8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

April 16, 2003

Date of Report (date of earliest event reported)

SUN MICROSYSTEMS, INC.

(Exact name of Registrant as specified in its charter)

Delaware	0-15086	94-2805249
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

4150 Network Circle
Santa Clara, CA 95054-1778

(Address of principal executive offices)

(650) 960-1300

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

TABLE OF CONTENTS

	Item 7. Financial Statements and Exhibits
	Item 9. Regulation FD Disclosure
SIGNATURE
EXHIBIT INDEX
EXHIBIT 99.1

Item 7.    Financial Statements and Exhibits

(c)	Exhibits
		The following exhibit is filed herewith:

Exhibit
Number	Description
99.1	Text of press release issued by Sun Microsystems, Inc., dated April 16, 2003, titled “Sun Microsystems Reports Slight Profit in Third Fiscal Quarter Results,” together with related Condensed Consolidated Statements of Operations, Balance Sheets and Cash Flows and Operations Analysis

Item 9. Regulation FD Disclosure

     In accordance with Securities and Exchange Commission Release No. 33-8216, the following information, which is intended to be furnished under Item 12, “Results of Operations and Financial Condition,” is instead being furnished under Item 9, “Regulation FD Disclosure.” This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

     On April 16, 2003, Sun Microsystems, Inc. (“Sun”) issued a press release regarding Sun’s financial results for its third fiscal quarter ended March 30, 2003. The full text of Sun's press release, together with the related Condensed Consolidated Statements of Operations Blanace Sheets and Cash Flows and Operations Analysis, are attached hereto as Exhibit 99.1.

     The Condensed Consolidated Statement of Operations and the Operations Analysis contain non-GAAP presentations of net income (loss) excluding special items and EPS (basic and diluted) excluding special items below the presentation of the net income (loss) and EPS (basic and diluted) in accordance with GAAP. The special items include: in-process research and development, restructuring charges, loss on equity investments, net, impairment expense and related tax effects. In-process research and development and goodwill impairment are primarily related to the effect of Sun's acquisition activity. Gain/loss on equity investments shows the effect of our investment portfolio management. These measures and the other special items presented are not necessarily representative of Sun's core operations and Sun management believes that presentation of these non-GAAP financial measures provides useful information to investors by illustrating the impact of the special items on Sun's net income (loss) and EPS (basic and diluted).

SIGNATURE

     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 hereunto duly authorized.

	SUN MICROSYSTEMS, INC.
Date: April 16, 2003	By:	/s/ Stephen T. McGowan
		Stephen T. McGowan Chief Financial Officer and Executive Vice President, Corporate Resources

EXHIBIT INDEX

Exhibit
Number	Description
99.1	Text of press release issued by Sun Microsystems, Inc., dated April 16, 2003, titled “Sun Microsystems Reports Slight Profit in Third Fiscal Quarter Results,” together with related Condensed Consolidated Statements of Operations, Balance Sheets and Cash Flows and Operations Analysis

EX-99.1 3 f89228exv99w1.htm EXHIBIT 99.1

Exhibit 99.1

INVESTOR CONTACT:
Jeff Boldt (650) 786-0333
jeff.boldt@sun.com

MEDIA CONTACT:
May Goh Petry (408) 276-6058
may.petry@sun.com

INDUSTRY ANALYST CONTACT:
Angela Grady (415) 972-0522
angela.grady@sun.com

SUN MICROSYSTEMS REPORTS SLIGHT PROFIT
IN THIRD FISCAL QUARTER RESULTS

SANTA CLARA, Calif. — April 16, 2003 — Sun Microsystems, Inc. (NASDAQ: SUNW), a leader in systems and solutions that make the Net work, reported results today for its fiscal third quarter which ended March 30, 2003.

Revenues for the third quarter were $2.790 billion, a decline of 10.2 percent as compared with $3.107 billion for the third quarter of fiscal 2002. Total gross margin as a percent of revenues was 44.6 percent, an increase of 2.5 percentage points as compared with the third quarter of fiscal 2002. Net income for the third quarter of fiscal 2003 was $4 million or zero cents per share compared with a net loss of $37 million or a net loss of $.01 per share for the third quarter of fiscal 2002. Cash generated from operating activities was $379 million for the quarter, and cash and marketable securities increased to over $5.5 billion as compared with approximately $5.3 billion in the second quarter of fiscal 2003.

Sun’s Chairman, President, and CEO Scott McNealy said, “Sun’s Network Computing strategy is resonating well as customers look to Sun to reduce complexity and cost through a singular focus on the Network Computer. CIOs are increasingly managing their diverse IT portfolio as a single enterprise architecture rather than a haphazard collection of distributed technologies. Sun is well positioned to address this growing need.”

McNealy added, “We made a number of strategic efforts in the areas of entry-level systems, SPARC® processor development and Utility and Managed services that strengthen our position. We expanded the reach of the leading 64-bit operating system,

launching Trusted Solaris^TM for x86 and SPARC platforms, and announcing Project Orion. These moves equip our customers to build and manage heterogeneous Network Computers so they can secure, simplify and reduce the costs of the infrastructure on which the business must run.”

Steve McGowan, Sun’s Chief Financial Officer and Executive Vice President, Corporate Resources said, “The company responded well to the continued economic challenges and earned a slight profit this quarter. Although revenue was down, we’re pleased with the increase in both our products and services gross margin percentages, the reduction in SG&A expenses of almost $200 million year over year, the continued investments in R&D, and the generation of $379 million in cash flow from operations. This is the 34th quarter in a row we generated positive cash flow from operations.”

McGowan added, “This quarter’s results indicate we continued to take the appropriate actions in areas such as cost improvements, productivity enhancements, discretionary expense management, and cash generation. These actions further strengthened our leverage capability for turning revenue into operating income. Our significant cash and marketable securities balance of over $5.5 billion and demonstrated ability to continue generating cash are solid evidence of Sun’s financial strength.”

Sun has scheduled a conference call today to discuss its earnings for the third quarter of fiscal year 2003 at 1:30 p.m. (PT), which is being broadcast live at www.sun.com/investors.

About Sun Microsystems, Inc.

Since its inception in 1982, a singular vision — “The Network Is The Computer^TM” — has propelled Sun Microsystems, Inc. (Nasdaq: SUNW) 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.

This news release contains forward-looking statements regarding the future results and performance of Sun Microsystems, Inc., including statements relating to the effect of Sun’s Network Computing strategy on Sun’s customers, the way CIOs are managing their diverse IT portfolios, Sun’s position and its ability to address growing needs, the effect of Sun’s recent strategic efforts on our customers’ ability to build and manage heterogeneous network computers, and Sun’s cash and marketable securities balance and demonstrated ability to continue generating cash as solid evidence of our financial strength. 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 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 and in technical advancements, increased competition, and the failure to manage costs and improve operating efficiencies. 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 and quarterly reports on Form 10-Q for the fiscal quarters ended September 29, 2002 and December 29, 2002.

Sun, Sun Microsystems, the Sun logo, Trusted 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.

SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in millions, except per share amounts)

				Three Months Ended						Nine Months Ended
				March 30, 2003			March 31, 2002			March 30, 2003			March 31, 2002
Net revenues:
	Products			$	1,897		$	2,269		$	5,790		$	6,586
	Services				893			838			2,662			2,490
		Total net revenues			2,790			3,107			8,452			9,076
Cost of sales:
	Cost of sales-products				1,021			1,306			3,232			4,030
	Cost of sales-services				526			494			1,582			1,544
		Total cost of sales			1,547			1,800			4,814			5,574
			Gross margin		1,243			1,307			3,638			3,502
Operating expenses:
	Research and development				467			468			1,355			1,369
	Selling, general and administrative				791			985			2,503			2,912
	Restructuring charges				(4	)		(4	)		377			521
	Purchased in-process research and development				—			—			4			3
	Impairment of goodwill and other intangible assets				—			6			2,125			6
		Total operating expenses			1,254			1,455			6,364			4,811
			Operating loss		(11	)		(148	)		(2,726	)		(1,309	)
Loss on equity investments, net					(16	)		(23	)		(58	)		(81	)
Interest income, net					33			77			110			252
	Income (loss) before income taxes				6			(94	)		(2,674	)		(1,138	)
Provision (benefit) for income taxes					2			(57	)		(284	)		(490	)
Net income (loss)				$	4		$	(37	)	$	(2,390	)	$	(648	)
Net income (loss) per common share-basic and diluted				$	—		$	(0.01	)	$	(0.75	)	$	(0.20	)
Shares used in the calculation of net income (loss) per common share – basic					3,193			3,245			3,181			3,242
Shares used in the calculation of net income (loss) per common share – diluted					3,218			3,245			3,181			3,242
Calculation of net income (loss) excluding special items:
	Net income(loss) per above			$	4		$	(37	)	$	(2,390	)	$	(648	)
	Purchased in-process research and development				—			—			4			3
	Restructuring charges				(4	)		(4	)		377			521
	Loss on equity investments, net				16			23			58			81
	Impairment expense				—			6			2,125			6
	Related tax effects				(5	)		(8	)		(231	)		(240	)
Net income (loss) excluding special items				$	11		$	(20	)	$	(57	)	$	(277	)
Net income (loss) excluding special items per common share – basic and diluted				$	—		$	(0.01	)	$	(0.02	)	$	(0.09	)
Shares used in the calculation of net income (loss) excluding special items per common share — basic					3,193			3,245			3,181			3,242
Shares used in the calculation of net income (loss) excluding special items per common share — diluted					3,218			3,245			3,181			3,242

SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)

			March 30, 2003		June 30, 2002
			(unaudited)
ASSETS
Current assets:
	Cash and cash equivalents		$	1,838	$	2,024
	Short-term marketable debt securities			798		861
	Accounts receivable, net			2,296		2,745
	Inventories			397		591
	Deferred and prepaid tax assets			700		709
	Prepaid expenses and other current assets			602		847
		Total current assets		6,631		7,777
Property, plant and equipment, net				2,265		2,453
Long-term marketable debt securities				2,902		2,979
Goodwill				326		2,182
Other acquisition-related intangible assets, net				106		104
Other non-current assets, net				1,315		1,027
			$	13,545	$	16,522
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Current portion of long-term debt and short-term borrowings		$	—	$	205
	Accounts payable			870		1,044
	Accrued payroll-related liabilities			542		538
	Accrued liabilities			981		1,201
	Deferred revenues and other			1,662		1,785
	Warranty reserve			269		284
		Total current liabilities		4,324		5,057
Long-term debt				1,495		1,449
Other non-current obligations				366		215
Total stockholders’ equity				7,360		9,801
			$	13,545	$	16,522

SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)

				Nine Months Ended
				March 30, 2003			March 31, 2002
Cash flows from operating activities:
	Net loss			$	(2,390	)	$	(648	)
		Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation and amortization			676			717
		Amortization of other acquisition-related intangible assets and unearned equity compensation			87			89
		Impairment of goodwill and other intangible assets			2,125			6
		Tax benefits from employee stock plans			9			58
		Deferred taxes			(284	)		(270	)
		Loss on equity investments, net			58			81
		Purchased in-process research and development			4			3
		Changes in operating assets and liabilities:
			Accounts receivable, net		468			548
			Inventories		206			495
			Prepaid and other assets		171			401
			Accounts payable		(168	)		(115	)
			Other liabilities		(260	)		(662	)
Net cash provided by operating activities					702			703
Cash flows from investing activities:
		Purchases of marketable debt securities			(4,643	)		(11,020	)
		Proceeds from sales of marketable debt securities			4,219			11,031
		Proceeds from maturities of marketable debt securities			564			349
		Purchases of equity investments			(18	)		(38	)
		Proceeds from sales of equity investments			3			7
		Acquisition of property, plant and equipment, net			(238	)		(461	)
		Acquisition of spare parts and other assets			(132	)		(67	)
		Payments for acquisitions, net of cash acquired			(30	)		(49	)
Net cash used in investing activities					(275	)		(248	)
Cash flows from financing activities:
		Acquisition of treasury stock			(499	)		(366	)
		Proceeds from issuance of common stock, net			87			121
		Principal payments on borrowings and other obligations			(201	)		(10	)
Net cash used in financing activities					(613	)		(255	)
Net increase (decrease) in cash and cash equivalents					(186	)		200
Cash and cash equivalents, beginning of period					2,024			1,472
Cash and cash equivalents, end of period				$	1,838		$	1,672

SUN MICROSYSTEMS, INC.
OPERATIONS ANALYSIS — CONSOLIDATED
(unaudited)

(in millions except per share amounts)		Q103			Q203			Q303			FY03 YTD			Q102			Q202			Q302			Q402			FY02			Q301			Q401			FY01
NET REVENUES
Products			1,880			2,013			1,897			5,790			2,057			2,260			2,269			2,507			9,093			3,262			3,093			15,015
Services			867			902			893			2,662			804			848			838			913			3,403			833			902			3,235
TOTAL			2,747			2,915			2,790			8,452			2,861			3,108			3,107			3,420			12,496			4,095			3,995			18,250
	Growth vs. prior year (%)		-4.0	%		-6.2	%		-10.2	%		-6.9	%		-43.3	%		-39.2	%		-24.1	%		-14.4	%		-31.5	%		2.2	%		-20.4	%		16.1	%
	Growth vs. prior quarter (%)		-19.7	%		6.1	%		-4.3	%					-28.4	%		8.6	%		0.0	%		10.1	%					-19.9	%		-2.4	%
COST OF SALES
Products			1,093			1,118			1,021			3,232			1,287			1,437			1,306			1,476			5,506			1,864			1,790			7,960
Services			522			534			526			1,582			518			532			494			530			2,074			539			561			2,080
TOTAL			1,615			1,652			1,547			4,814			1,805			1,969			1,800			2,006			7,580			2,403			2,351			10,040
	% of revenue		58.8	%		56.7	%		55.4	%		57.0	%		63.1	%		63.4	%		57.9	%		58.7	%		60.7	%		58.7	%		58.8	%		55.0	%
GROSS MARGIN ($)
Products			787			895			876			2,558			770			823			963			1,031			3,587			1,398			1,303			7,055
	% of product revenue		41.9	%		44.5	%		46.2	%		44.2	%		37.4	%		36.4	%		42.4	%		41.1	%		39.4	%		42.9	%		42.1	%		47.0	%
Services			345			368			367			1,080			286			316			344			383			1,329			294			341			1,155
	% of service revenue		39.8	%		40.8	%		41.1	%		40.6	%		35.6	%		37.3	%		41.1	%		41.9	%		39.1	%		35.3	%		37.8	%		35.7	%
TOTAL			1,132			1,263			1,243			3,638			1,056			1,139			1,307			1,414			4,916			1,692			1,644			8,210
	% of revenue		41.2	%		43.3	%		44.6	%		43.0	%		36.9	%		36.6	%		42.1	%		41.3	%		39.3	%		41.3	%		41.2	%		45.0	%
R&D			437			451			467			1,355			473			428			468			463			1,832			486			543			2,016
	% of revenue		15.9	%		15.5	%		16.7	%		16.0	%		16.5	%		13.8	%		15.1	%		13.5	%		14.7	%		11.9	%		13.6	%		11.0	%
IN PROCESS R&D			0			4			0			4			3			0			0			0			3			1			5			77
	% of revenue		0.0	%		0.1	%		0.0	%		0.0	%		0.1	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.1	%		0.4	%
SG&A			882			830			791			2,503			961			966			985			894			3,806			948			1,074			4,445
	% of revenue		32.1	%		28.5	%		28.4	%		29.6	%		33.6	%		31.1	%		31.7	%		26.1	%		30.5	%		23.2	%		26.9	%		24.4	%
RESTRUCTURING CHARGES			24			357			(4	)		377			14			511			(4	)		(4	)		517			0			75			75
	% of revenue		0.9	%		12.2	%		-0.1	%		4.5	%		0.5	%		16.4	%		-0.1	%		-0.1	%		4.1	%		0.0	%		1.9	%		0.4	%
IMPAIRMENT EXPENSE			0			2,125			0			2,125			0			0			6			0			6			0			1			1
	% of revenue		0.0	%		72.9	%		0.0	%		25.1	%		0.0	%		0.0	%		0.2	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
GOODWILL AMORTIZATION			0			0			0			0			0			0			0			0			0			105			125			285
	% of revenue		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		2.6	%		3.1	%		1.6	%
TOTAL OPERATING EXPENSES			1,343			3,767			1,254			6,364			1,451			1,905			1,455			1,353			6,164			1,540			1,823			6,899
	% of revenue		48.9	%		129.2	%		44.9	%		75.3	%		50.7	%		61.3	%		46.8	%		39.6	%		49.3	%		37.6	%		45.6	%		37.8	%
OPERATING INCOME (LOSS)			(211	)		(2,504	)		(11	)		(2,726	)		(395	)		(766	)		(148	)		61			(1,248	)		152			(179	)		1,311
	Operating margin		-7.7	%		-85.9	%		-0.4	%		-32.3	%		-13.8	%		-24.6	%		-4.8	%		1.8	%		-10.0	%		3.7	%		-4.5	%		7.2	%
Interest income, net			39			38			33			110			107			68			77			47			299			110			87			363
Loss on equity investments, net			(31	)		(11	)		(16	)		(58	)		(19	)		(39	)		(23	)		(18	)		(99	)		(13	)		(78	)		(90	)
PRETAX INCOME (LOSS)			(203	)		(2,477	)		6			(2,674	)		(307	)		(737	)		(94	)		90			(1,048	)		249			(170	)		1,584
	Pretax income margin		-7.4	%		-85.0	%		0.2	%		-31.6	%		-10.7	%		-23.7	%		-3.0	%		0.6	%		-8.4	%		6.1	%		-4.2	%		8.7	%
INCOME TAX PROVISION (BENEFIT)			(92	)		(194	)		2			(284	)		(127	)		(306	)		(57	)		29			(461	)		113			(82	)		603
TAX RATE (%)			45.5	%		7.8	%		44.0	%		10.6	%		41.5	%		41.5	%		60.8	%		11.3	%		44.0	%		45.4	%		48.3	%		38.1	%
Income (loss) before cumulative effect of change in accounting principle			(111	)		(2,283	)		4			(2,390	)		(180	)		(431	)		(37	)		61			(587	)		136			(88	)		981
Cumulative effect of change in accounting principle			0			0			0			0			0			0			0			0			0			0			0			(54	)
NET INCOME (LOSS) (Reported)			(111	)		(2,283	)		4			(2,390	)		(180	)		(431	)		(37	)		61			(587	)		136			(88	)		927
	Growth vs. prior year (%)		38.3	%		-429.7	%		110.8	%		-268.8	%		-139.5	%		-201.9	%		-127.3	%		169.3	%		-163.3	%		-73.3	%		-112.2	%		-50.0	%
	Growth vs. prior quarter (%)		-282.0	%		-1956.8	%		100.2	%					-104.5	%		-139.4	%		91.4	%		264.9	%					-67.9	%		-164.7	%
	Net income margin		-4.0	%		-78.3	%		0.1	%		-28.3	%		-6.3	%		-13.9	%		-1.2	%		1.8	%		-4.7	%		3.3	%		-2.2	%		5.1	%
EPS (Diluted) before cumulative effect of change in accounting principle			(0.04	)		(0.72	)		0.00			(0.75	)		(0.06	)		(0.13	)		(0.01	)		0.02			(0.18	)		0.04			(0.03	)		0.29
	Growth vs. prior year (%)		33.3	%		-453.8	%		100.0	%		-275.0	%		-140.0	%		-208.3	%		-125.0	%		166.7	%		-165.5	%		-73.3	%		-114.3	%		-47.3	%
	Growth vs. prior quarter (%)		-300.0	%		-1700.0	%		100.0	%					-100.0	%		-116.7	%		92.3	%		300.0	%					-66.7	%		-175.0	%
EPS (Diluted) (Reported)			(0.04	)		(0.72	)		0.00			(0.75	)		(0.06	)		(0.13	)		(0.01	)		0.02			(0.18	)		0.04			(0.03	)		0.27
	Growth vs. prior year (%)		33.3	%		-453.8	%		100.0	%		-275.0	%		-146.2	%		-208.3	%		-125.0	%		166.7	%		-170.4	%		-73.3	%		-114.3	%		-50.0	%
	Growth vs. prior quarter (%)		-300.0	%		-1700.0	%		100.0	%					-100.0	%		-116.7	%		92.3	%		300.0	%					-66.7	%		-175.0	%
SHARES (CSE)(Diluted)			3,168			3,181			3,218			3,181			3,240			3,239			3,245			3,309			3,242			3,417			3,248			3,417
OUTSTANDING SHARES			3,116			3,194			3,200			3,200			3,237			3,250			3,245			3,234			3,234			3,258			3,248			3,248
GAAP net income (loss)			(111	)		(2,283	)		4			(2,390	)		(180	)		(431	)		(37	)		61			(587	)		136			(88	)		927
	In-process research and development		0			4			0			4			3			0			0			0			3			1			5			77
	Restructuring charges		24			357			(4	)		377			14			511			(4	)		(4	)		517			0			75			75
	Loss on equity investments, net		31			11			16			58			19			39			23			18			99			13			78			90
	Impairment expense		0			2,125			0			2,125			0			0			6			0			6			0			1			1
	Related tax effects		(22	)		(204	)		(5	)		(231	)		(14	)		(218	)		(8	)		(6	)		(246	)		(5	)		(60	)		(64	)
Net income (loss) excluding special items			(78	)		10			11			(57	)		(158	)		(99	)		(20	)		69			(208	)		145			11			1,106
	Growth vs. prior year (%)		50.6	%		110.1	%		155.0	%		79.4	%		-132.0	%		-120.0	%		-113.8	%		590.0	%		-123.1	%		-67.5	%		-98.3	%		-36.4	%
EPS (Diluted) excluding special items *			(0.02	)		0.00			0.00			(0.02	)		(0.05	)		(0.03	)		(0.01	)		0.02			(0.06	)		0.04			0.00			0.32
	Growth vs. prior year (%)		60.0	%		100.0	%		100.0	%		77.8	%		-138.5	%		-121.4	%		-125.0	%		N/A			-125.0	%		-69.2	%		-98.3	%		-37.3	%

• For the quarters ended June 30, 2001 and December 29, 2002, Sun used 3,383 shares and 3,205 shares to calculate the “Net income (loss) excluding special items per common share-diluted”, respectively. For all other periods, the number of shares used to calculate “EPS (Diluted) (Reported)” and “EPS (Diluted) excluding special items” were the same.

			FY 2003												FY 2002															FY 2001
(in millions)			Q103			Q203			Q303			FY03 YTD			Q102			Q202			Q302			Q402			FY02			Q301			Q401			FY01
REVENUE BY GEOGRAPHY
	UNITED STATES ($M)			1,242			1,267			1,212			3,721			1,347			1,436			1,439			1,714			5,936			1,671			1,902			8,777
		Growth vs. prior year (%)		-7.8	%		-11.8	%		-15.8	%		-11.9	%		-50.5	%		-42.2	%		-13.9	%		-9.9	%		-32.4	%		-13.0	%		-29.8	%		7.9	%
		Growth vs. prior quarter (%)		-27.5	%		2.0	%		-4.3	%					-29.2	%		6.6	%		0.2	%		19.1	%					-32.7	%		13.8	%
	EUROPE ($M)			806			932			886			2,624			809			900			924			973			3,606			1,338			1,121			5,271
		Growth vs. prior year (%)		-0.4	%		3.6	%		-4.1	%		-0.3	%		-38.6	%		-39.8	%		-30.9	%		-13.2	%		-31.6	%		16.4	%		-16.2	%		22.7	%
		Growth vs. prior quarter (%)		-17.2	%		15.6	%		-4.9	%					-27.8	%		11.2	%		2.7	%		5.3	%					-10.5	%		-16.2	%
	JAPAN ($M)			250			243			243			736			287			292			278			203			1,060			493			361			1,711
		Growth vs. prior year (%)		-12.9	%		-16.8	%		-12.6	%		-14.1	%		-30.6	%		-32.7	%		-44.2	%		-43.8	%		-38.0	%		20.5	%		7.1	%		27.3	%
		Growth vs. prior quarter (%)		23.2	%		-2.8	%		0.0	%					-20.5	%		1.7	%		-6.1	%		-26.0	%					13.6	%		-26.8	%
	REST OF WORLD ($M)			449			473			449			1,371			418			480			466			530			1,894			593			611			2,491
		Growth vs. prior year (%)		7.4	%		-1.5	%		-3.6	%		0.5	%		-28.5	%		-31.6	%		-20.5	%		-13.3	%		-24.0	%		12.5	%		-3.6	%		28.0	%
		Growth vs. prior quarter (%)		-15.3	%		5.3	%		-5.1	%					-31.6	%		14.8	%		-1.0	%		13.7	%					-15.5	%		3.5	%
% of Total Revenue
	UNITED STATES (%)			45.2	%		43.5	%		43.4	%		44.0	%		47.1	%		46.2	%		46.3	%		50.1	%		47.5	%		40.8	%		47.6	%		48.1	%
	EUROPE (%)			29.3	%		32.0	%		31.8	%		31.0	%		28.3	%		29.0	%		29.7	%		28.5	%		28.9	%		32.7	%		28.1	%		28.9	%
	JAPAN (%)			9.1	%		8.3	%		8.7	%		8.7	%		10.0	%		9.4	%		8.9	%		5.9	%		8.5	%		12.0	%		9.0	%		9.4	%
	REST OF WORLD (%)			16.3	%		16.2	%		16.1	%		16.2	%		14.6	%		15.4	%		15.0	%		15.5	%		15.2	%		14.5	%		15.3	%		13.6	%
NET BOOKINGS ($M)				2,601			2,989			2,688			8,278			2,717			3,193			3,088			3,486			12,484			3,612			3,651			17,265
		Growth vs. prior year (%)		-4.3	%		-6.4	%		-13.0	%		-8.0	%		-46.2	%		-35.5	%		-14.5	%		-4.5	%		-27.7	%		-11.2	%		-35.3	%		3.2	%
		Growth vs. prior quarter (%)		-25.4	%		14.9	%		-10.1	%					-25.6	%		17.5	%		-3.3	%		12.9	%					-27.1	%		1.1	%
BACKLOG ($M)				695			769			667			667			709			794			775			841			841			1,197			853			853

BALANCE SHEET		FY 2003												FY 2002															FY 2001
(in millions)		Q103			Q203			Q303			FY03 YTD			Q102			Q202			Q302			Q402			FY02			Q301			Q401			FY01
CASH & ST INVESTMENTS			2,632			2,606			2,636						1,938			1,853			2,384			2,885						2,229			1,859
ACCOUNTS RECEIVABLE, NET			2,133			2,291			2,296						2,183			2,274			2,407			2,745						2,913			2,955
	RAW MATERIALS		136			119			101						449			305			206			168						429			600
	WORK IN PROCESS		123			130			82						129			104			118			125						117			137
	FINISHED GOODS		250			235			214						267			215			230			298						399			312
TOTAL INVENTORIES			509			484			397						845			624			554			591						945			1,049
OTHER CURRENT ASSETS			1,629			1,447			1,302						2,291			2,512			2,348			1,556						1,687			2,071
TOTAL CURRENT ASSETS			6,903			6,828			6,631						7,257			7,263			7,693			7,777						7,774			7,934
PP&E, NET			2,408			2,321			2,265						2,744			2,596			2,512			2,453						2,564			2,697
GOODWILL			2,182			326			326						2,181			2,180			2,182			2,182						1,820			2,126
LT MARKETABLE DEBT SECURITIES			2,612			2,671			2,902						4,068			4,117			3,564			2,979						4,638			4,312
OTHER NON-CURRENT ASSETS, NET			1,271			1,323			1,421						1,112			997			923			1,131						1,161			1,112
TOTAL ASSETS			15,376			13,469			13,545						17,362			17,153			16,874			16,522						17,957			18,181
SHORT TERM BORROWINGS			0			0			0						9			217			207			205						2			3
ACCOUNTS PAYABLE			798			809			870						813			871			935			1,044						1,023			1,050
ACCRUED LIABILITIES			1,873			1,900			1,792						2,078			2,147			2,135			2,023						2,489			2,266
DEFERRED REVENUES & OTHER			1,643			1,589			1,662						1,701			1,626			1,609			1,785						1,756			1,827
TOTAL CURRENT LIABILITIES			4,314			4,298			4,324						4,601			4,861			4,886			5,057						5,270			5,146
LT DEBT			1,500			1,519			1,495						1,643			1,408			1,384			1,449						1,586			1,565
OTHER NON-CURRENT OBLIGATIONS			253			379			366						866			985			873			215						595			884
STOCKHOLDERS’ EQUITY			9,309			7,273			7,360						10,252			9,899			9,731			9,801						10,506			10,586
TOTAL LIABILITIES & SE			15,376			13,469			13,545						17,362			17,153			16,874			16,522						17,957			18,181
CASH FLOW			Q1			Q2			Q3		FY03 YTD				Q1			Q2			Q3			Q4		FY02				Q3			Q4		FY01
OPERATING ACTIVITIES			182			141			379			702			333			82			288			177			880			767			66			2,089
INVESTING ACTIVITIES			126			(293	)		(108	)		(275	)		(534	)		17			269			287			39			(424	)		490			(1,554	)
FINANCING ACTIVITIES			(696	)		73			10			(613	)		(250	)		85			(90	)		(112	)		(367	)		(459	)		(371	)		(912	)
KEY METRICS			Q1			Q2			Q3		FY03				Q1			Q2			Q3			Q4		FY02				Q3			Q4		FY01
INVENTORY TURNS (hist.)			10.9			12.8			14.3						11.8			11.7			10.6			9.2						13.4			12.5
INVENTORY TURNS-PRODUCT ONLY (hist.)			7.8			9.0			9.9						9.1			8.7			7.8			6.7						10.8			9.9
DAYS SALES OUTSTANDING			70			71			74						69			66			70			72						64			67
DAYS PAYABLES OUTSTANDING			(44	)		(44	)		(51	)					(41	)		(40	)		(47	)		(47	)					(38	)		(40	)
DAYS OF SUPPLY ON HAND			28			26			23						42			29			28			27						35			40
L-T DEBT/EQUITY (%)			16.1	%		20.9	%		20.3	%					16.0	%		14.2	%		14.2	%		14.8	%					15.1	%		14.8	%
ROE (12 mo. avg.)(%)			-5.3	%		-26.3	%		-27.6	%					2.8	%		-5.5	%		-7.3	%		-5.9	%					18.9	%		9.3	%
BOOK VALUE PER SHARE ($)			2.99			2.28			2.30						3.17			3.05			3.00			3.03						3.22			3.26
PRICE PER SHARE @ CLOSE			2.67			3.25			3.43						8.27			12.59			9.52			5.01						15.37			15.72
P/E RATIO (previous 4 qtrs)			N/A			N/A			N/A						118			N/A			N/A			N/A						31			60
ROA (12 mo. avg.)(%)			-3.1	%		-15.2	%		-15.8	%					1.6	%		-3.2	%		-4.2	%		-3.5	%					10.6	%		5.3	%
DEPREC. & AMORT. ($M)			272			275			216						273			260			273			285						373			399
CAPITAL EXPENDITURES ($M)			83			98			57						213			122			126			98						370			350
NUMBER OF EMPLOYEES			39,001			36,460			35,745						43,260			40,093			39,473			39,433						43,682			43,683
REV. PER EMP. (12 mo.)($K)			317.5			334.3			332.1						371.4			350.7			331.1			316.9						441.2			417.8
GM PER EMP. (12mo.)($K)			128.0			140.3			141.3						158.0			138.0			130.4			124.7						210.1			187.9
OP EXP AS % OF REV (12mo.)			48.9	%		65.0	%		65.0	%					41.2	%		47.8	%		50.8	%		49.3	%					35.1	%		37.8	%
NET INCOME PER EMP. (12mo.)($K)			(13.3	)		(65.0	)		(65.2	)					6.7			(14.0	)		(18.6	)		(14.9	)					39.7			21.2

-----END PRIVACY-ENHANCED MESSAGE-----

EX-99.1

Exhibit 99.1