EX-99.1 2 f31468exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
(ORACLE LOGO)               
For Immediate Release
         
Contacts:
  Krista Bessinger   Bob Wynne
 
  Oracle Investor Relations   Oracle Corporate Communications
 
  +1.650.506.4073   +1.650.506.5834
 
  investor_us@oracle.com   bob.wynne@oracle.com
ORACLE REPORTS Q4 GAAP EPS UP 27% TO 31 CENTS, NON-GAAP EPS UP 28% TO 37 CENTS
Q4 New Software License Revenues Up 17%, Annual Operating Cash Flow Up $1 Billion to $5.5 Billion
     REDWOOD SHORES, Calif., June 26, 2007¾Oracle Corporation (NASDAQ: ORCL) today announced that fiscal 2007 Q4 GAAP earnings per share were up 27% to $0.31, compared to the same quarter last year. Fourth quarter GAAP revenues were up 20% to $5.8 billion, while quarterly GAAP net income was up 23% to $1.6 billion. Total GAAP software revenues were up 19% to $4.8 billion. GAAP new license revenues were up 17% with GAAP database and middleware new license revenues up 18% and GAAP applications new license revenues up 13%. GAAP services revenues were up 26% to $1.1 billion compared to the same quarter last year.
     Fourth quarter non-GAAP earnings per share were up 28% to $0.37, and non-GAAP net income was up 24% to $1.9 billion compared to Q4 last year.
     For fiscal year 2007, GAAP earnings per share were up 27% to $0.81. Fiscal year 2007 GAAP revenues were up 25% to $18.0 billion, while annual GAAP net income was up 26% to $4.3 billion. Total GAAP software revenues for the year were up 23% to $14.2 billion with GAAP database and middleware new license revenues up 16% and GAAP applications new license revenues up 32%. Annual GAAP services revenues were $3.8 billion, up 33% compared to the year ago period.
     Fiscal year 2007 non-GAAP earnings per share were up 25% year over year to $1.01. Annual non-GAAP net income was up 25% to $5.3 billion compared to fiscal year 2006.
     “If you have the right strategy and the best technology it will show up in your results”, said Oracle President and CFO Safra Catz. “The numbers speak for themselves. Annual revenue
-more-

 

 

increased $3.6 billion to $18 billion, operating income increased $1.2 billion to $6 billion, and cash flow from operations increased $1 billion to $5.5 billion. It was a great year.”
     “Over the last twelve months Oracle’s application new software license revenues grew at a rate of 32% while SAP’s growth slowed to 10% in their most recent fiscal year”, said Oracle President Charles Phillips. “Our strategy of combining innovation with acquisitions is clearly beating SAP’s strategy of trying to build everything themselves using a 1970s-era proprietary programming language.”
     “Oracle’s unique database grid architecture has enabled us to take market share from IBM”, said Oracle CEO Larry Ellison. “Gartner’s just published database research report confirms that Oracle’s database market share has now increased to 47% while IBM’s share declined to 21%. IBM has been unable to match the performance and reliability of Oracle database grids.”
     Q4 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 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 June 26, 2007. Oracle undertakes no duty to update any statement in light of new information or future events.

 

 

ORACLE CORPORATION
Q4 FISCAL 2007 QUARTER TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
                                                 
    Three Months Ended May 31,           % Increase
                                    % Increase   (Decrease)
            % of           % of   (Decrease)   in Constant
    2007   Revenues   2006   Revenues   in US $   Currency (1)
             
REVENUES
                                                
New software licenses
   $ 2,481       43 %   $ 2,121       43 %     17 %     13 %
Software license updates and product support
     2,272       39 %     1,873       39 %     21 %     17 %
                           
Software Revenues
     4,753       82 %     3,994       82 %     19 %     15 %
                           
Services
     1,075       18 %     857       18 %     26 %     20 %
                           
Total Revenues
     5,828       100 %     4,851       100 %     20 %     16 %
                         
 
                                                
OPERATING EXPENSES
                                                
Sales and marketing
     1,275       22 %     1,100       23 %     16 %     13 %
Software license updates and product support
     229       4 %     206       4 %     12 %     8 %
Cost of services
     928       16 %     758       16 %     22 %     17 %
Research and development
     600       10 %     536       11 %     12 %     10 %
General and administrative
     190       3 %     145       3 %     31 %     26 %
Amortization of intangible assets
     255       4 %     185       4 %     38 %     38 %
Acquisition related
     74       1 %     16       0 %     378 %     377 %
Restructuring
     (4 )     0 %     48       1 %     (109 %)     (108 %)
                         
Total Operating Expenses
     3,547       61 %     2,994       62 %     18 %     15 %
                         
 
                                                
OPERATING INCOME
     2,281       39 %     1,857       38 %     23 %     18 %
Interest expense
     (96 )     (2 %)     (83 )     (2 %)     16 %     16 %
Non-operating income, net
     79       1 %     104       2 %     (25 %)     (26 %)
                         
INCOME BEFORE PROVISION FOR INCOME TAXES
     2,264       39 %     1,878       38 %     21 %     16 %
                         
Provision for income taxes
     660       11 %     578       12 %     14 %     13 %
                         
NET INCOME
   $ 1,604       28 %   $ 1,300       26 %     23 %     17 %
                         
EARNINGS PER SHARE:
                                                
Basic
   $ 0.31             $ 0.25               27 %        
Diluted
   $ 0.31             $ 0.24               27 %        
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                                                
Basic
     5,122               5,278               (3 %)        
Diluted
     5,224               5,373               (3 %)        
 
(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, 2006, 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 May 31, 2007 compared with the corresponding prior year period, contributing 4 percentage points of revenue, 3 percentage points of operating expense and 5 percentage points of operating income growth.

 

 

ORACLE CORPORATION
Q4 FISCAL 2007 QUARTER TO DATE FINANCIAL RESULTS
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(in millions, except per share data)
                                                                     
                                                        % Increase (Decrease)
    Three Months Ended May 31,     in US $
    2007           2007     2006           2006          
    GAAP   Adj.   Non-GAAP     GAAP   Adj.   Non-GAAP     GAAP   Non-GAAP
 
TOTAL REVENUES (2)
   $ 5,828     $ 55     $ 5,883       $ 4,851     $ 86     $ 4,937         20 %     19 %
 
                                                                    
TOTAL SOFTWARE REVENUES (2)
   $ 4,753     $ 55     $ 4,808       $ 3,994     $ 86     $ 4,080         19 %     18 %
New software licenses
     2,481       —       2,481         2,121       —       2,121         17 %     17 %
Software license updates and product support (2)
     2,272       55       2,327         1,873       86       1,959         21 %     19 %
 
                                                                    
TOTAL OPERATING EXPENSES
   $ 3,547     $ (378 )   $ 3,169       $ 2,994     $ (257 )   $ 2,737         18 %     16 %
Stock-based compensation (3)
     53       (53 )     —         8       (8 )     —         585 %     0 %
Amortization of intangible assets (4)
     255       (255 )     —         185       (185 )     —         38 %     0 %
Acquisition related
     74       (74 )     —         16       (16 )     —         378 %     0 %
Restructuring
     (4 )     4       —         48       (48 )     —         (109 %)     0 %
 
                                                                    
OPERATING INCOME
   $ 2,281     $ 433     $ 2,714       $ 1,857     $ 343     $ 2,200         23 %     23 %
 
                                                                    
OPERATING MARGIN %
     39 %             46 %       38 %             45 %       1 %     2 %
 
                                                                    
INCOME TAX EFFECTS ON ABOVE ADJUSTMENTS (5)
   $ 660     $ 127     $ 787       $ 578     $ 106     $ 684         14 %     15 %
 
                                                                    
NET INCOME
   $ 1,604     $ 306     $ 1,910       $ 1,300     $ 237     $ 1,537         23 %     24 %
 
                                                                    
DILUTED EARNINGS PER SHARE (6)
   $ 0.31             $ 0.37       $ 0.24             $ 0.29         27 %     28 %
 
                                                                    
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (6)
     5,224       6       5,230         5,373       —       5,373         (3 %)     (3 %)
 
(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 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 May 31, 2007, approximately $120 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 May 31,     Three months ended May 31,  
    2007     2006  
    GAAP     Adj.     Non-GAAP     GAAP     Adj.     Non-GAAP  
 
Sales and marketing
   $ 11     $ (11 )   $ —     $ 2     $ (2 )   $ —  
Software license updates and product support
     3       (3 )     —       1       (1 )     —  
Cost of services
     4       (4 )     —       3       (3 )     —  
Research and development
     21       (21 )     —       2       (2 )     —  
General and administrative
     14       (14 )     —       —       —       —  
 
                                    
Subtotal
     53       (53 )     —       8       (8 )     —  
 
                                    
Acquisition related
     8       (8 )     —       8       (8 )     —  
 
                                    
Total stock-based compensation
   $ 61     $ (61 )   $ —     $ 16     $ (16 )   $ —  
 
                                    
 
    Stock-based compensation expense in the fourth quarter of fiscal 2007 is recognized based upon fair value pursuant to FASB Statement 123R. Stock-based compensation expense in the fourth quarter of fiscal 2006 is recognized based upon intrinsic value pursuant to APB Opinion 25 and pertains only to unvested stock options assumed from acquisitions.
 
(4)   Estimated future annual amortization expense related to intangible assets as of May 31, 2007 is as follows:
         
2008
   $ 1,114  
2009
     1,101  
2010
     976  
2011
     756  
2012
     620  
Thereafter
     1,397  
 
      
Total
   $ 5,964  
 
      
 
(5)   The income tax provision was calculated reflecting an effective tax rate of 29.2% and 30.8% in the fourth quarter of fiscal 2007 and 2006, respectively.
 
(6)   Non-GAAP diluted earnings per share and non-GAAP diluted weighted average common shares outstanding were calculated excluding the effects of adopting Statement 123R.

 

 

ORACLE CORPORATION
FISCAL 2007 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
                                                 
                                              % Increase
    Year Ended May 31,   % Increase   (Decrease)
            % of           % of   (Decrease)   in Constant
    2007   Revenues   2006   Revenues   in US $   Currency (1)
             
REVENUES
                                                
New software licenses
   $ 5,882       33 %   $ 4,905       34 %     20 %     17 %
Software license updates and product support
     8,329       46 %     6,636       46 %     25 %     22 %
                         
Software Revenues
     14,211       79 %     11,541       80 %     23 %     20 %
                         
Services
     3,785       21 %     2,839       20 %     33 %     29 %
                         
Total Revenues
     17,996       100 %     14,380       100 %     25 %     22 %
                         
 
                                                
OPERATING EXPENSES
                                                
Sales and marketing
     3,907       22 %     3,177       22 %     23 %     20 %
Software license updates and product support
     842       5 %     719       5 %     17 %     14 %
Cost of services
     3,349       19 %     2,516       17 %     33 %     29 %
Research and development
     2,195       12 %     1,872       13 %     17 %     16 %
General and administrative
     692       4 %     555       4 %     25 %     22 %
Amortization of intangible assets
     878       5 %     583       4 %     51 %     51 %
Acquisition related (2)
     140       1 %     137       1 %     1 %     1 %
Restructuring
     19       0 %     85       1 %     (78 %)     (78 %)
                         
Total Operating Expenses
     12,022       67 %     9,644       67 %     25 %     22 %
                         
 
                                                
OPERATING INCOME
     5,974       33 %     4,736       33 %     26 %     21 %
Interest expense
     (343 )     (2 %)     (169 )     (1 %)     103 %     104 %
Non-operating income, net
     355       2 %     243       1 %     46 %     45 %
                         
INCOME BEFORE PROVISION FOR INCOME TAXES
     5,986       33 %     4,810       33 %     24 %     19 %
                         
Provision for income taxes
     1,712       10 %     1,429       9 %     20 %     20 %
                         
NET INCOME
   $ 4,274       24 %   $ 3,381       24 %     26 %     19 %
                         
EARNINGS PER SHARE:
                                                
Basic
   $ 0.83             $ 0.65               27 %        
Diluted
   $ 0.81             $ 0.64               27 %        
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                                                
Basic
     5,170               5,196               (1 %)        
Diluted
     5,269               5,287               0 %        
 
(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, 2006, 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 for the year ended May 31, 2007 compared with the corresponding prior year period, contributing 3 percentage points of revenue, 3 percentage points of operating expense and 5 percentage points of operating income growth.
 
(2)   Acquisition related costs include a benefit of $51.5 million for the year ended May 31, 2007 related to the settlement of a pre-acquisition lawsuit against PeopleSoft, Inc. filed on behalf of the U.S. government. Please see Appendix A for further discussion.

 

 

ORACLE CORPORATION
FISCAL 2007 YEAR TO DATE FINANCIAL RESULTS
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(in millions, except per share data)
                                                                 
                                                      % Increase (Decrease)
    Year Ended May 31,   in US $
    2007           2007   2006           2006        
    GAAP   Adj.   Non-GAAP   GAAP   Adj.   Non-GAAP   GAAP   Non-GAAP
             
TOTAL REVENUES (2)
   $ 17,996     $ 212     $ 18,208     $ 14,380     $ 391     $ 14,771       25 %     23 %
 
                                                                
TOTAL SOFTWARE REVENUES (2)
   $ 14,211     $ 212     $ 14,423     $ 11,541     $ 391     $ 11,932       23 %     21 %
New software licenses
     5,882       —       5,882       4,905       —       4,905       20 %     20 %
Software license updates and product support (2)
     8,329       212       8,541       6,636       391       7,027       25 %     22 %
 
                                                                
TOTAL OPERATING EXPENSES
   $ 12,022     $ (1,235 )   $ 10,787     $ 9,644     $ (836 )   $ 8,808       25 %     22 %
Stock-based compensation (3)
     198       (198 )     —       31       (31 )     —       532 %     0 %
Amortization of intangible assets (4)
     878       (878 )     —       583       (583 )     —       51 %     0 %
Acquisition related
     140       (140 )     —       137       (137 )     —       1 %     0 %
Restructuring
     19       (19 )     —       85       (85 )     —       (78 %)     0 %
 
                                                                
OPERATING INCOME
   $ 5,974     $ 1,447     $ 7,421     $ 4,736     $ 1,227     $ 5,963       26 %     24 %
 
                                                                
OPERATING MARGIN %
     33 %             41 %     33 %             40 %     0 %     0 %
 
                                                                
INCOME TAX EFFECTS ON ABOVE ADJUSTMENTS (5)
   $ 1,712     $ 414     $ 2,126     $ 1,429     $ 362     $ 1,791       20 %     19 %
 
                                                                
NET INCOME
   $ 4,274     $ 1,033     $ 5,307     $ 3,381     $ 865     $ 4,246       26 %     25 %
 
                                                                
DILUTED EARNINGS PER SHARE (6)
   $ 0.81             $ 1.01     $ 0.64             $ 0.80       27 %     25 %
 
                                                                
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (6)
     5,269       8       5,277       5,287       —       5,287       (0 %)     (0 %)
 
(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 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 May 31, 2007, approximately $120 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:
                                                 
    Year ended May 31,     Year ended May 31,  
    2007     2006  
  GAAP     Adj.     Non-GAAP     GAAP     Adj.     Non-GAAP  
Sales and marketing
   $ 38     $ (38 )   $ —     $ 8     $ (8 )   $ —  
Software license updates and product support
     11       (11 )     —       3       (3 )     —  
Cost of services
     15       (15 )     —       7       (7 )     —  
Research and development
     85       (85 )     —       13       (13 )     —  
General and administrative
     49       (49 )     —       —       —       —  
 
                                    
Subtotal
     198       (198 )     —       31       (31 )     —  
 
                                    
Acquisition related
     9       (9 )     —       18       (18 )     —  
 
                                    
Total stock-based compensation
   $ 207       (207 )   $ —     $ 49     $ (49 )   $ —  
 
                                    
 
    Stock-based compensation expense in the year ended May 31, 2007 is recognized based upon fair value pursuant to FASB Statement 123R. Stock-based compensation expense in the year ended May 31, 2006 is recognized based upon intrinsic value pursuant to APB Opinion 25 and pertains only to unvested stock options assumed from acquisitions.
 
(4)   Estimated future annual amortization expense related to intangible assets as of May 31, 2007 is as follows:
         
2008
   $ 1,114  
2009
     1,101  
2010
     976  
2011
     756  
2012
     620  
Thereafter
     1,397  
 
      
Total
   $ 5,964  
 
      
 
(5)   The income tax provision was calculated reflecting an effective tax rate of 28.6% and 29.7% in the year ended May 31, 2007 and 2006, respectively.
 
(6)   Non-GAAP diluted earnings per share and non-GAAP diluted weighted average common shares outstanding were calculated excluding the effects of adopting Statement 123R.

 

ORACLE CORPORATION
FISCAL 2007 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS (1)
($ in millions)
                   
    May 31,     May 31,
    2007     2006
   
ASSETS
                  
Current Assets:
                  
Cash and cash equivalents
   $ 6,218       $ 6,659  
Marketable securities
     802         946  
Trade receivables, net
     4,074         3,022  
Deferred tax assets
     968         714  
Other current assets
     821         633  
           
Total Current Assets
     12,883         11,974  
 
                  
Non-Current Assets:
                  
Property, net
     1,603         1,391  
Intangible assets, net
     5,964         4,528  
Goodwill
     13,479         9,809  
Other assets
     643         1,327  
           
Total Non-Current Assets
     21,689         17,055  
           
TOTAL ASSETS
   $ 34,572       $ 29,029  
           
 
                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
 
                  
Current Liabilities:
                  
Short-term borrowings and current portion of long-term debt
   $ 1,358       $ 159  
Accounts payable
     315         268  
Income taxes payable
     1,237         810  
Accrued compensation and related benefits
     1,349         1,172  
Accrued restructuring
     201         412  
Deferred revenues
     3,492         2,830  
Other current liabilities
     1,435         1,279  
           
Total Current Liabilities
     9,387         6,930  
 
                  
Non-Current Liabilities:
                  
Long-term debt
     6,235         5,735  
Deferred tax liabilities
     1,121         564  
Accrued restructuring
     258         273  
Deferred revenues
     93         114  
Minority interests
     316         202  
Other long-term liabilities
     243         199  
           
Total Non-Current Liabilities
     8,266         7,087  
 
                  
Stockholders’ Equity
     16,919         15,012  
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 34,572       $ 29,029  
           
 
(1)   Certain prior period balances have been reclassified to conform to the current period presentation.

 

 

ORACLE CORPORATION
FISCAL 2007 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (1)
($ in millions)
                   
    Year Ended May 31,
    2007     2006
       
Cash Flows From Operating Activities:
                  
Net income
   $ 4,274       $ 3,381  
Adjustments to reconcile net income to net cash provided by operating activities:
                  
Depreciation
     249         223  
Amortization of intangible assets
     878         583  
Provision for trade receivable allowances
     244         241  
Deferred income taxes
     56       (40 )
Minority interests in income
     71         41  
Stock-based compensation
     207         49  
Tax benefit on the exercise of stock options
     338         162  
Excess tax benefits from stock-based compensation (2)
     (259 )       —  
In-process research and development
     151         78  
Net investment gains and earnings related to equity investments
     (22 )       (39 )
Changes in operating assets and liabilities, net of effects from acquisitions:
                  
Increase in trade receivables
     (723 )       (355 )
(Increase) decrease in prepaid expenses and other assets
     (153 )       14  
Increase (decrease) in accounts payable and other liabilities
     (345 )       23  
Increase (decrease) in income taxes payable
     167         (98 )
Increase in deferred revenues
     387         278  
           
Net cash provided by operating activities
     5,520         4,541  
           
 
                  
Cash Flows From Investing Activities:
                  
Purchases of marketable securities
     (5,383 )       (2,128 )
Proceeds from maturities and sale of marketable securities
     5,756         3,676  
Acquisitions, net of cash acquired
     (5,005 )       (3,953 )
Purchases of equity and other investments
     (22 )       (858 )
Capital expenditures
     (319 )       (236 )
Proceeds from sales of property
     2         140  
           
Net cash used for investing activities
     (4,971 )       (3,359 )
           
 
                  
Cash Flows From Financing Activities:
                  
Payments for repurchases of common stock (3)
     (3,937 )       (2,067 )
Proceeds from issuance of common stock
     924         632  
Proceeds from borrowings, net of financing costs
     4,079         12,636  
Payments of debt
     (2,418 )       (9,635 )
Excess tax benefits from stock-based compensation (2)
     259         —  
Distributions to minority interests
     (46 )       (39 )
           
Net cash (used for) provided by financing activities
     (1,139 )       1,527  
           
 
                  
Effect of exchange rate changes on cash and cash equivalents
     149         56  
           
 
                  
Net (decrease) increase in cash and cash equivalents
     (441 )       2,765  
           
Cash and cash equivalents at beginning of period
     6,659         3,894  
           
Cash and cash equivalents at end of period
   $ 6,218       $ 6,659  
           
 
(1)   Certain prior period balances have been reclassified to conform to the current period presentation.
 
(2)   Excess tax benefits received from stock-based compensation arrangements are presented as financing cash inflows rather than operating cash inflows prospectively from June 1, 2006, which is our adoption date of Statement 123R. Prior period reclassifications are not allowed.
 
(3)   We repurchased 234 million shares for approximately $4 billion during the year ended May 31, 2007 (including 2.4 million shares for $47 million that were repurchased but not settled as of May 31, 2007).

 

 

ORACLE CORPORATION
FISCAL 2007 FINANCIAL RESULTS
FREE CASH FLOW — TRAILING 4-QUARTERS (1)
($ in millions)
                                                                   
    Fiscal 2006     Fiscal 2007 (2)
    Q1   Q2   Q3   Q4     Q1   Q2   Q3   Q4
     
GAAP Operating Cash Flow
   $ 3,596     $ 3,509     $ 3,857     $ 4,541       $ 4,706     $ 4,651     $ 4,984     $ 5,520  
 
Capital Expenditures (3)
     (206 )     (182 )     (199 )     (236 )       (233 )     (256 )     (258 )     (319 )
         
 
Free Cash Flow
   $ 3,390     $ 3,327     $ 3,658     $ 4,305       $ 4,473     $ 4,395     $ 4,726     $ 5,201  
         
 
                                                                  
% Growth over prior year
     6 %     4 %     8 %     28 %       32 %     32 %     29 %     21 %
     
 
                                                                  
GAAP Net Income
   $ 2,896     $ 2,878     $ 3,103     $ 3,381       $ 3,532     $ 3,702     $ 3,970     $ 4,274  
Free Cash Flow as a % of Net Income
     117 %     116 %     118 %     127 %       127 %     119 %     119 %     122 %
 
(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)   We adopted FASB Statement 123R on June 1, 2006 under the modified prospective method. Under the modified prospective method, prior period reclassifications are not allowed. Excess tax benefits received from stock-based compensation arrangements are presented as financing cash inflows rather than operating cash inflows prospectively from June 1, 2006. Excess tax benefits reclassified from GAAP Operating Cash Flow were $259 million for the year ended May 31, 2007.
 
(3)   Represents capital expenditures as reported in cash flows from investing activities on our cash flow statements presented in accordance with GAAP.

 

 

ORACLE CORPORATION
FISCAL 2007 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
(in millions, except headcount data)
                                                                                 
    Fiscal 2006   Fiscal 2007
    Q1   Q2   Q3   Q4   TOTAL   Q1   Q2   Q3   Q4   TOTAL
   
REVENUES
                                                                                
 
                                                                                
New software licenses
   $ 629     $ 1,058     $ 1,096     $ 2,121     $ 4,905     $ 804     $ 1,207     $ 1,390     $ 2,481     $ 5,882  
Software license updates and product support
     1,502       1,559       1,703       1,873       6,636       1,941       2,007       2,108       2,272       8,329  
       
Software Revenues
     2,131       2,617       2,799       3,994       11,541       2,745       3,214       3,498       4,753       14,211  
 
                                                                                
Consulting
     481       506       501       632       2,120       640       716       694       819       2,869  
On Demand
     84       87       96       130       397       125       140       142       151       557  
Education
     72       82       74       95       322       81       93       80       105       359  
       
Services Revenues
     637       675       671       857       2,839       846       949       916       1,075       3,785  
 
                                                                                
 
                                                                                
       
Total Revenues
   $ 2,768     $ 3,292     $ 3,470     $ 4,851     $ 14,380     $ 3,591     $ 4,163     $ 4,414     $ 5,828     $ 17,996  
       
 
                                                                                
AS REPORTED REVENUE GROWTH RATES
                                                                      
New software licenses
     12 %     9 %     16 %     32 %     20 %     28 %     14 %     27 %     17 %     20 %
Software license updates and product support
     28 %     25 %     23 %     24 %     25 %     29 %     29 %     24 %     21 %     25 %
Software Revenues
     23 %     18 %     20 %     28 %     23 %     29 %     23 %     25 %     19 %     23 %
 
                                                                                
Consulting
     36 %     28 %     7 %     7 %     17 %     33 %     42 %     38 %     30 %     35 %
On Demand
     18 %     20 %     26 %     62 %     32 %     49 %     61 %     48 %     16 %     40 %
Education
     42 %     25 %     9 %     11 %     20 %     13 %     14 %     8 %     10 %     11 %
Services Revenues
     34 %     26 %     9 %     13 %     19 %     33 %     41 %     36 %     26 %     33 %
 
                                                                                
Total Revenues
     25 %     19 %     18 %     25 %     22 %     30 %     26 %     27 %     20 %     25 %
 
                                                                                
CONSTANT CURRENCY GROWTH RATES
                                                                      
New software licenses
     10 %     12 %     20 %     32 %     21 %     26 %     10 %     23 %     13 %     17 %
Software license updates and product support
     26 %     27 %     27 %     25 %     26 %     27 %     25 %     20 %     17 %     22 %
Software Revenues
     21 %     20 %     24 %     28 %     24 %     27 %     19 %     21 %     15 %     20 %
 
                                                                                
Consulting
     34 %     31 %     10 %     8 %     19 %     31 %     37 %     34 %     24 %     31 %
On Demand
     17 %     22 %     29 %     63 %     33 %     47 %     56 %     43 %     12 %     37 %
Education
     40 %     27 %     13 %     12 %     21 %     11 %     11 %     4 %     6 %     8 %
Services Revenues
     32 %     29 %     13 %     14 %     21 %     31 %     36 %     32 %     20 %     29 %
 
                                                                                
Total Revenues
     23 %     22 %     22 %     26 %     23 %     28 %     23 %     23 %     16 %     22 %
 
                                                                                
   
GEOGRAPHIC REVENUES
                                                                                
 
                                                                                
REVENUES
                                                                                
Americas
   $ 1,475     $ 1,733     $ 1,848     $ 2,595     $ 7,652     $ 1,956     $ 2,170     $ 2,315     $ 3,018     $ 9,460  
Europe, Middle East & Africa
     883       1,090       1,164       1,572       4,708       1,140       1,422       1,484       1,992       6,037  
Asia Pacific
     410       469       458       684       2,020       495       571       615       818       2,499  
       
Total Revenues
   $ 2,768     $ 3,292     $ 3,470     $ 4,851     $ 14,380     $ 3,591     $ 4,163     $ 4,414     $ 5,828     $ 17,996  
       
 
                                                                                
   
HEADCOUNT (2)
                                                                                
 
                                                                                
GEOGRAPHIC AREA
                                                                                
Americas
     24,221       24,142       26,503       26,439               26,798       27,444       27,874       29,830          
Europe, Middle East & Africa
     12,389       12,532       13,736       13,812               14,199       14,640       14,758       15,680          
Asia Pacific
     12,907       14,480       15,342       15,882               24,129       26,350       27,850       29,164          
       
Total Company
     49,516       51,154       55,582       56,133               65,126       68,434       70,481       74,674          
       
 
(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 acquisitions and the consolidation of i-flex beginning in the first quarter of fiscal 2007.

 

 

ORACLE CORPORATION
FISCAL 2007 FINANCIAL RESULTS
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)
($ in millions)
                                                                                   
  Fiscal 2006       Fiscal 2007
    Q1   Q2   Q3   Q4   TOTAL     Q1   Q2   Q3   Q4   TOTAL
       
APPLICATIONS REVENUES
                                                                                  
 
                                                                                  
New software licenses
   $ 127     $ 266     $ 269     $ 641     $ 1,303       $ 228     $ 340     $ 423     $ 726     $ 1,716  
Software license updates and product support
     466       502       608       676       2,252         703       728       769       832       3,032  
           
Software Revenues
   $ 593     $ 768     $ 877     $ 1,317     $ 3,555       $ 931     $ 1,068     $ 1,192     $ 1,558     $ 4,748  
           
 
                                                                                  
AS REPORTED GROWTH RATES
                                                                                  
New software licenses
     84 %     24 %     77 %     83 %     66 %       80 %     28 %     57 %     13 %     32 %
Software license updates and product support
     96 %     98 %     73 %     52 %     75 %       51 %     45 %     27 %     23 %     35 %
Software Revenues
     93 %     64 %     74 %     66 %     71 %       57 %     39 %     36 %     18 %     34 %
 
                                                                                  
CONSTANT CURRENCY GROWTH RATES
                                                                                  
New software licenses
     82 %     27 %     82 %     83 %     67 %       78 %     25 %     52 %     10 %     29 %
Software license updates and product support
     93 %     101 %     79 %     53 %     77 %       49 %     41 %     23 %     19 %     32 %
Software Revenues
     91 %     67 %     80 %     66 %     72 %       55 %     35 %     32 %     15 %     31 %
 
                                                                                  
       
DATABASE & MIDDLEWARE REVENUES
                                                                                  
 
                                                                                  
New software licenses
   $ 502     $ 792     $ 827     $ 1,480     $ 3,602       $ 576     $ 867     $ 967     $ 1,755     $ 4,166  
Software license updates and product support
     1,036       1,057       1,095       1,197       4,384         1,238       1,279       1,339       1,440       5,297  
           
Software Revenues
   $ 1,538     $ 1,849     $ 1,922     $ 2,677     $ 7,986       $ 1,814     $ 2,146     $ 2,306     $ 3,195     $ 9,463  
           
 
                                                                                  
AS REPORTED GROWTH RATES
                                                                                  
New software licenses
     2 %     5 %     4 %     18 %     9 %       15 %     9 %     17 %     18 %     16 %
Software license updates and product support
     10 %     6 %     6 %     12 %     8 %       19 %     21 %     22 %     20 %     21 %
Software Revenues
     7 %     5 %     5 %     15 %     9 %       18 %     16 %     20 %     19 %     18 %
 
                                                                                  
CONSTANT CURRENCY GROWTH RATES
                                                                                  
New software licenses
     0 %     8 %     8 %     18 %     10 %       13 %     5 %     13 %     15 %     12 %
Software license updates and product support
     9 %     8 %     9 %     13 %     9 %       18 %     18 %     19 %     17 %     18 %
Software Revenues
     6 %     8 %     9 %     15 %     10 %       16 %     13 %     16 %     16 %     15 %
       
(1)   The sum of the quarterly financial information may vary from year-to-date financial information due to rounding.

 

 

ORACLE CORPORATION
FISCAL 2007 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE REVENUE ANALYSIS (1) (2)
($ in millions)
                                                                                 
    Fiscal 2006   Fiscal 2007
    Q1   Q2   Q3   Q4   TOTAL   Q1   Q2   Q3   Q4   TOTAL
     
AMERICAS
                                                                                
                                                                                 
Database & Middleware
   $ 194     $ 327     $ 334     $ 662     $ 1,518     $ 232     $ 333     $ 383     $ 795     $ 1,743  
Applications
     75       163       148       395       782       126       195       250       415       986  
         
New Software License Revenues
   $ 269     $ 490     $ 482     $ 1,057     $ 2,300     $ 358     $ 528     $ 633     $ 1,210     $ 2,729  
         
 
                                                                                
AS REPORTED GROWTH RATES
                                                                                
Database & Middleware
     (2 %)     15 %     16 %     22 %     16 %     19 %     2 %     15 %     20 %     15 %
Applications
     150 %     41 %     61 %     73 %     67 %     69 %     19 %     69 %     5 %     26 %
New Software License Revenues
     19 %     22 %     27 %     37 %     29 %     33 %     8 %     31 %     14 %     19 %
 
                                                                                
CONSTANT CURRENCY GROWTH RATES
                                                                      
Database & Middleware
     (4 %)     13 %     14 %     21 %     14 %     18 %     2 %     15 %     19 %     14 %
Applications
     148 %     40 %     60 %     72 %     66 %     69 %     19 %     69 %     4 %     26 %
New Software License Revenues
     17 %     21 %     25 %     36 %     28 %     32 %     7 %     31 %     13 %     18 %
 
                                                                                
     
EUROPE / MIDDLE EAST / AFRICA
                                                                                
 
                                                                                
Database & Middleware
   $ 164     $ 282     $ 316     $ 515     $ 1,278     $ 184     $ 341     $ 363     $ 619     $ 1,507  
Applications
     38       75       96       158       366       69       101       124       224       518  
         
New Software License Revenues
   $ 202     $ 357     $ 412     $ 673     $ 1,644     $ 253     $ 442     $ 487     $ 843     $ 2,025  
         
 
                                                                                
AS REPORTED GROWTH RATES
                                                                      
Database & Middleware
     4 %     (7 %)     (3 %)     7 %     1 %     12 %     21 %     15 %     20 %     18 %
Applications
     38 %     (6 %)     119 %     108 %     61 %     83 %     35 %     29 %     42 %     42 %
New Software License Revenues
     9 %     (7 %)     12 %     20 %     10 %     25 %     24 %     18 %     25 %     23 %
 
                                                                                
CONSTANT CURRENCY GROWTH RATES
                                                                      
Database & Middleware
     3 %     0 %     6 %     7 %     5 %     8 %     11 %     6 %     12 %     10 %
Applications
     36 %     1 %     138 %     108 %     67 %     78 %     25 %     19 %     34 %     33 %
New Software License Revenues
     8 %     0 %     22 %     21 %     14 %     21 %     14 %     9 %     18 %     15 %
 
                                                                                
     
ASIA PACIFIC
                                                                                
 
                                                                                
Database & Middleware
   $ 134     $ 176     $ 170     $ 292     $ 771     $ 149     $ 185     $ 213     $ 322     $ 869  
Applications
     14       28       25       88       155       33       44       49       87       212  
         
New Software License Revenues
   $ 148     $ 203     $ 195     $ 380     $ 926     $ 182     $ 229     $ 262     $ 409     $ 1,081  
         
 
                                                                                
AS REPORTED GROWTH RATES
                                                                                
Database & Middleware
     2 %     9 %     1 %     31 %     13 %     12 %     5 %     26 %     10 %     13 %
Applications
     28 %     48 %     52 %     94 %     69 %     126 %     58 %     89 %     (1 %)     36 %
New Software License Revenues
     4 %     13 %     5 %     42 %     20 %     23 %     12 %     34 %     8 %     17 %
 
                                                                                
CONSTANT CURRENCY GROWTH RATES
                                                                                
Database & Middleware
     0 %     14 %     6 %     34 %     16 %     13 %     2 %     24 %     7 %     11 %
Applications
     23 %     50 %     60 %     96 %     71 %     124 %     53 %     83 %     (4 %)     33 %
New Software License Revenues
     2 %     18 %     11 %     45 %     23 %     24 %     9 %     32 %     5 %     15 %
 
                                                                                
     
TOTAL COMPANY
                                                                                
 
                                                                                
Database & Middleware
   $ 492     $ 785     $ 820     $ 1,469     $ 3,567     $ 565     $ 859     $ 959     $ 1,736     $ 4,119  
Applications
     127       266       269       641       1,303       228       340       423       726       1,716  
         
New Software License Revenues (2)
   $ 619     $ 1,051     $ 1,089     $ 2,110     $ 4,870     $ 793     $ 1,199     $ 1,382     $ 2,462     $ 5,835  
         
 
                                                                                
AS REPORTED GROWTH RATES
                                                                                
Database & Middleware
     1 %     5 %     5 %     18 %     9 %     15 %     9 %     17 %     18 %     15 %
Applications
     84 %     24 %     77 %     83 %     66 %     80 %     28 %     57 %     13 %     32 %
New Software License Revenues
     12 %     9 %     17 %     32 %     20 %     28 %     14 %     27 %     17 %     20 %
 
                                                                                
CONSTANT CURRENCY GROWTH RATES
                                                                                
Database & Middleware
     0 %     8 %     9 %     18 %     10 %     13 %     5 %     13 %     14 %     12 %
Applications
     82 %     27 %     82 %     83 %     67 %     78 %     25 %     52 %     10 %     29 %
New Software License Revenues
     10 %     12 %     21 %     32 %     21 %     27 %     10 %     23 %     13 %     16 %
 
(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
FISCAL 2007 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 adopted FASB Statement No. 123R, Share-Based Payments, on June 1, 2006 under the modified prospective method. Statement 123R requires us to record non-cash operating expenses associated with stock option awards at their estimated fair values. Prior to our Statement 123R adoption, we were required to record stock-based compensation expenses at intrinsic values, which were substantially related to options assumed from acquisitions. In accordance with the modified prospective method, our financial statements for prior periods have not been restated to reflect, and do not include, the changes in methodology to expense options at fair values in accordance with Statement 123R. 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 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 Oracle duplicate facility closures in connection with 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 year ended May 31, 2007, 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. The lawsuit alleged PeopleSoft made defective pricing disclosures to the General Services Administration. This lawsuit represented a pre-acquisition contingency that we identified and assumed in connection with the PeopleSoft acquisition. On October 10, 2006, we agreed to pay the U.S. government $98.5 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 our fiscal year 2006, the favorable difference of $51.5 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 year ended May 31, 2007 as a component of acquisition related charges.