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.
UNIX is a registered trademark in the United States and other countries, exclusively licensed through X/Open Company, Ltd.
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| Billings represents amounts invoiced to customers in a period. |
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This press release contains forward-looking statements regarding the future results and performance of Sun Microsystems, Inc., including statements regarding future investments and industry trends. These forward-looking statements involve risks and uncertainties and actual results could differ materially from those predicted in any such forward-looking statements. Factors that could cause Sun's actual results to differ materially from those contained in such forward-looking statements include: risks associated with developing, designing, manufacturing and distributing new products; lack of success in technological advancements; pricing pressures; lack of customer acceptance and implementation of new products and technologies; the possibility of errors or defects in new products; a material acquisition, restructuring or other event that results in significant charges; competition; adverse business conditions; failure to retain key employees; the cancellation or delay of projects; Sun's reliance on single-source suppliers; risks associated with Sun's ability to purchase a sufficient amount of components to meet demand; inventory risks; risks associated with Sun's international customers and operations; delays in product development; Sun's dependence on significant customers and specific industries; and Sun's dependence on channel partners. Please also refer to Sun's periodic reports that are filed from time to time with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2007 and its Quarterly Reports on Form 10-Q for the fiscal quarters ended September 30, 2007 and December 30, 2007. Sun assumes no obligation to, and does not currently intend to, update these forward-looking statements.
| SUN MICROSYSTEMS, INC. | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| (unaudited) | |||||||||||||||||
| (in millions, except per share amounts) | |||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
||||||||||||||||
| March 30, | April 1, | March 30, | April 1, | ||||||||||||||
| 2008 | 2007 | 2008 | 2007 | ||||||||||||||
| Net revenues: | |||||||||||||||||
| Products | $ | 2,003 | $ | 2,060 | $ | 6,232 | $ | 6,279 | |||||||||
| Services | 1,263 | 1,223 | 3,868 | 3,759 | |||||||||||||
| Total net revenues | 3,266 | 3,283 | 10,100 | 10,038 | |||||||||||||
| Cost of sales: | |||||||||||||||||
| Cost of sales-products (1) | 1,106 | 1,148 | 3,296 | 3,499 | |||||||||||||
| Cost of sales-services (1) | 692 | 674 | 2,022 | 2,086 | |||||||||||||
| Total cost of sales | 1,798 | 1,822 | 5,318 | 5,585 | |||||||||||||
| Gross margin | 1,468 | 1,461 | 4,782 | 4,453 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development (1) | 457 | 514 | 1,366 | 1,494 | |||||||||||||
| Selling, general and administrative (1) | 989 | 957 | 2,923 | 2,893 | |||||||||||||
| Restructuring charges and related impairment of long-lived assets | 14 | 35 | 159 | 82 | |||||||||||||
| Purchased in-process research and development | 24 | - | 25 | - | |||||||||||||
| Total operating expenses | 1,484 | 1,506 | 4,473 | 4,469 | |||||||||||||
| Operating income (loss) | (16 | ) | (45 | ) | 309 | (16 | ) | ||||||||||
| Gain on equity investments, net | - | 5 | 22 | 5 | |||||||||||||
| Interest and other income, net | 34 | 104 | 145 | 209 | |||||||||||||
| Income before income taxes | 18 | 64 | 476 | 198 | |||||||||||||
| Provision (benefit) for income taxes | 52 | (3 | ) | 161 | 54 | ||||||||||||
| Net income (loss) | $ | (34 | ) | $ | 67 | $ | 315 | $ | 144 | ||||||||
| Net income (loss) per common share-basic | $ | (0.04 | ) | $ | 0.08 | (2) | $ | 0.38 | $ | 0.16 | (2) | ||||||
| Net income (loss) per common share-diluted | $ | (0.04 | ) | $ | 0.07 | (2) | $ | 0.38 | $ | 0.16 | (2) | ||||||
| Shares used in the calculation of net income (loss) per common share-basic | 785 | 887 | (2) | 821 | 881 | (2) | |||||||||||
| Shares used in the calculation of net income (loss) per common share-diluted | 785 | 915 | (2) | 837 | 900 | (2) | |||||||||||
| (1) Includes stock-based compensation expense as follows: | |||||||||||||||||
| Cost of sales-products | $ | 3 | $ | 3 | $ | 8 | $ | 10 | |||||||||
| Cost of sales-services | $ | 10 | $ | 8 | $ | 28 | $ | 24 | |||||||||
| Research and development | $ | 17 | $ | 15 | $ | 47 | $ | 49 | |||||||||
| Selling, general and administrative | $ | 27 | $ | 24 | $ | 74 | $ | 83 | |||||||||
| (2) Amounts have been restated to reflect the one-for-four reverse stock split effective November 12, 2007. | |||||||||||||||||
| SUN MICROSYSTEMS, INC. | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (in millions) | ||||||
| March 30, | June 30, | |||||
| 2008 | 2007 (1) | |||||
| (unaudited) | ||||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 2,363 | $ | 3,620 | ||
| Short-term marketable debt securities | 664 | 962 | ||||
| Accounts receivable, net | 2,405 | 2,964 | ||||
| Inventories | 735 | 524 | ||||
| Deferred and prepaid tax assets | 223 | 200 | ||||
| Prepaid expenses and other current assets | 1,106 | 1,058 | ||||
| Total current assets | 7,496 | 9,328 | ||||
| Property, plant and equipment, net | 1,584 | 1,533 | ||||
| Long-term marketable debt securities | 774 | 1,360 | ||||
| Goodwill | 3,288 | 2,514 | ||||
| Other acquisition-related intangible assets, net | 611 | 633 | ||||
| Other non-current assets | 509 | 470 | ||||
| $ | 14,262 | $ | 15,838 | |||
| LIABILITIES AND STOCKHOLDERS ’ EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 1,306 | $ | 1,381 | ||
| Accrued payroll-related liabilities | 724 | 842 | ||||
| Accrued liabilities and other | 1,128 | 961 | ||||
| Deferred revenues | 1,979 | 2,047 | ||||
| Warranty reserve | 204 | 220 | ||||
| Total current liabilities | 5,341 | 5,451 | ||||
| Long-term debt | 1,275 | 1,264 | ||||
| Long-term deferred revenues | 627 | 659 | ||||
| Other non-current obligations | 1,229 | 1,285 | ||||
| Total stockholders ’ equity | 5,790 | 7,179 | ||||
| $ | 14,262 | $ | 15,838 | |||
| (1) Derived from audited financial statements. | ||||||
| SUN MICROSYSTEMS, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (unaudited, in millions) | ||||||||
| Nine Months Ended | ||||||||
| March 30, | April 1, | |||||||
| 2008 | 2007 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 315 | $ | 144 | ||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and other amortization | 353 | 388 | ||||||
| Amortization of acquisition related intangible assets | 225 | 239 | ||||||
| Deferred taxes | 8 | (20 | ) | |||||
| Impairment of long-lived assets | - | 16 | ||||||
| Gain on investments and other, net | (54 | ) | - | |||||
| Stock-based compensation expense | 157 | 166 | ||||||
| Purchased in-process research and development | 25 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | 603 | 265 | ||||||
| Inventories | (205 | ) | (51 | ) | ||||
| Prepaid and other assets | (105 | ) | (104 | ) | ||||
| Accounts payable | (114 | ) | (222 | ) | ||||
| Other liabilities | 31 | (427 | ) | |||||
| Net cash provided by operating activities | 1,239 | 394 | ||||||
| Cash flows from investing activities: | ||||||||
| Decrease (increase) in restricted cash, net | 22 | (4 | ) | |||||
| Purchases of marketable debt securities | (1,292 | ) | (2,465 | ) | ||||
| Proceeds from sales of marketable debt securities | 1,404 | 1,041 | ||||||
| Proceeds from maturities of marketable debt securities | 764 | 523 | ||||||
| Proceeds from sales of equity investments, net | 25 | 8 | ||||||
| Purchases of property, plant and equipment, net | (297 | ) | (73 | ) | ||||
| Payments for acquisitions, net of cash acquired | (923 | ) | (10 | ) | ||||
| Net cash used in investing activities | (297 | ) | (980 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Purchase of common stock call options | - | (228 | ) | |||||
| Sale of common stock warrants | - | 145 | ||||||
| Purchase of common stock under 2007 Stock Repurchase Plan | (2,300 | ) | - | |||||
| Proceeds from the exercise of common stock options, net | 121 | 176 | ||||||
| Proceeds from issuance of convertible notes, net | - | 692 | ||||||
| Principal payments on borrowings and other obligations | (20 | ) | (476 | ) | ||||
| Net cash (used in) provided by financing activities | (2,199 | ) | 309 | |||||
| Net decrease in cash and cash equivalents | (1,257 | ) | (277 | ) | ||||
| Cash and cash equivalents, beginning of period | 3,620 | 3,569 | ||||||
| Cash and cash equivalents, end of period | $ | 2,363 | $ | 3,292 | ||||
