuity, eRoom, FLARE, LEGATO, MirrorView, Navisphere, NetWin, NetWorker, PowerPath, RepliStor, SAN Copy, SnapView, SRDF, Symmetrix, TimeFinder, VisualSRM and VMware are either registered trademarks or trademarks of EMC Corporation. Other trademarks are either registered trademarks or trademarks of their respective owners.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock, par value $.01 per share, trades on the New York Stock Exchange under the symbol EMC.

The following table sets forth the range of high and low sales prices of our common stock on the New York Stock Exchange for the past two years during the fiscal periods shown.

Fiscal 2003	High		Low
First Quarter	$	8.59	$	5.98
Second Quarter		11.45		7.20
Third Quarter		13.96		9.61
Fourth Quarter		14.65		12.11

Fiscal 2002	High		Low
First Quarter	$	17.97	$	10.60
Second Quarter		12.25		5.90
Third Quarter		9.40		4.45
Fourth Quarter		7.70		3.67

We have never paid cash dividends on our common stock. While subject to periodic review, the current policy of our Board of Directors is to retain cash and investments primarily to provide funds for our future growth. Additionally, from time to time, we use cash to repurchase our common stock.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and notes thereto which appear elsewhere in this Annual Report on Form 10-K. The following discussion contains forward-looking statements and should also be read in conjunction with "FACTORS THAT MAY AFFECT FUTURE RESULTS" beginning on page 40. The forward-looking statements do not include the potential impact of any mergers, acquisitions, divestitures or business combinations that may be completed after the date hereof.

We generate revenue through the sale, license and lease of products and services for information lifecycle management. The demand for our products is correlated, in general, to the worldwide economy, and more specifically, to the demand for IT infrastructure. We experienced a decline in demand for our products and services in 2001 and 2002 compared to the late 1990's and 2000. Commencing in 2001, we began to implement programs to reduce costs and to focus our efforts on areas we considered strategic in order to return to profitability. As a result of various initiatives, as well as an increase in demand for IT infrastructure, we returned to profitability in 2003.

Our financial objective is to achieve profitable growth. Management believes that by providing a combination of systems, software and services to meet customers' demand for information lifecycle management, we will be able to further increase revenues and profitability. In 2003, our operating income was 6.4% of revenue. We believe that by increasing revenues and further controlling costs, we will be able to improve operating income as a percentage of revenue. Our efforts in 2004 will be primarily focused on expanding our portfolio of offerings to satisfy our customers' information lifecycle management requirements. This will include additional investments in research and development and the introduction of new and enhanced product and service offerings, with a goal of increasing our market share. We will focus on improving our gross margins through a combination of providing a more profitable mix of systems, software and services and further leveraging our existing fixed cost component of cost of sales. Additionally, we will further integrate the operations of LEGATO, Documentum and VMware into EMC to streamline operations and reduce costs.

The following table presents certain consolidated statement of operations information stated as a percentage of total revenues. Certain columns may not add due to rounding.

		Year Ended December 31,
		2003		2002
Total revenue		100.0	%	100.0	%
Cost and expenses
	Cost of sales	54.4		61.0
	Research and development	11.5		14.4
	Selling, general and administrative	26.6		30.9
	Restructuring and other special charges	1.1		2.8

Operating income (loss)		6.4		(9.1	)
	Investment income, interest expense and other expense, net	2.7		3.6

	Income (loss) before income taxes	9.2		(5.5	)
	Provision for (benefit from) income taxes	1.2		(3.3	)

Net income (loss)		8.0	%	(2.2	)%

Location	Approximate Sq. Ft.*		Principal Use
Hopkinton, MA	owned: leased:	1,832,500 299,900	executive and administrative offices, research and development, customer service and sales

Franklin, MA	owned: leased:	938,600 97,000	manufacturing

Milford, MA	owned: leased:	53,200 255,000	customer service and research and development

Southborough, MA	owned:	551,800	research and development and customer service

Westborough, MA	owned: leased:	285,700 740,000	research and development, sales and administrative offices

Apex, NC	owned:	387,900	manufacturing

Research Triangle Park, NC	owned:	170,900	research and development and customer service

Other North American locations	leased:	2,926,300	sales, customer service and research and development

Asia Pacific region	leased:	439,700	sales, customer service and research and development

Cork, Ireland	owned: leased:	555,600 29,000	manufacturing, customer service, research and development and administrative offices

Europe, Middle East and Africa (excluding Cork, Ireland)	leased:	892,600	sales, customer service and research and development

Latin American region	leased:	68,700	sales and customer service

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
October 1, 2003 – October 31, 2003	2,100,000	$	13.11	2,100,000	237,917,700
November 1, 2003 – November 30, 2003	–		–	–	237,917,700
December 1, 2003 – December 31, 2003	–		–	–	237,917,700

Total	2,100,000	$	13.11	2,100,000	237,917,700

		Year Ended December 31,
		2003		2002			2001			2000		1999 (1)
Summary of Operations:
	Revenues	$	6,236,808	$	5,438,352		$	7,090,633		$	8,872,816	$	6,715,610
	Operating income (loss) (2)		401,157		(493,831	)		(697,841	)		2,256,903		1,241,094
	Net income (loss) (2)		496,108		(118,706	)		(507,712	)		1,782,075		1,010,570
	Net income (loss) per weighted average share, basic (2)(3)	$	0.22	$	(.05	)	$	(0.23	)	$	0.82	$	0.49
	Net income (loss) per weighted average share, diluted (2)(3)	$	0.22	$	(.05	)	$	(0.23	)	$	0.79	$	0.46
	Weighted average shares, basic (3)		2,211,544		2,206,294			2,211,273			2,164,180		2,061,101
	Weighted average shares, diluted (3)		2,237,656		2,206,294			2,211,273			2,245,203		2,219,065
Balance Sheet Data:
	Working capital	$	2,140,775	$	2,175,598		$	2,743,828		$	3,986,404	$	2,922,481
	Total assets		14,092,860		9,590,447			9,889,635			10,537,799		7,064,701
	Long-term obligations (4)		132,634		6,963			17,202			14,457		686,609
	Stockholders' equity	$	10,884,721	$	7,226,002		$	7,600,820		$	8,177,209	$	4,951,786