UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from ____________ to ____________
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer ☐ |
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Non-accelerated filer ☐ |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares of registrant’s common stock outstanding as of March 7, 2024 was:
ORACLE CORPORATION
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
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PART I. |
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3 |
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Item 1. |
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3 |
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Condensed Consolidated Balance Sheets as of February 29, 2024 and May 31, 2023 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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38 |
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Item 4. |
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39 |
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PART II. |
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40 |
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Item 1. |
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40 |
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Item 1A. |
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40 |
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Item 2. |
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40 |
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Item 5. |
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41 |
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Item 6. |
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42 |
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43 |
Cautionary Note on Forward-Looking Statements
For purposes of this Quarterly Report on Form 10-Q (this Quarterly Report), the terms “Oracle,” “we,” “us” and “our” refer to Oracle Corporation and its consolidated subsidiaries. This Quarterly Report contains statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the Securities Act of 1933, as amended (the Securities Act). These include, among other things, statements regarding:
1
as well as other statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements may be preceded by, followed by or include the words “anticipates,” “believes,” “continues,” “could,” “endeavors,” “estimates,” “expects,” “intends,” “is designed to,” “may,” “plans,” “potential,” “seeks,” “should,” “strives,” “will” and similar expressions. We claim the protection of the safe harbor for forward-looking statements contained in the Exchange Act and the Securities Act for all forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about our business that could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in “Risk Factors” included in documents we file from time to time with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended May 31, 2023 and our other Quarterly Reports on Form 10-Q filed by us in our fiscal year 2024, which runs from June 1, 2023 to May 31, 2024.
We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or risks, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. New information, future events or risks could cause the forward-looking events we discuss in this Quarterly Report not to occur. You should not place undue reliance on these forward-looking statements, which reflect our expectations only as of the date of this Quarterly Report.
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
ORACLE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
As of February 29, 2024 and May 31, 2023
(Unaudited)
(in millions, except per share data) |
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February 29, |
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May 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Trade receivables, net of allowances for credit losses of $ |
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Prepaid expenses and other current assets |
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Total current assets |
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Non-current assets: |
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Property, plant and equipment, net |
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Intangible assets, net |
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Goodwill, net |
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Deferred tax assets |
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Other non-current assets |
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Total non-current assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Notes payable and other borrowings, current |
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$ |
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$ |
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Accounts payable |
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Accrued compensation and related benefits |
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Deferred revenues |
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Other current liabilities |
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Total current liabilities |
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Non-current liabilities: |
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Notes payable and other borrowings, non-current |
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Income taxes payable |
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Deferred tax liabilities |
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Other non-current liabilities |
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Total non-current liabilities |
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Oracle Corporation stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Accumulated deficit |
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Accumulated other comprehensive loss |
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Total Oracle Corporation stockholders’ equity |
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Noncontrolling interests |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
3
ORACLE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended February 29, 2024 and February 28, 2023
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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(in millions, except per share data) |
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February 29, |
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February 28, |
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February 29, |
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February 28, |
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Revenues: |
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Cloud services and license support |
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$ |
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$ |
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$ |
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$ |
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Cloud license and on-premise license |
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Hardware |
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Services |
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Total revenues |
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Operating expenses: |
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Cloud services and license support(1) |
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Hardware(1) |
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Services(1) |
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Sales and marketing(1) |
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Research and development |
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General and administrative |
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Amortization of intangible assets |
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Acquisition related and other |
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Restructuring |
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Total operating expenses |
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Operating income |
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Interest expense |
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( |
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Non-operating expenses, net |
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( |
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Income before income taxes |
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Provision for income taxes |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Earnings per share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average common shares outstanding: |
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Basic |
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Diluted |
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See notes to condensed consolidated financial statements.
4
ORACLE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three and Nine Months Ended February 29, 2024 and February 28, 2023
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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(in millions) |
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February 29, |
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February 28, |
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February 29, |
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February 28, |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive (loss) income, net of tax: |
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Net foreign currency translation (losses) gains |
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( |
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Net unrealized (losses) gains on cash flow hedges |
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( |
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Other, net |
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( |
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( |
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Total other comprehensive (loss) income, net |
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( |
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( |
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Comprehensive income |
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$ |
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$ |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
5
ORACLE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
For the Three and Nine Months Ended February 29, 2024 and February 28, 2023
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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(in millions, except per share data) |
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February 29, |
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February 28, |
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February 29, |
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February 28, |
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Common stock and additional paid in capital |
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Balance, beginning of period |
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$ |
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$ |
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$ |
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$ |
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Common stock issued |
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Stock-based compensation |
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Repurchases of common stock |
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( |
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( |
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( |
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Shares repurchased for tax withholdings upon vesting of restricted stock-based awards |
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( |
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( |
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( |
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( |
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Other, net |
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( |
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( |
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Balance, end of period |
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$ |
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$ |
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$ |
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$ |
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Accumulated deficit |
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Balance, beginning of period |
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$ |
( |
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$ |
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$ |
( |
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$ |
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Repurchases of common stock |
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( |
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( |
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( |
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( |
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Cash dividends declared |
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( |
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( |
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( |
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Net income |
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Balance, end of period |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Other stockholders’ equity (deficit), net |
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Balance, beginning of period |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Other comprehensive (loss) income, net |
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( |
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Other, net |
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Balance, end of period |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Total stockholders’ equity (deficit) |
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$ |
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$ |
( |
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$ |
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$ |
( |
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Cash dividends declared per common share |
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$ |
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$ |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
6
ORACLE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended February 29, 2024 and February 28, 2023
(Unaudited)
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Nine Months Ended |
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(in millions) |
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February 29, |
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February 28, |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation |
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Amortization of intangible assets |
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Deferred income taxes |
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( |
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( |
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Stock-based compensation |
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Other, net |
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Changes in operating assets and liabilities, net of effects from acquisitions: |
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(Increase) decrease in trade receivables, net |
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( |
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Decrease in prepaid expenses and other assets |
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Decrease in accounts payable and other liabilities |
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( |
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( |
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Decrease in income taxes payable |
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( |
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( |
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Increase in deferred revenues |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Purchases of marketable securities and other investments |
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( |
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( |
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Proceeds from sales and maturities of marketable securities and other investments |
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Acquisitions, net of cash acquired |
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( |
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( |
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Capital expenditures |
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( |
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( |
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Net cash used for investing activities |
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( |
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( |
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Cash flows from financing activities: |
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Payments for repurchases of common stock |
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( |
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( |
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Proceeds from issuances of common stock |
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Shares repurchased for tax withholdings upon vesting of restricted stock-based awards |
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( |
) |
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( |
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Payments of dividends to stockholders |
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( |
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( |
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Proceeds from issuances of commercial paper, net of repayments |
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Proceeds from issuances of senior notes and other borrowings, net of issuance costs |
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Repayments of senior notes and other borrowings |
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( |
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( |
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Other, net |
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Net cash (used for) provided by financing activities |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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( |
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Net decrease in cash and cash equivalents |
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( |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Non-cash financing activities: |
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Fair values of stock awards assumed in connection with acquisitions |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
7
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
February 29, 2024
(Unaudited)
Basis of Presentation
We have prepared the condensed consolidated financial statements included herein pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures herein are adequate to ensure the information presented is not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023.
We believe that all necessary adjustments, which consisted only of normal recurring items, have been included in the accompanying financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year ending May 31, 2024.
During the first quarter of fiscal 2024, we finalized our
Cash, Cash Equivalents and Restricted Cash
Restricted cash that was included within cash and cash equivalents as presented within our condensed consolidated balance sheets as of February 29, 2024 and May 31, 2023 and our condensed consolidated statements of cash flows for the nine months ended February 29, 2024 and February 28, 2023 was immaterial.
Remaining Performance Obligations from Contracts with Customers
Trade receivables, net of allowance for credit losses, and deferred revenues are reported net of related uncollected deferred revenues in our condensed consolidated balance sheets as of February 29, 2024 and May 31, 2023. The revenues recognized during the nine months ended February 29, 2024 and February 28, 2023 that were included in the opening deferred revenues balances as of May 31, 2023 and 2022, respectively, were approximately $
Remaining performance obligations, as defined in Note 1 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023, were $
Sales of Financing Receivables
We offer certain of our customers the option to acquire certain of our cloud and license, hardware and services offerings through separate long-term payment contracts. We generally sell these contracts that we have financed for our customers on a non-recourse basis to financial institutions within 90 days of the contracts’ dates of execution. We record the transfers of amounts due from customers to financial institutions as sales of financing receivables
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
February 29, 2024
(Unaudited)
because we are considered to have surrendered control of these financing receivables. Financing receivables sold to financial institutions were $
Non-Marketable Investments
Our non-marketable debt investments and equity securities and related instruments totaled $
Acquisition Related and Other Expenses
Acquisition related and other expenses primarily consist of personnel related costs for transitional and certain other employees, certain business combination adjustments, including adjustments after the measurement period has ended, and certain other operating items, net.
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Three Months Ended |
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Nine Months Ended |
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(in millions) |
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February 29, |
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February 28, |
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February 29, |
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February 28, |
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Transitional and other employee related costs |
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$ |
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$ |
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$ |
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$ |
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Business combination adjustments, net |
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Other, net |
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Total acquisition related and other expenses |
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$ |
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$ |
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$ |
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$ |
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Non-Operating Expenses, net
Non-operating expenses, net consists primarily of interest income, net foreign currency exchange losses, the noncontrolling interests in the net profits of our majority-owned subsidiaries (primarily Oracle Financial Services Software Limited and Oracle Corporation Japan), net losses related to equity investments, including losses attributable to equity method investments (primarily Ampere) and net other income and expenses, including net unrealized gains and losses from our investment portfolio related to our deferred compensation plan and non-service net periodic pension income and losses.
9
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
February 29, 2024
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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(in millions) |
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February 29, |
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February 28, |
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February 29, |
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February 28, |
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Interest income |
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$ |
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$ |
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$ |
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$ |
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Foreign currency losses, net |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Noncontrolling interests in income |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Losses from equity investments, net |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Other income (expenses), net |
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( |
) |
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( |
) |
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Total non-operating expenses, net |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Recent Accounting Pronouncements
Segment Reporting: In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which enhances the disclosures required for operating segments in our annual and interim consolidated financial statements. ASU 2023-07 is effective for us for our annual reporting for fiscal 2025 and for interim period reporting beginning in fiscal 2026 on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2023-07 on our consolidated financial statements.
Income Taxes: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which enhances the disclosures required for income taxes in our annual consolidated financial statements. ASU 2023-09 is effective for us for our annual reporting for fiscal 2026 on a prospective basis. Both early adoption and retrospective application are permitted. We are currently evaluating the impact of our pending adoption of ASU 2023-09 on our consolidated financial statements.
Fiscal 2023 Acquisition of Cerner Corporation
On June 8, 2022, we completed our acquisition of Cerner Corporation (Cerner), a provider of digital information systems used within hospitals and health systems that are designed to enable medical professionals to deliver better healthcare to individual patients and communities.
The total purchase price for Cerner was $
Other Fiscal 2024 and 2023 Acquisitions
During the first nine months of fiscal 2024 and full year fiscal 2023, we acquired certain other companies and purchased certain technology and development assets primarily to expand our products and services offerings. These acquisitions were not significant individually or in the aggregate to our condensed consolidated financial statements.
We perform fair value measurements in accordance with FASB Accounting Standards Codification (ASC) 820, Fair Value Measurement. ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When
10
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
February 29, 2024
(Unaudited)
determining the fair value measurements for assets and liabilities required to be recorded at their fair values, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions and risk of nonperformance.
ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value:
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Our assets and liabilities measured at fair value on a recurring basis consisted of the following (Level 1 and Level 2 inputs are defined above):
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February 29, 2024 |
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May 31, 2023 |
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Fair Value Measurements |
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Fair Value Measurements |
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(in millions) |
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Level 1 |
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Level 2 |
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Total |
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Level 1 |
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Level 2 |
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Total |
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Assets: |
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Money market funds |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Time deposits and other |
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Derivative financial instruments |
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Total assets |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Liabilities: |
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Derivative financial instruments |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Our cash equivalents and marketable securities investments consist of money market funds, time deposits, marketable equity securities and certain other securities. Marketable securities as presented per our condensed consolidated balance sheets included debt securities with original maturities at the time of purchase greater than three months and the remainder of the debt securities were included in cash and cash equivalents. We classify our marketable debt securities as available-for-sale debt securities at the time of purchase and reevaluate such classification as of each balance sheet date. As of February 29, 2024 and May 31, 2023, all of our marketable debt securities investments mature within one year. Our valuation techniques used to measure the fair values of our instruments that were classified as Level 1 in the table above were derived from quoted market prices and active markets for these instruments that exist. Our valuation techniques used to measure the fair values of Level 2 instruments listed in the table above were derived from the following: non-binding market consensus prices that were corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data including reference rate yield curves, among others.
11
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
February 29, 2024
(Unaudited)
Based on the trading prices of the $
The changes in intangible assets for fiscal 2024 and the net book value of intangible assets as of February 29, 2024 and May 31, 2023 were as follows:
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Intangible Assets, Gross |
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Accumulated Amortization |
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Intangible Assets, Net |
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