Applications New License Revenues Up 28%, Database and Middleware
New License Revenues Up 9% REDWOOD SHORES, Calif., Dec. 18
/PRNewswire-FirstCall/ -- Oracle Corporation (NASDAQ-GS: ORCL)
today announced fiscal 2007 Q2 GAAP earnings per share were up 20%
to $0.18, compared to the same quarter last year. Second quarter
total GAAP revenues were up 26% to $4.2 billion, while quarterly
GAAP net income was up 21% to $967 million. Total GAAP software
revenues were up 23% to $3.2 billion with database and middleware
new license revenues up 9% and applications new license revenues up
28%. Services revenues were up 41% to $949 million, compared to the
same quarter last year. Second quarter non-GAAP earnings per share
were up 18% to $0.22, and non- GAAP net income was up 20% to $1.17
billion, compared to the same quarter last year. "We delivered
strong top line revenue growth along with solid earnings for the
second quarter," said Oracle President and CFO, Safra Catz. "We are
now halfway through our five year plan targeting EPS growth at 20%
per year. For the first two-and-a-half years we are comfortably
ahead of that target." "We continue to gain market share in
applications from SAP, in middleware from BEA, and in database from
IBM," said Oracle President, Charles Phillips. "In Q2 our
middleware new license growth was exceptionally strong. We expect
to pass BEA in total middleware new license sales later this year."
"Our applications acquisition strategy has strengthened our
competitiveness in several industries including retail, banking,
telecommunications and utilities," said Oracle CEO, Larry Ellison.
"Now, the very first industry vertical we entered via acquisition,
our retail software business, is beginning to see the benefits of
operational integration with Oracle. In Q2, our retail new software
license sales more than tripled. During the second half of the year
the retail business unit expects to do even better. Eight of the
top ten retailers in North America use Oracle retail software, only
one uses SAP." Oracle Corporation is the world's largest enterprise
software company. For more information about Oracle, including
supplemental financial information, please visit Oracle on the web
at http://www.oracle.com/investor or call Investor Relations at
(650) 506-4073. "Safe Harbor" Statement: Statements in this press
release relating to Oracle's future plans and prospects are
"forward-looking statements" and are subject to material risks and
uncertainties. Many factors could affect our current expectations
and our actual results, and could cause actual results to differ
materially. We presently consider the following to be among the
important factors that could cause actual results to differ
materially from expectations: (1) Economic, political and market
conditions could adversely affect our revenue growth and
profitability through reductions in IT budgets and expenditures.
(2) We may fail to achieve our financial forecasts due to such
factors as delays or size reductions in transactions, fewer large
transactions in a particular quarter, unanticipated fluctuations in
currency exchange rates, delays in delivery of new products or
releases, or a decline in our renewal rates for software license
updates and product support. (3) We cannot assure market acceptance
of new products or new versions of existing products. (4) We have
an active acquisition program, and our acquisitions may not be
successful, may involve unanticipated costs or other integration
issues, or may disrupt our existing operations. (5) Periodic
changes to our pricing model and sales organization could
temporarily disrupt operations and cause a decline or delay in
sales. (6) Intense competitive forces demand rapid technological
advances and frequent new product introductions, and could require
us to reduce prices. A detailed discussion of these factors and
other risks that affect our business is contained in our SEC
filings, including our most recent reports on Form 10-K and Form
10-Q, particularly under the heading "Risk Factors." Copies of
these filings are available online from the SEC or by contacting
Oracle Corporation's Investor Relations Department at (650)
506-4073 or by clicking on SEC Filings on Oracle's Investor
Relations website at http://www.oracle.com/investor . All
information set forth in this release is current as of December 18,
2006. Oracle undertakes no duty to update any statement in light of
new information or future events. ORACLE CORPORATION Q2 FISCAL 2007
QUARTER TO DATE FINANCIAL RESULTS CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (in millions, except per share data) % Increase %
(Decrease) Three Months Ended November 30, Increase in
------------------------------- (Decrease) Constant % of % of in
Currency 2006 Revenues 2005 Revenues US $ (1)
----------------------------------------------------- REVENUES New
software licenses $1,207 29% $1,058 32% 14% 10% Software license
updates and product support 2,007 48% 1,559 48% 29% 25%
------------------------------- Software Revenues 3,214 77% 2,617
80% 23% 19% ------------------------------- Services 949 23% 675
20% 41% 36% ------------------------------- Total Revenues 4,163
100% 3,292 100% 26% 23% ------------------------------- OPERATING
EXPENSES Sales and marketing 915 22% 706 22% 30% 26% Software
license updates and product support 205 5% 175 5% 17% 14% Cost of
services 820 20% 582 18% 41% 37% Research and development 519 12%
468 14% 11% 10% General and administrative 170 4% 109 3% 56% 53%
Amortization of intangible assets 202 5% 126 4% 60% 60% Acquisition
related (2) (36) (1%) 10 0% (471%) (467%) Restructuring 11 0% - 0%
100% 100% ------------------------------- Total Operating Expenses
2,806 67% 2,176 66% 29% 26% -------------------------------
OPERATING INCOME 1,357 33% 1,116 34% 22% 16% Interest expense (82)
(2%) (16) 0% 409% * Non-operating income, net 79 2% 22 0% 262% *
------------------------------- INCOME BEFORE PROVISION FOR INCOME
TAXES 1,354 33% 1,122 34% 21% * Provision for income taxes 387 10%
324 10% 20% * ------------------------------- NET INCOME $967 23%
$798 24% 21% * =============================== EARNINGS PER SHARE:
Basic $0.19 $0.15 20% Diluted $0.18 $0.15 20% WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING: Basic 5,184 5,152 1% Diluted 5,287 5,238
1% * not meaningful (1) We compare the percent change in the
results from one period to another period using constant currency
disclosure. We present constant currency information to provide a
framework for assessing how our underlying businesses performed
excluding the effect of foreign currency rate fluctuations. To
present this information, current and comparative prior period
results for entities reporting in currencies other than United
States dollars are converted into United States dollars at the
exchange rate in effect on May 31, 2006, which was the last day of
our prior fiscal year, rather than the actual exchange rates in
effect during the respective periods. The United States dollar
weakend relative to major international currencies in the three
months ended November 30, 2006 compared with the corresponding
prior year period, contributing 3 percentage points of revenue, 3
percentage points of operating expense and 6 percentage points of
operating income growth. (2) Acquisition related costs include a
benefit of $51.5 million related to the settlement of a
pre-acquisition lawsuit against PeopleSoft, Inc. filed on behalf of
the U.S. government. Please see Appendix A for further discussion.
ORACLE CORPORATION Q2 FISCAL 2007 QUARTER TO DATE FINANCIAL RESULTS
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1) (in
millions, except per share data) % Increase (Decrease) Three Months
Ended November 30, in US $
------------------------------------------------------------ 2006
2005 2006 Non- 2005 Non- Non- GAAP Adj. GAAP GAAP Adj. GAAP GAAP
GAAP ------------------------------------------------------------
TOTAL REVENUES (2) $4,163 $53 $4,216 $3,292 $102 $3,394 26% 24%
TOTAL SOFTWARE REVENUES (2) $3,214 $53 $3,267 $2,617 $102 $2,719
23% 20% New software licenses 1,207 - 1,207 1,058 - 1,058 14% 14%
Software license updates and product support (2) 2,007 53 2,060
1,559 102 1,661 29% 24% TOTAL OPERATING EXPENSES $2,806 $(224)
$2,582 $2,176 $(143) $2,033 29% 27% Stock-based compensation (3) 47
(47) - 7 (7) - 554% 0% Amortization of intangible assets (4) 202
(202) - 126 (126) - 60% 0% Acquisition related (36) 36 - 10 (10) -
(471%) 0% Restructuring 11 (11) - - - - 100% 0% OPERATING INCOME
$1,357 $277 $1,634 $1,116 $245 $1,361 22% 20% OPERATING MARGIN %
33% 39% 34% 40% (4%) (3%) INCOME TAX EFFECTS ON ABOVE ADJUSTMENTS
(5)$387 $79 $466 $324 $71 $395 19% 18% NET INCOME $967 $198 $1,165
$798 $174 $972 21% 20% DILUTED EARNINGS PER SHARE (6) $0.18 $0.22
$0.15 $0.19 20% 18% DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (6) 5,287 16 5,303 5,238 - 5,238 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) Estimated revenues related to assumed support
contracts, as of November 30, 2006, that will not be recognized in
future periods due to business combination accounting rules are as
follows: Remainder of Fiscal 2007 $38 Fiscal 2008 9 ------ Total
$47 ====== (3) Stock-based compensation is included in the
following GAAP operating expenses: Q2 Fiscal 2007 Q2 Fiscal 2006
------------------------ ------------------------ Non- Non- GAAP
Adj. GAAP GAAP Adj. GAAP ------------------------
------------------------ Sales and marketing $8 $(8) $- $1 $(1) $-
Software license updates and product support 3 (3) - - - - Cost of
services 3 (3) - 2 (2) - Research and development 21 (21) - 4 (4) -
General and administrative 12 (12) - - - - ------ ------ ------
------ ------ ------ Subtotal 47 (47) - 7 (7) - ------ ------
------ ------ ------ ------ Acquisition related - - - 1 (1) -
------ ------ ------ ------ ------ ------ Total stock-based
compensation $47 $(47) $- $8 $(8) $- ====== ====== ====== ======
====== ====== Stock-based compensation expense in the second
quarter of fiscal 2007 is recognized at fair value under FASB
Statement 123R. Stock- based compensation expense in the second
quarter of fiscal 2006 is recognized at intrinsic value under APB
Opinion 25 and pertains only to unvested stock options assumed from
acquisitions. (4) Estimated future amortization expense related to
intangible assets as of November 30, 2006 is as follows: Remainder
of Fiscal 2007 $415 Fiscal 2008 819 Fiscal 2009 811 Fiscal 2010 687
Fiscal 2011 475 Fiscal 2012 375 Thereafter 977 ------ Total $4,559
====== (5) The income tax provision was calculated reflecting a tax
rate of 28.6% and 28.9% in the second quarter of fiscal 2007 and
2006, respectively. (6) Non-GAAP diluted earnings per share and
non-GAAP diluted weighted shares outstanding were calculated
excluding the effects of expensing stock options under Statement
123R. ORACLE CORPORATION Q2 FISCAL 2007 YEAR TO DATE FINANCIAL
RESULTS CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in
millions, except per share data) % Increase % (Decrease) Six Months
Ended November 30, Increase in -------------------------------
(Decrease) Constant % of % of in Currency 2006 Revenues 2005
Revenues US $ (1)
----------------------------------------------------- REVENUES New
software licenses $2,011 26% $1,687 28% 19% 16% Software license
updates and product support 3,948 51% 3,061 50% 29% 26%
------------------------------- Software Revenues 5,959 77% 4,748
78% 25% 23% ------------------------------- Services 1,795 23%
1,312 22% 37% 34% ------------------------------- Total Revenues
7,754 100% 6,060 100% 28% 25% -------------------------------
OPERATING EXPENSES Sales and marketing 1,665 21% 1,321 22% 26% 23%
Software license updates and product support 404 5% 335 6% 21% 18%
Cost of services 1,599 21% 1,145 19% 40% 37% Research and
development 1,026 14% 868 14% 18% 18% General and administrative
328 4% 265 4% 24% 22% Amortization of intangible assets 401 5% 249
4% 60% 60% Acquisition related (2) 12 0% 38 1% (68%) (69%)
Restructuring 20 0% 11 0% 85% 77% -------------------------------
Total Operating Expenses 5,455 70% 4,232 70% 29% 27%
------------------------------- OPERATING INCOME 2,299 30% 1,828
30% 26% 21% Interest expense (166) (2%) (37) 0% 347% *
Non-operating income, net 183 2% 63 1% 187% * INCOME BEFORE
PROVISION FOR INCOME TAXES 2,316 30% 1,854 31% 25% *
------------------------------- Provision for income taxes 679 9%
538 9% 26% * ------------------------------- NET INCOME $1,637 21%
$1,316 22% 24% * =============================== EARNINGS PER
SHARE: Basic $0.31 $0.26 23% Diluted $0.31 $0.25 23% WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING: Basic 5,200 5,150 1% Diluted
5,297 5,241 1% * not meaningful (1) We compare the percent change
in the results from one period to another period using constant
currency disclosure. We present constant currency information to
provide a framework for assessing how our underlying businesses
performed excluding the effect of foreign currency rate
fluctuations. To present this information, current and comparative
prior period results for entities reporting in currencies other
than United States dollars are converted into United States dollars
at the exchange rate in effect on May 31, 2006, which was the last
day of our prior fiscal year, rather than the actual exchange rates
in effect during the respective periods. The United States dollar
weakend relative to major international currencies in the six
months ended November 30, 2006 compared with the corresponding
prior year period, contributing 3 percentage points of revenue, 2
percentage points of operating expense and 5 percentage points of
operating income growth. (2) Acquisition related costs include a
benefit of $51.5 million related to the settlement of a
pre-acquisition lawsuit against PeopleSoft, Inc. filed on behalf of
the U.S. government. Please see Appendix A for further discussion.
ORACLE CORPORATION Q2 FISCAL 2007 YEAR TO DATE FINANCIAL RESULTS
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1) (in
millions, except per share data) % Increase (Decrease) Six Months
Ended November 30, in US $
------------------------------------------------------------ 2006
2005 2006 Non- 2005 Non- Non- GAAP Adj. GAAP GAAP Adj. GAAP GAAP
GAAP ------------------------------------------------------------
TOTAL REVENUES (2) $7,754 $122 $7,876 $6,060 $240 $6,300 28% 25%
TOTAL SOFTWARE REVENUES (2) $5,959 $122 $6,081 $4,748 $240 $4,988
25% 22% New software licenses 2,011 - 2,011 1,687 - 1,687 19% 19%
Software license updates and product support (2) 3,948 122 4,070
3,061 240 3,301 29% 23% TOTAL OPERATING EXPENSES $5,455 $(530)
$4,925 $4,232 $(314) $3,918 29% 26% Stock-based compensation (3) 97
(97) - 16 (16) - 499% 0% Amortization of intangible assets (4) 401
(401) - 249 (249) - 60% 0% Acquisition related 12 (12) - 38 (38) -
(68%) 0% Restructuring 20 (20) - 11 (11) - 85% 0% OPERATING INCOME
$2,299 $652 $2,951 $1,828 $554 $2,382 26% 24% OPERATING MARGIN %
30% 37% 30% 38% (2%) (1%) INCOME TAX EFFECTS ON ABOVE ADJUSTMENTS
(5) $679 $193 $872 $538 $160 $698 26% 25% NET INCOME $1,637 $459
$2,096 $1,316 $394 $1,710 24% 23% DILUTED EARNINGS PER SHARE (6)
$0.31 $0.39 $0.25 $0.33 23% 21% DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING (6) 5,297 12 5,309 5,241 - 5,241 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) Estimated revenues related to assumed support
contracts, as of November 30, 2006, that will not be recognized in
future periods due to business combination accounting rules are as
follows: Remainder of Fiscal 2007 $38 Fiscal 2008 9 ------ Total
$47 ====== (3) Stock-based compensation is included in the
following GAAP operating expenses: First Half Fiscal 2007 First
Half Fiscal 2006 ------------------------ ------------------------
Non- Non- GAAP Adj. GAAP GAAP Adj. GAAP ------------------------
------------------------ Sales and marketing $18 $(18) $- $3 $(3)
$- Software license updates and product support 6 (6) - 1 (1) -
Cost of services 6 (6) - 4 (4) - Research and development 43 (43) -
8 (8) - General and administrative 24 (24) - - - - ----- -----
----- ----- ----- ----- Subtotal 97 (97) - 16 (16) - ----- -----
----- ----- ----- ----- Acquisition related 1 (1) - 4 (4) - -----
----- ----- ----- ----- ----- Total stock-based compensation $98
$(98) $- $20 $(20) $- ===== ===== ===== ===== ===== =====
Stock-based compensation expense in the first half of fiscal 2007
is recognized at fair value under FASB Statement 123R. Stock-based
compensation expense in the first half of fiscal 2006 is recognized
at intrinsic value under APB Opinion 25 and pertains only to
unvested stock options assumed from acquisitions. (4) Estimated
future amortization expense related to intangible assets as of
November 30, 2006 is as follows: Remainder of Fiscal 2007 $415
Fiscal 2008 819 Fiscal 2009 811 Fiscal 2010 687 Fiscal 2011 475
Fiscal 2012 375 Thereafter 977 ------- Total $4,559 ======= (5) The
income tax provision was calculated reflecting a tax rate of 29.3%
and 29.0% in the first half of fiscal 2007 and 2006, respectively.
(6) Non-GAAP diluted earnings per share and non-GAAP diluted
weighted shares outstanding were calculated excluding the effects
of expensing stock options under Statement 123R. ORACLE CORPORATION
Q2 FISCAL 2007 FINANCIAL RESULTS CONDENSED CONSOLIDATED BALANCE
SHEETS (1) ($ in millions) November 30, May 31, 2006 2006 -------
------- ASSETS Current Assets: Cash and cash equivalents $4,684
$6,659 Marketable securities 3,141 946 Trade receivables, net 2,543
3,022 Deferred tax assets 706 714 Other current assets 588 633
------- ------- Total Current Assets 11,662 11,974 Non-Current
Assets: Property, net 1,446 1,391 Intangible assets, net 4,559
4,528 Goodwill 10,682 9,809 Other assets 578 1,327 ------- -------
Total Non-Current Assets 17,265 17,055 ------- ------- TOTAL ASSETS
$28,927 $29,029 ======= ======= LIABILITIES AND STOCKHOLDERS'
EQUITY Current Liabilities: Short-term borrowings and current
portion of long-term debt $168 $159 Accounts payable 284 268 Income
taxes payable 647 810 Accrued compensation and related benefits 909
1,172 Accrued restructuring 173 412 Deferred revenues 2,770 2,830
Other current liabilities 1,145 1,279 ------- ------- Total Current
Liabilities 6,096 6,930 Non-Current Liabilities: Long-term debt
5,735 5,735 Deferred tax liabilities 561 564 Accrued restructuring
252 273 Deferred revenues 115 114 Minority interests 415 202 Other
long-term liabilities 239 199 ------- ------- Total Non-Current
Liabilities 7,317 7,087 Stockholders' Equity 15,514 15,012 -------
------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $28,927 $29,029
======= ======= (1) Certain prior period balances have been
reclassified to conform to the current period presentation. ORACLE
CORPORATION Q2 FISCAL 2007 YEAR TO DATE FINANCIAL RESULTS CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (1) ($ in millions) Six
Months Ended November 30, ---------------------------- 2006 2005
------- ------- Cash Flows From Operating Activities: Net income
$1,637 $1,316 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation 124 110 Amortization
of intangible assets 401 249 Deferred income taxes 5 (65) Minority
interests in income 32 17 Stock-based compensation 97 20 Tax
benefit on the exercise of stock options 205 59 Excess tax benefits
from stock-based compensation (2) (159) -- In-process research and
development 50 12 Net investment gains related to equity securities
(18) (4) Changes in operating assets and liabilities, net of
effects from acquisitions: Decrease in trade receivables 681 558
Decrease in prepaid expenses and other assets 23 162 Decrease in
accounts payable and other liabilities (855) (308) Decrease in
income taxes payable (195) (278) Decrease in deferred revenues
(162) (92) ------- ------- Net cash provided by operating
activities 1,866 1,756 ------- ------- Cash Flows From Investing
Activities: Purchases of marketable securities (4,246) (926)
Proceeds from maturities and sale of investments 2,204 1,203
Acquisitions, net of cash acquired (488) (498) Purchases of equity
and other investments (5) (608) Capital expenditures (106) (86)
Proceeds from sales of property -- 89 ------- ------- Net cash used
for investing activities (2,641) (826) ------- ------- Cash Flows
From Financing Activities: Payments for repurchase of common stock
(3) (1,936) (324) Proceeds from issuance of common stock 566 245
Proceeds from borrowings, net of financing costs -- 6,518 Payments
of debt (8) (8,321) Excess tax benefits from stock-based
compensation (2) 159 -- Distributions to minority interests (29)
(23) ------- ------- Net cash used for financing activities (1,248)
(1,905) ------- ------- Effect of exchange rate changes on cash and
cash equivalents 48 (82) ------- ------- Net decrease in cash and
cash equivalents (1,975) (1,057) ------- ------- Cash and cash
equivalents at beginning of period 6,659 3,894 ------- ------- Cash
and cash equivalents at end of period $4,684 $2,837 ======= =======
(1) Certain prior period balances have been reclassified to conform
to the current period presentation. (2) Excess tax benefits
received from stock-based compensation arrangements are presented
as financing cash inflows rather than operating cash inflows
prospectively from June 1, 2006, which is our adoption date of
Statement 123R. Prior period reclassifications are not allowed. (3)
We repurchased 121 million shares for approximately $2 billion
during the six months ended November 30, 2006 (including 3 million
shares for $48 million that were repurchased but not settled at
November 30, 2006). ORACLE CORPORATION Q2 FISCAL 2007 FINANCIAL
RESULTS FREE CASH FLOW - TRAILING 4-QUARTERS (1) ($ in millions)
Fiscal 2006 ---------------------------------------------- Q1 Q2 Q3
Q4 ---------------------------------------------- GAAP Operating
Cash Flow $3,596 $3,509 $3,857 $4,541 Capital Expenditures (4)
(206) (182) (199) (236)
---------------------------------------------- Free Cash Flow
$3,390 $3,327 $3,658 $4,305
============================================== % Growth 6% 4% 8%
28% GAAP Net Income $2,896 $2,878 $3,103 $3,381 Free Cash Flow as a
% of Net Income 117% 116% 118% 127% Fiscal 2007 (2)
---------------------------------------------- Q1 Q2(3) Q3 Q4
---------------------------------------------- GAAP Operating Cash
Flow $4,706 $4,651 Capital Expenditures (4) (233) (256)
---------------------------------------------- Free Cash Flow
$4,473 $4,395 ============================================== %
Growth 32% 32% GAAP Net Income $3,532 $3,702 Free Cash Flow as a %
of Net Income 127% 119% (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) We adopted
FASB Statement 123R on June 1, 2006 under the modified prospective
method. Under the modified prospective method, prior period
reclassifications are not allowed. Excess tax benefits received
from stock-based compensation arrangements are presented as
financing cash inflows rather than operating cash inflows
prospectively from June 1, 2006. Excess tax benefits reclassified
from GAAP Operating Cash Flow were $159 million for the trailing 4-
quarters ended November 30, 2006. (3) Free cash flow and free cash
flow as a percent of GAAP net income for the first half of fiscal
2006 and first half of fiscal 2007: First Half First Half of of
Fiscal 2006 Fiscal 2007 --------------------------- GAAP Operating
Cash Flow $1,756 $1,866 Capital Expenditures (86) (106)
--------------------------- Free Cash Flow $1,670 $1,760
=========================== % Growth (2%) 5%
--------------------------- GAAP Net Income $1,316 $1,637 Free Cash
Flow as a % of Net Income 127% 108% (4) Represents capital
expenditures as reported in cash flows from investing activities on
our cash flow statements presented in accordance with GAAP. ORACLE
CORPORATION Q2 FISCAL 2007 FINANCIAL RESULTS SUPPLEMENTAL ANALYSIS
OF GAAP REVENUES AND HEADCOUNT (1) (in millions, except headcount
data) Fiscal 2006
------------------------------------------------------- Q1 Q2 Q3 Q4
TOTAL -------------------------------------------------------
REVENUES New software licenses $629 $1,058 $1,096 $2,121 $4,905
Software license updates and product support 1,502 1,559 1,703
1,873 6,636 -------------------------------------------------------
Software Revenues 2,131 2,617 2,799 3,994 11,541 Consulting 481 506
501 632 2,120 On Demand 84 87 96 130 397 Education 72 82 74 95 322
------------------------------------------------------- Services
Revenues 637 675 671 857 2,839
------------------------------------------------------- Total
Revenues $2,768 $3,292 $3,470 $4,851 $14,380
======================================================= AS REPORTED
REVENUE GROWTH RATES New software licenses 12% 9% 16% 32% 20%
Software license updates and product support 28% 25% 23% 24% 25%
Software Revenues 23% 18% 20% 28% 23% Consulting 36% 28% 7% 7% 17%
On Demand 18% 20% 26% 62% 32% Education 42% 25% 9% 11% 20% Services
Revenues 34% 26% 9% 13% 19% Total Revenues 25% 19% 18% 25% 22%
CONSTANT CURRENCY GROWTH RATES New software licenses 10% 12% 20%
32% 21% Software license updates and product support 26% 27% 27%
25% 26% Software Revenues 21% 20% 24% 28% 24% Consulting 34% 31%
10% 8% 19% On Demand 17% 22% 29% 63% 33% Education 40% 27% 13% 12%
21% Services Revenues 32% 29% 13% 14% 21% Total Revenues 23% 22%
22% 26% 23% -------------------------------------------------------
GEOGRAPHIC REVENUES REVENUES Americas $1,475 $1,733 $1,848 $2,595
$7,652 Europe, Middle East & Africa 883 1,090 1,164 1,572 4,708
Asia Pacific 410 469 458 684 2,020
------------------------------------------------------- Total
Revenues $2,768 $3,292 $3,470 $4,851 $14,380
======================================================= HEADCOUNT
(2) GEOGRAPHIC AREA Domestic 21,198 21,133 23,256 23,209
International 28,318 30,021 32,326 32,924
------------------------------------------------------- Total
Company 49,516 51,154 55,582 56,133
======================================================= Fiscal 2007
------------------------------------------------------- Q1 Q2 Q3 Q4
TOTAL -------------------------------------------------------
REVENUES New software licenses $804 $1,207 $2,011 Software license
updates and product support 1,941 2,007 3,948
------------------------------------------------------- Software
Revenues 2,745 3,214 5,959 Consulting 640 716 1,356 On Demand 125
140 265 Education 81 93 174
------------------------------------------------------- Services
Revenues 846 949 1,795
------------------------------------------------------- Total
Revenues $3,591 $4,163 $7,754
======================================================= AS REPORTED
REVENUE GROWTH RATES New software licenses 28% 14% 19% Software
license updates and product support 29% 29% 29% Software Revenues
29% 23% 25% Consulting 33% 42% 37% On Demand 49% 61% 55% Education
13% 14% 14% Services Revenues 33% 41% 37% Total Revenues 30% 26%
28% CONSTANT CURRENCY GROWTH RATES New software licenses 26% 10%
16% Software license updates and product support 27% 25% 26%
Software Revenues 27% 19% 23% Consulting 31% 37% 34% On Demand 47%
56% 52% Education 11% 11% 11% Services Revenues 31% 36% 34% Total
Revenues 28% 23% 25%
------------------------------------------------------- GEOGRAPHIC
REVENUES REVENUES Americas $1,956 $2,170 $4,126 Europe, Middle East
& Africa 1,140 1,422 2,562 Asia Pacific 495 571 1,066
------------------------------------------------------- Total
Revenues $3,591 $4,163 $7,754
======================================================= HEADCOUNT
(2) GEOGRAPHIC AREA Domestic 23,503 24,054 International 41,623
44,380 -------------------------------------------------------
Total Company 65,126 68,434
======================================================= (1) The sum
of the quarterly financial information may vary from year-to-date
financial information due to rounding. (2) Headcount has increased
primarily due to acquisitions and the consolidation of i-flex
beginning in the first quarter of fiscal 2007. ORACLE CORPORATION
Q2 FISCAL 2007 FINANCIAL RESULTS SUPPLEMENTAL TOTAL SOFTWARE
PRODUCT REVENUE ANALYSIS(1) ($ in millions) Fiscal 2006
----------------------------------------------- Q1 Q2 Q3 Q4 TOTAL
----------------------------------------------- APPLICATIONS
REVENUES New software licenses $127 $266 $269 $641 $1,303 Software
license updates and product support 466 502 608 676 2,252
----------------------------------------------- Software Revenues
$593 $768 $877 $1,317 $3,555
=============================================== AS REPORTED GROWTH
RATES New software licenses 84% 24% 77% 83% 66% Software license
updates and product support 96% 98% 73% 52% 75% Software Revenues
93% 64% 74% 66% 71% CONSTANT CURRENCY GROWTH RATES New software
licenses 82% 27% 82% 83% 67% Software license updates and product
support 93% 101% 79% 53% 77% Software Revenues 91% 67% 80% 66% 72%
----------------------------------------------- DATABASE &
MIDDLEWARE REVENUES New software licenses $502 $792 $827 $1,480
$3,602 Software license updates and product support 1,036 1,057
1,095 1,197 4,384 -----------------------------------------------
Software Revenues $1,538 $1,849 $1,922 $2,677 $7,986
=============================================== AS REPORTED GROWTH
RATES New software licenses 2% 5% 4% 18% 9% Software license
updates and product support 10% 6% 6% 12% 8% Software Revenues 7%
5% 5% 15% 9% CONSTANT CURRENCY GROWTH RATES New software licenses
0% 8% 8% 18% 10% Software license updates and product support 9% 8%
9% 13% 9% Software Revenues 6% 8% 9% 15% 10% Fiscal 2007
----------------------------------------------- Q1 Q2 Q3 Q4 TOTAL
----------------------------------------------- APPLICATIONS
REVENUES New software licenses $228 $340 $568 Software license
updates and product support 703 728 1,431
----------------------------------------------- Software Revenues
$931 $1,068 $1,999 ===============================================
AS REPORTED GROWTH RATES New software licenses 80% 28% 45% Software
license updates and product support 51% 45% 48% Software Revenues
57% 39% 47% CONSTANT CURRENCY GROWTH RATES New software licenses
78% 25% 42% Software license updates and product support 49% 41%
45% Software Revenues 55% 35% 44%
----------------------------------------------- DATABASE &
MIDDLEWARE REVENUES New software licenses $576 $867 $1,443 Software
license updates and product support 1,238 1,279 2,517
----------------------------------------------- Software Revenues
$1,814 $2,146 $3,960
=============================================== AS REPORTED GROWTH
RATES New software licenses 15% 9% 11% Software license updates and
product support 19% 21% 20% Software Revenues 18% 16% 17% CONSTANT
CURRENCY GROWTH RATES New software licenses 13% 5% 9% Software
license updates and product support 18% 18% 18% Software Revenues
16% 13% 14% (1) The sum of the quarterly financial information may
vary from year-to-date financial information due to rounding.
ORACLE CORPORATION Q2 FISCAL 2007 FINANCIAL RESULTS SUPPLEMENTAL
GEOGRAPHIC NEW SOFTWARE LICENSE REVENUE ANALYSIS (1) (2) ($ in
millions) Fiscal 2006
----------------------------------------------- Q1 Q2 Q3 Q4 TOTAL
----------------------------------------------- AMERICAS Database
& Middleware $194 $327 $334 $662 $1,518 Applications 75 163 148
395 782 ----------------------------------------------- New
Software License Revenues $269 $490 $482 $1,057 $2,300
=============================================== AS REPORTED GROWTH
RATES Database & Middleware (2%) 15% 16% 22% 16% Applications
150% 41% 61% 73% 67% New Software License Revenues 19% 22% 27% 37%
29% CONSTANT CURRENCY GROWTH RATES Database & Middleware (4%)
13% 14% 21% 14% Applications 148% 40% 60% 72% 66% New Software
License Revenues 17% 21% 25% 36% 28% EUROPE / MIDDLE EAST / AFRICA
Database & Middleware $164 $282 $316 $515 $1,278 Applications
38 75 96 158 366 -----------------------------------------------
New Software License Revenues $202 $357 $412 $673 $1,644
=============================================== AS REPORTED GROWTH
RATES Database & Middleware 4% (7%) (3%) 7% 1% Applications 38%
(6%) 119% 108% 61% New Software License Revenues 9% (7%) 12% 20%
10% CONSTANT CURRENCY GROWTH RATES Database & Middleware 3% 0%
6% 7% 5% Applications 36% 1% 138% 108% 67% New Software License
Revenues 8% 0% 22% 21% 14% ASIA PACIFIC Database & Middleware
$134 $176 $170 $292 $771 Applications 14 28 25 88 155
----------------------------------------------- New Software
License Revenues $148 $203 $195 $380 $926
=============================================== AS REPORTED GROWTH
RATES Database & Middleware 2% 9% 1% 31% 13% Applications 28%
48% 52% 94% 69% New Software License Revenues 4% 13% 5% 42% 20%
CONSTANT CURRENCY GROWTH RATES Database & Middleware 0% 14% 6%
34% 16% Applications 23% 50% 60% 96% 71% New Software License
Revenues 2% 18% 11% 45% 23% TOTAL COMPANY Database & Middleware
$492 $785 $820 $1,469 $3,567 Applications 127 266 269 641 1,303
----------------------------------------------- New Software
License Revenues $619 $1,051 $1,089 $2,110 $4,870
=============================================== AS REPORTED GROWTH
RATES Database & Middleware 1% 5% 5% 18% 9% Applications 84%
24% 77% 83% 66% New Software License Revenues 12% 9% 17% 32% 20%
CONSTANT CURRENCY GROWTH RATES Database & Middleware 0% 8% 9%
18% 10% Applications 82% 27% 82% 83% 67% New Software License
Revenues 10% 12% 21% 32% 21% Fiscal 2007
----------------------------------------------- Q1 Q2 Q3 Q4 TOTAL
----------------------------------------------- AMERICAS Database
& Middleware $232 $333 $565 Applications 126 195 321
----------------------------------------------- New Software
License Revenues $358 $528 $886
=============================================== AS REPORTED GROWTH
RATES Database & Middleware 19% 2% 8% Applications 69% 19% 35%
New Software License Revenues 33% 8% 17% CONSTANT CURRENCY GROWTH
RATES Database & Middleware 18% 2% 8% Applications 69% 19% 35%
New Software License Revenues 32% 7% 16% EUROPE / MIDDLE EAST /
AFRICA Database & Middleware $184 $341 $525 Applications 69 101
170 ----------------------------------------------- New Software
License Revenues $253 $442 $695
=============================================== AS REPORTED GROWTH
RATES Database & Middleware 12% 21% 17% Applications 83% 35%
51% New Software License Revenues 25% 24% 24% CONSTANT CURRENCY
GROWTH RATES Database & Middleware 8% 11% 10% Applications 78%
25% 43% New Software License Revenues 21% 14% 17% ASIA PACIFIC
Database & Middleware $149 $185 $334 Applications 33 44 77
----------------------------------------------- New Software
License Revenues $182 $229 $411
=============================================== AS REPORTED GROWTH
RATES Database & Middleware 12% 5% 8% Applications 126% 58% 81%
New Software License Revenues 23% 12% 17% CONSTANT CURRENCY GROWTH
RATES Database & Middleware 13% 2% 7% Applications 124% 53% 77%
New Software License Revenues 24% 9% 15% TOTAL COMPANY Database
& Middleware $565 $859 $1,424 Applications 228 340 568
----------------------------------------------- New Software
License Revenues $793 $1,199 $1,992
=============================================== AS REPORTED GROWTH
RATES Database & Middleware 15% 9% 11% Applications 80% 28% 45%
New Software License Revenues 28% 14% 19% CONSTANT CURRENCY GROWTH
RATES Database & Middleware 13% 5% 8% Applications 78% 25% 42%
New Software License Revenues 27% 10% 16% (1) The sum of the
quarterly financial information may vary from year-to-date
financial information due to rounding. (2) New Software License
Revenues presented exclude documentation and miscellaneous
revenues. APPENDIX A ORACLE CORPORATION Q2 FISCAL 2007 FINANCIAL
RESULTS EXPLANATION OF NON-GAAP MEASURES To supplement our
financial results presented on a GAAP basis, we use the non-GAAP
measures indicated in the table, which exclude certain business
combination accounting entries and expenses related to acquisitions
as well as other significant expenses including stock-based
compensation, that we believe are helpful in understanding our past
financial performance and our future results. Our non-GAAP
financial measures are not meant to be considered in isolation or
as a substitute for comparable GAAP measures, and should be read
only in conjunction with our consolidated financial statements
prepared in accordance with GAAP. Our management regularly uses our
supplemental non-GAAP financial measures internally to understand,
manage and evaluate our business and make operating decisions.
These non-GAAP measures are among the primary factors management
uses in planning for and forecasting future periods. Compensation
of our executives is based in part on the performance of our
business based on these non-GAAP measures. Our non-GAAP financial
measures reflect adjustments based on the following items, as well
as the related income tax effect: * Support deferred revenue:
Business combination accounting rules require us to account for the
fair value of support contracts assumed in connection with
acquisitions. Because these are typically one-year contracts, our
GAAP revenues for the one-year period subsequent to acquisitions do
not reflect the full amount of revenue on assumed contracts that
would have otherwise been recorded by the acquired entities. The
non-GAAP adjustment is intended to reflect the full amount of such
revenue. We believe this adjustment is useful to investors as a
measure of the ongoing performance of our business because we have
historically experienced high renewal rates on support contracts,
although we cannot be sure that customers will renew these
contracts. * Stock-based compensation: We adopted FASB Statement
No. 123R, Share- Based Payments, on June 1, 2006 under the modified
prospective method. Statement 123R requires us to record non-cash
operating expenses associated with stock option awards at their
estimated fair values. Prior to our Statement 123R adoption, we
were required to record stock-based compensation expenses at
intrinsic values, which were substantially related to options
assumed from acquisitions. In accordance with the modified
prospective method, our financial statements for prior periods have
not been restated to reflect, and do not include, the changes in
methodology to expense options at fair values in accordance with
Statement 123R. Although stock-based compensation is a key
incentive offered to our employees, and we believe it contributed
to the revenue earned during the period and will contribute to our
future revenue generation, 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 affect of
amortization of intangibles from our non-GAAP net income.
Amortization of intangible assets is inconsistent in amount and
frequency and is significantly affected by the timing and size of
our acquisitions. We believe the exclusion of these amounts enables
investors to better evaluate our current operating performance
compared with prior periods. Investors should note that the use of
intangible assets contributed to revenue earned during the period
and will contribute to future revenues as well. Amortization
expenses are recurring. * Acquisition related charges and
restructuring costs: We incurred significant expenses in connection
with acquisitions, principally Siebel, which we would not have
otherwise incurred. Acquisition related charges primarily consist
of in-process research and development expenses,
integration-related professional services, stock-based compensation
expenses (in addition to the stock-based compensation expenses
described above) and personnel related costs for transitional
employees. Stock-based compensation included in acquisition related
charges resulted from unvested options assumed in acquisitions
whose vesting was fully accelerated upon termination of the
employees pursuant to the terms of the options. Restructuring costs
consist of Oracle employee severance and Oracle duplicate facility
closures in connection with acquisitions. We believe it is useful
for investors to understand the effect of these expenses on our
cost structure. Although acquisition related charges and
restructuring costs are not recurring with respect to past
acquisitions, we will incur these charges in connection with future
acquisitions. For the three months ended November 30, 2006,
acquisition related charges also included a benefit related to the
settlement of a lawsuit filed against PeopleSoft on behalf of the
U.S. government. This lawsuit was filed in October 2003, prior to
our acquisition of PeopleSoft. The lawsuit alleged PeopleSoft made
defective pricing disclosures to the General Services
Administration. This lawsuit represented a pre-acquisition
contingency that we identified and assumed in connection with the
PeopleSoft acquisition. On October 10, 2006, we agreed to pay the
U.S. government $98.5 million to settle this lawsuit. Business
combination accounting standards require that after the end of the
purchase price allocation period, any adjustment that results from
a pre- acquisition contingency should be included as an element of
net income in the period of settlement, versus an adjustment to the
original purchase price allocation. Since the purchase price
allocation period for PeopleSoft ended in the third quarter of
fiscal 2006, the favorable difference of $51.5 million between the
estimated exposure recorded for this lawsuit during the purchase
price allocation period and the actual settlement amount has been
included in our consolidated statement of operations for the three
and six month periods ended November 30, 2006 as a component of
acquisition related charges.
http://www.newscom.com/cgi-bin/prnh/20020718/ORCLLOGO
http://photoarchive.ap.org/ DATASOURCE: Oracle Corporation CONTACT:
Krista Bessinger of Oracle Investor Relations, +1-650-506-4073, or
, or Bob Wynne of Oracle Corporate Communications, +1-650-506-5834,
or Web site: http://www.oracle.com/
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