Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - ORACLE CORP | d8k.htm |
For Immediate Release
| Contact: | Ken Bond | Deborah Hellinger | ||
| Oracle Investor Relations | Oracle Corporate Communications | |||
| 1.650.607.0349 | 1.212.508.7935 | |||
| ken.bond@oracle.com | deborah.hellinger@oracle.com |
ORACLE REPORTS Q4 GAAP EPS UP 34% TO 62 CENTS; Q4 NON-GAAP EPS UP 25% TO 75 CENTS
Q4 Software New License Sales Up 19%, Q4 Total Revenue Up 13%
REDWOOD SHORES, Calif., June 23, 2011 — Oracle Corporation (NASDAQ: ORCL) today announced fiscal 2011 Q4 GAAP total revenues were up 13% to $10.8 billion, while non-GAAP total revenues were up 12% to $10.8 billion. Both GAAP and non-GAAP new software license revenues were up 19% to $3.7 billion. Both GAAP and non-GAAP software license updates and product support revenues were up 15% to $4.0 billion. Both GAAP and non-GAAP hardware systems products revenues were down 6% to $1.2 billion. GAAP operating income was up 32% to $4.4 billion, and GAAP operating margin was 40%. Non-GAAP operating income was up 19% to $5.2 billion, and non-GAAP operating margin was 48%. GAAP net income was up 36% to $3.2 billion, while non-GAAP net income was up 27% to $3.9 billion. GAAP earnings per share were $0.62, up 34% compared to last year while non-GAAP earnings per share were up 25% to $0.75. GAAP operating cash flow on a trailing twelve-month basis was $11.2 billion.
For fiscal year 2011, GAAP total revenues were up 33% to $35.6 billion, while non-GAAP total revenues were up 33% to $35.9 billion. Both GAAP and non-GAAP new software license revenues were up 23% to $9.2 billion. GAAP software license updates and product support revenues were up 13% to $14.8 billion, while non-GAAP software license updates and product support revenues were up 13% to $14.9 billion. Both GAAP and non-GAAP hardware systems products revenues were $4.4 billion. GAAP operating income was up 33% to $12.0 billion, and GAAP operating margin was 34%. Non-GAAP operating income was up 27% to $15.9 billion, and non-GAAP operating margin was 44%. GAAP net income was up 39% to $8.5 billion, while non-GAAP net income was up 34% to $11.4 billion. GAAP earnings per share were $1.67, up 38% compared to last year while non-GAAP earnings per share were up 33% to $2.22.
“In Q4, we achieved a 19% new software license growth rate with almost no help from acquisitions,” said Oracle President and CFO, Safra Catz. “This strong organic growth combined with continuously improving operational efficiencies enabled us to deliver a 48% operating margin in the quarter. As our results reflect, we clearly exceeded even our own high expectations for Sun’s business.”
“In addition to record setting software sales, our Exadata and Exalogic systems also made a strong contribution to our growth in Q4,” said Oracle President, Mark Hurd. “Today there are more than 1,000 Exadata machines installed worldwide. Our goal is to triple that number in FY12.”
“In FY11 Oracle’s database business experienced its fastest growth in a decade,” said Oracle CEO, Larry Ellison. “Over the past few years we added features to the Oracle database for both cloud computing and in-memory databases that led to increased database sales this past year. Lately we’ve been focused on the big business opportunity presented by Big Data.”
In addition, Oracle also announced that its Board of Directors 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 July 13, 2011, with a payment date of August 3, 2011.
Q4 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 (913) 312-0945 or (877) 612-6725, Passcode: 7002523. To access the live webcast of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor.
About Oracle
Oracle (NASDAQ: ORCL) is the world’s most complete, open, and integrated business software and hardware systems company. For more information about Oracle, please visit http://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, 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 global economic crisis and the current situation in Japan caused by the recent earthquake and resulting tsunami, 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, risks relating to compliance with international and U.S. laws that apply to our international operations and risks to the sales of our products and services and supply chain operations caused by the recent earthquake and tsunami in Japan. (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 June 23, 2011. Oracle undertakes no duty to update any statement in light of new information or future events.
ORACLE CORPORATION
Q4 FISCAL 2011 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
| Three Months Ended May 31, | % Increase | % Increase (Decrease) |
||||||||||||||||||||||
| 2011 | % of Revenues |
2010 | % of Revenues |
(Decrease) in US $ |
in Constant Currency (1) |
|||||||||||||||||||
| REVENUES |
||||||||||||||||||||||||
| New software licenses |
$ | 3,736 | 35% | $ | 3,135 | 33% | 19% | 12% | ||||||||||||||||
| Software license updates and product support |
3,961 | 36% | 3,431 | 36% | 15% | 10% | ||||||||||||||||||
| Software Revenues |
7,697 | 71% | 6,566 | 69% | 17% | 11% | ||||||||||||||||||
| Hardware systems products |
1,157 | 11% | 1,233 | 13% | (6%) | (11%) | ||||||||||||||||||
| Hardware systems support |
673 | 6% | 598 | 6% | 12% | 6% | ||||||||||||||||||
| Hardware Systems Revenues |
1,830 | 17% | 1,831 | 19% | 0% | (5%) | ||||||||||||||||||
| Services |
1,248 | 12% | 1,108 | 12% | 13% | 7% | ||||||||||||||||||
| Total Revenues |
10,775 | 100% | 9,505 | 100% | 13% | 7% | ||||||||||||||||||
| OPERATING EXPENSES |
||||||||||||||||||||||||
| Sales and marketing |
2,098 | 20% | 1,745 | 18% | 20% | 15% | ||||||||||||||||||
| Software license updates and product support |
350 | 3% | 292 | 3% | 20% | 15% | ||||||||||||||||||
| Hardware systems products |
511 | 5% | 675 | 7% | (24%) | (29%) | ||||||||||||||||||
| Hardware systems support |
309 | 3% | 306 | 4% | 1% | (5%) | ||||||||||||||||||
| Services |
1,000 | 9% | 969 | 10% | 3% | (2%) | ||||||||||||||||||
| Research and development |
1,170 | 11% | 1,063 | 11% | 10% | 8% | ||||||||||||||||||
| General and administrative |
255 | 2% | 293 | 3% | (13%) | (15%) | ||||||||||||||||||
| Amortization of intangible assets |
598 | 6% | 605 | 6% | (1%) | (1%) | ||||||||||||||||||
| Acquisition related and other |
48 | 0% | 103 | 1% | (54%) | (59%) | ||||||||||||||||||
| Restructuring |
77 | 1% | 154 | 2% | (50%) | (56%) | ||||||||||||||||||
| Total Operating Expenses |
6,416 | 60% | 6,205 | 65% | 3% | (1%) | ||||||||||||||||||
| OPERATING INCOME |
4,359 | 40% | 3,300 | 35% | 32% | 22% | ||||||||||||||||||
| Interest expense |
(195 | ) | (1%) | (201 | ) | (2%) | (3%) | (3%) | ||||||||||||||||
| Non-operating income (expense), net |
6 | 0% | (24 | ) | 0% | 126% | 120% | |||||||||||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES |
4,170 | 39% | 3,075 | 33% | 36% | 25% | ||||||||||||||||||
| Provision for income taxes |
961 | 9% | 711 | 8% | 35% | 24% | ||||||||||||||||||
| NET INCOME |
$ | 3,209 | 30% | $ 2,364 | 25% | 36% | 25% | |||||||||||||||||
| EARNINGS PER SHARE: |
||||||||||||||||||||||||
| Basic |
$ | 0.63 | $ 0.47 | |||||||||||||||||||||
| Diluted |
$ | 0.62 | $ 0.46 | |||||||||||||||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
||||||||||||||||||||||||
| Basic |
5,065 | 5,022 | ||||||||||||||||||||||
| Diluted
|
|
5,164
|
|
|
5,090
|
|
||||||||||||||||||
| (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, 2010, 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 May 31, 2011 compared with the corresponding prior year period increased our revenues by 6 percentage points, operating expenses by 4 percentage points and operating income by 10 percentage points. |
1
ORACLE CORPORATION
Q4 FISCAL 2011 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
| Three Months Ended May 31, | % Increase (Decrease) in US $ |
% Increase (Decrease) in Constant Currency (2) |
||||||||||||||||||||||||||||||||||||||
| 2011 GAAP |
Adj. | 2011 Non-GAAP |
2010 GAAP |
Adj. | 2010 Non-GAAP |
GAAP | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||||||||||||||||||
|
TOTAL REVENUES (3) (4)
|
$
|
10,775
|
|
$
|
31
|
|
$
|
10,806
|
|
$
|
9,505
|
|
$
|
126
|
|
$
|
9,631
|
|
|
13%
|
|
|
12%
|
|
|
7%
|
|
|
6%
|
| ||||||||||
| TOTAL SOFTWARE REVENUES (3) |
$ | 7,697 | $ | 17 | $ | 7,714 | $ | 6,566 | $ | 36 | $ | 6,602 | 17% | 17% | 11% | 10% | ||||||||||||||||||||||||
| New software licenses |
3,736 | — | 3,736 | 3,135 | — | 3,135 | 19% | 19% | 12% | 12% | ||||||||||||||||||||||||||||||
| Software license updates and product support (3) |
3,961 | 17 | 3,978 | 3,431 | 36 | 3,467 | 15% | 15% | 10% | 9% | ||||||||||||||||||||||||||||||
| TOTAL HARDWARE SYSTEMS REVENUES (4) |
$ | 1,830 | $ | 14 | $ | 1,844 | $ | 1,831 | $ | 90 | $ | 1,921 | 0% | (4%) | (5%) | (9%) | ||||||||||||||||||||||||
| Hardware systems products |
1,157 | — | 1,157 | 1,233 | — | 1,233 | (6%) | (6%) | (11%) | (11%) | ||||||||||||||||||||||||||||||
| Hardware systems support (4) |
673 | 14 | 687 | 598 | 90 | 688 | 12% | 0% | 6% | (6%) | ||||||||||||||||||||||||||||||
| TOTAL OPERATING EXPENSES |
$ | 6,416 | $ | (848 | ) | $ | 5,568 | $ | 6,205 | $ | (989 | ) | $ | 5,216 | 3% | 7% | (1%) | 2% | ||||||||||||||||||||||
| Hardware systems products |
511 | — | 511 | 675 | (6 | ) | 669 | (24%) | (24%) | (29%) | (28%) | |||||||||||||||||||||||||||||
| Stock-based compensation (5) |
125 | (125 | ) | — | 121 | (121 | ) | — | 4% | * | 4% | * | ||||||||||||||||||||||||||||
| Amortization of intangible assets (6) |
598 | (598 | ) | — | 605 | (605 | ) | — | (1%) | * | (1%) | * | ||||||||||||||||||||||||||||
| Acquisition related and other |
48 | (48 | ) | — | 103 | (103 | ) | — | (54%) | * | (59%) | * | ||||||||||||||||||||||||||||
| Restructuring |
77 | (77 | ) | — | 154 | (154 | ) | — | (50%) | * | (56%) | * | ||||||||||||||||||||||||||||
| OPERATING INCOME |
$ | 4,359 | $ | 879 | $ | 5,238 | $ | 3,300 | $ | 1,115 | $ | 4,415 | 32% | 19% | 22% | 11% | ||||||||||||||||||||||||
| OPERATING MARGIN % |
40% | 48% | 35% | 46% | 574 bp. | 264 bp. | 477 bp. | 197 bp. | ||||||||||||||||||||||||||||||||
| INCOME TAX EFFECTS (7) |
$ | 961 | $ | 216 | $ | 1,177 | $ | 711 | $ | 431 | $ | 1,142 | 35% | 3% | 24% | (4%) | ||||||||||||||||||||||||
| NET INCOME |
$ | 3,209 | $ | 663 | $ | 3,872 | $ | 2,364 | $ | 684 | $ | 3,048 | 36% | 27% | 25% | 18% | ||||||||||||||||||||||||
| DILUTED EARNINGS PER SHARE |
$ | 0.62 | $ | 0.75 | $ | 0.46 | $ | 0.60 | 34% | 25% | 23% | 16% | ||||||||||||||||||||||||||||
| DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
5,164 | — | 5,164 | 5,090 | — | 5,090 | 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, 2010, 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 May 31, 2011, approximately $29 million, $9 million and $2 million in estimated revenues related to assumed software support contracts will not be recognized for fiscal 2012, fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules. |
| (4) | As of May 31, 2011, approximately $30 million and $11 million in estimated revenues related to hardware systems support contracts will not be recognized for 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 May 31, 2011 |
Three Months Ended May 31, 2010 |
|||||||||||||||||||||||
| GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||||
| Sales and marketing |
$ | 23 | $ | (23 | ) | $ | — | $ | 24 | $ | (24 | ) | $ | — | ||||||||||
| Software license updates and product support |
3 | (3 | ) | — | 5 | (5 | ) | — | ||||||||||||||||
| Hardware systems products |
— | — | — | 1 | (1 | ) | — | |||||||||||||||||
| Hardware systems support |
1 | (1 | ) | — | 1 | (1 | ) | — | ||||||||||||||||
| Services |
3 | (3 | ) | — | 4 | (4 | ) | — | ||||||||||||||||
| Research and development |
60 | (60 | ) | — | 50 | (50 | ) | — | ||||||||||||||||
| General and administrative |
35 | (35 | ) | — | 36 | (36 | ) | — | ||||||||||||||||
| Subtotal |
125 | (125 | ) | — | 121 | (121 | ) | — | ||||||||||||||||
| Acquisition related and other |
2 | (2 | ) | — | 5 | (5 | ) | — | ||||||||||||||||
| Total stock-based compensation |
$ | 127 | $ | (127 | ) | $ | — | $ | 126 | $ | (126 | ) | $ | — | ||||||||||
| (6) | Estimated future annual amortization expense related to intangible assets as of May 31, 2011 was as follows: |
| Fiscal 2012 |
$ | 2,275 | ||
| Fiscal 2013 |
1,902 | |||
| Fiscal 2014 |
1,554 | |||
| Fiscal 2015 |
1,155 | |||
| Fiscal 2016 |
657 | |||
| Thereafter |
267 | |||
| Total intangible assets subject to amortization |
7,810 | |||
| In-process research and development |
50 | |||
| Total intangible assets, net |
$ | 7,860 | ||
| (7) | Income tax effects were calculated reflecting an effective GAAP tax rate of 23.1% and 23.1% in the fourth quarter of fiscal 2011 and 2010, respectively, and an effective non-GAAP tax rate of 23.3% and 27.3% in the fourth quarter of fiscal 2011 and 2010, respectively. The differences between our GAAP and non-GAAP tax rates in the fourth quarter of fiscal 2011 were primarily due to income tax effects related to acquired tax exposures and tax benefits attributable to our restructuring expenses in this period. The differences between our GAAP and non-GAAP tax rates in the fourth quarter of fiscal 2010 were primarily due to income tax effects of non-GAAP pretax income adjustments including differences in jurisdictional tax rates and the related tax benefits attributable to our restructuring expenses in this period, and were also due to income tax effects related to acquired tax exposures. |
| * | Not meaningful |
2
ORACLE CORPORATION
FISCAL 2011 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
| Year Ended May 31, | % Increase | % Increase (Decrease) |
||||||||||||||||||||||
| 2011 | % of Revenues |
2010 | % of Revenues |
(Decrease) in US $ |
in Constant Currency (1) |
|||||||||||||||||||
|
REVENUES |
||||||||||||||||||||||||
| New software licenses |
$ | 9,235 | 26% | $ | 7,533 | 28% | 23% | 19% | ||||||||||||||||
| Software license updates and product support |
14,796 | 42% | 13,092 | 49% | 13% | 12% | ||||||||||||||||||
| Software Revenues |
24,031 | 68% | 20,625 | 77% | 17% | 15% | ||||||||||||||||||
| Hardware systems products |
4,382 | 12% | 1,506 | 6% | 191% | 184% | ||||||||||||||||||
| Hardware systems support |
2,562 | 7% | 784 | 3% | 227% | 218% | ||||||||||||||||||
| Hardware Systems Revenues |
6,944 | 19% | 2,290 | 9% | 203% | 195% | ||||||||||||||||||
| Services |
4,647 | 13% | 3,905 | 14% | 19% | 17% | ||||||||||||||||||
| Total Revenues |
35,622 | 100% | 26,820 | 100% | 33% | 30% | ||||||||||||||||||
| OPERATING EXPENSES |
||||||||||||||||||||||||
| Sales and marketing |
6,579 | 18% | 5,080 | 19% | 30% | 28% | ||||||||||||||||||
| Software license updates and product support |
1,264 | 3% | 1,063 | 4% | 19% | 17% | ||||||||||||||||||
| Hardware systems products |
2,057 | 6% | 880 | 3% | 134% | 126% | ||||||||||||||||||
| Hardware systems support |
1,259 | 3% | 423 | 2% | 198% | 189% | ||||||||||||||||||
| Services |
3,818 | 11% | 3,398 | 13% | 12% | 11% | ||||||||||||||||||
| Research and development |
4,519 | 13% | 3,254 | 12% | 39% | 38% | ||||||||||||||||||
| General and administrative (2) |
970 | 3% | 911 | 3% | 6% | 5% | ||||||||||||||||||
| Amortization of intangible assets |
2,428 | 7% | 1,973 | 7% | 23% | 23% | ||||||||||||||||||
| Acquisition related and other |
208 | 1% | 154 | 1% | 35% | 27% | ||||||||||||||||||
| Restructuring |
487 | 1% | 622 | 2% | (22%) | (23%) | ||||||||||||||||||
| Total Operating Expenses |
23,589 | 66% | 17,758 | 66% | 33% | 31% | ||||||||||||||||||
| OPERATING INCOME |
12,033 | 34% | 9,062 | 34% | 33% | 29% | ||||||||||||||||||
| Interest expense |
(808) | (3%) | (754) | (3%) | 7% | 7% | ||||||||||||||||||
| Non-operating income (expense), net |
186 | 1% | (65) | 0% | 388% | 372% | ||||||||||||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES |
11,411 | 32% | 8,243 | 31% | 38% | 35% | ||||||||||||||||||
| Provision for income taxes |
2,864 | 8% | 2,108 | 8% | 36% | 32% | ||||||||||||||||||
| NET INCOME |
$ | 8,547 | 24% | $ | 6,135 | 23% | 39% | 36% | ||||||||||||||||
| EARNINGS PER SHARE: |
||||||||||||||||||||||||
| Basic |
$ | 1.69 | $ | 1.22 | ||||||||||||||||||||
| Diluted |
$ | 1.67 | $ | 1.21 | ||||||||||||||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
||||||||||||||||||||||||
| Basic |
5,048 | 5,014 | ||||||||||||||||||||||
| Diluted
|
5,128 | 5,073 | ||||||||||||||||||||||
| (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, 2010, 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 year ended May 31, 2011 compared with the corresponding prior year increased our revenues by 3 percentage points, operating expenses by 2 percentage points and operating income by 4 percentage points. |
| (2) | General and administrative expenses for the year ended May 31, 2011 included a benefit of $120 million related to the recovery of legal costs. |
3
ORACLE CORPORATION
FISCAL 2011 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
| Year Ended May 31, | % Increase
(Decrease) in US $ |
% Increase (Decrease) in Constant Currency (2) |
||||||||||||||||||||||||||||||||||||||
| 2011 GAAP |
Adj. | 2011 Non-GAAP |
2010 GAAP |
Adj. | 2010 Non-GAAP |
GAAP | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||||||||||||||||||
|
TOTAL REVENUES (3) (4)
|
$
|
35,622
|
|
$
|
228
|
|
$
|
35,850
|
|
$
|
26,820
|
|
$
|
214
|
|
$
|
27,034
|
|
|
33%
|
|
|
33%
|
|
|
30%
|
|
|
30%
|
| ||||||||||
| TOTAL SOFTWARE REVENUES (3) |
$ | 24,031 | $ | 80 | $ | 24,111 | $ | 20,625 | $ | 86 | $ | 20,711 | 17% | 16% | 15% | 14% | ||||||||||||||||||||||||
| New software licenses |
9,235 | — | 9,235 | 7,533 | — | 7,533 | 23% | 23% | 19% | 19% | ||||||||||||||||||||||||||||||
| Software license updates and product support (3) |
14,796 | 80 | 14,876 | 13,092 | 86 | 13,178 | 13% | 13% | 12% | 12% | ||||||||||||||||||||||||||||||
| TOTAL HARDWARE SYSTEMS REVENUES (4) |
$ | 6,944 | $ | 148 | $ | 7,092 | $ | 2,290 | $ | 128 | $ | 2,418 | 203% | 193% | 195% | 186% | ||||||||||||||||||||||||
| Hardware systems products |
4,382 | — | 4,382 | 1,506 | — | 1,506 | 191% | 191% | 184% | 184% | ||||||||||||||||||||||||||||||
| Hardware systems support (4) |
2,562 | 148 | 2,710 | 784 | 128 | 912 | 227% | 197% | 218% | 189% | ||||||||||||||||||||||||||||||
| TOTAL OPERATING EXPENSES |
$ | 23,589 | $ | (3,623 | ) | $ | 19,966 | $ | 17,758 | $ | (3,199 | ) | $ | 14,559 | 33% | 37% | 31% | 35% | ||||||||||||||||||||||
| Hardware systems products |
2,057 | (2 | ) | 2,055 | 880 | (29 | ) | 851 | 134% | 142% | 126% | 134% | ||||||||||||||||||||||||||||
| Stock-based compensation (5) |
498 | (498 | ) | — | 421 | (421 | ) | — | 19% | * | 19% | * | ||||||||||||||||||||||||||||
| Amortization of intangible assets (6) |
2,428 | (2,428 | ) | — | 1,973 | (1,973 | ) | — | 23% | * | 23% | * | ||||||||||||||||||||||||||||
| Acquisition related and other |
208 | (208 | ) | — | 154 | (154 | ) | — | 35% | * | 27% | * | ||||||||||||||||||||||||||||
| Restructuring |
487 | (487 | ) | — | 622 | (622 | ) | — | (22% | ) | * | (23% | ) | * | ||||||||||||||||||||||||||
| OPERATING INCOME |
$ | 12,033 | $ | 3,851 | $ | 15,884 | $ | 9,062 | $ | 3,413 | $ | 12,475 | 33% | 27% | 29% | 24% | ||||||||||||||||||||||||
| OPERATING MARGIN % |
34% | 44% | 34% | 46% | (1) bp. | (184) bp. | (37) bp. | (208) bp. | ||||||||||||||||||||||||||||||||
| INCOME TAX EFFECTS (7) |
$ | 2,864 | $ | 1,003 | $ | 3,867 | $ | 2,108 | $ | 1,054 | $ | 3,162 | 36% | 22% | 32% | 20% | ||||||||||||||||||||||||
| NET INCOME |
$ | 8,547 | $ | 2,848 | $ | 11,395 | $ | 6,135 | $ | 2,359 | $ | 8,494 | 39% | 34% | 36% | 31% | ||||||||||||||||||||||||
| DILUTED EARNINGS PER SHARE |
$ | 1.67 | $ | 2.22 | $ | 1.21 | $ | 1.67 | 38% | 33% | 34% | 30% | ||||||||||||||||||||||||||||
| DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
5,128 | — | 5,128 | 5,073 | — | 5,073 | 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, 2010, 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 May 31, 2011, approximately $29 million, $9 million and $2 million in estimated revenues related to assumed software support contracts will not be recognized for fiscal 2012, fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules. |
| (4) | As of May 31, 2011, approximately $30 million and $11 million in estimated revenues related to hardware systems support contracts will not be recognized for 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: |
| Year Ended | Year Ended | |||||||||||||||||||||||
| May 31, 2011 | May 31, 2010 | |||||||||||||||||||||||
| GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||||
| Sales and marketing |
$ | 87 | $ | (87 | ) | $ | — | $ | 81 | $ | (81 | ) | $ | — | ||||||||||
| Software license updates and product support |
14 | (14 | ) | — | 17 | (17 | ) | — | ||||||||||||||||
| Hardware systems products |
2 | (2 | ) | — | 3 | (3 | ) | — | ||||||||||||||||
| Hardware systems support |
5 | (5 | ) | — | 2 | (2 | ) | — | ||||||||||||||||
| Services |
16 | (16 | ) | — | 14 | (14 | ) | — | ||||||||||||||||
| Research and development |
231 | (231 | ) | — | 172 | (172 | ) | — | ||||||||||||||||
| General and administrative |
145 | (145 | ) | — | 132 | (132 | ) | — | ||||||||||||||||
| Subtotal |
500 | (500 | ) | — | 421 | (421 | ) | — | ||||||||||||||||
| Acquisition related and other |
10 | (10 | ) | — | 15 | (15 | ) | — | ||||||||||||||||
| Total stock-based compensation |
$ | 510 | $ | (510 | ) | $ | — | $ | 436 | $ | (436 | ) | $ | — | ||||||||||
| (6) | Estimated future annual amortization expense related to intangible assets as of May 31, 2011 was as follows: |
| Fiscal 2012 |
$ | 2,275 | ||
| Fiscal 2013 |
1,902 | |||
| Fiscal 2014 |
1,554 | |||
| Fiscal 2015 |
1,155 | |||
| Fiscal 2016 |
657 | |||
| Thereafter |
267 | |||
| Total intangible assets subject to amortization |
7,810 | |||
| In-process research and development |
50 | |||
| Total intangible assets, net |
$ | 7,860 | ||
| (7) | Income tax effects were calculated reflecting an effective GAAP tax rate of 25.1% and 25.6% in fiscal 2011 and 2010, respectively, and an effective non-GAAP tax rate of 25.3% and 27.1% in fiscal 2011 and 2010, respectively. The differences between our GAAP and non-GAAP tax rates in both fiscal 2011 and fiscal 2010 were primarily due to differences in jurisdictional tax rates and the related tax benefits attributable to our restructuring expenses in these periods, and were also due to income tax effects related to acquired tax exposures. |
| * | Not meaningful |
4
ORACLE CORPORATION
FISCAL 2011 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
| May 31, 2011 |
May 31, 2010 |
|||||||
|
ASSETS
|
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 16,163 | $ | 9,914 | ||||
| Marketable securities |
12,685 | 8,555 | ||||||
| Trade receivables, net |
6,628 | 5,585 | ||||||
| Inventories |
303 | 259 | ||||||
| Deferred tax assets |
1,189 | 1,159 | ||||||
| Prepaid expenses and other current assets |
2,206 | 1,532 | ||||||
| Total Current Assets |
39,174 | 27,004 | ||||||
| Non-Current Assets: |
||||||||
| Property, plant and equipment, net |
2,857 | 2,763 | ||||||
| Intangible assets, net |
7,860 | 9,321 | ||||||
| Goodwill |
21,553 | 20,425 | ||||||
| Deferred tax assets |
1,076 | 1,267 | ||||||
| Other assets |
1,015 | 798 | ||||||
| Total Non-Current Assets |
34,361 | 34,574 | ||||||
| TOTAL ASSETS |
$ | 73,535 | $ | 61,578 | ||||
| LIABILITIES AND EQUITY
|
||||||||
| Current Liabilities: |
||||||||
| Notes payable, current and other current borrowings |
$ | 1,150 | $ | 3,145 | ||||
| Accounts payable |
701 | 775 | ||||||
| Accrued compensation and related benefits |
2,320 | 1,895 | ||||||
| Deferred revenues |
6,802 | 5,900 | ||||||
| Other current liabilities |
3,219 | 2,976 | ||||||
| Total Current Liabilities |
14,192 | 14,691 | ||||||
| Non-Current Liabilities: |
||||||||
| Notes payable and other non-current borrowings |
14,772 | 11,510 | ||||||
| Income taxes payable |
3,169 | 2,695 | ||||||
| Deferred tax liabilities |
59 | 424 | ||||||
| Other non-current liabilities |
1,098 | 1,059 | ||||||
| Total Non-Current Liabilities |
19,098 | 15,688 | ||||||
| Equity |
40,245 | 31,199 | ||||||
| TOTAL LIABILITIES AND EQUITY |
$ | 73,535 | $ | 61,578 | ||||
5
ORACLE CORPORATION
FISCAL 2011 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
| Year Ended May 31, | ||||||||
| 2011 | 2010 | |||||||
| Cash Flows From Operating Activities: |
||||||||
| Net income |
$ | 8,547 | $ | 6,135 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation |
368 | 298 | ||||||
| Amortization of intangible assets |
2,428 | 1,973 | ||||||
| Deferred income taxes |
(253 | ) | (511 | ) | ||||
| Stock-based compensation |
510 | 436 | ||||||
| Tax benefits on the exercise of stock options and vesting of restricted stock-based awards |
325 | 203 | ||||||
| Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards |
(215 | ) | (110 | ) | ||||
| Other, net |
68 | 13 | ||||||
| Changes in operating assets and liabilities, net of effects from acquisitions: |
||||||||
| Increase in trade receivables, net |
(565 | ) | (219 | ) | ||||
| (Increase) decrease in inventories |
(28 | ) | 73 | |||||
| Decrease in prepaid expenses and other assets |
14 | 340 | ||||||
| Decrease in accounts payable and other liabilities |
(120 | ) | (360 | ) | ||||
| Decrease in income taxes payable |
(96 | ) | (79 | ) | ||||
| Increase in deferred revenues |
231 | 489 | ||||||
| Net cash provided by operating activities |
11,214 | 8,681 | ||||||
| Cash Flows From Investing Activities: |
||||||||
| Purchases of marketable securities and other investments |
(31,009 | ) | (15,703 | ) | ||||
| Proceeds from maturities and sales of marketable securities and other investments |
27,120 | 11,220 | ||||||
| Acquisitions, net of cash acquired |
(1,847 | ) | (5,606 | ) | ||||
| Capital expenditures |
(450 | ) | (230 | ) | ||||
| Proceeds from sale of property |
105 | — | ||||||
| Net cash used for investing activities |
(6,081 | ) | (10,319 | ) | ||||
| Cash Flows From Financing Activities: |
||||||||
| Payments for repurchases of common stock |
(1,160 | ) | (992 | ) | ||||
| Proceeds from issuances of common stock |
1,376 | 874 | ||||||
| Payments of dividends to stockholders |
(1,061 | ) | (1,004 | ) | ||||
| Proceeds from borrowings, net of issuance costs |
4,354 | 7,220 | ||||||
| Repayments of borrowings |
(3,143 | ) | (3,582 | ) | ||||
| Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards |
215 | 110 | ||||||
| Distributions to noncontrolling interests |
(65 | ) | (59 | ) | ||||
| Other, net |
— | 97 | ||||||
| Net cash provided by financing activities |
516 | 2,664 | ||||||
| Effect of exchange rate changes on cash and cash equivalents |
600 | (107 | ) | |||||
| Net increase in cash and cash equivalents |
6,249 | 919 | ||||||
| Cash and cash equivalents at beginning of period |
9,914 | 8,995 | ||||||
| Cash and cash equivalents at end of period |
$ | 16,163 | $ | 9,914 | ||||
6
ORACLE CORPORATION
FISCAL 2011 FINANCIAL RESULTS
FREE CASH FLOW—TRAILING 4-QUARTERS (1)
($ in millions)
| Fiscal 2010 | Fiscal 2011 | |||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||||||||||||||||||||||
|
GAAP Operating Cash Flow |
$ | 8,753 | $ | 8,654 | $ | 8,178 | $ | 8,681 | $ | 8,760 | $ | 9,053 | $ | 9,948 | $ | 11,214 | ||||||||||||||||
| Capital Expenditures (2) |
(261 | ) | (230 | ) | (199 | ) | (230 | ) | (293 | ) | (369 | ) | (441 | ) | (450 | ) | ||||||||||||||||
|
Free Cash Flow |
$ | 8,492 | $ | 8,424 | $ | 7,979 | $ | 8,451 | $ | 8,467 | $ | 8,684 | $ | 9,507 | $ | 10,764 | ||||||||||||||||
| % Growth over prior year |
14 | % | 11 | % | 0 | % | 9 | % | 0 | % | 3 | % | 19 | % | 27 | % | ||||||||||||||||
|
GAAP Net Income |
$ | 5,640 | $ | 5,802 | $ | 5,663 | $ | 6,135 | $ | 6,363 | $ | 6,776 | $ | 7,701 | $ | 8,547 | ||||||||||||||||
| Free Cash Flow as a % of Net Income
|
151 | % | 145 | % | 141 | % | 138 | % | 133 | % | 128 | % | 123 | % | 126 | % | ||||||||||||||||
| (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
FISCAL 2011 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($ in millions)
| Fiscal 2010 | Fiscal 2011 | |||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||||||||||||||||||||||||
|
REVENUES |
||||||||||||||||||||||||||||||||||||||
| New software licenses |
$ | 1,028 | $ | 1,653 | $ | 1,718 | $ | 3,135 | $ | 7,533 | $ | 1,286 | $ | 1,999 | $ | 2,214 | $ | 3,736 | $ 9,235 | |||||||||||||||||||
| Software license updates and product support |
3,117 | 3,247 | 3,297 | 3,431 | 13,092 | 3,450 | 3,645 | 3,740 | 3,961 | 14,796 | ||||||||||||||||||||||||||||
| Software Revenues |
4,145 | 4,900 | 5,015 | 6,566 | 20,625 | 4,736 | 5,644 | 5,954 | 7,697 | 24,031 | ||||||||||||||||||||||||||||
|
Hardware systems products |
— | — | 273 | 1,233 | 1,506 | 1,079 | 1,112 | 1,035 | 1,157 | 4,382 | ||||||||||||||||||||||||||||
| Hardware systems support |
— | — | 185 | 598 | 784 | 619 | 641 | 629 | 673 | 2,562 | ||||||||||||||||||||||||||||
| Hardware Systems Revenues |
— | — | 458 | 1,831 | 2,290 | 1,698 | 1,753 | 1,664 | 1,830 | 6,944 | ||||||||||||||||||||||||||||
|
Consulting |
663 | 692 | 651 | 713 | 2,720 | 666 | 738 | 722 | 787 | 2,914 | ||||||||||||||||||||||||||||
| Cloud Services |
180 | 188 | 211 | 295 | 874 | 321 | 350 | 341 | 367 | 1,378 | ||||||||||||||||||||||||||||
| Education |
66 | 78 | 69 | 100 | 311 | 81 | 97 | 83 | 94 | 355 | ||||||||||||||||||||||||||||
| Services Revenues |
909 | 958 | 931 | 1,108 | 3,905 | 1,068 | 1,185 | 1,146 | 1,248 | 4,647 | ||||||||||||||||||||||||||||
|
Total Revenues |
$ | 5,054 | $ | 5,858 | $ | 6,404 | $ | 9,505 | $ | 26,820 | $ | 7,502 | $ | 8,582 | $ | 8,764 | $ | 10,775 | $ 35,622 | |||||||||||||||||||
| AS REPORTED REVENUE GROWTH RATES |
||||||||||||||||||||||||||||||||||||||
| New software licenses |
(17% | ) | 2% | 13% | 14% | 6% | 25% | 21% | 29% | 19% | 23% | |||||||||||||||||||||||||||
| Software license updates and product support |
6% | 14% | 13% | 12% | 11% | 11% | 12% | 13% | 15% | 13% | ||||||||||||||||||||||||||||
| Software Revenues |
(1% | ) | 9% | 13% | 13% | 9% | 14% | 15% | 19% | 17% | 17% | |||||||||||||||||||||||||||
|
Hardware systems products |
* | * | * | * | * | * | * | 279% | (6% | ) | 191% | |||||||||||||||||||||||||||
| Hardware systems support |
* | * | * | * | * | * | * | 239% | 12% | 227% | ||||||||||||||||||||||||||||
| Hardware Systems Revenues |
* | * | * | * | * | * | * | 263% | 0% | 203% | ||||||||||||||||||||||||||||
|
Consulting |
(23% | ) | (18% | ) | (14% | ) | (9% | ) | (16% | ) | 0% | 7% | 11% | 10% | 7% | |||||||||||||||||||||||
| Cloud Services |
(8% | ) | (1% | ) | 10% | 45% | 12% | 78% | 86% | 61% | 24% | 58% | ||||||||||||||||||||||||||
| Education |
(34% | ) | (22% | ) | (4% | ) | 26% | (11% | ) | 24% | 25% | 20% | (6% | ) | 14% | |||||||||||||||||||||||
| Services Revenues |
(22% | ) | (15% | ) | (9% | ) | 4% | (11% | ) | 18% | 24% | 23% | 13% | 19% | ||||||||||||||||||||||||
|
Total Revenues |
(5% | ) | 4% | 17% | 39% | 15% | 48% | 47% | 37% | 13% | 33% | |||||||||||||||||||||||||||
| CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||||||
| New software licenses |
(14% | ) | (5% | ) | 8% | 15% | 4% | 25% | 23% | 27% | 12% | 19% | ||||||||||||||||||||||||||
| Software license updates and product support |
11% | 9% | 8% | 11% | 10% | 12% | 13% | 12% | 10% | 12% | ||||||||||||||||||||||||||||
| Software Revenues |
4% | 4% | 8% | 13% | 8% | 15% | 17% | 17% | 11% | 15% | ||||||||||||||||||||||||||||
|
Hardware systems products |
* | * | * | * | * | * | * | 274% | (11% | ) | 184% | |||||||||||||||||||||||||||
| Hardware systems support |
* | * | * | * | * | * | * | 234% | 6% | 218% | ||||||||||||||||||||||||||||
| Hardware Systems Revenues |
* | * | * | * | * | * | * | 258% | (5% | ) | 195% | |||||||||||||||||||||||||||
|
Consulting |
(19% | ) | (22% | ) | (18% | ) | (10% | ) | (17% | ) | 1% | 8% | 10% | 5% | 6% | |||||||||||||||||||||||
| Cloud Services |
(3% | ) | (4% | ) | 6% | 44% | 11% | 80% | 86% | 58% | 16% | 54% | ||||||||||||||||||||||||||
| Education |
(30% | ) | (26% | ) | (8% | ) | 24% | (12% | ) | 24% | 26% | 19% | (11% | ) | 12% | |||||||||||||||||||||||
| Services Revenues |
(18% | ) | (19% | ) | (13% | ) | 3% | (12% | ) | 18% | 25% | 21% | 7% | 17% | ||||||||||||||||||||||||
|
Total Revenues |
(1% | ) | 0% | 12% | 38% | 14% | 49% | 48% | 35% | 7% | 30% | |||||||||||||||||||||||||||
| GEOGRAPHIC REVENUES |
||||||||||||||||||||||||||||||||||||||
| REVENUES |
||||||||||||||||||||||||||||||||||||||
| Americas |
$ | 2,671 | $ | 2,979 | $ | 3,284 | $ | 4,886 | $ | 13,819 | $ | 3,904 | $ | 4,452 | $ | 4,509 | $ | 5,487 | $ 18,352 | |||||||||||||||||||
| Europe, Middle East & Africa |
1,642 | 1,976 | 2,167 | 3,153 | 8,938 | 2,381 | 2,738 | 2,815 | 3,564 | 11,497 | ||||||||||||||||||||||||||||
| Asia Pacific |
741 | 903 | 953 | 1,466 | 4,063 | 1,217 | 1,392 | 1,440 | 1,724 | 5,773 | ||||||||||||||||||||||||||||
|
Total Revenues |
$ | 5,054 | $ | 5,858 | $ | 6,404 | $ | 9,505 | $ | 26,820 | $ | 7,502 | $ | 8,582 | $ | 8,764 | $ | 10,775 | $ 35,622 | |||||||||||||||||||
| HEADCOUNT |
||||||||||||||||||||||||||||||||||||||
| GEOGRAPHIC AREA |
||||||||||||||||||||||||||||||||||||||
| Americas |
32,034 | 31,849 | 44,554 | 43,968 | 44,494 | 44,815 | 45,825 | 45,887 | ||||||||||||||||||||||||||||||
| Europe, Middle East & Africa |
16,839 | 16,491 | 23,566 | 23,040 | 22,886 | 22,690 | 22,705 | 22,394 | ||||||||||||||||||||||||||||||
| Asia Pacific |
35,766 | 35,026 | 38,372 | 37,561 | 37,856 | 38,225 | 39,340 | 40,148 | ||||||||||||||||||||||||||||||
|
Total Company |
84,639 | 83,366 | 106,492 | 104,569 | 105,236 | 105,730 | 107,870 | 108,429 | ||||||||||||||||||||||||||||||
| (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, 2010 and 2009 for the fiscal 2011 and fiscal 2010 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. |
| * | Not meaningful |
8
ORACLE CORPORATION
FISCAL 2011 FINANCIAL RESULTS
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)
($ in millions)
| Fiscal 2010 | Fiscal 2011 |
|||||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||||||||||||||||||||||||||
|
SOFTWARE REVENUES
|
||||||||||||||||||||||||||||||||||||||||
|
DATABASE & MIDDLEWARE REVENUES |
||||||||||||||||||||||||||||||||||||||||
| New software licenses |
$ | 711 | $ | 1,175 | $ | 1,241 | $ | 2,280 | $ | 5,406 | $ | 937 | $ | 1,420 | $ | 1,575 | $ | 2,694 | $ | 6,626 | ||||||||||||||||||||
| Software license updates and product support |
2,065 | 2,131 | 2,191 | 2,309 | 8,696 | 2,316 | 2,443 | 2,523 | 2,663 | 9,945 | ||||||||||||||||||||||||||||||
| Database and Middleware Revenues |
$ | 2,776 | $ | 3,306 | $ | 3,432 | $ | 4,589 | $ | 14,102 | $ | 3,253 | $ | 3,863 | $ | 4,098 | $ | 5,357 | $ | 16,571 | ||||||||||||||||||||
|
AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||||||||
| New software licenses |
(22 | %) | 1 | % | 11 | % | 18 | % | 6 | % | 32 | % | 21 | % | 27 | % | 18 | % | 23% | |||||||||||||||||||||
| Software license updates and product support |
9 | % | 16 | % | 14 | % | 15 | % | 14 | % | 12 | % | 15 | % | 15 | % | 15 | % | 14% | |||||||||||||||||||||
| Database and Middleware Revenues |
(1 | %) | 10 | % | 13 | % | 16 | % | 10 | % | 17 | % | 17 | % | 19 | % | 17 | % | 18% | |||||||||||||||||||||
|
CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||||||||
| New software licenses |
(19 | %) | (5 | %) | 5 | % | 18 | % | 4 | % | 32 | % | 23 | % | 26 | % | 10 | % | 19% | |||||||||||||||||||||
| Software license updates and product support |
14 | % | 12 | % | 9 | % | 13 | % | 12 | % | 13 | % | 16 | % | 14 | % | 10 | % | 13% | |||||||||||||||||||||
| Database and Middleware Revenues |
4 | % | 5 | % | 8 | % | 16 | % | 9 | % | 18 | % | 18 | % | 18 | % | 10 | % | 15% | |||||||||||||||||||||
|
APPLICATIONS REVENUES
|
||||||||||||||||||||||||||||||||||||||||
| New software licenses |
$ | 317 | $ | 478 | $ | 477 | $ | 855 | $ | 2,127 | $ | 349 | $ | 579 | $ | 639 | $ | 1,042 | $ | 2,609 | ||||||||||||||||||||
| Software license updates and product support |
1,052 | 1,116 | 1,106 | 1,122 | 4,396 | 1,134 | 1,202 | 1,217 | 1,298 | 4,851 | ||||||||||||||||||||||||||||||
| Applications Revenues |
$ | 1,369 | $ | 1,594 | $ | 1,583 | $ | 1,977 | $ | 6,523 | $ | 1,483 | $ | 1,781 | $ | 1,856 | $ | 2,340 | $ | 7,460 | ||||||||||||||||||||
|
AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||||||||
| New software licenses |
(4 | %) | 2 | % | 21 | % | 6 | % | 6 | % | 10 | % | 21 | % | 34 | % | 22 | % | 23% | |||||||||||||||||||||
| Software license updates and product support |
1 | % | 10 | % | 10 | % | 8 | % | 7 | % | 8 | % | 8 | % | 10 | % | 16 | % | 10% | |||||||||||||||||||||
| Applications Revenues |
0 | % | 7 | % | 13 | % | 7 | % | 7 | % | 8 | % | 12 | % | 17 | % | 18 | % | 14% | |||||||||||||||||||||
|
CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||||||||
| New software licenses |
0 | % | (3 | %) | 15 | % | 7 | % | 5 | % | 10 | % | 22 | % | 31 | % | 16 | % | 20% | |||||||||||||||||||||
| Software license updates and product support |
6 | % | 6 | % | 5 | % | 6 | % | 6 | % | 9 | % | 9 | % | 9 | % | 10 | % | 9% | |||||||||||||||||||||
| Applications Revenues |
4 | % | 3 | % | 8 | % | 6 | % | 5 | % | 9 | % | 13 | % | 16 | % | 12 | % | 13% | |||||||||||||||||||||
| (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, 2010 and 2009 for the fiscal 2011 and fiscal 2010 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. |
9
ORACLE CORPORATION
FISCAL 2011 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE AND HARDWARE SYSTEMS PRODUCTS REVENUES ANALYSIS (1)
($ in millions)
| Fiscal 2010 | Fiscal 2011 | |||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||||||||||||||||||||||||
|
AMERICAS |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
$ | 310 | $ | 492 | $ | 540 | $ | 1,123 | $ | 2,465 | $ | 446 | $ | 671 | $ | 755 | $ | 1,284 | $ 3,155 | |||||||||||||||||||
| Applications |
185 | 286 | 283 | 485 | 1,239 | 212 | 359 | 355 | 580 | 1,507 | ||||||||||||||||||||||||||||
| New Software License Revenues |
$ | 495 | $ | 778 | $ | 823 | $ | 1,608 | $ | 3,704 | $ | 658 | $ | 1,030 | $ | 1,110 | $ | 1,864 | $ 4,662 | |||||||||||||||||||
| Hardware Systems Products Revenues |
$ | — | $ | — | $ | 131 | $ | 617 | $ | 747 | $ | 543 | $ | 602 | $ | 506 | $ | 599 | $ 2,248 | |||||||||||||||||||
| AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
(12% | ) | 4% | 20% | 34% | 17% | 44% | 36% | 40% | 14% | 28% | |||||||||||||||||||||||||||
| Applications |
2% | 2% | 26% | 16% | 12% | 14% | 26% | 26% | 20% | 22% | ||||||||||||||||||||||||||||
| New Software License Revenues |
(7% | ) | 4% | 22% | 28% | 15% | 33% | 32% | 35% | 16% | 26% | |||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | * | * | * | * | * | 287% | (3% | ) | 201% | |||||||||||||||||||||||||||
| CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
(11% | ) | 2% | 16% | 32% | 15% | 43% | 36% | 39% | 12% | 27% | |||||||||||||||||||||||||||
| Applications |
6% | 1% | 23% | 15% | 11% | 14% | 26% | 24% | 18% | 20% | ||||||||||||||||||||||||||||
| New Software License Revenues |
(5% | ) | 1% | 18% | 26% | 14% | 32% | 32% | 34% | 14% | 24% | |||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | * | * | * | * | * | 285% | (4% | ) | 199% | |||||||||||||||||||||||||||
|
EUROPE / MIDDLE EAST / AFRICA |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
$ | 224 | $ | 429 | $ | 456 | $ | 751 | $ | 1,859 | $ | 279 | $ | 426 | $ | 505 | $ | 925 | $ 2,137 | |||||||||||||||||||
| Applications |
90 | 119 | 134 | 261 | 604 | 73 | 148 | 197 | 308 | 724 | ||||||||||||||||||||||||||||
| New Software License Revenues |
$ | 314 | $ | 548 | $ | 590 | $ | 1,012 | $ | 2,463 | $ | 352 | $ | 574 | $ | 702 | $ | 1,233 | $ 2,861 | |||||||||||||||||||
| Hardware Systems Products Revenues |
$ | — | $ | — | $ | 95 | $ | 390 | $ | 485 | $ | 338 | $ | 329 | $ | 330 | $ | 341 | $ 1,337 | |||||||||||||||||||
| AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
(31% | ) | (1% | ) | 2% | (1% | ) | (5% | ) | 25% | (1% | ) | 11% | 23% | 15% | |||||||||||||||||||||||
| Applications |
(5% | ) | (6% | ) | 7% | (7% | ) | (4% | ) | (19% | ) | 23% | 47% | 18% | 20% | |||||||||||||||||||||||
| New Software License Revenues |
(25% | ) | (2% | ) | 3% | (3% | ) | (5% | ) | 12% | 5% | 19% | 22% | 16% | ||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | * | * | * | * | * | 246% | (13% | ) | 176% | |||||||||||||||||||||||||||
| CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
(26% | ) | (10% | ) | (3% | ) | 6% | (5% | ) | 32% | 7% | 12% | 9% | 12% | ||||||||||||||||||||||||
| Applications |
3% | (14% | ) | 1% | (2% | ) | (3% | ) | (16% | ) | 31% | 46% | 7% | 16% | ||||||||||||||||||||||||
| New Software License Revenues |
(20% | ) | (11% | ) | (2% | ) | 4% | (4% | ) | 18% | 12% | 20% | 9% | 13% | ||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | * | * | * | * | * | 246% | (21% | ) | 165% | |||||||||||||||||||||||||||
|
ASIA PACIFIC |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
$ | 177 | $ | 254 | $ | 245 | $ | 406 | $ | 1,082 | $ | 212 | $ | 323 | $ | 315 | $ | 485 | $ 1,334 | |||||||||||||||||||
| Applications |
42 | 73 | 60 | 109 | 284 | 64 | 72 | 87 | 154 | 378 | ||||||||||||||||||||||||||||
| New Software License Revenues |
$ | 219 | $ | 327 | $ | 305 | $ | 515 | $ | 1,366 | $ | 276 | $ | 395 | $ | 402 | $ | 639 | $ 1,712 | |||||||||||||||||||
| Hardware Systems Products Revenues |
$ | — | $ | — | $ | 47 | $ | 226 | $ | 274 | $ | 198 | $ | 181 | $ | 199 | $ | 217 | $ 797 | |||||||||||||||||||
| AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
(22% | ) | 0% | 9% | 19% | 3% | 19% | 27% | 28% | 20% | 23% | |||||||||||||||||||||||||||
| Applications |
(24% | ) | 17% | 29% | 2% | 5% | 54% | (1% | ) | 45% | 41% | 33% | ||||||||||||||||||||||||||
| New Software License Revenues |
(22% | ) | 3% | 12% | 15% | 4% | 26% | 21% | 32% | 24% | 25% | |||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | * | * | * | * | * | 325% | (4% | ) | 191% | |||||||||||||||||||||||||||
| CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
(22% | ) | (10% | ) | 1% | 14% | (3% | ) | 13% | 22% | 20% | 8% | 15% | |||||||||||||||||||||||||
| Applications |
(23% | ) | 2% | 16% | (3% | ) | (2% | ) | 47% | (5% | ) | 34% | 27% | 24% | ||||||||||||||||||||||||
| New Software License Revenues |
(22% | ) | (8% | ) | 4% | 10% | (3% | ) | 19% | 16% | 23% | 12% | 16% | |||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | * | * | * | * | * | 295% | (13% | ) | 173% | |||||||||||||||||||||||||||
|
TOTAL COMPANY |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
$ | 711 | $ | 1,175 | $ | 1,241 | $ | 2,280 | $ | 5,406 | $ | 937 | $ | 1,420 | $ | 1,575 | $ | 2,694 | $ 6,626 | |||||||||||||||||||
| Applications |
317 | 478 | 477 | 855 | 2,127 | 349 | 579 | 639 | 1,042 | 2,609 | ||||||||||||||||||||||||||||
| New Software License Revenues |
$ | 1,028 | $ | 1,653 | $ | 1,718 | $ | 3,135 | $ | 7,533 | $ | 1,286 | $ | 1,999 | $ | 2,214 | $ | 3,736 | $ 9,235 | |||||||||||||||||||
| Hardware Systems Products Revenues |
$ | — | $ | — | $ | 273 | $ | 1,233 | $ | 1,506 | $ | 1,079 | $ | 1,112 | $ | 1,035 | $ | 1,157 | $ 4,382 | |||||||||||||||||||
| AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
(22% | ) | 1% | 11% | 18% | 6% | 32% | 21% | 27% | 18% | 23% | |||||||||||||||||||||||||||
| Applications |
(4% | ) | 2% | 21% | 6% | 6% | 10% | 21% | 34% | 22% | 23% | |||||||||||||||||||||||||||
| New Software License Revenues |
(17% | ) | 2% | 13% | 14% | 6% | 25% | 21% | 29% | 19% | 23% | |||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | * | * | * | * | * | 279% | (6% | ) | 191% | |||||||||||||||||||||||||||
| CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||||||
| Database & Middleware |
(19% | ) | (5% | ) | 5% | 18% | 4% | 32% | 23% | 26% | 10% | 19% | ||||||||||||||||||||||||||
| Applications |
0% | (3% | ) | 15% | 7% | 5% | 10% | 22% | 31% | 16% | 20% | |||||||||||||||||||||||||||
| New Software License Revenues |
(14% | ) | (5% | ) | 8% | 15% | 4% | 25% | 23% | 27% | 12% | 19% | ||||||||||||||||||||||||||
| Hardware Systems Products Revenues |
* | * | * | * | * | * | * | 274% | (11% | ) | 184% | |||||||||||||||||||||||||||
| (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, 2010 and 2009 for the fiscal 2011 and fiscal 2010 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
FISCAL 2011 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. |
| • | Hardware systems products expenses: We have excluded the effects of the fair value adjustments to our inventories acquired from Sun that were sold to customers in the periods presented, which resulted in the exclusion of these adjustments from our hardware systems products expenses and net income measures. Business combination accounting rules require us to account for inventories assumed from our acquisitions at their fair values. The non-GAAP adjustment to our hardware systems products expenses is intended to reflect the hardware systems products expenses that would have been otherwise recorded by Sun as a standalone entity upon the sale of these inventories. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business because we do not expect the fair value adjustments to our inventories to recur in future periods with respect to the Sun acquisition and, therefore, we expect that these adjustments will not impact our future operating expenses. Investors should note that other factors may affect the future values of our inventories and hardware systems products expenses. If we assume inventories in future acquisitions, we will be required to assess their fair values, which may result in fair value adjustments to those inventories. |
| • | 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 after the measurement period has ended 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