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Condensed Consolidated Statements of Operations
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Cash Flows
Calculation of Non-GAAP Net Income (Loss) (unaudited)
Sun Microsystems Reports Results for the Third Quarter Fiscal 2009
SANTA CLARA, Calif. - April 28, 2009 - Sun Microsystems, Inc. (NASDAQ: JAVA) reported results today for its third quarter of fiscal 2009, which ended March 29, 2009.
Revenues for the third quarter of fiscal 2009 were $2.614 billion, as compared with $3.266 billion for the third quarter of fiscal 2008, and compared with $3.220 billion for the second quarter of fiscal 2009. Total gross margin as a percent of revenues was 42.7, a decrease of 2.2 percentage points as compared with the third quarter of fiscal 2008 and an increase of 0.8 percentage points as compared with the second quarter of fiscal 2009.
Net loss for the third quarter of fiscal 2009 on a GAAP basis was $201 million, or $(0.27) per share on a diluted basis, as compared with a net loss of $34 million, or $(0.04) per share, for the third quarter of fiscal 2008, and compared with a net loss of $209 million, or $(0.28) per share, for the second quarter of fiscal 2009. GAAP net loss per share includes a restructuring charge of $46 million primarily related to the restructuring announcement of November 2008.
On a non-GAAP basis, net loss for the third quarter of fiscal 2009 was $52 million, or $(0.07) per share on a diluted basis, as compared with a non-GAAP net income of $132 million, or $0.17 per share, for the third quarter of fiscal 2008, and compared with a non-GAAP net income of $114 million, or $0.15 per share, for the second quarter of fiscal 2009. Non-GAAP net income per share excludes purchased in-process research and development, amortization of acquisition-related intangibles, stock-based compensation, restructuring and related impairment of long-lived assets, net gain or loss on equity investments and the tax effect of these non-GAAP adjustments.
Sun ended the quarter with a cash and marketable debt securities balance of $2.990 billion and generated cash flow from operations for the third quarter of fiscal 2009 of $178 million - the third consecutive quarter of positive cash flow from operations in fiscal 2009, and following upon 19 consecutive years of positive cash flow from operations.
Third Quarter Highlights
- Grew billings nearly 4 percent year-over-year in combined key growth categories of Total Software, Open Storage, Solaris-based SPARC CMT Servers, and X64 Servers.
- Combined key growth categories accounted for 40 percent of total billings in the third quarter of fiscal 2009 versus 30 percent in the third quarter of fiscal 2008.
- Total Software billings grew 28 percent year-over-year.
- Open Storage billings grew 63 percent year-over-year.
- Solaris-based SPARC CMT Servers billings grew 3 percent year-over-year.
- Reduced R&D and SG&A expenses nearly 15 percent year-over-year.
Sun will not be hosting a conference call in conjunction with these results. For more information or to access the financial results, please visit www.sun.com/investors.
To supplement Sun's preliminary financial results presented in accordance with GAAP, Sun provides non-GAAP net income and non-GAAP net income per share data on a diluted basis. The presentation of these non-GAAP financial measures should be considered in addition to Sun's GAAP results and are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Sun's management believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding certain gains, losses and charges that may not be indicative of Sun's core business operating results. Sun believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Sun's performance. These non-GAAP financial measures also facilitate comparisons to Sun's historical performance and its competitors' operating results. Sun includes these non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. Non-GAAP measures are reconciled to comparable GAAP measures in the table entitled "Calculation of Non-GAAP Net Income (Loss)" following the text of this press release.
About Sun Microsystems, Inc.
Sun Microsystems develops the technologies that power the global marketplace. Guided by a singular vision -- "The Network is the Computer" -- Sun drives network participation through shared innovation, community development and open source leadership. Sun can be found in more than 100 countries and on the Web at http://sun.com
Sun, Sun Microsystems, the Sun logo, Java, Solaris, and The Network Is The Computer are trademarks or registered trademarks of Sun Microsystems, Inc. or its subsidiaries 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. Producers 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 29, 2009 |
March 30, 2008 |
March 29, 2009 |
March 30, 2008 |
| Net revenues: |
| Products |
$1,519 |
$2,003 |
$5,222 |
$6,232 |
| Services |
1,095 |
1,263 |
3,602 |
3,868 |
| Total net revenues |
2,614 |
3,266 |
8,824 |
10,100 |
| Cost of sales: |
| Cost of sales-products |
877 |
1,106 |
3,200 |
3,296 |
| Cost of sales-services |
621 |
692 |
1,957 |
2,022 |
| Total cost of sales |
1,498 |
1,798 |
5,157 |
5,318 |
| Gross margin |
1,116 |
1,468 |
3,667 |
4,782 |
| Operating expenses: |
| Research and development |
393 |
457 |
1,227 |
1,366 |
| Selling, general and administrative |
843 |
989 |
2,679 |
2,923 |
| Restructuring charges and related impairment of long-lived assets |
46 |
14 |
331 |
159 |
| Purchased in-process research and development |
3 |
24 |
3 |
25 |
| Impairment of goodwill |
- |
- |
1,445 |
- |
| Total operating expenses |
1,285 |
1,484 |
5,685 |
4,473 |
| Operating income (loss) |
(169) |
(16) |
(2,018) |
309 |
| Gain on equity investments, net |
3 |
- |
8 |
22 |
| Interest and other income (expense), net |
(2) |
34 |
(3) |
145 |
| Income (loss) before income taxes |
(168) |
18 |
(2,013) |
476 |
| Provision for income taxes |
33 |
52 |
74 |
161 |
| Net income (loss) |
$(201) |
$(34) |
$(2,087) |
$315 |
| Net income (loss) per common share-basic |
$(0.27) |
$(0.04) |
$(2.80) |
$0.38 |
| Net income (loss) per common share-diluted |
$(0.27) |
$(0.04) |
$(2.80) |
$0.38 |
| Shares used in the calculation of net income (loss) per common share-basic |
745 |
785 |
746 |
821 |
| Shares used in the calculation of net income (loss) per common share-diluted |
745 |
785 |
746 |
837 |
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Sun Microsystems, Inc.
Condensed Consolidated Balance Sheets
(in millions)
|
|
March 29, 2009
(unaudited) |
June 30, 2008(1) |
| Assets |
| Current Assets: |
| Cash and cash equivalents |
$1,569 |
$2,272 |
| Short-term marketable debt securities |
1,134 |
429 |
| Accounts receivable, net |
2,265 |
3,019 |
| Inventories |
561 |
680 |
| Deferred and prepaid tax assets |
185 |
216 |
| Prepaid expenses and other current assets |
1,036 |
1,218 |
| Total current assets |
6,750 |
7,834 |
| Property, plant and equipment, net |
1,670 |
1,611 |
| Long-term marketable debt securities |
287 |
609 |
| Goodwill |
1,740 |
3,215 |
| Other acquisition-related intangible assets, net |
357 |
565 |
| Other non-current assets |
458 |
506 |
| |
$11,262 |
$14,340 |
| Liabilities and stockholders' equity |
| Current liabilities: |
| Accounts payable |
1,049 |
1,387 |
| Accrued payroll-related liabilities |
595 |
734 |
| Accrued liabilities and other |
1,142 |
1,105 |
| Deferred revenues |
2,190 |
2,236 |
| Warranty reserve |
160 |
206 |
| Current portion of long-term debt |
562 |
- |
| Total current liabilities |
5,698 |
5,668 |
| Long-term debt |
695 |
1,265 |
| Long-term deferred revenues |
548 |
683 |
| Other non-current obligations |
970 |
1,136 |
| Stockholders' equity: |
| Common stock and additional paid-in-capital |
7,541 |
7,391 |
| Treasury stock, at cost |
(2,680) |
(2,726) |
| Retained earnings (accumulated deficit) |
(1,819) |
430 |
| Accumulated other comprehensive income |
309 |
493 |
| Total stockholders' equity |
3,351 |
5,588 |
| |
$11,262 |
$14,340 |
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(1) Derived from audited financial statements.
Sun Microsystems, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited, in millions)
| |
Nine Months Ended |
| March 29, 2009 |
March 30, 2008 |
| Cash flows from operating activities: |
Net income (loss) |
$(2,087) |
$315 |
Adjustments to reconcile net income to net cash provided by operating activities: |
Depreciation and amortization |
321 |
354 |
Amortization of acquisition-related intangible assets |
224 |
224 |
Stock-based compensation expense |
150 |
157 |
Purchased in-process research and development |
3 |
25 |
Impairment of goodwill |
1,445 |
- |
(Gain) loss on investments and other, net |
23 |
(54) |
Deferred taxes |
2 |
8 |
Changes in operating assets and liabilities: |
Accounts receivable, net |
752 |
603 |
Inventories |
118 |
(205) |
Prepaid and other assets |
177 |
(105) |
Accounts payable |
(341) |
(114) |
Other liabilities |
(405) |
31 |
Net cash provided by operating activities
|
382
|
1,239
|
Cash flows from investing activities: |
Decrease (increase) in restricted cash |
(19) |
22 |
Purchases of marketable debt securities |
(1,535) |
(1,292) |
Proceeds from sales of marketable debt securities |
423 |
1,404 |
Proceeds from maturities of marketable debt securities |
684 |
764 |
Proceeds from sales of equity investments, net |
7 |
25 |
Purchases of property, plant and equipment, net |
(404) |
(297) |
Payment for acquisitions, net of cash acquired |
(55) |
(923) |
Net cash used in investing activities
|
(899)
|
(297)
|
Cash flows from financing activities: |
Purchase of common stock under stock repurchase plans |
(130) |
(2,300) |
Proceeds from issuance of options and ESPP purchases, net |
24 |
121 |
Principal payments on borrowings and other obligations |
(12) |
(20) |
Net cash used in financing activities
|
(118)
|
(2,199)
|
Effect of changes in exchange rates on cash and cash equivalents |
(68) |
- |
Net decrease in cash and cash equivalents |
(703) |
(1,257) |
Cash and cash equivalents, beginning of period |
2,272 |
3,620 |
Cash and cash equivalents, end of period
|
$1,569
|
$2,363
|
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Sun Microsystems, Inc.
Calculation of Non-GAAP Net Income (Loss) (unaudited)
(in millions, except per share amounts)
| |
Three Months Ended |
| March 29, 2009 |
March 30, 2008 |
December 28, 2008 |
| Calculation of non-GAAP net income (loss): |
GAAP loss |
$(201) |
$(34) |
$(209) |
Purchased in-process research and development |
3 |
24 |
- |
Amortization of acquisition related intangibles |
72 |
76 |
72 |
Stock-based compensation |
49 |
57 |
52 |
Restructuring and related impairment of long-lived assets |
46 |
14 |
222 |
(Gain) loss on equity investments, net |
(3) |
- |
3 |
Tax effect of non-GAAP adjustments |
(18) |
(5) |
(26) |
Non-GAAP net income (loss) |
$(52) |
$132 |
$114 |
Diluted non-GAAP net income (loss) per share |
$(0.07) |
$0.17 |
$0.15 |
Shares used in the calculation of non-GAAP net income (loss) per common share - diluted |
745 |
797 |
746 |
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