Exhibit 99.1
SUN MICROSYSTEMS REPORTS RESULTS FOR
FISCAL 2005 THIRD QUARTER
SANTA CLARA, Calif. - April 14, 2005 - Sun Microsystems, Inc., (NASDAQ: SUNW)
reported results today for its fiscal third quarter, which ended March 27, 2005.
Revenues for the third quarter were $2.625 billion, a decrease of 1.0 percent as compared with $2.651 billion for the third quarter of fiscal 2004. Total gross margin as a percent of revenues was 41.3 percent, an increase of 1.0 percentage points as compared with the third quarter of fiscal 2004. Net loss for the third quarter of fiscal 2005 on a GAAP basis was $9 million or a net loss of $0.00 per share. This net loss included the favorable impact of $54 million in additional settlement income from Microsoft, a $69 million benefit related to the impact of a change in foreign withholding tax legislation, and a $23 million net beneficial correction to the valuation allowance on deferred tax assets and foreign tax provisions. This compared with a net loss of $760 million or a net loss of $0.23 per share for the third quarter of fiscal 2004.
Excluding a charge of $45 million for workforce and real estate restructuring, a $2 million gain on equity investments, $54 million in additional settlement income from Microsoft (recorded in other income), a $34 million beneficial correcting adjustment to the valuation allowance on deferred tax assets, and a tax benefit of $7 million for related tax effects, net loss for Q3 fiscal 2005 on a non-GAAP basis was $61 million or a net loss of $0.02 per share. This compared with a net loss, on a non-GAAP basis, in Q3 fiscal 2004 of $260 million or a net loss of $0.08 per share.
The cash and marketable debt securities balance at the end of the quarter was $7.357 billion.
“We made good progress in the third fiscal quarter, but more importantly we’re seeing a marked improvement over the first nine months of fiscal 2004,” said Scott McNealy, chairman and chief executive officer, Sun Microsystems, Inc. “Break even is a huge move forward from the loss we experienced a year ago. We’ve made over a $1 billion improvement in Net Income on a year to date three quarter comparison,” McNealy continued, “Revenue was stable for the first three quarters of fiscal 2005 as compared with the same period in fiscal 2004, while margins have improved and we’ve made tremendous strides in reducing our R&D and SG&A by over $400 million dollars. On top of that, in the third quarter we experienced growth in SunTM x86 server unit shipments, good traction in NetraTM servers, SunTM Fire 4-8 way and 12-24 way SPARC® processor-based servers, and SolarisTM10 registrations exceeded expectations. All of these results, combined with a solid new product pipeline, point to real improvements in the business.”
Sun has scheduled a conference call today to discuss its earnings for the third quarter at 1:30 p.m. (PT), which is being broadcast live atwww.sun.com/investors.
About Sun Microsystems, Inc.
Since its inception in 1982, a singular vision — “The Network Is The ComputerTM” — has propelled Sun Microsystems, Inc. (Nasdaq: SUNW) to its position as a leading provider of industrial-strength hardware, software and services that make the Net work. Sun can be found in more than 100 countries and on the World Wide Web athttp://www.sun.com.
FOR MORE INFORMATION
INVESTOR CONTACT:
Jeff Boldt (650) 786-0333
jeff.boldt@sun.com
MEDIA CONTACT:
Stephanie Vonallmen (650) 786-8589
stephanie.vonallmen@sun.com
INDUSTRY ANALYST CONTACT:
Joanne Masters (650) 786-0847
joanne.masters@sun.com
The company believes that presentation of results including items such as net income (loss) on a non-GAAP basis provides meaningful supplemental information to both management and investors that is indicative of the Company’s core operating results and facilitates comparison of operating results across reporting periods.
Sun, Sun Microsystems, the Sun logo, Sun Fire, Netra, Solaris, and The Network Is The Computer are trademarks or registered trademarks of Sun Microsystems, Inc. in the United States and in other countries. All SPARC trademarks are used under license and are trademarks or registered trademarks of SPARC International, Inc. in the US and other countries. Products bearing SPARC trademarks are based upon an architecture developed by Sun Microsystems, Inc.
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in millions, except per share amounts)
Three Months Ended | Nine Months Ended | |||||||||||||||
March 27, 2005 | March 28, 2004 | March 27, 2005 | March 28, 2004 | |||||||||||||
Net revenues: | ||||||||||||||||
Products | $ | 1,681 | $ | 1,711 | $ | 5,197 | $ | 5,289 | ||||||||
Services | 944 | 940 | 2,897 | 2,786 | ||||||||||||
Total net revenues | 2,625 | 2,651 | 8,094 | 8,075 | ||||||||||||
Cost of sales: | ||||||||||||||||
Cost of sales-products | 975 | 980 | 3,044 | 3,052 | ||||||||||||
Cost of sales-services | 565 | 603 | 1,694 | 1,731 | ||||||||||||
Total cost of sales | 1,540 | 1,583 | 4,738 | 4,783 | ||||||||||||
Gross margin | 1,085 | 1,068 | 3,356 | 3,292 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 450 | 470 | 1,313 | 1,408 | ||||||||||||
Selling, general and administrative | 736 | 842 | 2,132 | 2,468 | ||||||||||||
Restructuring charges | 45 | 203 | 177 | 194 | ||||||||||||
Purchased in-process research and development | — | — | — | 1 | ||||||||||||
Total operating expenses | 1,231 | 1,515 | 3,622 | 4,071 | ||||||||||||
Operating loss | (146 | ) | (447 | ) | (266 | ) | (779 | ) | ||||||||
Gain (loss) on equity investments, net | 2 | 3 | 7 | (58 | ) | |||||||||||
Interest and other income, net | 91 | 23 | 155 | 64 | ||||||||||||
Loss before income taxes | (53 | ) | (421 | ) | (104 | ) | (773 | ) | ||||||||
Provision (benefit) for income taxes | (44 | ) | 339 | 34 | 398 | |||||||||||
Net loss | $ | (9 | ) | $ | (760 | ) | $ | (138 | ) | $ | (1,171 | ) | ||||
Net loss per common share-basic and diluted | $ | 0.00 | $ | (0.23 | ) | $ | (0.04 | ) | $ | (0.36 | ) | |||||
Shares used in the calculation of net loss per common share – basic and diluted | 3,376 | 3,286 | 3,358 | 3,261 | ||||||||||||
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
March 27, 2005 | June 30, 2004* | |||||
(unaudited) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 1,534 | $ | 2,141 | ||
Short-term marketable debt securities | 1,601 | �� | 1,460 | |||
Accounts receivable, net | 2,020 | 2,339 | ||||
Inventories | 388 | 464 | ||||
Deferred and prepaid tax assets | 112 | 62 | ||||
Prepaid expenses and other current assets | 1,062 | 837 | ||||
Total current assets | 6,717 | 7,303 | ||||
Property, plant and equipment, net | 1,851 | 1,996 | ||||
Long-term marketable debt securities | 4,222 | 4,007 | ||||
Goodwill | 441 | 406 | ||||
Other acquisition-related intangible assets, net | 79 | 127 | ||||
Other non-current assets, net | 605 | 664 | ||||
$ | 13,915 | $ | 14,503 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Current portion of long-term debt and short-term borrowings | $ | — | $ | 257 | ||
Accounts payable | 1,071 | 1,057 | ||||
Accrued payroll-related liabilities | 701 | 622 | ||||
Accrued liabilities and other | 1,165 | 1,308 | ||||
Deferred revenues | 1,409 | 1,617 | ||||
Warranty reserve | 225 | 252 | ||||
Total current liabilities | 4,571 | 5,113 | ||||
Long-term debt | 1,116 | 1,175 | ||||
Long-term deferred revenues | 509 | 557 | ||||
Other non-current obligations | 1,189 | 1,220 | ||||
Total stockholders’ equity | 6,530 | 6,438 | ||||
$ | 13,915 | $ | 14,503 | |||
* | Derived from audited financial statements |
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
Nine Months Ended | ||||||||
March 27, 2005 | March 28, 2004 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (138 | ) | $ | (1,171 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 497 | 517 | ||||||
Amortization of other intangible assets and unearned equity compensation | 73 | 65 | ||||||
Deferred taxes | (107 | ) | 300 | |||||
Loss (gain) on equity investments, net | (7 | ) | 58 | |||||
Purchased in-process research and development | — | 1 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | 338 | 202 | ||||||
Inventories | 79 | (77 | ) | |||||
Prepaid and other assets | (264 | ) | (18 | ) | ||||
Accounts payable | 16 | 113 | ||||||
Other liabilities | (313 | ) | 64 | |||||
Net cash provided by operating activities | 174 | 54 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of marketable debt securities | (5,115 | ) | (6,649 | ) | ||||
Proceeds from sales of marketable debt securities | 4,066 | 6,374 | ||||||
Proceeds from maturities of marketable debt securities | 651 | — | ||||||
Proceeds from sales of equity investments, net | 47 | 14 | ||||||
Acquisition of property, plant and equipment, net | (199 | ) | (189 | ) | ||||
Acquisition of spare parts and other assets | (68 | ) | (56 | ) | ||||
Payments for acquisitions, net of cash acquired | (45 | ) | (201 | ) | ||||
Net cash used in investing activities | (663 | ) | (707 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common stock, net | 134 | 151 | ||||||
Principal payments on borrowings and other obligations | (252 | ) | (7 | ) | ||||
Net cash provided by (used in) financing activities | (118 | ) | 144 | |||||
Net decrease in cash and cash equivalents | (607 | ) | (509 | ) | ||||
Cash and cash equivalents, beginning of period | 2,141 | 2,015 | ||||||
Cash and cash equivalents, end of period | $ | 1,534 | $ | 1,506 | ||||
SUN MICROSYSTEMS, INC.
NON-GAAP CALCULATION OF NET LOSS EXCLUDING SPECIAL ITEMS
(unaudited)
(in millions, except per share amounts)
Three Months Ended | Nine Months Ended | |||||||||||||||
March 27, 2005* | March 28, 2004 | March 27, 2005* | March 28, 2004 | |||||||||||||
Calculation of net loss excluding special items: | ||||||||||||||||
Net loss | $ | (9 | ) | $ | (760 | ) | $ | (138 | ) | $ | (1,171 | ) | ||||
Restructuring charges | 45 | 203 | 177 | 194 | ||||||||||||
Purchased in-process research and development | — | — | — | 1 | ||||||||||||
Loss (gain) on equity investments, net | (2 | ) | (3 | ) | (7 | ) | 58 | |||||||||
Settlement income** | (54 | ) | — | (54 | ) | — | ||||||||||
Settlement of litigation*** | — | — | 55 | — | ||||||||||||
Valuation allowance on deferred tax assets | (34 | ) | 300 | (34 | ) | 300 | ||||||||||
Related tax effects | (7 | ) | — | (20 | ) | — | ||||||||||
Net loss excluding special items | $ | (61 | ) | $ | (260 | ) | $ | (21 | ) | $ | (618 | ) | ||||
Net loss excluding special items per common share – basic & diluted | $ | (0.02 | ) | $ | (0.08 | ) | $ | (0.01 | ) | $ | (0.19 | ) | ||||
Shares used in the calculation of net loss excluding special items per common share – basic & diluted | 3,376 | 3,286 | 3,358 | 3,261 | ||||||||||||
* | The non-GAAP calculation of Net loss excluding special items for the three and nine month periods ended March 27, 2005 includes a $69 million benefit for the impact of the change in Dutch withholding tax legislation which was effected in the third quarter of fiscal 2005. |
** | Included in Interest and other income, net. |
*** | Included in Cost of sales—Products. |
SUN MICROSYSTEMS, INC.
OPERATIONS ANALYSIS – CONSOLIDATED (UNAUDITED)
STATEMENTS OF OPERATIONS
| FY 2005 | FY 2004 | FY 2003 | |||||||||||||||||||||||||||||||||
(in millions except per share amounts) | Q1 | Q2 | Q3 | FY05 | Q1 | Q2 | Q3 | Q4 | FY04 | Q3 | Q4 | FY03 | ||||||||||||||||||||||||
NET REVENUES | ||||||||||||||||||||||||||||||||||||
Products | 1,676 | 1,840 | 1,681 | 5,197 | 1,634 | 1,944 | 1,711 | 2,066 | 7,355 | 1,897 | 2,003 | 7,793 | ||||||||||||||||||||||||
Services | 952 | 1,001 | 944 | 2,897 | 902 | 944 | 940 | 1,044 | 3,830 | 893 | 979 | 3,641 | ||||||||||||||||||||||||
TOTAL | 2,628 | 2,841 | 2,625 | 8,094 | 2,536 | 2,888 | 2,651 | 3,110 | 11,185 | 2,790 | 2,982 | 11,434 | ||||||||||||||||||||||||
Growth vs. prior year (%) | 3.6 | % | -1.6 | % | -1.0 | % | 0.2 | % | -7.7 | % | -0.9 | % | -5.0 | % | 4.3 | % | -2.2 | % | -10.2 | % | -12.8 | % | -8.5 | % | ||||||||||||
Growth vs. prior quarter (%) | -15.5 | % | 8.1 | % | -7.6 | % | -15.0 | % | 13.9 | % | -8.2 | % | 17.3 | % | -4.3 | % | 6.9 | % | ||||||||||||||||||
COST OF SALES | ||||||||||||||||||||||||||||||||||||
Products | 949 | 1,065 | 975 | 2,989 | 965 | 1,107 | 980 | 1,238 | 4,290 | 1,021 | 1,110 | 4,342 | ||||||||||||||||||||||||
Cost of settlement | 55 | 0 | 0 | 55 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Total | 1,004 | 1,065 | 975 | 3,044 | 965 | 1,107 | 980 | 1,238 | 4,290 | 1,021 | 1,110 | 4,342 | ||||||||||||||||||||||||
Services | 551 | 578 | 565 | 1,694 | 555 | 573 | 603 | 648 | 2,379 | 526 | 568 | 2,150 | ||||||||||||||||||||||||
TOTAL | 1,555 | 1,643 | 1,540 | 4,738 | 1,520 | 1,680 | 1,583 | 1,886 | 6,669 | 1,547 | 1,678 | 6,492 | ||||||||||||||||||||||||
% of revenue | 59.2 | % | 57.8 | % | 58.7 | % | 58.5 | % | 59.9 | % | 58.2 | % | 59.7 | % | 60.6 | % | 59.6 | % | 55.4 | % | 56.3 | % | 56.8 | % | ||||||||||||
PRODUCTS GROSS MARGIN | ||||||||||||||||||||||||||||||||||||
Products | 727 | 775 | 706 | 2,208 | 669 | 837 | 731 | 828 | 3,065 | 876 | 893 | 3,451 | ||||||||||||||||||||||||
% of product revenue | 43.4 | % | 42.1 | % | 42.0 | % | 42.5 | % | 40.9 | % | 43.1 | % | 42.7 | % | 40.1 | % | 41.7 | % | 46.2 | % | 44.6 | % | 44.3 | % | ||||||||||||
Cost of settlement | (55 | ) | 0 | 0 | (55 | ) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
% of product revenue | -3.3 | % | 0.0 | % | 0.0 | % | -1.1 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||||
Total product margin | 672 | 775 | 706 | 2,153 | 669 | 837 | 731 | 828 | 3,065 | 876 | 893 | 3,451 | ||||||||||||||||||||||||
% of product revenue | 40.1 | % | 42.1 | % | 42.0 | % | 41.4 | % | 40.9 | % | 43.1 | % | 42.7 | % | 40.1 | % | 41.7 | % | 46.2 | % | 44.6 | % | 44.3 | % | ||||||||||||
Services gross margin | 401 | 423 | 379 | 1,203 | 347 | 371 | 337 | 396 | 1,451 | 367 | 411 | 1,491 | ||||||||||||||||||||||||
% of service revenue | 42.1 | % | 42.3 | % | 40.1 | % | 41.5 | % | 38.5 | % | 39.3 | % | 35.9 | % | 37.9 | % | 37.9 | % | 41.1 | % | 42.0 | % | 41.0 | % | ||||||||||||
Total excluding settlement | 1,128 | 1,198 | 1,085 | 3,411 | 1,016 | 1,208 | 1,068 | 1,224 | 4,516 | 1,243 | 1,304 | 4,942 | ||||||||||||||||||||||||
% of revenue | 42.9 | % | 42.2 | % | 41.3 | % | 42.1 | % | 40.1 | % | 41.8 | % | 40.3 | % | 39.4 | % | 40.4 | % | 44.6 | % | 43.7 | % | 43.2 | % | ||||||||||||
Cost of settlement | (55 | ) | 0 | 0 | (55 | ) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
% of revenue | -2.1 | % | 0.0 | % | 0.0 | % | -0.7 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||||
TOTAL GROSS MARGIN | 1,073 | 1,198 | 1,085 | 3,356 | 1,016 | 1,208 | 1,068 | 1,224 | 4,516 | 1,243 | 1,304 | 4,942 | ||||||||||||||||||||||||
% of revenue | 40.8 | % | 42.2 | % | 41.3 | % | 41.5 | % | 40.1 | % | 41.8 | % | 40.3 | % | 39.4 | % | 40.4 | % | 44.6 | % | 43.7 | % | 43.2 | % | ||||||||||||
R&D | 416 | 447 | 450 | 1,313 | 467 | 471 | 470 | 518 | 1,926 | 467 | 482 | 1,837 | ||||||||||||||||||||||||
% of revenue | 15.8 | % | 15.7 | % | 17.1 | % | 16.2 | % | 18.4 | % | 16.3 | % | 17.7 | % | 16.7 | % | 17.2 | % | 16.7 | % | 16.2 | % | 16.1 | % | ||||||||||||
PURCHASED IN PROCESS R&D | 0 | 0 | 0 | 0 | 1 | 0 | 0 | 69 | 70 | 0 | 0 | 4 | ||||||||||||||||||||||||
% of revenue | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 2.2 | % | 0.6 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||||
SG&A | 684 | 712 | 736 | 2,132 | 798 | 828 | 842 | 849 | 3,317 | 791 | 826 | 3,329 | ||||||||||||||||||||||||
% of revenue | 26.0 | % | 25.1 | % | 28.0 | % | 26.3 | % | 31.5 | % | 28.7 | % | 31.8 | % | 27.3 | % | 29.7 | % | 28.4 | % | 27.7 | % | 29.1 | % | ||||||||||||
RESTRUCTURING CHARGES | 108 | 24 | 45 | 177 | 1 | (10 | ) | 203 | 150 | 344 | (4 | ) | (6 | ) | 371 | |||||||||||||||||||||
% of revenue | 4.1 | % | 0.8 | % | 1.7 | % | 2.2 | % | 0.0 | % | -0.3 | % | 7.7 | % | 4.8 | % | 3.1 | % | -0.1 | % | -0.2 | % | 3.2 | % | ||||||||||||
IMPAIRMENT EXPENSE | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 49 | 49 | 0 | 0 | 2,125 | ||||||||||||||||||||||||
% of revenue | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 1.6 | % | 0.4 | % | 0.0 | % | 0.0 | % | 18.6 | % | ||||||||||||
TOTAL OPERATING EXPENSES | 1,208 | 1,183 | 1,231 | 3,622 | 1,267 | 1,289 | 1,515 | 1,635 | 5,706 | 1,254 | 1,302 | 7,666 | ||||||||||||||||||||||||
% of revenue | 46.0 | % | 41.6 | % | 46.9 | % | 44.7 | % | 50.0 | % | 44.6 | % | 57.1 | % | 52.6 | % | 51.0 | % | 44.9 | % | 43.7 | % | 67.0 | % | ||||||||||||
OPERATING INCOME (LOSS) | (135 | ) | 15 | (146 | ) | (266 | ) | (251 | ) | (81 | ) | (447 | ) | (411 | ) | (1,190 | ) | (11 | ) | 2 | (2,724 | ) | ||||||||||||||
Operating margin | -5.1 | % | 0.5 | % | -5.6 | % | -3.3 | % | -9.9 | % | -2.8 | % | -16.9 | % | -13.2 | % | -10.6 | % | -0.4 | % | 0.1 | % | -23.8 | % | ||||||||||||
Interest and other income, net | 31 | 33 | 37 | 101 | 21 | 20 | 23 | 30 | 94 | 33 | 45 | 155 | ||||||||||||||||||||||||
Gain (loss) on equity investments, net | (4 | ) | 9 | 2 | 7 | (25 | ) | (36 | ) | 3 | (6 | ) | (64 | ) | (16 | ) | (26 | ) | (84 | ) | ||||||||||||||||
Settlement income | 0 | 0 | 54 | 54 | 0 | 0 | 0 | 1,597 | 1,597 | 0 | 0 | 0 | ||||||||||||||||||||||||
PRETAX INCOME (LOSS) | (108 | ) | 57 | (53 | ) | (104 | ) | (255 | ) | (97 | ) | (421 | ) | 1,210 | 437 | 6 | 21 | (2,653 | ) | |||||||||||||||||
Pretax income (loss) margin | -4.1 | % | 2.0 | % | -2.0 | % | -1.3 | % | -10.1 | % | -3.4 | % | -15.9 | % | 38.9 | % | 3.9 | % | 0.2 | % | 0.7 | % | -23.2 | % | ||||||||||||
INCOME TAX PROVISION (BENEFIT) | 39 | 39 | (44 | ) | 34 | 31 | 28 | 339 | 427 | 825 | 2 | 1,060 | 776 | |||||||||||||||||||||||
TAX RATE (%) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 44.0 | % | N/A | N/A | |||||||||||||||||||||||
NET INCOME (LOSS) (Reported) | (147 | ) | 18 | (9 | ) | (138 | ) | (286 | ) | (125 | ) | (760 | ) | 783 | (388 | ) | 4 | (1,039 | ) | (3,429 | ) | |||||||||||||||
Growth vs. prior year (%) | 48.6 | % | 114.4 | % | 98.8 | % | 88.2 | % | -157.7 | % | 94.5 | % | -19100.0 | % | 175.4 | % | 88.7 | % | 110.8 | % | -1803.3 | % | -484.2 | % | ||||||||||||
Growth vs. prior quarter (%) | -118.8 | % | 112.2 | % | -150.0 | % | 72.5 | % | 56.3 | % | -508.0 | % | 203.0 | % | 100.2 | % | -26075.0 | % | ||||||||||||||||||
Net income (loss) margin | -5.6 | % | 0.6 | % | -0.3 | % | -1.7 | % | -11.3 | % | -4.3 | % | -28.7 | % | 25.2 | % | -3.5 | % | 0.1 | % | -34.8 | % | -30.0 | % | ||||||||||||
EPS (Diluted) (Reported) | (0.04 | ) | 0.01 | 0.00 | (0.04 | ) | (0.09 | ) | (0.04 | ) | (0.23 | ) | 0.23 | (0.12 | ) | 0.00 | (0.32 | ) | (1.07 | ) | ||||||||||||||||
Growth vs. prior year (%) | 55.6 | % | 125.0 | % | 100.0 | % | 88.9 | % | -125.0 | % | 94.4 | % | N/A | 171.9 | % | -88.8 | % | 100.0 | % | -1700.0 | % | -494.4 | % | |||||||||||||
Growth vs. prior quarter (%) | -117.4 | % | 125.0 | % | -100.0 | % | 71.9 | % | 55.6 | % | -475.0 | % | 200.0 | % | 100.0 | % | N/A | |||||||||||||||||||
SHARES (CSE)(Diluted) | 3,343 | 3,400 | 3,376 | 3,358 | 3,235 | 3,262 | 3,286 | 3,348 | 3,277 | 3,218 | 3,219 | 3,190 | ||||||||||||||||||||||||
OUTSTANDING SHARES | 3,344 | 3,375 | 3,383 | 3,383 | 3,240 | 3,280 | 3,293 | 3,336 | 3,336 | 3,200 | 3,236 | 3,236 |
FY 2005 | FY 2004 | FY 2003 | ||||||||||||||||||||||||||||||||||
(in millions) | Q1 | Q2 | Q3 | FY05 | Q1 | Q2 | Q3 | Q4 | FY04 | Q3 | Q4 | FY03 | ||||||||||||||||||||||||
REVENUE BY GEOGRAPHY | ||||||||||||||||||||||||||||||||||||
UNITED STATES ($M) | 1,105 | 1,130 | 982 | 3,217 | 1,162 | 1,214 | 1,037 | 1,356 | 4,769 | 1,212 | 1,327 | 5,048 | ||||||||||||||||||||||||
Growth vs. prior year (%) | -4.9 | % | -6.9 | % | -5.3 | % | -5.7 | % | -6.4 | % | -4.2 | % | -14.4 | % | 2.2 | % | -5.5 | % | -15.8 | % | -22.6 | % | -14.9 | % | ||||||||||||
Growth vs. prior quarter (%) | -18.5 | % | 2.3 | % | -13.1 | % | -12.4 | % | 4.5 | % | -14.6 | % | 30.8 | % | -4.3 | % | 9.5 | % | ||||||||||||||||||
EUROPE ($M) | 918 | 975 | 938 | 2,831 | 780 | 966 | 941 | 1,026 | 3,713 | 886 | 954 | 3,578 | ||||||||||||||||||||||||
Growth vs. prior year (%) | 17.7 | % | 0.9 | % | -0.3 | % | 5.4 | % | -3.2 | % | 3.6 | % | 6.2 | % | 7.5 | % | 3.8 | % | -4.1 | % | -2.0 | % | -0.8 | % | ||||||||||||
Growth vs. prior quarter (%) | -10.5 | % | 6.2 | % | -3.8 | % | -18.2 | % | 23.8 | % | -2.6 | % | 9.0 | % | -4.9 | % | 7.7 | % | ||||||||||||||||||
JAPAN ($M) | 183 | 190 | 197 | 570 | 185 | 192 | 207 | 178 | 762 | 243 | 200 | 936 | ||||||||||||||||||||||||
Growth vs. prior year (%) | -1.1 | % | -1.0 | % | -4.8 | % | -2.4 | % | -26.0 | % | -21.0 | % | -14.8 | % | -11.0 | % | -18.6 | % | -12.6 | % | -1.5 | % | -11.7 | % | ||||||||||||
Growth vs. prior quarter (%) | 2.8 | % | 3.8 | % | 3.7 | % | -7.5 | % | 3.8 | % | 7.8 | % | -14.0 | % | 0.0 | % | -17.7 | % | ||||||||||||||||||
REST OF WORLD ($M) | 422 | 546 | 508 | 1,476 | 409 | 516 | 466 | 550 | 1,941 | 449 | 501 | 1,872 | ||||||||||||||||||||||||
Growth vs. prior year (%) | 3.2 | % | 5.8 | % | 9.0 | % | 6.1 | % | -8.9 | % | 9.1 | % | 3.8 | % | 9.8 | % | 3.7 | % | -3.6 | % | -5.5 | % | -1.2 | % | ||||||||||||
Growth vs. prior quarter (%) | -23.3 | % | 29.4 | % | -7.0 | % | -18.4 | % | 26.2 | % | -9.7 | % | 18.0 | % | -5.1 | % | 11.6 | % | ||||||||||||||||||
% of Total Revenue | ||||||||||||||||||||||||||||||||||||
UNITED STATES (%) | 42.0 | % | 39.8 | % | 37.4 | % | 39.7 | % | 45.8 | % | 42.1 | % | 39.1 | % | 43.6 | % | 42.6 | % | 43.4 | % | 44.5 | % | 44.1 | % | ||||||||||||
EUROPE (%) | 34.9 | % | 34.3 | % | 35.7 | % | 35.0 | % | 30.8 | % | 33.4 | % | 35.5 | % | 33.0 | % | 33.2 | % | 31.8 | % | 32.0 | % | 31.3 | % | ||||||||||||
JAPAN (%) | 7.0 | % | 6.7 | % | 7.5 | % | 7.0 | % | 7.3 | % | 6.6 | % | 7.8 | % | 5.7 | % | 6.8 | % | 8.7 | % | 6.7 | % | 8.2 | % | ||||||||||||
REST OF WORLD (%) | 16.1 | % | 19.2 | % | 19.4 | % | 18.3 | % | 16.1 | % | 17.9 | % | 17.6 | % | 17.7 | % | 17.4 | % | 16.1 | % | 16.8 | % | 16.4 | % | ||||||||||||
PRODUCTS AND SERVICES REVENUE | ||||||||||||||||||||||||||||||||||||
COMPUTER SYSTEMS PRODUCTS ($M) | 1,354 | 1,505 | 1,389 | 4,248 | 1,282 | 1,568 | 1,365 | 1,639 | 5,854 | 1,530 | 1,580 | 6,243 | ||||||||||||||||||||||||
Growth vs. prior year (%) | 5.6 | % | -4.0 | % | 1.8 | % | 0.8 | % | -15.2 | % | -3.3 | % | -10.8 | % | 3.7 | % | -6.2 | % | -17.9 | % | -21.1 | % | -15.6 | % | ||||||||||||
Growth vs. prior quarter (%) | -17.4 | % | 11.2 | % | -7.7 | % | -18.9 | % | 22.3 | % | -12.9 | % | 20.1 | % | -5.6 | % | 3.3 | % | ||||||||||||||||||
NETWORK STORAGE PRODUCTS ($M) | 322 | 335 | 292 | 949 | 352 | 376 | 346 | 427 | 1,501 | 367 | 423 | 1,550 | ||||||||||||||||||||||||
Growth vs. prior year (%) | -8.5 | % | -10.9 | % | -15.6 | % | -11.6 | % | -4.3 | % | -4.1 | % | -5.7 | % | 0.9 | % | -3.2 | % | -9.4 | % | -16.2 | % | -8.7 | % | ||||||||||||
Growth vs. prior quarter (%) | -24.6 | % | 4.0 | % | -12.8 | % | -16.8 | % | 6.8 | % | -8.0 | % | 23.4 | % | -6.4 | % | 15.3 | % | ||||||||||||||||||
SUPPORT SERVICES ($M) | 745 | 774 | 734 | 2,253 | 731 | 745 | 731 | 792 | 2,999 | 704 | 755 | 2,844 | ||||||||||||||||||||||||
Growth vs. prior year (%) | 1.9 | % | 3.9 | % | 0.4 | % | 2.1 | % | 7.0 | % | 6.1 | % | 3.8 | % | 4.9 | % | 5.5 | % | 10.7 | % | 9.1 | % | 12.1 | % | ||||||||||||
Growth vs. prior quarter (%) | -5.9 | % | 3.9 | % | -5.2 | % | -3.2 | % | 1.9 | % | -1.9 | % | 8.3 | % | 0.3 | % | 7.2 | % | ||||||||||||||||||
CLIENT SOLUTIONS & KNOWLEDGE SERVICES ($M) | 207 | 227 | 210 | 644 | 171 | 199 | 209 | 252 | 831 | 189 | 224 | 797 | ||||||||||||||||||||||||
Growth vs. prior year (%) | 21.1 | % | 14.1 | % | 0.5 | % | 11.2 | % | -7.1 | % | -0.5 | % | 10.6 | % | 12.5 | % | 4.3 | % | -6.4 | % | 1.4 | % | -7.9 | % | ||||||||||||
Growth vs. prior quarter (%) | -17.9 | % | 9.7 | % | -7.5 | % | -23.7 | % | 16.4 | % | 5.0 | % | 20.6 | % | -5.5 | % | 18.5 | % | ||||||||||||||||||
NET BOOKINGS ($M) | 2,453 | 2,976 | 2,534 | 7,963 | 2,538 | 2,980 | 2,617 | 3,179 | 11,314 | 2,688 | 3,020 | 11,298 | ||||||||||||||||||||||||
Growth vs. prior year (%) | -3.3 | % | -0.1 | % | -3.2 | % | -2.1 | % | -2.4 | % | -0.3 | % | -2.6 | % | 5.3 | % | 0.1 | % | -13.0 | % | -13.4 | % | -9.5 | % | ||||||||||||
Growth vs. prior quarter (%) | -22.8 | % | 21.3 | % | -14.9 | % | -16.0 | % | 17.4 | % | -12.2 | % | 21.5 | % | -10.1 | % | 12.4 | % | ||||||||||||||||||
BACKLOG ($M) | 659 | 792 | 701 | 707 | 799 | 765 | 834 | 667 | 705 |
BALANCE SHEETS
| FY 2005 | FY 2004 | FY 2003 | |||||||||||||||||||||||||||||||||
(in millions) | Q1 | Q2 | Q3 | Q1 | Q2 | Q3 | Q4 | Q3 | Q4 | |||||||||||||||||||||||||||
CASH & ST INVESTMENTS | 3,520 | 3,639 | 3,135 | 2,520 | 2,160 | 2,372 | 3,601 | 2,636 | 3,062 | |||||||||||||||||||||||||||
ACCOUNTS RECEIVABLE, NET | 1,730 | 1,840 | 2,020 | 1,905 | 2,214 | 2,201 | 2,339 | 2,296 | 2,381 | |||||||||||||||||||||||||||
RAW MATERIALS | 66 | 60 | 70 | 103 | 93 | 92 | 78 | 73 | 93 | |||||||||||||||||||||||||||
WORK IN PROCESS | 155 | 154 | 117 | 137 | 161 | 180 | 131 | 152 | 134 | |||||||||||||||||||||||||||
FINISHED GOODS | 195 | 215 | 201 | 186 | 226 | 225 | 255 | 172 | 189 | |||||||||||||||||||||||||||
TOTAL INVENTORIES | 416 | 429 | 388 | 426 | 480 | 497 | 464 | 397 | 416 | |||||||||||||||||||||||||||
OTHER CURRENT ASSETS | 842 | 960 | 1,174 | 890 | 966 | 1,246 | 899 | 1,302 | 920 | |||||||||||||||||||||||||||
TOTAL CURRENT ASSETS | 6,508 | 6,868 | 6,717 | 5,741 | 5,820 | 6,316 | 7,303 | 6,631 | 6,779 | |||||||||||||||||||||||||||
PP&E, NET | 1,918 | 1,903 | 1,851 | 2,152 | 2,115 | 2,075 | 1,996 | 2,265 | 2,267 | |||||||||||||||||||||||||||
GOODWILL | 406 | 406 | 441 | 389 | 466 | 470 | 406 | 326 | 326 | |||||||||||||||||||||||||||
LT MARKETABLE DEBT SECURITIES | 3,913 | 3,825 | 4,222 | 3,006 | 3,001 | 3,111 | 4,007 | 2,902 | 2,679 | |||||||||||||||||||||||||||
OTHER NON-CURRENT ASSETS, NET | 762 | 732 | 684 | 825 | 822 | 811 | 791 | 1,421 | 934 | |||||||||||||||||||||||||||
TOTAL ASSETS | 13,507 | 13,734 | 13,915 | 12,113 | 12,224 | 12,783 | 14,503 | 13,545 | 12,985 | |||||||||||||||||||||||||||
SHORT TERM BORROWINGS | 0 | 0 | 0 | 263 | 263 | 257 | 257 | 0 | 0 | |||||||||||||||||||||||||||
ACCOUNTS PAYABLE | 807 | 963 | 1,071 | 780 | 906 | 1,011 | 1,057 | 870 | 903 | |||||||||||||||||||||||||||
ACCRUED LIABILITIES & OTHER | 2,105 | 2,032 | 2,091 | 1,652 | 1,583 | 1,884 | 2,182 | 1,792 | 1,773 | |||||||||||||||||||||||||||
DEFERRED REVENUES | 1,346 | 1,313 | 1,409 | 1,214 | 1,213 | 1,342 | 1,617 | 1,162 | 1,453 | |||||||||||||||||||||||||||
TOTAL CURRENT LIABILITIES | 4,258 | 4,308 | 4,571 | 3,909 | 3,965 | 4,494 | 5,113 | 3,824 | 4,129 | |||||||||||||||||||||||||||
LT DEBT | 1,163 | 1,145 | 1,116 | 1,215 | 1,214 | 1,209 | 1,175 | 1,495 | 1,531 | |||||||||||||||||||||||||||
LT DEFERRED REVENUES | 524 | 519 | 509 | 462 | 463 | 537 | 557 | 512 | 450 | |||||||||||||||||||||||||||
OTHER NON-CURRENT OBLIGATIONS | 1,264 | 1,242 | 1,189 | 364 | 343 | 990 | 1,220 | 354 | 384 | |||||||||||||||||||||||||||
STOCKHOLDERS’ EQUITY | 6,298 | 6,520 | 6,530 | 6,163 | 6,239 | 5,553 | 6,438 | 7,360 | 6,491 | |||||||||||||||||||||||||||
TOTAL LIABILITIES & SE | 13,507 | 13,734 | 13,915 | 12,113 | 12,224 | 12,783 | 14,503 | 13,545 | 12,985 | |||||||||||||||||||||||||||
CASH FLOW | Q1 | Q2 | Q3 | FY05 | Q1 | Q2 | Q3 | Q4 | FY04 | Q3 | Q4 | FY03 | ||||||||||||||||||||||||
OPERATING ACTIVITIES | 124 | 52 | (2 | ) | 174 | (49 | ) | (282 | ) | 385 | 2,172 | 2,226 | 379 | 335 | 1,037 | |||||||||||||||||||||
INVESTING ACTIVITIES | 157 | (475 | ) | (345 | ) | (663 | ) | (492 | ) | 123 | (338 | ) | (1,604 | ) | (2,311 | ) | (108 | ) | (253 | ) | (528 | ) | ||||||||||||||
FINANCING ACTIVITIES | (235 | ) | 99 | 18 | (118 | ) | 7 | 106 | 31 | 67 | 211 | 10 | 95 | (518 | ) | |||||||||||||||||||||
KEY METRICS | Q1 | Q2 | Q3 | Q1 | Q2 | Q3 | Q4 | Q3 | Q4 | |||||||||||||||||||||||||||
INVENTORY TURNS (hist.) | 15.9 | 14.7 | 15.0 | 13.7 | 13.3 | 14.5 | 15.2 | 14.3 | 12.9 | |||||||||||||||||||||||||||
INVENTORY TURNS-PRODUCT ONLY (hist.) | 10.3 | 9.4 | 9.7 | 9.0 | 8.7 | 9.3 | 9.8 | 9.9 | 8.6 | |||||||||||||||||||||||||||
DAYS SALES OUTSTANDING | 59 | 58 | 69 | 68 | 69 | 75 | 68 | 74 | 72 | |||||||||||||||||||||||||||
DAYS PAYABLES OUTSTANDING | (46 | ) | (53 | ) | (63 | ) | (46 | ) | (49 | ) | (57 | ) | (50 | ) | (51 | ) | (48 | ) | ||||||||||||||||||
DAYS OF SUPPLY ON HAND | 24 | 23 | 23 | 25 | 26 | 28 | 22 | 23 | 22 | |||||||||||||||||||||||||||
L-T DEBT/EQUITY (%) | 18.5 | % | 17.6 | % | 17.1 | % | 19.7 | % | 19.5 | % | 21.8 | % | 18.3 | % | 20.3 | % | 23.6 | % | ||||||||||||||||||
ROE (12 mo. avg.)(%) | -4.1 | % | -1.7 | % | 10.0 | % | -52.8 | % | -22.0 | % | -36.2 | % | -6.4 | % | -27.6 | % | -45.1 | % | ||||||||||||||||||
BOOK VALUE PER SHARE ($) | 1.88 | 1.93 | 1.93 | 1.90 | 1.90 | 1.69 | 1.93 | 2.30 | 2.01 | |||||||||||||||||||||||||||
PRICE PER SHARE @ CLOSE | 4.13 | 5.44 | 4.03 | 3.84 | 4.38 | 4.11 | 4.33 | 3.43 | 4.65 | |||||||||||||||||||||||||||
ROA (12 mo. avg.)(%) | -1.9 | % | -0.8 | % | 4.6 | % | -27.7 | % | -11.4 | % | -17.6 | % | -3.0 | % | -15.8 | % | -24.8 | % | ||||||||||||||||||
DEPREC. & AMORT. ($M) | 187 | 191 | 192 | 218 | 189 | 175 | 231 | 216 | 265 | |||||||||||||||||||||||||||
CAPITAL EXPENDITURES ($M) | 56 | 85 | 58 | 55 | 72 | 62 | 60 | 57 | 135 | |||||||||||||||||||||||||||
NUMBER OF EMPLOYEES | 32,449 | 31,855 | 31,999 | 36,014 | 35,802 | 35,386 | 34,962 | 35,745 | 36,068 | |||||||||||||||||||||||||||
REV. PER EMP. (12 mo.)($K) | 347.5 | 352.5 | 350.1 | 311.6 | 312.7 | 312.5 | 319.9 | 332.1 | 317.0 | |||||||||||||||||||||||||||
GM PER EMP. (12mo.)($K) | 140.9 | 143.2 | 143.1 | 134.0 | 133.3 | 129.9 | 129.2 | 141.3 | 137.0 | |||||||||||||||||||||||||||
OP EXP AS% OF REV (12mo.) | 50.1 | % | 49.3 | % | 46.9 | % | 67.6 | % | 45.7 | % | 48.6 | % | 51.0 | % | 65.0 | % | 67.0 | % | ||||||||||||||||||
NET INCOME (LOSS) PER EMP. (12mo.)($K) | (7.7 | ) | (3.3 | ) | 20.2 | (100.1 | ) | (40.4 | ) | (62.5 | ) | (11.1 | ) | (65.2 | ) | (95.1 | ) |
SUN MICROSYSTEMS, INC.
OPERATIONS ANALYSIS – CONSOLIDATED (UNAUDITED)
NON-GAAP CALCULATION | FY 2005 | FY 2004 | FY 2003 | |||||||||||||||||||||||||||||||||
(in millions except per share | Q1 | Q2 | Q3* | FY05* | Q1 | Q2 | Q3 | Q4 | FY04 | Q3 | Q4 | FY03 | ||||||||||||||||||||||||
GAAP net income (loss) | (147 | ) | 18 | (9 | ) | (138 | ) | (286 | ) | (125 | ) | (760 | ) | 783 | (388 | ) | 4 | (1,039 | ) | (3,429 | ) | |||||||||||||||
In-process research and development | 0 | 0 | 0 | 0 | 1 | 0 | 0 | 69 | 70 | 0 | 0 | 4 | ||||||||||||||||||||||||
Restructuring charges | 108 | 24 | 45 | 177 | 1 | (10 | ) | 203 | 150 | 344 | (4 | ) | (6 | ) | 371 | |||||||||||||||||||||
Loss (gain) on equity investments, net | 4 | (9 | ) | (2 | ) | (7 | ) | 25 | 36 | (3 | ) | 6 | 64 | 16 | 26 | 84 | ||||||||||||||||||||
Impairment expense | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 49 | 49 | 0 | 0 | 2,125 | ||||||||||||||||||||||||
Settlement income** | 0 | 0 | (54 | ) | (54 | ) | 0 | 0 | 0 | (1,597 | ) | (1,597 | ) | 0 | 0 | 0 | ||||||||||||||||||||
Settlement of litigation*** | 55 | 0 | 0 | 55 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Valuation allowance on deferred tax assets | 0 | 0 | (34 | ) | (34 | ) | 0 | 0 | 300 | 0 | 300 | 0 | 1,051 | 1,051 | ||||||||||||||||||||||
Related tax effects | (7 | ) | (6 | ) | (7 | ) | (20 | ) | 0 | 0 | 0 | 367 | 367 | (5 | ) | (8 | ) | (239 | ) | |||||||||||||||||
Net income (loss) excluding special items | 13 | 27 | (61 | ) | (21 | ) | (259 | ) | (99 | ) | (260 | ) | (173 | ) | (791 | ) | 11 | 24 | (33 | ) | ||||||||||||||||
Growth vs. prior year (%) | 105.0 | % | 127.3 | % | 76.5 | % | 96.6 | % | -232.1 | % | -1090.0 | % | -2463.6 | % | -820.8 | % | -2297.0 | % | 155.0 | % | -65.2 | % | 84.1 | % | ||||||||||||
EPS (Diluted) excluding special items **** | 0.00 | 0.01 | (0.02 | ) | (0.01 | ) | (0.08 | ) | (0.03 | ) | (0.08 | ) | (0.05 | ) | (0.24 | ) | 0.00 | 0.01 | (0.01 | ) | ||||||||||||||||
Growth vs. prior year (%) | 100.0 | % | 133.3 | % | 75.0 | % | 94.7 | % | -300.0 | % | N/A | N/A | -600.0 | % | -2300.0 | % | 100.0 | % | -50.0 | % | 83.3 | % | ||||||||||||||
SHARES (CSE)(Diluted) | 3,343 | 3,400 | 3,376 | 3,358 | 3,235 | 3,262 | 3,286 | 3,327 | 3,277 | 3,218 | 3,219 | 3,190 | ||||||||||||||||||||||||
OUTSTANDING SHARES | 3,344 | 3,375 | 3,383 | 3,383 | 3,240 | 3,280 | 3,293 | 3,336 | 3,336 | 3,200 | 3,236 | 3,236 |
* | The non-GAAP calculation of Net income (loss) excluding special items for the three and nine month periods ended March 27, 2005 includes a $69 million benefit for the impact of the change in Dutch withholding tax legislation which was effected in the third quarter of fiscal 2005. |
** | Included in Interest and other income, net. |
*** | Included in Cost of sales – products. |
**** | For the quarters ended September 26, 2004, and June 30, 2004 and 2003, Sun used 3,356, 3,327, and 3,251 shares, respectively, to calculate the “EPS (Diluted) excluding special items”. For all other periods, the number of shares Used to calculate “EPS (Diluted) (Reported)” and “EPS (Diluted) excluding special items” was the same. |