Exhibit 99.1

SUN MICROSYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share amounts)

	Three Months Ended					Fiscal Years Ended
	June 30, 2009			June 30, 2008		June 30, 2009			June 30, 2008
Net revenues:
Products	$	1,482		$	2,386	$	6,704		$	8,618
Services		1,143			1,394		4,745			5,262
Total net revenues		2,625			3,780		11,449			13,880
Cost of sales:
Cost of sales-products		924			1,372		4,124			4,668
Cost of sales-services		637			735		2,594			2,757
Total cost of sales		1,561			2,107		6,718			7,425
Gross margin		1,064			1,673		4,731			6,455
Operating expenses:
Research and development		421			468		1,648			1,834
Selling, general and administrative		782			1,032		3,461			3,955
Restructuring charges		64			104		395			263
Purchased in-process research and development		—			6		3			31
Impairment of goodwill and intangible assets		15			—		1,460			—
Total operating expenses		1,282			1,610		6,967			6,083
Operating income (loss)		(218	)		63		(2,236	)		372
Gain on equity investments, net		—			10		8			32
Interest and other income (expense), net		1			16		(2	)		161
Settlement income		47			45		47			45
Income (loss) before income taxes		(170	)		134		(2,183	)		610
Provision (benefit) for income taxes		(23	)		46		51			207
Net income (loss)	$	(147	)	$	88	$	(2,234	)	$	403
Net income (loss) per common share-basic	$	(0.20	)	$	0.11	$	(2.99	)	$	0.50
Net income (loss) per common share-diluted	$	(0.20	)	$	0.11	$	(2.99	)	$	0.49
Shares used in the calculation of net income (loss) per common share-basic		749			772		747			809
Shares used in the calculation of net income (loss) per common share-diluted		749			776		747			822

SUN MICROSYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(in millions)

	June 30, 2009			June 30, 2008 (1)
ASSETS
Current assets:
Cash and cash equivalents	$	1,876		$	2,272
Short-term marketable debt securities		981			429
Accounts receivable, net		2,258			3,019
Inventories		566			680
Deferred and prepaid tax assets		188			216
Prepaid expenses and other current assets, net		995			1,218
Total current assets		6,864			7,834
Property, plant and equipment, net		1,616			1,611
Long-term marketable debt securities		204			609
Goodwill		1,743			3,215
Other acquisition-related intangible assets, net		269			565
Other non-current assets, net		536			506
	$	11,232		$	14,340
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,027		$	1,387
Accrued payroll-related liabilities		573			734
Accrued liabilities and other		983			1,105
Deferred revenues		2,341			2,236
Warranty reserve		143			206
Current portion of long-term debt		554			—
Total current liabilities		5,621			5,668
Long-term debt		695			1,265
Long-term deferred revenues		635			683
Other non-current obligations		976			1,136
Stockholders’ equity:
Preferred stock		—			—
Common stock and additional paid-in-capital		7,582			7,391
Treasury stock, at cost		(2,569	)		(2,726	)
Retained earnings (accumulated deficit)		(2,055	)		430
Accumulated other comprehensive income		347			493
Total stockholders’ equity		3,305			5,588
	$	11,232		$	14,340

(1) Derived from audited financial statements.

SUN MICROSYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

	Fiscal Years Ended
	June 30, 2009			June 30, 2008
Cash flows from operating activities:
Net income (loss)	$	(2,234	)	$	403
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		474			476
Amortization of acquisition-related intangible assets		296			310
Stock-based compensation expense		192			214
Purchased in-process research and development		3			31
Impairment of goodwill and intangible assets		1,460			—
(Gain) loss on investments and other, net		30			(68	)
Deferred taxes		(34	)		2
Changes in operating assets and liabilities:
Accounts receivable, net		757			(9	)
Inventories		113			(148	)
Prepaid and other assets, net		140			(165	)
Accounts payable		(364	)		(15	)
Other liabilities		(376	)		298
Net cash provided by operating activities		457			1,329
Cash flows from investing activities:
Decrease (increase) in restricted cash		(24	)		17
Purchases of marketable debt securities		(1,813	)		(1,333	)
Proceeds from sales of marketable debt securities		508			1,550
Proceeds from maturities of marketable debt securities		1,130			1,058
Proceeds from sales of equity investments, net		13			32
Purchases of property, plant and equipment, net		(466	)		(520	)
Proceeds from sales of property, plant and equipment		—			79
Payment for acquisitions, net of cash acquired		(55	)		(949	)
Net cash used in investing activities		(707	)		(66	)
Cash flows from financing activities:
Purchase of common stock under stock repurchase plans		(130	)		(2,764	)
Proceeds from issuance of options and ESPP purchases, net		51			177
Proceeds from issuance of convertible notes, net					—
Principal payments on borrowings and other obligations		(16	)		(24	)
Net cash used in financing activities		(95	)		(2,611	)
Effect of changes in exchange rates on cash and cash equivalents		(51	)		—
Net decrease in cash and cash equivalents		(396	)		(1,348	)
Cash and cash equivalents, beginning of period		2,272			3,620
Cash and cash equivalents, end of period	$	1,876			2,272

SUN MICROSYSTEMS, INC.

CALCULATION OF NON-GAAP NET INCOME (LOSS)

(in millions, except per share amounts)

	Three Months Ended
	June 30, 2009			June 30, 2008			March 29, 2009
Calculation of non-GAAP net income (loss):
GAAP income (loss)	$	(147	)	$	88		$	(201	)
Purchased in-process research and development		—			6			3
Amortization of acquisition related intangibles		72			86			72
Stock-based compensation		42			57			49
Restructuring charges		64			104			46
Impairment of goodwill and intangible assets		15			—			—
Settlement income		(47	)		(45	)		—
(Gain) loss on equity investments, net		—			(10	)		(3	)
Tax effect of non-GAAP adjustments		(20	)		(11	)		(18	)
Non-GAAP net income (loss)	$	(21	)	$	275		$	(52	)
Diluted non-GAAP net income (loss) per share	$	(0.03	)	$	0.35		$	(0.07	)
Shares used in the calculation of non-GAAP net income (loss) per common share – diluted		749			776			745

SUN MICROSYSTEMS, INC.

OPERATIONS ANALYSIS – CONSOLIDATED (UNAUDITED)

STATEMENTS OF OPERATIONS

	FY 2009										FY 2008										FY 2007
(in millions except per share amounts)	Q1		Q2		Q3		Q4		FY09		Q1		Q2		Q3		Q4		FY08		Q4		FY07
NET REVENUES
Products	1,764		1,939		1,519		1,482		6,704		1,980		2,249		2,003		2,386		8,618		2,492		8,771
Services	1,226		1,281		1,095		1,143		4,745		1,239		1,366		1,263		1,394		5,262		1,343		5,102
TOTAL	2,990		3,220		2,614		2,625		11,449		3,219		3,615		3,266		3,780		13,880		3,835		13,873
Growth vs. prior year (%)	-7.1	%	-10.9	%	-20.0	%	-30.6	%	-17.5	%	0.9	%	1.4	%	-0.5	%	-1.4	%	0.1	%	0.2	%	6.2	%
Growth vs. prior quarter (%)	-20.9	%	7.7	%	-18.8	%	0.4	%			-16.1	%	12.3	%	-9.7	%	15.7	%			16.8	%
COST OF SALES
Products	1,143		1,180		877		924		4,124		1,029		1,161		1,106		1,372		4,668		1,312		4,811
Services	646		690		621		637		2,594		629		701		692		735		2,757		711		2,797
TOTAL	1,789		1,870		1,498		1,561		6,718		1,658		1,862		1,798		2,107		7,425		2,023		7,608
% of revenue	59.8	%	58.1	%	57.3	%	59.5	%	58.7	%	51.5	%	51.5	%	55.1	%	55.7	%	53.5	%	52.8	%	54.8	%
GROSS MARGIN
Products	621		759		642		558		2,580		951		1,088		897		1,014		3,950		1,180		3,960
% of product revenue	35.2	%	39.1	%	42.3	%	37.7	%	38.5	%	48.0	%	48.4	%	44.8	%	42.5	%	45.8	%	47.4	%	45.1	%
Services gross margin	580		591		474		506		2,151		610		665		571		659		2,505		632		2,305
% of service revenue	47.3	%	46.1	%	43.3	%	44.3	%	45.3	%	49.2	%	48.7	%	45.2	%	47.3	%	47.6	%	47.1	%	45.2	%
TOTAL GROSS MARGIN	1,201		1,350		1,116		1,064		4,731		1,561		1,753		1,468		1,673		6,455		1,812		6,265
% of revenue	40.2	%	41.9	%	42.7	%	40.5	%	41.3	%	48.5	%	48.5	%	44.9	%	44.3	%	46.5	%	47.2	%	45.2	%
R&D	423		411		393		421		1,648		446		463		457		468		1,834		514		2,008
% of revenue	14.1	%	12.8	%	15.0	%	16.0	%	14.4	%	13.9	%	12.8	%	14.0	%	12.4	%	13.2	%	13.4	%	14.5	%
PURCHASED IN PROCESS R&D	—		—		3		—		3		—		1		24		6		31		—		—
% of revenue	0.0	%	0.0	%	0.1	%	0.0	%	0.0	%	0.0	%	0.0	%	0.7	%	0.2	%	0.2	%	0.0	%	0.0	%
SG&A	920		916		843		782		3,461		939		995		989		1,032		3,955		958		3,851
% of revenue	30.8	%	28.4	%	32.2	%	29.8	%	30.2	%	29.2	%	27.5	%	30.3	%	27.3	%	28.5	%	25.0	%	27.8	%
RESTRUCTURING CHARGES	63		222		46		64		395		113		32		14		104		263		15		97
% of revenue	2.1	%	6.9	%	1.8	%	2.4	%	3.5	%	3.5	%	0.9	%	0.4	%	2.8	%	1.9	%	0.4	%	0.7	%
IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS	1,445		—		—		15		1,460		—		—		—		—		—		—		—
% of revenue	48.3	%	0.0	%	0.0	%	0.6	%	12.8	%	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%
TOTAL OPERATING EXPENSES	2,851		1,549		1,285		1,282		6,967		1,498		1,491		1,484		1,610		6,083		1,487		5,956
% of revenue	95.4	%	48.1	%	49.2	%	48.8	%	60.9	%	46.5	%	41.2	%	45.4	%	42.6	%	43.8	%	38.8	%	42.9	%
OPERATING INCOME (LOSS)	(1,650	)	(199	)	(169	)	(218	)	(2,236	)	63		262		(16	)	63		372		325		309
Operating margin	-55.2	%	-6.2	%	-6.5	%	-8.3	%	-19.5	%	2.0	%	7.2	%	-0.5	%	1.7	%	2.7	%	8.5	%	2.2	%
Interest and other income (expense), net	(11	)	10		(2	)	1		(2	)	58		53		34		16		161		59		214
Gain (loss) on equity investments, net	8		(3	)	3		—		8		22		—		—		10		32		1		6
Settlement income	—		—		—		47		47		—		—		—		45		45		—		54
PRETAX INCOME (LOSS)	(1,653	)	(192	)	(168	)	(170	)	(2,183	)	143		315		18		134		610		385		583
Pretax income (loss) margin	-55.3	%	-6.0	%	-6.4	%	-6.5	%	-19.1	%	4.4	%	8.7	%	0.6	%	3.5	%	4.4	%	10.0	%	4.2	%
INCOME TAX PROVISION (BENEFIT)	24		17		33		(23	)	51		54		55		52		46		207		56		110
NET INCOME (LOSS) (Reported)	(1,677	)	(209	)	(201	)	(147	)	(2,234	)	89		260		(34	)	88		403		329		473
Growth vs. prior year (%)	-1984.3	%	-180.4	%	-491.2	%	-267.0	%	-654.3	%	258.9	%	95.5	%	-150.7	%	-73.3	%	-14.8	%	209.3	%	154.7	%
Growth vs. prior quarter (%)	-2005.7	%	87.5	%	3.8	%	26.9	%			-72.9	%	192.1	%	-113.1	%	358.8	%			391.0	%
Net income (loss) margin	-56.1	%	-6.5	%	-7.7	%	-5.6	%	-19.5	%	2.8	%	7.2	%	-1.0	%	2.3	%	2.9	%	8.6	%	3.4	%
EPS (Diluted) (Reported)(1)	(2.24	)	(0.28	)	(0.27	)	(0.20	)	(2.99	)	0.10		0.31		(0.04	)	0.11		0.49		0.36		0.52
Growth vs. prior year (%)	-2340.0	%	-190.3	%	-575.0	%	-281.8	%	-722.9	%	266.7	%	106.7	%	-157.1	%	-69.4	%	-5.8	%	202.9	%	151.5	%
Growth vs. prior quarter (%)	-2136.4	%	87.5	%	3.6	%	25.9	%			-72.2	%	210.0	%	-112.9	%	375.0	%			414.3	%
SHARES (CSE)(Basic)(1)	749		743		745		749		747		866		806		785		772		809		889		883
SHARES (CSE)(Diluted)(1)	749		743		745		749		747		884		826		785		776		822		908		902
OUTSTANDING SHARES(1)	738		745		746		751		751		824		792		782		751		751		884		884

(1) Basic, diluted and outstanding shares have been retroactively restated to reflect the one-for-four reverse stock split effective November 12, 2007. Accordingly, basic and diluted EPS has also been retroactively restated to reflect the reverse stock split.

	FY 2009										FY 2008										FY 2007
(in millions)	Q1		Q2		Q3		Q4		FY09		Q1		Q2		Q3		Q4		FY08		Q4		FY07
REVENUE BY GEOGRAPHY(1) (2)
NORTH AMERICA REGION ($M)	1,213		1,258		1,042		1,046		4,559		1,386		1,407		1,253		1,551		5,597		1,676		5,964
Growth vs. prior year (%)	-12.5	%	-10.6	%	-16.8	%	-32.6	%	-18.5	%	-3.5	%	-6.2	%	-7.3	%	-7.5	%	-6.2	%	-1.7	%	2.0	%
Growth vs. prior quarter (%)	-21.8	%	3.7	%	-17.2	%	0.4	%			-17.3	%	1.5	%	-10.9	%	23.8	%			24.0	%
EUROPE REGION ($M)	954		1,067		849		893		3,763		1,042		1,223		1,114		1,252		4,631		1,201		4,449
Growth vs. prior year (%)	-8.4	%	-12.8	%	-23.8	%	-28.7	%	-18.7	%	5.3	%	3.7	%	3.2	%	4.2	%	4.1	%	4.7	%	11.6	%
Growth vs. prior quarter (%)	-23.8	%	11.8	%	-20.4	%	5.2	%			-13.2	%	17.4	%	-8.9	%	12.4	%			11.3	%
EMERGING MARKETS REGION ($M)	463		558		407		366		1,794		415		563		463		528		1,969		496		1,730
Growth vs. prior year (%)	11.6	%	-0.9	%	-12.1	%	-30.7	%	-8.9	%	11.6	%	26.8	%	10.8	%	6.5	%	13.8	%	2.7	%	11.5	%
Growth vs. prior quarter (%)	-12.3	%	20.5	%	-27.1	%	-10.1	%			-16.3	%	35.7	%	-17.8	%	14.0	%			18.7	%
APAC REGION ($M)	360		337		316		320		1,333		376		422		436		449		1,683		462		1,730
Growth vs. prior year (%)	-4.3	%	-20.1	%	-27.5	%	-28.7	%	-20.8	%	-3.8	%	-4.7	%	0.5	%	-2.8	%	-2.7	%	-6.3	%	2.9	%
Growth vs. prior quarter (%)	-19.8	%	-6.4	%	-6.2	%	1.3	%			-18.6	%	12.2	%	3.3	%	3.0	%			6.5	%
% of Total Revenue
NORTH AMERICA REGION (%)	40.6	%	39.1	%	39.8	%	39.8	%	39.8	%	43.1	%	38.9	%	38.4	%	41.0	%	40.3	%	43.7	%	43.0	%
EUROPE REGION (%)	31.9	%	33.1	%	32.5	%	34.0	%	32.9	%	32.4	%	33.8	%	34.1	%	33.1	%	33.4	%	31.3	%	32.1	%
EMERGING MARKETS REGION (%)	15.5	%	17.3	%	15.6	%	13.9	%	15.7	%	12.9	%	15.6	%	14.2	%	14.0	%	14.2	%	12.9	%	12.5	%
APAC REGION (%)	12.0	%	10.5	%	12.1	%	12.3	%	11.6	%	11.6	%	11.7	%	13.3	%	11.9	%	12.1	%	12.1	%	12.4	%
SYSTEMS PRODUCTS AND SERVICES REVENUE
SERVER PRODUCTS ($M)	1,257		1,369		1,094		1,099		4,819		1,475		1,594		1,473		1,722		6,264		1,853		6,455
Growth vs. prior year (%)	-14.8	%	-14.1	%	-25.7	%	-36.2	%	-23.1	%	0.5	%	-2.4	%	-1.8	%	-7.1	%	-3.0	%	2.3	%	7.6	%
Growth vs. prior quarter (%)	-27.0	%	8.9	%	-20.1	%	0.5	%			-20.4	%	8.1	%	-7.6	%	16.9	%			23.5	%
STORAGE PRODUCTS ($M)	507		570		425		383		1,885		505		655		530		664		2,354		639		2,316
Growth vs. prior year (%)	0.4	%	-13.0	%	-19.8	%	-42.3	%	-19.9	%	2.9	%	4.6	%	-5.4	%	3.9	%	1.6	%	-10.4	%	-2.4	%
Growth vs. prior quarter (%)	-23.6	%	12.4	%	-25.4	%	-9.9	%			-21.0	%	29.7	%	-19.1	%	25.3	%			14.1	%
SUPPORT SERVICES ($M)	963		946		853		886		3,648		979		1,041		961		1,042		4,023		1,024		3,962
Growth vs. prior year (%)	-1.6	%	-9.1	%	-11.2	%	-15.0	%	-9.3	%	-0.8	%	4.0	%	1.2	%	1.8	%	1.5	%	3.9	%	7.7	%
Growth vs. prior quarter (%)	-7.6	%	-1.8	%	-9.8	%	3.9	%			-4.4	%	6.3	%	-7.7	%	8.4	%			7.8	%
PROFESSIONAL SERVICES & EDUCATIONAL SERVICES ($M)	263		335		242		257		1,097		260		325		302		352		1,239		319		1,140
Growth vs. prior year (%)	1.2	%	3.1	%	-19.9	%	-27.0	%	-11.5	%	7.0	%	6.6	%	10.6	%	10.3	%	8.7	%	0.3	%	11.9	%
Growth vs. prior quarter (%)	-25.3	%	27.4	%	-27.8	%	6.2	%			-18.5	%	25.0	%	-7.1	%	16.6	%			16.8	%
NET BOOKINGS ($M)) (4)	2,981		3,259		2,619		2,599		11,458		3,149		3,872		3,186		3,783		13,990		3,909		13,786
Growth vs. prior year (%)	-5.3	%	-15.8	%	-17.8	%	-31.3	%	-18.1	%	3.7	%	7.5	%	-1.6	%	-3.2	%	1.5	%	15.8	%	20.0	%
Growth vs. prior quarter (%)	-21.2	%	9.3	%	-19.6	%	-0.8	%			-19.4	%	23.0	%	-17.7	%	18.7	%			20.7	%
BOOK TO BILL RATIO ) (4)	1.00		1.01		1.00		0.99				0.98		1.07		0.98		1.00				1.02
PRODUCT BACKLOG ($M) (3) (4)	1,149		1,187		1,192		1,159				980		1,235		1,154		1,157				1,051
SERVICES BACKLOG ($M) (4)	773		598		645		626				951		772		753		779				879
TOTAL BACKLOG ($M)	1,922		1,785		1,837		1,785				1,931		2,007		1,907		1,936				1,930
DEFERRED REVENUES
PRODUCTS DEFERRED REVENUES ($M) (4)	868		898		930		987				564		793		745		897				603
Growth vs. prior year (%)	53.9	%	13.2	%	24.8	%	10.0	%			16.0	%	47.4	%	29.1	%	48.8	%			0.2	%
Growth vs. prior quarter (%)	-3.2	%	3.5	%	3.6	%	6.1	%			-6.5	%	40.6	%	-6.1	%	20.4	%			4.5	%
SERVICES DEFERRED REVENUES ($M) (4)	1,899		1,693		1,808		1,989				1,977		1,896		1,861		2,022				2,103
Growth vs. prior year (%)	-3.9	%	-10.7	%	-2.8	%	-1.6	%			13.2	%	16.3	%	-1.1	%	-3.9	%			12.3	%
Growth vs. prior quarter (%)	-6.1	%	-10.8	%	6.8	%	10.0	%			-6.0	%	-4.1	%	-1.8	%	8.7	%			11.8	%
TOTAL DEFERRED REVENUES ($M)	2,767		2,591		2,738		2,976				2,541		2,689		2,606		2,919				2,706
Growth vs. prior year (%)	8.9	%	-3.6	%	5.1	%	2.0	%			13.8	%	24.0	%	6.0	%	7.9	%			9.3	%
Growth vs. prior quarter (%)	-5.2	%	-6.4	%	5.7	%	8.7	%			-6.1	%	5.8	%	-3.1	%	12.0	%			10.1	%

(1) Geographic revenue reported for Q2FY07 has been adjusted to reflect a correction in intercompany revenue to properly report country of origin.

(2) Effective Q1FY09, we began utilizing revised geographic groupings. Revenue figures have been adjusted to reflect the change in the compilation of the countries that make up each of our geographic regions.

(3) Our product backlog includes orders for which customer-requested delivery is scheduled within six months and orders that have been specified by the customers for which products have been shipped but revenue has been deferred.

(4) The bookings and products and services backlog and deferred revenue number presented in Q3 FY08, Q4 FY08 and Q1 FY09 have been adjusted to reflect a correction. Q4 FY07 services backlog has also been adjusted to reflect a correction.

BALANCE SHEETS(1) (2) (3)

	FY 2009										FY 2008										FY 2007
(in millions)	Q1		Q2		Q3		Q4				Q1		Q2		Q3		Q4				Q4
CASH & ST INVESTMENTS	2,631		2,644		2,703		2,857				3,819		3,433		3,027		2,701				4,582
ACCOUNTS RECEIVABLE, NET	2,448		2,574		2,265		2,258				2,203		2,789		2,405		3,019				2,964
RAW MATERIALS	153		115		99		102				130		152		159		154				125
WORK IN PROCESS	94		67		61		52				110		96		99		90				95
FINISHED GOODS	415		410		401		412				331		383		477		436				304
TOTAL INVENTORIES	662		592		561		566				571		631		735		680				524
OTHER CURRENT ASSETS	1,356		1,298		1,221		1,183				1,297		1,306		1,329		1,434				1,258
TOTAL CURRENT ASSETS	7,097		7,108		6,750		6,864				7,890		8,159		7,496		7,834				9,328
PP&E, NET	1,662		1,645		1,670		1,616				1,556		1,569		1,584		1,611				1,533
GOODWILL	1,700		1,700		1,740		1,743				2,466		2,496		3,288		3,215				2,514
LT MARKETABLE DEBT SECURITIES	490		364		287		204				1,374		1,244		774		609				1,360
OTHER NON-CURRENT ASSETS, NET	961		867		815		805				1,072		1,011		1,120		1,071				1,103
TOTAL ASSETS	11,910		11,684		11,262		11,232				14,358		14,479		14,262		14,340				15,838
CURRENT PORTION OF LT DEBT	565		569		562		554				—		—		—		—				—
ACCOUNTS PAYABLE	1,110		1,290		1,049		1,027				1,140		1,312		1,306		1,387				1,381
ACCRUED LIABILITIES & OTHER	1,957		2,003		1,897		1,699				1,943		2,074		2,056		2,045				2,023
DEFERRED REVENUES	2,226		2,070		2,190		2,341				1,911		2,049		1,979		2,236				2,047
TOTAL CURRENT LIABILITIES	5,858		5,932		5,698		5,621				4,994		5,435		5,341		5,668				5,451
LT DEBT	694		694		695		695				1,270		1,273		1,275		1,265				1,264
LT DEFERRED REVENUES	541		521		548		635				630		640		627		683				659
OTHER NON-CURRENT OBLIGATIONS	1,055		1,014		970		976				1,271		1,259		1,229		1,136				1,285
STOCKHOLDERS’ EQUITY	3,762		3,523		3,351		3,305				6,193		5,872		5,790		5,588				7,179
TOTAL LIABILITIES & SE	11,910		11,684		11,262		11,232				14,358		14,479		14,262		14,340				15,838
CASH FLOW(1)
	Q1		Q2		Q3		Q4		FY09		Q1		Q2		Q3		Q4		FY08		Q4		FY07
OPERATING ACTIVITIES	168		36		178		75		457		574		336		329		90		1,329		564		958
INVESTING ACTIVITIES	(258	)	(414	)	(227	)	192		(707	)	(211	)	(199	)	113		231		(66	)	(97	)	(1,077	)
FINANCING ACTIVITIES	(132	)	13		1		23		(95	)	(1,231	)	(675	)	(293	)	(412	)	(2,611	)	(139	)	170
FX ON CASH	(20	)	(35	)	(13	)	17		(51	)	—		—		—		—		—		—		—
KEY METRICS
	Q1		Q2		Q3		Q4				Q1		Q2		Q3		Q4				Q4
DAYS SALES OUTSTANDING (DSO)	74		72		78		77				62		69		66		72				70
DAYS OF SUPPLY ON HAND (DOS)	33		28		34		33				31		30		37		29				23
DAYS PAYABLES OUTSTANDING (DPO)	(56	)	(62	)	(63	)	(59	)			(62	)	(63	)	(65	)	(59	)			(61	)
CASH CONVERSION CYCLE (CCC)	51		38		49		51				31		36		38		42				32
L-T DEBT/EQUITY (%)	18.4	%	19.7	%	20.7	%	37.8	%			20.5	%	21.7	%	22.0	%	22.6	%			17.6	%
INVENTORY TURNS-PRODUCT ONLY (hist.)	7.8		7.9		7.1		6.6				8.2		7.5		7.1		7.8				9.0
ROE (12 mo. avg.)(%)	-25.9	%	-39.3	%	-49.3	%	-64.1	%			9.1	%	11.4	%	10.3	%	6.9	%			6.9	%
ROA (12 mo. avg.)(%)	-9.9	%	-14.0	%	-16.3	%	-19.4	%			4.2	%	5.0	%	4.4	%	2.8	%			3.2	%
ROIC (12 mo. avg.)(%)	-38.3	%	-52.0	%	-63.8	%	-84.7	%			8.1	%	11.8	%	10.7	%	4.0	%			5.2	%
DEPREC. & AMORT. ($M)	194		172		179		225				193		196		189		208				203
CAPITAL INVESTMENTS, NET ($M)	165		120		119		62				127		108		62		144				(36	)
NUMBER OF EMPLOYEES	33,423		33,556		32,780		29,108				33,904		33,350		34,440		34,909				34,219
REVENUE PER EMPLOYEE (12 mo. Avg.) ($K)	401		389		374		355				405		410		410		406				397

(1) Certain numbers presented in the Q2-Q3 fiscal 2007 balance sheets and statements of cash flow have been reclassified from other non-current assets to other current assets and investing activities to operating activities, respectively, to reflect a change in associated classification.

(2) Certain numbers presented in the fiscal 2007 balance sheets have been reclassified from accounts payable to accrued liabilities and other.

(3) Certain numbers presented in the fiscal 2007 and first quarter of fiscal 2008 balance sheets have been reclassified from deferred revenues to accrued liabilities and other.

SUN MICROSYSTEMS, INC.

OPERATIONS ANALYSIS – CONSOLIDATED (UNAUDITED)

CALCULATION OF NON-GAAP NET INCOME (LOSS)

	FY 2009										FY 2008										FY 2007
(in millions except per share amounts)	Q1		Q2		Q3		Q4		FY09		Q1		Q2		Q3		Q4		FY08		Q4		FY07
GAAP net income (loss)	(1,677	)	(209	)	(201	)	(147	)	(2,234	)	89		260		(34	)	88		403		329		473
Non-GAAP adjustments:
Purchased in-process research and development	—		—		3		—		3		—		1		24		6		31		—		—
Amortization of acquisition related intangibles	80		72		72		72		296		74		74		76		86		310		74		313
Stock-based compensation	49		52		49		42		192		48		52		57		57		214		48		214
Restructuring charges	63		222		46		64		395		113		32		14		104		263		15		97
Impairment of goodwill and intangible assets	1,445		—		—		15		1,460		—		—		—		—		—		—		—
(Gain) loss on equity investments, net	(8	)	3		(3	)	—		(8	)	(22	)	—		—		(10	)	(32	)	(1	)	(6	)
Settlement income	—		—		—		(47	)	(47	)	—		—		—		(45	)	(45	)	—		(54	)
Tax effect of non-GAAP adjustments	(17	)	(26	)	(18	)	(20	)	(81	)	(17	)	(10	)	(5	)	(11	)	(43	)	(7	)	(34	)
Non-GAAP net income (loss)	(65	)	114		(52	)	(21	)	(24	)	285		409		132		275		1,101		458		1,003
Diluted non-GAAP net income (loss) per share	-0.09		0.15		-0.07		-0.03		-0.03		0.32		0.50		0.17		0.35		1.34		0.50		1.11
Growth vs. prior year (%)	-128.1	%	-70.0	%	-141.2	%	-108.6	%	-297.1	%	190.9	%	56.3	%	-5.6	%	-30.0	%	20.7	%	455.6	%	-3800.0	%
Growth vs. prior quarter (%)	-125.7	%	266.7	%	-146.7	%	57.1	%			-36.0	%	56.3	%	-66.0	%	105.9	%			177.8	%

This operations analysis contains non-GAAP financial measures. Sun utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing its overall business performance, for making operating decisions and for forecasting and planning future periods. The non-GAAP financial measures Sun uses include non-GAAP net income and diluted non-GAAP net income per share. Non-GAAP net income is defined as net income excluding purchased in-process research and development, amortization of acquisition related intangibles, stock-based compensation, restructuring and related impairment of long-lived assets, impairment of goodwill, gain or loss on equity investments, net, settlement income and the tax effect of these non-GAAP adjustments. These measures are used by some investors when assessing the performance of Sun. Sun believes the assessment of its operations excluding these items is relevant to the assessment of internal operations and comparisons to industry performance.

Reasons for Presenting Non-GAAP Measures. Sun believes these non-GAAP measures help illustrate Sun’s baseline performance before gains, losses or charges that are considered by Sun to be outside of on-going operating results. Accordingly, Sun uses these non-GAAP measures to gain a better understanding of Sun’s comparative operating performance from period-to-period and as a basis for planning and forecasting future periods. Sun believes these non-GAAP measures, when read in conjunction with Sun’s GAAP financials, provide useful information to investors by offering:

• the ability to make more meaningful period-to-period comparisons of Sun’s on-going operating results;

• the ability to better identify trends in Sun’s underlying business and perform related trend analysis;

• a better understanding of how management plans and measures Sun’s underlying business; and

• an easier way to compare Sun’s most recent results of operations against investor and analyst financial models.

Items Excluded From Non-GAAP Measures. As described above, the calculation of non-GAAP net income excludes items in the following categories:

Purchased In-Process Research and Development and Amortization of Acquisition Related Intangibles. Sun excludes purchased in-process research and development and amortization of intangible assets resulting from acquisitions to allow more accurate comparisons of its financial results to its historical operations, forward-looking guidance and the financial results of peer companies. In recent years, Sun has completed the acquisitions of MySQL and StorageTek and the acquisition of other assets and technologies, which resulted in operating expenses that would not otherwise have been incurred. Sun believes that providing a non-GAAP financial measure that excludes purchased in-process research and development and the amortization of acquisition related intangible assets provides the users of its financial statements an enhanced understanding of historic and future financial results and facilitates comparisons to peer companies. Additionally, with respect to the amortization of acquisition related intangible assets, had Sun internally developed these intangible assets, the amortization of such intangible assets would have been expensed historically, and Sun believes the assessment of its operations excluding these costs is relevant to the assessment of internal operations and comparisons to industry performance. Amortization of acquisition related intangibles will recur in future periods. Although purchased in-process research and development expenses are not recurring with respect to past acquisitions, Sun will incur these expenses in connection with any future acquisitions.

Stock-Based Compensation. Stock-based compensation is a key incentive offered to Sun’s employees, and Sun believes such compensation contributed to the revenues earned during the periods presented and also believes it will contribute to the generation of future period revenues. Nevertheless, Sun believes that the exclusion of non-cash stock-based compensation allows management and investors to compare Sun’s recurring core business operating results over multiple periods. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use to account for stock-based compensation under FAS 123R, Sun’s management believes that providing a non-GAAP financial measure that excludes stock-based compensation allows investors to make meaningful comparisons between Sun’s recurring core business operating results and those of other companies, as well as providing Sun’s management with an important tool for financial and operational decision making and for evaluating Sun’s own recurring core business operating results over different periods of time. In addition, Sun prepares and maintains its budgets and forecasts for future periods excluding stock-based compensation. Stock-based compensation expenses will recur in future periods.

Restructuring and Related Impairment of Long-Lived Assets, Impairment of Goodwill, Gain or Loss on Equity Investments, Net, Settlement Income and Tax Effect of Non-GAAP Adjustments. Sun excludes these items because it believes that they are not directly related to the underlying performance of Sun’s core business operations. Other than impairment of goodwill, each of these items are expected to recur in future periods.

Limitations. Each of the non-GAAP financial measures described above, and used in this operations analysis, should not be considered in isolation from, or as a substitute for, a measure of financial performance prepared in accordance with GAAP. Further, investors are cautioned that there are inherent limitations associated with the use of each of these non-GAAP financial measures as an analytical tool. In particular, these non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in Sun’s financial results for the foreseeable future. In addition, other companies, including other companies in Sun’s industry, may calculate non-GAAP financial measures differently than Sun does, limiting their usefulness as a comparative tool. Sun compensates for these limitations by providing specific information in the reconciliation included in this operations analysis regarding the GAAP amounts excluded from the non-GAAP financial measures. In addition, as noted above, Sun evaluates the non-GAAP financial measures together with the most directly comparable GAAP financial information.