Exhibit 99.1
For Immediate Release
| Contact: | Ken Bond Oracle Investor Relations 1.650.607.0349 ken.bond@oracle.com |
Deborah Hellinger Oracle Corporate Communications 1.212.508.7935 deborah.hellinger@oracle.com |
ORACLE REPORTS Q3 GAAP EPS UP 20% TO 49 CENTS; Q3 NON-GAAP EPS UP 15% TO 62 CENTS
Trailing Twelve Month Operating Cash Flow Up 35% to $13.5 billion
REDWOOD SHORES, Calif., Mar. 20, 2012 — Oracle Corporation (NASDAQ: ORCL) today announced fiscal 2012 Q3 GAAP total revenues were up 3% to $9.0 billion, and non-GAAP total revenues were up 3% to $9.1 billion. Both GAAP and non-GAAP new software license revenues were up 7% to $2.4 billion. Both GAAP and non-GAAP software license updates and product support revenues were up 8% to $4.1 billion. Both GAAP and non-GAAP hardware systems products revenues were down 16% to $869 million. GAAP operating income was up 11% to $3.3 billion, and GAAP operating margin was 37%. Non-GAAP operating income was up 8% to $4.2 billion, and non-GAAP operating margin was 46%. GAAP net income was up 18% to $2.5 billion, while non-GAAP net income was up 13% to $3.1 billion. GAAP earnings per share were $0.49, up 20% compared to last year while non-GAAP earnings per share were up 15% to $0.62. GAAP operating cash flow on a trailing twelve-month basis was $13.5 billion.
“Oracle is on track to deliver the highest operating margins in our history this year,” said Oracle President and CFO, Safra Catz. “Oracle can achieve these record margins as an integrated hardware and software company because we are focusing on high margin systems where hardware and software are engineered to work together.”
“Hardware revenue for our engineered systems grew 139% this quarter and going into Q4, we have a record pipeline,” said Oracle President, Mark Hurd. “In applications, Fusion in the Cloud is winning with great success against niche HCM cloud vendors in the US and worldwide. Our modular, integrated platform of 100 apps available in the cloud or on-premise is a key differentiator.”
“This past quarter Oracle delivered the hardware and software for our new extreme-performance Exalytics In-Memory Machine,” said Oracle CEO, Larry Ellison. “At the core of Exalytics is our new in-memory database technology capable of instantaneous big data analysis; questions are answered at the speed of thought. And unlike SAP’s Hana in-memory appliance, Exalytics runs your existing applications. Simply plug-in Exalytics and your existing Oracle Business Intelligence applications and Hyperion Enterprise Performance Management applications run much, much faster.”
The Board of Directors also declared a quarterly cash dividend of $0.06 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on April 11, 2012, with a payment date of May 2, 2012.
Q3 Earnings Conference Call and Webcast
Oracle will hold a conference call and webcast today to discuss these results at 2:00 p.m. Pacific. You may listen to the call by dialing (719) 325-2433, Passcode: 110382. To access the live webcast of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. A replay of the conference call will also be available by dialing (719) 457-0820 or (888) 203-1112, Passcode: 6577274.
About Oracle
Oracle engineers hardware and software to work together in the cloud and in your data center. For more information about Oracle (NASDAQ: ORCL), visit www.oracle.com or contact Investor Relations at investor_us@oracle.com or (650) 506-4073.
# # #
Trademarks
Oracle and Java are registered trademarks of Oracle 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, expectations, beliefs, intentions and prospects, including statements regarding operating margin growth and the fourth quarter pipeline for engineered systems, 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, including the recent recession and current European debt crisis, can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (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) Our hardware systems business may not be successful, and we may fail to achieve our financial forecasts with respect to this business. (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) Our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses and risks relating to compliance with international and U.S. laws that apply to our international operations. (6) Intense competitive forces demand rapid technological advances and frequent new product introductions and could require us to reduce prices or cause us to lose customers. (7) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our products and support services in a timely manner or to position and/or price our products and services to meet market demand, customers may not buy new software licenses or hardware systems products or purchase or renew support contracts. 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 press release is current as of March 20, 2012. Oracle undertakes no duty to update any statement in light of new information or future events.
ORACLE CORPORATION
Q3 FISCAL 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
| Three Months Ended | % Increase | % Increase (Decrease) |
||||||||||||||||||||||
| February 29, 2012 |
% of Revenues |
February 28, 2011 |
% of Revenues |
(Decrease) in US $ |
in Constant Currency (1) |
|||||||||||||||||||
| REVENUES |
||||||||||||||||||||||||
| New software licenses |
$ | 2,374 | 26% | $ | 2,214 | 25% | 7% | 8% | ||||||||||||||||
| Software license updates and product support |
4,051 | 45% | 3,740 | 43% | 8% | 9% | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Software Revenues |
6,425 | 71% | 5,954 | 68% | 8% | 9% | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Hardware systems products |
869 | 10% | 1,035 | 12% | (16% | ) | (16% | ) | ||||||||||||||||
| Hardware systems support |
604 | 6% | 629 | 7% | (4% | ) | (3% | ) | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Hardware Systems Revenues |
1,473 | 16% | 1,664 | 19% | (11% | ) | (11% | ) | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Services |
1,141 | 13% | 1,146 | 13% | 0% | 1% | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total Revenues |
9,039 | 100% | 8,764 | 100% | 3% | 4% | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| OPERATING EXPENSES |
||||||||||||||||||||||||
| Sales and marketing |
1,700 | 19% | 1,618 | 19% | 5% | 6% | ||||||||||||||||||
| Software license updates and product support |
305 | 3% | 299 | 3% | 2% | 3% | ||||||||||||||||||
| Hardware systems products |
424 | 5% | 465 | 6% | (9% | ) | (8% | ) | ||||||||||||||||
| Hardware systems support |
257 | 3% | 294 | 3% | (13% | ) | (12% | ) | ||||||||||||||||
| Services |
922 | 10% | 954 | 11% | (3% | ) | (2% | ) | ||||||||||||||||
| Research and development |
1,145 | 13% | 1,127 | 13% | 2% | 3% | ||||||||||||||||||
| General and administrative |
261 | 3% | 286 | 3% | (9% | ) | (8% | ) | ||||||||||||||||
| Amortization of intangible assets |
606 | 7% | 612 | 7% | (1% | ) | (1% | ) | ||||||||||||||||
| Acquisition related and other |
38 | 0% | 30 | 0% | 28% | 27% | ||||||||||||||||||
| Restructuring |
64 | 0% | 92 | 1% | (31% | ) | (31% | ) | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total Operating Expenses |
5,722 | 63% | 5,777 | 66% | (1% | ) | 0% | |||||||||||||||||
|
|
|
|||||||||||||||||||||||
| OPERATING INCOME |
3,317 | 37% | 2,987 | 34% | 11% | 11% | ||||||||||||||||||
| Interest expense |
(190 | ) | (2% | ) | (204 | ) | (2% | ) | (7% | ) | (7% | ) | ||||||||||||
| Non-operating income, net |
21 | 0% | 16 | 0% | 33% | 31% | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES |
3,148 | 35% | 2,799 | 32% | 12% | 13% | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Provision for income taxes |
650 | 7% | 683 | 8% | (5% | ) | (4% | ) | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| NET INCOME |
$ | 2,498 | 28% | $ | 2,116 | 24% | 18% | 19% | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| EARNINGS PER SHARE: |
||||||||||||||||||||||||
| Basic |
$ | 0.50 | $ | 0.42 | ||||||||||||||||||||
| Diluted |
$ | 0.49 | $ | 0.41 | ||||||||||||||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
||||||||||||||||||||||||
| Basic |
5,007 | 5,057 | ||||||||||||||||||||||
| Diluted
|
|
5,080 |
|
|
5,149 |
|
||||||||||||||||||
| (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 rates in effect on May 31, 2011, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the three months ended February 29, 2012 compared with the corresponding prior year period decreased our revenues by 1 percentage point, operating expenses by 1 percentage point and had no impact on our operating income. |
1
ORACLE CORPORATION
Q3 FISCAL 2012 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
| Three Months Ended | % Increase (Decrease) in US $ |
% Increase (Decrease)
in Constant Currency (2) |
||||||||||||||||||||||||||||||||||||||
| February 29, 2012 GAAP |
Adj. | February 29, 2012 Non-GAAP |
February 28, 2011 GAAP |
Adj. | February 28, 2011 Non-GAAP |
GAAP | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||||||||||||||||||
|
TOTAL REVENUES (3) (4)
|
$
|
9,039
|
|
$
|
23
|
|
$
|
9,062
|
|
$
|
8,764
|
|
$
|
43
|
|
$
|
8,807
|
|
|
3%
|
|
|
3%
|
|
|
4%
|
|
|
4%
|
| ||||||||||
| TOTAL SOFTWARE REVENUES (3) |
$ | 6,425 | $ | 17 | $ | 6,442 | $ | 5,954 | $ | 16 | $ | 5,970 | 8% | 8% | 9% | 9% | ||||||||||||||||||||||||
| New software licenses |
2,374 | — | 2,374 | 2,214 | — | 2,214 | 7% | 7% | 8% | 8% | ||||||||||||||||||||||||||||||
| Software license updates and product support (3) |
4,051 | 17 | 4,068 | 3,740 | 16 | 3,756 | 8% | 8% | 9% | 9% | ||||||||||||||||||||||||||||||
| TOTAL HARDWARE SYSTEMS REVENUES (4) |
$ | 1,473 | $ | 6 | $ | 1,479 | $ | 1,664 | $ | 27 | $ | 1,691 | (11% | ) | (12% | ) | (11% | ) | (12% | ) | ||||||||||||||||||||
| Hardware systems products |
869 | — | 869 | 1,035 | — | 1,035 | (16% | ) | (16% | ) | (16% | ) | (16% | ) | ||||||||||||||||||||||||||
| Hardware systems support (4) |
604 | 6 | 610 | 629 | 27 | 656 | (4% | ) | (7% | ) | (3% | ) | (6% | ) | ||||||||||||||||||||||||||
|
TOTAL OPERATING EXPENSES |
$ | 5,722 | $ | (865 | ) | $ | 4,857 | $ | 5,777 | $ | (862 | ) | $ | 4,915 | (1% | ) | (1% | ) | 0% | 0% | ||||||||||||||||||||
| Stock-based compensation (5) |
157 | (157 | ) | — | 128 | (128 | ) | — | 23% | * | 23% | * | ||||||||||||||||||||||||||||
| Amortization of intangible assets (6) |
606 | (606 | ) | — | 612 | (612 | ) | — | (1% | ) | * | (1% | ) | * | ||||||||||||||||||||||||||
| Acquisition related and other |
38 | (38 | ) | — | 30 | (30 | ) | — | 28% | * | 27% | * | ||||||||||||||||||||||||||||
| Restructuring |
64 | (64 | ) | — | 92 | (92 | ) | — | (31% | ) | * | (31% | ) | * | ||||||||||||||||||||||||||
|
OPERATING INCOME |
$ | 3,317 | $ | 888 | $ | 4,205 | $ | 2,987 | $ | 905 | $ | 3,892 | 11% | 8% | 11% | 8% | ||||||||||||||||||||||||
| OPERATING MARGIN % |
37% | 46% | 34% | 44% | 261 bp. | 221 bp. | 253 bp. | 205 bp. | ||||||||||||||||||||||||||||||||
| INCOME TAX EFFECTS (7) |
$ | 650 | $ | 258 | $ | 908 | $ | 683 | $ | 258 | $ | 941 | (5% | ) | (4% | ) | (4% | ) | (3% | ) | ||||||||||||||||||||
| NET INCOME |
$ | 2,498 | $ | 630 | $ | 3,128 | $ | 2,116 | $ | 647 | $ | 2,763 | 18% | 13% | 19% | 14% | ||||||||||||||||||||||||
| DILUTED EARNINGS PER SHARE |
$ | 0.49 | $ | 0.62 | $ | 0.41 | $ | 0.54 | 20% | 15% | 20% | 15% | ||||||||||||||||||||||||||||
| DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
5,080 | — | 5,080 | 5,149 | — | 5,149 | (1% | ) | (1% | ) | (1% | ) | (1% | ) | ||||||||||||||||||||||||||
| (1) | This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our 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) | 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 rates in effect on May 31, 2011, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. |
| (3) | As of February 29, 2012, approximately $20 million, $25 million and $2 million in estimated revenues primarily related to assumed software support contracts will not be recognized for the remainder of fiscal 2012, fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules. |
| (4) | As of February 29, 2012, approximately $4 million and $11 million in estimated revenues primarily related to hardware systems support contracts will not be recognized for the remainder of fiscal 2012 and fiscal 2013, respectively, due to business combination accounting rules. |
| (5) | Stock-based compensation was included in the following GAAP operating expense categories: |
| Three Months Ended February 29, 2012 |
Three Months Ended February 28, 2011 |
|||||||||||||||||||||||
|
GAAP |
Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||||
| Sales and marketing |
$ | 30 | $ | (30 | ) | $ | — | $ | 22 | $ | (22 | ) | $ | — | ||||||||||
| Software license updates and product support |
5 | (5 | ) | — | 4 | (4 | ) | — | ||||||||||||||||
| Hardware systems products |
— | — | — | 1 | (1 | ) | — | |||||||||||||||||
| Hardware systems support |
1 | (1 | ) | — | 1 | (1 | ) | — | ||||||||||||||||
| Services |
6 | (6 | ) | — | 5 | (5 | ) | — | ||||||||||||||||
| Research and development |
74 | (74 | ) | — | 58 | (58 | ) | — | ||||||||||||||||
| General and administrative |
41 | (41 | ) | — | 37 | (37 | ) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Subtotal |
157 | (157 | ) | — | 128 | (128 | ) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Acquisition related and other |
18 | (18 | ) | — | 1 | (1 | ) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total stock-based compensation |
$ | 175 | $ | (175 | ) | $ | — | $ | 129 | $ | (129 | ) | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (6) | Estimated future annual amortization expense related to intangible assets as of February 29, 2012 was as follows: |
| Remainder of Fiscal 2012 |
$ | 614 | ||
| Fiscal 2013 |
2,163 | |||
| Fiscal 2014 |
1,787 | |||
| Fiscal 2015 |
1,345 | |||
| Fiscal 2016 |
843 | |||
| Fiscal 2017 |
286 | |||
| Thereafter |
406 | |||
|
|
|
|||
| Total intangible assets subject to amortization |
7,444 | |||
| In-process research and development |
11 | |||
|
|
|
|||
| Total intangible assets, net |
$ | 7,455 | ||
|
|
|
| (7) | Income tax effects were calculated reflecting an effective GAAP tax rate of 20.7% and 24.4% in the third quarter of fiscal 2012 and 2011, respectively, and an effective non-GAAP tax rate of 22.5% and 25.4% in the third quarter of fiscal 2012 and 2011, respectively. The difference between our GAAP and non-GAAP tax rates in the third quarter of fiscal 2012 was primarily due to income tax effects related to acquired tax exposures, the differences in jurisdictional tax rates and related tax benefits attributable to our restructuring expenses, and the disproportionate rate impact of discrete items for the quarter. The difference between our GAAP and non-GAAP tax rates in the third quarter of fiscal 2011 was primarily due to income tax effects related to acquired tax exposures and the disproportionate tax rate impact of the retroactive extension of U.S. research and development tax credits. |
| * | Not meaningful |
2
ORACLE CORPORATION
Q3 FISCAL 2012 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
| Nine Months Ended | % Increase |
% Increase (Decrease) |
||||||||||||||||||||||
| February 29, 2012 |
% of Revenues |
February 28, 2011 |
% of Revenues |
(Decrease) in US $ |
in Constant Currency (1) |
|||||||||||||||||||
| REVENUES |
||||||||||||||||||||||||
| New software licenses |
$ | 5,921 | 23% | $ | 5,498 | 22% | 8% | 7% | ||||||||||||||||
| Software license updates and product support |
12,058 | 46% | 10,835 | 44% | 11% | 9% | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Software Revenues |
17,979 | 69% | 16,333 | 66% | 10% | 9% | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Hardware systems products |
2,851 | 11% | 3,225 | 13% | (12% | ) | (14% | ) | ||||||||||||||||
| Hardware systems support |
1,874 | 7% | 1,890 | 8% | (1% | ) | (3% | ) | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Hardware Systems Revenues |
4,725 | 18% | 5,115 | 21% | (8% | ) | (10% | ) | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Services |
3,501 | 13% | 3,399 | 13% | 3% | 2% | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total Revenues |
26,205 | 100% | 24,847 | 100% | 5% | 4% | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| OPERATING EXPENSES |
||||||||||||||||||||||||
| Sales and marketing |
5,027 | 19% | 4,482 | 18% | 12% | 10% | ||||||||||||||||||
| Software license updates and product support |
899 | 3% | 914 | 4% | (2% | ) | (2% | ) | ||||||||||||||||
| Hardware systems products |
1,367 | 5% | 1,547 | 6% | (12% | ) | (12% | ) | ||||||||||||||||
| Hardware systems support |
798 | 3% | 950 | 4% | (16% | ) | (18% | ) | ||||||||||||||||
| Services |
2,788 | 11% | 2,818 | 11% | (1% | ) | (2% | ) | ||||||||||||||||
| Research and development |
3,297 | 13% | 3,349 | 13% | (2% | ) | (1% | ) | ||||||||||||||||
| General and administrative (2) |
848 | 3% | 714 | 3% | 19% | 18% | ||||||||||||||||||
| Amortization of intangible assets |
1,790 | 7% | 1,829 | 7% | (2% | ) | (2% | ) | ||||||||||||||||
| Acquisition related and other |
63 | 0% | 160 | 1% | (61% | ) | (63% | ) | ||||||||||||||||
| Restructuring |
217 | 1% | 410 | 2% | (47% | ) | (48% | ) | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total Operating Expenses |
17,094 | 65% | 17,173 | 69% | 0% | (1% | ) | |||||||||||||||||
|
|
|
|||||||||||||||||||||||
| OPERATING INCOME |
9,111 | 35% | 7,674 | 31% | 19% | 15% | ||||||||||||||||||
| Interest expense |
(574 | ) | (2% | ) | (613 | ) | (2% | ) | (7% | ) | (7% | ) | ||||||||||||
| Non-operating income, net |
42 | 0% | 180 | 0% | (77% | ) | (73% | ) | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES |
8,579 | 33% | 7,241 | 29% | 18% | 15% | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Provision for income taxes |
2,050 | 8% | 1,903 | 8% | 8% | 4% | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| NET INCOME |
$ | 6,529 | 25% | $ | 5,338 | 21% | 22% | 19% | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| EARNINGS PER SHARE: |
||||||||||||||||||||||||
| Basic |
$ | 1.30 | $ | 1.06 | ||||||||||||||||||||
| Diluted |
$ | 1.28 | $ | 1.04 | ||||||||||||||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
||||||||||||||||||||||||
| Basic |
5,037 | 5,042 | ||||||||||||||||||||||
| Diluted
|
|
5,118
|
|
|
5,117
|
|
||||||||||||||||||
| (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 rates in effect on May 31, 2011, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the nine months ended February 29, 2012 compared with the corresponding prior year period increased our revenues by 1 percentage point, operating expenses by 1 percentage point and operating income by 4 percentage points. |
| (2) | General and administrative expenses for the nine months ended February 28, 2011 included a benefit of $120 million related to the recovery of legal costs. |
3
ORACLE CORPORATION
Q3 FISCAL 2012 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
| Nine Months Ended | % Increase (Decrease) in US $ |
% Increase (Decrease) in Constant Currency (2) |
||||||||||||||||||||||||||||||||||||||
| February 29, 2012 GAAP |
Adj. | February 29, 2012 Non-GAAP |
February 28, 2011 GAAP |
Adj. | February 28, 2011 Non-GAAP |
GAAP | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||||||||||||||||||
|
TOTAL REVENUES (3) (4)
|
$
|
26,205
|
|
$
|
66
|
|
$
|
26,271
|
|
$
|
24,847
|
|
$
|
197
|
|
$
|
25,044
|
|
|
5%
|
|
|
5%
|
|
|
4%
|
|
|
3%
|
| ||||||||||
| TOTAL SOFTWARE REVENUES (3) |
$ | 17,979 | $ | 40 | $ | 18,019 | $ | 16,333 | $ | 64 | $ | 16,397 | 10% | 10% | 9% | 8% | ||||||||||||||||||||||||
| New software licenses |
5,921 | — | 5,921 | 5,498 | — | 5,498 | 8% | 8% | 7% | 7% | ||||||||||||||||||||||||||||||
| Software license updates and product support (3) |
12,058 | 40 | 12,098 | 10,835 | 64 | 10,899 | 11% | 11% | 9% | 9% | ||||||||||||||||||||||||||||||
| TOTAL HARDWARE SYSTEMS REVENUES (4) |
$ | 4,725 | $ | 26 | $ | 4,751 | $ | 5,115 | $ | 133 | $ | 5,248 | (8% | ) | (9% | ) | (10% | ) | (12% | ) | ||||||||||||||||||||
| Hardware systems products |
2,851 | — | 2,851 | 3,225 | — | 3,225 | (12% | ) | (12% | ) | (14% | ) | (14% | ) | ||||||||||||||||||||||||||
| Hardware systems support (4) |
1,874 | 26 | 1,900 | 1,890 | 133 | 2,023 | (1% | ) | (6% | ) | (3% | ) | (8% | ) | ||||||||||||||||||||||||||
|
TOTAL OPERATING EXPENSES |
$ | 17,094 | $ | (2,523 | ) | $ | 14,571 | $ | 17,173 | $ | (2,774 | ) | $ | 14,399 | 0% | 1% | (1% | ) | 0% | |||||||||||||||||||||
| Stock-based compensation (5) |
453 | (453 | ) | — | 375 | (375 | ) | — | 21% | * | 21% | * | ||||||||||||||||||||||||||||
| Amortization of intangible assets (6) |
1,790 | (1,790 | ) | — | 1,829 | (1,829 | ) | — | (2% | ) | * | (2% | ) | * | ||||||||||||||||||||||||||
| Acquisition related and other |
63 | (63 | ) | — | 160 | (160 | ) | — | (61% | ) | * | (63% | ) | * | ||||||||||||||||||||||||||
| Restructuring |
217 | (217 | ) | — | 410 | (410 | ) | — | (47% | ) | * | (48% | ) | * | ||||||||||||||||||||||||||
|
OPERATING INCOME |
$ | 9,111 | $ | 2,589 | $ | 11,700 | $ | 7,674 | $ | 2,971 | $ | 10,645 | 19% | 10% | 15% | 7% | ||||||||||||||||||||||||
| OPERATING MARGIN % |
35% | 45% | 31% | 43% | 388 bp. | 203 bp. | 344 bp. | 172 bp. | ||||||||||||||||||||||||||||||||
| INCOME TAX EFFECTS (7) |
$ | 2,050 | $ | 740 | $ | 2,790 | $ | 1,903 | $ | 785 | $ | 2,688 | 8% | 4% | 4% | 1% | ||||||||||||||||||||||||
| NET INCOME |
$ | 6,529 | $ | 1,849 | $ | 8,378 | $ | 5,338 | $ | 2,186 | $ | 7,524 | 22% | 11% | 19% | 9% | ||||||||||||||||||||||||
| DILUTED EARNINGS PER SHARE |
$ | 1.28 | $ | 1.64 | $ | 1.04 | $ | 1.47 | 22% | 11% | 19% | 9% | ||||||||||||||||||||||||||||
| DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
5,118 | — | 5,118 | 5,117 | — | 5,117 | 0% | 0% | 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) | 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 rates in effect on May 31, 2011, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. |
| (3) | As of February 29, 2012, approximately $20 million, $25 million and $2 million in estimated revenues primarily related to assumed software support contracts will not be recognized for the remainder of fiscal 2012, fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules. |
| (4) | As of February 29, 2012, approximately $4 million and $11 million in estimated revenues primarily related to hardware systems support contracts will not be recognized for the remainder of fiscal 2012 and fiscal 2013, respectively, due to business combination accounting rules. |
| (5) | Stock-based compensation was included in the following GAAP operating expense categories: |
| Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||
| February 29, 2012 | February 28, 2011 | |||||||||||||||||||||||
|
GAAP |
Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||||
| Sales and marketing |
$ | 86 | $ | (86 | ) | $ | — | $ | 64 | $ | (64 | ) | $ | — | ||||||||||
| Software license updates and product support |
13 | (13 | ) | — | 11 | (11 | ) | — | ||||||||||||||||
| Hardware systems products |
1 | (1 | ) | — | 2 | (2 | ) | — | ||||||||||||||||
| Hardware systems support |
4 | (4 | ) | — | 4 | (4 | ) | — | ||||||||||||||||
| Services |
16 | (16 | ) | — | 13 | (13 | ) | — | ||||||||||||||||
| Research and development |
213 | (213 | ) | — | 171 | (171 | ) | — | ||||||||||||||||
| General and administrative |
120 | (120 | ) | — | 110 | (110 | ) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Subtotal |
453 | (453 | ) | — | 375 | (375 | ) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Acquisition related and other |
21 | (21 | ) | — | 8 | (8 | ) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total stock-based compensation |
$ | 474 | $ | (474 | ) | $ | — | $ | 383 | $ | (383 | ) | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (6) | Estimated future annual amortization expense related to intangible assets as of February 29, 2012 was as follows: |
| Remainder of Fiscal 2012 |
$ | 614 | ||
| Fiscal 2013 |
2,163 | |||
| Fiscal 2014 |
1,787 | |||
| Fiscal 2015 |
1,345 | |||
| Fiscal 2016 |
843 | |||
| Fiscal 2017 |
286 | |||
| Thereafter |
406 | |||
|
|
|
|||
| Total intangible assets subject to amortization |
7,444 | |||
| In-process research and development |
11 | |||
|
|
|
|||
| Total intangible assets, net |
$ | 7,455 | ||
|
|
|
| (7) | Income tax effects were calculated reflecting an effective GAAP tax rate of 23.9% and 26.3% in the first nine months of fiscal 2012 and 2011, respectively, and an effective non-GAAP tax rate of 25.0% and 26.3% in the first nine months of fiscal 2012 and 2011, respectively. The differences between our GAAP and non-GAAP tax rates in the first nine months of fiscal 2012 were primarily due to income tax effects related to acquired tax exposures, the differences in jurisdictional tax rates and related tax benefits attributable to our restructuring expenses, and the disproportionate rate impact of discrete items for the first nine months of fiscal 2012. |
| * | Not meaningful |
4
ORACLE CORPORATION
Q3 FISCAL 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
| February 29, 2012 |
May 31, 2011 |
|||||||
|
ASSETS
|
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 13,781 | $ | 16,163 | ||||
| Marketable securities |
15,961 | 12,685 | ||||||
| Trade receivables, net |
4,656 | 6,628 | ||||||
| Inventories |
172 | 303 | ||||||
| Deferred tax assets |
1,290 | 1,189 | ||||||
| Prepaid expenses and other current assets |
1,678 | 2,206 | ||||||
|
|
|
|||||||
| Total Current Assets |
37,538 | 39,174 | ||||||
| Non-Current Assets: |
||||||||
| Property, plant and equipment, net |
2,936 | 2,857 | ||||||
| Intangible assets, net |
7,455 | 7,860 | ||||||
| Goodwill |
23,819 | 21,553 | ||||||
| Deferred tax assets |
977 | 1,076 | ||||||
| Other assets |
1,636 | 1,015 | ||||||
|
|
|
|||||||
| Total Non-Current Assets |
36,823 | 34,361 | ||||||
|
|
|
|||||||
| TOTAL ASSETS |
$ | 74,361 | $ | 73,535 | ||||
|
|
|
|||||||
| LIABILITIES AND EQUITY
|
||||||||
| Current Liabilities: |
||||||||
| Notes payable, current and other current borrowings |
$ | — | $ | 1,150 | ||||
| Accounts payable |
442 | 494 | ||||||
| Accrued compensation and related benefits |
1,665 | 2,320 | ||||||
| Deferred revenues |
6,285 | 6,802 | ||||||
| Other current liabilities |
3,240 | 3,426 | ||||||
|
|
|
|||||||
| Total Current Liabilities |
11,632 | 14,192 | ||||||
| Non-Current Liabilities: |
||||||||
| Notes payable and other non-current borrowings |
14,777 | 14,772 | ||||||
| Income taxes payable |
3,216 | 3,169 | ||||||
| Other non-current liabilities |
1,470 | 1,157 | ||||||
|
|
|
|||||||
| Total Non-Current Liabilities |
19,463 | 19,098 | ||||||
| Equity |
43,266 | 40,245 | ||||||
|
|
|
|||||||
| TOTAL LIABILITIES AND EQUITY |
$ | 74,361 | $ | 73,535 | ||||
|
|
|
|||||||
|
|
|
|||||||
5
ORACLE CORPORATION
Q3 FISCAL 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
| Nine Months Ended | ||||||||
| February 29, 2012 |
February 28, 2011 |
|||||||
|
|
||||||||
| Cash Flows From Operating Activities: |
||||||||
| Net income |
$ | 6,529 | $ | 5,338 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation |
350 | 283 | ||||||
| Amortization of intangible assets |
1,790 | 1,829 | ||||||
| Deferred income taxes |
(200 | ) | (174 | ) | ||||
| Stock-based compensation |
474 | 383 | ||||||
| Tax benefits on the exercise of stock options and vesting of restricted stock-based awards |
123 | 222 | ||||||
| Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards |
(71 | ) | (139 | ) | ||||
| Other, net |
67 | 42 | ||||||
| Changes in operating assets and liabilities, net of effects from acquisitions: |
||||||||
| Decrease in trade receivables, net |
2,028 | 1,377 | ||||||
| Decrease (increase) in inventories |
139 | (9 | ) | |||||
| Decrease in prepaid expenses and other assets |
87 | 261 | ||||||
| Decrease in accounts payable and other liabilities |
(1,353 | ) | (821 | ) | ||||
| Increase (decrease) in income taxes payable |
259 | (591 | ) | |||||
| Decrease in deferred revenues |
(536 | ) | (564 | ) | ||||
|
|
|
|||||||
| Net cash provided by operating activities |
9,686 | 7,437 | ||||||
|
|
|
|||||||
| Cash Flows From Investing Activities: |
||||||||
| Purchases of marketable securities and other investments |
(29,745 | ) | (22,861 | ) | ||||
| Proceeds from maturities and sales of marketable securities and other investments |
26,472 | 19,159 | ||||||
| Acquisitions, net of cash acquired |
(2,833 | ) | (1,673 | ) | ||||
| Capital expenditures |
(431 | ) | (372 | ) | ||||
| Proceeds from sale of property |
— | 85 | ||||||
|
|
|
|||||||
| Net cash used for investing activities |
(6,537 | ) | (5,662 | ) | ||||
|
|
|
|||||||
| Cash Flows From Financing Activities: |
||||||||
| Payments for repurchases of common stock |
(3,457 | ) | (749 | ) | ||||
| Proceeds from issuances of common stock |
513 | 1,028 | ||||||
| Payments of dividends to stockholders |
(909 | ) | (757 | ) | ||||
| Proceeds from borrowings, net of issuance costs |
— | 3,204 | ||||||
| Repayments of borrowings |
(1,405 | ) | (3,143 | ) | ||||
| Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards |
71 | 139 | ||||||
| Distributions to noncontrolling interests |
(163 | ) | (65 | ) | ||||
|
|
|
|||||||
| Net cash used for financing activities |
(5,350 | ) | (343 | ) | ||||
|
|
|
|||||||
| Effect of exchange rate changes on cash and cash equivalents |
(181 | ) | 518 | |||||
|
|
|
|||||||
| Net (decrease) increase in cash and cash equivalents |
(2,382 | ) | 1,950 | |||||
|
|
|
|||||||
| Cash and cash equivalents at beginning of period |
16,163 | 9,914 | ||||||
|
|
|
|||||||
| Cash and cash equivalents at end of period |
$ | 13,781 | $ | 11,864 | ||||
|
|
|
|||||||
|
|
|
|||||||
6
ORACLE CORPORATION
Q3 FISCAL 2012 FINANCIAL RESULTS
FREE CASH FLOW—TRAILING 4-QUARTERS (1)
($ in millions)
| Fiscal 2011 | Fiscal 2012 | |||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||||||||||||||||||||
|
GAAP Operating Cash Flow |
$ | 8,760 | $ | 9,053 | $ | 9,948 | $ | 11,214 | $ | 12,818 | $ | 13,129 | $ | 13,463 | ||||||||||||||||
| Capital Expenditures (2) |
(293 | ) | (369 | ) | (441 | ) | (450 | ) | (492 | ) | (500 | ) | (509 | ) | ||||||||||||||||
|
|
| |||||||||||||||||||||||||||||
|
Free Cash Flow |
$ | 8,467 | $ | 8,684 | $ | 9,507 | $ | 10,764 | $ | 12,326 | $ | 12,629 | $ | 12,954 | ||||||||||||||||
|
|
| |||||||||||||||||||||||||||||
| % Growth over prior year |
0% | 3% | 19% | 27% | 46% | 45% | 36% | |||||||||||||||||||||||
|
GAAP Net Income |
$ | 6,363 | $ | 6,776 | $ | 7,701 | $ | 8,547 | $ | 9,035 | $ | 9,356 | $ | 9,738 | ||||||||||||||||
| Free Cash Flow as a % of Net Income
|
133% | 128% | 123% | 126% | 136% | 135% | 133% | |||||||||||||||||||||||
| (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. |
7
ORACLE CORPORATION
Q3 FISCAL 2012 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($ in millions)
| Fiscal 2011 | Fiscal 2012 | |||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||
|
REVENUES |
||||||||||||||||||||||||||||||||||||||
| New software licenses |
$ | 1,286 | $ | 1,999 | $ | 2,214 | $ | 3,736 | $ | 9,235 | $ | 1,498 | $ | 2,048 | $ | 2,374 | $ | 5,921 | ||||||||||||||||||||
| Software license updates and product support |
3,450 | 3,645 | 3,740 | 3,961 | 14,796 | 4,022 | 3,986 | 4,051 | 12,058 | |||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| Software Revenues |
4,736 | 5,644 | 5,954 | 7,697 | 24,031 | 5,520 | 6,034 | 6,425 | 17,979 | |||||||||||||||||||||||||||||
|
Hardware systems products |
1,079 | 1,112 | 1,035 | 1,157 | 4,382 | 1,029 | 953 | 869 | 2,851 | |||||||||||||||||||||||||||||
| Hardware systems support |
619 | 641 | 629 | 673 | 2,562 | 645 | 625 | 604 | 1,874 | |||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| Hardware Systems Revenues |
1,698 | 1,753 | 1,664 | 1,830 | 6,944 | 1,674 | 1,578 | 1,473 | 4,725 | |||||||||||||||||||||||||||||
|
Services Revenues |
1,068 | 1,185 | 1,146 | 1,248 | 4,647 | 1,180 | 1,180 | 1,141 | 3,501 | |||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
|
Total Revenues |
$ | 7,502 | $ | 8,582 | $ | 8,764 | $ | 10,775 | $ | 35,622 | $ | 8,374 | $ | 8,792 | $ | 9,039 | $ | 26,205 | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| AS REPORTED REVENUE GROWTH RATES |
||||||||||||||||||||||||||||||||||||||
| New software licenses |
25% | 21% | 29% | 19% | 23% | 17% | 2% | 7% | 8% | |||||||||||||||||||||||||||||
| Software license updates and product support |
11% | 12% | 13% | 15% | 13% | 17% | 9% | 8% | 11% | |||||||||||||||||||||||||||||
| Software Revenues |
14% | 15% | 19% | 17% | 17% | 17% | 7% | 8% | 10% | |||||||||||||||||||||||||||||
|
Hardware systems products |
* | * | 279% | (6% | ) | 191% | (5% | ) | (14% | ) | (16% | ) | (12% | ) | ||||||||||||||||||||||||
| Hardware systems support |
* | * | 239% | 12% | 227% | 4% | (2% | ) | (4% | ) | (1% | ) | ||||||||||||||||||||||||||
| Hardware Systems Revenues |
* | * | 263% | 0% | 203% | (1% | ) | (10% | ) | (11% | ) | (8% | ) | |||||||||||||||||||||||||
|
Services Revenues |
18% | 24% | 23% | 13% | 19% | 10% | 0% | 0% | 3% | |||||||||||||||||||||||||||||
|
Total Revenues |
48% | 47% | 37% | 13% | 33% | 12% | 2% | 3% | 5% | |||||||||||||||||||||||||||||
| CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||||||
| New software licenses |
25% | 23% | 27% | 12% | 19% | 11% | 3% | 8% | 7% | |||||||||||||||||||||||||||||
| Software license updates and product support |
12% | 13% | 12% | 10% | 12% | 10% | 9% | 9% | 9% | |||||||||||||||||||||||||||||
| Software Revenues |
15% | 17% | 17% | 11% | 15% | 11% | 7% | 9% | 9% | |||||||||||||||||||||||||||||
|
Hardware systems products |
* | * | 274% | (11% | ) | 184% | (11% | ) | (14% | ) | (16% | ) | (14% | ) | ||||||||||||||||||||||||
| Hardware systems support |
* | * | 234% | 6% | 218% | (3% | ) | (3% | ) | (3% | ) | (3% | ) | |||||||||||||||||||||||||
| Hardware Systems Revenues |
* | * | 258% | (5% | ) | 195% | (8% | ) | (10% | ) | (11% | ) | (10% | ) | ||||||||||||||||||||||||
|
Services Revenues |
18% | 25% | 21% | 7% | 17% | 5% | 0% | 1% | 2% | |||||||||||||||||||||||||||||
|
Total Revenues |
49% | 48% | 35% | 7% | 30% | 5% | 2% | 4% | 4% | |||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||
|
GEOGRAPHIC REVENUES |
||||||||||||||||||||||||||||||||||||||
| REVENUES |
||||||||||||||||||||||||||||||||||||||
| Americas |
$ | 3,904 | $ | 4,452 | $ | 4,509 | $ | 5,487 | $ | 18,352 | $ | 4,226 | $ | 4,532 | $ | 4,707 | $ | 13,465 | ||||||||||||||||||||
| Europe, Middle East & Africa |
2,381 | 2,738 | 2,815 | 3,564 | 11,497 | 2,704 | 2,756 | 2,787 | 8,247 | |||||||||||||||||||||||||||||
| Asia Pacific |
1,217 | 1,392 | 1,440 | 1,724 | 5,773 | 1,444 | 1,504 | 1,545 | 4,493 | |||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
|
Total Revenues |
$ | 7,502 | $ | 8,582 | $ | 8,764 | $ | 10,775 | $ | 35,622 | $ | 8,374 | $ | 8,792 | $ | 9,039 | $ | 26,205 | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||
|
HEADCOUNT |
||||||||||||||||||||||||||||||||||||||
| GEOGRAPHIC AREA |
||||||||||||||||||||||||||||||||||||||
| Americas |
44,494 | 44,815 | 45,825 | 45,887 | 46,338 | 46,672 | 47,884 | |||||||||||||||||||||||||||||||
| Europe, Middle East & Africa |
22,886 | 22,690 | 22,705 | 22,394 | 22,210 | 22,725 | 22,852 | |||||||||||||||||||||||||||||||
| Asia Pacific |
37,856 | 38,225 | 39,340 | 40,148 | 40,840 | 41,901 | 42,908 | |||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
|
Total Company |
105,236 | 105,730 | 107,870 | 108,429 | 109,388 | 111,298 | 113,644 | |||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||
| (1) | The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. |
| (2) | 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 rates in effect on May 31, 2011 and 2010 for the fiscal 2012 and fiscal 2011 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. |
| * | Not meaningful |
8
ORACLE CORPORATION
Q3 FISCAL 2012 FINANCIAL RESULTS
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)
($ in millions)
| Fiscal 2011 | Fiscal 2012 | |||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||
|
SOFTWARE REVENUES
|
||||||||||||||||||||||||||||||||||||||
|
DATABASE & MIDDLEWARE REVENUES |
||||||||||||||||||||||||||||||||||||||
| New software licenses |
$ | 937 | $ | 1,420 | $ | 1,575 | $ | 2,694 | $ | 6,626 | $ | 1,070 | $ | 1,479 | $ | 1,716 | $ | 4,265 | ||||||||||||||||||||
| Software license updates and product support |
2,316 | 2,443 | 2,523 | 2,663 | 9,945 | 2,710 | 2,707 | 2,776 | 8,191 | |||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| Database and Middleware Revenues |
$ | 3,253 | $ | 3,863 | $ | 4,098 | $ | 5,357 | $ | 16,571 | $ | 3,780 | $ | 4,186 | $ | 4,492 | $ | 12,456 | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||||||
| New software licenses |
32% | 21% | 27% | 18% | 23% | 14% | 4% | 9% | 8% | |||||||||||||||||||||||||||||
| Software license updates and product support |
12% | 15% | 15% | 15% | 14% | 17% | 11% | 10% | 12% | |||||||||||||||||||||||||||||
| Database and Middleware Revenues |
17% | 17% | 19% | 17% | 18% | 16% | 8% | 10% | 11% | |||||||||||||||||||||||||||||
| CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||||||
| New software licenses |
32% | 23% | 26% | 10% | 19% | 8% | 4% | 10% | 7% | |||||||||||||||||||||||||||||
| Software license updates and product support |
13% | 16% | 14% | 10% | 13% | 12% | 13% | 12% | 13% | |||||||||||||||||||||||||||||
| Database and Middleware Revenues |
18% | 18% | 18% | 10% | 15% | 11% | 10% | 11% | 11% | |||||||||||||||||||||||||||||
|
APPLICATIONS REVENUES
|
||||||||||||||||||||||||||||||||||||||
| New software licenses |
$ | 349 | $ | 579 | $ | 639 | $ | 1,042 | $ | 2,609 | $ | 428 | $ | 569 | $ | 658 | $ | 1,656 | ||||||||||||||||||||
| Software license updates and product support |
1,134 | 1,202 | 1,217 | 1,298 | 4,851 | 1,312 | 1,279 | 1,275 | 3,867 | |||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| Applications Revenues |
$ | 1,483 | $ | 1,781 | $ | 1,856 | $ | 2,340 | $ | 7,460 | $ | 1,740 | $ | 1,848 | $ | 1,933 | $ | 5,523 | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
|
AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||||||
| New software licenses |
10% | 21% | 34% | 22% | 23% | 23% | (2% | ) | 3% | 6% | ||||||||||||||||||||||||||||
| Software license updates and product support |
8% | 8% | 10% | 16% | 10% | 16% | 6% | 5% | 9% | |||||||||||||||||||||||||||||
| Applications Revenues |
8% | 12% | 17% | 18% | 14% | 17% | 4% | 4% | 8% | |||||||||||||||||||||||||||||
|
CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||||||
| New software licenses |
10% | 22% | 31% | 16% | 20% | 19% | (1% | ) | 3% | 5% | ||||||||||||||||||||||||||||
| Software license updates and product support |
9% | 9% | 9% | 10% | 9% | 7% | 2% | 2% | 4% | |||||||||||||||||||||||||||||
| Applications Revenues |
9% | 13% | 16% | 12% | 13% | 10% | 1% | 3% | 4% | |||||||||||||||||||||||||||||
| (1) | The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. |
| (2) | 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 rates in effect on May 31, 2011 and 2010 for the fiscal 2012 and fiscal 2011 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. |
9
ORACLE CORPORATION
Q3 FISCAL 2012 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE AND HARDWARE SYSTEMS PRODUCTS REVENUES ANALYSIS (1)
($ in millions)
| Fiscal 2011 | Fiscal 2012 | |||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||||||||||||||||||||||||
|
AMERICAS |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
$ | 446 | $ | 671 | $ | 755 | $ | 1,284 | $ | 3,155 | $ | 478 | $ | 669 | $ | 808 | $ | 1,955 | ||||||||||||||||||||
| Applications |
212 | 359 | 355 | 580 | 1,507 | 249 | 358 | 420 | 1,027 | |||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| New Software License Revenues |
$ | 658 | $ | 1,030 | $ | 1,110 | $ | 1,864 | $ | 4,662 | $ | 727 | $ | 1,027 | $ | 1,228 | $ | 2,982 | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
$ | 543 | $ | 602 | $ | 506 | $ | 599 | $ | 2,248 | $ | 475 | $ | 496 | $ | 410 | $ | 1,382 | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
44% | 36% | 40% | 14% | 28% | 7% | 0% | 7% | 4% | |||||||||||||||||||||||||||||
| Applications |
14% | 26% | 26% | 20% | 22% | 18% | 0% | 18% | 11% | |||||||||||||||||||||||||||||
| New Software License Revenues |
33% | 32% | 35% | 16% | 26% | 10% | 0% | 11% | 7% | |||||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | 287% | (3% | ) | 201% | (12% | ) | (17% | ) | (19% | ) | (16% | ) | ||||||||||||||||||||||||
| CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
43% | 36% | 39% | 12% | 27% | 6% | 1% | 8% | 5% | |||||||||||||||||||||||||||||
| Applications |
14% | 26% | 24% | 18% | 20% | 16% | 1% | 19% | 11% | |||||||||||||||||||||||||||||
| New Software License Revenues |
32% | 32% | 34% | 14% | 24% | 9% | 1% | 11% | 7% | |||||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | 285% | (4% | ) | 199% | (13% | ) | (17% | ) | (18% | ) | (16% | ) | ||||||||||||||||||||||||
|
EUROPE / MIDDLE EAST / AFRICA |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
$ | 279 | $ | 426 | $ | 505 | $ | 925 | $ | 2,137 | $ | 322 | $ | 443 | $ | 535 | $ | 1,301 | ||||||||||||||||||||
| Applications |
73 | 148 | 197 | 308 | 724 | 118 | 141 | 158 | 417 | |||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| New Software License Revenues |
$ | 352 | $ | 574 | $ | 702 | $ | 1,233 | $ | 2,861 | $ | 440 | $ | 584 | $ | 693 | $ | 1,718 | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
$ | 338 | $ | 329 | $ | 330 | $ | 341 | $ | 1,337 | $ | 344 | $ | 272 | $ | 265 | $ | 880 | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
25% | (1% | ) | 11% | 23% | 15% | 15% | 4% | 6% | 7% | ||||||||||||||||||||||||||||
| Applications |
(19% | ) | 23% | 47% | 18% | 20% | 63% | (4% | ) | (20% | ) | 0% | ||||||||||||||||||||||||||
| New Software License Revenues |
12% | 5% | 19% | 22% | 16% | 25% | 2% | (1% | ) | 6% | ||||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | 246% | (13% | ) | 176% | 2% | (17% | ) | (20% | ) | (12% | ) | |||||||||||||||||||||||||
| CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
32% | 7% | 12% | 9% | 12% | 5% | 5% | 8% | 6% | |||||||||||||||||||||||||||||
| Applications |
(16% | ) | 31% | 46% | 7% | 16% | 55% | (3% | ) | (18% | ) | 0% | ||||||||||||||||||||||||||
| New Software License Revenues |
18% | 12% | 20% | 9% | 13% | 15% | 3% | 1% | 5% | |||||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | 246% | (21% | ) | 165% | (11% | ) | (17% | ) | (18% | ) | (15% | ) | ||||||||||||||||||||||||
|
ASIA PACIFIC |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
$ | 212 | $ | 323 | $ | 315 | $ | 485 | $ | 1,334 | $ | 270 | $ | 367 | $ | 373 | $ | 1,009 | ||||||||||||||||||||
| Applications |
64 | 72 | 87 | 154 | 378 | 61 | 70 | 80 | 212 | |||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| New Software License Revenues |
$ | 276 | $ | 395 | $ | 402 | $ | 639 | $ | 1,712 | $ | 331 | $ | 437 | $ | 453 | $ | 1,221 | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
$ | 198 | $ | 181 | $ | 199 | $ | 217 | $ | 797 | $ | 210 | $ | 185 | $ | 194 | $ | 589 | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
19% | 27% | 28% | 20% | 23% | 28% | 14% | 19% | 19% | |||||||||||||||||||||||||||||
| Applications |
54% | (1% | ) | 45% | 41% | 33% | (4% | ) | (4% | ) | (8% | ) | (6% | ) | ||||||||||||||||||||||||
| New Software License Revenues |
26% | 21% | 32% | 24% | 25% | 20% | 11% | 13% | 14% | |||||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | 325% | (4% | ) | 191% | 6% | 2% | (3% | ) | 2% | |||||||||||||||||||||||||||
| CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
13% | 22% | 20% | 8% | 15% | 15% | 12% | 16% | 14% | |||||||||||||||||||||||||||||
| Applications |
47% | (5% | ) | 34% | 27% | 24% | (11% | ) | (6% | ) | (9% | ) | (9% | ) | ||||||||||||||||||||||||
| New Software License Revenues |
19% | 16% | 23% | 12% | 16% | 9% | 8% | 11% | 9% | |||||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | 295% | (13% | ) | 173% | (5% | ) | (1% | ) | (6% | ) | (4% | ) | ||||||||||||||||||||||||
|
TOTAL COMPANY |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
$ | 937 | $ | 1,420 | $ | 1,575 | $ | 2,694 | $ | 6,626 | $ | 1,070 | $ | 1,479 | $ | 1,716 | $ | 4,265 | ||||||||||||||||||||
| Applications |
349 | 579 | 639 | 1,042 | 2,609 | 428 | 569 | 658 | 1,656 | |||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| New Software License Revenues |
$ | 1,286 | $ | 1,999 | $ | 2,214 | $ | 3,736 | $ | 9,235 | $ | 1,498 | $ | 2,048 | $ | 2,374 | $ | 5,921 | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
$ | 1,079 | $ | 1,112 | $ | 1,035 | $ | 1,157 | $ | 4,382 | $ | 1,029 | $ | 953 | $ | 869 | $ | 2,851 | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||
| AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
32% | 21% | 27% | 18% | 23% | 14% | 4% | 9% | 8% | |||||||||||||||||||||||||||||
| Applications |
10% | 21% | 34% | 22% | 23% | 23% | (2% | ) | 3% | 6% | ||||||||||||||||||||||||||||
| New Software License Revenues |
25% | 21% | 29% | 19% | 23% | 17% | 2% | 7% | 8% | |||||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | 279% | (6% | ) | 191% | (5% | ) | (14% | ) | (16% | ) | (12% | ) | ||||||||||||||||||||||||
| CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
32% | 23% | 26% | 10% | 19% | 8% | 4% | 10% | 7% | |||||||||||||||||||||||||||||
| Applications |
10% | 22% | 31% | 16% | 20% | 19% | (1% | ) | 3% | 5% | ||||||||||||||||||||||||||||
| New Software License Revenues |
25% | 23% | 27% | 12% | 19% | 11% | 3% | 8% | 7% | |||||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | 274% | (11% | ) | 184% | (11% | ) | (14% | ) | (16% | ) | (14% | ) | ||||||||||||||||||||||||
| (1) | The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. |
| (2) | 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 rates in effect on May 31, 2011 and 2010 for the fiscal 2012 and fiscal 2011 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. |
| * | Not meaningful |
10
APPENDIX A
ORACLE CORPORATION
Q3 FISCAL 2012 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 tables, 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:
| • | Software license updates and product support and hardware systems support deferred revenues: Business combination accounting rules require us to account for the fair values of software license updates and product support contracts and hardware systems support contracts assumed in connection with our acquisitions. Because these support contracts are typically one year in duration, our GAAP revenues for the one year period subsequent to our acquisition of a business do not reflect the full amount of support revenues on these assumed support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment to our software license updates and product support revenues and hardware systems support revenues is intended to include, and thus reflect, the full amount of such revenues. We believe the adjustment to these support revenues is useful to investors as a measure of the ongoing performance of our business. We have historically experienced high renewal rates on our software license updates and product support contracts and our objective is to increase the renewal rates on acquired and new hardware systems support contracts; however, we cannot be certain that our customers will renew our software license updates and product support contracts or our hardware systems support contracts. |
| • | Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP operating expenses and net income measures. 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: We have excluded the effect of amortization of intangible assets from our non-GAAP operating expenses and net income measures. Amortization of intangible assets 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 our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods. |
| • | Acquisition related and other expenses; and restructuring expenses: We have excluded the effect of acquisition related and other expenses and the effect of restructuring expenses from our non-GAAP operating expenses and net income measures. We incurred significant expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related and other expenses consist of personnel related costs for transitional employees, other acquired employee related costs, stock-based compensation expenses (in addition to the stock-based compensation expenses described above), integration related professional services, certain business combination adjustments including adjustments after the measurement period has ended and changes in fair value of contingent consideration payable, and certain other operating expenses, net. Substantially all of the stock-based compensation expenses included in acquisition related and other expenses resulted from unvested options assumed in acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the original terms of those options. Restructuring expenses consist of employee severance and other exit costs. We believe it is useful for investors to understand the effects of these items on our total operating expenses. Although acquisition related expenses and restructuring expenses generally diminish over time with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions. |
11