Revenues for the first quarter of fiscal year 2003 were $2.7 billion, down 4 percent as compared with $2.9 billion for the first quarter of fiscal year 2002. GAAP net loss for the first quarter of fiscal year 2003 was $111 million and net loss per share was $.04 as compared with a net loss of $180 million and net loss per share of $.06 for the first quarter of fiscal year 2002. For the first quarter of fiscal year 2003, excluding a $31 million loss on equity investments, a $24 million charge in connection with previous restructuring charges, and a $22 million benefit for related tax effects, net loss was $78 million and net loss per share was $.02.
Sun plans to reduce its workforce by approximately 11% from its Q1 fiscal year 2003 beginning headcount level and consolidate and eliminate excess space. As a result of these reductions, Sun expects to record a charge of approximately $300 million in the second quarter of fiscal year 2003.
Steve McGowan, Sun's Chief Financial Officer and Executive Vice President of Corporate Resources said, "Sun has done an outstanding job in maintaining fiscal discipline but it hasn't been enough to counterbalance revenue shortfalls caused by the protracted economic downturn. We believe the actions announced today are necessary to return Sun to profitability and are in the best interest of our long-term stakeholders."
McGowan added, "Sun continued to remain cash flow positive from operations this quarter. We paid off $200 million of debt and, as a demonstration of faith in our company, we repurchased nearly $500 million dollars of stock. We ended the quarter with a cash and marketable securities position of over $5.2 billion and total debt of $1.5 billion."
Sun's Chairman, President, and CEO Scott McNealy stated, "Despite the challenging economic environment, we continue to broaden our industry footprint and win customers in new markets such as life sciences, healthcare and retail. At the same time, we are protecting our investments in research and development, aggressively managing cash balances, and gaining market share from competitors."
McNealy added, "We continue to deliver on our product roadmap and R&D investments with the goal of lowering both acquisition costs and total cost of ownership for our customers. In the last 90 days, we have announced the secure Linux desktop client, Solaris(TM) on x86, the Sun(TM) ONE software stack for Linux, and the Liberty-enabled Sun ONE Platform for Network Identity. In addition, we announced further advances in our UltraSPARC® processor-based technology and N1 architecture."
McNealy concluded, "We are doing our best to manage the company responsibly for our long-term stakeholders. Tough times require tough decisions and everyone at Sun is dedicated to returning the company to profitability as soon as possible."
Sun has scheduled a conference call today to discuss its earnings for the first quarter of fiscal year 2003 at 1:30 p.m. (PDT), which is being broadcast live at www.sun.com/investors.
This news release contains projections and other forward-looking statements regarding future results and the future performance of Sun Microsystems, Inc., including statements regarding Sun's plans to reduce its workforce by 11% and consolidate and eliminate excess space; Sun's expectations to record a charge of approximately $300 million in the second quarter of fiscal 2003; Sun's belief that the workforce and facilities reductions are necessary to return the company to profitability; statements that Sun continues to broaden its industry footprint and win customers in new markets; statements regarding protecting its investments in research and development, aggressively managing cash balances and gaining market share from competitors; Sun's belief that it continues to deliver on its product roadmap and R&D investments; Sun's goal of lowering both acquisition costs and total cost of ownership for our customers; Sun's belief that it is doing its best to manage the company responsibly for long-term stakeholders; and that everyone at Sun is dedicated to returning the company to profitability as soon as possible. Such statements are just predictions and involve risks and uncertainties such that actual results and performance may differ materially. Factors that might cause such a difference include risks associated with increased competition, continued adverse macroeconomic conditions in the U.S. and internationally, including adverse business conditions in the specific markets for Sun's products, lack of success in the timely development, production and acceptance of new products and services, lack of success in technological advancements, the failure to reduce costs or improve operating efficiencies, and our ability to attract, hire and retain key and qualified employees. These and other risks are detailed from time to time in Sun's periodic reports that are filed with the Securities and Exchange Commission, including Sun's annual report on Form 10-K for the fiscal year ended June 30, 2002.
About Sun Microsystems, Inc.
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 industrial-strength hardware, software and services that make the Net work. Sun can be found in more than 100 countries and on the World Wide Web at http://www.sun.com .
NOTE: Sun, Sun Microsystems, the Sun logo, Solaris, and The Network Is The Computer are trademarks or registered trademarks of Sun Microsystems, Inc. in the United States and in 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.
INVESTOR CONTACT:
Mark Paisley 408-404-8415
Email Contact
MEDIA CONTACT:
Diane Carlini 650-786-4500
Email Contact
INDUSTRY ANALYST CONTACT:
Angela Grady 415-972-0522
Email Contact
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
Three Months Ended
(Unaudited)
September 29, September 30,
2002 2001
Net revenues $2,747 $2,861
Costs and expenses:
Cost of sales 1,615 1,805
Research and development 437 473
Selling, general and
administrative 882 961
Restructuring charges 24 14
In-process research
and development -- 3
Total costs and expenses 2,958 3,256
Operating loss (211) (395)
Interest income, net 39 107
Loss on equity investments (31) (19)
Loss before income taxes (203) (307)
Income tax benefit (92) (127)
Net loss ($111) ($180)
Calculation of net loss
excluding special items:
Net loss per above ($111) ($180)
In-process research and
development -- 3
Restructuring charges 24 14
Loss on equity investments 31 19
Related tax effects (22) (14)
Net loss excluding special items ($78) ($158)
Per share data:
Shares used in the per
common share calculations -
basic and diluted 3,168 3,240
Net loss per common share -
basic and diluted ($0.04) ($0.06)
Net loss excluding special
items per common share -
basic and diluted ($0.02) ($0.05)
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
September 29, June 30,
2002 2002*
ASSETS (Unaudited)
Current assets:
Cash, cash equivalents
and short-term
investments $2,632 $2,885
Accounts receivable, net 2,133 2,745
Inventories 509 591
Other current assets 1,629 1,556
Total current assets 6,903 7,777
Property, plant and equipment, net 2,408 2,453
Goodwill 2,182 2,182
Long-term marketable debt securities 2,612 2,979
Other non-current assets, net 1,271 1,131
$15,376 $16,522
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $-- $205
Accounts payable 798 1,044
Accrued liabilities 1,873 2,023
Deferred revenues and
customer deposits 1,643 1,785
Total current liabilities 4,314 5,057
Long-term debt 1,500 1,449
Other non-current obligations 253 215
Stockholders' equity 9,309 9,801
$15,376 $16,522
*Derived from audited financial statements
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Source: Sun Microsystems, Inc.
