SOURCE: Oracle Corporation
March 24, 2011 16:00 ET
Oracle Reports Q3 GAAP EPS Up 75% to 41 Cents; Non-GAAP EPS Up 40% to 54 Cents
Software New License Sales Up 29%, Quarterly Dividend Increased 20%
REDWOOD SHORES, CA--(Marketwire - March 24, 2011) - Oracle Corporation (NASDAQ: ORCL) today
announced fiscal 2011 Q3 GAAP total revenues were up 37% to $8.8 billion,
while non-GAAP total revenues were up 36% to $8.8 billion. Both GAAP and
non-GAAP new software license revenues were up 29% to $2.2 billion. GAAP
software license updates and product support revenues were up 13% to $3.7
billion, while non-GAAP software license updates and product support
revenues were up 13% to $3.8 billion. Both GAAP and non-GAAP hardware
systems products revenues were $1.0 billion. GAAP operating income was up
62% to $3.0 billion, and GAAP operating margin was 34%. Non-GAAP operating
income was up 35% to $3.9 billion, and non-GAAP operating margin was 44%.
GAAP net income was up 78% to $2.1 billion, while non-GAAP net income was
up 42% to $2.8 billion. GAAP earnings per share were $0.41, up 75%
compared to last year while non-GAAP earnings per share were up 40% to
$0.54. GAAP operating cash flow on a trailing twelve-month basis was $9.9
billion.
"Strong revenue growth coupled with disciplined business management enabled
an increase in non-GAAP operating margin to 44% and earnings per share to
$0.54," said Oracle President, Safra Catz. "Our hardware product gross
margins increased to 55% in the quarter so we are now completely confident
that we will exceed the $1.5 billion profit goal we set for the overall Sun
business for the current fiscal year."
"Q3 performance was broad based with all geographies reporting revenue
growth of 30% or higher," said Oracle President, Mark Hurd. "The
sequential revenue growth for Exadata and Exalogic was up over 50%. And we
expect to see an even higher growth rate for these two game changing
technologies in Q4."
"In Q3 we signed several large hardware and software deals with some of the
biggest names in cloud computing," said Oracle CEO, Larry Ellison. "For
example, Salesforce.com's new multi-year contract enables them to continue
building virtually all of their cloud services on top of the Oracle
database and Oracle middleware. Oracle is the technology that powers the
cloud."
In addition, Oracle also announced that its Board of Directors declared a
quarterly cash dividend of $0.06 per share of outstanding common stock,
reflecting a 20% increase over the previous quarter's dividend of $0.05.
This increased dividend will be paid to stockholders of record as of the
close of business on April 13, 2011, with a payment date of May 4, 2011.
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 (877)
612-6725 or (912) 312-0950, Passcode: 7536150. 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 or its Board of Directors' future plans, expectations, beliefs,
intentions and prospects, including statements regarding exceeding our
profit goals for the Sun business and the higher growth rates for Exadata
and Exalogic in Q4, 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 entrance into the hardware systems business
may not be successful, and we may fail to achieve our financial forecasts
with respect to this new business. (4) We have an active acquisition
program and our acquisitions, including our acquisition of Sun
Microsystems, 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 March 24, 2011. Oracle undertakes no duty to
update any statement in light of new information or future events.
ORACLE CORPORATION
Q3 FISCAL 2011 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
% Increase
Three Months Ended February 28, (Decrease)
------------------------------------ % Increase in
% of % of (Decrease) Constant
2011 Revenues 2010 Revenues in US $ Currency (1)
------- -------- ------- -------- ---------- ----------
REVENUES
New software
licenses $ 2,214 25% $ 1,718 27% 29% 27%
Software
license
updates and
product
support 3,740 43% 3,297 51% 13% 12%
------- -------- ------- --------
Software
Revenues 5,954 68% 5,015 78% 19% 17%
------- -------- ------- --------
Hardware
systems
products 1,035 12% 273 4% 279% 274%
Hardware
systems
support 629 7% 185 3% 239% 234%
------- -------- ------- --------
Hardware
Systems
Revenues 1,664 19% 458 7% 263% 258%
------- -------- ------- --------
Services 1,146 13% 931 15% 23% 21%
------- -------- ------- --------
Total
Revenues 8,764 100% 6,404 100% 37% 35%
------- -------- ------- --------
OPERATING
EXPENSES
Sales and
marketing 1,618 19% 1,241 19% 30% 29%
Software
license
updates and
product
support 299 3% 281 4% 6% 5%
Hardware
systems
products 465 6% 206 3% 126% 115%
Hardware
systems
support 294 3% 116 2% 154% 144%
Services 954 11% 816 13% 17% 16%
Research
and
development 1,127 13% 823 13% 37% 36%
General and
adminis-
trative 286 3% 236 4% 21% 20%
Amortization
of intangi-
ble assets 612 7% 502 8% 22% 22%
Acquisition
related and
other 30 0% 34 0% (12%) (16%)
Restructuring 92 1% 306 5% (70%) (73%)
------- -------- ------- --------
Total
Opera-
ting
Expenses 5,777 66% 4,561 71% 27% 25%
------- -------- ------- --------
OPERATING
INCOME 2,987 34% 1,843 29% 62% 61%
Interest
expense (204) (2%) (186) (3%) 10% 10%
Non-operating
income
(expense),
net 16 0% (75) (1%) 121% 120%
------- -------- ------- --------
INCOME BEFORE
PROVISION FOR
INCOME TAXES 2,799 32% 1,582 25% 77% 77%
------- -------- ------- --------
Provision for
income taxes 683 8% 393 6% 74% 74%
------- -------- ------- --------
NET INCOME $ 2,116 24% $ 1,189 19% 78% 78%
======= ======== ======= ========
EARNINGS PER
SHARE:
Basic $ 0.42 $ 0.24
Diluted $ 0.41 $ 0.23
WEIGHTED
AVERAGE
COMMON
SHARES
OUTSTANDING:
Basic 5,057 5,015
Diluted 5,149 5,076
(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
February 28, 2011 compared with the corresponding prior year period
increased our revenues and operating expenses each by 2 percentage
points and our operating income by 1 percentage point.
ORACLE CORPORATION
Q3 FISCAL 2011 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Three Months Ended February 28,
----------------------------------------------------
2011 2011 2010 2010
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
------- ------- ------- ------- ------- -------
TOTAL REVENUES (3)(4) $ 8,764 $ 43 $ 8,807 $ 6,404 $ 65 $ 6,469
TOTAL SOFTWARE
REVENUES (3) $ 5,954 $ 16 $ 5,970 $ 5,015 $ 26 $ 5,041
New software
licenses 2,214 - 2,214 1,718 - 1,718
Software license
updates and product
support (3) 3,740 16 3,756 3,297 26 3,323
TOTAL HARDWARE SYSTEMS
REVENUES (4) $ 1,664 $ 27 $ 1,691 $ 458 $ 39 $ 497
Hardware systems
products 1,035 - 1,035 273 - 273
Hardware systems
support (4) 629 27 656 185 39 224
TOTAL OPERATING
EXPENSES $ 5,777 $ (862) $ 4,915 $ 4,561 $ (978) $ 3,583
Hardware systems
products 465 - 465 206 (24) 182
Stock-based
compensation (5) 128 (128) - 112 (112) -
Amortization of
intangible
assets (6) 612 (612) - 502 (502) -
Acquisition related
and other 30 (30) - 34 (34) -
Restructuring 92 (92) - 306 (306) -
OPERATING INCOME $ 2,987 $ 905 $ 3,892 $ 1,843 $ 1,043 $ 2,886
OPERATING MARGIN % 34% 44% 29% 45%
INCOME TAX
EFFECTS (7) $ 683 $ 258 $ 941 $ 393 $ 287 $ 680
NET INCOME $ 2,116 $ 647 $ 2,763 $ 1,189 $ 756 $ 1,945
DILUTED EARNINGS PER
SHARE $ 0.41 $ 0.54 $ 0.23 $ 0.38
DILUTED WEIGHTED
AVERAGE COMMON
SHARES OUTSTANDING 5,149 - 5,149 5,076 - 5,076
% Increase
% Increase (Decrease) in
(Decrease) in Constant
US $ Currency (2)
---------------- ----------------
GAAP Non-GAAP GAAP Non-GAAP
------- ------- ------- -------
TOTAL REVENUES (3)(4) 37% 36% 35% 34%
TOTAL SOFTWARE
REVENUES (3) 19% 18% 17% 17%
New software licenses 29% 29% 27% 27%
Software license
updates and
product support (3) 13% 13% 12% 12%
TOTAL HARDWARE SYSTEMS
REVENUES (4) 263% 240% 258% 234%
Hardware systems
products 279% 279% 274% 274%
Hardware systems
support (4) 239% 192% 234% 186%
TOTAL OPERATING
EXPENSES 27% 37% 25% 35%
Hardware systems
products 126% 156% 115% 144%
Stock-based
compensation (5) 14% * 14% *
Amortization of
intangible
assets (6) 22% * 22% *
Acquisition
related and
other (12%) * (16%) *
Restructuring (70%) * (73%) *
OPERATING INCOME 62% 35% 61% 33%
OPERATING MARGIN % 530 bp. (42) bp. 538 bp. (45) bp.
INCOME TAX EFFECTS (7) 74% 38% 74% 37%
NET INCOME 78% 42% 78% 40%
DILUTED EARNINGS PER
SHARE 75% 40% 76% 38%
DILUTED WEIGHTED
AVERAGE COMMON
SHARES OUTSTANDING 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 February 28, 2011, approximately $17 million, $28 million and
$9 million in estimated revenues related to assumed software support
contracts will not be recognized for the remainder of fiscal 2011,
fiscal 2012 and fiscal 2013, respectively, due to business combination
accounting rules.
(4) As of February 28, 2011, approximately $15 million, $35 million and
$11 million in estimated revenues related to hardware systems support
contracts will not be recognized for the remainder of fiscal 2011,
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 Three Months Ended
February 28, 2011 February 28, 2010
------------------------- -------------------------
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
------- ------- ------- ------- ------- -------
Sales and
marketing $ 22 $ (22) $ - $ 21 $ (21) $ -
Software
license
updates and
product
support 4 (4) - 4 (4) -
Hardware
systems
products 1 (1) - 2 (2) -
Hardware
systems
support 1 (1) - 1 (1) -
Services 5 (5) - 4 (4) -
Research and
development 58 (58) - 46 (46) -
General and
administrative 37 (37) - 34 (34) -
------- ------- ------- ------- ------- -------
Subtotal 128 (128) - 112 (112) -
------- ------- ------- ------- ------- -------
Acquisition
related
and other 1 (1) - 10 (10) -
------- ------- ------- ------- ------- -------
Total stock-
based
compen-
sation $ 129 $ (129) $ - $ 122 $ (122) $ -
======= ======= ======= ======= ======= =======
(6) Estimated future annual amortization expense related to intangible
assets as of February 28, 2011 was as follows:
Remainder of
Fiscal 2011 $ 598
Fiscal 2012 2,245
Fiscal 2013 1,874
Fiscal 2014 1,526
Fiscal 2015 1,127
Fiscal 2016 635
Thereafter 269
-------
Total intangible
assets subject
to amortization 8,274
In-process
research and
development 50
-------
Total
intangible
assets,
net $ 8,324
=======
(7) Income tax effects were calculated reflecting an effective GAAP tax
rate of 24.4% and 24.8% in the third quarter of fiscal 2011 and 2010,
respectively, and an effective non-GAAP tax rate of 25.4% and 25.9% in
the third quarter of fiscal 2011 and 2010, respectively. The difference
between our GAAP and non-GAAP tax rates in the third quarter of fiscal
2010 was primarily due to differences in jurisdictional tax rates and
the related tax benefits attributable to our restructuring expenses.
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
ORACLE CORPORATION
Q3 FISCAL 2011 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
% Increase
Nine Months Ended February 28, (Decrease)
------------------------------------ % Increase in
% of % of (Decrease) Constant
2011 Revenues 2010 Revenues in US $ Currency (1)
------- -------- ------- -------- ---------- ----------
REVENUES
New software
licenses $ 5,498 22% $ 4,399 25% 25% 25%
Software
license
updates and
product
support 10,835 44% 9,661 56% 12% 12%
------- -------- ------- --------
Software
Revenues 16,333 66% 14,060 81% 16% 16%
------- -------- ------- --------
Hardware
systems
products 3,225 13% 273 2% 1,082% 1,087%
Hardware
systems
support 1,890 8% 185 1% 917% 914%
------- -------- ------- --------
Hardware
Systems
Revenues 5,115 21% 458 3% 1,015% 1,017%
------- -------- ------- --------
Services 3,399 13% 2,797 16% 22% 21%
------- -------- ------- --------
Total
Revenues 24,847 100% 17,315 100% 44% 44%
------- -------- ------- --------
OPERATING
EXPENSES
Sales and
marketing 4,482 18% 3,335 19% 34% 34%
Software
license
updates and
product
support 914 4% 771 5% 19% 18%
Hardware
systems
products 1,547 6% 206 1% 651% 633%
Hardware
systems
support 950 4% 116 1% 718% 707%
Services 2,818 11% 2,429 14% 16% 16%
Research and
development 3,349 13% 2,191 12% 53% 53%
General and
adminis-
trative (2) 714 3% 619 4% 15% 14%
Amortization
of intangi-
ble assets 1,829 7% 1,369 8% 34% 34%
Acquisition
related and
other 160 1% 50 0% 218% 191%
Restructuring 410 2% 467 3% (12%) (12%)
------- -------- ------- --------
Total
Operating
Expenses 17,173 69% 11,553 67% 49% 49%
------- -------- ------- --------
OPERATING
INCOME 7,674 31% 5,762 33% 33% 33%
Interest
expense (613) (2%) (553) (3%) 11% 11%
Non-operating
income
(expense),
net 180 0% (41) 0% 538% 510%
------- -------- ------- --------
INCOME BEFORE
PROVISION
FOR INCOME
TAXES 7,241 29% 5,168 30% 40% 41%
------- -------- ------- --------
Provision for
income taxes 1,903 8% 1,396 8% 36% 37%
------- -------- ------- --------
NET INCOME $ 5,338 21% $ 3,772 22% 42% 42%
======= ======== ======= ========
EARNINGS PER
SHARE:
Basic $ 1.06 $ 0.75
Diluted $ 1.04 $ 0.74
WEIGHTED
AVERAGE
COMMON
SHARES
OUTSTANDING:
Basic 5,042 5,012
Diluted 5,117 5,067
(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 nine months ended
February 28, 2011 compared with the corresponding prior year period had
no impact on our revenues, operating expenses and operating income.
(2) General and administrative expenses for the nine months ended
February 28, 2011 included a benefit of $120 million related to the
recovery of legal costs.
ORACLE CORPORATION
Q3 FISCAL 2011 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Nine Months Ended February 28,
----------------------------------------------------
2011 2011 2010 2010
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
------- ------- ------- ------- ------- -------
TOTAL REVENUES (3)(4) $24,847 $ 197 $25,044 $17,315 $ 88 $17,403
TOTAL SOFTWARE
REVENUES (3) $16,333 $ 64 $16,397 $14,060 $ 49 $14,109
New software
licenses 5,498 - 5,498 4,399 - 4,399
Software license
updates and product
support (3) 10,835 64 10,899 9,661 49 9,710
TOTAL HARDWARE
SYSTEMS REVENUES (4) $ 5,115 $ 133 $ 5,248 $ 458 $ 39 $ 497
Hardware systems
products 3,225 - 3,225 273 - 273
Hardware systems
support (4) 1,890 133 2,023 185 39 224
TOTAL OPERATING
EXPENSES 17,173 (2,774) 14,399 11,553 (2,210) $ 9,343
Hardware systems
products 1,547 - 1,547 206 (24) 182
Stock-based
compensation (5) 375 (375) - 300 (300) -
Amortization of
intangible
assets (6) 1,829 (1,829) - 1,369 (1,369) -
Acquisition related
and other 160 (160) - 50 (50) -
Restructuring 410 (410) - 467 (467) -
OPERATING INCOME $ 7,674 $ 2,971 $10,645 $ 5,762 $ 2,298 $ 8,060
OPERATING MARGIN % 31% 43% 33% 46%
INCOME TAX
EFFECTS (7) $ 1,903 $ 785 $ 2,688 $ 1,396 $ 624 $ 2,020
NET INCOME $ 5,338 $ 2,186 $ 7,524 $ 3,772 $ 1,674 $ 5,446
DILUTED EARNINGS PER
SHARE $ 1.04 $ 1.47 $ 0.74 $ 1.07
DILUTED WEIGHTED
AVERAGE COMMON
SHARES OUTSTANDING 5,117 - 5,117 5,067 - 5,067
% Increase
% Increase (Decrease) in
(Decrease) in Constant
US $ Currency (2)
---------------- ----------------
GAAP Non-GAAP GAAP Non-GAAP
------- ------- ------- -------
TOTAL REVENUES (3)(4) 44% 44% 44% 44%
TOTAL SOFTWARE
REVENUES (3) 16% 16% 16% 16%
New software licenses 25% 25% 25% 25%
Software license
updates and
product support (3) 12% 12% 12% 13%
TOTAL HARDWARE SYSTEMS
REVENUES (4) 1,015% 955% 1,017% 955%
Hardware systems
products 1,082% 1,082% 1,087% 1,087%
Hardware systems
support (4) 917% 802% 914% 794%
TOTAL OPERATING EXPENSES 49% 54% 49% 54%
Hardware systems
products 651% 752% 633% 731%
Stock-based
compensation (5) 25% * 25% *
Amortization of
intangible
assets (6) 34% * 34% *
Acquisition
related and other 218% * 191% *
Restructuring (12%) * (12%) *
OPERATING INCOME 33% 32% 33% 32%
OPERATING MARGIN % (239) bp. (381) bp. (233) bp. (378) bp.
INCOME TAX EFFECTS (7) 36% 33% 37% 33%
NET INCOME 42% 38% 42% 39%
DILUTED EARNINGS PER
SHARE 40% 37% 41% 37%
DILUTED WEIGHTED
AVERAGE COMMON
SHARES OUTSTANDING 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 February 28, 2011, approximately $17 million, $28 million and
$9 million in estimated revenues related to assumed software support
contracts will not be recognized for the remainder of fiscal 2011,
fiscal 2012 and fiscal 2013, respectively, due to business combination
accounting rules.
(4) As of February 28, 2011, approximately $15 million, $35 million and
$11 million in estimated revenues related to hardware systems support
contracts will not be recognized for the remainder of fiscal 2011,
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 28, 2011 February 28, 2010
------------------------- -------------------------
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
------- ------- ------- ------- ------- -------
Sales and
marketing $ 64 $ (64) $ - $ 57 $ (57) $ -
Software
license
updates and
product
support 11 (11) - 12 (12) -
Hardware
systems
products 2 (2) - 2 (2) -
Hardware
systems
support 4 (4) - 1 (1) -
Services 13 (13) - 10 (10) -
Research and
development 171 (171) - 122 (122) -
General and
administrative 110 (110) - 96 (96) -
------- ------- ------- ------- ------- -------
Subtotal 375 (375) - 300 (300) -
------- ------- ------- ------- ------- -------
Acquisition
related and
other 8 (8) - 10 (10) -
------- ------- ------- ------- ------- -------
Total stock-
based
compen-
sation $ 383 $ (383) $ - $ 310 $ (310) $ -
======= ======= ======= ======= ======= =======
(6) Estimated future annual amortization expense related to intangible
assets as of February 28, 2011 was as follows:
Remainder of
Fiscal 2011 $ 598
Fiscal 2012 2,245
Fiscal 2013 1,874
Fiscal 2014 1,526
Fiscal 2015 1,127
Fiscal 2016 635
Thereafter 269
-------
Total intangible
assets subject
to amortization 8,274
In-process
research and
development 50
-------
Total
intangible
assets,
net $ 8,324
=======
(7) Income tax effects were calculated reflecting an effective GAAP tax
rate of 26.3% and 27.0% in the first nine months of fiscal 2011 and
2010, respectively, and an effective non-GAAP tax rate of 26.3% and
27.1% in the first nine months of fiscal 2011 and 2010, respectively.
The differences between our GAAP and non-GAAP tax rates in the first
nine months of fiscal 2010 were primarily due to differences in
jurisdictional tax rates and the related tax benefits attributable to
our restructuring expenses.
* Not meaningful
ORACLE CORPORATION
Q3 FISCAL 2011 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
February 28, May 31,
2011 2010
----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 11,864 $ 9,914
Marketable securities 12,491 8,555
Trade receivables, net 4,495 5,585
Inventories 276 259
Deferred tax assets 1,193 1,159
Prepaid expenses and other current assets 2,140 1,532
----------- -----------
Total Current Assets 32,459 27,004
Non-Current Assets:
Property, plant and equipment, net 2,894 2,763
Intangible assets, net 8,324 9,321
Goodwill 21,425 20,425
Deferred tax assets 1,519 1,267
Other assets 1,045 798
----------- -----------
Total Non-Current Assets 35,207 34,574
----------- -----------
TOTAL ASSETS $ 67,666 $ 61,578
=========== ===========
LIABILITIES AND EQUITY
Current Liabilities:
Notes payable, current and other current
borrowings $ - $ 3,145
Accounts payable 673 775
Accrued compensation and related benefits 1,872 1,895
Deferred revenues 5,849 5,900
Other current liabilities 2,888 2,976
----------- -----------
Total Current Liabilities 11,282 14,691
Non-Current Liabilities:
Notes payable and other non-current
borrowings 14,752 11,510
Income taxes payable 3,078 2,695
Deferred tax liabilities 350 424
Other non-current liabilities 1,145 1,059
----------- -----------
Total Non-Current Liabilities 19,325 15,688
Equity 37,059 31,199
----------- -----------
TOTAL LIABILITIES AND EQUITY $ 67,666 $ 61,578
=========== ===========
ORACLE CORPORATION
Q3 FISCAL 2011 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
Nine Months Ended
February 28,
-------------------------
2011 2010
----------- -----------
Cash Flows From Operating Activities:
Net income $ 5,338 $ 3,772
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 283 196
Amortization of intangible assets 1,829 1,369
Deferred income taxes (174) (362)
Stock-based compensation 383 310
Tax benefits on the exercise of stock
options and vesting of restricted
stock-based awards 222 117
Excess tax benefits on the exercise of
stock options and vesting of restricted
stock-based awards (139) (71)
Other, net 42 79
Changes in operating assets and liabilities,
net of effects from acquisitions:
Decrease in trade receivables, net 1,377 1,614
(Increase) decrease in inventories (9) 18
Decrease in prepaid expenses and other
assets 261 375
Decrease in accounts payable and other
liabilities (821) (842)
Decrease in income taxes payable (591) (269)
Decrease in deferred revenues (564) (136)
----------- -----------
Net cash provided by operating
activities 7,437 6,170
----------- -----------
Cash Flows From Investing Activities:
Purchases of marketable securities and
other investments (22,861) (11,162)
Proceeds from maturities and sales of
marketable securities and other investments 19,159 7,121
Acquisitions, net of cash acquired (1,673) (5,567)
Capital expenditures (372) (161)
Proceeds from sale of property 85 -
----------- -----------
Net cash used for investing
activities (5,662) (9,769)
----------- -----------
Cash Flows From Financing Activities:
Payments for repurchases of common stock (749) (738)
Proceeds from issuances of common stock 1,028 602
Payment of dividends to stockholders (757) (753)
Proceeds from borrowings, net of issuance
costs 3,204 6,420
Repayments of borrowings (3,143) (1,708)
Excess tax benefits on the exercise of
stock options and vesting of restricted
stock-based awards 139 71
Distributions to noncontrolling interests (65) (59)
----------- -----------
Net cash (used for) provided by
financing activities (343) 3,835
----------- -----------
Effect of exchange rate changes on cash and
cash equivalents 518 100
----------- -----------
Net increase in cash and cash equivalents 1,950 336
----------- -----------
Cash and cash equivalents at beginning of period 9,914 8,995
----------- -----------
Cash and cash equivalents at end of period $ 11,864 $ 9,331
=========== ===========
ORACLE CORPORATION
Q3 FISCAL 2011 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
Fiscal 2010
--------------------------------------
Q1 Q2 Q3 Q4
-------- -------- -------- --------
GAAP Operating Cash Flow $ 8,753 $ 8,654 $ 8,178 $ 8,681
Capital Expenditures (2) (261) (230) (199) (230)
-------- -------- -------- --------
Free Cash Flow $ 8,492 $ 8,424 $ 7,979 $ 8,451
======== ======== ======== ========
% Growth over prior year 14% 11% 0% 9%
-------- -------- -------- --------
GAAP Net Income $ 5,640 $ 5,802 $ 5,663 $ 6,135
Free Cash Flow as a % of Net Income 151% 145% 141% 138%
-------- -------- -------- --------
Fiscal 2011
--------------------------------------
Q1 Q2 Q3 Q4
-------- -------- -------- --------
GAAP Operating Cash Flow $ 8,760 $ 9,053 $ 9,948
Capital Expenditures (2) (293) (369) (441)
-------- -------- -------- --------
Free Cash Flow $ 8,467 $ 8,684 $ 9,507
======== ======== ======== ========
% Growth over prior year 0% 3% 19%
-------- -------- -------- --------
GAAP Net Income $ 6,363 $ 6,776 $ 7,701
Free Cash Flow as a % of Net Income 133% 128% 123%
-------- -------- -------- --------
(1) To supplement our statements of cash flows presented on a GAAP basis,
we use non-GAAP measures of cash flows on a trailing 4-quarter basis to
analyze cash flow generated from operations. We believe free cash flow
is also useful as one of the bases for comparing our performance with
our competitors. The presentation of non-GAAP free cash flow is not
meant to be considered in isolation or as an alternative to net income
as an indicator of our performance, or as an alternative to cash flows
from operating activities as a measure of liquidity.
(2) Represents capital expenditures as reported in cash flows from
investing activities on our cash flow statements presented in
accordance with GAAP.
ORACLE CORPORATION
Q3 FISCAL 2011 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($ in millions)
Fiscal 2010
------------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-------- -------- -------- -------- --------
REVENUES
New software licenses $ 1,028 $ 1,653 $ 1,718 $ 3,135 $ 7,533
Software license
updates and product
support 3,117 3,247 3,297 3,431 13,092
-------- -------- -------- -------- --------
Software Revenues 4,145 4,900 5,015 6,566 20,625
Hardware systems
products - - 273 1,233 1,506
Hardware systems
support - - 185 598 784
-------- -------- -------- -------- --------
Hardware Systems
Revenues - - 458 1,831 2,290
Consulting 663 692 651 713 2,720
On Demand 180 188 211 295 874
Education 66 78 69 100 311
-------- -------- -------- -------- --------
Services Revenues 909 958 931 1,108 3,905
-------- -------- -------- -------- --------
Total Revenues $ 5,054 $ 5,858 $ 6,404 $ 9,505 $ 26,820
======== ======== ======== ======== ========
AS REPORTED REVENUE
GROWTH RATES
New software licenses (17%) 2% 13% 14% 6%
Software license
updates and product
support 6% 14% 13% 12% 11%
Software Revenues (1%) 9% 13% 13% 9%
Hardware systems
products * * * * *
Hardware systems
support * * * * *
Hardware Systems
Revenues * * * * *
Consulting (23%) (18%) (14%) (9%) (16%)
On Demand (8%) (1%) 10% 45% 12%
Education (34%) (22%) (4%) 26% (11%)
Services Revenues (22%) (15%) (9%) 4% (11%)
Total Revenues (5%) 4% 17% 39% 15%
CONSTANT CURRENCY GROWTH
RATES (2)
New software licenses (14%) (5%) 8% 15% 4%
Software license
updates and product
support 11% 9% 8% 11% 10%
Software Revenues 4% 4% 8% 13% 8%
Hardware systems
products * * * * *
Hardware systems
support * * * * *
Hardware Systems
Revenues * * * * *
Consulting (19%) (22%) (18%) (10%) (17%)
On Demand (3%) (4%) 6% 44% 11%
Education (30%) (26%) (8%) 24% (12%)
Services Revenues (18%) (19%) (13%) 3% (12%)
Total Revenues (1%) 0% 12% 38% 14%
-------- -------- -------- -------- --------
GEOGRAPHIC REVENUES
REVENUES
Americas $ 2,671 $ 2,979 $ 3,284 $ 4,886 $ 13,819
Europe, Middle East
& Africa 1,642 1,976 2,167 3,153 8,938
Asia Pacific 741 903 953 1,466 4,063
-------- -------- -------- -------- --------
Total Revenues $ 5,054 $ 5,858 $ 6,404 $ 9,505 $ 26,820
======== ======== ======== ======== ========
-------- -------- -------- -------- --------
HEADCOUNT
GEOGRAPHIC AREA
Americas 32,034 31,849 44,554 43,968
Europe, Middle East
& Africa 16,839 16,491 23,566 23,040
Asia Pacific 35,766 35,026 38,372 37,561
-------- -------- -------- -------- --------
Total Company 84,639 83,366 106,492 104,569
======== ======== ======== ======== ========
Fiscal 2011
------------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-------- -------- -------- -------- --------
REVENUES
New software licenses $ 1,286 $ 1,999 $ 2,214 $ 5,498
Software license
updates and product
support 3,450 3,645 3,740 10,835
-------- -------- -------- -------- --------
Software Revenues 4,736 5,644 5,954 16,333
Hardware systems
products 1,079 1,112 1,035 3,225
Hardware systems
support 619 641 629 1,890
-------- -------- -------- -------- --------
Hardware Systems
Revenues 1,698 1,753 1,664 5,115
Consulting 666 738 722 2,127
On Demand 321 350 341 1,012
Education 81 97 83 260
-------- -------- -------- -------- --------
Services Revenues 1,068 1,185 1,146 3,399
-------- -------- -------- -------- --------
Total Revenues $ 7,502 $ 8,582 $ 8,764 $ 24,847
======== ======== ======== ======== ========
AS REPORTED REVENUE
GROWTH RATES
New software licenses 25% 21% 29% 25%
Software license
updates and product
support 11% 12% 13% 12%
Software Revenues 14% 15% 19% 16%
Hardware systems
products * * 279% 1,082%
Hardware systems
support * * 239% 917%
Hardware Systems
Revenues * * 263% 1,015%
Consulting 0% 7% 11% 6%
On Demand 78% 86% 61% 75%
Education 24% 25% 20% 23%
Services Revenues 18% 24% 23% 22%
Total Revenues 48% 47% 37% 44%
CONSTANT CURRENCY GROWTH
RATES (2)
New software licenses 25% 23% 27% 25%
Software license
updates and product
support 12% 13% 12% 12%
Software Revenues 15% 17% 17% 16%
Hardware systems
products * * 274% 1,087%
Hardware systems
support * * 234% 914%
Hardware Systems
Revenues * * 258% 1,017%
Consulting 1% 8% 10% 6%
On Demand 80% 86% 58% 74%
Education 24% 26% 19% 23%
Services Revenues 18% 25% 21% 21%
Total Revenues 49% 48% 35% 44%
-------- -------- -------- -------- --------
GEOGRAPHIC REVENUES
REVENUES
Americas $ 3,904 $ 4,452 $ 4,509 $ 12,865
Europe, Middle East
& Africa 2,381 2,738 2,815 7,934
Asia Pacific 1,217 1,392 1,440 4,048
-------- -------- -------- -------- --------
Total Revenues $ 7,502 $ 8,582 $ 8,764 $ 24,847
======== ======== ======== ======== ========
-------- -------- -------- -------- --------
HEADCOUNT
GEOGRAPHIC AREA
Americas 44,494 44,815 45,825
Europe, Middle East
& Africa 22,886 22,690 22,705
Asia Pacific 37,856 38,225 39,340
-------- -------- -------- -------- --------
Total Company 105,236 105,730 107,870
======== ======== ======== ======== ========
(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
ORACLE CORPORATION
Q3 FISCAL 2011 FINANCIAL RESULTS
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)
($ in millions)
Fiscal 2010
------------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-------- -------- -------- -------- --------
SOFTWARE REVENUES
DATABASE & MIDDLEWARE
REVENUES
New software
licenses $ 711 $ 1,175 $ 1,241 $ 2,280 $ 5,406
Software license
updates and
product support 2,065 2,131 2,191 2,309 8,696
-------- -------- -------- -------- --------
Database and
Middleware
Revenues $ 2,776 $ 3,306 $ 3,432 $ 4,589 $ 14,102
======== ======== ======== ======== ========
AS REPORTED GROWTH
RATES
New software
licenses (22%) 1% 11% 18% 6%
Software license
updates and
product support 9% 16% 14% 15% 14%
Database and
Middleware
Revenues (1%) 10% 13% 16% 10%
CONSTANT CURRENCY
GROWTH RATES (2)
New software
licenses (19%) (5%) 5% 18% 4%
Software license
updates and
product support 14% 12% 9% 13% 12%
Database and
Middleware
Revenues 4% 5% 8% 16% 9%
-------- -------- -------- -------- --------
APPLICATIONS REVENUES
New software
licenses $ 317 $ 478 $ 477 $ 855 $ 2,127
Software license
updates and
product support 1,052 1,116 1,106 1,122 4,396
-------- -------- -------- -------- --------
Applications
Revenues $ 1,369 $ 1,594 $ 1,583 $ 1,977 $ 6,523
======== ======== ======== ======== ========
AS REPORTED GROWTH
RATES
New software
licenses (4%) 2% 21% 6% 6%
Software license
updates and
product support 1% 10% 10% 8% 7%
Applications
Revenues 0% 7% 13% 7% 7%
CONSTANT CURRENCY
GROWTH RATES (2)
New software
licenses 0% (3%) 15% 7% 5%
Software license
updates and
product support 6% 6% 5% 6% 6%
Applications
Revenues 4% 3% 8% 6% 5%
-------- -------- -------- -------- --------
Fiscal 2011
------------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-------- -------- -------- -------- --------
SOFTWARE REVENUES
DATABASE & MIDDLEWARE
REVENUES
New software
licenses $ 937 $ 1,420 $ 1,575 $ 3,931
Software license
updates and
product support 2,316 2,443 2,523 7,282
-------- -------- -------- -------- --------
Database and
Middleware
Revenues $ 3,253 $ 3,863 $ 4,098 $ 11,213
======== ======== ======== ======== ========
AS REPORTED GROWTH
RATES
New software
licenses 32% 21% 27% 26%
Software license
updates and
product support 12% 15% 15% 14%
Database and
Middleware
Revenues 17% 17% 19% 18%
CONSTANT CURRENCY
GROWTH RATES (2)
New software
licenses 32% 23% 26% 26%
Software license
updates and
product support 13% 16% 14% 14%
Database and
Middleware
Revenues 18% 18% 18% 18%
-------- -------- -------- -------- --------
APPLICATIONS REVENUES
New software
licenses $ 349 $ 579 $ 639 $ 1,567
Software license
updates and
product support 1,134 1,202 1,217 3,553
-------- -------- -------- -------- --------
Applications
Revenues $ 1,483 $ 1,781 $ 1,856 $ 5,120
======== ======== ======== ======== ========
AS REPORTED GROWTH
RATES
New software
licenses 10% 21% 34% 23%
Software license
updates and
product support 8% 8% 10% 9%
Applications
Revenues 8% 12% 17% 13%
CONSTANT CURRENCY
GROWTH RATES (2)
New software
licenses 10% 22% 31% 22%
Software license
updates and
product support 9% 9% 9% 9%
Applications
Revenues 9% 13% 16% 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.
ORACLE CORPORATION
Q3 FISCAL 2011 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE AND HARDWARE SYSTEMS
PRODUCTS REVENUES ANALYSIS (1)
($ in millions)
Fiscal 2010
------------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-------- -------- -------- -------- --------
AMERICAS
Database & Middleware $ 310 $ 492 $ 540 $ 1,123 $ 2,465
Applications 185 286 283 485 1,239
-------- -------- -------- -------- --------
New Software
License Revenues $ 495 $ 778 $ 823 $ 1,608 $ 3,704
-------- -------- -------- -------- --------
Hardware Systems
Products Revenues $ - $ - $ 131 $ 617 $ 747
======== ======== ======== ======== ========
AS REPORTED GROWTH RATES
Database & Middleware (12%) 4% 20% 34% 17%
Applications 2% 2% 26% 16% 12%
New Software
License Revenues (7%) 4% 22% 28% 15%
Hardware Systems
Products Revenues * * * * *
CONSTANT CURRENCY GROWTH
RATES (2)
Database & Middleware (11%) 2% 16% 32% 15%
Applications 6% 1% 23% 15% 11%
New Software
License Revenues (5%) 1% 18% 26% 14%
Hardware Systems
Products Revenues * * * * *
-------- -------- -------- -------- --------
EUROPE / MIDDLE EAST /
AFRICA
Database & Middleware $ 224 $ 429 $ 456 $ 751 $ 1,859
Applications 90 119 134 261 604
-------- -------- -------- -------- --------
New Software
License Revenues $ 314 $ 548 $ 590 $ 1,012 $ 2,463
-------- -------- -------- -------- --------
Hardware Systems
Products Revenues $ - $ - $ 95 $ 390 $ 485
======== ======== ======== ======== ========
AS REPORTED GROWTH RATES
Database & Middleware (31%) (1%) 2% (1%) (5%)
Applications (5%) (6%) 7% (7%) (4%)
New Software
License Revenues (25%) (2%) 3% (3%) (5%)
Hardware Systems
Products Revenues * * * * *
CONSTANT CURRENCY GROWTH
RATES (2)
Database & Middleware (26%) (10%) (3%) 6% (5%)
Applications 3% (14%) 1% (2%) (3%)
New Software
License Revenues (20%) (11%) (2%) 4% (4%)
Hardware Systems
Products Revenues * * * * *
-------- -------- -------- -------- --------
ASIA PACIFIC
Database & Middleware $ 177 $ 254 $ 245 $ 406 $ 1,082
Applications 42 73 60 109 284
-------- -------- -------- -------- --------
New Software
License Revenues $ 219 $ 327 $ 305 $ 515 $ 1,366
-------- -------- -------- -------- --------
Hardware Systems
Products Revenues $ - $ - $ 47 $ 226 $ 274
======== ======== ======== ======== ========
AS REPORTED GROWTH RATES
Database & Middleware (22%) 0% 9% 19% 3%
Applications (24%) 17% 29% 2% 5%
New Software
License Revenues (22%) 3% 12% 15% 4%
Hardware Systems
Products Revenues * * * * *
CONSTANT CURRENCY GROWTH
RATES (2)
Database & Middleware (22%) (10%) 1% 14% (3%)
Applications (23%) 2% 16% (3%) (2%)
New Software
License Revenues (22%) (8%) 4% 10% (3%)
Hardware Systems
Products Revenues * * * * *
-------- -------- -------- -------- --------
TOTAL COMPANY
Database & Middleware $ 711 $ 1,175 $ 1,241 $ 2,280 $ 5,406
Applications 317 478 477 855 2,127
-------- -------- -------- -------- --------
New Software
License Revenues $ 1,028 $ 1,653 $ 1,718 $ 3,135 $ 7,533
-------- -------- -------- -------- --------
Hardware Systems
Products Revenues $ - $ - $ 273 $ 1,233 $ 1,506
======== ======== ======== ======== ========
AS REPORTED GROWTH RATES
Database & Middleware (22%) 1% 11% 18% 6%
Applications (4%) 2% 21% 6% 6%
New Software
License Revenues (17%) 2% 13% 14% 6%
Hardware Systems
Products Revenues * * * * *
CONSTANT CURRENCY GROWTH
RATES (2)
Database & Middleware (19%) (5%) 5% 18% 4%
Applications 0% (3%) 15% 7% 5%
New Software
License Revenues (14%) (5%) 8% 15% 4%
Hardware Systems
Products Revenues * * * * *
-------- -------- -------- -------- --------
Fiscal 2011
------------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-------- -------- -------- -------- --------
AMERICAS
Database & Middleware $ 446 $ 671 $ 755 $ 1,871
Applications 212 359 355 926
-------- -------- -------- -------- --------
New Software
License Revenues $ 658 $ 1,030 $ 1,110 $ 2,797
-------- -------- -------- -------- --------
Hardware Systems
Products Revenues $ 543 $ 602 $ 506 $ 1,650
======== ======== ======== ======== ========
AS REPORTED GROWTH RATES
Database & Middleware 44% 36% 40% 39%
Applications 14% 26% 26% 23%
New Software
License Revenues 33% 32% 35% 33%
Hardware Systems
Products Revenues * * 287% 1,163%
CONSTANT CURRENCY GROWTH
RATES (2)
Database & Middleware 43% 36% 39% 39%
Applications 14% 26% 24% 22%
New Software
License Revenues 32% 32% 34% 33%
Hardware Systems
Products Revenues * * 285% 1,158%
-------- -------- -------- -------- --------
EUROPE / MIDDLE EAST /
AFRICA
Database & Middleware $ 279 $ 426 $ 505 $ 1,211
Applications 73 148 197 417
-------- -------- -------- -------- --------
New Software
License Revenues $ 352 $ 574 $ 702 $ 1,628
-------- -------- -------- -------- --------
Hardware Systems
Products Revenues $ 338 $ 329 $ 330 $ 997
======== ======== ======== ======== ========
AS REPORTED GROWTH RATES
Database & Middleware 25% (1%) 11% 9%
Applications (19%) 23% 47% 22%
New Software
License Revenues 12% 5% 19% 12%
Hardware Systems
Products Revenues * * 246% 945%
CONSTANT CURRENCY GROWTH
RATES (2)
Database & Middleware 32% 7% 12% 14%
Applications (16%) 31% 46% 24%
New Software
License Revenues 18% 12% 20% 17%
Hardware Systems
Products Revenues * * 246% 987%
-------- -------- -------- -------- --------
ASIA PACIFIC
Database & Middleware $ 212 $ 323 $ 315 $ 849
Applications 64 72 87 224
-------- -------- -------- -------- --------
New Software
License Revenues $ 276 $ 395 $ 402 $ 1,073
-------- -------- -------- -------- --------
Hardware Systems
Products Revenues $ 198 $ 181 $ 199 $ 578
======== ======== ======== ======== ========
AS REPORTED GROWTH RATES
Database & Middleware 19% 27% 28% 26%
Applications 54% (1%) 45% 28%
New Software
License Revenues 26% 21% 32% 26%
Hardware Systems
Products Revenues * * 325% 1,133%
CONSTANT CURRENCY GROWTH
RATES (2)
Database & Middleware 13% 22% 20% 19%
Applications 47% (5%) 34% 21%
New Software
License Revenues 19% 16% 23% 19%
Hardware Systems
Products Revenues * * 295% 1,072%
-------- -------- -------- -------- --------
TOTAL COMPANY
Database & Middleware $ 937 $ 1,420 $ 1,575 $ 3,931
Applications 349 579 639 1,567
-------- -------- -------- -------- --------
New Software
License Revenues $ 1,286 $ 1,999 $ 2,214 $ 5,498
-------- -------- -------- -------- --------
Hardware Systems
Products Revenues $ 1,079 $ 1,112 $ 1,035 $ 3,225
======== ======== ======== ======== ========
AS REPORTED GROWTH RATES
Database & Middleware 32% 21% 27% 26%
Applications 10% 21% 34% 23%
New Software
License Revenues 25% 21% 29% 25%
Hardware Systems
Products Revenues * * 279% 1,082%
CONSTANT CURRENCY GROWTH
RATES (2)
Database & Middleware 32% 23% 26% 26%
Applications 10% 22% 31% 22%
New Software
License Revenues 25% 23% 27% 25%
Hardware Systems
Products Revenues * * 274% 1,087%
-------- -------- -------- -------- --------
(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
APPENDIX A
ORACLE CORPORATION
Q3 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.