UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended February 28, 2003
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number: 0-14376
Oracle Corporation
(Exact name of registrant as specified in its charter)
| Delaware |
94-2871189 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification no.) |
500 Oracle Parkway
Redwood City, California 94065
(Address of principal executive offices, including zip code)
(650) 506-7000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES x NO ¨
The number of shares of registrant’s common stock outstanding as of March 15, 2003 was: 5,242,996,382
FORM 10-Q
QUARTERLY REPORT
TABLE OF CONTENTS
| Page | ||||
| PART I. |
FINANCIAL INFORMATION |
|||
| Item 1. |
Financial Statements (Unaudited) |
|||
| Condensed Consolidated Balance Sheets as of February 28, 2003 and May 31, 2002 |
3 | |||
| 4 | ||||
| Condensed Consolidated Statements of Cash Flows for the Nine Months ended February 28, 2003 and 2002 |
5 | |||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 | ||
| Item 3. |
42 | |||
| Item 4. |
46 | |||
| PART II. |
OTHER INFORMATION |
|||
| Item 1. |
47 | |||
| Item 6. |
47 | |||
| 48 | ||||
| 49 |
| PART I. | FINANCIAL INFORMATION |
| Item 1. | Financial Statements |
CONDENSED CONSOLIDATED BALANCE SHEETS
As of February 28, 2003 and May 31, 2002
| (in millions, except per share data) |
February 28, 2003 |
May 31, 2002 |
|||||
| ASSETS |
(Unaudited) |
||||||
| Current assets: |
|||||||
| Cash and cash equivalents |
$ |
4,088 |
$ |
3,095 |
| ||
| Short-term investments |
|
1,952 |
|
2,746 |
| ||
| Trade receivables, net of allowances of $368 as of February 28, 2003 and $413 as of May 31, 2002 |
|
1,421 |
|
2,036 |
| ||
| Other receivables |
|
218 |
|
293 |
| ||
| Deferred tax assets |
|
461 |
|
452 |
| ||
| Prepaid expenses and other current assets |
|
104 |
|
106 |
| ||
| Total current assets |
|
8,244 |
|
8,728 |
| ||
| Long-term investments |
|
224 |
|
406 |
| ||
| Property, net |
|
899 |
|
987 |
| ||
| Deferred tax assets |
|
224 |
|
233 |
| ||
| Intangible and other assets |
|
357 |
|
446 |
| ||
| Total assets |
$ |
9,948 |
$ |
10,800 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||
| Current liabilities: |
|||||||
| Accounts payable |
$ |
223 |
$ |
228 |
| ||
| Current portion of long-term debt |
|
153 |
|
— |
| ||
| Income taxes payable |
|
928 |
|
1,091 |
| ||
| Value added tax and sales tax payable |
|
101 |
|
155 |
| ||
| Accrued compensation and related benefits |
|
374 |
|
458 |
| ||
| Other accrued liabilities |
|
815 |
|
787 |
| ||
| Deferred revenues |
|
1,225 |
|
1,241 |
| ||
| Total current liabilities |
|
3,819 |
|
3,960 |
| ||
| Long-term debt, net of current portion |
|
162 |
|
298 |
| ||
| Deferred tax liabilities |
|
175 |
|
204 |
| ||
| Other long-term liabilities |
|
208 |
|
221 |
| ||
| Commitments and contingencies |
|||||||
| Stockholders’ equity: |
|||||||
| Preferred stock, $0.01 par value per share—authorized: 1.0 shares; outstanding: none |
|
— |
|
— |
| ||
| Common stock, $0.01 par value per share and additional paid in capital—authorized: 11,000 shares; outstanding: 5,242 shares at February 28, 2003 and 5,431 shares at May 31, 2002 |
|
4,921 |
|
5,029 |
| ||
| Retained earnings |
|
657 |
|
1,210 |
| ||
| Accumulated other comprehensive income (loss) |
|
6 |
|
(122 |
) | ||
| Total stockholders’ equity |
|
5,584 |
|
6,117 |
| ||
| Total liabilities and stockholders’ equity |
$ |
9,948 |
$ |
10,800 |
| ||
See notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended February 28, 2003 and 2002
(Unaudited)
| Three Months Ended February 28, |
Nine Months Ended February 28, |
|||||||||||||||
| (in millions, except per share data) |
2003 |
2002 |
2003 |
2002 |
||||||||||||
| Revenues: |
||||||||||||||||
| Software licenses and other |
$ |
755 |
|
$ |
790 |
|
$ |
2,083 |
|
$ |
2,340 |
| ||||
| Software license updates and product support |
|
1,005 |
|
|
867 |
|
|
2,863 |
|
|
2,591 |
| ||||
| Services |
|
547 |
|
|
597 |
|
|
1,697 |
|
|
1,968 |
| ||||
| Total revenues |
|
2,307 |
|
|
2,254 |
|
|
6,643 |
|
|
6,899 |
| ||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
|
521 |
|
|
515 |
|
|
1,505 |
|
|
1,621 |
| ||||
| Software license updates and product support |
|
120 |
|
|
113 |
|
|
354 |
|
|
346 |
| ||||
| Cost of services |
|
454 |
|
|
459 |
|
|
1,408 |
|
|
1,491 |
| ||||
| Research and development |
|
301 |
|
|
283 |
|
|
882 |
|
|
794 |
| ||||
| General and administrative |
|
115 |
|
|
105 |
|
|
325 |
|
|
302 |
| ||||
| Total operating expenses |
|
1,511 |
|
|
1,475 |
|
|
4,474 |
|
|
4,554 |
| ||||
| Operating income |
|
796 |
|
|
779 |
|
|
2,169 |
|
|
2,345 |
| ||||
| Net investment losses related to equity securities |
|
(6 |
) |
|
(7 |
) |
|
(108 |
) |
|
(14 |
) | ||||
| Other income, net |
|
39 |
|
|
10 |
|
|
90 |
|
|
82 |
| ||||
| Income before provision for income taxes |
|
829 |
|
|
782 |
|
|
2,151 |
|
|
2,413 |
| ||||
| Provision for income taxes |
|
258 |
|
|
274 |
|
|
702 |
|
|
845 |
| ||||
| Net income |
$ |
571 |
|
$ |
508 |
|
$ |
1,449 |
|
$ |
1,568 |
| ||||
| Earnings per share: |
||||||||||||||||
| Basic |
$ |
0.11 |
|
$ |
0.09 |
|
$ |
0.27 |
|
$ |
0.28 |
| ||||
| Diluted |
$ |
0.11 |
|
$ |
0.09 |
|
$ |
0.27 |
|
$ |
0.27 |
| ||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
|
5,259 |
|
|
5,492 |
|
|
5,322 |
|
|||||||