Sun Microsystems Reports Third Quarter Revenues And Earnings

Year to Date Revenues Grew 33%



Apr 19, 2001, 01:00 ET from Sun Microsystems, Inc.

    PALO ALTO, Calif., April 19 /PRNewswire/ --
 Sun Microsystems, Inc., (Nasdaq:   SUNW), a leading provider of  hardware,
 software and services that power enterprises and network computing, today
 reported results for the third quarter of fiscal year 2001, which ended
 April 1, 2001.
     Revenues for the third quarter were $4.095 billion, up 2 percent compared
 with the third quarter of fiscal 2000. Orders for the third quarter were
 $3.612 billion. Proforma net income (which excludes realized gains/losses on
 Sun's venture equity portfolio, the effects of acquisition related charges,
 any unusual one time items, and the cumulative tax effects) for the third
 quarter was $263 million, a decrease of 43 percent compared with last year's
 proforma net income of $464 million. Third quarter proforma earnings per
 share, was $0.08, a decrease of 43 percent compared with $0.14 proforma
 earnings per share for the same period a year ago.
     For the first nine months of fiscal 2001, Sun reported revenues of
 $14.255 billion, up 33 percent compared with last year's revenues of
 $10.705 billion. Proforma net income was $1.367 billion, up 19 percent
 compared with last year's proforma net income of $1.146 billion. Proforma
 earnings per share was $0.40 per share, an increase of 18 percent compared
 with last year's proforma earnings per share of $0.34.
     Sun reported actual (or GAAP) net income (including realized gains/losses
 on Sun's venture equity portfolio, the effects of acquisition related charges,
 any unusual one time items, and the cumulative tax effects) for the third
 quarter of fiscal 2001 of $136 million or $0.04 per share, compared with
 $509 million or $0.15 per share for the same period a year ago.
     Actual reported net income for the first nine months of fiscal 2001 was
 $1.069 billion or $0.31 per share, compared with $1.134 billion or $0.34 per
 share in fiscal 2000.
     "Despite the economic slowdown in the United States, we were able to
 increase revenues over the very strong growth rate (35 percent) during the
 same quarter a year ago," said Scott McNealy, Chief Executive Officer of
 Sun Microsystems.
     McNealy added, "These results, coupled with our strong cash position of
 nearly $7 billion, enable SUN to continue protecting our investments in new
 products, R&D, our sales and service capabilities, and top-notch employees."
     McNealy concluded, "Our refreshed product line is positioned to be the
 best we've had in years. Led by our new Sun(TM) Open Net Environment (Sun ONE)
 architecture, Sun introduced exciting new products such as the iPlanet(TM)
 stack, Netra(TM) servers, Sun StorEdge(TM) hardware and software, Sun(TM)
 Cluster 3.0 technology, the recently acquired Sun Cobalt(TM) appliances, and
 the Sun Fire(TM) Midframe server product line running the UltraSPARC(TM) III
 processor and the Solaris(TM) 8 Operating Environment. These Midframe servers
 offer mainframe-class functionality at midrange server prices. With the
 additional product announcements planned in the months ahead, we intend to
 capitalize on our increased market opportunities."
     Michael E. Lehman, Sun's Executive Vice President of Corporate Resources
 and Chief Financial Officer, commented, "Our results reflected the sharp
 decline in capital spending in the information technology sector, principally
 in the United States, although we did see some moderation of demand in Europe
 and Asia Pacific."
     Lehman concluded, "Going forward, we will continue to make the necessary
 investments to ensure that Sun retains its competitive advantage over the long
 run. At the same time, we will focus on the appropriate trade-offs in order
 to align our cost structure with our revenue growth expectations."
     Sun has historically reported operating income, net income and earnings
 per share on an actual basis, as well as on a "normalized basis;" that is,
 those financial metrics prepared in accordance with GAAP but excluding
 realized gains/losses on Sun's venture equity portfolio, in-process research
 and development charges, the associated tax effects, and beginning in the
 second quarter of fiscal 2001, other accounting charges related to the
 acquisition of Cobalt Networks, Inc. Going forward, Sun will report on a
 proforma basis and GAAP basis only and will not continue reporting on a
 normalized basis.
     Sun has scheduled a conference call today to discuss its earnings for the
 third quarter of fiscal 2001 at 1:30 p.m. (PDT), which is being broadcast live
 at www.sun.com.
     All references to earnings per share set forth in this press release are
 diluted earnings per share as defined within Statement of Financial Accounting
 Standards No. 128.
     This news release contains forward-looking statements, including
 statements relating to the position of Sun's refreshed product line, planned
 product announcements, Sun's intention to capitalize on increased market
 opportunities, Sun's continued investment to retain its competitive advantage
 and its focus on trade offs to align cost structure with revenue growth
 expectations. Sun's actual results may differ materially from the results
 discussed in these forward-looking statements. Factors that might cause such a
 difference include risks related to continuing adverse changes in general
 economic conditions, failure to reduce costs, lack of success in the timely
 development, production and acceptance of new products and services and in
 technical advancements, and Sun's ability to compete in the highly competitive
 and rapidly changing marketplace. These and other risks are detailed from time
 to time in Sun's periodic reports filed with the Securities and Exchange
 Commission, including, but not limited to, its annual report on Form 10-K for
 its fiscal year ended June 30, 2000 and its quarterly reports on Form 10-Q for
 the quarters ended October 1, 2000 and December 31, 2000.
 
     About Sun Microsystems, Inc.
     Since its inception in 1982, a singular vision -- The Network Is The
 Computer(TM) -- has propelled Sun Microsystems, Inc., to its position as a
 leading provider of industrial-strength hardware, software and services that
 power the 'net and allow companies worldwide to take their businesses to the
 nth. With $19.2 billion in annual revenues, Sun can be found in more than
 170 countries and on the World Wide Web at http://www.sun.com.
 
     NOTE:  Sun, Sun Microsystems, the Sun logo, iPlanet, Sun StorEdge,
 Solaris, Netra, Sun Cobalt, Sun Fire  and The Network is The Computer are
 trademarks or registered trademarks of Sun Microsystems, Inc. in the United
 States and other countries. All SPARC trademarks are used under license and
 are trademarks or registered trademarks of SPARC International, Inc. in the
 United States and other countries. Products bearing SPARC trademarks are based
 upon an architecture developed by Sun Microsystems, Inc.
 
 
                               SUN MICROSYSTEMS, INC.
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME*
                      (In millions, except per share amounts)
 
                                        Three Months Ended   Nine Months Ended
                                            (unaudited)         (unaudited)
                                         April 1,  March 26, April 1, March 26,
                                           2001      2000     2001      2000
 
     Net revenues                        $4,095    $4,005   $14,255   $10,705
 
     Costs and expenses:
       Cost of sales                      2,403     1,913     7,689     5,145
       Research and development             486       417     1,473     1,172
       Selling, general and
        administrative                    1,053     1,067     3,531     2,902
       In-process research and
        development                           1         5        72         9
 
         Total costs and expenses         3,943     3,402    12,765     9,228
 
     Operating income                       152       603     1,490     1,477
 
     Interest income, net                   110        44       276       105
 
     Gain (loss) on investments            (13)       112      (12)       112
 
     Income before income taxes             249       759     1,754     1,694
 
     Provision for income taxes             113       250       685       560
 
     Net income                            $136      $509    $1,069    $1,134
 
     Net income per common share
      - basic                             $0.04     $0.16     $0.33     $0.36
 
     Net income per common share
      - diluted                           $0.04     $0.15     $0.31     $0.34
 
     Shares used in the calculation
      of net income per common share
      - basic                             3,256     3,170     3,230     3,142
 
     Shares used in the calculation
      of net income per common share
      - diluted                           3,417     3,397     3,428     3,369
 
 
     * Share and per share amounts for all periods presented have been adjusted
       to reflect stock splits (effected in theform of stock dividends)
       through April 1, 2001.
 
 
                               SUN MICROSYSTEMS, INC.
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (In millions)
                                                           April 1,    June 30,
                                                             2001        2000
     ASSETS                                              (unaudited)  (audited)
     Current assets:
 
       Cash, cash equivalents and short-term investments    $2,229     $2,475
 
       Accounts receivable, net                              2,913      2,690
 
       Inventories                                             899        557
 
       Other current assets                                  1,687      1,155
 
         Total current assets                                7,728      6,877
 
     Property, plant and equipment, net                      2,564      2,095
 
     Long-term investments                                   5,020      4,496
 
     Other assets, net                                       2,599        684
 
                                                           $17,911    $14,152
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
 
       Short-term borrowings                                    $2         $7
 
       Accounts payable                                      1,023        924
 
       Accrued liabilities                                   2,385      2,117
 
       Income taxes payable                                    139        422
 
       Deferred revenues and customer deposits               1,619      1,289
 
         Total current liabilities                           5,168      4,759
 
     Long-term debt and other obligations                    2,181      2,084
 
     Stockholders' equity                                   10,562      7,309
 
                                                           $17,911    $14,152
 
 
                               SUN MICROSYSTEMS, INC.
               CONDENSED CONSOLIDATED PRO FORMA STATEMENTS OF INCOME*
                      (In millions, except per share amounts)
 
                                        Three Months Ended   Nine Months Ended
                                            (unaudited)         (unaudited)
                                         April 1, March 26, April 1,  March 26,
                                           2001      2000     2001      2000
     Net revenues                        $4,095    $4,005   $14,255   $10,705
 
     Costs and expenses:
       Cost of sales                      2,391     1,905     7,666     5,116
       Research and development             480       415     1,461     1,164
       Selling, general and
        administrative                      937     1,046     3,345     2,843
 
         Total costs and expenses         3,808     3,366    12,472     9,123
 
     Operating income                       287       639     1,783     1,582
 
     Interest income, net                   110        44       276       105
 
     Income before income taxes             397       683     2,059     1,687
 
     Provision for income taxes             134       219       692       541
 
     Net income                            $263      $464    $1,367    $1,146
 
     Net income per common share
      - basic                             $0.08     $0.15     $0.42     $0.36
 
     Net income per common share
      - diluted                           $0.08     $0.14     $0.40     $0.34
 
     Shares used in the calculation
      of net income per common share
      - basic                             3,256     3,170     3,230     3,142
 
     Shares used in the calculation
      of net income per common share
      - diluted                           3,417     3,397     3,428     3,369
 
     Adjustments to net income
      under GAAP:
       Acquisition-related charges         $134       $31      $221       $96
       In-process research and
        development                           1         5        72         9
       (Gain) loss on investments            13     (112)        12     (112)
       Related tax effects                 (21)        31       (7)        19
 
     Total adjustments                     $127      (45)      $298       $12
 
 
     * The above Condensed Consolidated Pro Forma Statements of Income are
       presented for illustrative purposes only and are not prepared in
       accordance with generally accepted accounting principles.
 
 

SOURCE Sun Microsystems, Inc.
    PALO ALTO, Calif., April 19 /PRNewswire/ --
 Sun Microsystems, Inc., (Nasdaq:   SUNW), a leading provider of  hardware,
 software and services that power enterprises and network computing, today
 reported results for the third quarter of fiscal year 2001, which ended
 April 1, 2001.
     Revenues for the third quarter were $4.095 billion, up 2 percent compared
 with the third quarter of fiscal 2000. Orders for the third quarter were
 $3.612 billion. Proforma net income (which excludes realized gains/losses on
 Sun's venture equity portfolio, the effects of acquisition related charges,
 any unusual one time items, and the cumulative tax effects) for the third
 quarter was $263 million, a decrease of 43 percent compared with last year's
 proforma net income of $464 million. Third quarter proforma earnings per
 share, was $0.08, a decrease of 43 percent compared with $0.14 proforma
 earnings per share for the same period a year ago.
     For the first nine months of fiscal 2001, Sun reported revenues of
 $14.255 billion, up 33 percent compared with last year's revenues of
 $10.705 billion. Proforma net income was $1.367 billion, up 19 percent
 compared with last year's proforma net income of $1.146 billion. Proforma
 earnings per share was $0.40 per share, an increase of 18 percent compared
 with last year's proforma earnings per share of $0.34.
     Sun reported actual (or GAAP) net income (including realized gains/losses
 on Sun's venture equity portfolio, the effects of acquisition related charges,
 any unusual one time items, and the cumulative tax effects) for the third
 quarter of fiscal 2001 of $136 million or $0.04 per share, compared with
 $509 million or $0.15 per share for the same period a year ago.
     Actual reported net income for the first nine months of fiscal 2001 was
 $1.069 billion or $0.31 per share, compared with $1.134 billion or $0.34 per
 share in fiscal 2000.
     "Despite the economic slowdown in the United States, we were able to
 increase revenues over the very strong growth rate (35 percent) during the
 same quarter a year ago," said Scott McNealy, Chief Executive Officer of
 Sun Microsystems.
     McNealy added, "These results, coupled with our strong cash position of
 nearly $7 billion, enable SUN to continue protecting our investments in new
 products, R&D, our sales and service capabilities, and top-notch employees."
     McNealy concluded, "Our refreshed product line is positioned to be the
 best we've had in years. Led by our new Sun(TM) Open Net Environment (Sun ONE)
 architecture, Sun introduced exciting new products such as the iPlanet(TM)
 stack, Netra(TM) servers, Sun StorEdge(TM) hardware and software, Sun(TM)
 Cluster 3.0 technology, the recently acquired Sun Cobalt(TM) appliances, and
 the Sun Fire(TM) Midframe server product line running the UltraSPARC(TM) III
 processor and the Solaris(TM) 8 Operating Environment. These Midframe servers
 offer mainframe-class functionality at midrange server prices. With the
 additional product announcements planned in the months ahead, we intend to
 capitalize on our increased market opportunities."
     Michael E. Lehman, Sun's Executive Vice President of Corporate Resources
 and Chief Financial Officer, commented, "Our results reflected the sharp
 decline in capital spending in the information technology sector, principally
 in the United States, although we did see some moderation of demand in Europe
 and Asia Pacific."
     Lehman concluded, "Going forward, we will continue to make the necessary
 investments to ensure that Sun retains its competitive advantage over the long
 run. At the same time, we will focus on the appropriate trade-offs in order
 to align our cost structure with our revenue growth expectations."
     Sun has historically reported operating income, net income and earnings
 per share on an actual basis, as well as on a "normalized basis;" that is,
 those financial metrics prepared in accordance with GAAP but excluding
 realized gains/losses on Sun's venture equity portfolio, in-process research
 and development charges, the associated tax effects, and beginning in the
 second quarter of fiscal 2001, other accounting charges related to the
 acquisition of Cobalt Networks, Inc. Going forward, Sun will report on a
 proforma basis and GAAP basis only and will not continue reporting on a
 normalized basis.
     Sun has scheduled a conference call today to discuss its earnings for the
 third quarter of fiscal 2001 at 1:30 p.m. (PDT), which is being broadcast live
 at www.sun.com.
     All references to earnings per share set forth in this press release are
 diluted earnings per share as defined within Statement of Financial Accounting
 Standards No. 128.
     This news release contains forward-looking statements, including
 statements relating to the position of Sun's refreshed product line, planned
 product announcements, Sun's intention to capitalize on increased market
 opportunities, Sun's continued investment to retain its competitive advantage
 and its focus on trade offs to align cost structure with revenue growth
 expectations. Sun's actual results may differ materially from the results
 discussed in these forward-looking statements. Factors that might cause such a
 difference include risks related to continuing adverse changes in general
 economic conditions, failure to reduce costs, lack of success in the timely
 development, production and acceptance of new products and services and in
 technical advancements, and Sun's ability to compete in the highly competitive
 and rapidly changing marketplace. These and other risks are detailed from time
 to time in Sun's periodic reports filed with the Securities and Exchange
 Commission, including, but not limited to, its annual report on Form 10-K for
 its fiscal year ended June 30, 2000 and its quarterly reports on Form 10-Q for
 the quarters ended October 1, 2000 and December 31, 2000.
 
     About Sun Microsystems, Inc.
     Since its inception in 1982, a singular vision -- The Network Is The
 Computer(TM) -- has propelled Sun Microsystems, Inc., to its position as a
 leading provider of industrial-strength hardware, software and services that
 power the 'net and allow companies worldwide to take their businesses to the
 nth. With $19.2 billion in annual revenues, Sun can be found in more than
 170 countries and on the World Wide Web at http://www.sun.com.
 
     NOTE:  Sun, Sun Microsystems, the Sun logo, iPlanet, Sun StorEdge,
 Solaris, Netra, Sun Cobalt, Sun Fire  and The Network is The Computer are
 trademarks or registered trademarks of Sun Microsystems, Inc. in the United
 States and other countries. All SPARC trademarks are used under license and
 are trademarks or registered trademarks of SPARC International, Inc. in the
 United States and other countries. Products bearing SPARC trademarks are based
 upon an architecture developed by Sun Microsystems, Inc.
 
 
                               SUN MICROSYSTEMS, INC.
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME*
                      (In millions, except per share amounts)
 
                                        Three Months Ended   Nine Months Ended
                                            (unaudited)         (unaudited)
                                         April 1,  March 26, April 1, March 26,
                                           2001      2000     2001      2000
 
     Net revenues                        $4,095    $4,005   $14,255   $10,705
 
     Costs and expenses:
       Cost of sales                      2,403     1,913     7,689     5,145
       Research and development             486       417     1,473     1,172
       Selling, general and
        administrative                    1,053     1,067     3,531     2,902
       In-process research and
        development                           1         5        72         9
 
         Total costs and expenses         3,943     3,402    12,765     9,228
 
     Operating income                       152       603     1,490     1,477
 
     Interest income, net                   110        44       276       105
 
     Gain (loss) on investments            (13)       112      (12)       112
 
     Income before income taxes             249       759     1,754     1,694
 
     Provision for income taxes             113       250       685       560
 
     Net income                            $136      $509    $1,069    $1,134
 
     Net income per common share
      - basic                             $0.04     $0.16     $0.33     $0.36
 
     Net income per common share
      - diluted                           $0.04     $0.15     $0.31     $0.34
 
     Shares used in the calculation
      of net income per common share
      - basic                             3,256     3,170     3,230     3,142
 
     Shares used in the calculation
      of net income per common share
      - diluted                           3,417     3,397     3,428     3,369
 
 
     * Share and per share amounts for all periods presented have been adjusted
       to reflect stock splits (effected in theform of stock dividends)
       through April 1, 2001.
 
 
                               SUN MICROSYSTEMS, INC.
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (In millions)
                                                           April 1,    June 30,
                                                             2001        2000
     ASSETS                                              (unaudited)  (audited)
     Current assets:
 
       Cash, cash equivalents and short-term investments    $2,229     $2,475
 
       Accounts receivable, net                              2,913      2,690
 
       Inventories                                             899        557
 
       Other current assets                                  1,687      1,155
 
         Total current assets                                7,728      6,877
 
     Property, plant and equipment, net                      2,564      2,095
 
     Long-term investments                                   5,020      4,496
 
     Other assets, net                                       2,599        684
 
                                                           $17,911    $14,152
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
 
       Short-term borrowings                                    $2         $7
 
       Accounts payable                                      1,023        924
 
       Accrued liabilities                                   2,385      2,117
 
       Income taxes payable                                    139        422
 
       Deferred revenues and customer deposits               1,619      1,289
 
         Total current liabilities                           5,168      4,759
 
     Long-term debt and other obligations                    2,181      2,084
 
     Stockholders' equity                                   10,562      7,309
 
                                                           $17,911    $14,152
 
 
                               SUN MICROSYSTEMS, INC.
               CONDENSED CONSOLIDATED PRO FORMA STATEMENTS OF INCOME*
                      (In millions, except per share amounts)
 
                                        Three Months Ended   Nine Months Ended
                                            (unaudited)         (unaudited)
                                         April 1, March 26, April 1,  March 26,
                                           2001      2000     2001      2000
     Net revenues                        $4,095    $4,005   $14,255   $10,705
 
     Costs and expenses:
       Cost of sales                      2,391     1,905     7,666     5,116
       Research and development             480       415     1,461     1,164
       Selling, general and
        administrative                      937     1,046     3,345     2,843
 
         Total costs and expenses         3,808     3,366    12,472     9,123
 
     Operating income                       287       639     1,783     1,582
 
     Interest income, net                   110        44       276       105
 
     Income before income taxes             397       683     2,059     1,687
 
     Provision for income taxes             134       219       692       541
 
     Net income                            $263      $464    $1,367    $1,146
 
     Net income per common share
      - basic                             $0.08     $0.15     $0.42     $0.36
 
     Net income per common share
      - diluted                           $0.08     $0.14     $0.40     $0.34
 
     Shares used in the calculation
      of net income per common share
      - basic                             3,256     3,170     3,230     3,142
 
     Shares used in the calculation
      of net income per common share
      - diluted                           3,417     3,397     3,428     3,369
 
     Adjustments to net income
      under GAAP:
       Acquisition-related charges         $134       $31      $221       $96
       In-process research and
        development                           1         5        72         9
       (Gain) loss on investments            13     (112)        12     (112)
       Related tax effects                 (21)        31       (7)        19
 
     Total adjustments                     $127      (45)      $298       $12
 
 
     * The above Condensed Consolidated Pro Forma Statements of Income are
       presented for illustrative purposes only and are not prepared in
       accordance with generally accepted accounting principles.
 
 SOURCE  Sun Microsystems, Inc.