Fiscal 2001 was a mixed year for Sun Microsystems. While revenue grew 16% to $18.25 billion, net income declined 50% to $927 million due to economic pressures. Sun believes its focus on networking positions it well for long-term growth, and it will continue investing heavily in R&D. The company aims to provide increasing customer satisfaction and shareholder value going forward through its diverse product portfolio and commitment to open standards.

1. own the future >
2001 > sun microsystems, inc. annual report

2. Financial Highlights (fiscal years ended June 30)
>> 2001 2000 1999
Net revenues (in millions) $18,250 $15,721 $11,806
Operating income (in millions) $1,311 $2,393 $1,520
Net income (in millions) $927 $1,854 $1,030
Net income per common share – diluted $0.27 $0.55 $0.31
Return on average equity 9.3% 29.7% 23.8%
Return on average assets 5.3% 15.4% 14.3%
Approximate number of stockholders at fiscal year end 1,900,000 1,500,000 645,000
Total employees at fiscal year end 43,683 36,738 30,074
Shares used in the calculation of net income
per common share – diluted (in millions) 3,417 3,379 3,282
Outstanding shares at fiscal year end (in millions) 3,248 3,194 3,134
Book value per outstanding share at fiscal year end $3.26 $2.29 $1.55
This Annual Report should be read in conjunction with Sun’s Annual Report on Form 10-K for fiscal 2001.

3. own the future > invest with us >
At Sun Microsystems, we invest in the future every day. By constantly looking ahead, and working ahead,
we’re able to bring our customers innovative solutions when they need them most – right now. And right now
our product portfolio is stronger than ever. So, the recent economic slowdown notwithstanding, we remain
confident and prepared. We believe our vision and strategy leave us well positioned to gain a greater share
of the market – and deliver greater long-term stockholder value. To get all the latest financial reports, stock
tools, company information, and breaking news, visit www.sun.com/investors.

4. >> Corporate Snapshot >> Sun Brands
Founded February 1982. Powerful microprocessors The full-featured,
that drive the Internet and multiplatform office
Employees Over 43,000 worldwide.
enterprise networks. productivity suite.
Vision Ensure that network services are available to
The operating environment Helping customers build
anyone, anywhere, anytime, using any device.
that combines data-center and certify highly depend-
Markets Telecommunications, financial services, and network requirements. able and scalable service-
manufacturing, government, education and research, delivery environments.
The cross-platform architec-
retail, health care, digital media, and entertainment.
ture for building network- The network technology
Revenues $18.25 billion in fiscal 2001. centric applications. that enables devices and
services to form sponta-
Products and Services Network servers, data storage Award-winning solutions
neous networks.
systems, engineering workstations, desktop appliances, for online commerce,
microelectronics, software systems, e-commerce appli- communication, and The open standards-based
cations, cross-platform technologies, consulting and collaboration. software for managing
support services. Net-based data storage.
Business Philosophy Open standards and open pro-
gramming interfaces increase the value of Net-based
solutions and create a larger market for all players.
Value Proposition Sun is a relentless innovator. Sun
has a 19-year history of bringing innovative ideas to
market with practical results for our customers.
Because we build forward-thinking technology, we
enable our customers to get the most out of their
existing network environments and take advantage
of future opportunities.
Ranking Sun is ranked 125 on the Fortune 500 index.
Stock Sun’s common stock is traded on The Nasdaq
National Market under SUNW.
Locations Sun can be found in more than 170
countries and on the World Wide Web at www.sun.com.

5. to our stockholders >
Fiscal 2001 was clearly a mixed bag for Sun, the industry, and the economy as a whole. Still,
we finished with revenue growth of 16 percent – and that’s significant. We believe it’s a good
Sun 16%
indication that Sun continued to pull away from the pack and gain market share. > For
Microsoft 10%
that, we owe a debt of gratitude to our employees worldwide, who aggressively brought costs
ibm 4%
HP 0% down – even as they continued to bring exciting new products to market. > Our vision of
a networked world has been our guide and the key to our success, regardless of market condi-
intel -4%
tions, for nearly two decades. We see no reason to change that vision now. In fact, we see
Based on each company’s last four published quarters
preceding July 31.
every reason to stick with it. > Current economic pressures notwithstanding, we believe that
network computing is still the biggest value creator on the planet. The Internet and related
Annual revenue Growth
networking technologies have changed the way we live, work, learn, and communicate – and
we’ve hardly scratched the surface. > As we’ve been saying for years, the Net is about
much more than opening online storefronts; it represents a more cost-effective way to run
nearly every aspect of the enterprise – inventory management, billing, distribution, customer
service, employee communications – not to mention the entire supply chain. > Which is
www.sun.com/products-n-solutions

6. web site investor’s tool > investor’s briefcase
investor relations home page
www.sun.com/investors
sun facts
resources
stock report
>> Explore this new, easy-to-use resource. Our “Investor’s Briefcase” provides useful tools for investors and analysts alike. The “Stock
Report” section offers up-to-date information and analysis support. “Resources” includes financial presentations, a summary of
Sun’s product portfolio, and helpful information for first-time investors. Finally, “Sun Facts” gives a summary of notable corporate,
market, and customer facts.

7. why we believe that, even as the world economy takes a breather from its prolonged and often frenetic growth, our diverse base
of global Fortune 1000 customers will continue to need our Net-based products, for a wide range of uses, across all geographies.
> In the meantime, the whole Sun team has demonstrated an unwavering focus on its responsibility to stockholders. We have
maintained a strong balance sheet with $6 billion in cash on hand, and we are carefully managing all of our resources. Simply put,
we’re here to build a company for the benefit of our long-term stockholders. To that end, we’re willing to make certain sacrifices –
one of them being the maximization of near-term earnings – in order to protect key investments. That includes two of our most
valuable assets: the employees who have made us successful and the research-and-development projects on which our future
depends. > Indeed, R&D investments made over several years are what enabled us to extend the depth and breadth of our offer-
ings in fiscal 2001 – another strong product year for Sun: > We released the third generation of our powerful 64-bit UltraSPARC™
microprocessors and have been rolling out systems based on the new chip, from workstations and workgroup servers to our new
Sun Fire™ “midframe” computers – midrange servers with mainframe-style capabilities. > New high-end systems are also on the
way and on schedule. What’s more, the latest release of our operating environment, Solaris™ 8, has been recognized as the best
mission-critical network environment on the market. > Perhaps our most significant announcement was the introduction of
www.sun.com/aboutsun/investor/
corporate_info/customer_wins

8. the Sun™ Open Net Environment (Sun ONE). With the products and technologies of the Sun ONE architecture, we’re providing the
tools enterprise customers and service providers need to create, assemble, and deploy a new generation of Web-based services.
> We see this as the next big challenge in information technology: How to build services that interact with each other, setting off
a chain of electronic events at just the right time and place – reaching across multiple platforms, multiple networks, and multiple
businesses to do so. How to build services that factor in context, history, and personal preferences to deliver just what we need,
when we need it – at work, at home, or on the road. > Sun has a long history of introducing technologies that prepare our
customers for what’s beyond the here and now. Our software vision leverages the open programming interfaces and networking
protocols these customers are already using, and provides a framework for what’s next: smart Web services. > Here I think it’s
worth noting that, at Sun, we don’t just talk about being open. Our steadfast commitment to open standards – demonstrated time
and again throughout our history – has made us a trusted partner in the industry and a trusted advisor to our customers. > So
what about fiscal 2002? As noted in last year’s letter, investing in the future is what we do – what we’ve always done. We intend to
continue our substantial investments in R&D moving forward, concentrating our efforts on meeting the need for network computing
on a massive scale, continuous real-time access, and easily integratable, standards-based solutions. > We also plan to continue
our strategy of making targeted acquisitions – a strategy that last year enabled us to add Cobalt server appliances, HighGround and
www.sun.com/sunone

9. LSC storage software, and other key products to our portfolio. > As we look ahead, we believe our competitive advantage will
come from three key aspects of our business: 1. We own the key pieces of intellectual property, including critical hardware and
software designs, needed to build systems that are fully integratable, highly reliable, and scalable to the nth. 2. We offer a binary-
compatible product line that stretches from ultra-thin, rack-mountable servers priced under $1000 to massive, high-integrity sys-
tems in configurations costing as much as $10 million. 3. We have one of the strongest software developer bases in the industry.
The Sun Developer Connection program now includes more than two million members, which helps ensure a steady stream of
SM
new applications and Web-based services running on the Sun platform. > Developers and enterprise customers alike choose
the Sun platform for good reason: We understand that the prime measure of performance today isn’t speed, it’s availability. Let’s
face it: The fastest system in the world has raw performance of zero whenever it’s down. > That’s why we’ve been driving so
hard on all of our availability and quality initiatives – Sun Sigma, SunTone , Customer Advocacy, Mission-Critical Sign Off, and
SM
Sun Remote Services. > What’s more, in response to customer needs, we’ve been growing our service organization for several
years now, and those investments have been paying off – with revenues increasing faster in service than any other part of the
company. > Great companies distinguish themselves over long periods. Our aim is to provide ever greater customer satisfaction
and stockholder value in the days, weeks, and years ahead. > Thanks for investing in Sun and sticking with us. Together we
can own the future.
Scott McNealy
Chairman of the Board and Chief Executive Officer
scottg.mcnealy@sun.com
www.sun.com/developers

10. historical financial review > 1992 > 2001
Summary Consolidated Statements of Income 1
>>
2001 2000 1999 1998
(In millions, except per share amounts)
Dollars % Dollars % Dollars % Dollars %
Net revenues $18,250 100.0 $15,721 100.0 $11,806 100.0 $9,862 100.0
Costs and expenses:
Cost of sales 10,041 55.0 7,549 48.0 5,670 48.0 4,713 47.8
Research and development 2,016 11.0 1,630 10.4 1,280 10.8 1,029 10.4
Selling, general and administrative 4,544 24.9 4,072 25.9 3,196 27.1 2,826 28.7
Goodwill amortization 261 1.4 65 0.4 19 0.2 4 –
In-process research and development 77 0.5 12 0.1 121 1.0 176 1.8
Total costs and expenses 16,939 92.8 13,328 84.8 10,286 87.1 8,748 88.7
Operating income 1,311 7.2 2,393 15.2 1,520 12.9 1,114 11.3
Gain (loss) on strategic investments (90) (0.5) 208 1.3 – – – –
Interest income, net 363 2.0 170 1.1 85 0.7 48 0.5
Litigation settlement – – – – – – – –
Income before taxes 1,584 8.7 2,771 17.6 1,605 13.6 1,162 11.8
Provision for income taxes 603 3.3 917 5.8 575 4.9 407 4.1
Cumulative effect of change in
accounting principle, net (54) (0.3) – – – – – –
Net income $ 927 5.1 $ 1,854 11.8 $ 1,030 8.7 $ 755 7.7
Net income per common share – diluted 2 $ 0.27 $ 0.55 $ 0.31 $ 0.24
Shares used in the calculation of
net income per common share – diluted 2 3,417 3,379 3,282 3,180
Operating and Capitalization Data 1
>>
2001 2000 1999 1998
Return on average equity 9% 30% 24% 24%
Return on average assets 5% 15% 14% 14%
Effective income tax rate 38% 33% 36% 35%
Total assets (in millions) $18,181 $14,152 $8,499 $5,794
Long-term debt and other obligations
(in millions) $ 2,449 $ 2,297 $ 384 $ 77
Current ratio 1.5 1.4 1.9 2.0
Long-term debt-to-equity ratio 23% 31% 8% 2%
Outstanding shares at June 30
(in millions) 2 3,248 3,194 3,134 3,033
Book value per outstanding share $ 3.26 $ 2.29 $ 1.55 $ 1.18
2
1 Fiscal years ended June 30. All historical financial information has been restated to reflect the merger with Forte Software,
Inc. on October 19, 1999.
2 Share and per share amounts for all periods presented have been adjusted to reflect stock splits through June 30, 2001.

11. 1997 1996 1995 1994 1993 1992
Dollars % Dollars % Dollars % Dollars % Dollars % Dollars %
$8,661 100.0 $7,125 100.0 $5,912 100.0 $4,690 100.0 $4,308 100.0 $3,589 100.0
4,332 50.0 3,927 55.1 3,338 56.5 2,753 58.7 2,518 58.4 1,963 54.7
837 9.7 661 9.3 568 9.6 504 10.8 448 10.4 382 10.7
2,434 28.1 1,806 25.4 1,513 25.6 1,164 24.8 1,106 25.7 984 27.4
2 – – – – – – – – – – –
23 0.3 58 0.8 – – – – – – – –
7,628 88.1 6,452 90.6 5,419 91.7 4,421 94.3 4,072 94.5 3,329 92.8
1,033 11.9 673 9.4 493 8.3 269 5.7 236 5.5 260 7.2
62 0.7 – – – – – – – – – –
34 0.4 34 0.5 23 0.4 6 0.2 (1) (0.1) (6) (0.1)
– – – – – – – – (15) (0.3) – –
1,129 13.0 707 9.9 516 8.7 275 5.9 220 5.1 254 7.1
352 4.0 233 3.2 168 2.8 87 1.9 67 1.6 82 2.3
– – – – – – – – – – – –
$ 777 9.0 $ 474 6.7 $ 348 5.9 $ 188 4.0 $ 153 3.5 $ 172 4.8
$ 0.25 $ 0.15 $ 0.11 $ 0.06 $ 0.04 $ 0.05
3,137 3,173 3,178 3,130 3,466 3,474
1997 1996 1995 1994 1993 1992
31% 22% 19% 12% 10% 13%
18% 13% 11% 7% 6% 7%
31% 33% 33% 32% 31% 32%
$4,783 $3,858 $3,563 $2,905 $2,771 $2,674
$ 109 $ 64 $ 96 $ 124 $ 180 $ 348
2.0 2.0 2.2 2.0 2.4 2.6
4% 3% 5% 8% 11% 23%
2,986 2,990 3,174 3,004 3,268 3,200
$ 0.94 $ 0.77 $ 0.67 $ 0.55 $ 0.51 $ 0.47

12. go-to-Market strategy >
>> To be an industry leader, you need vision. But that’s just the beginning. You also need the people,
products, programs, and relationships to take your vision to market and turn it into a compelling reality.
Relationships
5
The reality is no one can
do it alone anymore. Our
iForce initiative brings
SM
How To
4
together the expertise of
For service providers and
Sun and best-of-breed
enterprise customers alike,
Platform
3 solutions providers to
our SunTone program
SM
help customers define a
Sun’s single, binary-
represents a comprehen-
Architecture
2 strategy, design an archi-
compatible product line,
sive how-to guide to
Vision
1 tecture, and develop an
based on the UltraSPARC
Sun offers an end-to-end
ensuring highly reliable
integration plan – even
processor architecture
Sun’s vision of the service- architecture that focuses
operations. It includes
deploy and manage the
and the Solaris Operating
driven network includes on three vital attributes:
proven architectural
whole network, if desired.
Environment, provides a
anyone, anywhere, anytime, Scalability – being able
frameworks, implementa-
powerful, easy-to-manage
using any device. It’s all to add capacity without
tion strategies, and profes-
platform for business.
about seamless interaction degrading performance or
sional services to help
What’s more, the Sun
based on open standards – adding undue complexity.
customers build and
Open Net Environment
seamless business trans- Availability – being able
certify highly dependable,
provides a standards-based
actions among suppliers, to provide continuous
massively scalable service-
framework for creating,
partners, and customers. real-time access to serv-
delivery environments.
assembling, and deploy-
ices. And integration –
ing services on demand.
the ability to interoperate
Within the enterprise and
with any standards-based
on the Net.
system.

13. market leadership >
21%
#1 in U.S. server revenue across all
operating systems (IDC, March 2001)
35%
#1 in worldwide UNIX® Server
revenue (IDC, March 2001)
>> Our industrial-strength products and technologies have made us a supplier of choice for leading enterprises around the world.
Sun’s Market Leadership
#1 UNIX operating system (D.H. Brown, March 2001)
#1 UNIX storage supplier for the third year in a row (IDC, December 2000)
#1 in UNIX workstation revenue (IDC, February 2001)
#1 iPlanet™ Portal server (Radicati, May 2001)
#1 iPlanet Messaging server revenue (Radicati, January 2001)
#1 iPlanet Web server (BizNix, 2000)
#1 UNIX platform integrator (IDC, May 2001)

14. investor resources >
For More Information Sun Worldwide
If you have questions concerning stock certificates, change of Manufacturing
address, consolidation of accounts, transfer of ownership, or 2 countries
other stock account matters, please contact Sun’s transfer agent:
International Research and Development
EquiServe Trust Company 16 countries
P.O. Box 43010
International Sales, Service, and Support
Providence, RI 02940-3010
48 countries
+1 (800) 730.6001 or +1 (781) 575.3120
International Distribution
http://www.equiserve.com
Over 170 countries
To receive an Annual Report on Form 10-K (available without
charge), and for general questions about Sun operations, recent
results, or historical performance, please contact:
Investor Relations
Mail Stop UPAL01.207
Sun Microsystems, Inc.
901 San Antonio Road
Palo Alto, California 94303.4900 USA
Phone: +1 (800) 801.SUNW (within the U.S.)
+1 (650) 336.0697 (outside the U.S.)
Fax: +1 (650) 336.0672
Also, to receive faxed information on earnings announcements
and press releases, please call:
+1 (800) FAX.SUNW (within the U.S.)
+1 (201) 946.9049 (outside the U.S.)
This Annual Report contains forward-looking statements regarding future results and the future performance of Sun Microsystems, Inc., including statements relating to market share, long-term
stockholder value, Sun’s vision, network computing as a value creator, customer need for Sun’s Net-based products, building a company for the benefit of long-term stockholders, willingness to make
sacrifices to protect key investments, new high-end systems, the next big challenge in information technology, investment in R&D, concentrating efforts on meeting the need for network computing,
continuous real-time access and easily integratable standards-based solutions, making targeted acquisitions, Sun’s competitive advantage and aims with respect to customer satisfaction and stock-
holder value. 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 increased competition, adverse business conditions such as continued adverse changes in general economic conditions in the U.S. and internationally, including adverse
changes in the specific markets for Sun’s products, lack of acceptance of new products, pricing pressures, lack of success in technological advancements, risks associated with foreign operations,
failure to reduce costs or improve operating efficiencies, and Sun’s ability to attract, hire and retain key and qualified employees. These and other risks are detailed from time to time in Sun’s peri-
odic 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, 2001.

15. corporate information >
Board of Directors Executive Committee Corporate Executive Officers
Scott G. McNealy Scott G. McNealy William T. Agnello Gregory M. Papadopoulos
Chairman of the Board of Directors Chief Executive Officer Senior Vice President, Senior Vice President and
and Chief Executive Officer, Workplace Resources Chief Technology Officer
Edward J. Zander
Sun Microsystems, Inc.
Mark A. Canepa Marissa Peterson
President and Chief
James L. Barksdale Operating Officer Executive Vice President, Executive Vice President,
Managing Partner, Network Storage Products Worldwide Operations
Michael E. Lehman
The Barksdale Group
Mel Friedman Michael L. Popov
Executive Vice President,
L. John Doerr Corporate Resources Senior Vice President, Vice President, Corporate Controller
General Partner, and Chief Financial Officer Customer Advocacy
Jonathan I. Schwartz
Kleiner Perkins Caufield & Byers
Crawford W. Beveridge Lawrence W. Hambly Senior Vice President,
Judith L. Estrin Executive Vice President and Executive Vice President, Corporate Strategy and Planning
Chief Executive Officer, Chief Human Resources Officer Enterprise Services
John C. Shoemaker
Packet Design, LLC
William N. Joy H. William Howard Executive Vice President,
Printing: George Rice and Sons/Northeast Graphics
Robert J. Fisher Co-founder and Chief Scientist Senior Vice President, Computer Systems
Director, The Gap, Inc. Chief Information Officer
Patricia C. Sueltz
Robert L. Long Masood A. Jabbar Executive Vice President,
Independent Management Executive Vice President, Software Systems Group
Consultant Global Sales Operations
Mark E. Tolliver
M. Kenneth Oshman John P. Loiacono Executive Vice President
Chairman of the Board of Directors Senior Vice President, and President, iPlanet,
|
Photography: Lindsay Milgate and Darrell Peterson
and Chief Executive Officer, Chief Marketing Officer Sun-Netscape Alliance
Echelon Corporation
Michael H. Morris
Naomi O. Seligman Senior Vice President,
Senior Partner, General Counsel and Secretary
Ostriker von Simson, Inc.
|
Design: Methodologie
©2001 Sun Microsystems, Inc. All rights reserved. Sun, Sun Microsystems, the Sun logo, Solaris, the Solaris logo, Java, the Java Coffee Cup logo, iPlanet, the iPlanet logo, Forte, StarOffice, the
StarOffice logo, Jini, the Jini logo, Jiro, the Jiro logo, Sun Developer Connection, Sun Fire, iForce, SunTone, and the SunTone logo are service marks, trademarks, or registered trademarks of Sun
Microsystems, Inc., in the United States and 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. UNIX is a registered trademark in the United States and other
countries, exclusively licensed through X/Open Company, Ltd.
LFC6.2 Printed in USA 9/01 AE181-0/1.9M

16. Sun Microsystems, Inc. 901 San Antonio Road, Palo Alto, California 94303-4900 USA tel +1(650) 960.1300 www.sun.com