Oracle Reports Q3 GAAP EPS Up 6% to 52 Cents; Q3 Non-GAAP EPS Up 5% to 65 Cents

REDWOOD SHORES, CA--(Marketwire - Mar 20, 2013) - Oracle Corporation ( NASDAQ : ORCL ) today announced that fiscal 2013 Q3 total revenues were down 1% to $9.0 billion. New software licenses and cloud software subscriptions revenues were down 2% to $2.3 billion. Software license updates and product support revenues were up 7% to $4.3 billion. Hardware systems products revenues were $671 million. GAAP operating income was up 1% to $3.3 billion, and GAAP operating margin was 37%. Non-GAAP operating income was down 1% to $4.2 billion, and non-GAAP operating margin was 47%. GAAP net income was unchanged at $2.5 billion, while non-GAAP net income was down 1% to $3.1 billion. GAAP earnings per share were $0.52, up 6% compared to last year while non-GAAP earnings per share were up 5% to $0.65. GAAP operating cash flow on a trailing twelve-month basis was $13.7 billion.

Without the impact of the US dollar strengthening compared to foreign currencies, Oracle's reported Q3 GAAP earnings per share would have been $0.01 higher at $0.53, up 8%, and Q3 non-GAAP earnings per share would have been approximately $0.01 higher. Total revenues also would have been 1% higher and new software licenses and cloud software subscription revenues would have been 2% higher than reported.

"Our non-GAAP operating margin increased to a Q3 record of 47%, and we expect it to reach an all-time high for the fiscal year," said Oracle President and CFO, Safra Catz. "Both operating cash flow and free cash flow were at record levels for a Q3, with operating cash flow of $13.7 billion over the last twelve months."

"The Oracle Cloud is the most robust and comprehensive cloud platform available with services at the infrastructure (IaaS), platform (PaaS) and application (SaaS) level," said Oracle President, Mark Hurd. "In Q3, our SaaS revenue alone grew well over 100% as lots of new customers adopted our Sales, Service, Marketing and Human Capital Management applications in the Cloud."

"This month we will begin deliveries of servers based on our new SPARC T5 microprocessor: the fastest microprocessor in the world," said Oracle CEO, Larry Ellison. "The new T5 servers can have up to eight microprocessors while our new M5 system can be configured with up to thirty-two microprocessors. The M5 runs the Oracle database 10 times faster than the M9000 it replaces."

Q3 Fiscal 2013 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: 591704. 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 Q3 results and Fiscal 2013 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: 1437646.

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 ), 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 non-GAAP operating margin reaching an all-time high for the fiscal year, the deliveries of servers based on our new SPARC T5 microprocessor and the configurations of the SPARC T5 servers and M5 systems, 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 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, cloud software subscriptions, or hardware systems products, or purchase or renew support contracts. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online from the SEC or by contacting Oracle Corporation's Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracle's Investor Relations website at http://www.oracle.com/investor. All information set forth in this press release is current as of March 20, 2013. Oracle undertakes no duty to update any statement in light of new information or future events.

                         
ORACLE CORPORATION  
                         
Q3 FISCAL 2013 FINANCIAL RESULTS  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
($ in millions, except per share data)  
                         
  Three Months Ended          
           
                      % Increase  
  February 28, 2013   % of Revenues   February 29, 2012   % of Revenues   % Increase (Decrease) in US $   (Decrease)
 in Constant Currency (1)
 
REVENUES                            
  New software licenses and cloud software subscriptions $ 2,332   26 % $ 2,374   26 % (2 %) 0 %
  Software license updates and product support   4,340   48 %   4,051   45 % 7 % 8 %
    Software Revenues   6,672   74 %   6,425   71 % 4 % 5 %
  Hardware systems products   671   8 %   869   10 % (23 %) (22 %)
  Hardware systems support   570   6 %   604   6 % (6 %) (5 %)
    Hardware Systems Revenues   1,241   14 %   1,473   16 % (16 %) (15 %)
    Services Revenues   1,045   12 %   1,141   13 % (8 %) (7 %)
                                 
      Total Revenues   8,958   100 %   9,039   100 % (1 %) 0 %
                                   
OPERATING EXPENSES                            
  Sales and marketing   1,802   20 %   1,700   19 % 6 % 7 %
  Software license updates and product support   306   3 %   305   3 % 1 % 2 %
  Hardware systems products   337   4 %   424   5 % (21 %) (20 %)
  Hardware systems support   219   2 %   257   3 % (15 %) (14 %)
  Services   854   10 %   922   10 % (7 %) (6 %)
  Research and development   1,186   13 %   1,145   13 % 4 % 4 %
  General and administrative   260   3 %   261   3 % 0 % 1 %
  Amortization of intangible assets   586   7 %   606   7 % (3 %) (3 %)
  Acquisition related and other   32   0 %   38   0 % (16 %) (17 %)
  Restructuring   42   1 %   64   0 % (35 %) (36 %)
                               
      Total Operating Expenses   5,624   63 %   5,722   63 % (2 %) (1 %)
                                   
OPERATING INCOME   3,334   37 %   3,317   37 % 1 % 2 %
  Interest expense   (205 ) (2 %)   (190 ) (2 %) 8 % 8 %
  Non-operating (expense) income, net   (39 ) (1 %)   21   0 % 284 % 298 %
                               
INCOME BEFORE PROVISION FOR INCOME TAXES   3,090   34 %   3,148   35 % (2 %) 0 %
  Provision for income taxes   586   6 %   650   7 % (10 %) (8 %)
                               
NET INCOME $ 2,504   28 % $ 2,498   28 % 0 % 2 %
                             
EARNINGS PER SHARE:                            
  Basic $ 0.53       $ 0.50              
  Diluted $ 0.52       $ 0.49              
                               
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                            
  Basic   4,735         5,007              
  Diluted   4,812         5,080              
                             
                             
(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, 2012, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the three months ended February 28, 2013 compared with the corresponding prior year period decreased our revenues by 1 percentage point, operating expenses by 1 percentage point and operating income by 1 percentage point.
   
   
   
ORACLE CORPORATION
 
Q3 FISCAL 2013 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
                                                           
  Three Months Ended     % Increase (Decrease) in US $     % Increase (Decrease) in Constant Currency (2)  
                                                           
  February 28, 2013 GAAP     Adj.     February 28, 2013 Non-GAAP     February 29, 2012 GAAP     Adj.     February 29, 2012 Non-GAAP     GAAP  Non-GAAP  GAAP  Non-GAAP 
                                                                       
TOTAL REVENUES (3) (4) (5) $ 8,958     $ 12     $ 8,970     $ 9,039     $ 23     $ 9,062     (1 %)   (1 %)   0 %   0 %
                                                                       
TOTAL SOFTWARE REVENUES (3) (4) $ 6,672     $ 10     $ 6,682     $ 6,425     $ 17     $ 6,442     4 %   4 %   5 %   5 %
  New software licenses and cloud software subscriptions (3)   2,332       6       2,338       2,374       -       2,374     (2 %)   (2 %)   0 %   0 %
  Software license updates and product support (4)   4,340       4       4,344       4,051       17       4,068     7 %   7 %   8 %   8 %
                                                                       
TOTAL HARDWARE SYSTEMS REVENUES (5) $ 1,241     $ 2     $ 1,243     $ 1,473     $ 6     $ 1,479     (16 %)   (16 %)   (15 %)   (15 %)
  Hardware systems products   671       -       671       869       -       869     (23 %)   (23 %)   (22 %)   (22 %)
  Hardware systems support (5)   570       2       572       604       6       610     (6 %)   (6 %)   (5 %)   (5 %)
                                                                       
TOTAL OPERATING EXPENSES $ 5,624     $ (832 )   $ 4,792     $ 5,722     $ (865 )   $ 4,857     (2 %)   (1 %)   (1 %)   0 %
  Stock-based compensation (6)   172       (172 )     -       157       (157 )     -     9 %   *     9 %   *  
  Amortization of intangible assets (7)   586       (586 )     -       606       (606 )     -     (3 %)   *     (3 %)   *  
  Acquisition related and other   32       (32 )     -       38       (38 )     -     (16 %)   *     (17 %)   *  
  Restructuring   42       (42 )     -       64       (64 )     -     (35 %)   *     (36 %)   *  
                                                                         
OPERATING INCOME $ 3,334     $ 844     $ 4,178     $ 3,317     $ 888     $ 4,205     1 %   (1 %)   2 %   0 %
                                                                       
OPERATING MARGIN %   37 %             47 %     37 %             46 %   52 bp.     17 bp.     65 bp.     17 bp.  
                                                                       
INCOME TAX EFFECTS (8) $ 586     $ 240     $ 826     $ 650     $ 258     $ 908     (10 %)   (9 %)   (8 %)   (8 %)
                                                                       
NET INCOME $ 2,504     $ 604     $ 3,108     $ 2,498     $ 630     $ 3,128     0 %   (1 %)   2 %   1 %
                                                                       
DILUTED EARNINGS PER SHARE $ 0.52             $ 0.65     $ 0.49             $ 0.62     6 %   5 %   8 %   6 %
                                                                       
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING   4,812       -       4,812       5,080       -       5,080     (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, 2012, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.
   
(3) As of February 28, 2013, approximately $7 million and $6 million in estimated revenues related to assumed cloud software subscriptions contracts will not be recognized for the remainder of fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules.
   
(4) As of February 28, 2013, approximately $3 million and $2 million in estimated revenues related to assumed software support contracts will not be recognized for the remainder of fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules.
   
(5) As of February 28, 2013, approximately $2 million in estimated revenues related to hardware systems support contracts will not be recognized for each of the remainder of fiscal 2013 and fiscal 2014 due to business combination accounting rules.
   
(6) Stock-based compensation was included in the following GAAP operating expense categories:
   
                               
                               
      Three Months Ended   Three Months Ended
      February 28, 2013   February 29, 2012
      GAAP   Adj.     Non-GAAP   GAAP   Adj.     Non-GAAP
  Sales and marketing   $ 32   $ (32 )   $ -   $ 30   $ (30 )   $ -
  Software license updates and product support     5     (5 )     -     5     (5 )     -
  Hardware systems products     1     (1 )     -     -     -       -
  Hardware systems support     1     (1 )     -     1     (1 )     -
  Services     7     (7 )     -     6     (6 )     -
  Research and development     86     (86 )     -     74     (74 )     -
  General and administrative     40     (40 )     -     41     (41 )     -
    Subtotal     172     (172 )     -     157     (157 )     -
  Acquisition related and other     8     (8 )     -     18     (18 )     -
    Total stock-based compensation   $ 180   $ (180 )   $ -   $ 175   $ (175 )   $ -
                                           
(7) Estimated future annual amortization expense related to intangible assets as of February 28, 2013 was as follows:
   
  Remainder of Fiscal 2013 $ 582
  Fiscal 2014   2,043
  Fiscal 2015   1,582
  Fiscal 2016   1,020
  Fiscal 2017   450
  Fiscal 2018   324
  Thereafter   661
  Total intangible assets, net $ 6,662
   
(8) Income tax effects were calculated reflecting an effective GAAP tax rate of 19.0% and 20.7% in the third quarter of fiscal 2013 and 2012, respectively, and an effective non-GAAP tax rate of 21.0% and 22.5% in the third quarter of fiscal 2013 and 2012, respectively. The difference between our GAAP and non-GAAP tax rates in the third quarter of fiscal 2013 was primarily due to the net tax effects of acquisition related items, including the tax effect of amortization of intangible assets, and the disproportionate rate impact of discrete items for the quarter. The difference between our GAAP and non-GAAP tax rates in the third quarter of fiscal 2012 was primarily due to income tax effects related to acquired tax exposures, the differences in jurisdictional tax rates and related tax benefits attributable to our restructuring expenses, and the disproportionate rate impact of discrete items for the quarter.
   
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ORACLE CORPORATION 
 
Q3 FISCAL 2013 YEAR TO DATE FINANCIAL RESULTS 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
($ in millions, except per share data) 
                         
  Nine Months Ended          
           
                      % Increase  
  February 28, 2013   % of Revenues   February 29, 2012   % of Revenues   % Increase (Decrease)in US $   (Decrease) in Constant Currency (1)  
REVENUES                            
  New software licenses and cloud software subscriptions $ 6,295   24 % $ 5,921   23 % 6 % 9 %
  Software license updates and product support   12,740   49 %   12,058   46 % 6 % 8 %
    Software Revenues   19,035   73 %   17,979   69 % 6 % 8 %
  Hardware systems products   2,185   8 %   2,851   11 % (23 %) (22 %)
  Hardware systems support