<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
__X___ Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
for the quarterly period ended March 27, 1994 or
_____ Transition report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
for the transition period from ____________ to ____________
Commission file number: 0-15086
SUN MICROSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2805249
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.
2550 Garcia Avenue, Mountain View, CA 94043-1100
(Address of principal executive offices with zip code)
Registrant's telephone number, including area code: (415)960-1300
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
YES __X___ NO _____
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15 (d) of the Securities Exchange Act of 1934 subsequent
to the distribution of securities under a plan confirmed by a
court.
YES _____ NO _____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practible date.
<TABLE>
<S> <C>
Class Outstanding at March 27, 1994
_________________________________ _____________________________
Common stock - $0.00067 par value 94,332,742
</TABLE>
1
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
COVER PAGE 1
INDEX 2
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Results of Operations and Financial
Condition 7
PART II - OTHER INFORMATION
Item 5 - Other Information 12
Item 6 - Exhibits and Reports on Form 8-K 13
SIGNATURES 14
</TABLE>
2
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
March 27, June 30,
1994 1993
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 482,087 $ 828,839
Short-term investments 428,753 309,873
Accounts receivable, net 802,729 627,174
Inventories 243,143 256,275
Other current assets 297,952 250,185
----------- ---------
Total current assets 2,254,664 2,272,346
Property, plant and equipment, at cost 833,660 775,038
Accumulated depreciation and
amortization (484,812) (426,656)
----------- ----------
348,848 348,382
Other assets, net 247,179 146,901
----------- ----------
$ 2,850,691 $2,767,629
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 46,852 $ 90,890
Accounts payable 357,527 270,440
Accrued liabilities 582,519 393,264
Other current liabilities 195,677 192,450
----------- ----------
Total current liabilities 1,182,575 947,044
Long-term debt and other obligation 118,312 177,802
Stockholders' equity 1,549,804 1,642,783
----------- ----------
$ 2,850,691 $2,767,629
</TABLE> =========== ==========
See accompanying notes.
3
<PAGE> 4
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------- -------------------------
March 27, March 28, March 27, March 28,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues $1,195,997 $1,141,342 $3,287,155 $3,048,090
Cost and expenses:
Cost of sales 684,297 682,689 1,911,074 1,790,189
Research and development 124,137 108,711 343,465 325,038
Selling, general and
administrative 302,806 278,184 866,768 800,619
--------- --------- --------- ---------
Total costs and expenses 1,111,240 1,069,584 3,121,307 2,915,846
--------- --------- --------- ---------
Operating income 84,757 71,758 165,848 132,244
Interest income
(expense), net 2,336 830 3,775 (2,117)
Settlement of litigation - - - (15,000)
--------- --------- --------- ---------
Income before income taxes 87,093 72,588 169,623 115,127
Provision for income taxes 29,612 20,925 51,712 34,538
--------- --------- --------- ---------
Net income $ 57,481 $ 51,663 $ 117,911 $ 80,589
========= ========= ========= =========
Net income per common
and common-equivalent
share $ 0.60 $ 0.47 $ 1.21 $ 0.77
====== ====== ====== ======
Common and common-equivalent
shares used in the
calculation of net income
per share 95,520 109,028 97,315 105,156
------ ------- ------ -------
</TABLE>
See accompanying notes.
4
<PAGE> 5
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------
March 27, March 28,
1994 1993
-------- --------
<S> <C> <C>
Cash flow from operating activities:
Net income $117,911 $80,589
Adjustments to reconcile net income
to operating cash flows:
Depreciation, amortization
and other non-cash items 183,907 192,404
Net increase in receivables,
inventories and other current
and non-current assets (201,415) (300,210)
Net increase in payables,
accruals and other current and
non-current liabilities 271,284 65,782
--------- ---------
Net cash provided from operating activities 371,687 38,565
--------- ---------
Cash flow from investing activities:
Acquisition of property, plant and equipment (146,944) (149,552)
Acquisition of other assets (135,787) (25,053)
Acquisition of short-term investments (2,070,926) (1,632,436)
Maturities of short-term investments 1,952,046 1,584,833
--------- ---------
Net cash used by investing activities (401,611) (222,208)
--------- ---------
Cash flow from financing activities:
Issuance of common stock 17,708 35,242
Acquisition of treasury stock (281,566) (88,615)
Proceeds from employee stock purchase plans 31,924 30,010
(Reduction) proceeds of short-term
borrowings, net (44,038) 37,437
(Reduction) proceeds of long-term
borrowings and other (40,856) 2,862
--------- ---------
Net cash (used by) provided from financing
activities (316,828) 16,936
--------- ---------
Net decrease in cash and cash equivalents $(346,752) $(166,707)
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $11,926 $29,632
Income taxes $54,510 $13,513
See accompanying notes.
</TABLE>
5
<PAGE> 6
SUN MICROSYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Sun Microsystems,
Inc. ("Sun" or "the Company") and its wholly-owned subsidiaries. Intercompany
accounts and transactions have been eliminated.
While the quarterly financial information furnished is unaudited, the financial
statements included in this report reflect all adjustments (consisting only of
normal recurring accruals) that the Company considers necessary for a fair
presentation of the results of operations for the interim periods covered and
of the financial condition of the Company at the date of the interim balance
sheet. The results for interim periods are not necessarily indicative of the
results for the entire year. The information included in this report should be
read in conjunction with the Company's 1993 Annual Report to Stockholders.
INVENTORIES (in thousands)
<TABLE>
<CAPTION>
March 27, 1994 June 30, 1993
-------------- -------------
<S> <C> <C>
Raw materials $119,984 $ 134,633
Work in process 37,887 34,974
Finished goods 85,272 86,668
-------- --------
$243,143 $256,275
</TABLE> ======== ========
INCOME TAXES
The Company accounts for income taxes under the liability method of
Statement of Financial Accounting Standards No. 109. The provision for income
taxes during the interim periods considers anticipated annual income before
taxes, research and development tax credits and other permanent differences.
6
<PAGE> 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following table sets forth items from the Condensed Consolidated
Statements of Income as percentages of net revenues:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------- ---------------------
March 27, March 28, March 27, March 28,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues 100.0% 100.0% 100.0% 100.0%
Cost of sales 57.2 59.8 58.1 58.7
---- ---- ---- ----
Gross margin 42.8 40.2 41.9 41.3
Research and development 10.4 9.5 10.4 10.7
Selling, general and
administrative 25.3 24.4 26.4 26.3
---- ---- ---- ----
Operating income 7.1 6.3 5.1 4.3
Interest income (expense), net 0.2 0.1 0.1 (0.1)
Settlement of litigation - - - (0.5)
---- ---- ---- ----
Income before income taxes 7.3 6.4 5.2 3.7
Provision for income taxes 2.5 1.8 1.6 1.1
---- ---- ---- ----
Net income 4.8% 4.6% 3.6% 2.6%
</TABLE> ==== ==== ==== ====
RESULTS OF OPERATIONS
Sun continues to introduce higher performance desktop workstations as well as
reduce prices to improve price point and price performance competitiveness.
Component cost reductions, operating efficiencies and demand for higher
performance desktop and server products have to date significantly offset the
effects of repricing actions. Future operating results will depend on
additional component cost reductions and further operating efficiencies, which
in turn depend in part on the Company's ability to generate higher system,
service and software license volumes (see "Future Operating Results").
The transition to the Solaris 2 operating environment continued in the third
quarter of fiscal 1994, with over 2,000 applications now ported and available
from independent software vendors. A significant and increasing share of
revenue is being generated from products which operate exclusively in the
Solaris 2 environment. Continuing this growth will depend, in part, on the
acceptance and migration of customers to Solaris 2, as well as the efforts of
independent software vendors to port existing and new applications software.
7
<PAGE> 8
Net revenues
Net revenues were $1.2 billion for the third quarter and $3.3 billion for the
first nine months of fiscal 1994, representing increases of 4.8% and 7.8%,
respectively, over the comparable periods in fiscal 1993. The primary
contributor to the growth in net revenues over the comparable periods was
higher revenue from memory, storage options and accessories which were shipped
to both installed base customers and to new customers purchasing more richly
configured systems. While system unit shipments increased by approximately 5%
for the third quarter of fiscal 1994 compared with the same quarter of fiscal
1993, they declined by 4% for the first nine months of fiscal 1994 when
compared with the corresponding period in fiscal 1993. A continuing mix shift
toward higher performance desktop and server units offset the effect of lower
upgrade revenues, as customers opted for the price/performance advantages of
new systems in both the third quarter and first nine months of fiscal 1994
compared with the corresponding periods of fiscal 1993. As a result, system
revenues remained relatively unchanged in absolute dollars for both the third
quarter and first nine months of fiscal 1994 when compared with the
corresponding periods of fiscal 1993. Service revenues for the third quarter
and first nine months of fiscal 1994 remained relatively unchanged as a percent
of net revenues when compared with the corresponding periods of fiscal 1993.
Domestic net revenues decreased by 7% in the third quarter of fiscal 1994
compared with fiscal 1993 and increased by 3% for the first nine months of
fiscal 1994 compared with the same period in fiscal 1993. Transition issues
related to new product introductions contributed to the decline in domestic net
revenues. International net revenues (including United States exports) grew
17% and 13% in the third quarter and first nine months of fiscal 1994,
respectively, over the comparable periods of fiscal 1993. European net revenues
grew 6% in the third quarter of fiscal 1994 over the third quarter of fiscal
1993 due primarily to the recent strengthening economies in certain Northern
European countries, while European net revenues remained relatively unchanged
for the first nine months of fiscal 1994 compared with the corresponding
periods of fiscal 1993. Net revenues in the Rest of World (primarily Japan)
increased 28% for both the third quarter and the first nine months of fiscal
1994 over the corresponding periods of fiscal 1993, primarily as a result of
the expanding client-server computer markets in Japan, Asia, Latin America and
other regions. International net revenues represented 54% and 51% of total net
revenues in the third quarter and first nine months of fiscal 1994,
respectively, compared with 49% for both of the comparable periods of fiscal
1993.
The impact of currency fluctuations on net revenues and operating results
cannot be precisely measured because the Company's product mix and pricing
change over time in various markets, partially in response to currency
movements. Further, the Company's international structure and transaction
activity provide a degree of natural hedge where fluctuations in a particular
currency result in financial effects that mitigate, or tend to offset each
other on a consolidated basis. The Company generally manages currency exposure
through an established hedging program, the objective of which is to minimize
the impact of currency fluctuations on results of operations.
Compared with the third quarter and the first nine months of the prior fiscal
year, the dollar has strengthened against most major European currencies but
weakened against the Japanese yen. Management has estimated that the net
impact of currency fluctuations on operating results, while slightly favorable
in the third quarter and slightly unfavorable in the first nine months of
fiscal 1994 , was not significant in either of those periods.
Gross margin
Gross margin was 42.8% for the third quarter and 41.9% for the first nine
months of fiscal 1994, compared with 40.2% and 41.3%, respectively, for the
corresponding periods of fiscal 1993. System margins improved in the third
quarter of fiscal 1994 compared with the corresponding period of fiscal 1993,
as shipment mix shifted toward higher performance desktop and server systems
with accompanying higher margins. This mix shift, combined with component cost
reductions and operating efficiencies, more than offset repricing actions
during fiscal 1994. Margins were comparatively lower in the third quarter of
fiscal 1993, as shipments included significant activity in lower margin
upgrades and peripheral options.
Repricing actions may be initiated in the future to increase shipment volumes
for low price point desktop systems, which could result in downward pressure on
gross margin. Increased software licensing, server and higher performance
desktop volumes, as well as additional component cost reductions and operating
efficiencies generated by higher system volumes, could mitigate this margin
pressure.
8
<PAGE> 9
Research and development
Research and development (R&D) expenses were $124.1 million in the third
quarter and $343.4 million for the first nine months of fiscal 1994, an
increase of $15 million, or 14%, and $18 million, or 6%, respectively, over the
same periods of fiscal 1993. R&D expenses represented 10.4% of net revenues for
both the third quarter and for the first nine months of fiscal 1994 compared
with 9.5% and 10.7%, respectively, for the corresponding periods of fiscal
1993. The increase in R&D expense for the third quarter of fiscal 1994 over the
corresponding period of fiscal 1993 is due in part to additional investment in
SPARC processor development and new product introductions. Sun continues to
believe that the market for its products is characterized by rapid rates of
technological advancement for both hardware and software products. To maintain
its competitive position in the industry, the Company expects to continue to
invest significant resources in new hardware and software product development
as well as in enhancements to existing products.
Selling, general and administrative
Selling, general and administrative (SG&A) expenses increased $24.6 million, or
9%, to $302.8 million in the third quarter, and $66.1 million, or 8%, to $866.8
million in the first nine months of fiscal 1994 compared with the corresponding
periods of fiscal 1993. As a percentage of net revenues, SG&A expenses were
25.3% and 24.4% in the third quarters of fiscal 1994 and 1993, respectively,
and 26.4% and 26.3% in the first nine months of fiscal 1994 and 1993,
respectively. The dollar increase primarily reflects additional sales and
marketing staff and increased occupancy costs related to continuing
international expansion.
Interest income (expense), net
Net interest income was $2.3 million for the third quarter of fiscal 1994,
compared with $.8 million for the third quarter of fiscal 1993 and $3.8 million
for the first nine months of fiscal 1994, compared with net interest expense of
$2.1 million for the corresponding period of 1993. The increase in net interest
income for the third quarter of fiscal 1994 compared to the third quarter of
fiscal 1993 is primarily the result of reduced interest expense on short-term
borrowings and long-term debt. The decrease in interest expense for the first
nine months of fiscal 1994 compared to the corresponding period of fiscal 1993
was primarily due to the elimination of certain interest expense as a result of
the conversion of the Company's subordinated debentures in November 1992, as
well as interest savings from scheduled debt repayments.
Settlement of litigation
Earnings for the first nine months of fiscal 1993 included a charge of $15
million in connection with the settlement of two securities class action
lawsuits brought against the Company and certain of its current and former
officers by purchasers of the Company's stock and debentures.
Income taxes
The Company's effective income tax rate was 34% for the third quarter and first
nine months of fiscal 1994 compared with 28.8% and 30% for the corresponding
periods of fiscal 1993. The effective tax rate for the first nine months of
fiscal 1994 was reduced by a one-time credit of $5.9 million recorded in the
first quarter as a result of the Omnibus Budget Reconciliation Act of 1993,
which included a retroactive reinstatement of the research and development
credit. The lower effective tax rate for fiscal 1993 was due primarily to the
lower U.S. statutory rate of 34% and lower taxes on foreign earnings.
Future operating results
The Company expects that the markets for its products and technology, as well
as its competitors within such markets, will continue to change as the
rightsizing trend shifts customer buying patterns to distributed systems
employing multiple-platform networks. In addition, improvements in products
introduced, or to be introduced, by Intel Corporation, Apple Computer Inc.,
Motorola, Inc. and IBM, coupled with enhanced operating system software
introduced by Microsoft Corporation and others, are expected to improve the
characteristics of certain networked personal computer solutions.
9
<PAGE> 10
These developments are expected to provide competitive pressure, particularly
at the low end of the Company's product range, where customers are more price
sensitive and the systems environment is less complex. The Company's future
operating results will depend, in part, on its ability to compete in
microprocessor technology and operating system software.
Sun operates in an industry marked by rapidly changing technology and
increasing competition. Therefore, the Company's future operating results will
also depend to a considerable extent on its ability to rapidly and continuously
develop, introduce and deliver in quantity new hardware and software products
that offer its customers enhanced performance at competitive prices. Inherent
in this process are a number of risks. The development of new, high performance
computer products is a complex and uncertain process requiring high levels of
innovation from both the Company's designers and those of its suppliers, as
well as accurate anticipation of customer requirements and technological
trends. Once a hardware product is developed, the Company must rapidly bring it
into volume manufacturing, a process that requires accurate forecasting of both
volumes and configurations, among other things, in order to achieve acceptable
yields and costs. The Company is increasingly dependent on the ability of its
suppliers to deliver advanced components required for the timely introduction
of new products and, if necessary, makes advance payments under contracts with
certain of its suppliers. The failure of any of these suppliers to deliver
components on time could result in a significant adverse impact on the
Company's operating results. The production of sufficient quantities of
advanced components on a timely basis entails both design risk and
manufacturing risk. The inability to secure enough components to build
products, including new products, in the quantities and configurations
required, or to produce, test and deliver sufficient products to meet demand in
a timely manner, would adversely affect the Company's net revenues and
operating results. The production and introduction of new or enhanced products
also requires the Company to manage the transition from older, displaced
products in order to minimize disruptions in customer ordering patterns and
excessive levels of older product inventory and to ensure that adequate
supplies of new products can be delivered to meet customer demand. The ability
of the Company to match supply and demand is further complicated by the need to
take pricing actions, which may result in the Company not being able to
correctly anticipate the demand for the mix of products following those pricing
actions. Because the Company is continuously engaged in this product
development and transition process, its operating results may be subject to
considerable fluctuation, particularly when measured on a quarterly basis.
Generally, the computer systems sold by Sun are the result of both hardware and
software development, so that delays in software development can delay the
ability of the Company to ship new hardware products. In addition, adoption of
a new release of an operating system, such as the Solaris 2 operating
environment, typically requires effort on the part of the customer as well as
software porting by software vendors providing applications. As a result, the
timing of conversion to a new release is inherently unpredictable. Moreover,
delays in adoption of a new release of an operating system by customers can
limit the acceptability of hardware products tied to that release. Such delays
could adversely affect the future operating results of the Company.
The Company's operating results will also be affected by the volume, mix and
timing of orders received during a period and by conditions both in the
computer industry and in the general economy, such as recessionary periods,
political instability, changes in trade policies and fluctuations in interest
or currency exchange rates. As the Company has reduced delivery lead times,
backlog levels have declined as a percentage of revenue. Increasingly, the
Company must generate a higher percentage of revenue from new order bookings in
the same fiscal period. Seasonality also affects the Company's operating
results, particularly in the first quarter of each fiscal year. In addition,
the Company's operating expenses are increasing as the Company continues to
expand its operations, and future operating results will be adversely affected
if revenues do not increase accordingly. The Company expects to continue
efforts to achieve additional operating efficiencies through the continual
review and improvement of business processes and cycle times. In connection
with these efforts, the Company is continuously engaged in the process of
managing the mix and level of its workforce.
LIQUIDITY AND CAPITAL RESOURCES
Total assets at March 27, 1994 increased by approximately $83.1 million from
June 30, 1993, due principally to increases in accounts receivable ($175.6
million) and other assets, net ($100.3 million) offset by net decreases in
cash, cash equivalents and short-term investments ($227.9 million). Cash
decreased primarily due to the completion in November 1993 of the planned
repurchase of approximately 10 million shares of the Company's common stock.
10
<PAGE> 11
Accounts receivable increased due primarily to a longer collection cycle
in the third quarter of fiscal 1994 when compared with the fourth quarter
of fiscal 1993, resulting in days sales outstanding increasing to 60 days from
45 days. The increase in other assets, net is principally due to an agreement
entered into with Novell, Inc. in the third quarter of fiscal 1994 that has,
among other things, eliminated substantially all of the Company's royalty
obligations for Unix-based licensing and released distribution and licensing
restrictions for most Unix-based operating system products. The one-time
payment of approximately $80 million related to the agreement was made in the
fourth quarter of fiscal 1994.
Total liabilities increased approximately $176.0 million from June 30, 1993,
due principally to increases in accrued liabilities ($189.3 million) and
accounts payable ($87.1 million), offset by smaller decreases in short-term
borrowings, other current liabilities and long-term debt and other obligations.
The increase in accrued liabilities is primarily the result of payments due
under the Novell agreement and other contractual obligations. Accounts payable
increased principally as a result of increased inventory purchases in support
of new product introductions. Long-term debt and other obligations decreased
as a result of income tax payments made and scheduled debt repayments.
At March 27, 1994, the Company's primary sources of liquidity consisted of
cash, cash equivalents and short-term investments of $911 million; uncommitted
lines of credit available to the Company's international subsidiaries totalling
approximately $431 million, of which approximately $384 million was available;
and a revolving credit facility with banks aggregating $300 million, all of
which was available subject to compliance with certain covenants. The Company
believes that the liquidity provided by existing cash and short-term investment
balances and the borrowing arrangements described above will be sufficient to
meet the Company's capital requirements through the remainder of calendar 1994.
However, the Company believes the level of financial resources is a significant
competitive factor in its industry and may choose at any time to raise
additional capital through debt or equity financings to strengthen its
financial position, facilitate growth and provide the Company with additional
flexibility to take advantage of business opportunities that may arise.
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 5 - OTHER INFORMATION
CHANGE OF EXECUTIVE OFFICERS
On February 16, 1994, J. Phillip Samper was appointed President of Sun
Microsystems Computer Corporation (SMCC), the Company's computer systems
subsidiary, and Corporate Executive Officer of the Company. Accordingly, Mr.
Samper resigned from the Company's Board of Directors effective simultaneously
with such appointment. Mr. Samper replaced Kevin C. Melia who was the Acting
President of SMCC. Mr. Melia continues to serve as a Vice President and
Corporate Executive Officer of the Company, serving in a capacity to be
determined by the Company. In addition, George Reyes was appointed as Vice
President and Corporate Controller of the Company effective April 7, 1994. Mr.
Reyes replaces Michael E. Lehman who was serving temporarily in such capacity
in addition to his continuing role as Vice President and Chief Financial
Officer of the Company.
SCHEDULE OF SALES BY EXECUTIVE OFFICERS DURING THE QUARTER
The following is a summary of all sales of the Company's Common Stock by the
Company's executive officers who are subject to Section 16 of the Securities
Exchange Act of 1934, as amended, during the fiscal quarter ended March 27,
1994:
<TABLE>
<CAPTION>
OFFICER DATE PRICE NUMBER OF
SHARES SOLD
=================================================================
<S> <C> <C> <C>
Masood A. Jabbar 1/25/94 $25.75 2,000
1/27/94 $27.00 2,000
1/27/94 $26.00 2,000
Lawrence W. Hambly 2/15/94 $26.1875 2,000
William N. Joy 2/3/94 $26.75 60,000
Michael E. Lehman 2/18/94 $25.6875 800
2/18/94 $25.6875 347
Michael H. Morris 2/28/94 $27.315 10,000
Joseph P. Roebuck 2/4/94 $26.125 5,000
Eric E. Schmidt 2/18/94 $26.125 5,000
2/25/94 $26.75 5,000
</TABLE>
12
<PAGE> 13
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS
11.0 Statement re: Computation of Earnings Per Share
B) REPORTS ON FORM 8-K
A report on Form 8-K was filed on April 1, 1994, reporting the Company's
preliminary unit and revenue growth estimates for its third quarter ended
March 27, 1994 . A report on Form 8-K was filed on April 7, 1994, reporting
the Company's earnings results for the third quarter ended March 27, 1994.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
SUN MICROSYSTEMS, INC.
BY
/s/ Michael E. Lehman
Michael E. Lehman
Vice President and Chief Financial Officer
/s/ George Reyes
George Reyes
Vice President and Corporate Controller,
Chief Accounting Officer
Dated: May 10, 1994
14
<PAGE> 15
EXHIBITS TO REPORT
ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 27, 1994
15
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------- ----------- ----
<S> <C> <C>
11.0 Statement re: Computation of Earnings Per Share 17
</TABLE>
16
<PAGE> 1
EXHIBIT 11.0
SUN MICROSYSTEMS, INC.
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
(unaudited)
(in thousands, except per share amounts)
PRIMARY
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------- ---------------------
March 27, March 28, March 27, March 28,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income $ 57,481 $51,663 $ 117,911 $80,589
======== ======= ========= =======
Weighted average common
shares outstanding 93,739 105,624 95,618 102,110
Common-equivalent shares
attributable to stock options
and warrants 1,781 3,404 1,697 3,046
-------- ------- --------- -------
Total common and common-
equivalent shares outstanding 95,520 109,028 97,315 105,156
======== ======= ========= =======
Net income per common and
common-equivalent share $ 0.60 $ 0.47 $ 1.21 $ 0.77
</TABLE> ====== ====== ====== ======
17
<PAGE> 2
EXHIBIT 11.0 (continued)
SUN MICROSYSTEMS, INC.
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
(unaudited)
(in thousands, except per share amounts)
FULLY DILUTED
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------- -----------------------
March 27, March 28, March 27, March 28,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income $ 57,481 $51,663 $ 117,911 $80,589
Adjustment for interest
assuming conversion of
5 1/4% subordinated
debentures, net of taxes - - - 2,324
-------- ------- --------- -------
Adjusted net income $ 57,481 $51,663 $ 117,911 $82,913
======== ======= ========= =======
Weighted average common
shares outstanding 93,739 105,624 95,618 102,110
Common-equivalent shares
attributable to:
Stock options and warrants 1,810 3,554 1,783 3,276
Conversion of 5 1/4%
subordinated debentures - - - 2,440
-------- ------- --------- -------
Total common and common-
equivalent shares outstanding 95,549 109,178 97,401 107,826
======== ======= ========= =======
Net income per common and
common-equivalents share $ 0.60 $ 0.47 $ 1.21 $ 0.77
</TABLE> ====== ====== ====== ======
18
