---------------------------------------------------------------------------- The Florida SunFlash Sun Microsystems Earnings for First Quarter SunFlash Vol 70 #16 October 1994 ---------------------------------------------------------------------------- The Electronic Journal For Sun Users Since 1988 John J. Mclaughlin, Publisher & Editor - flash@sun.com ____________________________________________________________________________ 70.16 Sun Microsystems Earnings for First Quarter Sun Microsystems, Inc., (NASDAQ:SUNW) today reported results for the first quarter ended October 2, 1994. Revenues for the quarter were $1.273 billion, up nearly 33 percent from the $960.5 million reported for the corresponding period a year ago. The company's first quarter net income more than doubled to $38.4 million, compared with $16.6 million in the first quarter of the prior fiscal year. Earnings per share in the first quarter was $0.40, up 150 percent from the $0.16 reported for the same period a year ago. ---------------------------------------------------------------------------- Contact: Sherrie Osborne of Investor Relations at (415)336-2244 Press: Susanne Vagadori at (415)336-0529 SUN MICROSYSTEMS EARNINGS PER SHARE JUMP 150 PERCENT Revenue Growth of 33 Percent Is Driven By Increase In Unit Shipments of Nearly 50 Percent Michael E. Lehman, Sun's Chief Financial Officer, said, "We had an outstanding quarter-- both in the marketplace and financially. Bookings and Revenues were up 35 percent and 33 percent respectively. This impressive growth, and our strong financial model, drove pre-tax income to more than triple last year's level and set a new record for first quarter revenues and earnings." "We experienced strong worldwide demand across all our major products and businesses in what is normally a seasonally weak quarter. First quarter unit shipments jumped nearly 50 percent over the year-ago levels, to 74 thousand systems in the quarter. And the revenue mix by product and geography, combined with improvements in manufacturing costs on our new systems, allowed us to maintain the gross margin percentage near recent historical ranges," concluded Lehman. SunSoft, Inc., the company's system software unit, distributed 82 thousand Solaris/UNIX licenses during the quarter. Earlier this month, SunSoft announced availability of the latest version of its flagship operating environment, Solaris 2.4, which offers identical functionality across both SPARC and x86 platforms. Solaris 2.4 also provides higher performance, new storage management features, and higher reliability and quality than ever before. Commenting on the results, Scott McNealy, Sun's chairman and chief executive officer, said, "Our strategy is paying off. We are seeing the benefits of our investments in technologies such as multiprocessing and networking. In just twelve years we've become a 5 billion dollar company, with well over a million UNIX licenses distributed. We are now adding nearly 300 thousand systems annually to our installed base of more than a million systems. Our SPARC and Solaris-based products are very strong and our financial model is letting us translate that strength into earnings growth." # # # Sun Microsystems, Inc., with revenues of $5 billion, is a leading supplier of open network computing products and services. Built on the philosophy "The Network is the ComputerTM," Sun's SPARC. work- stations and servers, Solaris. software operating environment, and one of the world's largest UNIX service organizations, lead the UNIX market. The company has its headquarters in Mountain View, California. Orders and backlog are subject to customer cancellation with minimal notice and generally without penalty, and are not necessarily indicative of future revenues. Sun, the Sun logo, Sun Microsystems, Solaris and the Network Is The Computer are trademarks or registered trademarks of Sun Microsystems, Inc. All SPARC trademarks, including the SCD Compliant Logo, are trademarks or registered trademarks of SPARC International, Inc. SPARCstation is licensed exclusively to Sun Microsystems, Inc. Products bearing SPARC trademarks are based on 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 STATEMENT OF INCOME (In thousands, except per share amounts) Three Months Ended (Unaudited) --------------------------------------------------------------------- October 2, September 26, 1994 1993 --------------------------------------------------------------------- Net Revenues $ 1,273,439 $960,481 Costs and expenses: Cost of sales 761,378 567,973 Research and development 119,366 107,898 Selling, general and administrative 338,877 269,070 --------------------------------------------------------------------- Total costs and expenses 1,219,621 944,941 --------------------------------------------------------------------- Operating income 53,818 15,540 Interest income, net 2,692 590 --------------------------------------------------------------------- Income before income taxes 56,510 16,130 Provision (credit) for income taxes 18,083 (476) --------------------------------------------------------------------- Net income $38,427 $16,606 --------------------------------------------------------------------- --------------------------------------------------------------------- Net income per common and common-equivalent share $0.40 $0.16 --------------------------------------------------------------------- --------------------------------------------------------------------- Common and common-equivalent shares used in the calculation of net income per share 95,667 100,976 --------------------------------------------------------------------- --------------------------------------------------------------------- SUN MICROSYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEET (In thousands) ASSETS October 2, 1994 June 30, (unaudited) 1994 --------------------------------------------------------------------- Current assets: Cash, cash equivalents and short-term investments $783,454 $882,816 Accounts receivable, net 839,404 853,031 Inventories 339,466 294,948 Other current assets 277,137 274,298 --------------------------------------------------------------------- Total current assets 2,239,461 2,305,093 Property, plant and equipment, net 334,836 360,248 Other assets, net 235,339 232,651 --------------------------------------------------------------------- $2,809,636 $2,897,992 --------------------------------------------------------------------- --------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY --------------------------------------------------------------------- Current liabilities: Short-term borrowings $68,060 $78,687 Accounts payable 270,920 363,828 Accrued liabilities 484,341 500,908 Income taxes payable 94,733 93,930 Other current liabilities 118,190 110,485 --------------------------------------------------------------------- Total current liabilities 1,036,244 1,147,838 Long-term debt and other obligations 83,648 121,831 Stockholders' equity 1,689,744 1,628,323 --------------------------------------------------------------------- $2,809,636 $2,897,992 --------------------------------------------------------------------- ---------------------------------------------------------------------