Oracle Becomes the Second Largest Cloud SaaS Company in the World

Q4 SaaS and PaaS Subscriptions Up 25% to $322 Million, Q4 IaaS Subscription Revenue Up 13% to $128 Million

Marketwired

REDWOOD SHORES, CA--(Marketwired - Jun 19, 2014) - Oracle Corporation (NYSE: ORCL) today announced that fiscal 2014 Q4 total revenues were up 3% to $11.3 billion. Software and Cloud revenues were up 4% to $8.9 billion. GAAP Cloud software-as-a-service (SaaS) and platform-as-a-service (PaaS) revenues were up 25% to $322 million, while non-GAAP SaaS and PaaS revenues were up 23% to $327 million. In addition, Cloud infrastructure-as-a-service (IaaS) revenues were up 13% to $128 million. New software licenses revenues were unchanged at $3.8 billion. Software license updates and product support revenues were up 7% to $4.7 billion. Overall hardware systems revenues were up 2% to $1.5 billion with hardware systems products up 2% to $870 million, and hardware systems support up 2% to $596 million.

In Q4, both GAAP and non-GAAP earnings per share were lowered by $0.02 due to a non-operating loss caused by exchange rate changes in Venezuela. Furthermore, last year's Q4 GAAP earnings per share increased $0.04 because of a $269 million acquisition price reduction. As a result of these two factors, Q4 GAAP earnings per share were unchanged at $0.80 compared with last year, while GAAP net income was down 4% to $3.6 billion, and GAAP operating income was down 2% to $4.9 billion. Q4 GAAP operating margin was 43% in the quarter. Non-GAAP earnings per share were up 6% to $0.92, but would have been $0.94 if not for the currency loss in Venezuela. Non-GAAP net income was up 2% to $4.2 billion while non-GAAP operating income was up 3% to $5.8 billion. The non-GAAP operating margin was 51%. GAAP operating cash flow on a trailing twelve-month basis was $14.9 billion.

For fiscal year 2014, total revenues were up 3% at $38.3 billion. GAAP Software and Cloud revenues were up 5%. GAAP Cloud SaaS and PaaS revenues were up 23% to $1.1 billion while Cloud IaaS revenues were $456 million. New software licenses revenues were unchanged at $9.4 billion while software license updates and product support revenues were up 6% to $18.2 billion. Total hardware system revenues were flat at $5.4 billion. GAAP operating income was up 1% to $14.8 billion, and GAAP operating margin was 39%. Non-GAAP operating income was up 3% to $18.1 billion, and non-GAAP operating margin was 47%. GAAP net income was unchanged at $11.0 billion, while non-GAAP net income was up 2% to $13.2 billion. GAAP earnings per share were $2.38, up 5% compared to last year while non-GAAP earnings per share were $2.87, up 7%.

"Our cloud subscription business is now approaching a run rate of $2 billion a year," said Oracle President and CFO Safra Catz. "As our business has transitioned, more software revenues are being recognized over the life of a subscription rather than upfront. We're making this transition to cloud subscriptions and ratable revenue recognition while continuously increasing our top-line revenue and our bottom-line profits year-after-year."

"We have transformed Sun's commodity hardware business into a profitable and growing Engineered Systems business," said Oracle President Mark Hurd. "Our overall hardware business grew 2% in constant currency this past year. We saw record levels of Engineered Systems shipments and expect to deliver our 10,000th unit in Q1."

"Oracle is now the second largest SaaS company in the world," said Oracle CEO Larry Ellison. "In SaaS, we're in front of everybody but salesforce.com. In IaaS we're larger and more profitable than Rackspace. We have by far the most complete portfolio of modern SaaS and PaaS products in the industry: CRM: Sales, Service & Marketing; HCM: HR, Payroll & Talent; ERP: Accounting, Procurement, Supply Chain & more. All these SaaS products run on the world's most powerful PaaS: the Oracle in-memory multitenant database and Java. We plan to increase our focus on the Cloud and become number one in both the SaaS and the PaaS businesses."

The Board of Directors declared a quarterly cash dividend of $0.12 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on July 9, 2014, with a payment date of July 30, 2014.

Q4 Fiscal 2014 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) 312-6699, Passcode: 822011. To access the live webcast of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. In addition, Oracle's Q4 results and Fiscal 2014 financial tables are available on the Oracle Investor Relations website.

A replay of the conference call will also be available by dialing (719) 457-0820 or (888) 203-1112, Passcode: 1625971.

About Oracle
Oracle engineers hardware and software to work together in the cloud and in your data center. For more information about Oracle (NYSE: ORCL), 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 our cloud subscription run rate, the timing of the delivery of our 10,000th Engineered Systems unit, and our plans to increase our focus on the Cloud and become number one in SaaS and PaaS, 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 continued slow economic recovery in the U.S. and other parts of the world, 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 support contracts. (3) Our cloud computing strategy, including our Oracle Cloud Software-as-a-Service, Platform-as-a-Service and Infrastructure-as-a-Service offerings, may not be successful. (4) 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, cloud software subscriptions or hardware systems products or purchase or renew support contracts. (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. (6) If the security measures for our software, hardware, services or Oracle Cloud offerings are compromised or if such offerings contain significant coding, manufacturing or configuration errors, we may experience reputational harm, legal claims and financial exposure. (7) 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. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online from the SEC or by contacting Oracle Corporation's Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracle's Investor Relations website at http://www.oracle.com/investor. All information set forth in this press release is current as of June 19, 2014. Oracle undertakes no duty to update any statement in light of new information or future events.

                           
                           
ORACLE CORPORATION
                           
Q4 FISCAL 2014 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
                           
  Three Months Ended May 31,        
  2014     % of Revenues   2013     % of Revenues   % Increase (Decrease) in US $   % Increase (Decrease) in Constant Currency (1)
REVENUES                              
  New software licenses $ 3,769     33%   $ 3,769     35%   0%   (1%)
  Cloud software-as-a-service and platform-as-a-service   322     3%     257     2%   25%   25%
  Cloud infrastructure-as-a-service   128     1%     113     1%   13%   13%
  Software license updates and product support   4,695     42%     4,402     40%   7%   6%
    Software and Cloud Revenues   8,914     79%     8,541     78%   4%   4%
  Hardware systems products   870     8%     849     8%   2%   3%
  Hardware systems support   596     5%     582     5%   2%   2%
    Hardware Systems Revenues   1,466     13%     1,431     13%   2%   3%
    Services Revenues   940     8%     975     9%   (4%)   (3%)
      Total Revenues   11,320     100%     10,947     100%   3%   3%
                               
OPERATING EXPENSES                              
  Sales and marketing   2,241     20%     2,125     19%   6%   5%
  Cloud software-as-a-service and platform-as-a-service   137     1%     101     1%   36%   35%
  Cloud infrastructure-as-a-service   84     1%     76     1%   10%   11%
  Software license updates and product support   303     3%     316     3%   (4%)   (4%)
  Hardware systems products   443     4%     413     4%   7%   8%
  Hardware systems support   205     2%     220     2%   (7%)   (6%)
  Services   759     7%     785     7%   (3%)   (3%)
  Research and development   1,349     12%     1,264     12%   7%   7%
  General and administrative   265     2%     274     2%   (3%)   (3%)
  Amortization of intangible assets   568     5%     596     5%   (5%)   (5%)
  Acquisition related and other (2)   20     0%     (257 )   (2%)   108%   108%
  Restructuring   37     0%     34     0%   8%   4%
      Total Operating Expenses   6,411     57%     5,947     54%   8%   8%
                               
OPERATING INCOME   4,909     43%     5,000     46%   (2%)   (3%)
  Interest expense   (239 )   (2%)     (210 )   (2%)   14%   14%
  Non-operating (expense) income, net   (81 )   0%     35     0%   328%   324%
                               
INCOME BEFORE PROVISION FOR INCOME TAXES   4,589     41%     4,825     44%   (5%)   (6%)
  Provision for income taxes   943     9%     1,018     9%   (7%)   (8%)
                               
NET INCOME $ 3,646     32%   $ 3,807     35%   (4%)   (5%)
                               
EARNINGS PER SHARE:                              
  Basic $ 0.81         $ 0.81              
  Diluted $ 0.80         $ 0.80              
                               
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                              
  Basic   4,475           4,684              
  Diluted   4,569           4,756              
                               
(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, 2013, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the three months ended May 31, 2014 compared with the corresponding prior year period increased our operating income by 1 percentage point.
   
(2) Acquisition related and other expenses for the quarter ended May 31, 2013 included a net benefit of $269 million due to an acquisition related item.
   
   
   
 
ORACLE CORPORATION
 
Q4 FISCAL 2014 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
                                                   
  Three Months Ended May 31,     % Increase (Decrease)
in US $
  % Increase (Decrease) in Constant Currency (2)
  2014 GAAP     Adj.     2014 Non-GAAP     2013 GAAP     Adj.     2013 Non-GAAP     GAAP   Non-GAAP   GAAP   Non-GAAP
                                                               
TOTAL REVENUES (3) (4) $ 11,320     $ 6     $ 11,326     $ 10,947     $ 14     $ 10,961     3%   3%   3%   3%
                                                               
TOTAL SOFTWARE AND CLOUD REVENUES (3) $ 8,914     $ 5     $ 8,919     $ 8,541     $ 10     $ 8,551     4%   4%   4%   4%
  New software licenses   3,769       -       3,769       3,769       -       3,769     0%   0%   (1%)   (1%)
  Cloud software-as-a-service and platform-as-a-service (3)   322       5       327       257       8       265     25%   23%   25%   23%
  Cloud infrastructure-as-a-service   128       -       128       113       -       113     13%   13%   13%   13%
  Software license updates and product support   4,695       -       4,695       4,402       2       4,404     7%   7%   6%   6%
                                                               
TOTAL HARDWARE SYSTEMS REVENUES (4) $ 1,466     $ 1     $ 1,467     $ 1,431     $ 4     $ 1,435     2%   2%   3%   2%
  Hardware systems products   870       -       870       849       -       849     2%   2%   3%   3%
  Hardware systems support (4)   596       1       597       582       4       586     2%   2%   2%   2%
                                                               
TOTAL OPERATING EXPENSES $ 6,411     $ (841 )   $ 5,570     $ 5,947     $ (559 )   $ 5,388     8%   3%   8%   3%
  Stock-based compensation (5)   216       (216 )     -       186       (186 )     -     16%   *   16%   *
  Amortization of intangible assets (6)   568       (568 )     -       596       (596 )     -     (5%)   *   (5%)   *
  Acquisition related and other   20       (20 )     -       (257 )     257       -     108%   *   108%   *
  Restructuring   37       (37 )     -       34       (34 )     -     8%   *   4%   *
                                                               
OPERATING INCOME $ 4,909     $ 847     $ 5,756     $ 5,000     $ 573     $ 5,573     (2%)   3%   (3%)   2%
                                                               
OPERATING MARGIN %   43 %             51 %     46 %             51 %   (231) bp.   (2) bp.   (255) bp.   (24) bp.
                                                               
INCOME TAX EFFECTS (7) $ 943     $ 308     $ 1,251     $ 1,018     $ 266     $ 1,284     (7%)   (3%)   (8%)   (4%)
                                                               
NET INCOME $ 3,646     $ 539     $ 4,185     $ 3,807     $ 307     $ 4,114     (4%)   2%   (5%)   1%
                                                               
DILUTED EARNINGS PER SHARE $ 0.80             $ 0.92     $ 0.80             $ 0.87     0%   6%   (1%)   5%
                                                               
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING   4,569       -       4,569       4,756       -       4,756     (4%)   (4%)   (4%)   (4%)
                                                               
(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, 2013, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.
                                         
(3) As of May 31, 2014, approximately $3 million in estimated revenues related to assumed cloud software-as-a-service and platform-as-a-service contracts will not be recognized for fiscal 2015 due to business combination accounting rules.
                                         
(4) As of May 31, 2014, approximately $2 million in estimated revenues related to hardware systems support contracts will not be recognized for fiscal 2015 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
    May 31, 2014   May 31, 2013
    GAAP   Adj.     Non-GAAP   GAAP   Adj.     Non-GAAP
  Sales and marketing $ 46   $ (46 )   $ -   $ 33   $ (33 )   $ -
  Cloud software-as-a-service and platform-as-a-service   3     (3 )     -     2     (2 )     -
  Cloud infrastructure-as-a-service   1     (1 )     -     2     (2 )     -
  Software license updates and product support   6     (6 )     -     5     (5 )     -
  Hardware systems products   1     (1 )     -     1     (1 )     -
  Hardware systems support   1     (1 )     -     1     (1 )     -
  Services   12     (12 )     -     6     (6 )     -
  Research and development   101     (101 )     -     93     (93 )     -
  General and administrative   45     (45 )     -     43     (43 )     -
    Subtotal   216     (216 )     -     186     (186 )     -
  Acquisition related and other   7     (7 )     -     4     (4 )     -
    Total stock-based compensation $ 223   $ (223 )   $ -   $ 190   $ (190 )   $ -
                                         
(6) Estimated future annual amortization expense related to intangible assets as of May 31, 2014 was as follows:
   
  Fiscal 2015 $ 1,934                                  
  Fiscal 2016   1,337                                  
  Fiscal 2017   741                                  
  Fiscal 2018   607                                  
  Fiscal 2019   508                                  
  Thereafter   980                                  
    Total intangible assets subject to amortization   6,107                                  
  In-process research and development   30                                  
    Total intangible assets, net $ 6,137                                  
                                         
(7) Income tax effects were calculated reflecting an effective GAAP tax rate of 20.5% and 21.1% in the fourth quarter of fiscal 2014 and 2013, respectively, and an effective non-GAAP tax rate of 23.0% and 23.8% in the fourth quarter of fiscal 2014 and 2013, respectively. The differences between our GAAP and non-GAAP tax rates in the fourth quarter of fiscal 2014 and 2013 were primarily due to the net tax effects of acquisition related items, including the tax effects of amortization of intangible assets.
                                         
* Not meaningful                                      
                                         
                                         
                                         
...
ORACLE CORPORATION
                           
FISCAL 2014 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
                           
  Year Ended May 31,        
  2014     % of Revenues   2013     % of Revenues   % Increase (Decrease) in US $   % Increase (Decrease) in Constant Currency (1)
REVENUES                              
  New software licenses $ 9,416     25%   $ 9,411     25%   0%   1%
  Cloud software-as-a-service and platform-as-a-service   1,121     3%     910     3%   23%   24%
  Cloud infrastructure-as-a-service   456     1%     457     1%   0%   1%
  Software license updates and product support   18,206     47%     17,142     46%   6%   7%
    Software and Cloud Revenues   29,199     76%     27,920     75%   5%   5%
  Hardware systems products   2,976     8%     3,033     8%   (2%)   (1%)
  Hardware systems support   2,396     6%     2,313     6%   4%   5%
    Hardware Systems Revenues   5,372     14%     5,346     14%   0%   2%
    Services Revenues   3,704     10%     3,914     11%   (5%)  (4%)
      Total Revenues   38,275     100%     37,180     100%   3%   4%
                               
OPERATING EXPENSES                              
  Sales and marketing   7,567     20%     7,062     19%   7%   8%
  Cloud software-as-a-service and platform-as-a-service   455     1%     327     1%   39%   40%
  Cloud Infrastructure-as-a-service   308     1%     304     1%   1%   3%
  Software license updates and product support   1,162     3%     1,175     3%   (1%)   1%
  Hardware systems products   1,521     4%     1,501     4%   1%   3%
  Hardware systems support   836     2%     890     2%   (6%)   (5%)
  Services   2,954     8%     3,182     9%   (7%)   (6%)
  Research and development   5,151     13%     4,850     13%   6%   7%
  General and administrative   1,038     3%     1,072     3%   (3%)   (2%)
  Amortization of intangible assets   2,300     6%     2,385     7%   (4%)   (4%)
  Acquisition related and other (2)   41     0%     (604 )   (2%)   107%   107%
  Restructuring   183     0%     352     1%   (48%)   (49%)
      Total Operating Expenses   23,516     61%     22,496     61%   5%   6%
                               
OPERATING INCOME   14,759     39%     14,684     39%   1%   1%
  Interest expense   (914 )   (3%)     (797 )   (2%)   15%   15%
  Non-operating (expense) income, net   (141 )   0%     11     0%   1,343%   1,749%
                               
INCOME BEFORE PROVISION FOR INCOME TAXES   13,704     36%     13,898     37%   (1%)   0%
  Provision for income taxes   2,749     7%     2,973     8%   (7%)   (6%)
                               
NET INCOME $ 10,955     29%   $ 10,925     29%   0%   1%
                               
EARNINGS PER SHARE:                              
  Basic $ 2.42         $ 2.29              
  Diluted $ 2.38         $ 2.26              
                               
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                              
  Basic   4,528           4,769              
  Diluted   4,604           4,844              
                               
(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, 2013, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the year ended May 31, 2014 compared with the corresponding prior year period decreased our revenues by 1 percentage point and operating expenses by 1 percentage point.
   
(2) Acquisition related and other expenses for the year ended May 31, 2013 included a benefit of $306 million related to certain litigation and a net benefit of $387 million due to an acquisition related item.
   
   
   
ORACLE CORPORATION
 
FISCAL 2014 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
                                                   
  Year Ended May 31,     % Increase (Decrease)
in US $
  % Increase (Decrease) in Constant Currency (2)
  2014 GAAP     Adj.     2014 Non-GAAP     2013 GAAP     Adj.     2013 Non-GAAP     GAAP   Non-GAAP   GAAP   Non-GAAP
                                                               
TOTAL REVENUES (3) (4) $ 38,275     $ 31     $ 38,306     $ 37,180     $ 73     $ 37,253     3%   3%   4%   4%
                                                               
TOTAL SOFTWARE AND CLOUD REVENUES (3) $ 29,199     $ 20     $ 29,219     $ 27,920     $ 59     $ 27,979     5%   4%   5%   5%
  New software licenses   9,416       -       9,416       9,411       -       9,411     0%   0%   1%   1%
  Cloud software-as-a-service and platform-as-a-service (3)   1,121       17       1,138       910       45       955     23%   19%   24%   20%
  Cloud infrastructure-as-a-service   456       -       456       457       -       457     0%   0%   1%   1%
  Software license updates and product support   18,206       3       18,209       17,142       14       17,156     6%   6%   7%   7%
                                                               
TOTAL HARDWARE SYSTEMS REVENUES (4) $ 5,372     $ 11     $ 5,383     $ 5,346     $ 14     $ 5,360     0%   0%   2%   2%
  Hardware systems products   2,976       -       2,976       3,033       -       3,033     (2%)   (2%)   (1%)   (1%)
  Hardware systems support (4)   2,396       11       2,407       2,313       14       2,327     4%   3%   5%   5%
                                                               
TOTAL OPERATING EXPENSES $ 23,516     $ (3,319 )   $ 20,197     $ 22,496     $ (2,855 )   $ 19,641     5%   3%   6%   4%
  Stock-based compensation (5)   795       (795 )     -       722       (722 )     -     10%   *   10%   *
  Amortization of intangible assets (6)   2,300       (2,300 )     -       2,385       (2,385 )     -     (4%)   *   (4%)   *
  Acquisition related and other   41       (41 )     -       (604 )     604       -     107%   *   107%   *
  Restructuring   183       (183 )     -       352       (352 )     -     (48%)   *   (49%)   *
                                                               
OPERATING INCOME $ 14,759     $ 3,350     $ 18,109     $ 14,684     $ 2,928     $ 17,612     1%   3%   1%   4%
                                                               
OPERATING MARGIN %   39 %             47 %     39 %             47 %   (93) bp.   0 bp.   (94) bp.   (8) bp.
                                                               
INCOME TAX EFFECTS (7) $ 2,749     $ 1,091     $ 3,840     $ 2,973     $ 896     $ 3,869     (7%)   (1%)   (6%)   0%
                                                               
NET INCOME $ 10,955     $ 2,259     $ 13,214     $ 10,925     $ 2,032     $ 12,957     0%   2%   1%   3%
                                                               
DILUTED EARNINGS PER SHARE $ 2.38             $ 2.87     $ 2.26             $ 2.68     5%   7%   7%   8%
                                                               
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING   4,604       -       4,604       4,844       -       4,844     (5%)   (5%)   (5%)   (5%)
                                                               
(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, 2013, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.
                                         
(3) As of May 31, 2014, approximately $3 million in estimated revenues related to assumed cloud software-as-a-service and platform-as-a-service contracts will not be recognized for fiscal 2015 due to business combination accounting rules.
                                         
(4) As of May 31, 2014, approximately $2 million in estimated revenues related to hardware systems support contracts will not be recognized for fiscal 2015 due to business combination accounting rules.
                                         
(5) Stock-based compensation was included in the following GAAP operating expense categories:
                                         
    Year Ended   Year Ended
    May 31, 2014   May 31, 2013
    GAAP   Adj.     Non-GAAP   GAAP   Adj.     Non-GAAP
  Sales and marketing $ 165   $ (165 )   $ -   $ 137   $ (137 )   $ -
  Cloud software-as-a-service and platform-as-a-service   8     (8 )     -     10     (10 )     -
  Cloud infrastructure-as-a-service   4     (4 )     -     8     (8 )     -
  Software license updates and product support   22     (22 )     -     20     (20 )     -
  Hardware systems products   5     (5 )     -     3     (3 )     -
  Hardware systems support   6     (6 )     -     5     (5 )     -
  Services   29     (29 )     -     23     (23 )     -
  Research and development   385     (385 )     -     352     (352 )     -
  General and administrative   171     (171 )     -     164     (164 )     -
    Subtotal   795     (795 )     -     722     (722 )     -
  Acquisition related and other   10     (10 )     -     33     (33 )     -
    Total stock-based compensation $ 805   $ (805 )   $ -   $ 755   $ (755 )   $ -
                                         
(6) Estimated future annual amortization expense related to intangible assets as of May 31, 2014 was as follows:
  Fiscal 2015 $ 1,934                                  
  Fiscal 2016   1,337                                  
  Fiscal 2017   741                                  
  Fiscal 2018   607                                  
  Fiscal 2019   508                                  
  Thereafter   980                                  
    Total intangible assets subject to amortization   6,107                                  
  In-process research and development   30                                  
    Total intangible assets, net $ 6,137                                  
                                         
(7) Income tax effects were calculated reflecting an effective GAAP tax rate of 20.1% and 21.4% in fiscal 2014 and 2013, respectively, and an effective non-GAAP tax rate of 22.5% and 23.0% in fiscal 2014 and 2013, respectively. The differences between our GAAP and non-GAAP tax rates in fiscal 2014 and 2013 were primarily due to the net tax effects of acquisition related items, including the tax effects of amortization of intangible assets.
                                         
* Not meaningful                                      
                                         
                                         
                                         
         
ORACLE CORPORATION
         
FISCAL 2014 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
         
    May 31,   May 31,
    2014   2013
ASSETS            
             
  Current Assets:            
    Cash and cash equivalents   $ 17,769   $ 14,613
    Marketable securities     21,050     17,603
    Trade receivables, net     6,087     6,049
    Inventories     189     240
    Deferred tax assets     914     974
    Prepaid expenses and other current assets     2,129     2,213
      Total Current Assets     48,138     41,692
             
  Non-Current Assets:            
    Property, plant and equipment, net     3,061     3,053
    Intangible assets, net     6,137     6,640
    Goodwill     29,652     27,343
    Deferred tax assets     837     766
    Other assets     2,519     2,318
      Total Non-Current Assets     42,206     40,120
             
TOTAL ASSETS   $ 90,344   $ 81,812
             
LIABILITIES AND EQUITY            
             
  Current Liabilities:            
    Notes payable, current and other current borrowings   $ 1,508   $ -
    Accounts payable     471     419
    Accrued compensation and related benefits     1,940     1,851
    Income taxes payable     416     911
    Deferred revenues     7,269     7,118
    Other current liabilities     2,785     2,573
      Total Current Liabilities     14,389     12,872
               
  Non-Current Liabilities:            
    Notes payable and other non-current borrowings     22,667     18,494
    Income taxes payable     4,184     3,899
    Other non-current liabilities     1,657     1,402
      Total Non-Current Liabilities     28,508     23,795
             
  Equity     47,447     45,145
             
TOTAL LIABILITIES AND EQUITY   $ 90,344   $ 81,812
             
             
             
ORACLE CORPORATION  
   
FISCAL 2014 FINANCIAL RESULTS  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
($ in millions)  
             
    Year Ended May 31,  
    2014     2013  
Cash Flows From Operating Activities:                
                 
  Net income   $ 10,955     $ 10,925  
  Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation     608       546  
    Amortization of intangible assets     2,300       2,385  
    Deferred income taxes     (248 )     (117 )
    Stock-based compensation     805       755  
    Tax benefits on the exercise of stock options and vesting of restricted stock-based awards     480       410  
    Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards     (250 )     (241 )
    Other, net     311       155  
    Changes in operating assets and liabilities, net of effects from acquisitions:                
      Decrease in trade receivables, net     146       385  
      Decrease (increase) in inventories     57       (66 )
      Increase in prepaid expenses and other assets     (143 )     (555 )
      Increase (decrease) in accounts payable and other liabilities     48       (541 )
      (Decrease) increase in income taxes payable     (320 )     35  
      Increase in deferred revenues     172       148  
                   
        Net cash provided by operating activities     14,921       14,224  
                 
Cash Flows From Investing Activities:                
  Purchases of marketable securities and other investments     (32,316 )     (32,160 )
  Proceeds from maturities and sales of marketable securities and other investments     28,845       30,159  
  Acquisitions, net of cash acquired     (3,488 )     (3,305 )
  Capital expenditures     (580 )     (650 )
                   
        Net cash used for investing activities     (7,539 )     (5,956 )
                 
Cash Flows From Financing Activities:                
  Payments for repurchases of common stock     (9,813 )     (11,021 )
  Proceeds from issuances of common stock     2,135       1,527  
  Payments of dividends to stockholders     (2,178 )     (1,433 )
  Proceeds from borrowings, net of issuance costs     5,566       4,974  
  Repayments of borrowings     -       (2,950 )
  Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards     250       241  
  Distributions to noncontrolling interests     (28 )     (31 )
  Other, net     -       193  
                 
        Net cash used for financing activities     (4,068 )     (8,500 )
                 
Effect of exchange rate changes on cash and cash equivalents     (158 )     (110 )
                 
Net increase (decrease) in cash and cash equivalents     3,156       (342 )
                 
Cash and cash equivalents at beginning of period     14,613       14,955  
                 
Cash and cash equivalents at end of period   $ 17,769     $ 14,613  
                 
                 
                 
ORACLE CORPORATION
FISCAL 2014 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($in millions)
                                               
  Fiscal 2013     Fiscal 2014  
  Q1     Q2     Q3     Q4     Q1     Q2     Q3     Q4
                                                               
GAAP Operating Cash Flow $ 13,993     $ 13,533     $ 13,717     $ 14,224     $ 14,845     $ 15,196     $ 15,029     $ 14,921  
                                                               
Capital Expenditures (2)   (627 )     (710 )     (684 )     (650 )     (664 )     (578 )     (609 )     (580 )
                                                               
Free Cash Flow $ 13,366     $ 12,823     $ 13,033     $ 13,574     $ 14,181     $ 14,618     $ 14,420     $ 14,341  
                                                               
% Growth over prior year   8 %     2 %     1 %     4 %     6 %     14 %     11 %     6 %
                                                               
                                                               
GAAP Net Income $ 10,175     $ 10,564     $ 10,571     $ 10,925     $ 11,082     $ 11,054     $ 11,115     $ 10,955  
                                                               
Free Cash Flow as a % of Net Income   131 %     121 %     123 %     124 %     128 %     132 %     130 %     131 %
                                                               
(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) Derived from capital expenditures as reported in cash flows from investing activities as per our consolidated statements of cash flows presented in accordance with GAAP.
   
   
   
ORACLE CORPORATION
FISCAL 2014 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($in millions)
                                                           
  Fiscal 2013     Fiscal 2014  
Q1     Q2     Q3     Q4     TOTAL     Q1     Q2     Q3     Q4     TOTAL  
REVENUES                                                                              
  New software licenses $ 1,371     $ 2,171     $ 2,101     $ 3,769     $ 9,411     $ 1,399     $ 2,121     $ 2,128     $ 3,769     $ 9,416  
  Cloud software-as-a-service and platform-as-a-service   203       218       231       257       910       254       259       287       322       1,121  
  Cloud infrastructure-as-a-service   119       114       110       113       457       109       97       121       128       456  
  Software license updates and product support   4,140       4,260       4,340       4,402       17,142       4,431       4,516       4,564       4,695       18,206  
    Software and Cloud Revenues   5,833       6,763       6,782       8,541       27,920       6,193       6,993       7,100       8,914       29,199  
                                                                                 
  Hardware systems products   779       734       671       849       3,033       669       714       725       870       2,976  
  Hardware systems support   574       587       570       582       2,313       592       609       598       596       2,396  
    Hardware Systems Revenues   1,353       1,321       1,241       1,431       5,346       1,261       1,323       1,323       1,466       5,372  
                                                                                 
    Services Revenues   995       1,010       935       975       3,914       918       959       884       940       3,704  
                                                                                 
      Total Revenues $ 8,181     $ 9,094     $ 8,958     $ 10,947     $ 37,180     $ 8,372     $ 9,275     $ 9,307     $ 11,320     $ 38,275  
                                                                               
AS REPORTED REVENUE GROWTH RATES                                                                              
  New software licenses   (3 %)     11 %     (7 %)     (1 %)     0 %     2 %     (2 %)     1 %     0 %     0 %
  Cloud software-as-a-service and platform-as-a-service   138 %     145 %     111 %     50 %     100 %     25 %     19 %     24 %     25 %     23 %
  Cloud infrastructure-as-a-service   13 %     5 %     (1 %)     (4 %)     3 %     (9 %)     (15 %)     10 %     13 %     0 %
  Software license updates and product support   3 %     7 %     7 %     6 %     6 %     7 %     6 %     5 %     7 %     6 %
    Software and Cloud Revenues   4 %     10 %     4 %     3 %     5 %     6 %     3 %     5 %     4 %     5 %
                                                                                 
  Hardware systems products   (24 %)     (23 %)     (23 %)     (13 %)     (21 %)     (14 %)     (3 %)     8 %     2 %     (2 %)
  Hardware systems support   (11 %)     (6 %)     (6 %)     (3 %)     (7 %)     3 %     4 %     5 %     2 %     4 %
    Hardware Systems Revenues   (19 %)     (16 %)     (16 %)     (9 %)     (15 %)     (7 %)     0 %     7 %     2 %     0 %
                                                                                 
    Services Revenues   (7 %)     (6 %)     (9 %)     (10 %)     (8 %)     (8 %)     (5 %)     (5 %)     (4 %)     (5 %)
                                                                                 
      Total Revenues   (2 %)     3 %     (1 %)     0 %     0 %     2 %     2 %     4 %     3 %     3 %
                                                                               
CONSTANT CURRENCY GROWTH RATES (2)                                                                              
  New software licenses   2 %     12 %     (6 %)     0 %     1 %     5 %     0 %     3 %     (1 %)     1 %
  Cloud software-as-a-service and platform-as-a-service   139 %     145 %     111 %     51 %     100 %     26 %     20 %     25 %     25 %     24 %
  Cloud infrastructure-as-a-service   18 %     6 %     0 %     (2 %)     5 %     (7 %)     (14 %)     11 %     13 %     1 %
  Software license updates and product support   8 %     8 %     8 %     8 %     8 %     8 %     7 %     7 %     6 %     7 %
    Software and Cloud Revenues   9 %     11 %     5 %     5 %     7 %     8 %     5 %     6 %     4 %     5 %
                                                                                 
  Hardware systems products   (21 %)     (23 %)     (22 %)     (12 %)     (19 %)     (13 %)     (2 %)     10 %     3 %     (1 %)
  Hardware systems support   (6 %)     (5 %)     (5 %)     (1 %)     (4 %)     5 %     5 %     7 %     2 %     5 %
    Hardware Systems Revenues   (15 %)     (16 %)     (15 %)     (8 %)     (13 %)     (6 %)     1 %     9 %     3 %     2 %
                                                                                 
    Services Revenues   (2 %)     (4 %)     (8 %)     (9 %)     (6 %)     (6 %)     (3 %)     (3 %)     (3 %)     (4 %)
                                                                                   
      Total Revenues   3 %     5 %     0 %     2 %     2 %     4 %     3 %     6 %     3 %     4 %
                                                                               
                                                                               
GEOGRAPHIC REVENUES                                                                              
                                                                               
REVENUES                                                                              
  Americas $ 4,324     $ 4,787     $ 4,698     $ 5,911     $ 19,719     $ 4,517     $ 4,995     $ 4,953     $ 5,857     $ 20,323  
  Europe, Middle East & Africa   2,383       2,701       2,745       3,328       11,158       2,439       2,817       2,923       3,768       11,946  
  Asia Pacific   1,474       1,606       1,515       1,708       6,303       1,416       1,463       1,431       1,695       6,006  
    Total Revenues $ 8,181     $ 9,094     $ 8,958     $ 10,947     $ 37,180     $ 8,372     $ 9,275     $ 9,307     $ 11,320     $ 38,275  
                                                                               
                                                                               
HEADCOUNT                                                                              
                                                                               
GEOGRAPHIC AREA                                                                              
  Americas   49,145       49,584       50,402       51,519               53,465       53,073       53,799       53,827          
  Europe, Middle East & Africa   22,584       22,594       22,592       22,860               23,349       23,178       23,350       23,339          
  Asia Pacific   44,170       45,051       45,663       45,855               45,513       45,617       45,561       45,108          
    Total Company   115,899       117,229       118,657       120,234               122,327       121,868       122,710       122,274          
                                                                               
(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, 2013 and 2012 for the fiscal 2014 and fiscal 2013 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.
   
   
   
 
 
ORACLE CORPORATION
FISCAL 2014 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1)
($ in millions)
                                                           
  Fiscal 2013     Fiscal 2014  
  Q1     Q2     Q3     Q4     TOTAL     Q1     Q2     Q3     Q4     TOTAL  
                                                                               
AMERICAS                                                                              
  Software and cloud revenues $ 3,164     $ 3,641     $ 3,651     $ 4,686     $ 15,142     $ 3,434     $ 3,808     $ 3,847     $ 4,649     $ 15,737  
  Hardware systems revenues $ 652     $ 648     $ 577     $ 728     $ 2,604     $ 640     $ 694     $ 655     $ 747     $ 2,736  
                                                                               
AS REPORTED GROWTH RATES                                                                              
  Software and cloud revenues   8 %     13 %     4 %     5 %     7 %     9 %     5 %     5 %     (1 %)     4 %
  Hardware systems revenues   (16 %)     (17 %)     (17 %)     (7 %)     (14 %)     (2 %)     7 %     14 %     3 %     5 %
                                                                               
CONSTANT CURRENCY GROWTH RATES (2)                                                                              
  Software and cloud revenues   10 %     13 %     5 %     6 %     8 %     9 %     6 %     7 %     1 %     5 %
  Hardware systems revenues   (15 %)     (17 %)     (17 %)     (7 %)     (14 %)     (1 %)     8 %     16 %     5 %     6 %
                                                                               
                                                                               
EUROPE / MIDDLE EAST / AFRICA                                                                              
  Software and cloud revenues $ 1,699     $ 1,993     $ 2,073     $ 2,627     $ 8,393     $ 1,816     $ 2,155     $ 2,245     $ 3,032     $ 9,249  
  Hardware systems revenues $ 402     $ 391     $ 390     $ 411     $ 1,594     $ 358     $ 372     $ 403     $ 440     $ 1,572  
                                                                               
AS REPORTED GROWTH RATES                                                                              
  Software and cloud revenues   (4 %)     5 %     5 %     5 %     3 %     7 %     8 %     8 %     15 %     10 %
  Hardware systems revenues   (31 %)     (22 %)     (18 %)     (10 %)     (21 %)     (11 %)     (5 %)     3 %     7 %     (1 %)
                                                                               
CONSTANT CURRENCY GROWTH RATES (2)                                                                              
  Software and cloud revenues   7 %     8 %     5 %     6 %     6 %     4 %     6 %     6 %     10 %     7 %
  Hardware systems revenues   (22 %)     (19 %)     (18 %)     (9 %)     (17 %)     (13 %)     (6 %)     2 %     3 %     (3 %)
                                                                               
                                                                               
ASIA PACIFIC                                                                              
  Software and cloud revenues $ 970     $ 1,129     $ 1,058     $ 1,228     $ 4,385     $ 943     $ 1,030     $ 1,008     $ 1,233     $ 4,213  
  Hardware systems revenues $ 299     $ 282     $ 274     $ 292     $ 1,148     $ 263     $ 257     $ 265     $ 279     $ 1,064  
                                                                               
AS REPORTED GROWTH RATES                                                                              
  Software and cloud revenues   6 %     10 %     1 %     (5 %)     2 %     (3 %)     (9 %)     (5 %)     0 %     (4 %)
  Hardware systems revenues   (7 %)     (5 %)     (10 %)     (12 %)     (9 %)     (12 %)     (9 %)     (3 %)     (4 %)     (7 %)
                                                                               
CONSTANT CURRENCY GROWTH RATES (2)                                                                              
  Software and cloud revenues   10 %     10 %     5 %     0 %     6 %     8 %     0 %     3 %     3 %     3 %
  Hardware systems revenues   (4 %)     (6 %)     (7 %)     (9 %)     (7 %)     (5 %)     (3 %)     3 %     (3 %)     (2 %)
                                                                               
                                                                               
TOTAL COMPANY                                                                              
  Software and cloud revenues $ 5,833     $ 6,763     $ 6,782     $ 8,541     $ 27,920     $ 6,193     $ 6,993     $ 7,100     $ 8,914     $ 29,199  
  Hardware systems revenues $ 1,353     $ 1,321     $ 1,241     $ 1,431     $ 5,346     $ 1,261     $ 1,323     $ 1,323     $ 1,466     $ 5,372  
                                                                               
AS REPORTED GROWTH RATES                                                                              
  Software and cloud revenues   4 %     10 %     4 %     3 %     5 %     6 %     3 %     5 %     4 %     5 %
  Hardware systems revenues   (19 %)     (16 %)     (16 %)     (9 %)     (15 %)     (7 %)     0 %     7 %     2 %     0 %
                                                                               
CONSTANT CURRENCY GROWTH RATES (2)                                                                              
  Software and cloud revenues   9 %     11 %     5 %     5 %     7 %     8 %     5 %     6 %     4 %     5 %
  Hardware systems revenues   (15 %)     (16 %)     (15 %)     (8 %)     (13 %)     (6 %)     1 %     9 %     3 %     2 %
                                                                               
(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, 2013 and 2012 for the fiscal 2014 and fiscal 2013 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.
   
   
   
 APPENDIX A
ORACLE CORPORATION
Q4 FISCAL 2014 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:

  • Cloud software-as-a-service and platform-as-a-service, 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 cloud software-as-a-service and platform-as-a-service contracts, software license updates and product support contracts and hardware systems support contracts assumed in connection with our acquisitions. Because these contracts are generally one year in duration, our GAAP revenues generally for the one year period subsequent to our acquisition of a business do not reflect the full amount of revenues on these assumed cloud and support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment to our cloud software-as-a-service and platform-as-a-service revenues, 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 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 cloud software-as-a-service and platform-as-a-service and hardware systems support contracts; however, we cannot be certain that our customers will renew our cloud software-as-a-service and platform-as-a-service contracts, 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 certain other operating items, 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.
Contact:


Ken Bond
Oracle Investor Relations
1.650.607.0349
Email Contact

Deborah Hellinger
Oracle Corporate Communications
1.212.508.7935
Email Contact

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