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

MEDIA AND INDUSTRY ANALYST CONTACT:
May Goh Petry (650) 786-0034
may.petry@sun.com

SUN MICROSYSTEMS REPORTS SLIGHT PROFIT IN
FOURTH FISCAL QUARTER AND REPORTS FULL YEAR RESULTS

SANTA CLARA, Calif. — July 22, 2003 — Sun Microsystems, Inc. (NASDAQ: SUNW) a leader in systems and solutions that make the Net work, reported results today for its fiscal fourth quarter and full fiscal year which ended June 30, 2003.

Revenues for the fourth quarter were $2.982 billion, a decline of 13 percent as compared with $3.420 billion for the fourth quarter of fiscal 2002. Total gross margin as a percent of revenues was 43.7 percent, an increase of 2.4 percentage points as compared with the fourth quarter of fiscal 2002. Net income for the fourth quarter of fiscal 2003 was $12 million or zero cents per share compared with a net income of $61 million or a net income of $.02 per share for the fourth quarter of fiscal 2002.

Cash generated from operating activities was $335 million for the quarter, and the balance of cash and marketable securities was over $5.7 billion.

For the full 2003 fiscal year, Sun reported revenues of $11.434 billion, a decline of 8.5 percent as compared with $12.496 billion for the full 2002 fiscal year. Total gross margin as a percent of revenues was 43.2 percent, an increase of 3.9 percentage points as compared with the 2002 fiscal year. The net loss for fiscal year 2003 was $2.378 billion or a net loss of $.75 per share as

compared with a net loss of $587 million or a net loss per share of $.18 for the 2002 fiscal year. The net loss for fiscal year 2003 included a non-cash impairment expense of $2.125 billion.

Steve McGowan, Sun’s Chief Financial Officer and Executive Vice President, Corporate Resources said, “We’re pleased we generated $1 billion in cash from operations in fiscal 2003 and ended the year with a cash and marketable securities balance in excess of $5.7 billion. During fiscal 2003, we significantly reduced costs in the company. For example, we reduced SG&A expenses by nearly $500 million and improved gross margin by almost 4 percentage points on an annual basis. We also reduced capital expenditures and inventory by almost $200 million each while maintaining our nearly $2 billion investment in R&D, the lifeblood of our company.”

“We’ve made solid progress throughout the fiscal year, delivering on key initiatives such as NC03, low cost computing, N1(TM) and Project Orion. At the same time, we’ve driven internal costs down while continuing our investment in R&D,” added Scott McNealy, Sun’s Chairman, President, and CEO. “We enter the new fiscal year with an intense focus toward growing revenue, improving profitability and maintaining positive cash flow from operations. We’re well positioned to take full advantage of market opportunity over the long-term with a strong pipeline of innovations, one of the world’s largest partner networks, and an intense competitive drive to deliver quality products and services with value to our customers and shareholders.”

Sun has scheduled a conference call today to discuss its earnings for the fourth quarter and full 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 Sun’s intense focus toward growing revenue, improving profitability and maintaining positive cash flow from operations and Sun’s being well positioned to take full advantage of market opportunity over the long-term with a strong pipeline of innovations, one of the world’s largest partner networks, and an intense competitive drive to deliver quality products and services with value to our customers and shareholders. 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, December 29, 2002, and March 30, 2003.

Sun, Sun Microsystems, the Sun logo, N1, and The Network Is The Computer are trademarks or registered trademarks of Sun Microsystems, Inc. in the United States and in 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, 2003			June 30, 2002			June 30, 2003			June 30, 2002
Net revenues:
	Products			$	2,003		$	2,507		$	7,793		$	9,093
	Services				979			913			3,641			3,403
		Total net revenues			2,982			3,420			11,434			12,496
Cost of sales:
	Cost of sales — products				1,110			1,476			4,342			5,506
	Cost of sales — services				568			530			2,150			2,074
		Total cost of sales			1,678			2,006			6,492			7,580
			Gross margin		1,304			1,414			4,942			4,916
Operating expenses:
	Research and development				482			463			1,837			1,832
	Selling, general and administrative				826			894			3,329			3,806
	Restructuring charges				(6	)		(4	)		371			517
	Purchased in-process research and development				—			—			4			3
	Impairment of goodwill and other intangible assets				—			—			2,125			6
		Total operating expenses			1,302			1,353			7,666			6,164
			Operating income (loss)		2			61			(2,724	)		(1,248	)
Loss on equity investments, net					(26	)		(18	)		(84	)		(99	)
Interest income, net					45			47			155			299
	Income (loss) before income taxes				21			90			(2,653	)		(1,048	)
Provision (benefit) for income taxes					9			29			(275	)		(461	)
Net income (loss)				$	12		$	61		$	(2,378	)	$	(587	)
Net income (loss) per common share — basic and diluted				$	0.00		$	0.02		$	(0.75	)	$	(0.18	)
Shares used in the calculation of net income (loss) per common share — basic					3,219			3,245			3,190			3,242
Shares used in the calculation of net income (loss) per common share — diluted					3,251			3,309			3,190			3,242
Calculation of net income (loss) excluding special items:
	Net income (loss) per above			$	12		$	61		$	(2,378	)	$	(587	)
	Purchased in-process research and development				—			—			4			3
	Restructuring charges				(6	)		(4	)		371			517
	Loss on equity investments, net				26			18			84			99
	Impairment expense				—			—			2,125			6
	Related tax effects				(8	)		(6	)		(239	)		(246	)
Net income (loss) excluding special items				$	24		$	69		$	(33	)	$	(208	)
Net income (loss) excluding special items per common share — basic and diluted				$	0.01		$	0.02		$	(0.01	)	$	(0.06	)
Shares used in the calculation of net income (loss) excluding special items per common share — basic					3,219			3,245			3,190			3,242
Shares used in the calculation of net income (loss) excluding special items per common share — diluted					3,251			3,309			3,190			3,242

SUN MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

			June 30, 2003		June 30, 2002*
			(unaudited)
ASSETS
Current assets:
	Cash and cash equivalents		$	2,015	$	2,024
	Short-term marketable debt securities			1,047		861
	Accounts receivable, net			2,381		2,745
	Inventories			416		591
	Deferred and prepaid tax assets			569		709
	Prepaid expenses and other current assets			787		847
		Total current assets		7,215		7,777
Property, plant and equipment, net				2,267		2,453
Long-term marketable debt securities				2,679		2,979
Goodwill				326		2,182
Other acquisition-related intangible assets, net				91		104
Other non-current assets, net				1,425		1,027
				14,003		16,522
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Current portion of long-term debt and short-term borrowings		$	—	$	205
	Accounts payable			903		1,044
	Accrued payroll-related liabilities			479		538
	Accrued liabilities and other			1,027		1,201
	Deferred revenues			1,841		1,785
	Warranty reserve			267		284
		Total current liabilities		4,517		5,057
Long-term debt				1,531		1,449
Other non-current obligations				413		215
Total stockholders’ equity				7,542		9,801
			$	14,003	$	16,522

*Derived from audited financial statements

SUN MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)

				Fiscal Years Ended
				June 30, 2003			June 30, 2002*
Cash flows from operating activities:
	Net loss			$	(2,378	)	$	(587	)
		Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation and amortization			918			970
		Amortization of other acquisition-related intangible assets and unearned equity compensation			110			122
		Impairment of goodwill and other intangible assets			2,125			6
		Tax benefits from employee stock plans			9			98
		Deferred taxes			(276	)		(673	)
		Loss on equity investments, net			84			99
		Purchased in-process research and development			4			3
		Changes in operating assets and liabilities:
			Accounts receivable, net		387			211
			Inventories		181			458
			Prepaid and other assets		31			383
			Accounts payable		(133	)		(7	)
			Other liabilities		(25	)		(203	)
Net cash provided by operating activities					1,037			880
Cash flows from investing activities:
		Purchases of marketable debt securities			(6,958	)		(14,921	)
		Proceeds from sales of marketable debt securities			6,476			15,377
		Proceeds from maturities of marketable debt securities			578			377
		Purchases of equity investments			(21	)		(41	)
		Proceeds from sales of equity investments			17			7
		Acquisition of property, plant and equipment, net			(373	)		(559	)
		Acquisition of spare parts and other assets			(217	)		(152	)
		Payments for acquisitions, net of cash acquired			(30	)		(49	)
Net cash provided by (used in) investing activities					(528	)		39
Cash flows from financing activities:
		Acquisition of treasury stock			(499	)		(591	)
		Proceeds from issuance of common stock, net			182			237
		Principal payments on borrowings and other obligations			(201	)		(13	)
Net cash used in financing activities					(518	)		(367	)
Net increase (decrease) in cash and cash equivalents					(9	)		552
Cash and cash equivalents, beginning of year					2,024			1,472
Cash and cash equivalents, end of year				$	2,015		$	2,024

*  Certain amounts have been reclassified to conform to the current year presentation.

SUN MICROSYSTEMS, INC.

OPERATIONS ANALYSIS — CONSOLIDATED
(unaudited)

			FY 2003															FY 2002															FY 2001
INCOME STATEMENT
(in millions except per share amounts)			Q103			Q203			Q303			Q403			FY03			Q102			Q202			Q302			Q402			FY02			Q401			FY01
NET REVENUES
Products				1,880			2,013			1,897			2,003			7,793			2,057			2,260			2,269			2,507			9,093			3,093			15,015
Services				867			902			893			979			3,641			804			848			838			913			3,403			902			3,235
TOTAL				2,747			2,915			2,790			2,982			11,434			2,861			3,108			3,107			3,420			12,496			3,995			18,250
		Growth vs. prior year (%)		-4.0	%		-6.2	%		-10.2	%		-12.8	%		-8.5	%		-43.3	%		-39.2	%		-24.1	%		-14.4	%		-31.5	%		-20.4	%		16.1	%
		Growth vs. prior quarter (%)		-19.7	%		6.1	%		-4.3	%		6.9	%					-28.4	%		8.6	%		0.0	%		10.1	%					-2.4	%
COST OF SALES
Products				1,093			1,118			1,021			1,110			4,342			1,287			1,437			1,306			1,476			5,506			1,790			7,960
Services				522			534			526			568			2,150			518			532			494			530			2,074			561			2,080
TOTAL				1,615			1,652			1,547			1,678			6,492			1,805			1,969			1,800			2,006			7,580			2,351			10,040
		% of revenue		58.8	%		56.7	%		55.4	%		56.3	%		56.8	%		63.1	%		63.4	%		57.9	%		58.7	%		60.7	%		58.8	%		55.0	%
GROSS MARGIN ($)
Products				787			895			876			893			3,451			770			823			963			1,031			3,587			1,303			7,055
		% of product revenue		41.9	%		44.5	%		46.2	%		44.6	%		44.3	%		37.4	%		36.4	%		42.4	%		41.1	%		39.4	%		42.1	%		47.0	%
Services				345			368			367			411			1,491			286			316			344			383			1,329			341			1,155
		% of service revenue		39.8	%		40.8	%		41.1	%		42.0	%		41.0	%		35.6	%		37.3	%		41.1	%		41.9	%		39.1	%		37.8	%		35.7	%
TOTAL				1,132			1,263			1,243			1,304			4,942			1,056			1,139			1,307			1,414			4,916			1,644			8,210
		% of revenue		41.2	%		43.3	%		44.6	%		43.7	%		43.2	%		36.9	%		36.6	%		42.1	%		41.3	%		39.3	%		41.2	%		45.0	%
R&D				437			451			467			482			1,837			473			428			468			463			1,832			543			2,016
		% of revenue		15.9	%		15.5	%		16.7	%		16.2	%		16.1	%		16.5	%		13.8	%		15.1	%		13.5	%		14.7	%		13.6	%		11.0	%
IN PROCESS R&D				0			4			0			0			4			3			0			0			0			3			5			77
		% of revenue		0.0	%		0.1	%		0.0	%		0.0	%		0.0	%		0.1	%		0.0	%		0.0	%		0.0	%		0.0	%		0.1	%		0.4	%
SG&A				882			830			791			826			3,329			961			966			985			894			3,806			1,074			4,445
		% of revenue		32.1	%		28.5	%		28.4	%		27.7	%		29.1	%		33.6	%		31.1	%		31.7	%		26.1	%		30.5	%		26.9	%		24.4	%
RESTRUCTURING CHARGES				24			357			(4	)		(6	)		371			14			511			(4	)		(4	)		517			75			75
		% of revenue		0.9	%		12.2	%		-0.1	%		-0.2	%		3.2	%		0.5	%		16.4	%		-0.1	%		-0.1	%		4.1	%		1.9	%		0.4	%
IMPAIRMENT EXPENSE				0			2,125			0			0			2,125			0			0			6			0			6			1			1
		% of revenue		0.0	%		72.9	%		0.0	%		0.0	%		18.6	%		0.0	%		0.0	%		0.2	%		0.0	%		0.0	%		0.0	%		0.0	%
GOODWILL AMORTIZATION				0			0			0			0			0			0			0			0			0			0			125			285
		% of revenue		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		3.1	%		1.6	%
TOTAL OPERATING EXPENSES				1,343			3,767			1,254			1,302			7,666			1,451			1,905			1,455			1,353			6,164			1,823			6,899
		% of revenue		48.9	%		129.2	%		44.9	%		43.7	%		67.0	%		50.7	%		61.3	%		46.8	%		39.6	%		49.3	%		45.6	%		37.8	%
OPERATING INCOME (LOSS)				(211	)		(2,504	)		(11	)		2			(2,724	)		(395	)		(766	)		(148	)		61			(1,248	)		(179	)		1,311
		Operating margin		-7.7	%		-85.9	%		-0.4	%		0.1	%		-23.8	%		-13.8	%		-24.6	%		-4.8	%		1.8	%		-10.0	%		-4.5	%		7.2	%
Interest income, net				39			38			33			45			155			107			68			77			47			299			87			363
Loss on equity investments, net				(31	)		(11	)		(16	)		(26	)		(84	)		(19	)		(39	)		(23	)		(18	)		(99	)		(78	)		(90	)
PRETAX INCOME (LOSS)				(203	)		(2,477	)		6			21			(2,653	)		(307	)		(737	)		(94	)		90			(1,048	)		(170	)		1,584
		Pretax income margin		-7.4	%		-85.0	%		0.2	%		0.7	%		-23.2	%		-10.7	%		-23.7	%		-3.0	%		2.6	%		-8.4	%		-4.3	%		8.7	%
INCOME TAX PROVISION (BENEFIT)				(92	)		(194	)		2			9			(275	)		(127	)		(306	)		(57	)		29			(461	)		(82	)		603
TAX RATE (%)				45.5	%		7.8	%		44.0	%		44.0	%		10.4	%		41.5	%		41.5	%		60.8	%		11.3	%		44.0	%		48.3	%		38.1	%
Income (loss) before cumulative effect of change in accounting principle				(111	)		(2,283	)		4			12			(2,378	)		(180	)		(431	)		(37	)		61			(587	)		(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			12			(2,378	)		(180	)		(431	)		(37	)		61			(587	)		(88	)		927
		Growth vs. prior year (%)		38.3	%		-429.7	%		110.8	%		-80.3	%		-305.1	%		-139.5	%		-201.9	%		-127.2	%		169.3	%		-163.3	%		-112.2	%		-50.0	%
		Growth vs. prior quarter (%)		-282.0	%		-1956.8	%		100.2	%		200.0	%					-104.5	%		-139.4	%		91.4	%		264.9	%					-164.7	%
		Net income margin		-4.0	%		-78.3	%		0.1	%		0.4	%		-20.8	%		-6.3	%		-13.9	%		-1.2	%		1.8	%		-4.7	%		-2.2	%		5.1	%
EPS (Diluted) before cumulative effect of change in accounting principle				(0.04	)		(0.72	)		0.00			0.00			(0.75	)		(0.06	)		(0.13	)		(0.01	)		0.02			(0.18	)		(0.03	)		0.29
		Growth vs. prior year (%)		33.3	%		-453.8	%		100.0	%		-100.0	%		-316.7	%		-140.0	%		-208.3	%		-125.0	%		166.7	%		-162.1	%		-114.3	%		-47.3	%
		Growth vs. prior quarter (%)		-300.0	%		-1700.0	%		100.0	%		N/A						-100.0	%		-116.7	%		92.3	%		300.0	%					-175.0	%
EPS (Diluted) (Reported)				(0.04	)		(0.72	)		0.00			0.00			(0.75	)		(0.06	)		(0.13	)		(0.01	)		0.02			(0.18	)		(0.03	)		0.27
		Growth vs. prior year (%)		33.3	%		-453.8	%		100.0	%		-100.0	%		-316.7	%		-146.2	%		-208.3	%		-125.0	%		166.7	%		-166.7	%		-114.3	%		-50.9	%
		Growth vs. prior quarter (%)		-300.0	%		-1700.0	%		100.0	%		N/A						-100.0	%		-116.7	%		92.3	%		300.0	%					-175.0	%
SHARES (CSE)(Diluted)				3,168			3,181			3,218			3,251			3,190			3,240			3,239			3,245			3,309			3,242			3,248			3,417
OUTSTANDING SHARES				3,116			3,194			3,200			3,236			3,236			3,237			3,250			3,245			3,234			3,234			3,248			3,248
GAAP net income (loss)				(111	)		(2,283	)		4			12			(2,378	)		(180	)		(431	)		(37	)		61			(587	)		(88	)		927
	In-process research and development			0			4			0			0			4			3			0			0			0			3			5			77
	Restructuring charges			24			357			(4	)		(6	)		371			14			511			(4	)		(4	)		517			75			75
	Loss on equity investments, net			31			11			16			26			84			19			39			23			18			99			78			90
	Impairment expense			0			2,125			0			0			2,125			0			0			6			0			6			1			1
	Related tax effects			(22	)		(204	)		(5	)		(8	)		(239	)		(14	)		(218	)		(8	)		(6	)		(246	)		(60	)		(64	)
Net income (loss) excluding special items				(78	)		10			11			24			(33	)		(158	)		(99	)		(20	)		69			(208	)		11			1,106
		Growth vs. prior year (%)		50.6	%		110.1	%		155.0	%		-65.2	%		84.1	%		-134.6	%		-120.0	%		-113.8	%		527.3	%		-118.8	%		-98.3	%		-36.4	%
EPS (Diluted) excluding special items *				(0.02	)		0.00			0.00			0.01			(0.01	)		(0.05	)		(0.03	)		(0.01	)		0.02			(0.06	)		0.00			0.32
		Growth vs. prior year (%)		60.0	%		100.0	%		100.0	%		-50.0	%		83.3	%		-138.5	%		-121.4	%		-125.0	%		N/A			-118.8	%		-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.

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			FY 2003															FY 2002															FY 2001
(in millions)			Q103			Q203			Q303			Q403			FY03			Q102			Q202			Q302			Q402			FY02			Q401			FY01
REVENUE BY GEOGRAPHY
	UNITED STATES ($M)			1,242			1,267			1,212			1,328			5,049			1,347			1,436			1,439			1,714			5,936			1,902			8,777
		Growth vs. prior year (%)		-7.8	%		-11.8	%		-15.8	%		-22.5	%		-14.9	%		-50.5	%		-42.2	%		-13.9	%		-9.9	%		-32.4	%		-29.8	%		7.9	%
		Growth vs. prior quarter (%)		-27.5	%		2.0	%		-4.3	%		9.6	%					-29.2	%		6.6	%		0.2	%		19.1	%					13.8	%
	EUROPE ($M)			806			932			886			954			3,578			809			900			924			973			3,606			1,121			5,271
		Growth vs. prior year (%)		-0.4	%		3.6	%		-4.1	%		-2.0	%		-0.8	%		-38.6	%		-39.8	%		-30.9	%		-13.2	%		-31.6	%		-16.2	%		22.7	%
		Growth vs. prior quarter (%)		-17.2	%		15.6	%		-4.9	%		7.7	%					-27.8	%		11.2	%		2.7	%		5.3	%					-16.2	%
	JAPAN ($M)			250			243			243			200			936			287			292			278			203			1,060			361			1,711
		Growth vs. prior year (%)		-12.9	%		-16.8	%		-12.6	%		-1.5	%		-11.7	%		-32.2	%		-32.7	%		-43.6	%		-43.8	%		-38.0	%		7.1	%		27.3	%
		Growth vs. prior quarter (%)		23.2	%		-2.8	%		0.0	%		-17.7	%					-20.5	%		1.7	%		-4.8	%		-27.0	%					-26.8	%
	REST OF WORLD ($M)			449			473			449			500			1,871			418			480			466			530			1,894			611			2,491
		Growth vs. prior year (%)		7.4	%		-1.5	%		-3.6	%		-5.7	%		-1.2	%		-28.5	%		-31.6	%		-21.4	%		-13.3	%		-24.0	%		-3.6	%		28.0	%
		Growth vs. prior quarter (%)		-15.3	%		5.3	%		-5.1	%		11.4	%					-31.6	%		14.8	%		-2.9	%		13.7	%					3.0	%
	% of Total Revenue
	UNITED STATES (%)			45.2	%		43.5	%		43.4	%		44.5	%		44.2	%		47.1	%		46.2	%		46.3	%		50.1	%		47.5	%		47.6	%		48.1	%
	EUROPE (%)			29.3	%		32.0	%		31.8	%		32.0	%		31.3	%		28.3	%		29.0	%		29.7	%		28.5	%		28.9	%		28.1	%		28.9	%
	JAPAN (%)			9.1	%		8.3	%		8.7	%		6.7	%		8.2	%		10.0	%		9.4	%		8.9	%		5.9	%		8.5	%		9.0	%		9.4	%
	REST OF WORLD (%)			16.3	%		16.2	%		16.1	%		16.8	%		16.4	%		14.6	%		15.4	%		15.0	%		15.5	%		15.2	%		15.3	%		13.6	%
PRODUCTS AND SERVICES REVENUE
	COMPUTER SYSTEMS PRODUCTS ($M)			1,512			1,621			1,530			1,580			6,243			1,692			1,838			1,864			2,002			7,396			2,547			12,389
		Growth vs. prior year (%)		-10.6	%		-11.8	%		-17.9	%		-21.1	%		-15.6	%		-52.2	%		-48.8	%		-31.3	%		-21.4	%		-40.3	%		-29.3	%		12.7	%
		Growth vs. prior quarter (%)		-24.5	%		7.2	%		-5.6	%		3.3	%					-33.6	%		8.6	%		1.4	%		7.4	%					-6.2	%
	NETWORK STORAGE PRODUCTS ($M)			368			392			367			423			1,550			365			422			405			505			1,697			546			2,626
		Growth vs. prior year (%)		0.8	%		-7.1	%		-9.4	%		-16.2	%		-8.7	%		-54.5	%		-42.2	%		-26.1	%		-7.5	%		-35.4	%		-24.7	%		8.0	%
		Growth vs. prior quarter (%)		-27.1	%		6.5	%		-6.4	%		15.3	%					-33.2	%		15.6	%		-4.0	%		24.7	%					-0.4	%
	SUPPORT SERVICES ($M)			683			702			704			755			2,844			585			625			636			692			2,538			615			2,188
		Growth vs. prior year (%)		16.8	%		12.3	%		10.7	%		9.1	%		12.1	%		20.4	%		16.2	%		15.8	%		12.5	%		16.0	%		31.4	%		36.7	%
		Growth vs. prior quarter (%)		-1.3	%		2.8	%		0.3	%		7.2	%					-4.9	%		6.8	%		1.8	%		8.8	%					12.0	%
	PROFESSIONAL AND EDUCATION SERVICES ($M)			184			200			189			224			797			219			223			202			221			865			287			1,047
		Growth vs. prior year (%)		-16.0	%		-10.3	%		-6.4	%		1.4	%		-7.9	%		1.4	%		-14.2	%		-28.9	%		-23.0	%		-17.4	%		29.9	%		49.8	%
		Growth vs. prior quarter (%)		-16.7	%		8.7	%		-5.5	%		18.5	%					-23.7	%		1.8	%		-9.4	%		9.4	%					1.1	%
NET BOOKINGS ($M)				2,601			2,989			2,688			3,020			11,298			2,717			3,193			3,088			3,486			12,484			3,651			17,265
	Growth vs. prior year (%)			-4.3	%		-6.4	%		-13.0	%		-13.4	%		-9.5	%		-46.2	%		-35.5	%		-14.5	%		-4.5	%		-27.7	%		-35.3	%		3.2	%
	Growth vs. prior quarter (%)			-25.4	%		14.9	%		-10.1	%		12.4	%					-25.6	%		17.5	%		-3.3	%		12.9	%					1.1	%
BACKLOG ($M)				695			769			667			705			705			709			794			775			841			841			853			853

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		FY 2003															FY 2002															FY 2001
BALANCE SHEET
(in millions)		Q103			Q203			Q303			Q403			FY03			Q102			Q202			Q302			Q402			FY02			Q401			FY01
CASH & ST INVESTMENTS			2,632			2,606			2,636			3,062						1,938			1,853			2,384			2,885						1,859
ACCOUNTS RECEIVABLE, NET			2,133			2,291			2,296			2,381						2,183			2,274			2,407			2,745						2,955
	RAW MATERIALS		136			119			101			114						449			305			206			168						600
	WORK IN PROCESS		123			130			82			75						129			104			118			125						137
	FINISHED GOODS		250			235			214			227						267			215			230			298						312
TOTAL INVENTORIES			509			484			397			416						845			624			554			591						1,049
OTHER CURRENT ASSETS			1,629			1,447			1,302			1,356						2,291			2,512			2,348			1,556						2,071
TOTAL CURRENT ASSETS			6,903			6,828			6,631			7,215						7,257			7,263			7,693			7,777						7,934
PP&E, NET			2,408			2,321			2,265			2,267						2,744			2,596			2,512			2,453						2,697
GOODWILL			2,182			326			326			326						2,181			2,180			2,182			2,182						2,126
LT MARKETABLE DEBT SECURITIES			2,612			2,671			2,902			2,679						4,068			4,117			3,564			2,979						4,312
OTHER NON-CURRENT ASSETS, NET			1,271			1,323			1,421			1,516						1,112			997			923			1,131						1,112
TOTAL ASSETS			15,376			13,469			13,545			14,003						17,362			17,153			16,874			16,522						18,181
SHORT TERM BORROWINGS			0			0			0			0						9			217			207			205						3
ACCOUNTS PAYABLE			798			809			870			903						813			871			935			1,044						1,050
ACCRUED LIABILITIES & OTHER			1,873			1,900			1,792			1,773						2,078			2,147			2,135			2,023						2,266
DEFERRED REVENUES			1,643			1,589			1,662			1,841						1,701			1,626			1,609			1,785						1,827
TOTAL CURRENT LIABILITIES			4,314			4,298			4,324			4,517						4,601			4,861			4,886			5,057						5,146
LT DEBT			1,500			1,519			1,495			1,531						1,643			1,408			1,384			1,449						1,565
OTHER NON-CURRENT OBLIGATIONS			253			379			366			413						866			985			873			215						884
STOCKHOLDERS’ EQUITY			9,309			7,273			7,360			7,542						10,252			9,899			9,731			9,801						10,586
TOTAL LIABILITIES & SE			15,376			13,469			13,545			14,003						17,362			17,153			16,874			16,522						18,181
CASH FLOW			Q1			Q2			Q3			Q4			FY03			Q1			Q2			Q3			Q4			FY02			Q4			FY01
OPERATING ACTIVITIES			182			141			379			335			1,037			333			82			288			177			880			66			2,089
INVESTING ACTIVITIES			126			(293	)		(108	)		(253	)		(528	)		(534	)		17			269			287			39			490			(1,554	)
FINANCING ACTIVITIES			(696	)		73			10			95			(518	)		(250	)		85			(90	)		(112	)		(367	)		(371	)		(912	)
KEY METRICS			Q1			Q2			Q3			Q4			FY03			Q1			Q2			Q3			Q4			FY02			Q4			FY01
INVENTORY TURNS (hist.)			10.9			12.8			14.3			12.9						11.8			11.7			10.6			9.2						12.5
INVENTORY TURNS-PRODUCT ONLY (hist.)			7.8			9.0			9.9			8.6						9.1			8.7			7.8			6.7						9.9
DAYS SALES OUTSTANDING			70			71			74			72						69			66			70			72						67
DAYS PAYABLES OUTSTANDING			(44	)		(44	)		(51	)		(48	)					(41	)		(40	)		(47	)		(47	)					(40	)
DAYS OF SUPPLY ON HAND			28			26			23			22						42			29			28			27						40
L-T DEBT/EQUITY (%)			16.1	%		20.9	%		20.3	%		20.3	%					16.0	%		14.2	%		14.2	%		14.8	%					14.8	%
ROE (12 mo. avg.)(%)			-5.3	%		-26.3	%		-27.6	%		-30.2	%					2.8	%		-5.5	%		-7.3	%		-5.9	%					9.3	%
BOOK VALUE PER SHARE ($)			2.99			2.28			2.30			2.33						3.17			3.05			3.00			3.03						3.26
PRICE PER SHARE @ CLOSE			2.67			3.25			3.43			4.65						8.27			12.59			9.52			5.01						15.72
P/E RATIO (previous 4 qtrs)			N/A			N/A			N/A			N/A						118			N/A			N/A			N/A						60
ROA (12 mo. avg.)(%)			-3.1	%		-15.2	%		-15.8	%		-16.9	%					1.6	%		-3.2	%		-4.2	%		-3.5	%					5.3	%
DEPREC. & AMORT. ($M)			272			275			216			265						273			260			273			286						399
CAPITAL EXPENDITURES ($M)			83			98			57			135						213			122			126			98						350
NUMBER OF EMPLOYEES			39,001			36,460			35,745			36,068						43,260			40,093			39,473			39,433						43,683
REV. PER EMP. (12 mo.)($K)			317.5			334.3			332.1			317.0						371.4			350.7			331.1			316.9						417.8
GM PER EMP. (12mo.)($K)			128.0			140.3			141.3			137.0						158.0			138.0			130.4			124.7						187.9
OP EXP AS % OF REV (12mo.)			48.9	%		65.0	%		65.0	%		67.0	%					41.2	%		47.8	%		50.8	%		49.3	%					37.8	%
NET INCOME (LOSS) PER EMP. (12mo.)($K)			(13.3	)		(65.0	)		(65.2	)		(65.9	)					6.7			(14.0	)		(18.6	)		(14.9	)					21.2

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