REDWOOD SHORES, CA--(Marketwire -12/20/11)- Oracle Corporation (NASDAQ: ORCL - News) today announced fiscal 2012 Q2 GAAP and non-GAAP total revenues were up 2% to $8.8 billion. Both GAAP and non-GAAP new software license revenues were up 2% to $2.0 billion. Both GAAP and non-GAAP software license updates and product support revenues were up 9% to $4.0 billion. Both GAAP and non-GAAP hardware systems products revenues were down 14% to $953 million. GAAP operating income was up 12% to $3.1 billion, and GAAP operating margin was 35%. Non-GAAP operating income was up 3% to $3.9 billion, and non-GAAP operating margin was 45%. GAAP net income was up 17% to $2.2 billion, while non-GAAP net income was up 6% to $2.8 billion. GAAP earnings per share were $0.43, up 17% compared to last year while non-GAAP earnings per share were up 6% to $0.54. GAAP operating cash flow on a trailing twelve-month basis was $13.1 billion.
"Non-GAAP operating margins increased to 45% in Q2," said Oracle President and CFO, Safra Catz, "and we expect those margins to keep growing. Operating cash flow over the last twelve months grew to $13.1 billion; that's up a remarkable 45% compared to the preceding twelve month period."
"We have expanded our worldwide sales capacity by adding over 1,700 sales professionals in the first half of this fiscal year," said Oracle President, Mark Hurd. "We believe that this increase in our field organization combined with innovative new products like Fusion Cloud ERP and Cloud CRM will enable solid organic growth in the second half of this year."
"Sales of our engineered systems accelerated in Q2," said Oracle CEO, Larry Ellison. "Exadata growth was well over 100% compared to last year, and Exalogic grew more than 100% on a sequential basis. We shipped our first SPARC SuperCluster in Q2 and expect to begin deliveries of our Exalytics system and the Oracle Big Data Appliance in Q3."
Oracle announced that its Board of Directors authorized the repurchase of up to an additional $5.0 billion of common stock under its existing share repurchase program in future quarters.
The Board of Directors also declared a quarterly cash dividend of $0.06 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on January 11, 2012, with a payment date of February 1, 2012.
Q2 Earnings Conference Call and Webcast
Oracle will hold a conference call and webcast today to discuss these results at 2:00 p.m. Pacific. You may listen to the call by dialing (913) 312-0945 or (877) 612-6725, Passcode: 289185. To access the live webcast of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. A replay of the conference call will also be available by dialing (719) 457-0820 or (888) 203-1112, Passcode: 5771640.
About Oracle
Oracle engineers hardware and software to work together in the cloud and in your data center. For more information about Oracle (NASDAQ: ORCL - News), visit www.oracle.com or contact Investor Relations at investor_us@oracle.com or (650) 506-4073.
Trademarks
Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners.
"Safe Harbor" Statement: Statements in this press release relating to Oracle's future plans, expectations, beliefs, intentions and prospects, including statements regarding operating margin growth, organic growth in the second half of fiscal 2012, Exalytics systems and Oracle Big Data Appliance deliveries and our share repurchase program, are "forward-looking statements" and are subject to material risks and uncertainties. Many factors could affect our current expectations and our actual results, and could cause actual results to differ materially. We presently consider the following to be among the important factors that could cause actual results to differ materially from expectations: (1) Economic, political and market conditions, including the recent recession and current European debt crisis, can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (2) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, unanticipated fluctuations in currency exchange rates, delays in delivery of new products or releases or a decline in our renewal rates for software license updates and product support. (3) Our hardware systems business may not be successful, and we may fail to achieve our financial forecasts with respect to this business. (4) We have an active acquisition program and our acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. (5) Our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses and risks relating to compliance with international and U.S. laws that apply to our international operations. (6) Intense competitive forces demand rapid technological advances and frequent new product introductions and could require us to reduce prices or cause us to lose customers. (7) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our products and support services in a timely manner or to position and/or price our products and services to meet market demand, customers may not buy new software licenses or hardware systems products or purchase or renew support contracts. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online from the SEC or by contacting Oracle Corporation's Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracle's Investor Relations website at http://www.oracle.com/investor. All information set forth in this press release is current as of December 20, 2011. Oracle undertakes no duty to update any statement in light of new information or future events.
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Three Months Ended November 30,
---------------------------------
% Increase
(Decrease)
in
% Increase Constant
% of % of (Decrease) Currency
2011 Revenues 2010 Revenues in US $ (1)
------ -------- ------ -------- ---------- ----------
REVENUES
New software
licenses $2,048 23% $1,999 23% 2% 3%
Software license
updates and
product support 3,986 46% 3,645 43% 9% 9%
------ -------- ------ --------
Software
Revenues 6,034 69% 5,644 66% 7% 7%
------ -------- ------ --------
Hardware systems
products 953 11% 1,112 13% (14%) (14%)
Hardware systems
support 625 7% 641 7% (2%) (3%)
------ -------- ------ --------
Hardware Systems
Revenues 1,578 18% 1,753 20% (10%) (10%)
------ -------- ------ --------
Services 1,180 13% 1,185 14% 0% 0%
------ -------- ------ --------
Total Revenues 8,792 100% 8,582 100% 2% 2%
------ -------- ------ --------
OPERATING EXPENSES
Sales and
marketing 1,697 19% 1,530 18% 11% 11%
Software license
updates and
product support 298 3% 307 4% (3%) (3%)
Hardware systems
products 471 5% 525 6% (10%) (10%)
Hardware systems
support 258 3% 356 4% (27%) (28%)
Services 929 11% 969 11% (4%) (3%)
Research and
development 1,102 13% 1,119 13% (2%) (1%)
General and
administrative
(2) 277 3% 156 2% 77% 77%
Amortization of
intangible assets 592 7% 614 7% (4%) (4%)
Acquisition
related and other 5 0% 47 1% (89%) (92%)
Restructuring 52 1% 189 2% (72%) (72%)
------ -------- ------ --------
Total
Operating
Expenses 5,681 65% 5,812 68% (2%) (2%)
------ -------- ------ --------
OPERATING INCOME 3,111 35% 2,770 32% 12% 12%
Interest expense (192) (2%) (214) (2%) (11%) (11%)
Non-operating
income, net 41 1% 90 1% (55%) (49%)
------ -------- ------ --------
INCOME BEFORE
PROVISION FOR
INCOME TAXES 2,960 34% 2,646 31% 12% 11%
------ -------- ------ --------
Provision for
income taxes 768 9% 776 9% (1%) (2%)
------ -------- ------ --------
NET INCOME $2,192 25% $1,870 22% 17% 17%
====== ======== ====== ========
EARNINGS PER SHARE:
Basic $ 0.43 $ 0.37
Diluted $ 0.43 $ 0.37
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 5,041 5,044
Diluted 5,123 5,117
(1) We compare the percent change in the results from one period to another
period using constant currency disclosure. We present constant currency
information to provide a framework for assessing how our underlying
businesses performed excluding the effect of foreign currency rate
fluctuations. To present this information, current and comparative
prior period results for entities reporting in currencies other than
United States dollars are converted into United States dollars at the
exchange rates in effect on May 31, 2011, which was the last day of our
prior fiscal year, rather than the actual exchange rates in effect
during the respective periods. Movements in international currencies
relative to the United States dollar during the three months ended
November 30, 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 three months ended November
30, 2010 included a benefit of $120 million related to the recovery of
legal costs.
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Three Months Ended November 30,
----------------------------------------------
2011 2010
2011 Non- 2010 Non-
GAAP Adj. GAAP GAAP Adj. GAAP
------- ----- ------- ------- ------ -------
TOTAL REVENUES (3) (4) $ 8,792 $ 19 $ 8,811 $ 8,582 $ 67 $ 8,649
TOTAL SOFTWARE REVENUES (3) $ 6,034 $ 10 $ 6,044 $ 5,644 $ 22 $ 5,666
New software licenses 2,048 - 2,048 1,999 - 1,999
Software license updates
and product support (3) 3,986 10 3,996 3,645 22 3,667
TOTAL HARDWARE SYSTEMS
REVENUES (4) $ 1,578 $ 9 $ 1,587 $ 1,753 $ 45 $ 1,798
Hardware systems products 953 - 953 1,112 - 1,112
Hardware systems support
(4) 625 9 634 641 45 686
TOTAL OPERATING EXPENSES $ 5,681 $(799) $ 4,882 $ 5,812 $ (969) $ 4,843
Stock-based compensation
(5) 150 (150) - 119 (119) -
Amortization of intangible
assets (6) 592 (592) - 614 (614) -
Acquisition related and
other 5 (5) - 47 (47) -
Restructuring 52 (52) - 189 (189) -
OPERATING INCOME $ 3,111 $ 818 $ 3,929 $ 2,770 $1,036 $ 3,806
OPERATING MARGIN % 35% 45% 32% 44%
INCOME TAX EFFECTS (7) $ 768 $ 226 $ 994 $ 776 $ 274 $ 1,050
NET INCOME $ 2,192 $ 592 $ 2,784 $ 1,870 $ 762 $ 2,632
DILUTED EARNINGS PER SHARE $ 0.43 $ 0.54 $ 0.37 $ 0.51
DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 5,123 - 5,123 5,117 - 5,117
% Increase
% Increase (Decrease) in
(Decrease) in US Constant
$ Currency (2)
---------------- ----------------
Non- Non-
GAAP GAAP GAAP GAAP
-------- ------- -------- -------
TOTAL REVENUES (3) (4) 2% 2% 2% 2%
TOTAL SOFTWARE REVENUES (3) 7% 7% 7% 7%
New software licenses 2% 2% 3% 3%
Software license updates
and product support (3) 9% 9% 9% 9%
TOTAL HARDWARE SYSTEMS
REVENUES (4) (10%) (12%) (10%) (12%)
Hardware systems products (14%) (14%) (14%) (14%)
Hardware systems support
(4) (2%) (8%) (3%) (8%)
TOTAL OPERATING EXPENSES (2%) 1% (2%) 1%
Stock-based compensation
(5) 26% * 26% *
Amortization of intangible
assets (6) (4%) * (4%) *
Acquisition related and
other (89%) * (92%) *
Restructuring (72%) * (72%) *
OPERATING INCOME 12% 3% 12% 3%
OPERATING MARGIN % 310 bp. 59 bp. 291 bp. 42 bp.
INCOME TAX EFFECTS (7) (1%) (5%) (2%) (6%)
NET INCOME 17% 6% 17% 5%
DILUTED EARNINGS PER SHARE 17% 6% 16% 5%
DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 0% 0% 0% 0%
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are
not meant to be considered in isolation or as a substitute for
comparable GAAP measures, and should be read only in conjunction with
our consolidated financial statements prepared in accordance with GAAP.
For a detailed explanation of the adjustments made to comparable GAAP
measures, the reasons why management uses these measures, the usefulness
of these measures and the material limitations on the usefulness of
these measures, please see Appendix A.
(2) We compare the percent change in the results from one period to another
period using constant currency disclosure. We present constant currency
information to provide a framework for assessing how our underlying
businesses performed excluding the effect of foreign currency rate
fluctuations. To present this information, current and comparative prior
period results for entities reporting in currencies other than United
States dollars are converted into United States dollars at the exchange
rates in effect on May 31, 2011, which was the last day of our prior
fiscal year, rather than the actual exchange rates in effect during the
respective periods.
(3) As of November 30, 2011, approximately $11 million, $9 million and $2
million in estimated revenues related to assumed software support
contracts will not be recognized for the remainder of fiscal 2012,
fiscal 2013 and fiscal 2014, respectively, due to business combination
accounting rules.
(4) As of November 30, 2011, approximately $10 million and $11 million in
estimated revenues related to hardware systems support contracts will
not be recognized for the remainder of fiscal 2012 and fiscal 2013,
respectively, due to business combination accounting rules.
(5) Stock-based compensation was included in the following GAAP operating
expense categories:
Three Months Ended Three Months Ended
November 30, 2011 November 30, 2010
---------------------- ----------------------
Non- Non-
GAAP Adj. GAAP GAAP Adj. GAAP
------- ------- ----- ------- ------- -----
Sales and marketing $ 29 $ (29) $ - $ 19 $ (19) $ -
Software license updates
and product support 5 (5) - 3 (3) -
Hardware systems
products - - - 1 (1) -
Hardware systems support 2 (2) - 1 (1) -
Services 6 (6) - 4 (4) -
Research and development 68 (68) - 55 (55) -
General and
administrative 40 (40) - 36 (36) -
------- ------- ----- ------- ------- -----
Subtotal 150 (150) - 119 (119) -
------- ------- ----- ------- ------- -----
Acquisition related and
other 2 (2) - 5 (5) -
------- ------- ----- ------- ------- -----
Total stock-based
compensation $ 152 $ (152) $ - $ 124 $ (124) $ -
======= ======= ===== ======= ======= =====
(6) Estimated future annual amortization expense related to intangible
assets as of November 30, 2011 was as follows:
Remainder of Fiscal
2012 $ 1,162
Fiscal 2013 1,991
Fiscal 2014 1,644
Fiscal 2015 1,244
Fiscal 2016 737
Fiscal 2017 183
Thereafter 180
-------
Total intangible assets
subject to amortization 7,141
In-process research
and development 11
-------
Total intangible
assets, net $ 7,152
=======
(7) Income tax effects were calculated reflecting an effective GAAP tax rate
of 25.9% and 29.3% in the second quarter of fiscal 2012 and 2011,
respectively, and an effective non-GAAP tax rate of 26.3% and 28.5% in
the second quarter of fiscal 2012 and 2011, respectively. The
differences between our GAAP and non-GAAP tax rates in the second
quarter of fiscal 2012 and fiscal 2011 were primarily due to differences
in jurisdictional tax rates and the related tax benefits attributable to
our restructuring expenses in these periods.
* Not meaningful
ORACLE CORPORATION
Q2 FISCAL 2012 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Six Months Ended November 30,
-----------------------------------
% Increase
(Decrease)
in
% Increase Constant
% of % of (Decrease) Currency
2011 Revenues 2010 Revenues in US $ (1)
------- -------- ------- -------- ---------- ----------
REVENUES
New software
licenses $ 3,546 21% $ 3,284 21% 8% 6%
Software license
updates and
product support 8,008 46% 7,096 44% 13% 10%
------- -------- ------- --------
Software
Revenues 11,554 67% 10,380 65% 11% 8%
------- -------- ------- --------
Hardware systems
products 1,981 12% 2,190 13% (10%) (13%)
Hardware systems
support 1,271 7% 1,261 8% 1% (3%)
------- -------- ------- --------
Hardware
Systems
Revenues 3,252 19% 3,451 21% (6%) (9%)
------- -------- ------- --------
Services 2,360 14% 2,253 14% 5% 2%
------- -------- ------- --------
Total
Revenues 17,166 100% 16,084 100% 7% 4%
------- -------- ------- --------
OPERATING EXPENSES
Sales and
marketing 3,327 19% 2,864 18% 16% 13%
Software license
updates and
product support 594 3% 615 4% (3%) (5%)
Hardware systems
products 943 6% 1,082 7% (13%) (14%)
Hardware systems
support 541 3% 656 4% (17%) (20%)
Services 1,865 11% 1,865 11% 0% (2%)
Research and
development 2,152 13% 2,222 14% (3%) (4%)
General and
administrative
(2) 587 3% 428 3% 37% 34%
Amortization of
intangible
assets 1,184 7% 1,217 7% (3%) (3%)
Acquisition
related and
other 25 0% 130 1% (81%) (83%)
Restructuring 154 1% 318 2% (52%) (53%)
------- -------- ------- --------
Total
Operating
Expenses 11,372 66% 11,397 71% 0% (2%)
------- -------- ------- --------
OPERATING INCOME 5,794 34% 4,687 29% 24% 17%
Interest expense (384) (2%) (410) (2%) (6%) (6%)
Non-operating
income, net 21 0% 165 1% (87%) (84%)
------- -------- ------- --------
INCOME BEFORE
PROVISION FOR
INCOME TAXES 5,431 32% 4,442 28% 22% 16%
------- -------- ------- --------
Provision for
income taxes 1,399 9% 1,219 8% 15% 9%
------- -------- ------- --------
NET INCOME $ 4,032 23% $ 3,223 20% 25% 19%
======= ======== ======= ========
EARNINGS PER
SHARE:
Basic $ 0.80 $ 0.64
Diluted $ 0.78 $ 0.63
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 5,052 5,035
Diluted 5,137 5,100
(1) We compare the percent change in the results from one period to another
period using constant currency disclosure. We present constant currency
information to provide a framework for assessing how our underlying
businesses performed excluding the effect of foreign currency rate
fluctuations. To present this information, current and comparative prior
period results for entities reporting in currencies other than United
States dollars are converted into United States dollars at the exchange
rates in effect on May 31, 2011, which was the last day of our prior
fiscal year, rather than the actual exchange rates in effect during the
respective periods. Movements in international currencies relative to
the United States dollar during the six months ended November 30, 2011
compared with the corresponding prior year period increased our revenues
by 3 percentage points, operating expenses by 2 percentage points and
operating income by 7 percentage points.
(2) General and administrative expenses for the six months ended November
30, 2010 included a benefit of $120 million related to the recovery of
legal costs.
ORACLE CORPORATION
Q2 FISCAL 2012 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Six Months Ended November 30,
-------------------------------------------------
2011 2010
2011 Non- 2010 Non-
GAAP Adj. GAAP GAAP Adj. GAAP
------- ------- ------- ------- ------- -------
TOTAL REVENUES (3) (4) $17,166 $ 43 $17,209 $16,084 $ 153 $16,237
TOTAL SOFTWARE REVENUES
(3) $11,554 $ 24 $11,578 $10,380 $ 47 $10,427
New software licenses 3,546 - 3,546 3,284 - 3,284
Software license updates
and product support (3) 8,008 24 8,032 7,096 47 7,143
TOTAL HARDWARE SYSTEMS
REVENUES (4) $ 3,252 $ 19 $ 3,271 $ 3,451 $ 106 $ 3,557
Hardware systems
products 1,981 - 1,981 2,190 - 2,190
Hardware systems support
(4) 1,271 19 1,290 1,261 106 1,367
TOTAL OPERATING EXPENSES $11,372 $(1,658) $ 9,714 $11,397 $(1,913) $ 9,484
Stock-based compensation
(5) 295 (295) - 248 (248) -
Amortization of
intangible assets (6) 1,184 (1,184) - 1,217 (1,217) -
Acquisition related and
other 25 (25) - 130 (130) -
Restructuring 154 (154) - 318 (318) -
OPERATING INCOME $ 5,794 $ 1,701 $ 7,495 $ 4,687 $ 2,066 $ 6,753
OPERATING MARGIN % 34% 44% 29% 42%
INCOME TAX EFFECTS (7) $ 1,399 $ 483 $ 1,882 $ 1,219 $ 528 $ 1,747
NET INCOME $ 4,032 $ 1,218 $ 5,250 $ 3,223 $ 1,538 $ 4,761
DILUTED EARNINGS PER SHARE $ 0.78 $ 1.02 $ 0.63 $ 0.93
DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 5,137 - 5,137 5,100 - 5,100
% Increase
% Increase (Decrease) in
(Decrease) in US Constant Currency
$ (2)
----------------- -----------------
Non- Non-
GAAP GAAP GAAP GAAP
-------- ------- -------- -------
TOTAL REVENUES (3) (4) 7% 6% 4% 3%
TOTAL SOFTWARE REVENUES
(3) 11% 11% 8% 8%
New software licenses 8% 8% 6% 6%
Software license updates
and product support (3) 13% 12% 10% 9%
TOTAL HARDWARE SYSTEMS
REVENUES (4) (6%) (8%) (9%) (11%)
Hardware systems
products (10%) (10%) (13%) (13%)
Hardware systems support
(4) 1% (6%) (3%) (9%)
TOTAL OPERATING EXPENSES 0% 2% (2%) 0%
Stock-based compensation
(5) 20% * 20% *
Amortization of
intangible assets (6) (3%) * (3%) *
Acquisition related and
other (81%) * (83%) *
Restructuring (52%) * (53%) *
OPERATING INCOME 24% 11% 17% 7%
OPERATING MARGIN % 461 bp. 196 bp. 393 bp. 154 bp.
INCOME TAX EFFECTS (7) 15% 8% 9% 4%
NET INCOME 25% 10% 19% 6%
DILUTED EARNINGS PER SHARE 24% 9% 18% 5%
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, 2011, which was the last day of our prior
fiscal year, rather than the actual exchange rates in effect during the
respective periods.
(3) As of November 30, 2011, approximately $11 million, $9 million and $2
million in estimated revenues related to assumed software support
contracts will not be recognized for the remainder of fiscal 2012,
fiscal 2013 and fiscal 2014, respectively, due to business combination
accounting rules.
(4) As of November 30, 2011, approximately $10 million and $11 million in
estimated revenues related to hardware systems support contracts will
not be recognized for the remainder of fiscal 2012 and fiscal 2013,
respectively, due to business combination accounting rules.
(5) Stock-based compensation was included in the following GAAP operating
expense categories:
Six Months Ended Six Months Ended
November 30, 2011 November 30, 2010
---------------------- ----------------------
Non- Non-
GAAP Adj. GAAP GAAP Adj. GAAP
------- ------- ----- ------- ------- -----
Sales and marketing $ 55 $ (55) $ - $ 42 $ (42) $ -
Software license updates
and product support 8 (8) - 8 (8) -
Hardware systems
products 1 (1) - 2 (2) -
Hardware systems support 3 (3) - 2 (2) -
Services 10 (10) - 8 (8) -
Research and development 139 (139) - 114 (114) -
General and
administrative 79 (79) - 72 (72) -
------- ------- ----- ------- ------- -----
Subtotal 295 (295) - 248 (248) -
------- ------- ----- ------- ------- -----
Acquisition related and
other 3 (3) - 6 (6) -
------- ------- ----- ------- ------- -----
Total stock-based
compensation $ 298 $ (298) $ - $ 254 $ (254) $ -
======= ======= ===== ======= ======= =====
(6) Estimated future annual amortization expense related to intangible
assets as of November 30, 2011 was as follows:
Remainder of Fiscal
2012 $ 1,162
Fiscal 2013 1,991
Fiscal 2014 1,644
Fiscal 2015 1,244
Fiscal 2016 737
Fiscal 2017 183
Thereafter 180
-------
Total intangible assets
subject to amortization 7,141
In-process research
and development 11
-------
Total intangible
assets, net $ 7,152
=======
(7) Income tax effects were calculated reflecting an effective GAAP tax rate
of 25.8% and 27.4% in the first half of fiscal 2012 and 2011,
respectively, and an effective non-GAAP tax rate of 26.4% and 26.8% in
the first half of fiscal 2012 and 2011, respectively. The differences
between our GAAP and non-GAAP tax rates in the first half of fiscal 2012
were primarily due to income tax effects related to our acquired tax
exposures and the differences in jurisdictional tax rates and the
related tax benefits attributable to our restructuring expenses. The
differences between our GAAP and non-GAAP tax rates in the first half of
fiscal 2011 were primarily due to differences in jurisdictional tax
rates and the related tax benefits attributable to our restructuring
expenses.
* Not meaningful
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
November 30, May 31,
2011 2011
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 13,286 $ 16,163
Marketable securities 17,726 12,685
Trade receivables, net 4,434 6,628
Inventories 218 303
Deferred tax assets 1,239 1,189
Prepaid expenses and other current assets 1,579 2,206
------------ ------------
Total Current Assets 38,482 39,174
Non-Current Assets:
Property, plant and equipment, net 2,900 2,857
Intangible assets, net 7,152 7,860
Goodwill 21,994 21,553
Deferred tax assets 1,122 1,076
Other assets 1,260 1,015
------------ ------------
Total Non-Current Assets 34,428 34,361
------------ ------------
TOTAL ASSETS $ 72,910 $ 73,535
============ ============
LIABILITIES AND EQUITY
Current Liabilities:
Notes payable, current and other current
borrowings $ - $ 1,150
Accounts payable 445 494
Accrued compensation and related benefits 1,582 2,320
Deferred revenues 6,091 6,802
Other current liabilities 2,954 3,426
------------ ------------
Total Current Liabilities 11,072 14,192
Non-Current Liabilities:
Notes payable and other non-current
borrowings 14,778 14,772
Income taxes payable 3,383 3,169
Other non-current liabilities 1,410 1,157
------------ ------------
Total Non-Current Liabilities 19,571 19,098
Equity 42,267 40,245
------------ ------------
TOTAL LIABILITIES AND EQUITY $ 72,910 $ 73,535
============ ============
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
Six Months Ended
November 30,
2011 2010
--------- ---------
Cash Flows From Operating Activities:
Net income $ 4,032 $ 3,223
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 226 194
Amortization of intangible assets 1,184 1,217
Deferred income taxes (137) (76)
Stock-based compensation 298 254
Tax benefits on the exercise of stock options and
vesting of restricted stock-based awards 94 142
Excess tax benefits on the exercise of stock
options and vesting of restricted stock-based
awards (53) (86)
Other, net 53 24
Changes in operating assets and liabilities, net
of effects from acquisitions:
Decrease in trade receivables, net 2,128 1,343
Decrease in inventories 93 25
Decrease in prepaid expenses and other assets 424 280
Decrease in accounts payable and other
liabilities (1,306) (620)
Increase (decrease) in income taxes payable 184 (613)
Decrease in deferred revenues (544) (546)
--------- ---------
Net cash provided by operating activities 6,676 4,761
--------- ---------
Cash Flows From Investing Activities:
Purchases of marketable securities and other
investments (21,422) (16,802)
Proceeds from maturities and sales of marketable
securities and other investments 16,335 11,153
Acquisitions, net of cash acquired (571) (806)
Capital expenditures (289) (239)
--------- ---------
Net cash used for investing activities (5,947) (6,694)
--------- ---------
Cash Flows From Financing Activities:
Payments for repurchases of common stock (1,798) (504)
Proceeds from issuances of common stock 434 734
Payments of dividends to stockholders (607) (504)
Proceeds from borrowings, net of issuance costs - 3,204
Repayments of borrowings (1,150) (890)
Excess tax benefits on the exercise of stock options
and vesting of restricted stock-based awards 53 86
Distributions to noncontrolling interests (163) (38)
--------- ---------
Net cash (used for) provided by financing
activities (3,231) 2,088
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents (375) 351
--------- ---------
Net (decrease) increase in cash and cash equivalents (2,877) 506
--------- ---------
Cash and cash equivalents at beginning of period 16,163 9,914
--------- ---------
Cash and cash equivalents at end of period $ 13,286 $ 10,420
========= =========
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
Fiscal 2011 Fiscal 2012
---------------------------- -------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
------ ------ ------ ------- ------- ------- ---- ----
GAAP Operating Cash
Flow $8,760 $9,053 $9,948 $11,214 $12,818 $13,129
Capital Expenditures
(2) (293) (369) (441) (450) (492) (500)
------ ------ ------ ------- ------- ------- ---- ----
Free Cash Flow $8,467 $8,684 $9,507 $10,764 $12,326 $12,629
====== ====== ====== ======= ======= ======= ==== ====
% Growth over prior
year 0% 3% 19% 27% 46% 45%
------------------------------------------------------
GAAP Net Income $6,363 $6,776 $7,701 $ 8,547 $ 9,035 $ 9,356
Free Cash Flow as a %
of Net Income 133% 128% 123% 126% 136% 135%
(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
Q2 FISCAL 2012 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($ in millions)
Fiscal 2011
--------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-------- -------- -------- -------- -------
REVENUES
New software licenses $ 1,286 $ 1,999 $ 2,214 $ 3,736 $ 9,235
Software license updates and
product support 3,450 3,645 3,740 3,961 14,796
-------- -------- -------- -------- -------
Software Revenues 4,736 5,644 5,954 7,697 24,031
Hardware systems products 1,079 1,112 1,035 1,157 4,382
Hardware systems support 619 641 629 673 2,562
-------- -------- -------- -------- -------
Hardware Systems Revenues 1,698 1,753 1,664 1,830 6,944
Services Revenues 1,068 1,185 1,146 1,248 4,647
-------- -------- -------- -------- -------
Total Revenues $ 7,502 $ 8,582 $ 8,764 $ 10,775 $35,622
======== ======== ======== ======== =======
AS REPORTED REVENUE GROWTH
RATES
New software licenses 25% 21% 29% 19% 23%
Software license updates and
product support 11% 12% 13% 15% 13%
Software Revenues 14% 15% 19% 17% 17%
Hardware systems products * * 279% (6%) 191%
Hardware systems support * * 239% 12% 227%
Hardware Systems Revenues * * 263% 0% 203%
Services Revenues 18% 24% 23% 13% 19%
Total Revenues 48% 47% 37% 13% 33%
CONSTANT CURRENCY GROWTH RATES
(2)
New software licenses 25% 23% 27% 12% 19%
Software license updates and
product support 12% 13% 12% 10% 12%
Software Revenues 15% 17% 17% 11% 15%
Hardware systems products * * 274% (11%) 184%
Hardware systems support * * 234% 6% 218%
Hardware Systems Revenues * * 258% (5%) 195%
Services Revenues 18% 25% 21% 7% 17%
Total Revenues 49% 48% 35% 7% 30%
--------------------------------------------
GEOGRAPHIC REVENUES
REVENUES
Americas $ 3,904 $ 4,452 $ 4,509 $ 5,487 $18,352
Europe, Middle East & Africa 2,381 2,738 2,815 3,564 11,497
Asia Pacific 1,217 1,392 1,440 1,724 5,773
-------- -------- -------- -------- -------
Total Revenues $ 7,502 $ 8,582 $ 8,764 $ 10,775 $35,622
======== ======== ======== ======== =======
--------------------------------------------
HEADCOUNT
GEOGRAPHIC AREA
Americas 44,494 44,815 45,825 45,887
Europe, Middle East & Africa 22,886 22,690 22,705 22,394
Asia Pacific 37,856 38,225 39,340 40,148
-------- -------- -------- -------- -------
Total Company 105,236 105,730 107,870 108,429
======== ======== ======== ======== =======
Fiscal 2012
-------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-------- -------- ---- ---- -------
REVENUES
New software licenses $ 1,498 $ 2,048 $ 3,546
Software license updates and
product support 4,022 3,986 8,008
-------- -------- ---- ---- -------
Software Revenues 5,520 6,034 11,554
Hardware systems products 1,029 953 1,981
Hardware systems support 645 625 1,271
-------- -------- ---- ---- -------
Hardware Systems Revenues 1,674 1,578 3,252
Services Revenues 1,180 1,180 2,360
-------- -------- ---- ---- -------
Total Revenues $ 8,374 $ 8,792 $17,166
======== ======== ==== ==== =======
AS REPORTED REVENUE GROWTH
RATES
New software licenses 17% 2% 8%
Software license updates and
product support 17% 9% 13%
Software Revenues 17% 7% 11%
Hardware systems products (5%) (14%) (10%)
Hardware systems support 4% (2%) 1%
Hardware Systems Revenues (1%) (10%) (6%)
Services Revenues 10% 0% 5%
Total Revenues 12% 2% 7%
CONSTANT CURRENCY GROWTH RATES
(2)
New software licenses 11% 3% 6%
Software license updates and
product support 10% 9% 10%
Software Revenues 11% 7% 8%
Hardware systems products (11%) (14%) (13%)
Hardware systems support (3%) (3%) (3%)
Hardware Systems Revenues (8%) (10%) (9%)
Services Revenues 5% 0% 2%
Total Revenues 5% 2% 4%
--------------------------------------
GEOGRAPHIC REVENUES
REVENUES
Americas $ 4,226 $ 4,532 $ 8,758
Europe, Middle East & Africa 2,704 2,756 5,460
Asia Pacific 1,444 1,504 2,948
-------- -------- ---- ---- -------
Total Revenues $ 8,374 $ 8,792 $17,166
======== ======== ==== ==== =======
--------------------------------------
HEADCOUNT
GEOGRAPHIC AREA
Americas 46,338 46,672
Europe, Middle East & Africa 22,210 22,725
Asia Pacific 40,840 41,901
-------- -------- ---- ---- -------
Total Company 109,388 111,298
======== ======== ==== ==== =======
(1) The sum of the quarterly financial information may vary from year-to-
date financial information due to rounding.
(2) We compare the percent change in the results from one period to another
period using constant currency disclosure. We present constant currency
information to provide a framework for assessing how our underlying
businesses performed excluding the effect of foreign currency rate
fluctuations. To present this information, current and comparative prior
period results for entities reporting in currencies other than United
States dollars are converted into United States dollars at the exchange
rates in effect on May 31, 2011 and 2010 for the fiscal 2012 and fiscal
2011 constant currency growth rate calculations presented, respectively,
rather than the actual exchange rates in effect during the respective
periods.
* Not meaningful
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)
($ in millions)
Fiscal 2011
-----------------------------------
Q1 Q2 Q3 Q4 TOTAL
------ ------ ------ ------ -------
SOFTWARE REVENUES
DATABASE & MIDDLEWARE REVENUES
New software licenses $ 937 $1,420 $1,575 $2,694 $ 6,626
Software license updates and product
support 2,316 2,443 2,523 2,663 9,945
------ ------ ------ ------ -------
Database and Middleware Revenues $3,253 $3,863 $4,098 $5,357 $16,571
====== ====== ====== ====== =======
AS REPORTED GROWTH RATES
New software licenses 32% 21% 27% 18% 23%
Software license updates and product
support 12% 15% 15% 15% 14%
Database and Middleware Revenues 17% 17% 19% 17% 18%
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses 32% 23% 26% 10% 19%
Software license updates and product
support 13% 16% 14% 10% 13%
Database and Middleware Revenues 18% 18% 18% 10% 15%
-----------------------------------
APPLICATIONS REVENUES
New software licenses $ 349 $ 579 $ 639 $1,042 $ 2,609
Software license updates and product
support 1,134 1,202 1,217 1,298 4,851
------ ------ ------ ------ -------
Applications Revenues $1,483 $1,781 $1,856 $2,340 $ 7,460
====== ====== ====== ====== =======
AS REPORTED GROWTH RATES
New software licenses 10% 21% 34% 22% 23%
Software license updates and product
support 8% 8% 10% 16% 10%
Applications Revenues 8% 12% 17% 18% 14%
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses 10% 22% 31% 16% 20%
Software license updates and product
support 9% 9% 9% 10% 9%
Applications Revenues 9% 13% 16% 12% 13%
Fiscal 2012
-------------------------------
Q1 Q2 Q3 Q4 TOTAL
------ ------ ---- ---- ------
SOFTWARE REVENUES
DATABASE & MIDDLEWARE REVENUES
New software licenses $1,070 $1,479 $2,548
Software license updates and product
support 2,710 2,707 5,416
------ ------ ---- ---- ------
Database and Middleware Revenues $3,780 $4,186 $7,964
====== ====== ==== ==== ======
AS REPORTED GROWTH RATES
New software licenses 14% 4% 8%
Software license updates and product
support 17% 11% 14%
Database and Middleware Revenues 16% 8% 12%
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses 8% 4% 6%
Software license updates and product
support 12% 13% 13%
Database and Middleware Revenues 11% 10% 10%
--------------------------------
APPLICATIONS REVENUES
New software licenses $ 428 $ 569 $ 998
Software license updates and product
support 1,312 1,279 2,592
------ ------ ---- ---- ------
Applications Revenues $1,740 $1,848 $3,590
====== ====== ==== ==== ======
AS REPORTED GROWTH RATES
New software licenses 23% (2%) 8%
Software license updates and product
support 16% 6% 11%
Applications Revenues 17% 4% 10%
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses 19% (1%) 7%
Software license updates and product
support 7% 2% 4%
Applications Revenues 10% 1% 5%
(1) The sum of the quarterly financial information may vary from year-to-
date financial information due to rounding.
(2) We compare the percent change in the results from one period to another
period using constant currency disclosure. We present constant currency
information to provide a framework for assessing how our underlying
businesses performed excluding the effect of foreign currency rate
fluctuations. To present this information, current and comparative prior
period results for entities reporting in currencies other than United
States dollars are converted into United States dollars at the exchange
rates in effect on May 31, 2011 and 2010 for the fiscal 2012 and fiscal
2011 constant currency growth rate calculations presented, respectively,
rather than the actual exchange rates in effect during the respective
periods.
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE AND HARDWARE SYSTEMS PRODUCTS
REVENUES ANALYSIS (1)
($in millions)
Fiscal 2011
-------------------------------------
Q1 Q2 Q3 Q4 TOTAL
------ ------ ------ ------ ------
AMERICAS
Database & Middleware $ 446 $ 671 $ 755 $1,284 $3,155
Applications 212 359 355 580 1,507
------ ------ ------ ------ ------
New Software License Revenues $ 658 $1,030 $1,110 $1,864 $4,662
====== ====== ====== ====== ======
Hardware Systems Products Revenues $ 543 $ 602 $ 506 $ 599 $2,248
====== ====== ====== ====== ======
AS REPORTED GROWTH RATES
Database & Middleware 44% 36% 40% 14% 28%
Applications 14% 26% 26% 20% 22%
New Software License Revenues 33% 32% 35% 16% 26%
Hardware Systems Products Revenues * * 287% (3%) 201%
CONSTANT CURRENCY GROWTH RATES (2)
Database & Middleware 43% 36% 39% 12% 27%
Applications 14% 26% 24% 18% 20%
New Software License Revenues 32% 32% 34% 14% 24%
Hardware Systems Products Revenues * * 285% (4%) 199%
-------------------------------------
EUROPE / MIDDLE EAST / AFRICA
Database & Middleware $ 279 $ 426 $ 505 $ 925 $2,137
Applications 73 148 197 308 724
------ ------ ------ ------ ------
New Software License Revenues $ 352 $ 574 $ 702 $1,233 $2,861
====== ====== ====== ====== ======
Hardware Systems Products Revenues $ 338 $ 329 $ 330 $ 341 $1,337
====== ====== ====== ====== ======
AS REPORTED GROWTH RATES
Database & Middleware 25% (1%) 11% 23% 15%
Applications (19%) 23% 47% 18% 20%
New Software License Revenues 12% 5% 19% 22% 16%
Hardware Systems Products Revenues * * 246% (13%) 176%
CONSTANT CURRENCY GROWTH RATES (2)
Database & Middleware 32% 7% 12% 9% 12%
Applications (16%) 31% 46% 7% 16%
New Software License Revenues 18% 12% 20% 9% 13%
Hardware Systems Products Revenues * * 246% (21%) 165%
-------------------------------------
ASIA PACIFIC
Database & Middleware $ 212 $ 323 $ 315 $ 485 $1,334
Applications 64 72 87 154 378
------ ------ ------ ------ ------
New Software License Revenues $ 276 $ 395 $ 402 $ 639 $1,712
====== ====== ====== ====== ======
Hardware Systems Products Revenues $ 198 $ 181 $ 199 $ 217 $ 797
====== ====== ====== ====== ======
AS REPORTED GROWTH RATES
Database & Middleware 19% 27% 28% 20% 23%
Applications 54% (1%) 45% 41% 33%
New Software License Revenues 26% 21% 32% 24% 25%
Hardware Systems Products Revenues * * 325% (4%) 191%
CONSTANT CURRENCY GROWTH RATES (2)
Database & Middleware 13% 22% 20% 8% 15%
Applications 47% (5%) 34% 27% 24%
New Software License Revenues 19% 16% 23% 12% 16%
Hardware Systems Products Revenues * * 295% (13%) 173%
-------------------------------------
TOTAL COMPANY
Database & Middleware $ 937 $1,420 $1,575 $2,694 $6,626
Applications 349 579 639 1,042 2,609
------ ------ ------ ------ ------
New Software License Revenues $1,286 $1,999 $2,214 $3,736 $9,235
====== ====== ====== ====== ======
Hardware Systems Products Revenues $1,079 $1,112 $1,035 $1,157 $4,382
====== ====== ====== ====== ======
AS REPORTED GROWTH RATES
Database & Middleware 32% 21% 27% 18% 23%
Applications 10% 21% 34% 22% 23%
New Software License Revenues 25% 21% 29% 19% 23%
Hardware Systems Products Revenues * * 279% (6%) 191%
CONSTANT CURRENCY GROWTH RATES (2)
Database & Middleware 32% 23% 26% 10% 19%
Applications 10% 22% 31% 16% 20%
New Software License Revenues 25% 23% 27% 12% 19%
Hardware Systems Products Revenues * * 274% (11%) 184%
Fiscal 2012
--------------------------------
Q1 Q2 Q3 Q4 TOTAL
------ ------ ---- ---- ------
AMERICAS
Database & Middleware $ 478 $ 669 $1,146
Applications 249 358 608
------ ------ ---- ---- ------
New Software License Revenues $ 727 $1,027 $1,754
====== ====== ==== ==== ======
Hardware Systems Products Revenues $ 475 $ 496 $ 971
====== ====== ==== ==== ======
AS REPORTED GROWTH RATES
Database & Middleware 7% 0% 3%
Applications 18% 0% 6%
New Software License Revenues 10% 0% 4%
Hardware Systems Products Revenues (12%) (17%) (15%)
CONSTANT CURRENCY GROWTH RATES (2)
Database & Middleware 6% 1% 3%
Applications 16% 1% 7%
New Software License Revenues 9% 1% 4%
Hardware Systems Products Revenues (13%) (17%) (15%)
---------------------------------
EUROPE / MIDDLE EAST / AFRICA
Database & Middleware $ 322 $ 443 $ 765
Applications 118 141 259
------ ------ ---- ---- ------
New Software License Revenues $ 440 $ 584 $1,024
====== ====== ==== ==== ======
Hardware Systems Products Revenues $ 344 $ 272 $ 615
====== ====== ==== ==== ======
AS REPORTED GROWTH RATES
Database & Middleware 15% 4% 8%
Applications 63% (4%) 18%
New Software License Revenues 25% 2% 11%
Hardware Systems Products Revenues 2% (17%) (8%)
CONSTANT CURRENCY GROWTH RATES (2)
Database & Middleware 5% 5% 5%
Applications 55% (3%) 16%
New Software License Revenues 15% 3% 7%
Hardware Systems Products Revenues (11%) (17%) (14%)
---------------------------------
ASIA PACIFIC
Database & Middleware $ 270 $ 367 $ 637
Applications 61 70 131
------ ------ ---- ---- ------
New Software License Revenues $ 331 $ 437 $ 768
====== ====== ==== ==== ======
Hardware Systems Products Revenues $ 210 $ 185 $ 395
====== ====== ==== ==== ======
AS REPORTED GROWTH RATES
Database & Middleware 28% 14% 19%
Applications (4%) (4%) (4%)
New Software License Revenues 20% 11% 14%
Hardware Systems Products Revenues 6% 2% 4%
CONSTANT CURRENCY GROWTH RATES (2)
Database & Middleware 15% 12% 13%
Applications (11%) (6%) (9%)
New Software License Revenues 9% 8% 9%
Hardware Systems Products Revenues (5%) (1%) (3%)
---------------------------------
TOTAL COMPANY
Database & Middleware $1,070 $1,479 $2,548
Applications 428 569 998
------ ------ ---- ---- ------
New Software License Revenues $1,498 $2,048 $3,546
====== ====== ==== ==== ======
Hardware Systems Products Revenues $1,029 $ 953 $1,981
====== ====== ==== ==== ======
AS REPORTED GROWTH RATES
Database & Middleware 14% 4% 8%
Applications 23% (2%) 8%
New Software License Revenues 17% 2% 8%
Hardware Systems Products Revenues (5%) (14%) (10%)
CONSTANT CURRENCY GROWTH RATES (2)
Database & Middleware 8% 4% 6%
Applications 19% (1%) 7%
New Software License Revenues 11% 3% 6%
Hardware Systems Products Revenues (11%) (14%) (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, 2011 and 2010 for the fiscal 2012 and fiscal
2011 constant currency growth rate calculations presented, respectively,
rather than the actual exchange rates in effect during the respective
periods.
* Not meaningful
APPENDIX A
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES
To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the tables, which exclude certain business combination accounting entries and expenses related to acquisitions, as well as other significant expenses including stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:
-- Software license updates and product support and hardware systems support deferred revenues: Business combination accounting rules require us to account for the fair values of software license updates and product support contracts and hardware systems support contracts assumed in connection with our acquisitions. Because these support contracts are typically one year in duration, our GAAP revenues for the one year period subsequent to our acquisition of a business do not reflect the full amount of support revenues on these assumed support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment to our software license updates and product support revenues and hardware systems support revenues is intended to include, and thus reflect, the full amount of such revenues. We believe the adjustment to these support revenues is useful to investors as a measure of the ongoing performance of our business. We have historically experienced high renewal rates on our software license updates and product support contracts and our objective is to increase the renewal rates on acquired and new hardware systems support contracts; however, we cannot be certain that our customers will renew our software license updates and product support contracts or our hardware systems support contracts.
-- Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.
-- Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP operating expenses and net income measures. Amortization of intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods.
-- Acquisition related and other expenses; and restructuring expenses: We have excluded the effect of acquisition related and other expenses and the effect of restructuring expenses from our non-GAAP operating expenses and net income measures. We incurred significant expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related and other expenses consist of personnel related costs for transitional employees, other acquired employee related costs, stock-based compensation expenses (in addition to the stock-based compensation expenses described above), integration related professional services, certain business combination adjustments including adjustments after the measurement period has ended and changes in fair value of contingent consideration payable, and certain other operating expenses, net. Substantially all of the stock-based compensation expenses included in acquisition related and other expenses resulted from unvested options assumed in acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the original terms of those options. Restructuring expenses consist of employee severance and other exit costs. We believe it is useful for investors to understand the effects of these items on our total operating expenses. Although acquisition related expenses and restructuring expenses generally diminish over time with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions.
Ken Bond
Oracle Investor Relations
1.650.607.0349
Email Contact
Deborah Hellinger
Oracle Corporate Communications
1.212.508.7935
Email Contact
