SUN MICROSYSTEMS REPORTS RECORD SECOND QUARTER
REVENUES AND EARNINGS
PALO ALTO, Calif., Jan. 21 /PRNewswire/ -- Sun Microsystems, Inc.,
(Nasdaq: SUNW) today reported results for the second quarter which
ended December 27, 1998. Revenues for the second quarter were $2.784
billion, up 14 percent compared with the second quarter of fiscal 1998.
Net income for the second quarter was $272.3 million, an increase of 22
percent from the previous year's results (excluding acquisition-related
charges for fiscal years 1998 and 1999). Second quarter earnings per
share were $.67, an increase of 18 percent over the corresponding
period a year ago (excluding acquisition-related charges for fiscal
years 1998 and 1999).
During the second quarter, acquisition-related charges for in-process
research and development totaled $12 million in connection with the
acquisitions of Beduin Communications, Incorporated and i-Planet, Inc.
Including these charges, net income was $261.1 million and earnings per
share totaled $.64 for the second quarter. Due to the structure of the
i-Planet transaction, Sun also recorded an increase of $3.2 million to
its income tax provision.
For the first six months of fiscal 1999, Sun reported revenues of
$5.276 billion, up 16 percent over the corresponding period a year ago.
Net income (excluding acquisition-related charges for fiscal years 1998
and 1999) was $470.2 million, up 22 percent over the same period a year
earlier. Earnings per share, excluding these charges, was $1.17, an
increase of 19 percent from the previous year's results. Including
acquisition related charges, net income was $375 million and earnings
per share totaled $.93 for the first six months of fiscal 1999.
All earnings per share amounts represent diluted earnings per share as
defined within Statement of Financial Accounting Standards No. 128.
"The team really delivered," said Chief Executive Officer Scott
McNealy. "Not only did we successfully bring on line our new ERP
systems, but we also introduced new products and partnerships during
the quarter. We announced our strategic alliance with America Online,
the #1 internet content/service provider in the world, furthering our
focus on e-commerce and driving the internet economy. We continue to
provide customers and developers with the latest products and
technologies with our next generation Solaris(TM) 7 and the Java(TM)2
platforms. Sun continues to change the rules of the game with our new
Community Source Licensing model, which allows for sharing rights to
source code, ensuring compatibility and providing a business model that
rewards innovation. We recently introduced the NEBS certified,
fault-tolerant servers and storage systems products for telco
customers, furthering our push into the telecommunications industry.
Finally, in the storage arena, we unveiled Project StoreX, the
industry's first open management platform for the storage developer
community."
McNealy added, "Sun's unrelenting focus and investments in SPARC(TM),
Solaris(TM), Java(TM) and Jini(TM) technologies continue to fuel our
growth in commercial, technical and consumer markets. We continue to
position Sun to take advantage of the growing importance of web-centric
computing."
Michael E. Lehman, Sun's Vice President of Corporate Resources and
Chief Financial Officer, commented, "One of Sun's core competencies is
our ability to consistently execute. We are very pleased with the
results of the quarter, given the major implementation of our new order
entry, manufacturing and distribution systems. Even with the
operational challenges we faced, including a very back end loaded
quarter, we were able to deliver on the results."
Lehman concluded, "Our focus on both the traditional enterprise
customers as well as the emerging growth of service providers is
enabling Sun to realize more benefits from our vision of network
computing. This is evidenced by strong customer demand for our low end
workstations, workgroup servers, E10000 servers and storage product
lines. We are enthusiastic about the market opportunities that are
becoming increasingly available to us. Our financial position and
business model are strong, positioning us well for the growth potential
ahead."
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 Exchange Commission, including, but not
limited to, its report on Form 10-K for its fiscal year ended June 30,
1998 and its report on Form 10-Q for its fiscal quarter ended September
27, 1998.
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 high quality hardware, software and services for
establishing enterprise-wide intranets and expanding the power of the
Internet. With more than $10.5 billion in annual revenues, Sun can be
found in more than 150 countries and on the World Wide Web at
sun.com
NOTE: Sun, the Sun logo, Sun Microsystems, Solaris, Java, Jini 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 thousands, except per share amounts)
Three Months Ended Six Months Ended
(unaudited) (unaudited)
Dec. 27, Dec. 28, Dec. 27, Dec. 28,
1998 1997 1998 1997
Net revenues $2,784,440 $2,450,243 $5,275,624 $4,548,847
Costs and expenses:
Cost of sales 1,347,210 1,171,630 2,563,547 2,199,064
Research and development 303,482 259,228 586,762 481,846
Selling, general and
administrative 747,603 696,450 1,459,191 1,311,943
In-process research and
development 12,000 110,100 92,000 162,284
Total costs and expenses 2,410,295 2,237,408 4,701,500 4,155,137
Operating income 374,145 212,835 574,124 393,710
Interest income, net 20,306 10,197 35,661 20,768
Income before income taxes 394,451 223,032 609,785 414,478
Provision for income taxes 133,364 73,600 234,824 156,613
Net income $261,087 $149,432 $374,961 $257,865
Net income per common
share - basic $0.68 $0.40 $0.99 $0.69
Net income per common
share - diluted $0.64 $0.38 $0.93 $0.65
Shares used in the
calculation of net income
per share - basic 382,547 373,875 379,883 372,968
Shares used in the
calculation of net income
per share - diluted 405,288 393,231 401,445 394,165
SUN MICROSYSTEMS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
EXCLUDING ONE-TIME ACQUISITION-RELATED CHARGES
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
(unaudited) (unaudited)
Dec. 27, Dec. 28, Dec. 27, Dec. 28,
1998 1997 1998 1997
Net revenues $2,784,440 $2,450,243 $5,275,624 $4,548,847
Costs and expenses:
Cost of sales 1,347,210 1,171,630 2,563,547 2,199,064
Research and development 303,482 259,228 586,762 481,846
Selling, general and
administrative 747,603 696,450 1,459,191 1,311,943
Total costs and
expenses 2,398,295 2,127,308 4,609,500 3,992,853
Operating income 386,145 322,935 666,124 555,994
Interest income, net 20,306 10,197 35,661 20,768
Income before income taxes 406,451 333,132 701,785 576,762
Provision for income taxes 134,128 109,934 231,587 190,331
Net income $272,323 $223,198 $470,198 $386,431
Net income per common
share - basic $0.71 $0.60 $1.24 $1.04
Net income per common
share - diluted $0.67 $0.57 $1.17 $0.98
Shares used in the
calculation of net income
per share - basic 382,547 373,875 379,883 372,968
Shares used in the
calculation of net income
per share - diluted 405,288 393,231 401,445 394,165
Notes:
The above pro forma amounts have been adjusted to eliminate acquisition
related charges of $12.0 million to R&D and the related income tax effects
for the three months ended December 27, 1998, and acquisition related
charges of $92.0 million to R&D and the related income tax effects for the
six months ended December 27, 1998.
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Dec. 27, June 30,
1998 1998
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $1,572,791 $1,298,452
Accounts receivable, net 2,108,237 1,845,765
Inventories 363,664 346,446
Other current assets 701,002 656,862
Total current assets 4,745,694 4,147,525
Property, plant and equipment, net 1,452,608 1,300,612
Other assets, net 363,218 262,925
$6,561,520 $5,711,062
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $12,351 $7,169
Accounts payable 611,412 495,603
Accrued liabilities 1,230,718 1,166,491
Income taxes payable 205,340 188,641
Other current liabilities 288,169 264,967
Total current liabilities 2,347,990 2,122,871
Long-term debt and other obligations 112,527 74,563
Stockholders' equity 4,101,003 3,513,628
$6,561,520 $5,711,062
SOURCE Sun Microsystems, Inc.
-0- 01/21/99 /CONTACT: investors, Mark
Paisley, 650-336-2238, or mark.paisley@sun.com, or press, Anne Little,
650-786-6702, or anne.little@sun.com, or industry analysts, Angela
Grady, 650-786-7252, or angela.grady@sun.com, all of Sun Microsystems/
/Web site: sun.com (SUNW)
CO: Sun Microsystems, Inc. ST: California IN: CPR SU: ERN
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