Oracle Reports Q4 Earnings Per Share of $0.16 vs. $0.12 Last Year
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Oracle Reports Q4 Earnings Per Share of $0.16 vs. $0.12 Last Year

Applications Sales Up, Database Sales Up, Total Revenues Up, Operating Margins Record 45%

REDWOOD SHORES, Calif., June 12 /PRNewswire-FirstCall/ -- ( http://www.oracle.com/tellmemore/?1734560 ) Today, Oracle Corporation announced financial results for its fiscal fourth quarter and full year 2003.

(Photo: http://www.newscom.com/cgi-bin/prnh/20020718/ORCLLOGO )

Fourth quarter net income increased 31% to $858 million, or $0.16 per share, compared to net income of $656 million, or $0.12 per share for the fourth quarter last year, which included an equity securities impairment charge of $104 million net of tax, or $0.02 per share related to Oracle's investment in Liberate Technologies. Total revenues in Q4 increased 2% to $2.83 billion, new software license and other revenues rose 1% to $1.2 billion, software license updates and product support increased 12% to $1.1 billion, and services declined 11% to $580 million. Operating margin in the quarter reached a record 45% eclipsing the previous record of 44% in the fourth quarter of 2002.

For the full fiscal year 2003, net income increased 4% to $2.31 billion or $0.43 per share, compared with net income of $2.22 billion or $0.39 per share in fiscal year 2002, while total revenues declined 2% to $9.5 billion. The annual operating margin was 36%.

"This has been a very strong quarter for us, even with the war in Iraq and the SARS concerns right in the middle of it," said Oracle CFO Jeff Henley. "In light of the continuing tight IT spending environment, we are particularly pleased that we executed well enough to deliver some top line growth in our business while improving both profits and margins."

"We had a great applications quarter," said Oracle CEO Larry Ellison. "The strength of our applications business is apparent when you compare our results to the results of our competitors. For the quarter our applications new software license revenues were flat at $246 million. Many of our major competitors showed significant license revenue decline in their most recently reported quarter. For instance, in PeopleSoft's most recent quarter their applications new license revenues decreased 39% to $80 million. We believe that our growth and PeopleSoft's decline resulted in part from an increase in our competitive win rate over PeopleSoft, and the fact that we are beginning to replace PeopleSoft at a number of major accounts."

Oracle is the world's largest enterprise software company. For more information about Oracle, including supplemental financial information, please call Investor Relations at (650) 506-4073 or visit Oracle on the web at http://www.oracle.com/investor.

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: Information in this release relating to Oracle's future prospects (other than those statements relating to the tender offer) which are "forward- looking statements" are subject to certain risks and uncertainties that could cause actual results to differ materially, including, but not necessarily limited to, the following: (1) Economic, political and market conditions could continue to adversely affect purchasing decisions for computer software and services throughout the world. The war on terrorism and the potential for war or other hostilities in other parts of the world add to the climate of uncertainty that could adversely affect revenues. Delays in closing of sales, reductions in size of individual sales without an offsetting increase in volume or delays in product delivery can cause quarterly revenues and income to fall significantly short of anticipated levels. (2) Management's ability to forecast revenues and control expenses, especially on a quarterly basis, continues to be a challenge. An unexpected decline in revenues without a corresponding and timely slowdown in expense growth could have a material adverse effect on results of operations. (3) Oracle is introducing new or revised versions of its products and services, such as Oracle 9i Database, Oracle 9iAS Application Server, E-Business Suite, Oracle Collaboration Suite and Outsourcing; the market acceptance and contribution to Oracle's revenues of these new versions or products and services cannot be assured. (4) Oracle has made changes to its pricing model and sales organization, which could lead to a decline or delay in sales as its sales force and customers adjust to the new pricing policies and organizational changes. Intense competition in the various markets in which Oracle competes may also put pressure on Oracle to reduce prices on certain products. (5) The market for Oracle's products is intensely competitive and is characterized by rapid technological advances and frequent new product introductions. There can be no assurances that Oracle will continue to introduce new products and new versions of existing products that keep pace with technological developments, satisfy increasingly sophisticated customer requirements and achieve market acceptance. Oracle undertakes no obligation to update information contained in this release. For further information regarding risks and uncertainties associated with Oracle's business, please refer to the "Risk Factors" section of Oracle Corporation's SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Oracle Corporation's Investor Relations Department at 650-506-4073 or Oracle's Investor Relations website at http://www.oracle.com/investor .

The solicitation and the offer to buy PeopleSoft's common stock is only made pursuant to the Offer to Purchase and related materials that Oracle Corporation and Pepper Acquisition Corp. filed on June 9, 2003. Stockholders should read the Offer to Purchase and related materials carefully because they contain important information, including the terms and conditions of the offer. Stockholders can obtain the Offer to Purchase and related materials free at the SEC's website at http://www.sec.gov/, from Credit Suisse First Boston LLC, the Dealer Manager for the offer, from MacKenzie Partners, the Information Agent for the offer, or from Oracle Corporation.

                            ORACLE CORPORATION

                  CONSOLIDATED STATEMENTS OF OPERATIONS
                 ($ in thousands, except per share data)

                            Three Months Ended             Year Ended
                                  May 31,                    May 31,
                           2003           2002       2003           2002
  REVENUES
    New software
     licenses and
     other             $1,186,859     $1,172,620  $3,270,080     $3,512,954
    Software license
     updates and
     product support    1,065,557        949,539   3,928,587      3,540,236
    Services              579,590        651,622   2,276,290      2,619,403

      Total Revenues    2,832,006      2,773,781   9,474,957      9,672,593

  OPERATING EXPENSES
    Sales and marketing   567,324        587,532   2,071,960      2,208,981
    Software license
     updates and
     product support      119,497        115,644     473,914        461,575
    Cost of services      461,038        452,600   1,868,469      1,943,936
    Research and
     development          298,095        282,142   1,180,261      1,076,156
    General and
     administrative       115,526        109,592     440,876        411,213

      Total Operating
       Expenses         1,561,480      1,547,510   6,035,480      6,101,861

  OPERATING INCOME      1,270,526      1,226,271   3,439,477      3,570,732

    Net investment
     losses related to
     equity securities
     (A)                   (3,085)      (229,316)   (111,243)      (243,515)
    Other income (expense),
     net                    6,092         (1,188)     96,366         80,987

  INCOME BEFORE TAXES   1,273,533        995,767   3,424,600      3,408,204

    Provision for
     income taxes (B)     415,442        339,846   1,117,574      1,184,199

  NET INCOME             $858,091       $655,921  $2,307,026     $2,224,005

  EARNINGS PER SHARE
    Basic                   $0.16          $0.12       $0.44          $0.40
    Diluted                 $0.16          $0.12       $0.43          $0.39

  WEIGHTED SHARES
   OUTSTANDING
    Basic               5,240,182      5,471,617   5,301,634      5,518,024
    Diluted             5,355,760      5,610,626   5,418,488      5,688,960


  (A) Net investment losses related to equity securities in the three
      months ended May 31, 2002 includes a $173,452 impairment charge
      related to Oracle's investment in Liberate Technologies. Excluding the
      effect of this charge, net income and diluted earnings per share would
      have been $759,992 and $0.14 per share.  Net investment losses related
      to equity securities in the year ended May 31, 2003 and 2002 include
      an $87,174 and $173,452 impairment charge related to Oracle's
      investment in Liberate Technologies, respectively. Excluding the
      effect of this charge, net income and diluted earnings per share would
      have been $2,359,330 and $0.44 per share, and $2,328,076 and $0.41 per
      share for the twelve months ended May 31, 2003 and 2002, respectively.

  (B) Provision for income taxes in the three months ended May 31, 2003 of
      $415,442 includes a $17,559 adjustment related to a decrease in
      Oracle's year to date effective income tax rate on operating and other
      income from 34% to 33.5%. Excluding the effect of this adjustment, the
      provision for income taxes would have been $433,001 for the three
      months ended May 31, 2003. The change in effective tax rate did not
      change basic or diluted earnings per share for the three or twelve
      months ended May 31, 2003. The effective tax rate for the year ended
      May 31, 2003 is 32.6%, which includes 33.5% on operating and other
      income, partially offset by the tax benefit of 40% on the impairment
      charge on Liberate Technologies, as well as a benefit from the release
      of previously accrued taxes relating to our Foreign Sales Corporation.


                            ORACLE CORPORATION

                CONSOLIDATED STATEMENTS OF OPERATIONS DATA


                                                             Percen- Percen-
                                Percentages                   tage    tage
                                 of Revenue     Percentages   Change Change
                                Three Months     of Revenue   Three   FY 03
                                   Ended         Year Ended   Months   vs.
                                   May 31,         May 31,     FY02   FY 02

                                2003    2002     2003    2002
  REVENUES
    New software licenses and
     other                       42%     42%      35%    36%      1%    (7%)
    Software license updates
     and product support         38%     34%      41%    37%     12%    11%
    Services                     20%     24%      24%    27%    (11%)  (13%)

          Total Revenues        100%    100%     100%   100%      2%    (2%)

  OPERATING EXPENSES
    Sales and marketing          20%     21%      22%    23%     (3%)   (6%)
    Software license updates
     and product support          4%      4%       5%     5%      3%     3%
    Cost of services             16%     17%      20%    20%      2%    (4%)
    Research and development     11%     10%      12%    11%      6%    10%
    General and administrative    4%      4%       5%     4%      5%     7%

          Total Operating
           Expenses              55%     56%      64%    63%      1%    (1%)

  OPERATING INCOME               45%     44%      36%    37%      4%    (4%)

    Net investment losses related
     to equity securities         0%     (8%)     (1%)   (3%)   (99%)  (54%)
    Other income (expense), net   0%      0%       1%     1%   (613%)   19%

  INCOME BEFORE TAXES            45%     36%      36%    35%     28%     0%

    Provision for income taxes   15%     12%      12%    12%     22%    (6%)

  NET INCOME                     30%     24%      24%    23%     31%     4%


                            ORACLE CORPORATION

                  CONDENSED CONSOLIDATED BALANCE SHEETS
                             ($ in thousands)

                                                May 31,           May 31,
                                                 2003              2002
        ASSETS
        Current Assets
          Cash and cash equivalents           $4,737,257        $3,095,109
          Short-term investments               1,781,763         2,746,069
          Trade receivables, net               1,920,291         2,034,996
          Deferred tax assets                    380,892           451,994
          Other current assets                   407,478           399,776

             Total Current Assets              9,227,681         8,727,944

        Long-term investments                    232,501           405,883
        Property, net                          1,062,313           986,970
        Deferred tax assets                      196,773           233,359
        Intangible and other assets              345,110           446,206

        TOTAL ASSETS                         $11,064,378       $10,800,362


        LIABILITIES AND STOCKHOLDERS' EQUITY

        Current Liabilities
          Current portion of long-term debt     $153,126              $450
          Accounts payable                       227,903           226,943
          Income taxes payable                   891,967         1,091,293
          Other current liabilities            1,476,557         1,399,660
          Deferred revenues                    1,409,234         1,241,471

             Total Current Liabilities         4,158,787         3,959,817

        Long-term debt                           175,455           298,391
        Deferred tax liabilities                 185,859           204,073
        Other long-term liabilities              224,521           220,791
        Stockholders' equity                   6,319,756         6,117,290

        TOTAL LIABILITIES AND STOCKHOLDERS'
         EQUITY                              $11,064,378       $10,800,362


                            ORACLE CORPORATION

             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             ($ in thousands)

                                                         Year Ended
                                                           May 31,
                                                  2003              2002
    Cash Flows From Operating Activities:
      Net income                               $2,307,026        $2,224,005
      Adjustments to reconcile net
       income to net cash provided by
       operating activities:
        Depreciation                              242,700           273,890
        Amortization of intangible assets          83,623            89,593
        Provision for trade receivable accounts   128,207           194,975
        Net investment losses related to
         equity securities                        111,243           243,515
        Deferred income taxes                      89,600          (160,004)
        Changes in assets and liabilities:
          Decrease in trade receivables           118,922           229,631
          (Increase) decrease in prepaid
           expenses and other assets               40,731           (22,886)
          Decrease in accounts payable
           and other current liabilities          (87,664)         (339,650)
          Increase (decrease) in income
           taxes payable                          (80,960)          383,779
          Increase in deferred revenues            65,489             4,609
          Increase in other long-term
           liabilities                              3,951            13,820
      Net cash provided by operating
       activities                               3,022,868         3,135,277

    Cash Flows From Investing Activities:
        Purchases of investments               (4,712,942)       (6,087,047)
        Proceeds from maturities and
         sale of investments                    5,942,066         4,384,419
        Capital expenditures                     (123,218)         (278,025)
        Purchase of office buildings             (168,165)               --
        Increase in other assets                  (42,723)          (49,350)
      Net cash provided by (used for)
       investing activities                       895,018        (2,030,003)

    Cash Flows From Financing Activities:
        Payments for repurchase of
         common stock                          (2,653,033)       (2,793,198)
        Proceeds from issuance of common
         stock                                    356,373           332,602
        Settlement of forward contract           (166,260)               --
        Borrowings (repayments) under
         notes payable and long-term debt           9,050            (4,945)
      Net cash used for financing activities   (2,453,870)       (2,465,541)
    Effect of exchange rate changes on
     cash and cash equivalents                    178,132             6,210

      Net increase (decrease) in cash
       and cash equivalents                     1,642,148        (1,354,057)
      Cash and cash equivalents at
       beginning of period                      3,095,109         4,449,166
      Cash and cash equivalents at end
       of period                               $4,737,257        $3,095,109

CONTACT: Joelle Fitzgerald, Director, Investor Relations,
+1-650-506-4073, or Jim Finn, Vice President, Corporate Communications,
+1-212-521-4805, both of Oracle Corporation

Web site: http://www.oracle.com/tellmemore/?1734560