Exhibit 99.1
For Immediate Release
| Contacts: | Roy Lobo | Deborah Hellinger | ||
| Oracle Investor Relations | Oracle Corporate Communications | |||
| +1.650.506.4073 | +1.650.506.5158 | |||
| investor_us@oracle.com | deborah.hellinger@oracle.com |
ORACLE REPORTS Q3 GAAP EPS UP 30% TO 26 CENTS, NON-GAAP EPS UP 23% TO 30 CENTS
Database and Middleware New License Revenues Up 20%, Total GAAP Revenues Up 21%
REDWOOD SHORES, Calif., March 26, 2008 — Oracle Corporation (NASDAQ: ORCL) today announced fiscal 2008 Q3 GAAP earnings per share were up 30% to $0.26, compared to the same quarter last year. Third quarter total GAAP revenues were up 21% to $5.3 billion, while quarterly GAAP operating income was up 35% to $1.9 billion and GAAP net income was up 30% to $1.3 billion. Total GAAP software revenues were up 21% to $4.2 billion with GAAP new software license revenues up 16% to $1.6 billion. Database and middleware new license revenues were up 20% and applications new license revenues were up 7%. GAAP software license updates and product support revenues were up 25% to $2.6 billion. Service revenues were up 21% to $1.1 billion, compared to the same quarter last year.
Third quarter non-GAAP earnings per share were up 23% to $0.30, and non-GAAP net income was up 22% to $1.6 billion, compared to the same quarter last year.
“Oracle delivered another quarter of strong financial results and earnings growth. In Q3, we once again exceeded our non-GAAP EPS growth target of 20%,” said Oracle President and CFO, Safra Catz. “For the first three quarters of this year we have grown our operating cash flow 55%, 3 times faster than at this point in the past five years.”
“Database and middleware new software license revenues growth accelerated to 20% in the third quarter,” said Oracle President, Charles Phillips. “We continue to grow faster and take market share from IBM.”
“Software license updates and product support revenues were up 23% on a non-GAAP basis to $2.6 billion. By next quarter we will pass $10 billion for the year,” said
Oracle CEO, Larry Ellison. “Our non-GAAP operating income grew to $2.2 billion with our margins increasing nearly 200 basis points to 41% up from 39% in Q3 of last year. Our operating margins are now substantially higher than our competitors, including Microsoft, reflecting the unique leverage in our business.”
Q3 Earnings Announcement
Oracle will hold a conference call and web broadcast today to discuss these results at 2:00 p.m. (PDT) / 5:00 p.m. (EDT). To access the live web broadcast of this event, please visit the Oracle Investor Relations website athttp://www.oracle.com/investor. Please hold down your control key while pressing refresh to ensure that the weblink is visible.
About Oracle
Oracle is the world’s largest enterprise software company. For more information about Oracle, including supplemental financial information, please visithttp://www.oracle.com/investor or call Investor Relations at (650) 506-4073.
# # #
Trademarks
Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners.
“Safe Harbor” Statement:Statements in this press release relating to Oracle’s future plans and prospects are “forward-looking statements” and are subject to material risks and uncertainties. Many factors could affect our current expectations and our actual results, and could cause actual results to differ materially. We presently consider the following to be among the important factors that could cause actual results to differ materially from expectations: (1) Economic, political and market conditions could adversely affect our revenue growth and profitability through reductions in IT budgets and expenditures. (2) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, unanticipated fluctuations in currency exchange rates, delays in delivery of new products or releases, or a decline in our renewal rates for software license updates and product support. (3) We cannot assure market acceptance of new products or new versions of existing or acquired products. (4) We have an active acquisition program (including our recently announced proposed acquisition of BEA
Systems, Inc.) and our acquisitions may not be successful, may involve unanticipated costs or other integration issues, or may disrupt our existing operations. (5) Periodic changes to our pricing model and sales organization could temporarily disrupt operations and cause a decline or delay in sales. (6) Intense competitive forces demand rapid technological advances and frequent new product introductions, and could require us to reduce prices. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading “Risk Factors.” Copies of these filings are available online from the SEC or by contacting Oracle Corporation’s Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracle’s Investor Relations website athttp://www.oracle.com/investor. All information set forth in this release is current as of March 26, 2008. Oracle undertakes no duty to update any statement in light of new information or future events.
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
| % Increase | ||||||||||||||||||||||||
| Three Months Ended | % Increase | (Decrease) | ||||||||||||||||||||||
| February 29, | % of | February 28, | % of | (Decrease) | in Constant | |||||||||||||||||||
| 2008 | Revenues | 2007 | Revenues | in US $ | Currency (1) | |||||||||||||||||||
REVENUES | ||||||||||||||||||||||||
| New software licenses | $ 1,616 | 30% | $ 1,390 | 31% | 16% | 9% | ||||||||||||||||||
| Software license updates and product support | 2,624 | 49% | 2,108 | 48% | 25% | 18% | ||||||||||||||||||
| Software Revenues | 4,240 | 79% | 3,498 | 79% | 21% | 15% | ||||||||||||||||||
| Services | 1,109 | 21% | 916 | 21% | 21% | 14% | ||||||||||||||||||
Total Revenues | 5,349 | 100% | 4,414 | 100% | 21% | 15% | ||||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||
| Sales and marketing | 1,083 | 20% | 967 | 22% | 12% | 6% | ||||||||||||||||||
| Software license updates and product support | 254 | 5% | 210 | 5% | 22% | 16% | ||||||||||||||||||
| Cost of services | 989 | 19% | 820 | 18% | 21% | 14% | ||||||||||||||||||
| Research and development | 682 | 13% | 570 | 13% | 20% | 17% | ||||||||||||||||||
| General and administrative | 206 | 4% | 175 | 4% | 18% | 12% | ||||||||||||||||||
| Amortization of intangible assets | 292 | 5% | 222 | 5% | 32% | 31% | ||||||||||||||||||
| Acquisition related and other (2) | (40 | ) | (1% | ) | 53 | 1% | (176% | ) | (178% | ) | ||||||||||||||
| Restructuring | 8 | 0% | 3 | 0% | 134% | 125% | ||||||||||||||||||
Total Operating Expenses | 3,474 | 65% | 3,020 | 68% | 15% | 10% | ||||||||||||||||||
OPERATING INCOME | 1,875 | 35% | 1,394 | 32% | 35% | 24% | ||||||||||||||||||
| Interest expense | (82 | ) | (2% | ) | (82 | ) | (2% | ) | 0% | 0% | ||||||||||||||
| Non-operating income, net | 84 | 2% | 94 | 2% | (11% | ) | (13% | ) | ||||||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 1,877 | 35% | 1,406 | 32% | 33% | 23% | ||||||||||||||||||
| Provision for income taxes | 537 | 10% | 373 | 9% | 44% | 40% | ||||||||||||||||||
NET INCOME | $ 1,340 | 25% | $ 1,033 | 23% | 30% | 17% | ||||||||||||||||||
EARNINGS PER SHARE: | ||||||||||||||||||||||||
| Basic | $ 0.26 | $ 0.20 | ||||||||||||||||||||||
| Diluted | $ 0.26 | $ 0.20 | ||||||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||||||||||
| Basic | 5,148 | 5,159 | ||||||||||||||||||||||
| Diluted | 5,235 | 5,257 | ||||||||||||||||||||||
| (1) | We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rate in effect on May 31, 2007, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. The United States dollar weakened relative to major international currencies in the three months ended February 29, 2008 compared with the corresponding prior year period, contributing 6 percentage points of revenue, 5 percentage points of operating expense and 11 percentage points of operating income growth. | |
| (2) | Acquisition related and other expenses for the three months ended February 29, 2008 include a gain on property sale of $57 million. Please see Appendix A for further discussion. |
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
(in millions, except per share data)
| % Increase (Decrease) | ||||||||||||||||||||||||||||||||
| Three Months Ended | in US $ | |||||||||||||||||||||||||||||||
| February 29, 2008 | February 29, 2008 | February 28, 2007 | February 28, 2007 | |||||||||||||||||||||||||||||
| GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||||||||||||
TOTAL REVENUES (2) | $ | 5,349 | $ | 22 | $ | 5,371 | $ | 4,414 | $ | 35 | $ | 4,449 | 21% | 21 | % | |||||||||||||||||
TOTAL SOFTWARE REVENUES (2) | $ | 4,240 | $ | 22 | $ | 4,262 | $ | 3,498 | $ | 35 | $ | 3,533 | 21% | 21 | % | |||||||||||||||||
| New software licenses | 1,616 | — | 1,616 | 1,390 | — | 1,390 | 16% | 16 | % | |||||||||||||||||||||||
| Software license updates and product support (2) | 2,624 | 22 | 2,646 | 2,108 | 35 | 2,143 | 25% | 23 | % | |||||||||||||||||||||||
TOTAL OPERATING EXPENSES | $ | 3,474 | $ | (322 | ) | $ | 3,152 | $ | 3,020 | $ | (326 | ) | $ | 2,694 | 15% | 17 | % | |||||||||||||||
| Stock-based compensation (3) | 62 | (62 | ) | — | 48 | (48 | ) | — | 30% | * | ||||||||||||||||||||||
| Amortization of intangible assets (4) | 292 | (292 | ) | — | 222 | (222 | ) | — | 32% | * | ||||||||||||||||||||||
| Acquisition related and other | (40 | ) | 40 | — | 53 | (53 | ) | — | (176%) | * | ||||||||||||||||||||||
| Restructuring | 8 | (8 | ) | — | 3 | (3 | ) | — | 134% | * | ||||||||||||||||||||||
OPERATING INCOME | $ | 1,875 | $ | 344 | $ | 2,219 | $ | 1,394 | $ | 361 | $ | 1,755 | 35% | 26 | % | |||||||||||||||||
OPERATING MARGIN % | 35 | % | 41 | % | 32 | % | 39 | % | 11% | 5 | % | |||||||||||||||||||||
INCOME TAX EFFECTS ON ABOVE ADJUSTMENTS (5) | $ | 537 | $ | 98 | $ | 635 | $ | 373 | $ | 93 | $ | 466 | 44% | 36 | % | |||||||||||||||||
NET INCOME | $ | 1,340 | $ | 246 | $ | 1,586 | $ | 1,033 | $ | 268 | $ | 1,301 | 30% | 22 | % | |||||||||||||||||
DILUTED EARNINGS PER SHARE (6) | $ | 0.26 | $ | 0.30 | $ | 0.20 | $ | 0.25 | 30% | 23 | % | |||||||||||||||||||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (6) | 5,235 | 5,235 | 5,257 | 5 | 5,262 | 0% | (1 | %) | ||||||||||||||||||||||||
| (1) | This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A. | |
| (2) | As of February 29, 2008, approximately $9 million in estimated revenues related to assumed support contracts will not be recognized in fiscal 2008 due to business combination accounting rules. | |
| (3) | Stock-based compensation is included in the following GAAP operating expense categories: |
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||
| February 29, 2008 | February 28, 2007 | |||||||||||||||||||||||
| GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||||
| Sales and marketing | $ | 12 | $ | (12 | ) | $ | — | $ | 9 | $ | (9 | ) | $ | — | ||||||||||
| Software license updates and product support | 1 | (1 | ) | — | 3 | (3 | ) | — | ||||||||||||||||
| Cost of services | 2 | (2 | ) | — | 3 | (3 | ) | — | ||||||||||||||||
| Research and development | 31 | (31 | ) | — | 21 | (21 | ) | — | ||||||||||||||||
| General and administrative | 16 | (16 | ) | — | 12 | (12 | ) | — | ||||||||||||||||
| Subtotal | 62 | (62 | ) | — | 48 | (48 | ) | — | ||||||||||||||||
| Acquisition related and other | 3 | (3 | ) | — | — | — | — | |||||||||||||||||
| Total stock-based compensation | $ | 65 | $ | (65 | ) | $ | — | $ | 48 | $ | (48 | ) | $ | — | ||||||||||
| (4) | Estimated future annual amortization expense related to intangible assets as of February 29, 2008 is as follows: |
| Remainder of Fiscal 2008 | $ | 317 | ||
| Fiscal 2009 | 1,153 | |||
| Fiscal 2010 | 1,029 | |||
| Fiscal 2011 | 799 | |||
| Fiscal 2012 | 660 | |||
| Fiscal 2013 | 306 | |||
| Thereafter | 1,142 | |||
| Total | $ | 5,406 | ||
| (5) | The income tax provision was calculated reflecting an effective tax rate of 28.6% and 26.5% in the third quarter of fiscal 2008 and 2007, respectively. | |
| (6) | Non-GAAP diluted earnings per share and non-GAAP diluted weighted average shares outstanding were calculated excluding the effects of expensing stock options under Statement 123R. | |
| * | Not meaningful |
ORACLE CORPORATION
Q3 FISCAL 2008 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
| % Increase | ||||||||||||||||||||||||
| Nine Months Ended | % Increase | (Decrease) | ||||||||||||||||||||||
| February 29, | % of | February 28, | % of | (Decrease) | in Constant | |||||||||||||||||||
| 2008 | Revenues | 2007 | Revenues | in US $ | Currency (1) | |||||||||||||||||||
REVENUES | ||||||||||||||||||||||||
| New software licenses | $ | 4,371 | 29 | % | $ | 3,401 | 28 | % | 29 | % | 22 | % | ||||||||||||
| Software license updates and product support | 7,497 | 49 | % | 6,056 | 50 | % | 24 | % | 18 | % | ||||||||||||||
| Software Revenues | 11,868 | 78 | % | 9,457 | 78 | % | 25 | % | 20 | % | ||||||||||||||
| Services | 3,323 | 22 | % | 2,710 | 22 | % | 23 | % | 16 | % | ||||||||||||||
Total Revenues | 15,191 | 100 | % | 12,167 | 100 | % | 25 | % | 19 | % | ||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||
| Sales and marketing | 3,153 | 21 | % | 2,632 | 21 | % | 20 | % | 14 | % | ||||||||||||||
| Software license updates and product support | 729 | 5 | % | 613 | 5 | % | 19 | % | 13 | % | ||||||||||||||
| Cost of services | 2,911 | 19 | % | 2,419 | 20 | % | 20 | % | 14 | % | ||||||||||||||
| Research and development | 2,007 | 13 | % | 1,596 | 13 | % | 26 | % | 23 | % | ||||||||||||||
| General and administrative | 608 | 4 | % | 503 | 4 | % | 21 | % | 16 | % | ||||||||||||||
| Amortization of intangible assets | 867 | 6 | % | 623 | 5 | % | 39 | % | 39 | % | ||||||||||||||
| Acquisition related and other (2) | 28 | 0 | % | 65 | 1 | % | (57 | %) | (60 | %) | ||||||||||||||
| Restructuring | 14 | 0 | % | 23 | 0 | % | (41 | %) | (44 | %) | ||||||||||||||
Total Operating Expenses | 10,317 | 68 | % | 8,474 | 69 | % | 22 | % | 17 | % | ||||||||||||||
OPERATING INCOME | 4,874 | 32 | % | 3,693 | 31 | % | 32 | % | 24 | % | ||||||||||||||
| Interest expense | (265 | ) | (2 | %) | (248 | ) | (2 | %) | 7 | % | 7 | % | ||||||||||||
| Non-operating income, net | 284 | 2 | % | 277 | 2 | % | 2 | % | 0 | % | ||||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 4,893 | 32 | % | 3,722 | 31 | % | 31 | % | 23 | % | ||||||||||||||
| Provision for income taxes | 1,409 | 9 | % | 1,052 | 9 | % | 34 | % | 31 | % | ||||||||||||||
NET INCOME | $ | 3,484 | 23 | % | $ | 2,670 | 22 | % | 30 | % | 20 | % | ||||||||||||
EARNINGS PER SHARE: | ||||||||||||||||||||||||
| Basic | $ | 0.68 | $ | 0.51 | ||||||||||||||||||||
| Diluted | $ | 0.67 | $ | 0.51 | ||||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||||||||||
| Basic | 5,128 | 5,186 | ||||||||||||||||||||||
| Diluted | 5,228 | 5,284 | ||||||||||||||||||||||
| (1) | We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rate in effect on May 31, 2007, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. The United States dollar weakened relative to major international currencies in the nine months ended February 29, 2008 compared with the corresponding prior year period, contributing 6 percentage points of revenue, 5 percentage points of operating expense and 8 percentage points of operating income growth. | |
| (2) | Acquisition related and other expenses for the nine months ended February 29, 2008 include a gain on property sale of $57 million. Acquisition related and other expenses for the nine months ended February 28, 2007 include a benefit of $52 million related to the settlement of a pre-acquisition lawsuit against PeopleSoft, Inc. Please see Appendix A for further discussion. |
ORACLE CORPORATION
Q3 FISCAL 2008 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
(in millions, except per share data)
| % Increase (Decrease) | ||||||||||||||||||||||||||||||||
| Nine Months Ended | in US $ | |||||||||||||||||||||||||||||||
| February 29, 2008 | February 29, 2008 | February 28, 2007 | February 28, 2007 | |||||||||||||||||||||||||||||
| GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||||||||||||
TOTAL REVENUES (2) | $ 15,191 | $ 138 | $ 15,329 | $ 12,167 | $ 158 | $ 12,325 | 25 | % | 24 | % | ||||||||||||||||||||||
TOTAL SOFTWARE REVENUES (2) | $ 11,868 | $ 138 | $ 12,006 | $ 9,457 | $ 158 | $ 9,615 | 25 | % | 25 | % | ||||||||||||||||||||||
| New software licenses | 4,371 | — | 4,371 | 3,401 | — | 3,401 | 29 | % | 29 | % | ||||||||||||||||||||||
| Software license updates and product support (2) | 7,497 | 138 | 7,635 | 6,056 | 158 | 6,214 | 24 | % | 23 | % | ||||||||||||||||||||||
TOTAL OPERATING EXPENSES | $ 10,317 | $ (1,103 | ) | $ 9,214 | $ 8,474 | $ (856 | ) | $ 7,618 | 22 | % | 21 | % | ||||||||||||||||||||
| Stock-based compensation (3) | 194 | (194 | ) | — | 145 | (145 | ) | — | 34 | % | * | |||||||||||||||||||||
| Amortization of intangible assets (4) | 867 | (867 | ) | — | 623 | (623 | ) | — | 39 | % | * | |||||||||||||||||||||
| Acquisition related and other | 28 | (28 | ) | — | 65 | (65 | ) | — | (57 | %) | * | |||||||||||||||||||||
| Restructuring | 14 | (14 | ) | — | 23 | (23 | ) | — | (41 | %) | * | |||||||||||||||||||||
OPERATING INCOME | $ 4,874 | $ 1,241 | $ 6,115 | $ 3,693 | $ 1,014 | $ 4,707 | 32 | % | 30 | % | ||||||||||||||||||||||
OPERATING MARGIN % | 32 | % | 40 | % | 31 | % | 38 | % | 6 | % | 4 | % | ||||||||||||||||||||
INCOME TAX EFFECTS ON ABOVE ADJUSTMENTS (5) | $ 1,409 | $ 357 | $ 1,766 | $ 1,052 | $ 287 | $ 1,339 | 34 | % | 32 | % | ||||||||||||||||||||||
NET INCOME | $ 3,484 | $ 884 | $ 4,368 | $ 2,670 | $ 727 | $ 3,397 | 30 | % | 29 | % | ||||||||||||||||||||||
DILUTED EARNINGS PER SHARE (6) | $ 0.67 | $ 0.84 | $ 0.51 | $ 0.64 | 32 | % | 30 | % | ||||||||||||||||||||||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (6) | 5,228 | 1 | 5,229 | 5,284 | 9 | 5,293 | (1 | %) | (1 | %) | ||||||||||||||||||||||
| (1) | This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A. | |
| (2) | As of February 29, 2008, approximately $9 million in estimated revenues related to assumed support contracts will not be recognized in fiscal 2008 due to business combination accounting rules. | |
| (3) | Stock-based compensation is included in the following GAAP operating expenses: |
| Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||
| February 29, 2008 | February 28, 2007 | |||||||||||||||||||||||
| GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||||
| Sales and marketing | $ | 38 | $ | (38 | ) | $ | — | $ | 27 | $ | (27 | ) | $ | — | ||||||||||
| Software license updates and product support | 8 | (8 | ) | — | 8 | (8 | ) | — | ||||||||||||||||
| Cost of services | 9 | (9 | ) | — | 11 | (11 | ) | — | ||||||||||||||||
| Research and development | 84 | (84 | ) | — | 63 | (63 | ) | — | ||||||||||||||||
| General and administrative | 55 | (55 | ) | — | 36 | (36 | ) | — | ||||||||||||||||
| Subtotal | 194 | (194 | ) | — | 145 | (145 | ) | — | ||||||||||||||||
| Acquisition related and other | 39 | (39 | ) | — | 1 | (1 | ) | — | ||||||||||||||||
| Total stock-based compensation | $ | 233 | $ | (233 | ) | $ | — | $ | 146 | $ | (146 | ) | $ | — | ||||||||||
| (4) | Estimated future amortization expense related to intangible assets as of February 29, 2008 is as follows: |
| Remainder of Fiscal 2008 | $ | 317 | ||
| Fiscal 2009 | 1,153 | |||
| Fiscal 2010 | 1,029 | |||
| Fiscal 2011 | 799 | |||
| Fiscal 2012 | 660 | |||
| Fiscal 2013 | 306 | |||
| Thereafter | 1,142 | |||
| Total | $ | 5,406 | ||
| (5) | The income tax provision was calculated reflecting a tax rate of 28.8% and 28.3% in the first nine months of fiscal 2008 and 2007, respectively. | |
| (6) | Non-GAAP diluted earnings per share and non-GAAP diluted weighted average shares outstanding were calculated excluding the effects of expensing stock options under Statement 123R. | |
| * | Not meaningful |
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
| February 29, | May 31, | |||||||
| 2008 | 2007 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
| Cash and cash equivalents | $ | 8,409 | $ | 6,218 | ||||
| Marketable securities | 2,097 | 802 | ||||||
| Trade receivables, net | 3,235 | 4,074 | ||||||
| Deferred tax assets | 964 | 968 | ||||||
| Other current assets | 1,026 | 821 | ||||||
Total Current Assets | 15,731 | 12,883 | ||||||
Non-Current Assets: | ||||||||
| Property, net | 1,570 | 1,603 | ||||||
| Intangible assets, net | 5,406 | 5,964 | ||||||
| Goodwill | 13,677 | 13,479 | ||||||
| Deferred tax assets | 257 | 48 | ||||||
| Other assets | 675 | 595 | ||||||
Total Non-Current Assets | 21,585 | 21,689 | ||||||
TOTAL ASSETS | $ | 37,316 | $ | 34,572 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
| Commercial paper and other short-term borrowings | $ | 1 | $ | 1,358 | ||||
| Accounts payable | 383 | 315 | ||||||
| Income taxes payable | — | 1,237 | ||||||
| Accrued compensation and related benefits | 1,292 | 1,349 | ||||||
| Accrued restructuring | 168 | 201 | ||||||
| Deferred revenues | 3,683 | 3,492 | ||||||
| Other current liabilities | 1,303 | 1,435 | ||||||
Total Current Liabilities | 6,830 | 9,387 | ||||||
Non-Current Liabilities: | ||||||||
| Notes payable, non-current | 6,237 | 6,235 | ||||||
| Income taxes payable | 1,522 | — | ||||||
| Deferred tax liabilities | 742 | 1,121 | ||||||
| Accrued restructuring | 229 | 258 | ||||||
| Deferred revenues | 257 | 93 | ||||||
| Minority interests | 341 | 316 | ||||||
| Other long-term liabilities | 343 | 243 | ||||||
Total Non-Current Liabilities | 9,671 | 8,266 | ||||||
Stockholders’ Equity | 20,815 | 16,919 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 37,316 | $ | 34,572 | ||||
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
| Nine Months Ended | ||||||||
| February 29, 2008 | February 28, 2007 | |||||||
Cash Flows From Operating Activities: | ||||||||
| Net income | $ | 3,484 | $ | 2,670 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 202 | 184 | ||||||
| Amortization of intangible assets | 867 | 623 | ||||||
| Deferred income taxes | (130 | ) | (20 | ) | ||||
| Minority interests in income | 45 | 52 | ||||||
| Stock-based compensation | 233 | 146 | ||||||
| Tax benefit on the exercise of stock options | 492 | 259 | ||||||
| Excess tax benefits from stock-based compensation | (403 | ) | (204 | ) | ||||
| In-process research and development | 7 | 95 | ||||||
| Other gains, net | (64 | ) | (20 | ) | ||||
| Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||
| Decrease in trade receivables, net | 980 | 501 | ||||||
| Decrease (increase) in prepaid expenses and other assets | 61 | (33 | ) | |||||
| Decrease in accounts payable and other liabilities | (482 | ) | (817 | ) | ||||
| Decrease in income taxes payable | (273 | ) | (110 | ) | ||||
| Increase (decrease) in deferred revenues | 88 | (21 | ) | |||||
Net cash provided by operating activities | 5,107 | 3,305 | ||||||
Cash Flows From Investing Activities: | ||||||||
| Purchases of marketable securities and other investments | (3,629 | ) | (4,686 | ) | ||||
| Proceeds from maturities and sales of marketable securities and other investments | 2,532 | 4,653 | ||||||
| Acquisitions, net of cash acquired | (700 | ) | (2,290 | ) | ||||
| Capital expenditures | (195 | ) | (183 | ) | ||||
| Proceeds from sale of property | 153 | 2 | ||||||
Net cash used for investing activities | (1,839 | ) | (2,504 | ) | ||||
Cash Flows From Financing Activities: | ||||||||
| Payments for repurchases of common stock | (1,520 | ) | (2,933 | ) | ||||
| Proceeds from issuance of common stock | 1,047 | 684 | ||||||
| Payments of debt | (1,362 | ) | (175 | ) | ||||
| Excess tax benefits from stock-based compensation | 403 | 204 | ||||||
| Distributions to minority interests | (49 | ) | (46 | ) | ||||
Net cash used for financing activities | (1,481 | ) | (2,266 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 404 | 56 | ||||||
Net increase (decrease) in cash and cash equivalents | 2,191 | (1,409 | ) | |||||
Cash and cash equivalents at beginning of period | 6,218 | 6,659 | ||||||
Cash and cash equivalents at end of period | $ | 8,409 | $ | 5,250 | ||||
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
FREE CASH FLOW — TRAILING 4-QUARTERS (1)
FREE CASH FLOW — TRAILING 4-QUARTERS (1)
($ in millions)
| Fiscal 2007 | Fiscal 2008 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||||||||||||||||||||||
GAAP Operating Cash Flow | $ | 4,706 | $ | 4,651 | $ | 4,984 | $ | 5,520 | $ | 6,598 | $ | 6,957 | $ | 7,322 | ||||||||||||||||||
Capital Expenditures (2) | (233 | ) | (256 | ) | (258 | ) | (319 | ) | (357 | ) | (369 | ) | (331 | ) | ||||||||||||||||||
Free Cash Flow | $ | 4,473 | $ | 4,395 | $ | 4,726 | $ | 5,201 | $ | 6,241 | $ | 6,588 | $ | 6,991 | ||||||||||||||||||
% Growth over prior year | 32 | % | 32 | % | 29 | % | 21 | % | 40 | % | 50 | % | 48 | % | ||||||||||||||||||
GAAP Net Income | $ | 3,532 | $ | 3,702 | $ | 3,970 | $ | 4,274 | $ | 4,444 | $ | 4,781 | $ | 5,088 | ||||||||||||||||||
Free Cash Flow as a % of Net Income | 127 | % | 119 | % | 119 | % | 122 | % | 140 | % | 138 | % | 137 | % | ||||||||||||||||||
| (1) | To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures of cash flows on a trailing 4-quarter basis to analyze cash flow generated from operations. We believe free cash flow is also useful as one of the bases for comparing our performance with our competitors. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity. | |
| (2) | Represents capital expenditures as reported in cash flows from investing activities on our cash flow statements presented in accordance with GAAP. |
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
(in millions, except headcount data)
| Fiscal 2007 | Fiscal 2008 | |||||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||||||||||||||||||||||||||
REVENUES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | $ | 804 | $ | 1,207 | $ | 1,390 | $ | 2,481 | $ | 5,882 | $ | 1,087 | $ | 1,668 | $ | 1,616 | $ | 4,371 | ||||||||||||||||||||||
| Software license updates and product support | 1,941 | 2,007 | 2,108 | 2,272 | 8,329 | 2,383 | 2,491 | 2,624 | 7,497 | |||||||||||||||||||||||||||||||
| Software Revenues | 2,745 | 3,214 | 3,498 | 4,753 | 14,211 | 3,470 | 4,159 | 4,240 | 11,868 | |||||||||||||||||||||||||||||||
| Consulting | 640 | 716 | 694 | 819 | 2,869 | 801 | 877 | 843 | 2,520 | |||||||||||||||||||||||||||||||
| On Demand | 125 | 140 | 142 | 151 | 557 | 158 | 167 | 174 | 500 | |||||||||||||||||||||||||||||||
| Education | 81 | 93 | 80 | 105 | 359 | 100 | 110 | 92 | 303 | |||||||||||||||||||||||||||||||
| Services Revenues | 846 | 949 | 916 | 1,075 | 3,785 | 1,059 | 1,154 | 1,109 | 3,323 | |||||||||||||||||||||||||||||||
| Total Revenues | $ | 3,591 | $ | 4,163 | $ | 4,414 | $ | 5,828 | $ | 17,996 | $ | 4,529 | $ | 5,313 | $ | 5,349 | $ | 15,191 | ||||||||||||||||||||||
AS REPORTED REVENUE GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | 28 | % | 14 | % | 27 | % | 17 | % | 20 | % | 35 | % | 38 | % | 16 | % | 29 | % | ||||||||||||||||||||||
| Software license updates and product support | 29 | % | 29 | % | 24 | % | 21 | % | 25 | % | 23 | % | 24 | % | 25 | % | 24 | % | ||||||||||||||||||||||
| Software Revenues | 29 | % | 23 | % | 25 | % | 19 | % | 23 | % | 26 | % | 29 | % | 21 | % | 25 | % | ||||||||||||||||||||||
| Consulting | 33 | % | 42 | % | 38 | % | 30 | % | 35 | % | 25 | % | 23 | % | 21 | % | 23 | % | ||||||||||||||||||||||
| On Demand | 49 | % | 61 | % | 48 | % | 16 | % | 40 | % | 27 | % | 20 | % | 23 | % | 23 | % | ||||||||||||||||||||||
| Education | 13 | % | 14 | % | 8 | % | 10 | % | 11 | % | 24 | % | 17 | % | 16 | % | 19 | % | ||||||||||||||||||||||
| Services Revenues | 33 | % | 41 | % | 36 | % | 26 | % | 33 | % | 25 | % | 22 | % | 21 | % | 23 | % | ||||||||||||||||||||||
| Total Revenues | 30 | % | 26 | % | 27 | % | 20 | % | 25 | % | 26 | % | 28 | % | 21 | % | 25 | % | ||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | 26 | % | 10 | % | 23 | % | 13 | % | 17 | % | 32 | % | 31 | % | 9 | % | 22 | % | ||||||||||||||||||||||
| Software license updates and product support | 27 | % | 25 | % | 20 | % | 17 | % | 22 | % | 19 | % | 18 | % | 18 | % | 18 | % | ||||||||||||||||||||||
| Software Revenues | 27 | % | 19 | % | 21 | % | 15 | % | 20 | % | 23 | % | 23 | % | 15 | % | 20 | % | ||||||||||||||||||||||
| Consulting | 31 | % | 37 | % | 34 | % | 24 | % | 31 | % | 20 | % | 15 | % | 14 | % | 16 | % | ||||||||||||||||||||||
| On Demand | 47 | % | 56 | % | 43 | % | 12 | % | 37 | % | 23 | % | 15 | % | 17 | % | 18 | % | ||||||||||||||||||||||
| Education | 11 | % | 11 | % | 4 | % | 6 | % | 8 | % | 20 | % | 10 | % | 9 | % | 13 | % | ||||||||||||||||||||||
| Services Revenues | 31 | % | 36 | % | 32 | % | 20 | % | 29 | % | 21 | % | 15 | % | 14 | % | 16 | % | ||||||||||||||||||||||
| Total Revenues | 28 | % | 23 | % | 23 | % | 16 | % | 22 | % | 22 | % | 21 | % | 15 | % | 19 | % | ||||||||||||||||||||||
GEOGRAPHIC REVENUES | ||||||||||||||||||||||||||||||||||||||||
REVENUES | ||||||||||||||||||||||||||||||||||||||||
| Americas | $ | 1,956 | $ | 2,170 | $ | 2,315 | $ | 3,018 | $ | 9,460 | $ | 2,375 | $ | 2,674 | $ | 2,707 | $ | 7,756 | ||||||||||||||||||||||
| Europe, Middle East & Africa | 1,140 | 1,422 | 1,484 | 1,992 | 6,037 | 1,530 | 1,865 | 1,871 | 5,265 | |||||||||||||||||||||||||||||||
| Asia Pacific | 495 | 571 | 615 | 818 | 2,499 | 624 | 774 | 771 | 2,170 | |||||||||||||||||||||||||||||||
| Total Revenues | $ | 3,591 | $ | 4,163 | $ | 4,414 | $ | 5,828 | $ | 17,996 | $ | 4,529 | $ | 5,313 | $ | 5,349 | $ | 15,191 | ||||||||||||||||||||||
HEADCOUNT (2) | ||||||||||||||||||||||||||||||||||||||||
GEOGRAPHIC AREA | ||||||||||||||||||||||||||||||||||||||||
| Americas | 26,798 | 27,444 | 27,873 | 29,830 | 30,455 | 30,654 | 30,624 | |||||||||||||||||||||||||||||||||
| Europe, Middle East & Africa | 14,199 | 14,640 | 14,758 | 15,680 | 15,985 | 16,140 | 16,383 | |||||||||||||||||||||||||||||||||
| Asia Pacific | 24,129 | 26,350 | 27,850 | 29,164 | 31,212 | 32,855 | 33,212 | |||||||||||||||||||||||||||||||||
| Total Company | 65,126 | 68,434 | 70,481 | 74,674 | 77,652 | 79,649 | 80,219 | |||||||||||||||||||||||||||||||||
| (1) | The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. | |
| (2) | Headcount has increased primarily due to our acquisitions. |
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)
($ in millions)
| Fiscal 2007 | Fiscal 2008 | |||||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||||||||||||||||||||||||||
APPLICATIONS REVENUES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | $ | 228 | $ | 340 | $ | 423 | $ | 726 | $ | 1,716 | $ | 376 | $ | 553 | $ | 451 | $ | 1,380 | ||||||||||||||||||||||
| Software license updates and product support | 703 | 728 | 769 | 832 | 3,032 | 886 | 929 | 974 | 2,789 | |||||||||||||||||||||||||||||||
| Software Revenues | $ | 931 | $ | 1,068 | $ | 1,192 | $ | 1,558 | $ | 4,748 | $ | 1,262 | $ | 1,482 | $ | 1,425 | $ | 4,169 | ||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | 80 | % | 28 | % | 57 | % | 13 | % | 32 | % | 65 | % | 63 | % | 7 | % | 39 | % | ||||||||||||||||||||||
| Software license updates and product support | 51 | % | 45 | % | 27 | % | 23 | % | 35 | % | 26 | % | 28 | % | 27 | % | 27 | % | ||||||||||||||||||||||
| Software Revenues | 57 | % | 39 | % | 36 | % | 18 | % | 34 | % | 36 | % | 39 | % | 20 | % | 31 | % | ||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | 78 | % | 25 | % | 52 | % | 10 | % | 29 | % | 61 | % | 56 | % | 2 | % | 34 | % | ||||||||||||||||||||||
| Software license updates and product support | 49 | % | 41 | % | 23 | % | 19 | % | 32 | % | 22 | % | 21 | % | 20 | % | 21 | % | ||||||||||||||||||||||
| Software Revenues | 55 | % | 35 | % | 32 | % | 15 | % | 31 | % | 32 | % | 32 | % | 14 | % | 25 | % | ||||||||||||||||||||||
DATABASE & MIDDLEWARE REVENUES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | $ | 576 | $ | 867 | $ | 967 | $ | 1,755 | $ | 4,166 | $ | 711 | $ | 1,115 | $ | 1,165 | $ | 2,991 | ||||||||||||||||||||||
| Software license updates and product support | 1,238 | 1,279 | 1,339 | 1,440 | 5,297 | 1,497 | 1,562 | 1,650 | 4,708 | |||||||||||||||||||||||||||||||
| Software Revenues | $ | 1,814 | $ | 2,146 | $ | 2,306 | $ | 3,195 | $ | 9,463 | $ | 2,208 | $ | 2,677 | $ | 2,815 | $ | 7,699 | ||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | 15 | % | 9 | % | 17 | % | 18 | % | 16 | % | 23 | % | 29 | % | 20 | % | 24 | % | ||||||||||||||||||||||
| Software license updates and product support | 19 | % | 21 | % | 22 | % | 20 | % | 21 | % | 21 | % | 22 | % | 23 | % | 22 | % | ||||||||||||||||||||||
| Software Revenues | 18 | % | 16 | % | 20 | % | 19 | % | 18 | % | 22 | % | 25 | % | 22 | % | 23 | % | ||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | 13 | % | 5 | % | 13 | % | 15 | % | 12 | % | 20 | % | 22 | % | 13 | % | 18 | % | ||||||||||||||||||||||
| Software license updates and product support | 18 | % | 18 | % | 19 | % | 17 | % | 18 | % | 17 | % | 16 | % | 17 | % | 17 | % | ||||||||||||||||||||||
| Software Revenues | 16 | % | 13 | % | 16 | % | 16 | % | 15 | % | 18 | % | 18 | % | 15 | % | 17 | % | ||||||||||||||||||||||
| (1) | The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. |
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE REVENUE ANALYSIS (1) (2)
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE REVENUE ANALYSIS (1) (2)
($ in millions)
| Fiscal 2007 | Fiscal 2008 | |||||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||||||||||||||||||||||||||
AMERICAS | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | $ | 232 | $ | 333 | $ | 383 | $ | 795 | $ | 1,743 | $ | 286 | $ | 438 | $ | 476 | $ | 1,200 | ||||||||||||||||||||||
| Applications | 126 | 195 | 250 | 415 | 986 | 199 | 306 | 252 | 757 | |||||||||||||||||||||||||||||||
| New Software License Revenues | $ | 358 | $ | 528 | $ | 633 | $ | 1,210 | $ | 2,729 | $ | 485 | $ | 744 | $ | 728 | $ | 1,957 | ||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 19 | % | 2 | % | 15 | % | 20 | % | 15 | % | 23 | % | 32 | % | 24 | % | 27 | % | ||||||||||||||||||||||
| Applications | 69 | % | 19 | % | 69 | % | 5 | % | 26 | % | 58 | % | 57 | % | 1 | % | 33 | % | ||||||||||||||||||||||
| New Software License Revenues | 33 | % | 8 | % | 31 | % | 14 | % | 19 | % | 35 | % | 41 | % | 15 | % | 29 | % | ||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 18 | % | 2 | % | 15 | % | 19 | % | 14 | % | 22 | % | 29 | % | 21 | % | 24 | % | ||||||||||||||||||||||
| Applications | 69 | % | 19 | % | 69 | % | 4 | % | 26 | % | 57 | % | 54 | % | (1 | %) | 31 | % | ||||||||||||||||||||||
| New Software License Revenues | 32 | % | 7 | % | 31 | % | 13 | % | 18 | % | 34 | % | 38 | % | 12 | % | 26 | % | ||||||||||||||||||||||
EUROPE / MIDDLE EAST / AFRICA | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | $ | 184 | $ | 341 | $ | 363 | $ | 619 | $ | 1,507 | $ | 253 | $ | 420 | $ | 446 | $ | 1,119 | ||||||||||||||||||||||
| Applications | 69 | 101 | 124 | 224 | 518 | 123 | 174 | 141 | 438 | |||||||||||||||||||||||||||||||
| New Software License Revenues | $ | 253 | $ | 442 | $ | 487 | $ | 843 | $ | 2,025 | $ | 376 | $ | 594 | $ | 587 | $ | 1,557 | ||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 12 | % | 21 | % | 15 | % | 20 | % | 18 | % | 38 | % | 23 | % | 23 | % | 26 | % | ||||||||||||||||||||||
| Applications | 83 | % | 35 | % | 29 | % | 42 | % | 42 | % | 77 | % | 72 | % | 14 | % | 49 | % | ||||||||||||||||||||||
| New Software License Revenues | 25 | % | 24 | % | 18 | % | 25 | % | 23 | % | 49 | % | 34 | % | 21 | % | 32 | % | ||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 8 | % | 11 | % | 6 | % | 12 | % | 10 | % | 30 | % | 12 | % | 11 | % | 16 | % | ||||||||||||||||||||||
| Applications | 78 | % | 25 | % | 19 | % | 34 | % | 33 | % | 69 | % | 58 | % | 6 | % | 39 | % | ||||||||||||||||||||||
| New Software License Revenues | 21 | % | 14 | % | 9 | % | 18 | % | 15 | % | 41 | % | 23 | % | 10 | % | 21 | % | ||||||||||||||||||||||
ASIA PACIFIC | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | $ | 149 | $ | 185 | $ | 213 | $ | 322 | $ | 869 | $ | 155 | $ | 244 | $ | 231 | $ | 630 | ||||||||||||||||||||||
| Applications | 33 | 44 | 49 | 87 | 212 | 54 | 73 | 58 | 185 | |||||||||||||||||||||||||||||||
| New Software License Revenues | $ | 182 | $ | 229 | $ | 262 | $ | 409 | $ | 1,081 | $ | 209 | $ | 317 | $ | 289 | $ | 815 | ||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 12 | % | 5 | % | 26 | % | 10 | % | 13 | % | 4 | % | 32 | % | 8 | % | 15 | % | ||||||||||||||||||||||
| Applications | 126 | % | 58 | % | 89 | % | (1 | %) | 36 | % | 67 | % | 66 | % | 18 | % | 47 | % | ||||||||||||||||||||||
| New Software License Revenues | 23 | % | 12 | % | 34 | % | 8 | % | 17 | % | 15 | % | 39 | % | 10 | % | 21 | % | ||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 13 | % | 2 | % | 24 | % | 7 | % | 11 | % | 1 | % | 26 | % | 0 | % | 9 | % | ||||||||||||||||||||||
| Applications | 124 | % | 53 | % | 83 | % | (4 | %) | 33 | % | 60 | % | 57 | % | 5 | % | 37 | % | ||||||||||||||||||||||
| New Software License Revenues | 24 | % | 9 | % | 32 | % | 5 | % | 15 | % | 12 | % | 32 | % | 1 | % | 14 | % | ||||||||||||||||||||||
TOTAL COMPANY | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | $ | 565 | $ | 859 | $ | 959 | $ | 1,736 | $ | 4,119 | $ | 694 | $ | 1,102 | $ | 1,153 | $ | 2,949 | ||||||||||||||||||||||
| Applications | 228 | 340 | 423 | 726 | 1,716 | 376 | 553 | 451 | 1,380 | |||||||||||||||||||||||||||||||
| New Software License Revenues | $ | 793 | $ | 1,199 | $ | 1,382 | $ | 2,462 | $ | 5,835 | $ | 1,070 | $ | 1,655 | $ | 1,604 | $ | 4,329 | ||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 15 | % | 9 | % | 17 | % | 18 | % | 15 | % | 23 | % | 28 | % | 20 | % | 24 | % | ||||||||||||||||||||||
| Applications | 80 | % | 28 | % | 57 | % | 13 | % | 32 | % | 65 | % | 63 | % | 7 | % | 39 | % | ||||||||||||||||||||||
| New Software License Revenues | 28 | % | 14 | % | 27 | % | 17 | % | 20 | % | 35 | % | 38 | % | 16 | % | 28 | % | ||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 13 | % | 5 | % | 13 | % | 14 | % | 12 | % | 19 | % | 21 | % | 12 | % | 17 | % | ||||||||||||||||||||||
| Applications | 78 | % | 25 | % | 52 | % | 10 | % | 29 | % | 61 | % | 56 | % | 2 | % | 34 | % | ||||||||||||||||||||||
| New Software License Revenues | 27 | % | 10 | % | 23 | % | 13 | % | 16 | % | 31 | % | 31 | % | 9 | % | 22 | % | ||||||||||||||||||||||
| (1) | The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. | |
| (2) | New Software License Revenues presented exclude documentation and miscellaneous revenues. |
APPENDIX A
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES
Q3 FISCAL 2008 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES
To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the table, which exclude certain business combination accounting entries and expenses related to acquisitions as well as other significant expenses including stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:
•Support deferred revenue : Business combination accounting rules require us to account for the fair value of support contracts assumed in connection with our acquisitions. Because these are typically one-year contracts, our GAAP revenues for the one-year period subsequent to our acquisitions do not reflect the full amount of software license updates and product support revenues on assumed support contracts that would have otherwise been recorded by the acquired entities. The non-GAAP adjustment is intended to reflect the full amount of such revenues. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business because we have historically experienced high renewal rates on support contracts, although we cannot be certain that customers will renew these contracts.
•Stock-based compensation expenses : We have excluded the effect of stock-based compensation expenses from our non-GAAP operating expenses and net income. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.
•Amortization of intangible assets expenses : We have excluded the effect of amortization of intangibles from our non-GAAP operating expenses and net income. Amortization of intangible assets expense is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well. Amortization expenses will recur in future periods.
•Acquisition related and other expenses, and restructuring expenses : We incurred significant expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we would not have otherwise incurred in the periods presented. Acquisition related and other expenses primarily consist of in-process research and development expenses, integration related professional services, stock-based compensation expenses (in addition to the stock-based compensation expenses described above), personnel related expenses for transitional employees, certain business combination contingency adjustments after the purchase price allocation period has ended, and certain other operating expenses or income. Stock-based compensation expenses included in acquisition related and other expenses primarily resulted from unvested options assumed in acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the terms of those options. Restructuring expenses consist of Oracle employee severance and other exit costs. We believe it is useful for investors to understand the effect of these items on our total operating expenses. Although acquisition related expenses and restructuring expenses are not recurring with respect to past acquisitions, we will incur these expenses in connection with future acquisitions.
For the three and nine months ended February 29, 2008, acquisition related and other expenses include a gain on property sale of $57 million. For the nine months ended February 28, 2007, acquisition related and other expenses included a $52 million benefit related to the settlement of a lawsuit filed against PeopleSoft, Inc. on behalf of the U.S. government. This lawsuit was filed in October 2003, prior to our acquisition of PeopleSoft and represented a pre-acquisition contingency that we identified and assumed in connection with our acquisition of PeopleSoft. In October 2006, we agreed to pay the U.S. government $98 million to settle this lawsuit. Business combination accounting standards require that after the end of the purchase price allocation period, any adjustment that results from a pre-acquisition contingency should be included as an element of net income in the period of settlement, versus an adjustment to the original purchase price allocation. Since the purchase price allocation period for PeopleSoft ended in the third quarter of fiscal 2006, the favorable difference of $52 million between the estimated exposure recorded for this lawsuit during the purchase price allocation period and the actual settlement amount has been included in our consolidated statement of operations for the nine months ended February 28, 2007 as a component of acquisition related and other expenses.