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 Q2 GAAP EPS UP 36% TO 25 CENTS, NON-GAAP EPS UP 40% TO 31 CENTS
Applications New License Revenues Up 63%, Database and Middleware New License Revenues Up 28%
Applications New License Revenues Up 63%, Database and Middleware New License Revenues Up 28%
REDWOOD SHORES, Calif., December 19, 2007 — Oracle Corporation (NASDAQ: ORCL) today announced fiscal 2008 Q2 GAAP earnings per share were up 36% to $0.25, compared to the same quarter last year. Second quarter total GAAP revenues were up 28% to $5.3 billion, while quarterly GAAP net income was up 35% to $1.3 billion. Total GAAP software revenues were up 29% to $4.2 billion with GAAP new software license revenues up 38% to $1.7 billion. Database and middleware new license revenues were up 28% and applications new license revenues were up 63%. Services revenues were up 22% to $1.2 billion, compared to the same quarter last year.
Second quarter non-GAAP earnings per share were up 40% to $0.31, and non-GAAP net income was up 38% to $1.6 billion, compared to the same quarter last year.
“In Q1 we reported new software license revenues up 35%, the strongest growth of any quarter in ten years,” said Oracle President and CFO, Safra Catz. “In Q2 we did even better with new software license sales up 38%. GAAP EPS were up 36%; non-GAAP EPS were up 40%. We exceeded our guidance and our best case forecast with strong revenue growth across all product lines and geographies.”
“In Q2 Oracle’s applications new license sales grew 63% compared to SAP’s new license sales growth rate of 15% in their most recently completed quarter,” said Oracle President, Charles Phillips. “We like our growth strategy of expanding beyond ERP into high-end industry specific vertical software in contrast to SAP’s strategy of moving down market to sell ERP systems to small companies.”
“Our database and middleware new license sales grew 28% in Q2,” said CEO, Larry Ellison. “We continue to take market share from IBM in both product categories.”
Q2 Earnings Announcement
Oracle will hold a conference call and web broadcast today to discuss these results at 2:00 p.m. (PST) / 5:00 p.m. (EST). To access the live web broadcast of this event, please visit the Oracle Investor Relations website at http://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 visit http://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 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 at http://www.oracle.com/investor. All information set forth in this release is current as of December 19, 2007. Oracle undertakes no duty to update any statement in light of new information or future events.
ORACLE CORPORATION
Q2 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 November 30, | % Increase | (Decrease) | |||||||||||||||||||||||
| % of | % of | (Decrease) | in Constant | ||||||||||||||||||||||
| 2007 | Revenues | 2006 | Revenues | in US $ | Currency (1) | ||||||||||||||||||||
REVENUES | |||||||||||||||||||||||||
| New software licenses | $ | 1,668 | 31% | $ | 1,207 | 29% | 38% | 31% | |||||||||||||||||
| Software license updates and product support | 2,491 | 47% | 2,007 | 48% | 24% | 18% | |||||||||||||||||||
| Software Revenues | 4,159 | 78% | 3,214 | 77% | 29% | 23% | |||||||||||||||||||
| Services | 1,154 | 22% | 949 | 23% | 22% | 15% | |||||||||||||||||||
Total Revenues | 5,313 | 100% | 4,163 | 100% | 28% | 21% | |||||||||||||||||||
OPERATING EXPENSES | |||||||||||||||||||||||||
| Sales and marketing | 1,095 | 21% | 915 | 22% | 20% | 14% | |||||||||||||||||||
| Software license updates and product support | 246 | 5% | 205 | 5% | 20% | 14% | |||||||||||||||||||
| Cost of services | 992 | 19% | 820 | 20% | 21% | 14% | |||||||||||||||||||
| Research and development | 674 | 12% | 519 | 12% | 30% | 27% | |||||||||||||||||||
| General and administrative | 206 | 4% | 170 | 4% | 21% | 16% | |||||||||||||||||||
| Amortization of intangible assets | 290 | 5% | 202 | 5% | 43% | 43% | |||||||||||||||||||
| Acquisition related (2) | 22 | 0% | (36 | ) | (1% | ) | 160% | 158% | |||||||||||||||||
| Restructuring | 6 | 0% | 11 | 0% | (49% | ) | (51% | ) | |||||||||||||||||
Total Operating Expenses | 3,531 | 66% | 2,806 | 67% | 26% | 20% | |||||||||||||||||||
OPERATING INCOME | 1,782 | 34% | 1,357 | 33% | 31% | 22% | |||||||||||||||||||
| Interest expense | (89 | ) | (2% | ) | (82 | ) | (2% | ) | 8% | 8% | |||||||||||||||
| Non-operating income, net | 122 | 2% | 79 | 2% | 52% | 48% | |||||||||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 1,815 | 34% | 1,354 | 33% | 34% | 25% | |||||||||||||||||||
| Provision for income taxes | 512 | 9% | 387 | 10% | 32% | 28% | |||||||||||||||||||
NET INCOME | $ | 1,303 | 25% | $ | 967 | 23% | 35% | 24% | |||||||||||||||||
EARNINGS PER SHARE: | |||||||||||||||||||||||||
| Basic | $ | 0.25 | $ | 0.19 | 36% | ||||||||||||||||||||
| Diluted | $ | 0.25 | $ | 0.18 | 36% | ||||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||||||||||||||||||||
| Basic | 5,125 | 5,184 | (1% | ) | |||||||||||||||||||||
| Diluted | 5,232 | 5,287 | (1% | ) | |||||||||||||||||||||
| (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 November 30, 2007 compared with the corresponding prior year period, contributing 7 percentage points of revenue, 6 percentage points of operating expense and 9 percentage points of operating income growth. | |
| (2) | Acquisition related costs for the three months ended November 30, 2006 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
Q2 FISCAL 2008 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) (in millions, except per share data)
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
| % Increase (Decrease) | ||||||||||||||||||||||||||||||||||
| Three Months Ended November 30, | in US $ | |||||||||||||||||||||||||||||||||
| 2007 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
| GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||||||||||||||
TOTAL REVENUES (2) | $ | 5,313 | $ | 51 | $ | 5,364 | $ | 4,163 | $ | 53 | $ | 4,216 | 28 | % | 27 | % | ||||||||||||||||||
TOTAL SOFTWARE REVENUES (2) | $ | 4,159 | $ | 51 | $ | 4,210 | $ | 3,214 | $ | 53 | $ | 3,267 | 29 | % | 29 | % | ||||||||||||||||||
| New software licenses | 1,668 | — | 1,668 | 1,207 | — | 1,207 | 38 | % | 38 | % | ||||||||||||||||||||||||
| Software license updates and product support (2) | 2,491 | 51 | 2,542 | 2,007 | 53 | 2,060 | 24 | % | 23 | % | ||||||||||||||||||||||||
TOTAL OPERATING EXPENSES | $ | 3,531 | $ | (381 | ) | $ | 3,150 | $ | 2,806 | $ | (224 | ) | $ | 2,582 | 26 | % | 22 | % | ||||||||||||||||
| Stock-based compensation (3) | 63 | (63 | ) | — | 47 | (47 | ) | — | 35 | % | ||||||||||||||||||||||||
| Amortization of intangible assets (4) | 290 | (290 | ) | — | 202 | (202 | ) | — | 43 | % | ||||||||||||||||||||||||
| Acquisition related | 22 | (22 | ) | — | (36 | ) | 36 | — | 160 | % | ||||||||||||||||||||||||
| Restructuring | 6 | (6 | ) | — | 11 | (11 | ) | — | (49 | %) | ||||||||||||||||||||||||
OPERATING INCOME | $ | 1,782 | $ | 432 | $ | 2,214 | $ | 1,357 | $ | 277 | $ | 1,634 | 31 | % | 36 | % | ||||||||||||||||||
OPERATING MARGIN % | 34 | % | 41 | % | 33 | % | 39 | % | 1 | % | 2 | % | ||||||||||||||||||||||
INCOME TAX EFFECTS ON ABOVE ADJUSTMENTS (5) | $ | 512 | $ | 122 | $ | 634 | $ | 387 | $ | 79 | $ | 466 | 32 | % | 36 | % | ||||||||||||||||||
NET INCOME | $ | 1,303 | $ | 310 | $ | 1,613 | $ | 967 | $ | 198 | $ | 1,165 | 35 | % | 38 | % | ||||||||||||||||||
DILUTED EARNINGS PER SHARE (6) | $ | 0.25 | $ | 0.31 | $ | 0.18 | $ | 0.22 | 36 | % | 40 | % | ||||||||||||||||||||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (6) | 5,232 | 1 | 5,233 | 5,287 | 16 | 5,303 | (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 November 30, 2007, approximately $31 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 | |||||||||||||||||||||||
| November 30, 2007 | November 30, 2006 | |||||||||||||||||||||||
| GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||||
| Sales and marketing | $ | 13 | $ | (13 | ) | $ | — | $ | 8 | $ | (8 | ) | $ | — | ||||||||||
| Software license updates and product support | 3 | (3 | ) | — | 3 | (3 | ) | — | ||||||||||||||||
| Cost of services | 3 | (3 | ) | — | 3 | (3 | ) | — | ||||||||||||||||
| Research and development | 25 | (25 | ) | — | 21 | (21 | ) | — | ||||||||||||||||
| General and administrative | 19 | (19 | ) | — | 12 | (12 | ) | — | ||||||||||||||||
| Subtotal | 63 | (63 | ) | — | 47 | (47 | ) | — | ||||||||||||||||
| Acquisition related | 4 | (4 | ) | — | — | — | — | |||||||||||||||||
| Total stock-based compensation | $ | 67 | $ | (67 | ) | $ | — | $ | 47 | $ | (47 | ) | $ | — | ||||||||||
| (4) | Estimated future annual amortization expense related to intangible assets as of November 30, 2007 is as follows: |
| Remainder of Fiscal 2008 | $ | 616 | ||
| Fiscal 2009 | 1,146 | |||
| Fiscal 2010 | 1,022 | |||
| Fiscal 2011 | 793 | |||
| Fiscal 2012 | 658 | |||
| Fiscal 2013 | 308 | |||
| Thereafter | 1,140 | |||
| Total | $ | 5,683 | ||
| (5) | The income tax provision was calculated reflecting an effective tax rate of 28.2% and 28.6% in the second 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. |
ORACLE CORPORATION
Q2 FISCAL 2008 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| % Increase | ||||||||||||||||||||||||
| Six Months Ended November 30, | % Increase | (Decrease) | ||||||||||||||||||||||
| % of | % of | (Decrease) | in Constant | |||||||||||||||||||||
| 2007 | Revenues | 2006 | Revenues | in US $ | Currency (1) | |||||||||||||||||||
REVENUES | ||||||||||||||||||||||||
| New software licenses | $ | 2,756 | 28 | % | $ | 2,011 | 26 | % | 37 | % | 31 | % | ||||||||||||
| Software license updates and product support | 4,873 | 50 | % | 3,948 | 51 | % | 23 | % | 18 | % | ||||||||||||||
| Software Revenues | 7,629 | 78 | % | 5,959 | 77 | % | 28 | % | 23 | % | ||||||||||||||
| Services | 2,213 | 22 | % | 1,795 | 23 | % | 23 | % | 17 | % | ||||||||||||||
Total Revenues | 9,842 | 100 | % | 7,754 | 100 | % | 27 | % | 22 | % | ||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||
| Sales and marketing | 2,070 | 21 | % | 1,665 | 21 | % | 24 | % | 19 | % | ||||||||||||||
| Software license updates and product support | 474 | 5 | % | 404 | 5 | % | 17 | % | 12 | % | ||||||||||||||
| Cost of services | 1,922 | 20 | % | 1,599 | 21 | % | 20 | % | 14 | % | ||||||||||||||
| Research and development | 1,326 | 13 | % | 1,026 | 14 | % | 29 | % | 27 | % | ||||||||||||||
| General and administrative | 402 | 4 | % | 328 | 4 | % | 23 | % | 18 | % | ||||||||||||||
| Amortization of intangible assets | 575 | 6 | % | 401 | 5 | % | 44 | % | 43 | % | ||||||||||||||
| Acquisition related (2) | 68 | 0 | % | 12 | 0 | % | 467 | % | 453 | % | ||||||||||||||
| Restructuring | 6 | 0 | % | 20 | 0 | % | (71 | %) | (73 | %) | ||||||||||||||
Total Operating Expenses | 6,843 | 69 | % | 5,455 | 70 | % | 25 | % | 21 | % | ||||||||||||||
OPERATING INCOME | 2,999 | 31 | % | 2,299 | 30 | % | 30 | % | 23 | % | ||||||||||||||
| Interest expense | (183 | ) | (2 | %) | (166 | ) | (2 | %) | 10 | % | 10 | % | ||||||||||||
| Non-operating income, net | 199 | 2 | % | 183 | 2 | % | 9 | % | 6 | % | ||||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 3,015 | 31 | % | 2,316 | 30 | % | 30 | % | 23 | % | ||||||||||||||
| Provision for income taxes | 871 | 9 | % | 679 | 9 | % | 28 | % | 26 | % | ||||||||||||||
NET INCOME | $ | 2,144 | 22 | % | $ | 1,637 | 21 | % | 31 | % | 22 | % | ||||||||||||
EARNINGS PER SHARE: | ||||||||||||||||||||||||
| Basic | $ | 0.42 | $ | 0.31 | 33 | % | ||||||||||||||||||
| Diluted | $ | 0.41 | $ | 0.31 | 33 | % | ||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||||||||||
| Basic | 5,117 | 5,200 | (2 | %) | ||||||||||||||||||||
| Diluted | 5,224 | 5,297 | (1 | %) | ||||||||||||||||||||
| (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 six months ended November 30, 2007 compared with the corresponding prior year period, contributing 5 percentage points of revenue, 4 percentage points of operating expense and 7 percentage points of operating income growth. | |
| (2) | Acquisition related costs for the six months ended November 30, 2006 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
Q2 FISCAL 2008 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) (in millions, except per share data)
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
| % Increase (Decrease) | ||||||||||||||||||||||||||||||||
| Six Months Ended November 30, | in US $ | |||||||||||||||||||||||||||||||
| 2007 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||
| GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||||||||||||
TOTAL REVENUES (2) | $ | 9,842 | $ | 115 | $ | 9,957 | $ | 7,754 | $ | 122 | $ | 7,876 | 27 | % | 26 | % | ||||||||||||||||
TOTAL SOFTWARE REVENUES (2) | $ | 7,629 | $ | 115 | $ | 7,744 | $ | 5,959 | $ | 122 | $ | 6,081 | 28 | % | 27 | % | ||||||||||||||||
| New software licenses | 2,756 | — | 2,756 | 2,011 | — | 2,011 | 37 | % | 37 | % | ||||||||||||||||||||||
| Software license updates and product support (2) | 4,873 | 115 | 4,988 | 3,948 | 122 | 4,070 | 23 | % | 23 | % | ||||||||||||||||||||||
TOTAL OPERATING EXPENSES | $ | 6,843 | $ | (780 | ) | $ | 6,063 | $ | 5,455 | $ | (530 | ) | $ | 4,925 | 25 | % | 23 | % | ||||||||||||||
| Stock-based compensation (3) | 131 | (131 | ) | — | 97 | (97 | ) | — | 36 | % | ||||||||||||||||||||||
| Amortization of intangible assets (4) | 575 | (575 | ) | — | 401 | (401 | ) | — | 44 | % | ||||||||||||||||||||||
| Acquisition related | 68 | (68 | ) | — | 12 | (12 | ) | — | 467 | % | ||||||||||||||||||||||
| Restructuring | 6 | (6 | ) | — | 20 | (20 | ) | — | (71 | %) | ||||||||||||||||||||||
OPERATING INCOME | $ | 2,999 | $ | 895 | $ | 3,894 | $ | 2,299 | $ | 652 | $ | 2,951 | 30 | % | 32 | % | ||||||||||||||||
OPERATING MARGIN % | 31 | % | 39 | % | 30 | % | 37 | % | 1 | % | 2 | % | ||||||||||||||||||||
INCOME TAX EFFECTS ON ABOVE ADJUSTMENTS (5) | $ | 871 | $ | 259 | $ | 1,130 | $ | 679 | $ | 193 | $ | 872 | 28 | % | 30 | % | ||||||||||||||||
NET INCOME | $ | 2,144 | $ | 636 | $ | 2,780 | $ | 1,637 | $ | 459 | $ | 2,096 | 31 | % | 33 | % | ||||||||||||||||
DILUTED EARNINGS PER SHARE (6) | $ | 0.41 | $ | 0.53 | $ | 0.31 | $ | 0.39 | 33 | % | 35 | % | ||||||||||||||||||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (6) | 5,224 | 3 | 5,227 | 5,297 | 12 | 5,309 | (1 | %) | (2 | %) | ||||||||||||||||||||||
| (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 November 30, 2007, approximately $31 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: |
| Six Months Ended | Six Months Ended | |||||||||||||||||||||||
| November 30, 2007 | November 30, 2006 | |||||||||||||||||||||||
| GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||||
| Sales and marketing | $ | 26 | $ | (26 | ) | $ | — | $ | 18 | $ | (18 | ) | $ | — | ||||||||||
| Software license updates and product support | 7 | (7 | ) | — | 6 | (6 | ) | — | ||||||||||||||||
| Cost of services | 8 | (8 | ) | — | 6 | (6 | ) | — | ||||||||||||||||
| Research and development | 52 | (52 | ) | — | 43 | (43 | ) | — | ||||||||||||||||
| General and administrative | 38 | (38 | ) | — | 24 | (24 | ) | — | ||||||||||||||||
| Subtotal | 131 | (131 | ) | — | 97 | (97 | ) | — | ||||||||||||||||
| Acquisition related | 37 | (37 | ) | — | 1 | (1 | ) | — | ||||||||||||||||
| Total stock-based compensation | $ | 168 | $ | (168 | ) | $ | — | $ | 98 | $ | (98 | ) | $ | — | ||||||||||
| (4) | Estimated future amortization expense related to intangible assets as of November 30, 2007 is as follows: |
| Remainder of Fiscal 2008 | $ | 616 | ||
| Fiscal 2009 | 1,146 | |||
| Fiscal 2010 | 1,022 | |||
| Fiscal 2011 | 793 | |||
| Fiscal 2012 | 658 | |||
| Fiscal 2013 | 308 | |||
| Thereafter | 1,140 | |||
| Total | $ | 5,683 | ||
| (5) | The income tax provision was calculated reflecting a tax rate of 28.9% and 29.3% in the first six 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. |
ORACLE CORPORATION
Q2 FISCAL 2008 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS ($ in millions)
CONDENSED CONSOLIDATED BALANCE SHEETS
| November 30, | May 31, | |||||||
| 2007 | 2007 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
| Cash and cash equivalents | $ | 6,733 | $ | 6,218 | ||||
| Marketable securities | 1,699 | 802 | ||||||
| Trade receivables, net | 3,264 | 4,074 | ||||||
| Deferred tax assets | 969 | 968 | ||||||
| Other current assets | 893 | 821 | ||||||
Total Current Assets | 13,558 | 12,883 | ||||||
Non-Current Assets: | ||||||||
| Property, net | 1,655 | 1,603 | ||||||
| Intangible assets, net | 5,683 | 5,964 | ||||||
| Goodwill | 13,663 | 13,479 | ||||||
| Deferred tax assets | 412 | 48 | ||||||
| Other assets | 682 | 595 | ||||||
Total Non-Current Assets | 22,095 | 21,689 | ||||||
TOTAL ASSETS | $ | 35,653 | $ | 34,572 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
| Commercial paper and other short-term borrowings | $ | 2 | $ | 1,358 | ||||
| Accounts payable | 346 | 315 | ||||||
| Income taxes payable | — | 1,237 | ||||||
| Accrued compensation and related benefits | 1,191 | 1,349 | ||||||
| Accrued restructuring | 169 | 201 | ||||||
| Deferred revenues | 3,577 | 3,492 | ||||||
| Other current liabilities | 1,264 | 1,435 | ||||||
Total Current Liabilities | 6,549 | 9,387 | ||||||
Non-Current Liabilities: | ||||||||
| Notes payable, non-current | 6,236 | 6,235 | ||||||
| Income taxes payable | 1,382 | — | ||||||
| Deferred tax liabilities | 1,045 | 1,121 | ||||||
| Accrued restructuring | 243 | 258 | ||||||
| Deferred revenues | 263 | 93 | ||||||
| Minority interests | 338 | 316 | ||||||
| Other long-term liabilities | 302 | 243 | ||||||
Total Non-Current Liabilities | 9,809 | 8,266 | ||||||
Stockholders’ Equity | 19,295 | 16,919 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 35,653 | $ | 34,572 | ||||
ORACLE CORPORATION
Q2 FISCAL 2008 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in millions)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended November 30, | ||||||||
| 2007 | 2006 | |||||||
Cash Flows From Operating Activities: | ||||||||
| Net income | $ | 2,144 | $ | 1,637 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 137 | 124 | ||||||
| Amortization of intangible assets | 575 | 401 | ||||||
| Deferred income taxes | (72 | ) | 5 | |||||
| Minority interests in income | 29 | 32 | ||||||
| Stock-based compensation | 168 | 98 | ||||||
| Tax benefit on the exercise of stock options | 262 | 205 | ||||||
| Excess tax benefits from stock-based compensation | (187 | ) | (159 | ) | ||||
| In-process research and development | 7 | 50 | ||||||
| Net investment gains related to equity securities | (2 | ) | (18 | ) | ||||
| Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||
| Decrease in trade receivables, net | 937 | 681 | ||||||
| Decrease in prepaid expenses and other assets | 27 | 23 | ||||||
| Decrease in accounts payable and other liabilities | (551 | ) | (855 | ) | ||||
| Decrease in income taxes payable | (241 | ) | (196 | ) | ||||
| Increase (decrease) in deferred revenues | 70 | (162 | ) | |||||
Net cash provided by operating activities | 3,303 | 1,866 | ||||||
Cash Flows From Investing Activities: | ||||||||
| Purchases of marketable securities and investments | (1,953 | ) | (4,251 | ) | ||||
| Proceeds from maturities and sales of marketable securities and investments | 1,273 | 2,204 | ||||||
| Acquisitions, net of cash acquired | (651 | ) | (488 | ) | ||||
| Capital expenditures | (156 | ) | (106 | ) | ||||
Net cash used for investing activities | (1,487 | ) | (2,641 | ) | ||||
Cash Flows From Financing Activities: | ||||||||
| Payments for repurchases of common stock | (1,023 | ) | (1,936 | ) | ||||
| Proceeds from issuance of common stock | 682 | 566 | ||||||
| Payments of debt | (1,362 | ) | (8 | ) | ||||
| Excess tax benefits from stock-based compensation | 187 | 159 | ||||||
| Distributions to minority interests | (28 | ) | (29 | ) | ||||
Net cash used for financing activities | (1,544 | ) | (1,248 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 243 | 48 | ||||||
Net increase (decrease) in cash and cash equivalents | 515 | (1,975 | ) | |||||
Cash and cash equivalents at beginning of period | 6,218 | 6,659 | ||||||
Cash and cash equivalents at end of period | $ | 6,733 | $ | 4,684 | ||||
ORACLE CORPORATION
Q2 FISCAL 2008 FINANCIAL RESULTS
FREE CASH FLOW — TRAILING 4-QUARTERS (1) ($ in millions)
FREE CASH FLOW — TRAILING 4-QUARTERS (1)
| 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 | ||||||||||||||||||||
Capital Expenditures (2) | (233 | ) | (256 | ) | (258 | ) | (319 | ) | (357 | ) | (369 | ) | ||||||||||||||||||||
Free Cash Flow | $ | 4,473 | $ | 4,395 | $ | 4,726 | $ | 5,201 | $ | 6,241 | $ | 6,588 | ||||||||||||||||||||
% Growth over prior year | 32 | % | 32 | % | 29 | % | 21 | % | 40 | % | 50 | % | ||||||||||||||||||||
GAAP Net Income | $ | 3,532 | $ | 3,702 | $ | 3,970 | $ | 4,274 | $ | 4,444 | $ | 4,781 | ||||||||||||||||||||
Free Cash Flow as a % of Net Income | 127 | % | 119 | % | 119 | % | 122 | % | 140 | % | 138 | % | ||||||||||||||||||||
| (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
Q2 FISCAL 2008 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1) (in millions, except headcount data)
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
| 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 | $ | 2,756 | ||||||||||||||||||||||||
| Software license updates and product support | 1,941 | 2,007 | 2,108 | 2,272 | 8,329 | 2,383 | 2,491 | 4,873 | ||||||||||||||||||||||||||||||||
| Software Revenues | 2,745 | 3,214 | 3,498 | 4,753 | 14,211 | 3,470 | 4,159 | 7,629 | ||||||||||||||||||||||||||||||||
| Consulting | 640 | 716 | 694 | 819 | 2,869 | 801 | 877 | 1,678 | ||||||||||||||||||||||||||||||||
| On Demand | 125 | 140 | 142 | 151 | 557 | 158 | 167 | 325 | ||||||||||||||||||||||||||||||||
| Education | 81 | 93 | 80 | 105 | 359 | 100 | 110 | 210 | ||||||||||||||||||||||||||||||||
| Services Revenues | 846 | 949 | 916 | 1,075 | 3,785 | 1,059 | 1,154 | 2,213 | ||||||||||||||||||||||||||||||||
| Total Revenues | $ | 3,591 | $ | 4,163 | $ | 4,414 | $ | 5,828 | $ | 17,996 | $ | 4,529 | $ | 5,313 | $ | 9,842 | ||||||||||||||||||||||||
AS REPORTED REVENUE GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | 28 | % | 14 | % | 27 | % | 17 | % | 20 | % | 35 | % | 38 | % | 37 | % | ||||||||||||||||||||||||
| Software license updates and product support | 29 | % | 29 | % | 24 | % | 21 | % | 25 | % | 23 | % | 24 | % | 23 | % | ||||||||||||||||||||||||
| Software Revenues | 29 | % | 23 | % | 25 | % | 19 | % | 23 | % | 26 | % | 29 | % | 28 | % | ||||||||||||||||||||||||
| Consulting | 33 | % | 42 | % | 38 | % | 30 | % | 35 | % | 25 | % | 23 | % | 24 | % | ||||||||||||||||||||||||
| On Demand | 49 | % | 61 | % | 48 | % | 16 | % | 40 | % | 27 | % | 20 | % | 23 | % | ||||||||||||||||||||||||
| Education | 13 | % | 14 | % | 8 | % | 10 | % | 11 | % | 24 | % | 17 | % | 20 | % | ||||||||||||||||||||||||
| Services Revenues | 33 | % | 41 | % | 36 | % | 26 | % | 33 | % | 25 | % | 22 | % | 23 | % | ||||||||||||||||||||||||
| Total Revenues | 30 | % | 26 | % | 27 | % | 20 | % | 25 | % | 26 | % | 28 | % | 27 | % | ||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | 26 | % | 10 | % | 23 | % | 13 | % | 17 | % | 32 | % | 31 | % | 31 | % | ||||||||||||||||||||||||
| Software license updates and product support | 27 | % | 25 | % | 20 | % | 17 | % | 22 | % | 19 | % | 18 | % | 18 | % | ||||||||||||||||||||||||
| Software Revenues | 27 | % | 19 | % | 21 | % | 15 | % | 20 | % | 23 | % | 23 | % | 23 | % | ||||||||||||||||||||||||
| Consulting | 31 | % | 37 | % | 34 | % | 24 | % | 31 | % | 20 | % | 15 | % | 18 | % | ||||||||||||||||||||||||
| On Demand | 47 | % | 56 | % | 43 | % | 12 | % | 37 | % | 23 | % | 15 | % | 19 | % | ||||||||||||||||||||||||
| Education | 11 | % | 11 | % | 4 | % | 6 | % | 8 | % | 20 | % | 10 | % | 15 | % | ||||||||||||||||||||||||
| Services Revenues | 31 | % | 36 | % | 32 | % | 20 | % | 29 | % | 21 | % | 15 | % | 17 | % | ||||||||||||||||||||||||
| Total Revenues | 28 | % | 23 | % | 23 | % | 16 | % | 22 | % | 22 | % | 21 | % | 22 | % | ||||||||||||||||||||||||
GEOGRAPHIC REVENUES | ||||||||||||||||||||||||||||||||||||||||
REVENUES | ||||||||||||||||||||||||||||||||||||||||
| Americas | $ | 1,956 | $ | 2,170 | $ | 2,315 | $ | 3,018 | $ | 9,460 | $ | 2,375 | $ | 2,674 | $ | 5,049 | ||||||||||||||||||||||||
| Europe, Middle East & Africa | 1,140 | 1,422 | 1,484 | 1,992 | 6,037 | 1,530 | 1,865 | 3,394 | ||||||||||||||||||||||||||||||||
| Asia Pacific | 495 | 571 | 615 | 818 | 2,499 | 624 | 774 | 1,399 | ||||||||||||||||||||||||||||||||
| Total Revenues | $ | 3,591 | $ | 4,163 | $ | 4,414 | $ | 5,828 | $ | 17,996 | $ | 4,529 | $ | 5,313 | $ | 9,842 | ||||||||||||||||||||||||
HEADCOUNT (2) | ||||||||||||||||||||||||||||||||||||||||
GEOGRAPHIC AREA | ||||||||||||||||||||||||||||||||||||||||
| Americas | 26,798 | 27,444 | 27,874 | 29,830 | 30,455 | 30,654 | ||||||||||||||||||||||||||||||||||
| Europe, Middle East & Africa | 14,199 | 14,640 | 14,758 | 15,680 | 15,985 | 16,140 | ||||||||||||||||||||||||||||||||||
| Asia Pacific | 24,129 | 26,350 | 27,850 | 29,164 | 31,212 | 32,855 | ||||||||||||||||||||||||||||||||||
| Total Company | 65,126 | 68,434 | 70,482 | 74,674 | 77,652 | 79,649 | ||||||||||||||||||||||||||||||||||
| (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
Q2 FISCAL 2008 FINANCIAL RESULTS
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1) ($ in millions)
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)
| 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 | $ | 929 | ||||||||||||||||||||||||
| Software license updates and product support | 703 | 728 | 769 | 832 | 3,032 | 886 | 929 | 1,815 | ||||||||||||||||||||||||||||||||
| Software Revenues | $ | 931 | $ | 1,068 | $ | 1,192 | $ | 1,558 | $ | 4,748 | $ | 1,262 | $ | 1,482 | $ | 2,744 | ||||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | 80 | % | 28 | % | 57 | % | 13 | % | 32 | % | 65 | % | 63 | % | 64 | % | ||||||||||||||||||||||||
| Software license updates and product support | 51 | % | 45 | % | 27 | % | 23 | % | 35 | % | 26 | % | 28 | % | 27 | % | ||||||||||||||||||||||||
| Software Revenues | 57 | % | 39 | % | 36 | % | 18 | % | 34 | % | 36 | % | 39 | % | 37 | % | ||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | 78 | % | 25 | % | 52 | % | 10 | % | 29 | % | 61 | % | 56 | % | 58 | % | ||||||||||||||||||||||||
| Software license updates and product support | 49 | % | 41 | % | 23 | % | 19 | % | 32 | % | 22 | % | 21 | % | 22 | % | ||||||||||||||||||||||||
| Software Revenues | 55 | % | 35 | % | 32 | % | 15 | % | 31 | % | 32 | % | 32 | % | 32 | % | ||||||||||||||||||||||||
DATABASE & MIDDLEWARE REVENUES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | $ | 576 | $ | 867 | $ | 967 | $ | 1,755 | $ | 4,166 | $ | 711 | $ | 1,115 | $ | 1,827 | ||||||||||||||||||||||||
| Software license updates and product support | 1,238 | 1,279 | 1,339 | 1,440 | 5,297 | 1,497 | 1,562 | 3,058 | ||||||||||||||||||||||||||||||||
| Software Revenues | $ | 1,814 | $ | 2,146 | $ | 2,306 | $ | 3,195 | $ | 9,463 | $ | 2,208 | $ | 2,677 | $ | 4,885 | ||||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | 15 | % | 9 | % | 17 | % | 18 | % | 16 | % | 23 | % | 29 | % | 27 | % | ||||||||||||||||||||||||
| Software license updates and product support | 19 | % | 21 | % | 22 | % | 20 | % | 21 | % | 21 | % | 22 | % | 21 | % | ||||||||||||||||||||||||
| Software Revenues | 18 | % | 16 | % | 20 | % | 19 | % | 18 | % | 22 | % | 25 | % | 23 | % | ||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| New software licenses | 13 | % | 5 | % | 13 | % | 15 | % | 12 | % | 20 | % | 22 | % | 21 | % | ||||||||||||||||||||||||
| Software license updates and product support | 18 | % | 18 | % | 19 | % | 17 | % | 18 | % | 17 | % | 16 | % | 17 | % | ||||||||||||||||||||||||
| Software Revenues | 16 | % | 13 | % | 16 | % | 16 | % | 15 | % | 18 | % | 18 | % | 18 | % | ||||||||||||||||||||||||
| (1) | The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. |
ORACLE CORPORATION
Q2 FISCAL 2008 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE REVENUE ANALYSIS (1) (2) ($ in millions)
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE REVENUE ANALYSIS (1) (2)
| 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 | $ | 724 | ||||||||||||||||||||||||
| Applications | 126 | 195 | 250 | 415 | 986 | 199 | 306 | 505 | ||||||||||||||||||||||||||||||||
| New Software License Revenues | $ | 358 | $ | 528 | $ | 633 | $ | 1,210 | $ | 2,729 | $ | 485 | $ | 744 | $ | 1,229 | ||||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 19 | % | 2 | % | 15 | % | 20 | % | 15 | % | 23 | % | 32 | % | 28 | % | ||||||||||||||||||||||||
| Applications | 69 | % | 19 | % | 69 | % | 5 | % | 26 | % | 58 | % | 57 | % | 57 | % | ||||||||||||||||||||||||
| New Software License Revenues | 33 | % | 8 | % | 31 | % | 14 | % | 19 | % | 35 | % | 41 | % | 39 | % | ||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 18 | % | 2 | % | 15 | % | 19 | % | 14 | % | 22 | % | 29 | % | 26 | % | ||||||||||||||||||||||||
| Applications | 69 | % | 19 | % | 69 | % | 4 | % | 26 | % | 57 | % | 54 | % | 55 | % | ||||||||||||||||||||||||
| New Software License Revenues | 32 | % | 7 | % | 31 | % | 13 | % | 18 | % | 34 | % | 38 | % | 37 | % | ||||||||||||||||||||||||
EUROPE / MIDDLE EAST / AFRICA | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | $ | 184 | $ | 341 | $ | 363 | $ | 619 | $ | 1,507 | $ | 253 | $ | 420 | $ | 673 | ||||||||||||||||||||||||
| Applications | 69 | 101 | 124 | 224 | 518 | 123 | 174 | 297 | ||||||||||||||||||||||||||||||||
| New Software License Revenues | $ | 253 | $ | 442 | $ | 487 | $ | 843 | $ | 2,025 | $ | 376 | $ | 594 | $ | 970 | ||||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 12 | % | 21 | % | 15 | % | 20 | % | 18 | % | 38 | % | 23 | % | 28 | % | ||||||||||||||||||||||||
| Applications | 83 | % | 35 | % | 29 | % | 42 | % | 42 | % | 77 | % | 72 | % | 74 | % | ||||||||||||||||||||||||
| New Software License Revenues | 25 | % | 24 | % | 18 | % | 25 | % | 23 | % | 49 | % | 34 | % | 40 | % | ||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 8 | % | 11 | % | 6 | % | 12 | % | 10 | % | 30 | % | 12 | % | 19 | % | ||||||||||||||||||||||||
| Applications | 78 | % | 25 | % | 19 | % | 34 | % | 33 | % | 69 | % | 58 | % | 62 | % | ||||||||||||||||||||||||
| New Software License Revenues | 21 | % | 14 | % | 9 | % | 18 | % | 15 | % | 41 | % | 23 | % | 29 | % | ||||||||||||||||||||||||
ASIA PACIFIC | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | $ | 149 | $ | 185 | $ | 213 | $ | 322 | $ | 869 | $ | 155 | $ | 244 | $ | 399 | ||||||||||||||||||||||||
| Applications | 33 | 44 | 49 | 87 | 212 | 54 | 73 | 127 | ||||||||||||||||||||||||||||||||
| New Software License Revenues | $ | 182 | $ | 229 | $ | 262 | $ | 409 | $ | 1,081 | $ | 209 | $ | 317 | $ | 526 | ||||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 12 | % | 5 | % | 26 | % | 10 | % | 13 | % | 4 | % | 32 | % | 19 | % | ||||||||||||||||||||||||
| Applications | 126 | % | 58 | % | 89 | % | (1 | %) | 36 | % | 67 | % | 66 | % | 67 | % | ||||||||||||||||||||||||
| New Software License Revenues | 23 | % | 12 | % | 34 | % | 8 | % | 17 | % | 15 | % | 39 | % | 28 | % | ||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 13 | % | 2 | % | 24 | % | 7 | % | 11 | % | 1 | % | 26 | % | 15 | % | ||||||||||||||||||||||||
| Applications | 124 | % | 53 | % | 83 | % | (4 | %) | 33 | % | 60 | % | 57 | % | 58 | % | ||||||||||||||||||||||||
| New Software License Revenues | 24 | % | 9 | % | 32 | % | 5 | % | 15 | % | 12 | % | 32 | % | 23 | % | ||||||||||||||||||||||||
TOTAL COMPANY | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | $ | 565 | $ | 859 | $ | 959 | $ | 1,736 | $ | 4,119 | $ | 694 | $ | 1,102 | $ | 1,796 | ||||||||||||||||||||||||
| Applications | 228 | 340 | 423 | 726 | 1,716 | 376 | 553 | 929 | ||||||||||||||||||||||||||||||||
| New Software License Revenues | $ | 793 | $ | 1,199 | $ | 1,382 | $ | 2,462 | $ | 5,835 | $ | 1,070 | $ | 1,655 | $ | 2,725 | ||||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 15 | % | 9 | % | 17 | % | 18 | % | 15 | % | 23 | % | 28 | % | 26 | % | ||||||||||||||||||||||||
| Applications | 80 | % | 28 | % | 57 | % | 13 | % | 32 | % | 65 | % | 63 | % | 64 | % | ||||||||||||||||||||||||
| New Software License Revenues | 28 | % | 14 | % | 27 | % | 17 | % | 20 | % | 35 | % | 38 | % | 37 | % | ||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES | ||||||||||||||||||||||||||||||||||||||||
| Database & Middleware | 13 | % | 5 | % | 13 | % | 14 | % | 12 | % | 19 | % | 21 | % | 21 | % | ||||||||||||||||||||||||
| Applications | 78 | % | 25 | % | 52 | % | 10 | % | 29 | % | 61 | % | 56 | % | 58 | % | ||||||||||||||||||||||||
| New Software License Revenues | 27 | % | 10 | % | 23 | % | 13 | % | 16 | % | 31 | % | 31 | % | 31 | % | ||||||||||||||||||||||||
| (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
Q2 FISCAL 2008 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES
Q2 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 charges and restructuring expenses: We incurred significant expenses in connection with acquisitions, which we would not have otherwise incurred in the periods presented. Acquisition related charges 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) and personnel related expenses for transitional employees. Stock-based compensation expenses included in acquisition related charges primarily resulted from unvested options assumed in acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the terms of the options. Restructuring expenses consist of Oracle employee severance and other exit costs, generally in connection with our acquisitions. We believe it is useful for investors to understand the effect of these expenses on our cost structure. Although acquisition related charges and restructuring costs are not recurring with respect to past acquisitions, we will incur these expenses in connection with future acquisitions.
For the three and six months ended November 30, 2006, acquisition related charges also included a 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 three and six months ended November 30, 2006 as a component of acquisition related charges.