SOURCE: Oracle Corporation

Oracle Corporation

December 20, 2011 16:03 ET

Oracle Reports Q2 GAAP EPS Up 17% to 43 Cents; Q2 Non-GAAP EPS Up 6% to 54 Cents

Trailing Twelve Month Operating Cash Flow Up 45% to $13.1 Billion

REDWOOD SHORES, CA--(Marketwire - Dec 20, 2011) - Oracle Corporation (NASDAQ: ORCL) today announced fiscal 2012 Q2 GAAP and non-GAAP total revenues were up 2% to $8.8 billion. Both GAAP and non-GAAP new software license revenues were up 2% to $2.0 billion. Both GAAP and non-GAAP software license updates and product support revenues were up 9% to $4.0 billion. Both GAAP and non-GAAP hardware systems products revenues were down 14% to $953 million. GAAP operating income was up 12% to $3.1 billion, and GAAP operating margin was 35%. Non-GAAP operating income was up 3% to $3.9 billion, and non-GAAP operating margin was 45%. GAAP net income was up 17% to $2.2 billion, while non-GAAP net income was up 6% to $2.8 billion. GAAP earnings per share were $0.43, up 17% compared to last year while non-GAAP earnings per share were up 6% to $0.54. GAAP operating cash flow on a trailing twelve-month basis was $13.1 billion.

"Non-GAAP operating margins increased to 45% in Q2," said Oracle President and CFO, Safra Catz, "and we expect those margins to keep growing. Operating cash flow over the last twelve months grew to $13.1 billion; that's up a remarkable 45% compared to the preceding twelve month period."

"We have expanded our worldwide sales capacity by adding over 1,700 sales professionals in the first half of this fiscal year," said Oracle President, Mark Hurd. "We believe that this increase in our field organization combined with innovative new products like Fusion Cloud ERP and Cloud CRM will enable solid organic growth in the second half of this year."

"Sales of our engineered systems accelerated in Q2," said Oracle CEO, Larry Ellison. "Exadata growth was well over 100% compared to last year, and Exalogic grew more than 100% on a sequential basis. We shipped our first SPARC SuperCluster in Q2 and expect to begin deliveries of our Exalytics system and the Oracle Big Data Appliance in Q3."

Oracle announced that its Board of Directors authorized the repurchase of up to an additional $5.0 billion of common stock under its existing share repurchase program in future quarters.

The Board of Directors also declared a quarterly cash dividend of $0.06 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on January 11, 2012, with a payment date of February 1, 2012.

Q2 Earnings Conference Call and Webcast
Oracle will hold a conference call and webcast today to discuss these results at 2:00 p.m. Pacific. You may listen to the call by dialing (913) 312-0945 or (877) 612-6725, Passcode: 289185. To access the live webcast of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. A replay of the conference call will also be available by dialing (719) 457-0820 or (888) 203-1112, Passcode: 5771640.

About Oracle
Oracle engineers hardware and software to work together in the cloud and in your data center. For more information about Oracle (NASDAQ: ORCL), visit www.oracle.com or contact Investor Relations at investor_us@oracle.com or (650) 506-4073.

Trademarks
Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners.

"Safe Harbor" Statement: Statements in this press release relating to Oracle's future plans, expectations, beliefs, intentions and prospects, including statements regarding operating margin growth, organic growth in the second half of fiscal 2012, Exalytics systems and Oracle Big Data Appliance deliveries and our share repurchase program, are "forward-looking statements" and are subject to material risks and uncertainties. Many factors could affect our current expectations and our actual results, and could cause actual results to differ materially. We presently consider the following to be among the important factors that could cause actual results to differ materially from expectations: (1) Economic, political and market conditions, including the recent recession and current European debt crisis, can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (2) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, unanticipated fluctuations in currency exchange rates, delays in delivery of new products or releases or a decline in our renewal rates for software license updates and product support. (3) Our hardware systems business may not be successful, and we may fail to achieve our financial forecasts with respect to this business. (4) We have an active acquisition program and our acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. (5) Our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses and risks relating to compliance with international and U.S. laws that apply to our international operations. (6) Intense competitive forces demand rapid technological advances and frequent new product introductions and could require us to reduce prices or cause us to lose customers. (7) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our products and support services in a timely manner or to position and/or price our products and services to meet market demand, customers may not buy new software licenses or hardware systems products or purchase or renew support contracts. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online from the SEC or by contacting Oracle Corporation's Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracle's Investor Relations website at http://www.oracle.com/investor. All information set forth in this press release is current as of December 20, 2011. Oracle undertakes no duty to update any statement in light of new information or future events.

ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Three Months Ended November 30,



2011


% of
Revenues


2010


% of
Revenues

% Increase
(Decrease)
in US $

% Increase
(Decrease)
in Constant
Currency (1)
REVENUES
New software licenses $ 2,048 23% $ 1,999 23% 2% 3%
Software license updates and product support 3,986 46% 3,645 43% 9% 9%
Software Revenues 6,034 69% 5,644 66% 7% 7%
Hardware systems products 953 11% 1,112 13% (14%) (14%)
Hardware systems support 625 7% 641 7% (2%) (3%)
Hardware Systems Revenues 1,578 18% 1,753 20% (10%) (10%)
Services 1,180 13% 1,185 14% 0% 0%
Total Revenues 8,792 100% 8,582 100% 2% 2%
OPERATING EXPENSES
Sales and marketing 1,697 19% 1,530 18% 11% 11%
Software license updates and product support 298 3% 307 4% (3%) (3%)
Hardware systems products 471 5% 525 6% (10%) (10%)
Hardware systems support 258 3% 356 4% (27%) (28%)
Services 929 11% 969 11% (4%) (3%)
Research and development 1,102 13% 1,119 13% (2%) (1%)
General and administrative (2) 277 3% 156 2% 77% 77%
Amortization of intangible assets 592 7% 614 7% (4%) (4%)
Acquisition related and other 5 0% 47 1% (89%) (92%)
Restructuring 52 1% 189 2% (72%) (72%)
Total Operating Expenses 5,681 65% 5,812 68% (2%) (2%)
OPERATING INCOME 3,111 35% 2,770 32% 12% 12%
Interest expense (192 ) (2%) (214 ) (2%) (11%) (11%)
Non-operating income, net 41 1% 90 1% (55%) (49%)
INCOME BEFORE PROVISION FOR INCOME TAXES 2,960 34% 2,646 31% 12% 11%
Provision for income taxes 768 9% 776 9% (1%) (2%)
NET INCOME $ 2,192 25% $ 1,870 22% 17% 17%
EARNINGS PER SHARE:
Basic $ 0.43 $ 0.37
Diluted $ 0.43 $ 0.37
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 5,041 5,044
Diluted 5,123 5,117
(1) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2011, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the three months ended November 30, 2011 compared with the corresponding prior year period had no impact on our revenues, operating expenses and operating income.
(2) General and administrative expenses for the three months ended November 30, 2010 included a benefit of $120 million related to the recovery of legal costs.
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Three Months Ended November 30, % Increase (Decrease) in US $ % Increase (Decrease) in Constant Currency (2)
2011
GAAP

Adj.
2011
Non-GAAP
2010
GAAP

Adj.
2010
Non-GAAP
GAAP Non-GAAP GAAP Non-GAAP
TOTAL REVENUES (3) (4) $ 8,792 $ 19 $ 8,811 $ 8,582 $ 67 $ 8,649 2% 2% 2% 2%
TOTAL SOFTWARE REVENUES (3) $ 6,034 $ 10 $ 6,044 $ 5,644 $ 22 $ 5,666 7% 7% 7% 7%
New software licenses 2,048 - 2,048 1,999 - 1,999 2% 2% 3% 3%
Software license updates and product support (3) 3,986 10 3,996 3,645 22 3,667 9% 9% 9% 9%
TOTAL HARDWARE SYSTEMS REVENUES (4) $ 1,578 $ 9 $ 1,587 $ 1,753 $ 45 $ 1,798 (10%) (12%) (10%) (12%)
Hardware systems products 953 - 953 1,112 - 1,112 (14%) (14%) (14%) (14%)
Hardware systems support (4) 625 9 634 641 45 686 (2%) (8%) (3%) (8%)
TOTAL OPERATING EXPENSES $ 5,681 $ (799 ) $ 4,882 $ 5,812 $ (969 ) $ 4,843 (2%) 1% (2%) 1%
Stock-based compensation (5) 150 (150 ) - 119 (119 ) - 26% * 26% *
Amortization of intangible assets (6) 592 (592 ) - 614 (614 ) - (4%) * (4%) *
Acquisition related and other 5 (5 ) - 47 (47 ) - (89%) * (92%) *
Restructuring 52 (52 ) - 189 (189 ) - (72%) * (72%) *
OPERATING INCOME $ 3,111 $ 818 $ 3,929 $ 2,770 $ 1,036 $ 3,806 12% 3% 12% 3%
OPERATING MARGIN % 35% 45% 32% 44% 310 bp. 59 bp. 291 bp. 42 bp.
INCOME TAX EFFECTS (7) $ 768 $ 226 $ 994 $ 776 $ 274 $ 1,050 (1%) (5%) (2%) (6%)
NET INCOME $ 2,192 $ 592 $ 2,784 $ 1,870 $ 762 $ 2,632 17% 6% 17% 5%
DILUTED EARNINGS PER SHARE $ 0.43 $ 0.54 $ 0.37 $ 0.51 17% 6% 16% 5%
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,123 - 5,123 5,117 - 5,117 0% 0% 0% 0%
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.
(2) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2011, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.
(3) As of November 30, 2011, approximately $11 million, $9 million and $2 million in estimated revenues related to assumed software support contracts will not be recognized for the remainder of fiscal 2012, fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules.
(4) As of November 30, 2011, approximately $10 million and $11 million in estimated revenues related to hardware systems support contracts will not be recognized for the remainder of fiscal 2012 and fiscal 2013, respectively, due to business combination accounting rules.
(5) Stock-based compensation was included in the following GAAP operating expense categories:
Three Months Ended Three Months Ended
November 30, 2011 November 30, 2010
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
Sales and marketing $ 29 $ (29 ) $ - $ 19 $ (19 ) $ -
Software license updates and product support 5 (5 ) - 3 (3 ) -
Hardware systems products - - - 1 (1 ) -
Hardware systems support 2 (2 ) - 1 (1 ) -
Services 6 (6 ) - 4 (4 ) -
Research and development 68 (68 ) - 55 (55 ) -
General and administrative 40 (40 ) - 36 (36 ) -
Subtotal 150 (150 ) - 119 (119 ) -
Acquisition related and other 2 (2 ) - 5 (5 ) -
Total stock-based compensation $ 152 $ (152 ) $ - $ 124 $ (124 ) $ -
(6) Estimated future annual amortization expense related to intangible assets as of November 30, 2011 was as follows:
Remainder of Fiscal 2012 $ 1,162
Fiscal 2013 1,991
Fiscal 2014 1,644
Fiscal 2015 1,244
Fiscal 2016 737
Fiscal 2017 183
Thereafter 180
Total intangible assets subject to amortization 7,141
In-process research and development 11
Total intangible assets, net $ 7,152
(7) Income tax effects were calculated reflecting an effective GAAP tax rate of 25.9% and 29.3% in the second quarter of fiscal 2012 and 2011, respectively, and an effective non-GAAP tax rate of 26.3% and 28.5% in the second quarter of fiscal 2012 and 2011, respectively. The differences between our GAAP and non-GAAP tax rates in the second quarter of fiscal 2012 and fiscal 2011 were primarily due to differences in jurisdictional tax rates and the related tax benefits attributable to our restructuring expenses in these periods.
* Not meaningful
ORACLE CORPORATION
Q2 FISCAL 2012 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Six Months Ended November 30,

2011
% of
Revenues

2010
% of
Revenues
% Increase
(Decrease)
in US $
% Increase
(Decrease)
in Constant
Currency (1)
REVENUES
New software licenses $ 3,546 21% $ 3,284 21% 8% 6%
Software license updates and product support 8,008 46% 7,096 44% 13% 10%
Software Revenues 11,554 67% 10,380 65% 11% 8%
Hardware systems products 1,981 12% 2,190 13% (10%) (13%)
Hardware systems support 1,271 7% 1,261 8% 1% (3%)
Hardware Systems Revenues 3,252 19% 3,451 21% (6%) (9%)
Services 2,360 14% 2,253 14% 5% 2%
Total Revenues 17,166 100% 16,084 100% 7% 4%
OPERATING EXPENSES
Sales and marketing 3,327 19% 2,864 18% 16% 13%
Software license updates and product support 594 3% 615 4% (3%) (5%)
Hardware systems products 943 6% 1,082 7% (13%) (14%)
Hardware systems support 541 3% 656 4% (17%) (20%)
Services 1,865 11% 1,865 11% 0% (2%)
Research and development 2,152 13% 2,222 14% (3%) (4%)
General and administrative (2) 587 3% 428 3% 37% 34%
Amortization of intangible assets 1,184 7% 1,217 7% (3%) (3%)
Acquisition related and other 25 0% 130 1% (81%) (83%)
Restructuring 154 1% 318 2% (52%) (53%)
Total Operating Expenses 11,372 66% 11,397 71% 0% (2%)
OPERATING INCOME 5,794 34% 4,687 29% 24% 17%
Interest expense (384 ) (2%) (410 ) (2%) (6%) (6%)
Non-operating income, net 21 0% 165 1% (87%) (84%)
INCOME BEFORE PROVISION FOR INCOME TAXES 5,431 32% 4,442 28% 22% 16%
Provision for income taxes 1,399 9% 1,219 8% 15% 9%
NET INCOME $ 4,032 23% $ 3,223 20% 25% 19%
EARNINGS PER SHARE:
Basic $ 0.80 $ 0.64
Diluted $ 0.78 $ 0.63
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 5,052 5,035
Diluted 5,137 5,100
(1) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2011, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the six months ended November 30, 2011 compared with the corresponding prior year period increased our revenues by 3 percentage points, operating expenses by 2 percentage points and operating income by 7 percentage points.
(2) General and administrative expenses for the six months ended November 30, 2010 included a benefit of $120 million related to the recovery of legal costs.
ORACLE CORPORATION
Q2 FISCAL 2012 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Six Months Ended November 30, % Increase (Decrease) in US $ % Increase (Decrease) in Constant Currency (2)
2011
GAAP

Adj.
2011
Non-GAAP
2010
GAAP

Adj.
2010
Non-GAAP
GAAP Non-GAAP GAAP Non-GAAP
TOTAL REVENUES (3) (4) $ 17,166 $ 43 $ 17,209 $ 16,084 $ 153 $ 16,237 7% 6% 4% 3%
TOTAL SOFTWARE REVENUES (3) $ 11,554 $ 24 $ 11,578 $ 10,380 $ 47 $ 10,427 11% 11% 8% 8%
New software licenses 3,546 - 3,546 3,284 - 3,284 8% 8% 6% 6%
Software license updates and product support (3) 8,008 24 8,032 7,096 47 7,143 13% 12% 10% 9%
TOTAL HARDWARE SYSTEMS REVENUES (4) $ 3,252 $ 19 $ 3,271 $ 3,451 $ 106 $ 3,557 (6%) (8%) (9%) (11%)
Hardware systems products 1,981 - 1,981 2,190 - 2,190 (10%) (10%) (13%) (13%)
Hardware systems support (4) 1,271 19 1,290 1,261 106 1,367 1% (6%) (3%) (9%)
TOTAL OPERATING EXPENSES $ 11,372 $ (1,658 ) $ 9,714 $ 11,397 $ (1,913 ) $ 9,484 0% 2% (2%) 0%
Stock-based compensation (5) 295 (295 ) - 248 (248 ) - 20% * 20% *
Amortization of intangible assets (6) 1,184 (1,184 ) - 1,217 (1,217 ) - (3%) * (3%) *
Acquisition related and other 25 (25 ) - 130 (130 ) - (81%) * (83%) *
Restructuring 154 (154 ) - 318 (318 ) - (52%) * (53%) *
OPERATING INCOME $ 5,794 $ 1,701 $ 7,495 $ 4,687 $ 2,066 $ 6,753 24% 11% 17% 7%
OPERATING MARGIN % 34% 44% 29% 42% 461 bp. 196 bp. 393 bp. 154 bp.
INCOME TAX EFFECTS (7) $ 1,399 $ 483 $ 1,882 $ 1,219 $ 528 $ 1,747 15% 8% 9% 4%
NET INCOME $ 4,032 $ 1,218 $ 5,250 $ 3,223 $ 1,538 $ 4,761 25% 10% 19% 6%
DILUTED EARNINGS PER SHARE $ 0.78 $ 1.02 $ 0.63 $ 0.93 24% 9% 18% 5%
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,137 - 5,137 5,100 - 5,100 1% 1% 1% 1%
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.
(2) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2011, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.
(3) As of November 30, 2011, approximately $11 million, $9 million and $2 million in estimated revenues related to assumed software support contracts will not be recognized for the remainder of fiscal 2012, fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules.
(4) As of November 30, 2011, approximately $10 million and $11 million in estimated revenues related to hardware systems support contracts will not be recognized for the remainder of fiscal 2012 and fiscal 2013, respectively, due to business combination accounting rules.
(5) Stock-based compensation was included in the following GAAP operating expense categories:
Six Months Ended Six Months Ended
November 30, 2011 November 30, 2010
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
Sales and marketing $ 55 $ (55 ) $ - $ 42 $ (42 ) $ -
Software license updates and product support 8 (8 ) - 8 (8 ) -
Hardware systems products 1 (1 ) - 2 (2 ) -
Hardware systems support 3 (3 ) - 2 (2 ) -
Services 10 (10 ) - 8 (8 ) -
Research and development 139 (139 ) - 114 (114 ) -
General and administrative 79 (79 ) - 72 (72 ) -
Subtotal 295 (295 ) - 248 (248 ) -
Acquisition related and other 3 (3 ) - 6 (6 ) -
Total stock-based compensation $ 298 $ (298 ) $ - $ 254 $ (254 ) $ -
(6) Estimated future annual amortization expense related to intangible assets as of November 30, 2011 was as follows:
Remainder of Fiscal 2012 $ 1,162
Fiscal 2013 1,991
Fiscal 2014 1,644
Fiscal 2015 1,244
Fiscal 2016 737
Fiscal 2017 183
Thereafter 180
Total intangible assets subject to amortization 7,141
In-process research and development 11
Total intangible assets, net $ 7,152
(7) Income tax effects were calculated reflecting an effective GAAP tax rate of 25.8% and 27.4% in the first half of fiscal 2012 and 2011, respectively, and an effective non-GAAP tax rate of 26.4% and 26.8% in the first half of fiscal 2012 and 2011, respectively. The differences between our GAAP and non-GAAP tax rates in the first half of fiscal 2012 were primarily due to income tax effects related to our acquired tax exposures and the differences in jurisdictional tax rates and the related tax benefits attributable to our restructuring expenses. The differences between our GAAP and non-GAAP tax rates in the first half of fiscal 2011 were primarily due to differences in jurisdictional tax rates and the related tax benefits attributable to our restructuring expenses.
* Not meaningful
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
November 30, May 31,
2011 2011
ASSETS
Current Assets:
Cash and cash equivalents $ 13,286 $ 16,163
Marketable securities 17,726 12,685
Trade receivables, net 4,434 6,628
Inventories 218 303
Deferred tax assets 1,239 1,189
Prepaid expenses and other current assets 1,579 2,206
Total Current Assets 38,482 39,174
Non-Current Assets:
Property, plant and equipment, net 2,900 2,857
Intangible assets, net 7,152 7,860
Goodwill 21,994 21,553
Deferred tax assets 1,122 1,076
Other assets 1,260 1,015
Total Non-Current Assets 34,428 34,361
TOTAL ASSETS $ 72,910 $ 73,535
LIABILITIES AND EQUITY
Current Liabilities:
Notes payable, current and other current borrowings $ - $ 1,150
Accounts payable 445 494
Accrued compensation and related benefits 1,582 2,320
Deferred revenues 6,091 6,802
Other current liabilities 2,954 3,426
Total Current Liabilities 11,072 14,192
Non-Current Liabilities:
Notes payable and other non-current borrowings 14,778 14,772
Income taxes payable 3,383 3,169
Other non-current liabilities 1,410 1,157
Total Non-Current Liabilities 19,571 19,098
Equity 42,267 40,245
TOTAL LIABILITIES AND EQUITY $ 72,910 $ 73,535
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
Six Months Ended November 30,
2011 2010
Cash Flows From Operating Activities:
Net income $ 4,032 $ 3,223
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 226 194
Amortization of intangible assets 1,184 1,217
Deferred income taxes (137 ) (76 )
Stock-based compensation 298 254
Tax benefits on the exercise of stock options and vesting of restricted stock-based awards 94 142
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards (53 ) (86 )
Other, net 53 24
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net 2,128 1,343
Decrease in inventories 93 25
Decrease in prepaid expenses and other assets 424 280
Decrease in accounts payable and other liabilities (1,306 ) (620 )
Increase (decrease) in income taxes payable 184 (613 )
Decrease in deferred revenues (544 ) (546 )
Net cash provided by operating activities 6,676 4,761
Cash Flows From Investing Activities:
Purchases of marketable securities and other investments (21,422 ) (16,802 )
Proceeds from maturities and sales of marketable securities and other investments 16,335 11,153
Acquisitions, net of cash acquired (571 ) (806 )
Capital expenditures (289 ) (239 )
Net cash used for investing activities (5,947 ) (6,694 )
Cash Flows From Financing Activities:
Payments for repurchases of common stock (1,798 ) (504 )
Proceeds from issuances of common stock 434 734
Payments of dividends to stockholders (607 ) (504 )
Proceeds from borrowings, net of issuance costs - 3,204
Repayments of borrowings (1,150 ) (890 )
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards 53 86
Distributions to noncontrolling interests (163 ) (38 )
Net cash (used for) provided by financing activities (3,231 ) 2,088
Effect of exchange rate changes on cash and cash equivalents (375 ) 351
Net (decrease) increase in cash and cash equivalents (2,877 ) 506
Cash and cash equivalents at beginning of period 16,163 9,914
Cash and cash equivalents at end of period $ 13,286 $ 10,420
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
Fiscal 2011 Fiscal 2012
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
GAAP Operating Cash Flow $ 8,760 $ 9,053 $ 9,948 $ 11,214 $ 12,818 $ 13,129
Capital Expenditures (2) (293 ) (369 ) (441 ) (450 ) (492 ) (500 )
Free Cash Flow $ 8,467 $ 8,684 $ 9,507 $ 10,764 $ 12,326 $ 12,629
% Growth over prior year 0% 3% 19% 27% 46% 45%
GAAP Net Income $ 6,363 $ 6,776 $ 7,701 $ 8,547 $ 9,035 $ 9,356
Free Cash Flow as a % of Net Income 133% 128% 123% 126% 136% 135%
(1) To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures of cash flows on a trailing 4-quarter basis to analyze cash flow generated from operations. We believe free cash flow is also useful as one of the bases for comparing our performance with our competitors. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity.
(2) Represents capital expenditures as reported in cash flows from investing activities on our cash flow statements presented in accordance with GAAP.
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($ in millions)
Fiscal 2011 Fiscal 2012
Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL
REVENUES
New software licenses $ 1,286 $ 1,999 $ 2,214 $ 3,736 $ 9,235 $ 1,498 $ 2,048 $ 3,546
Software license updates and product support 3,450 3,645 3,740 3,961 14,796 4,022 3,986 8,008
Software Revenues 4,736 5,644 5,954 7,697 24,031 5,520 6,034 11,554
Hardware systems products 1,079 1,112 1,035 1,157 4,382 1,029 953 1,981
Hardware systems support 619 641 629 673 2,562 645 625 1,271
Hardware Systems Revenues 1,698 1,753 1,664 1,830 6,944 1,674 1,578 3,252
Services Revenues 1,068 1,185 1,146 1,248 4,647 1,180 1,180 2,360
Total Revenues $ 7,502 $ 8,582 $ 8,764 $ 10,775 $ 35,622 $ 8,374 $ 8,792 $ 17,166
AS REPORTED REVENUE GROWTH RATES
New software licenses 25% 21% 29% 19% 23% 17% 2% 8%
Software license updates and product support 11% 12% 13% 15% 13% 17% 9% 13%
Software Revenues 14% 15% 19% 17% 17% 17% 7% 11%
Hardware systems products * * 279% (6% ) 191% (5% ) (14% ) (10% )
Hardware systems support * * 239% 12% 227% 4% (2% ) 1%
Hardware Systems Revenues * * 263% 0% 203% (1% ) (10% ) (6% )
Services Revenues 18% 24% 23% 13% 19% 10% 0% 5%
Total Revenues 48% 47% 37% 13% 33% 12% 2% 7%
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses 25% 23% 27% 12% 19% 11% 3% 6%
Software license updates and product support 12% 13% 12% 10% 12% 10% 9% 10%
Software Revenues 15% 17% 17% 11% 15% 11% 7% 8%
Hardware systems products * * 274% (11% ) 184% (11% ) (14% ) (13% )
Hardware systems support * * 234% 6% 218% (3% ) (3% ) (3% )
Hardware Systems Revenues * * 258% (5% ) 195% (8% ) (10% ) (9% )
Services Revenues 18% 25% 21% 7% 17% 5% 0% 2%
Total Revenues 49% 48% 35% 7% 30% 5% 2% 4%
GEOGRAPHIC REVENUES
REVENUES
Americas $ 3,904 $ 4,452 $ 4,509 $ 5,487 $ 18,352 $ 4,226 $ 4,532 $ 8,758
Europe, Middle East & Africa 2,381 2,738 2,815 3,564 11,497 2,704 2,756 5,460
Asia Pacific 1,217 1,392 1,440 1,724 5,773 1,444 1,504 2,948
Total Revenues $ 7,502 $ 8,582 $ 8,764 $ 10,775 $ 35,622 $ 8,374 $ 8,792 $ 17,166
HEADCOUNT
GEOGRAPHIC AREA
Americas 44,494 44,815 45,825 45,887 46,338 46,672
Europe, Middle East & Africa 22,886 22,690 22,705 22,394 22,210 22,725
Asia Pacific 37,856 38,225 39,340 40,148 40,840 41,901
Total Company 105,236 105,730 107,870 108,429 109,388 111,298
(1) The sum of the quarterly financial information may vary from year-to-date financial information due to rounding.
(2) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2011 and 2010 for the fiscal 2012 and fiscal 2011 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.
* Not meaningful
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)
($ in millions)
Fiscal 2011 Fiscal 2012
Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL
SOFTWARE REVENUES
DATABASE & MIDDLEWARE REVENUES
New software licenses $ 937 $ 1,420 $ 1,575 $ 2,694 $ 6,626 $ 1,070 $ 1,479 $ 2,548
Software license updates and product support 2,316 2,443 2,523 2,663 9,945 2,710 2,707 5,416
Database and Middleware Revenues $ 3,253 $ 3,863 $ 4,098 $ 5,357 $ 16,571 $ 3,780 $ 4,186 $ 7,964
AS REPORTED GROWTH RATES
New software licenses 32% 21% 27% 18% 23% 14% 4% 8%
Software license updates and product support 12% 15% 15% 15% 14% 17% 11% 14%
Database and Middleware Revenues 17% 17% 19% 17% 18% 16% 8% 12%
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses 32% 23% 26% 10% 19% 8% 4% 6%
Software license updates and product support 13% 16% 14% 10% 13% 12% 13% 13%
Database and Middleware Revenues 18% 18% 18% 10% 15% 11% 10% 10%
APPLICATIONS REVENUES
New software licenses $ 349 $ 579 $ 639 $ 1,042 $ 2,609 $ 428 $ 569 $ 998
Software license updates and product support 1,134 1,202 1,217 1,298 4,851 1,312 1,279 2,592
Applications Revenues $ 1,483 $ 1,781 $ 1,856 $ 2,340 $ 7,460 $ 1,740 $ 1,848 $ 3,590
AS REPORTED GROWTH RATES
New software licenses 10% 21% 34% 22% 23% 23% (2% ) 8%
Software license updates and product support 8% 8% 10% 16% 10% 16% 6% 11%
Applications Revenues 8% 12% 17% 18% 14% 17% 4% 10%
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses 10% 22% 31% 16% 20% 19% (1% ) 7%
Software license updates and product support 9% 9% 9% 10% 9% 7% 2% 4%
Applications Revenues 9% 13% 16% 12% 13% 10% 1% 5%
(1) The sum of the quarterly financial information may vary from year-to-date financial information due to rounding.
(2) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2011 and 2010 for the fiscal 2012 and fiscal 2011 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE AND HARDWARE SYSTEMS PRODUCTS REVENUES ANALYSIS (1)
($in millions)
Fiscal 2011 Fiscal 2012
Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL
AMERICAS
Database & Middleware $ 446 $ 671 $ 755 $ 1,284 $ 3,155 $ 478 $ 669 $ 1,146
Applications 212 359 355 580 1,507 249 358 608
New Software License Revenues $ 658 $ 1,030 $ 1,110 $ 1,864 $ 4,662 $ 727 $ 1,027 $ 1,754
Hardware Systems Products Revenues $ 543 $ 602 $ 506 $ 599 $ 2,248 $ 475 $ 496 $ 971
AS REPORTED GROWTH RATES
Database & Middleware 44% 36% 40% 14% 28% 7% 0% 3%
Applications 14% 26% 26% 20% 22% 18% 0% 6%
New Software License Revenues 33% 32% 35% 16% 26% 10% 0% 4%
Hardware Systems Products Revenues * * 287% (3% ) 201% (12% ) (17% ) (15% )
CONSTANT CURRENCY GROWTH RATES (2)
Database & Middleware 43% 36% 39% 12% 27% 6% 1% 3%
Applications 14% 26% 24% 18% 20% 16% 1% 7%
New Software License Revenues 32% 32% 34% 14% 24% 9% 1% 4%
Hardware Systems Products Revenues * * 285% (4% ) 199% (13% ) (17% ) (15% )
EUROPE / MIDDLE EAST / AFRICA
Database & Middleware $ 279 $ 426 $ 505 $ 925 $ 2,137 $ 322 $ 443 $ 765
Applications 73 148 197 308 724 118 141 259
New Software License Revenues $ 352 $ 574 $ 702 $ 1,233 $ 2,861 $ 440 $ 584 $ 1,024
Hardware Systems Products Revenues $ 338 $ 329 $ 330 $ 341 $ 1,337 $ 344 $ 272 $ 615
AS REPORTED GROWTH RATES
Database & Middleware 25% (1% ) 11% 23% 15% 15% 4% 8%
Applications (19% ) 23% 47% 18% 20% 63% (4% ) 18%
New Software License Revenues 12% 5% 19% 22% 16% 25% 2% 11%
Hardware Systems Products Revenues * * 246% (13% ) 176% 2% (17% ) (8% )
CONSTANT CURRENCY GROWTH RATES (2)
Database & Middleware 32% 7% 12% 9% 12% 5% 5% 5%
Applications (16% ) 31% 46% 7% 16% 55% (3% ) 16%
New Software License Revenues 18% 12% 20% 9% 13% 15% 3% 7%
Hardware Systems Products Revenues * * 246% (21% ) 165% (11% ) (17% ) (14% )
ASIA PACIFIC
Database & Middleware $ 212 $ 323 $ 315 $ 485 $ 1,334 $ 270 $ 367 $ 637
Applications 64 72 87 154 378 61 70 131
New Software License Revenues $ 276 $ 395 $ 402 $ 639 $ 1,712 $ 331 $ 437 $ 768
Hardware Systems Products Revenues $ 198 $ 181 $ 199 $ 217 $ 797 $ 210 $ 185 $ 395
AS REPORTED GROWTH RATES
Database & Middleware 19% 27% 28% 20% 23% 28% 14% 19%
Applications 54% (1% ) 45% 41% 33% (4% ) (4% ) (4% )
New Software License Revenues 26% 21% 32% 24% 25% 20% 11% 14%
Hardware Systems Products Revenues * * 325% (4% ) 191% 6% 2% 4%
CONSTANT CURRENCY GROWTH RATES (2)
Database & Middleware 13% 22% 20% 8% 15% 15% 12% 13%
Applications 47% (5% ) 34% 27% 24% (11% ) (6% ) (9% )
New Software License Revenues 19% 16% 23% 12% 16% 9% 8% 9%
Hardware Systems Products Revenues * * 295% (13% ) 173% (5% ) (1% ) (3% )
TOTAL COMPANY
Database & Middleware $ 937 $ 1,420 $ 1,575 $ 2,694 $ 6,626 $ 1,070 $ 1,479 $ 2,548
Applications 349 579 639 1,042 2,609 428 569 998
New Software License Revenues $ 1,286 $ 1,999 $ 2,214 $ 3,736 $ 9,235 $ 1,498 $ 2,048 $ 3,546
Hardware Systems Products Revenues $ 1,079 $ 1,112 $ 1,035 $ 1,157 $ 4,382 $ 1,029 $ 953 $ 1,981
AS REPORTED GROWTH RATES
Database & Middleware 32% 21% 27% 18% 23% 14% 4% 8%
Applications 10% 21% 34% 22% 23% 23% (2% ) 8%
New Software License Revenues 25% 21% 29% 19% 23% 17% 2% 8%
Hardware Systems Products Revenues * * 279% (6% ) 191% (5% ) (14% ) (10% )
CONSTANT CURRENCY GROWTH RATES (2)
Database & Middleware 32% 23% 26% 10% 19% 8% 4% 6%
Applications 10% 22% 31% 16% 20% 19% (1% ) 7%
New Software License Revenues 25% 23% 27% 12% 19% 11% 3% 6%
Hardware Systems Products Revenues * * 274% (11% ) 184% (11% ) (14% ) (13% )
(1) The sum of the quarterly financial information may vary from year-to-date financial information due to rounding.
(2) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2011 and 2010 for the fiscal 2012 and fiscal 2011 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.
* Not meaningful
APPENDIX A
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES

To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the tables, which exclude certain business combination accounting entries and expenses related to acquisitions, as well as other significant expenses including stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

Software license updates and product support and hardware systems support deferred revenues: Business combination accounting rules require us to account for the fair values of software license updates and product support contracts and hardware systems support contracts assumed in connection with our acquisitions. Because these support contracts are typically one year in duration, our GAAP revenues for the one year period subsequent to our acquisition of a business do not reflect the full amount of support revenues on these assumed support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment to our software license updates and product support revenues and hardware systems support revenues is intended to include, and thus reflect, the full amount of such revenues. We believe the adjustment to these support revenues is useful to investors as a measure of the ongoing performance of our business. We have historically experienced high renewal rates on our software license updates and product support contracts and our objective is to increase the renewal rates on acquired and new hardware systems support contracts; however, we cannot be certain that our customers will renew our software license updates and product support contracts or our hardware systems support contracts.

Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.

Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP operating expenses and net income measures. Amortization of intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods.

Acquisition related and other expenses; and restructuring expenses: We have excluded the effect of acquisition related and other expenses and the effect of restructuring expenses from our non-GAAP operating expenses and net income measures. We incurred significant expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related and other expenses consist of personnel related costs for transitional employees, other acquired employee related costs, stock-based compensation expenses (in addition to the stock-based compensation expenses described above), integration related professional services, certain business combination adjustments including adjustments after the measurement period has ended and changes in fair value of contingent consideration payable, and certain other operating expenses, net. Substantially all of the stock-based compensation expenses included in acquisition related and other expenses resulted from unvested options assumed in acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the original terms of those options. Restructuring expenses consist of employee severance and other exit costs. We believe it is useful for investors to understand the effects of these items on our total operating expenses. Although acquisition related expenses and restructuring expenses generally diminish over time with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions.

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