---------------------------------------------------------------------------- SUN NET INCOME UP 83 PERCENT SunFLASH Vol 20 #8 August 1990 ---------------------------------------------------------------------------- Revenues Near $2.5 Billion MOUNTAIN VIEW, Calif. -- August 9, 1990 -- Sun Microsystems, Inc. (SUNW) today reported results for its eighth full fiscal year ended June 30, 1990. Revenues for fiscal 1990 were $2.47 billion, a 40% increase over the $1.77 billion in fiscal 1989. Net income for the year was up 83%, to $111.2 million, or $1.21 per share, from the $60.8 million, or $0.76 per share, reported a year ago. Revenues for the fourth quarter were $700.1 million, a 62% increase over the $431.2 million reported in the same period a year ago. The company reported net income for the quarter of $ 49.1 million, or $0.51 per share, compared with a net loss of $20.3 million, or $0.25 per share, in the fourth quarter a year ago. Scott McNealy, president and CEO of Sun, said "We are continuing to reinforce our leadership position in easy workgroup computing -- including powerful, cost-efficient workstations and servers -- as these results clearly demonstrate. More than 34,000 units were shipped in the fourth quarter, bringing our worldwide installed base to more than 285,000 units. We had record bookings during the quarter and ended the period with a record backlog of orders. Fourth quarter gross margin reached a two-year high and operating income margins for the same period reached target levels despite an increasingly competitive environment. Throughout all of fiscal 1990, our employees did an excellent job of returning the company to levels of service, quality and profitability we can be proud of. Evidence of this is seen by the fact that Sun's revenue per employee reached a record $215,000, a 24% increase over last year's numbers. "Sun's financial focus throughout the past few quarters has been on strengthening the balance sheet," McNealy said. Sun ended the quarter with $394 million in cash, a sizable increase over the $54 million reported a year ago. Short-term debt decreased by $104 million from prior year levels. The company reduced inventory levels to $205 million at the end of the fourth quarter from $309 million last year due primarily to improved management over inventory supply/demand and procurement processes and increased component commonality. These changes have all greatly contributed to Sun's increased financial flexibility. "The ability of Sun to finance its growth has been an important facilitator of our success," McNealy said. Toward this end, shortly after the close of the quarter, Sun announced its intention to issue 4.58 million shares of common stock to AT&T under the terms of an agreement signed in January 1988. Sun expects to receive $192 million from this financing in early September. Sun has evolved into a truly multinational company with more than 50% of fourth quarter revenues coming from outside the United States. The company was recently chosen by the New Zealand Inland Revenue Department to provide systems for an extensive office automation project. In addition to major foreign contract wins, Sun has expanded its international presence with the opening of a new Scotland manufacturing facility, which will enhance the company's ability to serve customers throughout the world. In June, the Scotland facility delivered its first systems to customers. Meanwhile, United States business was stronger than expected during the fourth quarter; revenues reached record levels and bookings increased over the prior quarter due largely to strong demand for new products. "Sun continues to be as aggressive as ever in delivering price/performance leadership to customers," McNealy said. "In the fourth quarter, we made our desktop workstations even more affordable with the introduction of the SPARCstation SLC, a 12.5 MIPS, full-function RISC workstation for less than $5,000. In late July, we introduced the SPARCstation IPC, a diskfull, color RISC work station priced below $10,000. Both of these new products complement our desktop computing strategy by making available the processing power, small packaging, broad connectivity and built-in networking at price points that customers increasingly require today. Equally significant was our recent introduction of a new release of the OpenWindows application environment, which now features the OPEN LOOK graphical user interface in 3-D. The intuitive, easy-to-use OPEN LOOK interface has been well received by software developers, including Ventura Publishing, Lotus Development Corp., Frame Technology and Informix. We expect to introduce more new technologies and solutions throughout the next several quarters. "Our open, binary-compatible architecture based on SPARC, has proven to be what customers want today," McNealy said. During the fourth quarter, SPARC accounted for 90% of Sun's system revenues, up from 37% a year ago. Earlier this year, Sun licensed its core SPARC technology to SPARC International, an independent corporation chartered with the responsibility for the SPARC standard. In the fourth quarter, SPARC International announced that member companies have defined a common software and hardware specification, SPARC Compliance Definition version 1.0 (SCD), which outlines the requirements for hardware vendors to run compatible SPARC applications and for independent software vendors (ISVs) to run identical application binaries on all SPARC-compliant platforms. "We believe that the adoption of SCD by SPARC hardware vendors and ISVs will eventually make buying software for a SPARC-based system as easy as buying software for a PC," McNealy said. Sun Microsystems, Inc., headquartered in Mountain View, California, is a leading worldwide supplier of general purpose computing systems based upon the distributed computing model of networked workstations and servers. ### Sun Microsystems, the Sun logo are registered trademarks and Sun and OpenWindows are trademarks of Sun Microsystems, Inc. SPARC is a registered trademark and SPARCstation is a trademark of SPARC International. UNIX is a registered trademark and OPEN LOOK is a trademark of AT&T. All other products or services mentioned in this document are identified by the trademarks or service marks of their respective companies or organizations. Investor Relations Contact: Bob Haggerty (415) 336-2247 ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Sunflash is an electronic mail news service from Sun Microsystems, Ft. Lauderdale, Florida, USA. It is targeted at Sun Users and Customers. 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