SOURCE: Oracle Corporation

Oracle Corporation

June 20, 2013 16:01 ET

Oracle Doubles Dividend; Cloud SaaS Revenues Up 50%, Engineered Systems Up 45%

Q4 GAAP EPS Up 17% to 80 Cents, Non-GAAP EPS Up 5% to 87 Cents

REDWOOD SHORES, CA--(Marketwired - Jun 20, 2013) -  Oracle Corporation (NASDAQ: ORCL) today announced that fiscal 2013 Q4 GAAP total revenues were unchanged at $10.9 billion, while non-GAAP total revenues were unchanged at $11.0 billion. Both GAAP and non-GAAP new software licenses and cloud software subscriptions revenues were up 1% to $4.0 billion. Software license updates and product support revenues were up 6% to $4.4 billion. Hardware systems products revenues were $849 million. GAAP operating income was up 9% to $5.0 billion, and GAAP operating margin was 46%. Non-GAAP operating income was up 1% to $5.6 billion, and non-GAAP operating margin was 51%. GAAP net income was up 10% to $3.8 billion, while non-GAAP net income was down 1% to $4.1 billion. GAAP earnings per share were up 17% to $0.80, while non-GAAP earnings per share were up 5% to $0.87. GAAP operating cash flow on a trailing twelve-month basis was $14.2 billion. 

Without the impact of the US dollar strengthening compared to foreign currencies, Oracle's reported Q4 GAAP earnings per share would have been approximately $0.01 higher at $0.81, up 19%; and Q4 non-GAAP earnings per share would have been approximately $0.01 higher. GAAP total revenues also would have been up 2%, non-GAAP total revenue would have been up 1%, and new software licenses and cloud software subscription revenues would have been up 2%.

For fiscal year 2013, GAAP total revenues were unchanged at $37.2 billion, while non-GAAP total revenues were unchanged at $37.3 billion. GAAP new software licenses and cloud software subscriptions revenues were up 4% to $10.3 billion, while non-GAAP new software licenses and cloud software subscriptions revenues were up 4% to $10.4 billion. GAAP software license updates and product support revenues were up 6% to $17.1 billion, while non-GAAP software license updates and product support revenues were up 6% to $17.2 billion. Hardware systems products revenues were $3.0 billion. GAAP operating income was up 7% to $14.7 billion, and GAAP operating margin was 39%. Non-GAAP operating income was up 2% to $17.6 billion, and non-GAAP operating margin was 47%. GAAP net income was up 9% to $10.9 billion, while non-GAAP net income was up 3% to $13.0 billion. GAAP earnings per share were $2.26, up 15% compared to last year while non-GAAP earnings per share were $2.68, up 9%.

"A record level non-GAAP operating margin of 47% in FY13 enabled us to generate over $14 billion in operating cash flow during the year," said Oracle President and CFO, Safra Catz. "We returned almost 90% of that to shareholders through dividends and share repurchases while increasing the cash on our balance sheet to $32 billion. Consistently increasing our margins, cash flow and cash balance has allowed us to double our current quarterly dividend."

"Oracle's HCM Cloud, CRM Cloud and ERP Cloud grew 50% as we added over 500 new SaaS customers in Q4 alone," said Oracle President Mark Hurd. "Our annualized SaaS revenue run rate is over $1 billion, making us a strong number two in cloud applications -- we are larger than SAP and Workday combined. Furthermore, in Q4 our HCM cloud alone generated more SaaS revenue and added more new Fusion HCM customers than Workday added HCM and ERP customers combined in their most recent quarter."

"Exadata, Exalogic, Exalytics, SPARC SuperCluster and our other engineered systems grew at a rate of 45% in Q4 as we took considerable market share from our primary competitor -- IBM P-Series -- which declined 32% in their most recent quarter," said Oracle CEO, Larry Ellison. "We sold over 1,200 engineered systems in the quarter and over 3,000 during the year. Our fast growing engineered systems business is now more than one-third of our overall hardware business which is one of the reasons we believe hardware will be a growth story in Oracle's FY14."

Oracle also announced that its Board of Directors declared a quarterly cash dividend of $0.12 per share of outstanding common stock, reflecting a 100% increase over the current quarterly dividend of $0.06. Oracle's CEO and largest stockholder did not participate in the deliberation or the vote on this matter. This increased dividend will be paid to stockholders of record as of the close of business on July 12, 2013, with a payment date of August 2, 2013.

Oracle also announced that its Board of Directors authorized the repurchase of up to an additional $12.0 billion of common stock under its existing share repurchase program in future quarters.

Oracle also announced that it has applied to list its common stock on the New York Stock Exchange under its current symbol "ORCL". After careful consideration and deliberation, the Board of Directors of Oracle determined that the proposed transfer of Oracle's common stock listing to the New York Stock Exchange would be in the best interests of its stockholders, customers and partners. Subject to the approval by the NYSE of Oracle's listing application, Oracle expects that its common stock will begin trading on the NYSE on July 15, 2013. Until the transfer is completed, Oracle will continue to trade on the NASDAQ Stock Market under the symbol "ORCL". 

Q4 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) 312-9303, Passcode: 849181. 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 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: 2970367.

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 hardware being a growth story in FY14 and when Oracle's common stock will begin trading on the NYSE, 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 economic crisis and slowing economic conditions in 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 hardware systems revenues and profitability could decline further, 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. (6) Our periodic workforce restructurings, including reorganizations of our sales force, can be disruptive. (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 June 20, 2013. Oracle undertakes no duty to update any statement in light of new information or future events.

                             
                             
ORACLE CORPORATION
                             
Q4 FISCAL 2013 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
             
    Three Months Ended May 31,         
    2013     % of Revenues   2012     % of Revenues   % Increase (Decrease)
 in US $ 
  % Increase (Decrease) in Constant 
Currency (1) 
REVENUES                                
  New software licenses and cloud software subscriptions   $ 4,026     37%   $ 3,985     37%   1%   2%
  Software license updates and product support     4,402     40%     4,152     38%   6%   8%
    Software Revenues     8,428     77%     8,137     75%   4%   5%
  Hardware systems products     849     8%     977     9%   (13%)   (12%)
  Hardware systems support     582     5%     600     5%   (3%)   (1%)
    Hardware Systems Revenues     1,431     13%     1,577     14%   (9%)   (8%)
    Services Revenues     1,088     10%     1,202     11%   (9%)   (8%)
                                       
      Total Revenues     10,947     100%     10,916     100%   0%   2%
                                       
OPERATING EXPENSES                                
  Sales and marketing     2,208     20%     2,100     19%   5%   6%
  Software license updates and product support     316     3%     327     3%   (4%)   (2%)
  Hardware systems products     413     4%     476     4%   (13%)   (12%)
  Hardware systems support     220     2%     248     2%   (11%)   (10%)
  Services     879     8%     955     9%   (8%)   (7%)
  Research and development     1,264     12%     1,226     11%   3%   4%
  General and administrative     274     2%     278     3%   (1%)   0%
  Amortization of intangible assets     596     5%     640     6%   (7%)   (7%)
  Acquisition related and other (2)     (257 )   (2%)     (7 )   0%   (3,524%)   (3,515%)
  Restructuring     34     0%     77     1%   (56%)   (56%)
                                       
      Total Operating Expenses     5,947     54%     6,320     58%   (6%)   (5%)
                                       
OPERATING INCOME     5,000     46%     4,596     42%   9%   11%
  Interest expense     (210 )   (2%)     (194 )   (2%)   9%   9%
  Non-operating income (expense), net     35     0%     (20 )   0%   280%   281%
                                   
INCOME BEFORE PROVISION FOR INCOME TAXES     4,825     44%     4,382     40%   10%   12%
  Provision for income taxes     1,018     9%     931     8%   9%   11%
                                   
NET INCOME   $ 3,807     35%   $ 3,451     32%   10%   12%
                                 
EARNINGS PER SHARE:                                
  Basic   $ 0.81         $ 0.70              
  Diluted   $ 0.80         $ 0.69              
                                   
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                                
  Basic     4,684           4,950              
  Diluted     4,756           5,027              
                                 
(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 May 31, 2013 compared with the corresponding prior year period decreased our revenues by 2 percentage points, operating expenses by 1 percentage point and operating income by 2 percentage points.
   
(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 2013 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)
                                                 
    2013 GAAP     Adj.     2013 Non-GAAP   2012 GAAP     Adj.     2012 Non-GAAP   GAAP    Non-GAAP    GAAP    Non-GAAP 
                                                             
TOTAL REVENUES (3) (4)   $ 10,947     $ 14     $ 10,961   $ 10,916     $ 34     $ 10,950   0%   0%   2%   1%
                                                             
TOTAL SOFTWARE REVENUES (3)   $ 8,428     $ 10     $ 8,438   $ 8,137     $ 30     $ 8,167   4%   3%   5%   5%
  New software licenses and cloud software subscriptions (3)     4,026       8       4,034     3,985       22       4,007   1%   1%   2%   2%
  Software license updates and product support     4,402       2       4,404     4,152       8       4,160   6%   6%   8%   8%
                                                             
TOTAL HARDWARE SYSTEMS REVENUES (4)   $ 1,431     $ 4     $ 1,435   $ 1,577     $ 4     $ 1,581   (9%)   (9%)   (8%)   (8%)
  Hardware systems products     849       -       849     977       -       977   (13%)   (13%)   (12%)   (12%)
  Hardware systems support (4)     582       4       586     600       4       604   (3%)   (3%)   (1%)   (1%)
                                                             
TOTAL OPERATING EXPENSES   $ 5,947     $ (559 )   $ 5,388   $ 6,320     $ (882 )   $ 5,438   (6%)   (1%)   (5%)   0%
  Stock-based compensation (5)     186       (186 )     -     172       (172 )     -   8%   *   8%   *
  Amortization of intangible assets (6)     596       (596 )     -     640       (640 )     -   (7%)   *   (7%)   *
  Acquisition related and other     (257 )     257       -     (7 )     7       -   (3,524%)   *   (3,515%)   *
  Restructuring     34       (34 )     -     77       (77 )     -   (56%)   *   (56%)   *
                                                             
OPERATING INCOME   $ 5,000     $ 573     $ 5,573   $ 4,596     $ 916     $ 5,512   9%   1%   11%   3%
                                                             
OPERATING MARGIN %     46%               51%     42%               50%   357 bp.   51 bp.   375 bp.   59 bp.
                                                             
INCOME TAX EFFECTS (7)   $ 1,018     $ 266     $ 1,284   $ 931     $ 224     $ 1,155   9%   11%   11%   13%
                                                             
NET INCOME   $ 3,807     $ 307     $ 4,114   $ 3,451     $ 692     $ 4,143   10%   (1%)   12%   1%
                                                             
DILUTED EARNINGS PER SHARE   $ 0.80             $ 0.87   $ 0.69             $ 0.82   17%   5%   19%   7%
                                                             
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING     4,756       -       4,756     5,027       -       5,027   (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 May 31, 2013, approximately $6 million in estimated revenues related to assumed cloud software subscriptions contracts will not be recognized for fiscal 2014 due to business combination accounting rules.
   
(4) As of May 31, 2013, approximately $6 million in estimated revenues related to hardware systems support contracts will not be recognized for fiscal 2014 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, 2013   May 31, 2012
      GAAP   Adj.     Non-GAAP   GAAP   Adj.     Non-GAAP
  Sales and marketing   $ 35   $ (35 )   $ -   $ 35   $ (35 )   $ -
  Software license updates and product support     5     (5 )     -     5     (5 )     -
  Hardware systems products     1     (1 )     -     -     -       -
  Hardware systems support     1     (1 )     -     1     (1 )     -
  Services     8     (8 )     -     7     (7 )     -
  Research and development     93     (93 )     -     82     (82 )     -
  General and administrative     43     (43 )     -     42     (42 )     -
    Subtotal     186     (186 )     -     172     (172 )     -
  Acquisition related and other     4     (4 )     -     12     (12 )     -
    Total stock-based compensation   $ 190   $ (190 )   $ -   $ 184   $ (184 )   $ -
                                           
(6) Estimated future annual amortization expense related to intangible assets as of May 31, 2013 was as follows:
   
  Fiscal 2014 $ 2,123
  Fiscal 2015   1,656
  Fiscal 2016   1,094
  Fiscal 2017   523
  Fiscal 2018   397
  Thereafter   802
    Total intangible assets subject to amortization   6,595
  In-process research and development   45
    Total intangible assets, net $ 6,640
   
(7) Income tax effects were calculated reflecting an effective GAAP tax rate of 21.1% and 21.2% in the fourth quarter of fiscal 2013 and 2012, respectively, and an effective non-GAAP tax rate of 23.8% and 21.8% in the fourth quarter of fiscal 2013 and 2012, respectively. The difference between our GAAP and non-GAAP tax rates in the fourth 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. The difference between our GAAP and non-GAAP tax rates in the fourth quarter of fiscal 2012 was primarily due to the disproportionate rate impact of certain discrete items, differences in jurisdictional tax rates and related tax benefits attributable to our restructuring expenses, and income tax effects related to acquired tax exposures in the period.
   
* Not meaningful
   
   
   
ORACLE CORPORATION
                           
FISCAL 2013 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
           
  Year Ended May 31,        
  2013     % of Revenues   2012     % of Revenues   % Increase (Decrease) in US $   % Increase (Decrease) in Constant Currency (1)
REVENUES                              
  New software licenses and cloud software subscriptions $ 10,321     28%   $ 9,906     27%   4%   6%
  Software license updates and product support   17,142     46%     16,210     43%   6%   8%
    Software Revenues   27,463     74%     26,116     70%   5%   7%
  Hardware systems products   3,033     8%     3,827     10%   (21%)   (19%)
  Hardware systems support   2,313     6%     2,475     7%   (7%)   (4%)
    Hardware Systems Revenues   5,346     14%     6,302     17%   (15%)   (13%)
    Services Revenues   4,371     12%     4,703     13%   (7%)   (5%)
                                 
      Total Revenues   37,180     100%     37,121     100%   0%   2%
                               
OPERATING EXPENSES                              
  Sales and marketing   7,328     20%     7,127     19%   3%   5%
  Software license updates and product support   1,175     3%     1,226     3%   (4%)   (2%)
  Hardware systems products   1,501     4%     1,843     5%   (19%)   (17%)
  Hardware systems support   890     2%     1,046     3%   (15%)   (13%)
  Services   3,547     10%     3,743     10%   (5%)   (3%)
  Research and development   4,850     13%     4,523     12%   7%   8%
  General and administrative   1,072     3%     1,126     3%   (5%)   (3%)
  Amortization of intangible assets   2,385     7%     2,430     7%   (2%)   (2%)
  Acquisition related and other (2)   (604 )   (2%)     56     0%   (1,183%)   (1,200%)
  Restructuring   352     1%     295     1%   19%   23%
                               
      Total Operating Expenses   22,496     61%     23,415     63%   (4%)   (2%)
                               
OPERATING INCOME   14,684     39%     13,706     37%   7%   10%
  Interest expense   (797 )   (2%)     (766 )   (2%)   4%   4%
  Non-operating income, net   11     0%     22     0%   (49%)   4%
                               
INCOME BEFORE PROVISION FOR INCOME TAXES   13,898     37%     12,962     35%   7%   10%
  Provision for income taxes   2,973     8%     2,981     8%   0%   3%
                               
NET INCOME $ 10,925     29%   $ 9,981     27%   9%   13%
                               
EARNINGS PER SHARE:                              
  Basic $ 2.29         $ 1.99              
  Diluted $ 2.26         $ 1.96              
                               
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                              
  Basic   4,769           5,015              
  Diluted   4,844           5,095              
                                 
(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 year ended May 31, 2013 compared with the corresponding prior year period decreased our revenues by 2 percentage points, operating expenses by 2 percentage points and operating income by 3 percentage points.
   
(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 2013 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)
                                               
    2013 GAAP     Adj.     2013 Non-GAAP   2012 GAAP   Adj.     2012 Non-GAAP   GAAP  Non-GAAP  GAAP  Non-GAAP 
                                               
TOTAL REVENUES (3) (4)   $ 37,180     $ 73     $ 37,253   $ 37,121   $ 100     $ 37,221   0%   0%   2%   2%
                                                           
TOTAL SOFTWARE REVENUES (3)   $ 27,463     $ 59     $ 27,522   $ 26,116   $ 70     $ 26,186   5%   5%   7%   7%
  New software licenses and cloud software subscriptions (3)     10,321       45       10,366     9,906     22       9,928   4%   4%   6%   6%
  Software license updates and product support     17,142       14       17,156     16,210     48       16,258   6%   6%   8%   8%
                                                           
TOTAL HARDWARE SYSTEMS REVENUES (4)   $ 5,346     $ 14     $ 5,360   $ 6,302   $ 30     $ 6,332   (15%)   (15%)   (13%)   (14%)
  Hardware systems products     3,033       -       3,033     3,827     -       3,827   (21%)   (21%)   (19%)   (19%)
  Hardware systems support (4)     2,313       14       2,327     2,475     30       2,505   (7%)   (7%)   (4%)   (5%)
                                                           
TOTAL OPERATING EXPENSES   $ 22,496     $ (2,855 )   $ 19,641   $ 23,415   $ (3,407 )   $ 20,008   (4%)   (2%)   (2%)   0%
  Stock-based compensation (5)     722       (722 )     -     626     (626 )     -   16%   *   16%   *
  Amortization of intangible assets (6)     2,385       (2,385 )     -     2,430     (2,430 )     -   (2%)   *   (2%)   *
  Acquisition related and other     (604 )     604       -     56     (56 )     -   (1,183%)   *   (1,200%)   *
  Restructuring     352       (352 )     -     295     (295 )     -   19%   *   23%   *
                                                             
OPERATING INCOME   $ 14,684     $ 2,928     $ 17,612   $ 13,706   $ 3,507     $ 17,213   7%   2%   10%   4%
                                                           
OPERATING MARGIN %     39%               47%     37%             46%   257 bp.   103 bp.   277 bp.   106 bp.
                                                           
INCOME TAX EFFECTS (7)   $ 2,973     $ 896     $ 3,869   $ 2,981   $ 967     $ 3,948   0%   (2%)   3%   0%
                                                           
NET INCOME   $ 10,925     $ 2,032     $ 12,957   $ 9,981   $ 2,540     $ 12,521   9%   3%   13%   6%
                                                           
DILUTED EARNINGS PER SHARE   $ 2.26             $ 2.68   $ 1.96           $ 2.46   15%   9%   18%   11%
                                                           
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING     4,844       -       4,844     5,095     -       5,095   (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 May 31, 2013, approximately $6 million in estimated revenues related to assumed cloud software subscriptions contracts will not be recognized for fiscal 2014 due to business combination accounting rules.
   
(4) As of May 31, 2013, approximately $6 million in estimated revenues related to hardware systems support contracts will not be recognized for fiscal 2014 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, 2013   May 31, 2012
      GAAP   Adj.     Non-GAAP   GAAP   Adj.     Non-GAAP
  Sales and marketing   $ 147   $ (147 )   $ -   $ 122   $ (122 )   $ -
  Software license updates and product support     20     (20 )     -     18     (18 )     -
  Hardware systems products     3     (3 )     -     1     (1 )     -
  Hardware systems support     5     (5 )     -     5     (5 )     -
  Services     31     (31 )     -     23     (23 )     -
  Research and development     352     (352 )     -     295     (295 )     -
  General and administrative     164     (164 )     -     162     (162 )     -
    Subtotal     722     (722 )     -     626     (626 )     -
  Acquisition related and other     33     (33 )     -     33     (33 )     -
    Total stock-based compensation   $ 755   $ (755 )   $ -   $ 659   $ (659 )   $ -
                                           
(6) Estimated future annual amortization expense related to intangible assets as of May 31, 2013 was as follows:
   
   
  Fiscal 2014 $ 2,123
  Fiscal 2015   1,656
  Fiscal 2016   1,094
  Fiscal 2017   523
  Fiscal 2018   397
  Thereafter   802
    Total intangible assets subject to amortization   6,595
  In-process research and development   45
    Total intangible assets, net $ 6,640
   
(7) Income tax effects were calculated reflecting an effective GAAP tax rate of 21.4% and 23.0% in fiscal 2013 and 2012, respectively, and an effective non-GAAP tax rate of 23.0% and 24.0% in fiscal 2013 and 2012, respectively. The differences between our GAAP and non-GAAP tax rates in fiscal 2013 were primarily due to the net tax effects of acquisition related items, including the tax effect of amortization of intangible assets. The difference between our GAAP and non-GAAP tax rates in fiscal 2012 was primarily due to the disproportionate rate impact of certain discrete items, income tax effects related to acquired tax exposures, and differences in jurisdictional tax rates and related tax benefits attributable to our restructuring expenses in the period.
   
* Not meaningful
   
   
   
ORACLE CORPORATION
         
FISCAL 2013 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
         
    May 31,   May 31,
    2013   2012
ASSETS            
             
  Current Assets:            
    Cash and cash equivalents   $ 14,613   $ 14,955
    Marketable securities     17,603     15,721
    Trade receivables, net     6,049     6,377
    Inventories     240     158
    Deferred tax assets     974     877
    Prepaid expenses and other current assets     2,213     1,935
      Total Current Assets     41,692     40,023
               
  Non-Current Assets:            
    Property, plant and equipment, net     3,053     3,021
    Intangible assets, net     6,640     7,899
    Goodwill     27,343     25,119
    Deferred tax assets     766     595
    Other assets     2,318     1,670
      Total Non-Current Assets     40,120     38,304
             
TOTAL ASSETS   $ 81,812   $ 78,327
             
LIABILITIES AND EQUITY            
             
  Current Liabilities:            
    Notes payable, current and other current borrowings   $ -   $ 2,950
    Accounts payable     419     438
    Accrued compensation and related benefits     1,851     2,002
    Income taxes payable     911     528
    Deferred revenues     7,118     7,035
    Other current liabilities     2,573     2,435
      Total Current Liabilities     12,872     15,388
               
  Non-Current Liabilities:            
    Notes payable and other non-current borrowings     18,494     13,524
    Income taxes payable     3,899     3,759
    Other non-current liabilities     1,402     1,569
      Total Non-Current Liabilities     23,795     18,852
               
  Equity     45,145     44,087
             
TOTAL LIABILITIES AND EQUITY   $ 81,812   $ 78,327
             
             
             
ORACLE CORPORATION  
   
FISCAL 2013 FINANCIAL RESULTS  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
($ in millions)  
   
    Year Ended May 31,  
    2013     2012  
Cash Flows From Operating Activities:                
  Net income   $ 10,925     $ 9,981  
  Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation     546       486  
    Amortization of intangible assets     2,385       2,430  
    Deferred income taxes     (117 )     9  
    Stock-based compensation     755       659  
    Tax benefits on the exercise of stock options and vesting of restricted stock-based awards     410       182  
    Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards     (241 )     (97 )
    Other, net     155       84  
    Changes in operating assets and liabilities, net of effects from acquisitions:                
      Decrease in trade receivables, net     385       84  
      (Increase) decrease in inventories     (66 )     150  
      Increase in prepaid expenses and other assets     (555 )     (51 )
      Decrease in accounts payable and other liabilities     (541 )     (720 )
      Increase in income taxes payable     35       54  
      Increase in deferred revenues     148       492  
                   
        Net cash provided by operating activities     14,224       13,743  
                 
Cash Flows From Investing Activities:                
  Purchases of marketable securities and other investments     (32,160 )     (38,625 )
  Proceeds from maturities and sales of marketable securities and other investments     30,159       35,594  
  Acquisitions, net of cash acquired     (3,305 )     (4,702 )
  Capital expenditures     (650 )     (648 )
                 
        Net cash used for investing activities     (5,956 )     (8,381 )
                 
Cash Flows From Financing Activities:                
  Payments for repurchases of common stock     (11,021 )     (5,856 )
  Proceeds from issuances of common stock     1,527       733  
  Payments of dividends to stockholders     (1,433 )     (1,205 )
  Proceeds from borrowings, net of issuance costs     4,974       1,700  
  Repayments of borrowings     (2,950 )     (1,405 )
  Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards     241       97  
  Distributions to noncontrolling interests     (31 )     (163 )
  Other, net     193       -  
                 
        Net cash used for financing activities     (8,500 )     (6,099 )
                 
Effect of exchange rate changes on cash and cash equivalents     (110 )     (471 )
                 
Net decrease in cash and cash equivalents     (342 )     (1,208 )
                 
Cash and cash equivalents at beginning of period     14,955       16,163  
                 
Cash and cash equivalents at end of period   $ 14,613     $ 14,955  
                 
                 
                 
ORACLE CORPORATION  
FISCAL 2013 FINANCIAL RESULTS  
FREE CASH FLOW - TRAILING 4-QUARTERS (1)  
($ in millions)  
                                 
  Fiscal 2012   Fiscal 2013  
  Q1   Q2   Q3   Q4   Q1   Q2   Q3   Q4  
                                                 
GAAP Operating Cash Flow $ 12,818   $ 13,129   $ 13,463   $ 13,743   $ 13,993   $ 13,533   $ 13,717   $ 14,224  
                                                 
Capital Expenditures (2)   (492 )   (500 )   (509 )   (648 )   (627 )   (710 )   (684 )   (650 )
                                                 
Free Cash Flow $ 12,326   $ 12,629   $ 12,954   $ 13,095   $ 13,366   $ 12,823   $ 13,033   $ 13,574  
                                                 
% Growth over prior year   46 %   45 %   36 %   22 %   8 %   2 %   1 %   4 %
                                                 
                                                 
GAAP Net Income $ 9,035   $ 9,356   $ 9,738   $ 9,981   $ 10,175   $ 10,564   $ 10,571   $ 10,925  
                                                 
Free Cash Flow as a % of Net Income   136 %   135 %   133 %   131 %   131 %   121 %   123 %   124 %
                                                 
(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 2013 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($ in millions)
                                                           
  Fiscal 2012     Fiscal 2013  
Q1     Q2     Q3     Q4     TOTAL     Q1     Q2     Q3     Q4     TOTAL  
REVENUES                                                                              
  New software licenses and cloud software subscriptions $ 1,498     $ 2,048     $ 2,374     $ 3,985     $ 9,906     $ 1,574     $ 2,389     $ 2,332     $ 4,026     $ 10,321  
  Software license updates and product support   4,022       3,986       4,051       4,152       16,210       4,140       4,260       4,340       4,402       17,142  
    Software Revenues   5,520       6,034       6,425       8,137       26,116       5,714       6,649       6,672       8,428       27,463  
                                                                               
  Hardware systems products   1,029       953       869       977       3,827       779       734       671       849       3,033  
  Hardware systems support   645       625       604       600       2,475       574       587       570       582       2,313  
    Hardware Systems Revenues   1,674       1,578       1,473       1,577       6,302       1,353       1,321       1,241       1,431       5,346  
                                                                                 
    Services Revenues   1,180       1,180       1,141       1,202       4,703       1,114       1,124       1,045       1,088       4,371  
                                                                                 
      Total Revenues $ 8,374     $ 8,792     $ 9,039     $ 10,916     $ 37,121     $ 8,181     $ 9,094     $ 8,958     $ 10,947     $ 37,180  
                                                                               
AS REPORTED REVENUE GROWTH RATES                                                                              
  New software licenses and cloud software subscriptions   17 %     2 %     7 %     7 %     7 %     5 %     17 %     (2 %)     1 %     4 %
  Software license updates and product support   17 %     9 %     8 %     5 %     10 %     3 %     7 %     7 %     6 %     6 %
    Software Revenues   17 %     7 %     8 %     6 %     9 %     4 %     10 %     4 %     4 %     5 %
                                                                               
  Hardware systems products   (5 %)     (14 %)     (16 %)     (16 %)     (13 %)     (24 %)     (23 %)     (23 %)     (13 %)     (21 %)
  Hardware systems support   4 %     (2 %)     (4 %)     (11 %)     (3 %)     (11 %)     (6 %)     (6 %)     (3 %)     (7 %)
    Hardware Systems Revenues   (1 %)     (10 %)     (11 %)     (14 %)     (9 %)     (19 %)     (16 %)     (16 %)     (9 %)     (15 %)
                                                                               
    Services Revenues   10 %     0 %     0 %     (4 %)     1 %     (6 %)     (5 %)     (8 %)     (9 %)     (7 %)
                                                                               
      Total Revenues   12 %     2 %     3 %     1 %     4 %     (2 %)     3 %     (1 %)     0 %     0 %
                                                                               
CONSTANT CURRENCY GROWTH RATES (2)                                                                              
  New software licenses and cloud software subscriptions   11 %     3 %     8 %     11 %     8 %     10 %     18 %     0 %     2 %     6 %
  Software license updates and product support   10 %     9 %     9 %     8 %     9 %     8 %     8 %     8 %     8 %     8 %
    Software Revenues   11 %     7 %     9 %     10 %     9 %     9 %     11 %     5 %     5 %     7 %
                                                                               
  Hardware systems products   (11 %)     (14 %)     (16 %)     (13 %)     (14 %)     (21 %)     (23 %)     (22 %)     (12 %)     (19 %)
  Hardware systems support   (3 %)     (3 %)     (3 %)     (7 %)     (4 %)     (6 %)     (5 %)     (5 %)     (1 %)     (4 %)
    Hardware Systems Revenues   (8 %)     (10 %)     (11 %)     (11 %)     (10 %)     (15 %)     (16 %)     (15 %)     (8 %)     (13 %)
                                                                               
    Services Revenues   5 %     0 %     1 %     0 %     1 %     0 %     (3 %)     (7 %)     (8 %)     (5 %)
                                                                               
      Total Revenues   5 %     2 %     4 %     5 %     4 %     3 %     5 %     0 %     2 %     2 %
                                                                               
                                                                               
GEOGRAPHIC REVENUES                                                                              
                                                                               
REVENUES                                                                              
  Americas $ 4,226     $ 4,532     $ 4,707     $ 5,771     $ 19,236     $ 4,324     $ 4,787     $ 4,698     $ 5,911     $ 19,719  
  Europe, Middle East & Africa   2,704       2,756       2,787       3,314       11,561       2,383       2,701       2,745       3,328       11,158  
  Asia Pacific   1,444       1,504       1,545       1,831       6,324       1,474       1,606       1,515       1,708       6,303  
      Total Revenues $ 8,374     $ 8,792     $ 9,039     $ 10,916     $ 37,121     $ 8,181     $ 9,094     $ 8,958     $ 10,947     $ 37,180  
                                                                               
                                                                               
HEADCOUNT                                                                              
                                                                               
GEOGRAPHIC AREA                                                                              
  Americas   46,338       46,672       47,884       48,901               49,145       49,584       50,402       51,519          
  Europe, Middle East & Africa   22,210       22,725       22,852       22,957               22,584       22,594       22,592       22,860          
  Asia Pacific   40,840       41,901       42,908       43,308               44,170       45,051       45,663       45,855          
      Total Company   109,388       111,298       113,644       115,166               115,899       117,229       118,657       120,234          
                                                                               
(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, 2012 and 2011 for the fiscal 2013 and fiscal 2012 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.
   
   
   
ORACLE CORPORATION
FISCAL 2013 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1)
($ in millions)
       
    Fiscal 2012   Fiscal 2013  
    Q1     Q2     Q3     Q4     TOTAL   Q1     Q2     Q3     Q4     TOTAL  
                                                                               
AMERICAS                                                                              
                                                                               
  New software licenses and cloud software subscriptions   $ 727     $ 1,027     $ 1,228     $ 2,126     $ 5,107   $ 814     $ 1,253     $ 1,205     $ 2,194     $ 5,465  
  Hardware systems products   $ 475     $ 496     $ 410     $ 498     $ 1,880   $ 380     $ 370     $ 307     $ 439     $ 1,495  
                                                                               
AS REPORTED GROWTH RATES                                                                              
  New software licenses and cloud software subscriptions     10%       0%       11%       14%       10%     12%       22%       (2% )     3%       7%  
  Hardware systems products     (12% )     (17% )     (19% )     (17% )     (16% )   (20% )     (25% )     (25% )     (12% )     (20% )
                                                                               
CONSTANT CURRENCY GROWTH RATES (2)                                                                              
  New software licenses and cloud software subscriptions     9%       1%       11%       16%       11%     14%       22%       (1% )     4%       8%  
  Hardware systems products     (13% )     (17% )     (18% )     (16% )     (16% )   (19% )     (25% )     (25% )     (12% )     (20% )
                                                                               
                                                                               
EUROPE / MIDDLE EAST / AFRICA                                                                              
                                                                               
  New software licenses and cloud software subscriptions   $ 440     $ 584     $ 693     $ 1,166     $ 2,884   $ 403     $ 641     $ 690     $ 1,224     $ 2,959  
  Hardware systems products   $ 344     $ 272     $ 265     $ 260     $ 1,140   $ 214     $ 198     $ 201     $ 228     $ 842  
                                                                               
AS REPORTED GROWTH RATES                                                                              
  New software licenses and cloud software subscriptions     25%       2%       (1% )     (5% )     1%     (8% )     10%       0%       5%       3%  
  Hardware systems products     2%       (17% )     (20% )     (24% )     (15% )   (38% )     (27% )     (24% )     (12% )     (26% )
                                                                               
CONSTANT CURRENCY GROWTH RATES (2)                                                                              
  New software licenses and cloud software subscriptions     15%       3%       1%       2%       4%     1%       12%       1%       5%       5%  
  Hardware systems products     (11% )     (17% )     (18% )     (18% )     (16% )   (30% )     (25% )     (24% )     (11% )     (23% )
                                                                               
                                                                               
ASIA PACIFIC                                                                              
                                                                               
  New software licenses and cloud software subscriptions   $ 331     $ 437     $ 453     $ 693     $ 1,915   $ 357     $ 495     $ 437     $ 608     $ 1,897  
  Hardware systems products   $ 210     $ 185     $ 194     $ 219     $ 807   $ 185     $ 166     $ 163     $ 182     $ 696  
                                                                               
AS REPORTED GROWTH RATES                                                                              
  New software licenses and cloud software subscriptions     20%       11%       13%       8%       12%     8%       13%       (3% )     (12% )     (1% )
  Hardware systems products     6%       2%       (3% )     1%       1%     (12% )     (10% )     (16% )     (17% )     (14% )
                                                                               
CONSTANT CURRENCY GROWTH RATES (2)                                                                              
  New software licenses and cloud software subscriptions     9%       8%       11%       13%       11%     12%       13%       1%       (7% )     3%  
  Hardware systems products     (5% )     (1% )     (6% )     1%       (3% )   (10% )     (12% )     (14% )     (14% )     (12% )
                                                                               
                                                                               
TOTAL COMPANY                                                                              
                                                                               
  New software licenses and cloud software subscriptions   $ 1,498     $ 2,048     $ 2,374     $ 3,985     $ 9,906   $ 1,574     $ 2,389     $ 2,332     $ 4,026     $ 10,321  
  Hardware systems products   $ 1,029     $ 953     $ 869     $ 977     $ 3,827   $ 779     $ 734     $ 671     $ 849     $ 3,033  
                                                                               
AS REPORTED GROWTH RATES                                                                              
  New software licenses and cloud software subscriptions     17%       2%       7%       7%       7%     5%       17%       (2% )     1%       4%  
  Hardware systems products     (5% )     (14% )     (16% )     (16% )     (13% )   (24% )     (23% )     (23% )     (13% )     (21% )
                                                                               
CONSTANT CURRENCY GROWTH RATES (2)                                                                              
  New software licenses and cloud software subscriptions     11%       3%       8%       11%       8%     10%       18%       0%       2%       6%  
  Hardware systems products     (11% )     (14% )     (16% )     (13% )     (14% )   (21% )     (23% )     (22% )     (12% )     (19% )
                                                                               
(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, 2012 and 2011 for the fiscal 2013 and fiscal 2012 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 2013 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:

  • New software licenses and cloud software subscriptions, 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 subscriptions 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 software subscriptions contracts and support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment to our new software licenses and cloud software subscriptions 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 subscriptions and hardware systems support contracts; however, we cannot be certain that our customers will renew our cloud software subscriptions 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 changes in fair value of contingent consideration payable, 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 Information

  • Contact:
    Ken Bond
    Oracle Investor Relations
    1.650.607.0349
    Email Contact

    Deborah Hellinger
    Oracle Corporate Communications
    1.212.508.7935
    Email Contact