Sun Microsystems Reports Final Results for Full Fiscal Year and
Fourth Quarter 2008
Announces Additional $1 Billion Share Repurchase Authorization
SANTA CLARA, Calif. (Business Wire EON/PRWEB ) August 1, 2008 --
Sun Microsystems, Inc. (NASDAQ:JAVA) reported results today for its full
fiscal year and fourth quarter, which ended June 30, 2008.
For the full fiscal year, Sun reported revenues of $13.880 billion, an
increase of 0.1 percent over fiscal year 2007. Revenues for the fourth
quarter of fiscal 2008 were $3.780 billion, a decrease of 1.4 percent
from $3.835 in the fourth quarter of fiscal 2007. Total gross margin as
a percent of revenues for the full fiscal year was 46.5 percent, an
increase of 1.3 percentage points over fiscal year 2007. Gross margin
for the fourth quarter of fiscal 2008 was 44.3 percent, a decrease of
2.9 percentage points from the fourth quarter of fiscal 2007.
Net income on a GAAP basis for the full fiscal year was $403 million, or
$0.49 per share on a diluted basis, as compared with net income of $473
million, or $0.52 per share on a diluted basis, for fiscal year 2007.
Net income for the fourth quarter of fiscal 2008 was $88 million, or
$0.11 per share on a diluted basis, as compared with net income of $329
million, or $0.36 per share on a diluted basis, for the fourth quarter
of fiscal 2007.
Non-GAAP net income for the full fiscal year was $1.101 billion, or
$1.34 per share on a diluted basis, as compared with non-GAAP net income
of $1.003 billion, or $1.11 per share on a diluted basis, for fiscal
year 2007. Non-GAAP net income for the fourth quarter of fiscal 2008 was
$275 million, or $0.35 per share on a diluted basis, as compared with
non-GAAP net income of $458 million, or $0.50 per share on a diluted
basis, for the fourth quarter of fiscal 2007. Non-GAAP net income
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, settlement income and the tax effect of these non-GAAP
adjustments.
Cash generated from operations for the full fiscal year was $1.3
billion, and the cash and marketable debt securities balance at the end
of the year was approximately $3.3 billion.
“On a year-over-year basis, we saw
significant improvements across a number of key operating metrics
ranging from gross margins to non-GAAP earnings per share and cash flow
from operations,” said Jonathan Schwartz, CEO
of Sun Microsystems. “Despite this progress
and strong growth in international geographies, slowing performance in
the U.S. impacted top line revenue growth. Looking forward, we remain
confident in open source innovation as the accelerant to our growth
strategy through increased adoption of our open source offerings –
from the OpenSolarisTM operating system and the
MySQLTM database to the LustreTM
and ZFSTM storage systems, the foundation of our
open storage platforms.”
Full Fiscal Year & Fourth Quarter 2008 Highlights:
-
On an annual basis, Sun improved gross margins by 1.3 percentage
points, decreased total R&D and SG&A expenses by $70 million, improved
non-GAAP net income per share on a diluted basis by 21 percent and
increased cash flow from operations by $371 million.
-
Sun reported double-digit annual revenue growth in key international
markets including Brazil, India, Russia and Greater China.
-
Global demand for MySQL continued to accelerate, with billings growth
in the fourth quarter of over 44 percent year-over-year.
-
Sun's energy-efficient, SolarisTM-based Chip
Multi-Threading (CMT) systems delivered 61 percent year-over-year
billings growth in Q4, and for fiscal year 2008 was a $1.1 billion
dollar business for Sun.
-
ZFS, the foundation of Sun's Open Storage product line, saw increased
adoption across the globe during the quarter, and along with the Sun
FireTM x4500 server - the world's first hybrid
server/storage data server - helped customers reduce costs through the
use of open source software on industry standard systems.
During the fourth quarter, Sun continued to leverage its cash position,
spending $464 million to repurchase 35.7 million shares of its common
stock. Currently, $36 million remains of the $3 billion share repurchase
program announced in Sun's fourth quarter of fiscal 2007. Sun also
announced today that its Board of Directors authorized an additional
repurchase of up to $1 billion of the company's outstanding common
shares. For more information about this share repurchase, please see the
press release issued by Sun today which can be found at www.sun.com/investors.
Sun has scheduled a conference call today to discuss its financial
results for the full fiscal year and fourth quarter 2008 at 5:00 a.m.
(PT) / 8:00 a.m. (ET), which is being broadcast live at www.sun.com/investors.
About Sun Microsystems, Inc.
Sun Microsystems develops the technologies that power the global
marketplace. Guided by a singular vision -- "The Network is the ComputerTM"
-- 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.
This press release contains forward-looking statements regarding the
future results and performance of Sun Microsystems, Inc., including
statements regarding Sun's confidence in open source innovation as the
accelerant to its growth strategy, the rate of adoption of Sun's open
source offerings and the offerings constituting the foundation of Sun's
open storage platforms. These forward-looking statements involve risks
and uncertainties and actual results could differ materially from those
predicted in any such forward-looking statements. Factors that could
cause Sun's actual results to differ materially from those contained in
such forward-looking statements include: risks associated with
developing, designing, manufacturing and distributing new products; lack
of success in technological advancements; pricing pressures; lack of
customer acceptance and implementation of new products and technologies;
the possibility of errors or defects in new products; a material
acquisition, restructuring or other event that results in significant
charges; competition; adverse business conditions; failure to retain key
employees; the cancellation or delay of projects; Sun's reliance on
single-source suppliers; risks associated with Sun's ability to purchase
a sufficient amount of components to meet demand; inventory risks; risks
associated with Sun's international customers and operations; delays in
product development; Sun's dependence on significant customers and
specific industries; and Sun's dependence on channel partners. Please
also refer to Sun's periodic reports that are filed from time to time
with the Securities and Exchange Commission, including its Annual Report
on Form 10-K for the fiscal year ended June 30, 2007 and its Quarterly
Reports on Form 10-Q for the fiscal quarters ended September 30, 2007,
December 30, 2007 and March 30, 2008. Sun assumes no obligation to, and
does not currently intend to, update these forward-looking statements.
To supplement Sun's financial results presented in accordance with GAAP,
Sun provides non-GAAP net income and non-GAAP net income per share 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 Sun's 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" following the text of this press release.
Sun, Sun Microsystems, the Sun logo, OpenSolaris, MySQL, Lustre, ZFS,
Solaris, Sun Fire 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.
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited)
(in millions, except per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Fiscal Years Ended
|
|
|
|
|
June 30,
2008
|
|
June 30,
2007
|
|
|
June 30,
2008
|
|
June 30,
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
$
|
2,386
|
|
$
|
2,492
|
|
|
$
|
8,618
|
|
$
|
8,771
|
|
|
Services
|
|
|
1,394
|
|
|
1,343
|
|
|
|
5,262
|
|
|
5,102
|
|
|
Total net revenues
|
|
|
3,780
|
|
|
3,835
|
|
|
|
13,880
|
|
|
13,873
|
|
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales-products (1)
|
|
|
1,372
|
|
|
1,312
|
|
|
|
4,668
|
|
|
4,811
|
|
|
Cost of sales-services (1)
|
|
|
735
|
|
|
711
|
|
|
|
2,757
|
|
|
2,797
|
|
|
Total cost of sales
|
|
|
2,107
|
|
|
2,023
|
|
|
|
7,425
|
|
|
7,608
|
|
|
Gross margin
|
|
|
1,673
|
|
|
1,812
|
|
|
|
6,455
|
|
|
6,265
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Research and development (1)
|
|
|
468
|
|
|
514
|
|
|
|
1,834
|
|
|
2,008
|
|
|
Selling, general and administrative (1)
|
|
|
1,032
|
|
|
958
|
|
|
|
3,955
|
|
|
3,851
|
|
|
Restructuring charges and related impairment of long-lived assets
|
|
|
104
|
|
|
15
|
|
|
|
263
|
|
|
97
|
|
|
Purchased in-process research and development
|
|
|
6
|
|
|
-
|
|
|
|
31
|
|
|
-
|
|
|
Total operating expenses
|
|
|
1,610
|
|
|
1,487
|
|
|
|
6,083
|
|
|
5,956
|
|
|
Operating income
|
|
|
63
|
|
|
325
|
|
|
|
372
|
|
|
309
|
|
|
Gain on equity investments, net
|
|
|
10
|
|
|
1
|
|
|
|
32
|
|
|
6
|
|
|
Interest and other income, net
|
|
|
16
|
|
|
59
|
|
|
|
161
|
|
|
214
|
|
|
Settlement income
|
|
|
45
|
|
|
-
|
|
|
|
45
|
|
|
54
|
|
|
Income before income taxes
|
|
|
134
|
|
|
385
|
|
|
|
610
|
|
|
583
|
|
|
Provision for income taxes
|
|
|
46
|
|
|
56
|
|
|
|
207
|
|
|
110
|
|
|
Net income
|
|
$
|
88
|
|
$
|
329
|
|
|
$
|
403
|
|
$
|
473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share-basic
|
|
$
|
0.11
|
|
$
|
0.37
|
(2)
|
|
$
|
0.50
|
|
$
|
0.54
|
(2)
|
|
Net income per common share-diluted
|
|
$
|
0.11
|
|
$
|
0.36
|
(2)
|
|
$
|
0.49
|
|
$
|
0.52
|
(2)
|
|
Shares used in the calculation of net income per common share-basic
|
|
|
772
|
|
|
889
|
(2)
|
|
|
809
|
|
|
883
|
(2)
|
|
Shares used in the calculation of net income per common share-diluted
|
|
|
776
|
|
|
908
|
(2)
|
|
|
822
|
|
|
902
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes stock-based compensation expense as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales-products
|
|
$
|
4
|
|
$
|
3
|
|
|
$
|
12
|
|
$
|
13
|
|
|
|
|
Cost of sales-services
|
|
$
|
10
|
|
$
|
8
|
|
|
$
|
38
|
|
$
|
31
|
|
|
|
|
Research and development
|
|
$
|
20
|
|
$
|
14
|
|
|
$
|
67
|
|
$
|
64
|
|
|
|
|
Selling, general and administrative
|
|
$
|
23
|
|
$
|
23
|
|
|
$
|
97
|
|
$
|
106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
Amounts have been restated to reflect the one-for-four reverse
stock split effective November 12, 2007.
|
|
|
|
|
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in
millions)
|
|
|
|
|
|
|
|
|
|
June 30,
2008
|
|
June 30,
2007 (1)
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,272
|
|
$
|
3,620
|
|
Short-term marketable debt securities
|
|
|
429
|
|
|
962
|
|
Accounts receivable, net
|
|
|
3,019
|
|
|
2,964
|
|
Inventories
|
|
|
680
|
|
|
524
|
|
Deferred and prepaid tax assets
|
|
|
372
|
|
|
200
|
|
Prepaid expenses and other current assets, net
|
|
|
1,218
|
|
|
1,058
|
|
Total current assets
|
|
|
7,990
|
|
|
9,328
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
1,611
|
|
|
1,533
|
|
Long-term marketable debt securities
|
|
|
609
|
|
|
1,360
|
|
Goodwill
|
|
|
3,215
|
|
|
2,514
|
|
Other acquisition-related intangible assets, net
|
|
|
566
|
|
|
633
|
|
Other non-current assets, net
|
|
|
477
|
|
|
470
|
|
|
|
$
|
14,468
|
|
$
|
15,838
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,387
|
|
$
|
1,381
|
|
Accrued payroll-related liabilities
|
|
|
734
|
|
|
842
|
|
Accrued liabilities and other
|
|
|
1,105
|
|
|
961
|
|
Deferred revenues
|
|
|
2,236
|
|
|
2,047
|
|
Warranty reserve
|
|
|
206
|
|
|
220
|
|
Total current liabilities
|
|
|
5,668
|
|
|
5,451
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
1,265
|
|
|
1,264
|
|
Long-term deferred revenues
|
|
|
683
|
|
|
659
|
|
Other non-current obligations
|
|
|
1,264
|
|
|
1,285
|
|
Total stockholders’ equity
|
|
|
5,588
|
|
|
7,179
|
|
|
|
$
|
14,468
|
|
$
|
15,838
|
|
|
|
(1) Derived from audited financial statements.
|
|
|
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited, in millions)
|
|
|
|
|
|
Fiscal Years Ended
|
|
|
|
June 30,
2008
|
|
June 30,
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
403
|
|
$
|
473
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
476
|
|
|
517
|
|
Amortization of acquisition-related intangible assets
|
|
|
310
|
|
|
313
|
|
Stock-based compensation expense
|
|
|
214
|
|
|
214
|
|
Purchased in-process research and development
|
|
|
31
|
|
|
-
|
|
Gain on investments and other, net
|
|
|
(68)
|
|
|
(42)
|
|
Impairment of long-lived assets
|
|
|
-
|
|
|
16
|
|
Tax provisions for employee stock plans
|
|
|
-
|
|
|
29
|
|
Deferred taxes
|
|
|
2
|
|
|
74
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable, net
|
|
|
(9)
|
|
|
(241)
|
|
Inventories
|
|
|
(148)
|
|
|
(6)
|
|
Prepaid and other assets, net
|
|
|
(295)
|
|
|
(191)
|
|
Accounts payable
|
|
|
(15)
|
|
|
(8)
|
|
Other liabilities
|
|
|
428
|
|
|
(190)
|
|
Net cash provided by operating activities
|
|
|
1,329
|
|
|
958
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Decrease (increase) in restricted cash
|
|
|
17
|
|
|
(5)
|
|
Purchases of marketable debt securities
|
|
|
(1,333)
|
|
|
(3,088)
|
|
Proceeds from sales of marketable debt securities
|
|
|
1,550
|
|
|
1,335
|
|
Proceeds from maturities of marketable debt securities
|
|
|
1,058
|
|
|
725
|
|
Proceeds from sales of equity investments, net
|
|
|
32
|
|
|
16
|
|
Purchases of property, plant and equipment, net
|
|
|
(520)
|
|
|
(488)
|
|
Proceeds from sales of property, plant and equipment
|
|
|
79
|
|
|
451
|
|
Payments for acquisitions, net of cash acquired
|
|
|
(949)
|
|
|
(23)
|
|
Net cash used in investing activities
|
|
|
(66)
|
|
|
(1,077)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Purchase of common stock call options
|
|
|
-
|
|
|
(228)
|
|
Sale of common stock warrants
|
|
|
-
|
|
|
145
|
|
Purchase of common stock under 2007 Stock Repurchase Plan
|
|
|
(2,764)
|
|
|
(200)
|
|
Proceeds from issuance of options and ESPP purchases, net
|
|
|
177
|
|
|
244
|
|
Proceeds from issuance of convertible notes, net
|
|
|
-
|
|
|
692
|
|
Principal payments on borrowings and other obligations
|
|
|
(24)
|
|
|
(483)
|
|
Net cash (used in) provided by financing activities
|
|
|
(2,611)
|
|
|
170
|
|
Net decrease in cash and cash equivalents
|
|
|
(1,348)
|
|
|
51
|
|
Cash and cash equivalents, beginning of period
|
|
|
3,620
|
|
|
3,569
|
|
Cash and cash equivalents, end of period
|
|
$
|
2,272
|
|
$
|
3,620
|
|
|
|
|
|
|
SUN MICROSYSTEMS, INC.
CALCULATION OF NON-GAAP NET INCOME
(unaudited)
(in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Fiscal Years Ended
|
|
|
|
June 30,
2008
|
|
June 30,
2007
|
|
June 30,
2008
|
|
June 30,
2007
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of non-GAAP net income:
|
|
|
|
|
|
|
|
|
|
GAAP net income
|
|
$
|
88
|
|
|
$
|
329
|
|
|
$
|
403
|
|
|
$
|
473
|
|
|
Purchased in-process research and development
|
|
|
6
|
|
|
|
-
|
|
|
|
31
|
|
|
|
-
|
|
|
Amortization of acquisition related intangibles
|
|
|
86
|
|
|
|
74
|
|
|
|
310
|
|
|
|
313
|
|
|
Stock-based compensation
|
|
|
57
|
|
|
|
48
|
|
|
|
214
|
|
|
|
214
|
|
|
Restructuring and related impairment of long-lived assets
|
|
|
104
|
|
|
|
15
|
|
|
|
263
|
|
|
|
97
|
|
|
Gain on equity investments, net
|
|
|
(10
|
)
|
|
|
(1
|
)
|
|
|
(32
|
)
|
|
|
(6
|
)
|
|
Settlement income
|
|
|
(45
|
)
|
|
|
-
|
|
|
|
(45
|
)
|
|
|
(54
|
)
|
|
Tax effect of non-GAAP adjustments
|
|
|
(11
|
)
|
|
|
(7
|
)
|
|
|
(43
|
)
|
|
|
(34
|
)
|
|
Non-GAAP net income
|
|
$
|
275
|
|
|
$
|
458
|
|
|
$
|
1,101
|
|
|
$
|
1,003
|
|
|
Diluted non-GAAP net income per share
|
|
$
|
0.35
|
|
|
$
|
0.50
|
|
|
$
|
1.34
|
|
|
$
|
1.11
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in the calculation of non-GAAP net income per common
share – diluted
|
|
|
776
|
|
|
|
908
|
|
|
|
822
|
|
|
|
902
|
|
See the original story at: http://eon.businesswire.com/releases/fiscal/income/prweb1169464.htm
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