For Immediate Release Contact: Ken Bond Deborah

For Immediate Release
Contact:
Ken Bond
Oracle Investor Relations
1.650.607.0349
[email protected]
Deborah Hellinger
Oracle Corporate Communications
1.212.508.7935
[email protected]
ORACLE REPORTS GAAP EPS UP 8% to 56 CENTS, NON-GAAP EPS UP 5% to 68 CENTS
Cloud Software Subscriptions Revenues up 24%, Hardware Systems Products Revenues up 8%
REDWOOD SHORES, Calif., March 18, 2014 -- Oracle Corporation (NYSE: ORCL) today
announced that fiscal 2014 Q3 total revenues were up 4% to $9.3 billion. New software licenses
and cloud software subscriptions revenues were up 4% to $2.4 billion. Software license updates
and product support revenues were up 5% to $4.6 billion. Hardware systems products revenues
were up 8% to $725 million. GAAP operating income was up 7% to $3.6 billion and the GAAP
operating margin was 38%. Non-GAAP operating income was up 5% to $4.4 billion, and the
non-GAAP operating margin was 47%. GAAP net income was up 2% to $2.6 billion, while nonGAAP net income was unchanged at $3.1 billion. GAAP earnings per share were up 8% to
$0.56, while non-GAAP earnings per share were up 5% to $0.68. GAAP operating cash flow on
a trailing twelve-month basis was up 10% to $15 billion.
Without the impact of the US dollar strengthening compared to foreign currencies,
Oracle’s reported Q3 GAAP earnings per share would have been up 10% and non-GAAP
earnings per share would have been up 7%. In addition, GAAP and non-GAAP earnings per
share both include a non-operating $0.02 per share loss this quarter as a result of exchange rate
changes in Venezuela as compared to $0.01 last year. Excluding the impact of the US dollar
strengthening compared to foreign currencies and excluding Venezuela’s exchange loss impact
on both reporting periods, Oracle’s reported Q3 GAAP earnings per share would have been
$0.59, up 12%, and non-GAAP earnings per share would have been $0.71, up 8%. GAAP and
non-GAAP total revenues also would have been up 6%. GAAP new software licenses and cloud
software subscriptions revenues would have been up 6% and non-GAAP new software licenses
and cloud software subscriptions revenues would have been up 5%. Hardware systems product
revenues would have been up 10%.
“In constant currency, our Cloud Software Subscriptions revenues grew 25% and our
Engineered Systems revenue grew more than 30% in the quarter,” said Oracle President and
CFO, Safra Catz. “Oracle Cloud Applications and Engineered Systems are both rapidly growing,
billion dollar run-rate businesses. Those two high-growth businesses helped us deliver record
year-to-date operating cash flow, and a record $15 billion of operating cash flow over the past
twelve months.”
“Sales of Oracle’s Cloud Applications accelerated sharply in the quarter with bookings
growth of over 60%,” said Oracle President Mark Hurd. “Our quarterly Cloud Application
revenue is now approaching $300 million. All of our strategic Cloud Application Suites,
including Fusion Enterprise Resource Planning, Fusion Human Capital Management and Fusion
Customer Experience, posted triple-digit revenue growth.”
“Oracle’s Engineered Server Systems, including Exadata and SPARC SuperClusters,
achieved over a 30% constant currency growth rate in the quarter, while throughout the industry
traditional high-end server product lines are in steep decline,” said Oracle CEO, Larry Ellison.
“Our Engineered Systems business is growing rapidly for the same fundamental reason that our
Cloud Applications business is growing rapidly. In both cases, customers want us to integrate the
hardware and software and make it work together, so they don’t have to.”
The Board of Directors declared a quarterly cash dividend of $0.12 per share of
outstanding common stock. This dividend will be paid to stockholders of record as of the close
of business on April 8, 2014, with a payment date of April 29, 2014.
Q3 Fiscal 2014 Earnings Conference Call and Webcast
Oracle will hold a conference call and webcast today to discuss these results at 2:00 p.m.
Pacific. You may listen to the call by dialing (913) 312-6698, Passcode: 599932. To access the live
webcast of this event, please visit the Oracle Investor Relations website at
http://www.oracle.com/investor. In addition, Oracle’s Q3 results and Fiscal 2014 financial tables
are available on the Oracle Investor Relations website.
A replay of the conference call will also be available by dialing (719) 457-0820 or (888)
203-1112, Passcode: 8881061.
About Oracle
Oracle engineers hardware and software to work together in the cloud and in your data center. For
more information about Oracle (NYSE: ORCL), visit www.oracle.com or contact Investor Relations
at [email protected] 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 the rapid growth
of Oracle’s Engineered Systems and Cloud Application businesses, 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
March 18, 2014. Oracle undertakes no duty to update any statement in light of new information
or future events.
ORACLE CORPORATION
Q3 FISCAL 2014 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
2014
% of
Revenues
% Increase
(Decrease)
in US $
% Increase
(Decrease)
in Constant
Currency (1)
2,332
4,340
26%
48%
4%
5%
6%
7%
5%
8%
5%
6%
10%
7%
Three Months Ended February 28,
% of
Revenues
2013
REVENUES
New software licenses and cloud software subscriptions
Software license updates and product support
$
2,415
4,564
26%
49%
6,979
725
598
75%
8%
6%
6,672
671
570
74%
8%
6%
Hardware Systems Revenues
1,323
14%
1,241
14%
7%
9%
Services Revenues
1,005
11%
1,045
12%
(4%)
(2%)
9,307
100%
8,958
100%
4%
6%
1,928
286
379
207
804
1,292
251
560
(5)
38
21%
3%
4%
2%
9%
14%
3%
6%
0%
0%
1,802
306
337
219
854
1,186
260
586
32
42
20%
3%
4%
2%
10%
13%
3%
7%
0%
1%
7%
(7%)
13%
(5%)
(6%)
9%
(3%)
(4%)
(117%)
(9%)
9%
(4%)
15%
(4%)
(4%)
10%
(2%)
(4%)
(115%)
(9%)
5,740
62%
5,624
63%
2%
4%
OPERATING INCOME
Interest expense
Non-operating expense, net
3,567
(228)
(90)
38%
(2%)
(1%)
3,334
(205)
(39)
37%
(2%)
(1%)
7%
11%
132%
9%
11%
113%
INCOME BEFORE PROVISION FOR INCOME TAXES
3,249
35%
3,090
34%
5%
8%
684
7%
586
6%
17%
19%
28%
$
2,504
28%
2%
5%
$
$
0.53
0.52
Software Revenues
Hardware systems products
Hardware systems support
Total Revenues
OPERATING EXPENSES
Sales and marketing
Software license updates and product support
Hardware systems products
Hardware systems support
Services
Research and development
General and administrative
Amortization of intangible assets
Acquisition related and other
Restructuring
Total Operating Expenses
Provision for income taxes
NET INCOME
$
2,565
EARNINGS PER SHARE:
Basic
Diluted
$
$
0.57
0.56
$
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic
Diluted
4,496
4,575
4,735
4,812
(1) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to
provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information,
current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the
exchange rates in effect on May 31, 2013, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective
periods. Movements in international currencies relative to the United States dollar during the three months ended February 28, 2014 compared with the
corresponding prior year period decreased our revenues by 2 percentage points, operating expenses by 2 percentage points and operating income by 2 percentage
points.
1
ORACLE CORPORATION
Q3 FISCAL 2014 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
2014
GAAP
% Increase (Decrease)
in US $
Three Months Ended February 28,
2014
2013
Non-GAAP
GAAP
Adj.
2013
Non-GAAP
Adj.
% Increase (Decrease) in
Constant Currency (2)
GAAP
Non-GAAP
GAAP
Non-GAAP
TOTAL REVENUES (3) (4)
$
9,307
$
8
$
9,315
$
8,958
$
12
$
8,970
4%
4%
6%
6%
TOTAL SOFTWARE REVENUES (3)
New software licenses and cloud software subscriptions (3)
Software license updates and product support
$
6,979
2,415
4,564
$
6
5
1
$
6,985
2,420
4,565
$
6,672
2,332
4,340
$
10
6
4
$
6,682
2,338
4,344
5%
4%
5%
5%
4%
5%
6%
6%
7%
6%
5%
7%
TOTAL HARDWARE SYSTEMS REVENUES (4)
Hardware systems products
Hardware systems support (4)
$
1,323
725
598
$
2
2
$
1,325
725
600
$
1,241
671
570
$
2
2
$
1,243
671
572
7%
8%
5%
7%
8%
5%
9%
10%
7%
9%
10%
7%
TOTAL OPERATING EXPENSES
Stock-based compensation (5)
Amortization of intangible assets (6)
Acquisition related and other
Restructuring
$
5,740
198
560
(5)
38
$
(791)
(198)
(560)
5
(38)
$
4,949
-
$
5,624
172
586
32
42
$
(832)
(172)
(586)
(32)
(42)
$
4,792
-
2%
15%
(4%)
(117%)
(9%)
3%
*
*
*
*
4%
15%
(4%)
(115%)
(9%)
5%
*
*
*
*
OPERATING INCOME
$
3,567
$
799
$
4,366
$
3,334
$
844
$
4,178
OPERATING MARGIN %
38%
47%
37%
7%
5%
9%
6%
47%
111 bp.
30 bp.
120 bp.
24 bp.
INCOME TAX EFFECTS (7)
$
684
$
251
$
935
$
586
$
240
$
826
17%
13%
19%
15%
NET INCOME
$
2,565
$
548
$
3,113
$
2,504
$
604
$
3,108
2%
0%
5%
2%
DILUTED EARNINGS PER SHARE
$
0.56
$
0.68
$
0.52
$
0.65
8%
5%
10%
7%
4,812
(5%)
(5%)
(5%)
(5%)
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
4,575
-
4,575
4,812
-
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in
accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures,
please see Appendix A.
(2) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign
currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2013, which was the
last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.
(3) As of February 28, 2014, approximately $3 million in estimated revenues related to assumed cloud software subscriptions contracts will not be recognized for each of the remainder of fiscal 2014 and fiscal 2015 due to business combination accounting rules.
(4) As of February 28, 2014, approximately $1 million and $2 million in estimated revenues related to hardware systems support contracts will not be recognized for the remainder of fiscal 2014 and fiscal 2015, respectively, due to business combination accounting rules.
(5) Stock-based compensation was included in the following GAAP operating expense categories:
GAAP
Sales and marketing
Software license updates and product support
Hardware systems products
Hardware systems support
Services
Research and development
General and administrative
Subtotal
Acquisition related and other
Total stock-based compensation
$
$
42
6
1
1
7
99
42
198
198
Three Months Ended
February 28, 2014
Adj.
Non-GAAP
$
(42)
$
(6)
(1)
(1)
(7)
(99)
(42)
(198)
$
(198)
$
-
GAAP
$
$
Three Months Ended
February 28, 2013
Adj.
Non-GAAP
32
$
(32)
$
5
(5)
1
(1)
1
(1)
7
(7)
86
(86)
40
(40)
172
(172)
8
(8)
180
$
(180)
$
-
(6) Estimated future annual amortization expense related to intangible assets as of February 28, 2014 was as follows:
Remainder of Fiscal 2014
Fiscal 2015
Fiscal 2016
Fiscal 2017
Fiscal 2018
Fiscal 2019
Thereafter
Total intangible assets subject to amortization
In-process research and development
Total intangible assets, net
$
$
554
1,894
1,315
722
588
489
932
6,494
64
6,558
(7) Income tax effects were calculated reflecting an effective GAAP tax rate of 21.0% and 19.0% in the third quarter of fiscal 2014 and 2013, respectively, and an effective non-GAAP tax rate of 23.1% and 21.0% in the third quarter of fiscal 2014 and 2013, respectively. The
difference between our GAAP and non-GAAP tax rates in the third quarter of fiscal 2014 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 third quarter of fiscal 2013 was primarily due to the net tax effects of acquisition related items, including the tax effect of amortization of intangible assets, and the disproportionate rate impact of discrete items for the quarter.
*
Not meaningful
2
ORACLE CORPORATION
Q3 FISCAL 2014 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
2014
% of
Revenues
% Increase
(Decrease)
in US $
% Increase
(Decrease)
in Constant
Currency (1)
6,295
12,740
24%
49%
2%
6%
4%
7%
5%
(3%)
4%
6%
(2%)
6%
Nine Months Ended February 28,
% of
Revenues
2013
REVENUES
New software licenses and cloud software subscriptions
Software license updates and product support
$
6,447
13,511
24%
50%
19,958
2,108
1,800
74%
8%
7%
19,035
2,185
1,730
73%
8%
7%
Hardware Systems Revenues
3,908
15%
3,915
15%
0%
1%
Services Revenues
3,089
11%
3,283
12%
(6%)
(4%)
26,955
100%
26,233
100%
3%
4%
5,601
860
1,078
630
2,461
3,803
773
1,732
21
146
21%
3%
4%
2%
9%
14%
3%
6%
0%
1%
19%
3%
4%
3%
10%
14%
3%
7%
(1%)
1%
9%
0%
(1%)
(6%)
(8%)
6%
(3%)
(3%)
106%
(54%)
11%
2%
1%
(5%)
(6%)
7%
(2%)
(3%)
106%
(55%)
17,105
63%
63%
3%
5%
2%
15%
151%
4%
15%
64%
Software Revenues
Hardware systems products
Hardware systems support
Total Revenues
OPERATING EXPENSES
Sales and marketing
Software license updates and product support
Hardware systems products
Hardware systems support
Services
Research and development
General and administrative
Amortization of intangible assets
Acquisition related and other (2)
Restructuring
Total Operating Expenses
OPERATING INCOME
Interest expense
Non-operating expense, net
INCOME BEFORE PROVISION FOR INCOME TAXES
Provision for income taxes
$
5,120
860
1,087
670
2,668
3,586
798
1,789
(347)
318
16,549
9,850
(674)
(60)
37%
(3%)
0%
9,684
(588)
(24)
37%
(2%)
0%
9,116
34%
9,072
35%
0%
3%
1,807
7%
1,953
8%
(8%)
(5%)
27%
$
7,119
27%
3%
5%
$
$
1.48
1.46
NET INCOME
$
7,309
EARNINGS PER SHARE:
Basic
Diluted
$
$
1.61
1.58
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic
Diluted
4,546
4,616
4,798
4,873
(1) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information
to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this
information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States
dollars at the exchange rates in effect on May 31, 2013, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the
respective periods. Movements in international currencies relative to the United States dollar during the nine months ended February 28, 2014 compared with
the corresponding prior year period decreased our revenues by 1 percentage point, operating expenses by 2 percentage points and operating income by 2
percentage points.
(2) Acquisition related and other expenses for the nine months ended February 28, 2013 included a benefit of $306 million related to certain litigation and a net
benefit of $118 million due to an acquisition related item.
3
ORACLE CORPORATION
Q3 FISCAL 2014 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
2014
GAAP
% Increase (Decrease)
in US $
Nine Months Ended February 28,
2014
2013
Non-GAAP
GAAP
2013
Non-GAAP
% Increase (Decrease) in
Constant Currency (2)
GAAP
Non-GAAP
GAAP
Non-GAAP
TOTAL REVENUES (3) (4)
$
26,955
$
25
$
26,980
$
26,233
$
59
$
26,292
3%
3%
4%
4%
TOTAL SOFTWARE REVENUES (3)
New software licenses and cloud software subscriptions (3)
Software license updates and product support
$
19,958
6,447
13,511
$
14
12
2
$
19,972
6,459
13,513
$
19,035
6,295
12,740
$
49
37
12
$
19,084
6,332
12,752
5%
2%
6%
5%
2%
6%
6%
4%
7%
6%
4%
7%
TOTAL HARDWARE SYSTEMS REVENUES (4)
Hardware systems products
Hardware systems support (4)
$
3,908
2,108
1,800
$
11
11
$
3,919
2,108
1,811
$
3,915
2,185
1,730
$
10
10
$
3,925
2,185
1,740
0%
(3%)
4%
0%
(3%)
4%
1%
(2%)
6%
1%
(2%)
6%
TOTAL OPERATING EXPENSES
Stock-based compensation (5)
Amortization of intangible assets (6)
Acquisition related and other
Restructuring
$
17,105
579
1,732
21
146
$ (2,478)
(579)
(1,732)
(21)
(146)
$
14,627
-
$
16,549
536
1,789
(347)
318
$ (2,296)
(536)
(1,789)
347
(318)
$
14,253
-
3%
8%
(3%)
106%
(54%)
3%
*
*
*
*
5%
8%
(3%)
106%
(55%)
4%
*
*
*
*
OPERATING INCOME
$
9,850
$
$
12,353
$
9,684
$ 2,355
$
12,039
OPERATING MARGIN %
Adj.
2,503
37%
46%
Adj.
37%
46%
2%
3%
4%
4%
(37) bp.
0 bp.
(23) bp.
1 bp.
INCOME TAX EFFECTS (7)
$
1,807
$
783
$
2,590
$
1,953
$
630
$
2,583
(8%)
0%
(5%)
2%
NET INCOME
$
7,309
$
1,720
$
9,029
$
7,119
$ 1,725
$
8,844
3%
2%
5%
4%
DILUTED EARNINGS PER SHARE
$
1.96
$
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
1.58
$
4,616
-
4,616
1.46
$
4,873
-
1.81
8%
8%
11%
10%
4,873
(5%)
(5%)
(5%)
(5%)
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements
prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the
usefulness of these measures, please see Appendix A.
(2) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the
effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect
on May 31, 2013, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.
(3) As of February 28, 2014, approximately $3 million in estimated revenues related to assumed cloud software subscriptions contracts will not be recognized for each of the remainder of fiscal 2014 and fiscal 2015 due to business combination accounting
rules.
(4) As of February 28, 2014, approximately $1 million and $2 million in estimated revenues related to hardware systems support contracts will not be recognized for the remainder of fiscal 2014 and fiscal 2015, respectively, due to business combination
accounting rules.
(5) Stock-based compensation was included in the following GAAP operating expense categories:
GAAP
Sales and marketing
Software license updates and product support
Hardware systems products
Hardware systems support
Services
Research and development
General and administrative
Subtotal
Acquisition related and other
Total stock-based compensation
$
123
16
4
4
20
285
127
579
4
$
583
Nine Months Ended
February 28, 2014
Adj.
Non-GAAP
$
(123)
$
(16)
(4)
(4)
(20)
(285)
(127)
(579)
(4)
$
(583)
$
-
GAAP
$
$
Nine Months Ended
February 28, 2013
Adj.
Non-GAAP
112
$
(112)
$
15
(15)
2
(2)
3
(3)
24
(24)
258
(258)
122
(122)
536
(536)
30
(30)
566
$
(566)
$
-
(6) Estimated future annual amortization expense related to intangible assets as of February 28, 2014 was as follows:
Remainder of Fiscal 2014
Fiscal 2015
Fiscal 2016
Fiscal 2017
Fiscal 2018
Fiscal 2019
Thereafter
Total intangible assets subject to amortization
In-process research and development
Total intangible assets, net
$
$
554
1,894
1,315
722
588
489
932
6,494
64
6,558
(7) Income tax effects were calculated reflecting an effective GAAP tax rate of 19.8% and 21.5% in the first nine months of fiscal 2014 and 2013, respectively, and an effective non-GAAP tax rate of 22.3% and 22.6% in the first nine months of fiscal 2014 and
2013, respectively. The differences between our GAAP and non-GAAP tax rates in the first nine months of fiscal 2014 and 2013 were primarily due to the net tax effects of acquisition related items, including the tax effects of amortization of intangible
assets.
*
Not meaningful
4
ORACLE CORPORATION
Q3 FISCAL 2014 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
February 28,
2014
May 31,
2013
ASSETS
Current Assets:
Cash and cash equivalents
Marketable securities
Trade receivables, net
Inventories
Deferred tax assets
Prepaid expenses and other current assets
$
Total Current Assets
16,832
20,393
4,071
227
1,012
1,869
$
14,613
17,603
6,049
240
974
2,213
44,404
41,692
Non-Current Assets:
Property, plant and equipment, net
Intangible assets, net
Goodwill
Deferred tax assets
Other assets
3,052
6,558
29,322
720
2,506
3,053
6,640
27,343
766
2,318
Total Non-Current Assets
42,158
40,120
TOTAL ASSETS
$
86,562
$
81,812
$
1,516
396
1,583
438
6,473
2,686
$
419
1,851
911
7,118
2,573
LIABILITIES AND EQUITY
Current Liabilities:
Notes payable, current and other current borrowings
Accounts payable
Accrued compensation and related benefits
Income taxes payable
Deferred revenues
Other current liabilities
Total Current Liabilities
Non-Current Liabilities:
Notes payable and other non-current borrowings
Income taxes payable
Other non-current liabilities
Total Non-Current Liabilities
Equity
TOTAL LIABILITIES AND EQUITY
$
5
13,092
12,872
22,677
4,055
1,503
18,494
3,899
1,402
28,235
23,795
45,235
45,145
86,562
$
81,812
ORACLE CORPORATION
Q3 FISCAL 2014 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
Nine Months Ended February 28,
2014
2013
Cash Flows From Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
Amortization of intangible assets
Deferred income taxes
Stock-based compensation
Tax benefits on the exercise of stock options and vesting of restricted stock-based awards
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards
Other, net
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net
Decrease (increase) in inventories
Decrease (increase) in prepaid expenses and other assets
Decrease in accounts payable and other liabilities
Decrease in income taxes payable
Decrease in deferred revenues
$
Net cash provided by operating activities
Cash Flows From Investing Activities:
Purchases of marketable securities and other investments
Proceeds from maturities and sales of marketable securities and other investments
Acquisitions, net of cash acquired
Capital expenditures
Net cash used for investing activities
Cash Flows From Financing Activities:
Payments for repurchases of common stock
Proceeds from issuances of common stock
Payments of dividends to stockholders
Proceeds from borrowings, net of issuance costs
Repayments of borrowings
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards
Distributions to noncontrolling interests
Net cash used for financing activities
Effect of exchange rate changes on cash and cash equivalents
7,309
$
452
1,732
(307)
583
288
(162)
72
400
1,789
108
566
372
(220)
120
2,006
20
181
(730)
(457)
(522)
2,269
(48)
(241)
(912)
(853)
(809)
10,465
9,660
(25,550)
23,110
(3,066)
(426)
(24,027)
22,359
(1,592)
(467)
(5,932)
(3,727)
(7,841)
1,519
(1,640)
5,566
162
(28)
(8,204)
1,300
(1,433)
4,974
(1,700)
220
(31)
(2,262)
(4,874)
(52)
Net increase in cash and cash equivalents
87
2,219
Cash and cash equivalents at beginning of period
1,146
14,613
$
Cash and cash equivalents at end of period
6
7,119
16,832
14,955
$
16,101
ORACLE CORPORATION
Q3 FISCAL 2014 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
Fiscal 2013
Q1
GAAP Operating Cash Flow
$
Capital Expenditures (2)
Free Cash Flow
Free Cash Flow as a % of Net Income
13,993
$
(627)
$
% Growth over prior year
GAAP Net Income
Q2
13,366
10,175
131%
13,533
$
$
12,823
10,564
$
(684)
$
13,033
2%
$
Q4
13,717
(710)
8%
$
Fiscal 2014
Q3
10,571
121%
123%
14,224
$
(650)
$
1%
$
Q1
13,574
10,925
124%
14,845
$
(664)
$
4%
$
Q2
14,181
6%
$
11,082
128%
15,196
$
(578)
$
14,618
11,054
132%
15,029
(609)
$
14%
$
Q4
Q3
14,420
11%
$
11,115
130%
(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.
7
ORACLE CORPORATION
Q3 FISCAL 2014 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($ in millions)
Q1
REVENUES
New software licenses and cloud software subscriptions
Software license updates and product support
Software Revenues
$
Hardware systems products
Hardware systems support
Hardware Systems Revenues
Services Revenues
Total Revenues
AS REPORTED REVENUE GROWTH RATES
New software licenses and cloud software subscriptions
Software license updates and product support
Software Revenues
$
Fiscal 2013
Q3
Q2
1,574
4,140
5,714
$
2,389
4,260
6,649
$
2,332
4,340
6,672
Q4
$
Fiscal 2014
Q3
TOTAL
Q1
Q2
4,026
4,402
8,428
$ 10,321
17,142
27,463
$ 1,653
4,431
6,084
$ 2,380
4,516
6,896
$
2,415
4,564
6,979
Q4
TOTAL
$
6,447
13,511
19,958
779
574
1,353
734
587
1,321
671
570
1,241
849
582
1,431
3,033
2,313
5,346
669
592
1,261
714
609
1,323
725
598
1,323
2,108
1,800
3,908
1,114
1,124
1,045
1,088
4,371
1,027
1,056
1,005
3,089
8,958
$ 10,947
$ 37,180
$ 8,372
$ 9,275
9,307
$ 26,955
8,181
$
9,094
$
$
5%
3%
4%
17%
7%
10%
(2%)
7%
4%
1%
6%
4%
4%
6%
5%
5%
7%
6%
0%
6%
4%
4%
5%
5%
2%
6%
5%
(24%)
(11%)
(19%)
(23%)
(6%)
(16%)
(23%)
(6%)
(16%)
(13%)
(3%)
(9%)
(21%)
(7%)
(15%)
(14%)
3%
(7%)
(3%)
4%
0%
8%
5%
7%
(3%)
4%
0%
Services Revenues
(6%)
(5%)
(8%)
(9%)
(7%)
(8%)
(6%)
(4%)
(6%)
Total Revenues
(2%)
3%
(1%)
0%
0%
2%
2%
4%
3%
10%
8%
9%
18%
8%
11%
0%
8%
5%
2%
8%
5%
6%
8%
7%
7%
8%
8%
1%
7%
5%
6%
7%
6%
4%
7%
6%
(21%)
(6%)
(15%)
(23%)
(5%)
(16%)
(22%)
(5%)
(15%)
(12%)
(1%)
(8%)
(19%)
(4%)
(13%)
(13%)
5%
(6%)
(2%)
5%
2%
10%
7%
9%
(2%)
6%
1%
Services Revenues
0%
(3%)
(7%)
(8%)
(5%)
(6%)
(5%)
(2%)
(4%)
Total Revenues
3%
5%
0%
2%
2%
4%
3%
6%
4%
Hardware systems products
Hardware systems support
Hardware Systems Revenues
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses and cloud software subscriptions
Software license updates and product support
Software Revenues
Hardware systems products
Hardware systems support
Hardware Systems Revenues
GEOGRAPHIC REVENUES
REVENUES
Americas
Europe, Middle East & Africa
Asia Pacific
Total Revenues
$ 4,324
2,383
1,474
$ 8,181
$ 4,787
2,701
1,606
$ 9,094
49,145
22,584
44,170
115,899
49,584
22,594
45,051
117,229
$
$
4,698
2,745
1,515
8,958
$ 5,911
3,328
1,708
$ 10,947
50,402
22,592
45,663
118,657
51,519
22,860
45,855
120,234
$ 19,719
11,158
6,303
$ 37,180
$ 4,517
2,439
1,416
$ 8,372
$ 4,995
2,817
1,463
$ 9,275
$ 4,953
2,923
1,431
$ 9,307
53,465
23,349
45,513
122,327
53,073
23,178
45,617
121,868
53,799
23,350
45,561
122,710
$ 14,466
8,178
4,311
$ 26,955
HEADCOUNT
GEOGRAPHIC AREA
Americas
Europe, Middle East & Africa
Asia Pacific
Total Company
(1)
The sum of the quarterly financial information may vary from year-to-date financial information due to rounding.
(2)
We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for
assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for
entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2013 and 2012 for the fiscal 2014 and fiscal
2013 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.
8
ORACLE CORPORATION
Q3 FISCAL 2014 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1)
($ in millions)
Q1
Fiscal 2013
Q3
Q2
Q4
TOTAL
Q1
Fiscal 2014
Q3
Q2
Q4
TOTAL
AMERICAS
New software licenses and cloud software subscriptions
Hardware systems products
$
$
814
380
$
$
1,253 $
370 $
1,205 $
307 $
2,194 $
439 $
5,465
1,495
$
$
926
335
$
$
1,295 $
381 $
1,287
348
$
$
3,507
1,064
AS REPORTED GROWTH RATES
New software licenses and cloud software subscriptions
Hardware systems products
12%
(20%)
22%
(25%)
(2%)
(25%)
3%
(12%)
7%
(20%)
14%
(12%)
3%
3%
7%
13%
7%
1%
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses and cloud software subscriptions
Hardware systems products
14%
(19%)
22%
(25%)
(1%)
(25%)
4%
(12%)
8%
(20%)
15%
(11%)
5%
4%
9%
16%
9%
2%
1,224 $
228 $
2,959
842
EUROPE / MIDDLE EAST / AFRICA
New software licenses and cloud software subscriptions
Hardware systems products
$
$
403
214
$
$
641
198
$
$
690
201
$
$
$
$
388
177
$
$
675
184
$
$
727
218
$
$
1,789
579
AS REPORTED GROWTH RATES
New software licenses and cloud software subscriptions
Hardware systems products
(8%)
(38%)
10%
(27%)
0%
(24%)
5%
(12%)
3%
(26%)
(4%)
(18%)
5%
(7%)
5%
8%
3%
(6%)
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses and cloud software subscriptions
Hardware systems products
1%
(30%)
12%
(25%)
1%
(24%)
5%
(11%)
5%
(23%)
(5%)
(20%)
3%
(8%)
3%
8%
1%
(7%)
ASIA PACIFIC
New software licenses and cloud software subscriptions
Hardware systems products
$
$
357
185
$
$
495
166
$
$
437
163
$
$
608
182
$
$
1,897
696
$
$
339
157
$
$
410
149
$
$
401
159
$
$
1,151
465
AS REPORTED GROWTH RATES
New software licenses and cloud software subscriptions
Hardware systems products
8%
(12%)
13%
(10%)
(3%)
(16%)
(12%)
(17%)
(1%)
(14%)
(5%)
(15%)
(17%)
(10%)
(8%)
(2%)
(11%)
(10%)
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses and cloud software subscriptions
Hardware systems products
12%
(10%)
13%
(12%)
1%
(14%)
(7%)
(14%)
3%
(12%)
5%
(10%)
(10%)
(6%)
(2%)
2%
(3%)
(5%)
1,574 $
779 $
2,389 $
734 $
2,332 $
671 $
4,026 $
849 $
AS REPORTED GROWTH RATES
New software licenses and cloud software subscriptions
Hardware systems products
5%
(24%)
17%
(23%)
(2%)
(23%)
1%
(13%)
4%
(21%)
5%
(14%)
0%
(3%)
4%
8%
2%
(3%)
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses and cloud software subscriptions
Hardware systems products
10%
(21%)
18%
(23%)
0%
(22%)
2%
(12%)
6%
(19%)
7%
(13%)
1%
(2%)
6%
10%
4%
(2%)
TOTAL COMPANY
New software licenses and cloud software subscriptions
Hardware systems products
(1)
$
$
10,321
3,033
$
$
1,653
669
$
$
2,380 $
714 $
2,415
725
$
$
6,447
2,108
The sum of the quarterly financial information may vary from year-to-date financial information due to rounding.
(2) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for
assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities
reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2013 and 2012 for the fiscal 2014 and fiscal 2013 constant
currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.
9
APPENDIX A
ORACLE CORPORATION
Q3 FISCAL 2014 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES
To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the tables, which exclude
certain business combination accounting entries and expenses related to acquisitions, as well as other significant expenses including
stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our nonGAAP 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 nonGAAP 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 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.
10

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