Thursday January 15, 4:00 pm Eastern Time
Company Press Release
Sun Microsystems Reports Record Q2 Results
Net Income Grew 25 Percent on Revenue Growth of 18 Percent
PALO ALTO, Calif.--(BUSINESS WIRE)--Jan. 15, 1998--Sun Microsystems Inc. (NASDAQ:SUNW - news) today
reported results for the second quarter which ended Dec. 28, 1997.
Record revenues for the second quarter were $2.450 billion, up 18 percent compared with the second quarter of
fiscal 1997. Net income for the second quarter, excluding one-time charges related to acquisitions, was $223.2
million, an increase of 25 percent from the previous year's results. Second quarter earnings per share, excluding
these one-time charges, was $.57, an increase of 24 percent compared with the previous year's earnings per
share of $.46.
During the second quarter, acquisition-related charges for in-process research and development were $110.1
million in connection with the acquisitions of Encore Computer [OTC BB:ENCC - news] Corporation's storage
products business and Chorus Systems S.A. Including these one-time charges, net income was $149.4 million
and earnings per share totalled $.38 for the second quarter.
For the first six months of fiscal 1998, Sun reported revenues of $4.549 billion, up approximately 15 percent. Net
income, excluding one-time charges related to acquisitions, was $386.4 million, up 28 percent over the same
period a year earlier. Earnings per share, excluding these one-time charges, was $.98, an increase of 27
percent over the corresponding period a year ago.
All earnings per share amounts represent diluted earning per share as defined within Statement of Financial
Accounting Standards No. 128.
Chief Executive Officer Scott McNealy said, ''We are pleased with the results of the second quarter. Rumors
are that UNIX(R) is dying, if this dying it sure feels good! Sun's unrelenting focus and investments in
SPARC(TM), Solaris(TM) and Java(TM) platforms continue to fuel our growth in the commercial, technical and
consumer markets. Sun continues to be a force to be reckoned with as the high performance, safe and scalable
alternative to the PC model.''
Michael E. Lehman, Sun's Chief Financial Officer, commented, ''One of Sun's greatest strengths is the quality
and responsiveness of our field sales, service and support organizations, and we are continuing to invest in
growing these capabilities around the world. At the current rate, we will be spending more than $1 billion in
research and development, which will allow us to introduce more products and services designed to keep Sun at
the forefront of network computing. Our business model is strong, and we are well positioned to take advantage
of the market opportunities.''
This news release contains forward-looking statements based on current expectations that involve risks and
uncertainties. Sun's actual results may differ materially from the results discussed in the forward-looking
statements. Factors that might cause such a difference include risks surrounding the timely development,
production and acceptance of new products and services, 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 report on Form 10-K for its
fiscal year ended June 30, 1997 and its reports on Form 10-Q for its fiscal quarter ended September 28, 1997.
Since its inception in 1982, a singular vision, ''The Network is the Computer(TM),'' has propelled Sun
Microsystems Inc. (NASDAQ:SUNW - news) to its position as a leading provider of hardware, software and
services for establishing enterprise-wide intranets and expanding the power of the Internet. With more than $8.5
billion in annual revenues, Sun can be found in more than 150 countries and on the World Wide Web at
sun.com .
Note to Editors: Sun, the Sun logo, Sun Microsystems, Solaris, Java 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. UNIX is a registered trademark in the United States and
other countries, exclusively licensed through X/Open Company Ltd.
SUN MICROSYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
(Unaudited) (Unaudited)
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
1997 1996 1997 1996
---------- --------- --------- ----------
Net revenues $2,450,243 $2,081,588 $4,548,847 $3,940,607
Costs and expenses:
Cost of sales 1,171,630 1,033,402 2,199,064 2,005,503
Research & Development 259,228 201,010 481,846 387,278
In-process research
& development 110,100 0 162,284 0
Selling, general,
and administrative 696,450 591,331 1,311,943 1,115,997
Total costs & expenses 2,237,408 1,825,743 4,155,137 3,508,778
Operating income 212,835 255,845 393,710 431,829
Interest income, net 10,197 6,421 20,768 11,893
Income before income taxes 223,032 262,266 414,478 443,722
Provision for income taxes 73,600 83,925 156,613 141,991
Net income $ 149,432 $ 178,341 $ 257,865 $ 301,731
Net income per common
share -- basic $ 0.40 $ 0.48 $ 0.69 $ 0.82
Net income per common
share -- diluted $ 0.38 $ 0.46 $ 0.65 $ 0.77
Shares used in the
calculation of net
income per share --
basic 373,875 368,381 372,968 367,748
Shares used in the
calculation of net
income per share --
diluted 393,231 388,738 394,165 389,428
Note: Net income per common share computations reflect the
adoption of Statement of Financial Accounting Standards No. 128.
SUN MICROSYSTEMS INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
EXCLUDING ONE-TIME ACQUISITION-RELATED CHARGES
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
1997 1996 1997 1996
Net revenues $2,450,243 $2,081,588 $4,548,847 $3,940,607
Costs and expenses:
Cost of sales 1,171,630 1,033,402 2,199,064 2,005,503
Research &
development 259,228 201,010 481,846 387,278
Selling, general &
administrative 696,450 591,331 1,311,943 1,115,997
Total costs and
expenses 2,127,308 1,825,743 3,992,853 3,508,778
Operating income 322,935 255,845 555,994 431,829
Interest income,
net 10,197 6,421 20,768 11,893
Income before income
taxes 333,132 262,266 576,762 443,722
Provision for income
taxes 109,934 83,925 190,331 141,991
Net income $ 223,198 $ 178,341 $ 386,431 $ 301,731
Net income per
common share -
basic $0.60 $0.48 $1.04 $0.82
Net income per
common share -
diluted $0.57 $0.46 $0.98 $0.77
Shares used in the
calculation of net
income per
share - basic 373,875 368,381 372,968 367,748
Shares used in the
calculation of net
income per
share - diluted 393,231 388,738 394,165 389,428
Notes: The above pro forma amounts have been adjusted to
eliminate one-time acquisition charges of $110.1 million to R&D for
the three months ended Dec. 28, 1997, and the one-time acquisition
charges of $162.3 million to R&D and an additional
(acquisition-related) income tax provision of $19.9 million for the
six months ended Dec. 28, 1997. Net income per common share
computations reflect the adoption of Statement of Financial
Accounting Standards No. 128.
SUN MICROSYSTEMS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Dec. 28, 1997 June 30, 1997
Assets (unaudited)
Current assets:
Cash, cash equivalents
and short-term investments $ 902,744 $1,112,760
Accounts receivable, net 1,652,871 1,666,523
Inventories 459,579 437,978
Other current assets 580,447 511,189
Total current assets 3,595,641 3,728,450
Property, plant and
equipment, net 1,071,233 799,893
Other assets, net 269,730 168,931
Total assets $4,936,604 $4,697,274
Liabilities and Stockholders'
Equity
Current liabilities:
Short-term borrowings $ 482 $ 100,930
Accounts payable 520,999 468,912
Accrued liabilities 847,778 963,012
Income taxes payable 147,024 118,568
Other current liabilities 255,331 197,616
Total current liabilities 1,771,614 1,849,038
Long-term debt and other
obligations 137,782 106,299
Stockholders' equity 3,027,208 2,741,937
Total liabilities and
stockholders' equity $4,936,604 $4,697,274
Contact:
Sun Microsystems Inc.
Mark Paisley, 650/336-2238 (Investor Contact)
mark.paisley@sun.com
or
Anne Little, 650/786-6702 (Press Contact)
anne.little@sun.com
or
Mike Shuster, 650/786-9037 (Industry Analyst Contact)
michael.shuster@sun.com
sun.com |
