EX-99.1 2 f33899exv99w1.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 Q1 GAAP EPS UP 28% TO 16 CENTS, NON-GAAP EPS UP 27% TO 22 CENTS
Applications New License Revenues Up 65%, Database and Middleware New License Revenues Up 23%
     REDWOOD SHORES, Calif., Sept. 20, 2007 — Oracle Corporation (NASDAQ: ORCL) today announced fiscal 2008 Q1 GAAP earnings per share were up 28% to $0.16, compared to the same quarter last year. First quarter total GAAP revenues were up 26% to $4.5 billion, while quarterly GAAP net income was up 25% to $840 million. Total GAAP software revenues were up 26% to $3.5 billion with GAAP new software license revenues up 35% to $1.1 billion. Database and middleware new license revenues were up 23% and applications new license revenues were up 65%. Services revenues were up 25% to $1.1 billion, compared to the same quarter last year.
     First quarter non-GAAP earnings per share were up 27% to $0.22, and non-GAAP net income was up 25% to $1.2 billion, compared to the same quarter last year.
     “We reported new software license revenues up 35%, the strongest growth of any quarter in ten years,” said Oracle President and CFO, Safra Catz, “and that software sales growth is translating nicely into EPS growth. We’ve now completed thirteen quarters of our five year EPS growth plan of 20% per year, and we are delivering earnings growth well ahead of that target.”
     “We continue to take applications market share from SAP,” said Oracle President, Charles Phillips. “In Q1 Oracle’s applications new license sales grew 65% compared to SAP’s new license sales growth rate of 18% in their most recently completed quarter. We like our growth strategy of expanding into high-end industry specific vertical

 

 

software as opposed to SAP’s growth strategy of moving down market to sell software to small companies.”
     “Our Q1 database and middleware new license sales growth rate of 23% was the highest in seven years,” said CEO, Larry Ellison. “Oracle passed IBM to become the number one database company a long time ago. If we continue to grow our middleware software business at the same rate we grew it this quarter, Oracle will challenge IBM for the number one position in middleware by the end of this year.”
Q1 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 September 20, 2007. Oracle undertakes no duty to update any statement in light of new information or future events.

 

 

ORACLE CORPORATION
 
 
Q1 FISCAL 2008 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
                                                     
                                                % Increase
    Three Months Ended August 31,     % Increase   (Decrease)
            % of             % of     (Decrease)   in Constant
    2007   Revenues     2006   Revenues     in US $   Currency (1)
             
REVENUES
                                                    
New software licenses
   $  1,087       24 %     $ 804       22 %       35 %     32 %
Software license updates and product support
     2,383       53 %       1,941       54 %       23 %     19 %
                             
Software Revenues
     3,470       77 %       2,745       76 %       26 %     23 %
                             
Services
     1,059       23 %       846       24 %       25 %     21 %
                             
Total Revenues
     4,529       100 %       3,591       100 %       26 %     22 %
                             
 
                                                    
OPERATING EXPENSES
                                                    
Sales and marketing
     974       22 %       750       21 %       30 %     26 %
Software license updates and product support
     228       5 %       200       6 %       14 %     10 %
Cost of services
     931       21 %       780       22 %       19 %     15 %
Research and development
     652       14 %       506       14 %       29 %     26 %
General and administrative
     195       4 %       157       4 %       24 %     20 %
Amortization of intangible assets
     285       6 %       198       6 %       44 %     44 %
Acquisition related
     47       1 %       48       1 %       (3 %)     (3 %)
Restructuring
     —       0 %       9       0 %       (100 %)     (100 %)
                             
Total Operating Expenses
     3,312       73 %       2,648       74 %       25 %     21 %
                             
 
                                                    
OPERATING INCOME
     1,217       27 %       943       26 %       29 %     24 %
Interest expense
     (94 )     (2 %)       (83 )     (2 %)       12 %     12 %
Non-operating income, net
     77       2 %       102       3 %       (24 %)     (26 %)
                             
INCOME BEFORE PROVISION FOR INCOME TAXES
     1,200       27 %       962       27 %       25 %     20 %
                             
Provision for income taxes
     360       8 %       292       8 %       23 %     23 %
                             
NET INCOME
   $ 840       19 %     $ 670       19 %       25 %     19 %
                             
EARNINGS PER SHARE:
                                                    
Basic
   $ 0.16               $ 0.13                 28 %        
Diluted
   $ 0.16               $ 0.13                 28 %        
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                                                    
Basic
     5,110                 5,217                 (2 %)        
Diluted
     5,217                 5,307                 (2 %)        
 
(1)   We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rate in effect on May 31, 2007, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. The United States dollar weakened relative to major international currencies in the three months ended August 31, 2007 compared with the corresponding prior year period, contributing 4 percentage points of revenue, 4 percentage points of operating expense and 5 percentage points of operating income growth.

 

 

ORACLE CORPORATION
 
Q1 FISCAL 2008 FINANCIAL RESULTS
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(in millions, except per share data)
                                                                     
                                                        % Increase (Decrease)
    Three Months Ended August 31,     in US $
    2007           2007     2006           2006          
    GAAP   Adj.   Non-GAAP     GAAP   Adj.   Non-GAAP     GAAP   Non-GAAP
             
TOTAL REVENUES (2)
   $  4,529     $ 64     $  4,593       $  3,591     $ 70     $  3,661         26 %     25 %
 
                                                                    
TOTAL SOFTWARE REVENUES (2)
   $ 3,470     $ 64     $ 3,534       $ 2,745     $ 70     $ 2,815         26 %     26 %
New software licenses
     1,087       —       1,087         804       —       804         35 %     35 %
Software license updates and product support (2)
     2,383       64       2,447         1,941       70       2,011         23 %     22 %
 
                                                                    
TOTAL OPERATING EXPENSES
   $ 3,312     $  (401 )   $ 2,911       $ 2,648     $  (305 )   $ 2,343         25 %     24 %
Stock-based compensation (3)
     69       (69 )     —         50       (50 )     —         36 %        
Amortization of intangible assets (4)
     285       (285 )     —         198       (198 )     —         44 %        
Acquisition related
     47       (47 )     —         48       (48 )     —         (3 %)        
Restructuring
     —       —       —         9       (9 )     —         (100 %)        
 
                                                                    
OPERATING INCOME
   $ 1,217     $ 465     $ 1,682       $ 943     $ 375     $ 1,318         29 %     28 %
 
                                                                    
OPERATING MARGIN %
    27 %             37 %       26 %         36 %       1 %     1 %
 
                                                                    
INCOME TAX EFFECTS ON ABOVE ADJUSTMENTS (5)
   $ 360     $ 140     $ 500       $ 292     $ 114     $ 406         23 %     23 %
 
                                                                    
NET INCOME
   $ 840     $ 325     $ 1,165       $ 670     $ 261     $ 931         25 %     25 %
 
                                                                    
DILUTED EARNINGS PER SHARE (6)
   $ 0.16             $ 0.22       $ 0.13             $ 0.18         28 %     27 %
 
                                                                    
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (6)
     5,217       3       5,220         5,307       7       5,314         (2 %)     (2 %)
             
(1)   This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.
 
(2)   As of August 31, 2007, approximately $76 million in estimated revenues related to assumed support contracts will not be recognized in fiscal 2008 due to business combination accounting rules.
 
(3)   Stock-based compensation is included in the following GAAP operating expense categories:
                                                 
    Three Months Ended     Three Months Ended  
    August 31, 2007     August 31, 2006  
    GAAP     Adj.     Non-GAAP     GAAP     Adj.     Non-GAAP  
Sales and marketing
   $ 13     $ (13 )   $ —     $ 10     $ (10 )   $ —  
Software license updates and product support
     4       (4 )     —       3       (3 )     —  
Cost of services
     4       (4 )     —       3       (3 )     —  
Research and development
     28       (28 )     —       22       (22 )     —  
General and administrative
     20       (20 )     —       12       (12 )     —  
 
                                    
Subtotal
     69       (69 )     —       50       (50 )     —  
 
                                    
Acquisition related
     32       (32 )     —       —       —       —  
 
                                    
Total stock-based compensation
   $ 101     $  (101 )   $ —     $ 50     $ (50 )   $ —  
 
                                    
     
(4)   Estimated future annual amortization expense related to intangible assets as of August 31, 2007 is as follows:
Remainder of Fiscal 2008
   $ 871  
2009
     1,147  
2010
     1,021  
2011
     794  
2012
     656  
2013
     506  
Thereafter
     940  
 
      
Total
   $  5,935  
 
      
     
(5)   The income tax provision was calculated reflecting an effective tax rate of 30.0% and 30.4% in the first quarter of fiscal 2008 and 2007, 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
 
Q1 FISCAL 2008 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
                   
    August 31,     May 31,
    2007     2007
           
ASSETS
                  
 
Current Assets:
                  
Cash and cash equivalents
   $ 6,455       $ 6,218  
Marketable securities
     1,288         802  
Trade receivables, net
     2,735         4,074  
Deferred tax assets
     981         968  
Other current assets
     714         821  
           
Total Current Assets
     12,173         12,883  
 
                  
Non-Current Assets:
                  
Property, net
     1,633         1,603  
Intangible assets, net
     5,935         5,964  
Goodwill
     13,544         13,479  
Deferred tax assets
     385         48  
Other assets
     645         595  
           
Total Non-Current Assets
     22,142         21,689  
           
 
TOTAL ASSETS
   $  34,315       $  34,572  
           
 
                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
 
                  
Current Liabilities:
                  
Short-term borrowings and current portion of long-term debt
   $ 2       $ 1,358  
Accounts payable
     298         315  
Income taxes payable
     —         1,237  
Accrued compensation and related benefits
     1,090         1,349  
Accrued restructuring
     188         201  
Deferred revenues
     4,121         3,492  
Other current liabilities
     1,098         1,435  
           
Total Current Liabilities
     6,797         9,387  
 
                  
Non-Current Liabilities:
                  
Long-term debt
     6,236         6,235  
Income taxes payable
     1,291         —  
Deferred tax liabilities
     1,121         1,121  
Accrued restructuring
     251         258  
Deferred revenues
     270         93  
Minority interests
     308         316  
Other long-term liabilities
     256         243  
           
Total Non-Current Liabilities
     9,733         8,266  
 
                  
Stockholders’ Equity
     17,785         16,919  
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 34,315       $ 34,572  
           
           

 

 

ORACLE CORPORATION
Q1 FISCAL 2008 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
                   
    Three Months Ended August 31,
    2007     2006
 
Cash Flows From Operating Activities:
                  
Net income
   $ 840       $ 670  
Adjustments to reconcile net income to net cash provided by operating activities:
                  
Depreciation
     67         59  
Amortization of intangible assets
     285         198  
Deferred income taxes
     24         (6 )
Minority interests in income
     12         12  
Stock-based compensation
     101         50  
Tax benefit on the exercise of stock options
     129         49  
Excess tax benefits from stock-based compensation
     (82 )       (30 )
In-process research and development
     7         43  
Net investment gains and earnings related to equity investments
     —         (15 )
Changes in operating assets and liabilities, net of effects from acquisitions:
                  
Decrease in trade receivables
     1,381         1,040  
Decrease in prepaid expenses and other assets
     161         86  
Decrease in accounts payable and other liabilities
     (679 )       (900 )
Decrease in income taxes payable
     (301 )       (6 )
Increase in deferred revenues
     756         373  
           
Net cash provided by operating activities
     2,701         1,623  
           
 
                  
Cash Flows From Investing Activities:
                  
Purchases of marketable securities and investments
     (896 )       (2,430 )
Proceeds from maturities and sales of marketable securities and investments
     561         642  
Acquisitions, net of cash acquired
     (546 )       (225 )
Capital expenditures
     (87 )       (49 )
           
Net cash used for investing activities
     (968 )       (2,062 )
           
 
                  
Cash Flows From Financing Activities:
                  
Payments for repurchases of common stock
     (530 )       (936 )
Proceeds from issuance of common stock
     317         162  
Payments of debt
     (1,361 )       (7 )
Excess tax benefits from stock-based compensation
     82         30  
Distributions to minority interests
     (28 )       (25 )
           
Net cash used for financing activities
     (1,520 )       (776 )
           
 
                  
Effect of exchange rate changes on cash and cash equivalents
     24         2  
           
 
                  
Net increase (decrease) in cash and cash equivalents
     237         (1,213 )
           
Cash and cash equivalents at beginning of period
     6,218         6,659  
           
Cash and cash equivalents at end of period
   $ 6,455       $ 5,446  
           
 

 

 

ORACLE CORPORATION
 
Q1 FISCAL 2008 FINANCIAL RESULTS
FREE CASH FLOW — TRAILING 4-QUARTERS (1)
($ in millions)
                                                                   
    Fiscal 2007     Fiscal 2008
    Q1   Q2   Q3   Q4     Q1   Q2   Q3   Q4
           
GAAP Operating Cash Flow
   $  4,706     $  4,651     $  4,984     $  5,520       $  6,598                          
 
                                                                  
Capital Expenditures (2)
     (233 )     (256 )     (258 )     (319 )       (357 )                        
           
 
                                                                  
Free Cash Flow
   $ 4,473     $ 4,395     $ 4,726     $ 5,201       $ 6,241                          
           
 
                                                                  
% Growth over prior year
     32 %     32 %     29 %     21 %       40 %                        
       
 
                                                                  
GAAP Net Income
   $ 3,532     $ 3,702     $ 3,970     $ 4,274       $ 4,444                          
 
Free Cash Flow as a % of Net Income
     127 %     119 %     119 %     122 %       140 %                        
 
(1)   To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures of cash flows on a trailing 4-quarter basis to analyze cash flow generated from operations. We believe free cash flow is also useful as one of the bases for comparing our performance with our competitors. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity.
 
(2)   Represents capital expenditures as reported in cash flows from investing activities on our cash flow statements presented in accordance with GAAP.

 

 

ORACLE CORPORATION
 
Q1 FISCAL 2008 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
(in millions, except headcount data)
                                                                                   
    Fiscal 2007     Fiscal 2008
    Q1   Q2   Q3   Q4   TOTAL     Q1   Q2   Q3   Q4   TOTAL
           
REVENUES
                                                                                  
New software licenses
   $ 804     $ 1,207     $ 1,390     $ 2,481     $ 5,882       $ 1,087                             $  1,087  
Software license updates and product support
     1,941       2,007       2,108       2,272       8,329         2,383                               2,383  
           
Software Revenues
     2,745       3,214       3,498       4,753       14,211         3,470                               3,470  
 
                                                                                  
Consulting
     640       716       694       819       2,869         801                               801  
On Demand
     125       140       142       151       557         158                               158  
Education
     81       93       80       105       359         100                               100  
           
Services Revenues
     846       949       916       1,075       3,785         1,059                               1,059  
 
                                                                                  
           
Total Revenues
   $ 3,591     $ 4,163     $ 4,414     $ 5,828     $  17,996       $ 4,529                             $  4,529  
           
 
                                                                                  
AS REPORTED REVENUE GROWTH RATES
                                                                                  
New software licenses
     28 %     14 %     27 %     17 %     20 %       35 %                             35 %
Software license updates and product support
     29 %     29 %     24 %     21 %     25 %       23 %                             23 %
Software Revenues
     29 %     23 %     25 %     19 %     23 %       26 %                             26 %
 
                                                                                  
Consulting
     33 %     42 %     38 %     30 %     35 %       25 %                             25 %
On Demand
     49 %     61 %     48 %     16 %     40 %       27 %                             27 %
Education
     13 %     14 %     8 %     10 %     11 %       24 %                             24 %
Services Revenues
     33 %     41 %     36 %     26 %     33 %       25 %                             25 %
 
                                                                                  
Total Revenues
     30 %     26 %     27 %     20 %     25 %       26 %                             26 %
 
                                                                                  
CONSTANT CURRENCY GROWTH RATES
                                                                                  
New software licenses
     26 %     10 %     23 %     13 %     17 %       32 %                             32 %
Software license updates and product support
     27 %     25 %     20 %     17 %     22 %       19 %                             19 %
Software Revenues
     27 %     19 %     21 %     15 %     20 %       23 %                             23 %
 
                                                                                  
Consulting
     31 %     37 %     34 %     24 %     31 %       20 %                             20 %
On Demand
     47 %     56 %     43 %     12 %     37 %       23 %                             23 %
Education
     11 %     11 %     4 %     6 %     8 %       20 %                             20 %
Services Revenues
     31 %     36 %     32 %     20 %     29 %       21 %                             21 %
 
                                                                                  
Total Revenues
     28 %     23 %     23 %     16 %     22 %       22 %                             22 %
     
GEOGRAPHIC REVENUES
                                                                                  
 
                                                                                  
REVENUES
                                                                                  
Americas
   $ 1,956     $ 2,170     $ 2,315     $ 3,018     $ 9,460       $ 2,375                             $  2,375  
Europe, Middle East & Africa
     1,140       1,422       1,484       1,992       6,037         1,530                               1,530  
Asia Pacific
     495       571       615       818       2,499         624                               624  
           
Total Revenues
   $ 3,591     $ 4,163     $ 4,414     $ 5,828     $  17,996       $ 4,529                             $  4,529  
           
 
                                                                                  
           
HEADCOUNT (2)
                                                                                  
 
                                                                                  
GEOGRAPHIC AREA
                                                                                  
Americas
     26,798       27,444       27,874       29,830                 30,455                                  
Europe, Middle East & Africa
     14,199       14,640       14,758       15,680                 15,985                                  
Asia Pacific
     24,129       26,350       27,850       29,164                 31,212                                  
           
Total Company
     65,126       68,434       70,481       74,674                 77,652                                  
           
 
(1)   The sum of the quarterly financial information may vary from year-to-date financial information due to rounding.
 
(2)   Headcount has increased primarily due to our acquisitions.

 

 

ORACLE CORPORATION
 
Q1 FISCAL 2008 FINANCIAL RESULTS
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)
($ in millions)
                                                                                   
    Fiscal 2007     Fiscal 2008
    Q1   Q2   Q3   Q4   TOTAL     Q1   Q2   Q3   Q4   TOTAL
           
APPLICATIONS REVENUES
                                                                                  
 
                                                                                  
New software licenses
   $ 228     $ 340     $ 423     $ 726     $ 1,716       $ 376                             $ 376  
Software license updates and product support
     703       728       769       832       3,032         886                               886  
           
Software Revenues
   $ 931     $  1,068     $  1,192     $  1,558     $  4,748       $  1,262                             $ 1,262  
           
 
                                                                                  
AS REPORTED GROWTH RATES
                                                                                  
New software licenses
     80 %     28 %     57 %     13 %     32 %       65 %                             65 %
Software license updates and product support
     51 %     45 %     27 %     23 %     35 %       26 %                             26 %
Software Revenues
     57 %     39 %     36 %     18 %     34 %       36 %                             36 %
 
                                                                                  
CONSTANT CURRENCY GROWTH RATES
                                                                                  
New software licenses
     78 %     25 %     52 %     10 %     29 %       61 %                             61 %
Software license updates and product support
     49 %     41 %     23 %     19 %     32 %       22 %                             22 %
Software Revenues
     55 %     35 %     32 %     15 %     31 %       32 %                             32 %
 
                                                                                  
       
DATABASE & MIDDLEWARE REVENUES
                                                                                  
 
                                                                                  
New software licenses
   $ 576     $ 867     $ 967     $ 1,755     $ 4,166       $ 711                             $ 711  
Software license updates and product support
     1,238       1,279       1,339       1,440       5,297         1,497                               1,497  
           
Software Revenues
   $  1,814     $ 2,146     $ 2,306     $ 3,195     $ 9,463       $ 2,208                             $  2,208  
           
 
                                                                                  
AS REPORTED GROWTH RATES
                                                                                  
New software licenses
     15 %     9 %     17 %     18 %     16 %       23 %                             23 %
Software license updates and product support
     19 %     21 %     22 %     20 %     21 %       21 %                             21 %
Software Revenues
     18 %     16 %     20 %     19 %     18 %       22 %                             22 %
 
                                                                                  
CONSTANT CURRENCY GROWTH RATES
                                                                                  
New software licenses
     13 %     5 %     13 %     15 %     12 %       20 %                             20 %
Software license updates and product support
     18 %     18 %     19 %     17 %     18 %       17 %                             17 %
Software Revenues
     16 %     13 %     16 %     16 %     15 %       18 %                             18 %
           
(1)   The sum of the quarterly financial information may vary from year-to-date financial information due to rounding.

 

 

ORACLE CORPORATION
 
Q1 FISCAL 2008 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE REVENUE ANALYSIS (1) (2)
($ in millions)
                                                                                   
    Fiscal 2007     Fiscal 2008
    Q1   Q2   Q3   Q4   TOTAL     Q1   Q2   Q3   Q4   TOTAL
           
AMERICAS
                                                                        
 
                                                                                  
Database & Middleware
   $  232     $ 333     $ 383     $ 795     $ 1,743       $ 286                             $ 286  
Applications
     126       195       250       415       986         199                               199  
           
New Software License Revenues
   $ 358     $ 528     $ 633     $ 1,210     $ 2,729       $ 485                             $ 485  
           
 
                                                                                  
AS REPORTED GROWTH RATES
                                                                        
 
                                                                                  
Database & Middleware
     19 %     2 %     15 %     20 %     15 %       23 %                             23 %
Applications
     69 %     19 %     69 %     5 %     26 %       58 %                             58 %
New Software License Revenues
     33 %     8 %     31 %     14 %     19 %       35 %                             35 %
 
                                                                                  
CONSTANT CURRENCY GROWTH RATES
                                                                        
Database & Middleware
     18 %     2 %     15 %     19 %     14 %       22 %                             22 %
Applications
     69 %     19 %     69 %     4 %     26 %       57 %                             57 %
New Software License Revenues
     32 %     7 %     31 %     13 %     18 %       34 %                             34 %
 
                                                                                  
       
EUROPE / MIDDLE EAST / AFRICA
                                                                        
 
                                                                                  
Database & Middleware
   $ 184     $ 341     $ 363     $ 619     $ 1,507       $ 253                             $ 253  
Applications
     69       101       124       224       518         123                               123  
           
New Software License Revenues
   $ 253     $ 442     $ 487     $ 843     $ 2,025       $ 376                             $ 376  
           
AS REPORTED GROWTH RATES
                                                                        
Database & Middleware
     12 %     21 %     15 %     20 %     18 %       38 %                             38 %
Applications
     83 %     35 %     29 %     42 %     42 %       77 %                             77 %
New Software License Revenues
     25 %     24 %     18 %     25 %     23 %       49 %                             49 %
 
                                                                                  
CONSTANT CURRENCY GROWTH RATES
                                                                        
Database & Middleware
     8 %     11 %     6 %     12 %     10 %       30 %                             30 %
Applications
     78 %     25 %     19 %     34 %     33 %       69 %                             69 %
New Software License Revenues
     21 %     14 %     9 %     18 %     15 %       41 %                             41 %
 
                                                                                  
       
ASIA PACIFIC
                                                                        
 
                                                                                  
Database & Middleware
   $ 149     $ 185     $ 213     $ 322     $ 869       $ 155                             $ 155  
Applications
     33       44       49       87       212         54                               54  
           
New Software License Revenues
   $ 182     $ 229     $ 262     $ 409     $ 1,081       $ 209                             $ 209  
           
 
                                                                                  
AS REPORTED GROWTH RATES
                                                                        
 
                                                                                  
Database & Middleware
     12 %     5 %     26 %     10 %     13 %       4 %                             4 %
Applications
     126 %     58 %     89 %     (1 %)     36 %       67 %                             67 %
New Software License Revenues
     23 %     12 %     34 %     8 %     17 %       15 %                             15 %
 
                                                                                  
CONSTANT CURRENCY GROWTH RATES
                                                                        
Database & Middleware
     13 %     2 %     24 %     7 %     11 %       1 %                             1 %
Applications
     124 %     53 %     83 %     (4 %)     33 %       60 %                             60 %
New Software License Revenues
     24 %     9 %     32 %     5 %     15 %       12 %                             12 %
 
                                                                                  
       
TOTAL COMPANY
                                                                        
 
                                                                                  
Database & Middleware
   $ 565     $ 859     $ 959     $ 1,736     $ 4,119       $ 694                             $ 694  
Applications
     228       340       423       726       1,716         376                               376  
           
New Software License Revenues (2)
   $ 793     $  1,199     $  1,382     $  2,462     $  5,835       $  1,070                             $  1,070  
           
 
                                                                                  
AS REPORTED GROWTH RATES
                                                                        
Database & Middleware
     15 %     9 %     17 %     18 %     15 %       23 %                             23 %
Applications
     80 %     28 %     57 %     13 %     32 %       65 %                             65 %
New Software License Revenues
     28 %     14 %     27 %     17 %     20 %       35 %                             35 %
 
                                                                                  
CONSTANT CURRENCY GROWTH RATES
                                                                        
Database & Middleware
     13 %     5 %     13 %     14 %     12 %       19 %                             19 %
Applications
     78 %     25 %     52 %     10 %     29 %       61 %                             61 %
New Software License Revenues
     27 %     10 %     23 %     13 %     16 %       31 %                             31 %
 
(1)   The sum of the quarterly financial information may vary from year-to-date financial information due to rounding.
 
(2)   New Software License Revenues presented exclude documentation and miscellaneous revenues.

 

 

APPENDIX A
ORACLE CORPORATION
Q1 FISCAL 2008 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES
To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the table, which exclude certain business combination accounting entries and expenses related to acquisitions as well as other significant expenses including stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:
•    Support deferred revenue: Business combination accounting rules require us to account for the fair value of support contracts assumed in connection with our acquisitions. Because these are typically one-year contracts, our GAAP revenues for the one-year period subsequent to our acquisitions do not reflect the full amount of software license updates and product support revenues on assumed support contracts that would have otherwise been recorded by the acquired entities. The non-GAAP adjustment is intended to reflect the full amount of such revenues. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business because we have historically experienced high renewal rates on support contracts, although we cannot be certain that customers will renew these contracts.
•    Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP operating expenses and net income. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.
•    Amortization of intangible assets expenses: We have excluded the effect of amortization of intangibles from our non-GAAP operating expenses and net income. Amortization of intangible assets expense is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well. Amortization expenses will recur in future periods.
•    Acquisition related charges and restructuring expenses: We incurred significant expenses in connection with acquisitions, which we would not have otherwise incurred in the periods presented. Acquisition related charges primarily consist of in-process research and development expenses, integration-related professional services, stock-based compensation expenses (in addition to the stock-based compensation expenses described above) and personnel related expenses for transitional employees. Stock-based compensation expenses included in acquisition related charges 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.