Earnings Press Releases
Oracle Corporation Reports Record First Quarter; EPS $0.20
Total Revenue Growth Up 28 Percent
REDWOOD SHORES, Calif., Sept. 10, 1998 -- Oracle Corporation
(Nasdaq: ORCL) today announced record first quarter results for the period
ended August 31, 1998. Revenues for the first quarter increased 28 percent
(33 percent in local currencies) to $1.7 billion from $1.4 billion in the same
period last year. Net income for the period increased 30 percent to
$195 million, or $0.20 per share, compared to net income of $150 million, or
$0.15 per share, in the same period last year, excluding one-time charges for
the acquisitions of Treasury Services Corporation and Navio Communications,
Inc. Giving effect to the one-time charges, net income for the previous
period was $8 million.
Revenue from Oracle's two businesses, database and applications, totaled
$7.5 billion in the last four quarters. The database business, including
database, tools and related services, grew 25 percent to $1.3 billion in
revenues for the quarter and $5.6 billion for the last four quarters,
continuing its position as the largest database business in the world.
Revenues from the applications business and related services grew 37 percent
to $0.5 billion in revenues for the first fiscal quarter and $2.0 billion for
the last four quarters, continuing Oracle's position as the second largest
applications business in the world.
Product related revenues (license and support) in the first quarter grew
by 19 percent versus the same period last year, led by strong growth in
database products. Oracle's Education and Consulting services revenue
increased 48 percent during the quarter, indicating continued strong demand
for both businesses.
Oracle Americas led revenue growth by geographic region, up 37 percent,
followed by EMEA (Europe, Middle East and Africa), up 33 percent (34 percent
in local currencies), versus the same period last year. Asia Pacific was down
14 percent in reported dollars (up 7 percent in local currencies) versus the
same period last year, reflecting continuing weak economic conditions in Asia
Pacific.
Oracle made a number of significant announcements during the quarter:
* Oracle announced the full availability of Oracle(R) Application Server
4.0, delivering the first comprehensive and open platform to customers
enabling enterprise application features for multi-tier Internet Computing.
New Java features make the server 100 percent Java programmable, enabling
organizations to deploy and manage all of their applications on a standard
server platform, rather than on hundreds or thousands of desktop PCs.
* Oracle announced key executive appointments to further extend its focus
and capabilities in both its applications and database businesses. George
Roberts, senior vice president and an eight year Oracle veteran, was appointed
to lead database and related product sales in the U.S. and Canada. Peter
Dunning, who recently joined from SAP, was named to lead Oracle's North
American applications sales. Edward Sanderson, senior vice president of
Americas Consulting, expanded his responsibilities to include oversight of
Latin America's overall business.
* Oracle broadened its Front Office applications solution by announcing
the signing of an agreement to acquire Versatility Inc., a leading vendor of
computer telephony integration (CTI)-enabled customer interaction software.
The Versatility product series complements Oracle's inbound service call
center solution with outbound telesales and telemarketing functionality.
Versatility will also bring a strong customer base in the telecommunications
and financial services sector as well as experienced sales and professional
service capabilities. The acquisition, which will be accounted for as a cash
purchase transaction valued at approximately $12 million, is estimated to
close by the end of the calendar year.
* Oracle Applications(R) was selected as the 1998 ERP/MRP "Product of the
Year" by the readers of Managing Automation, a leading manufacturing
publication. The awards are based solely on votes from the monthly magazine's
subscribers, as the readership of more than 100,000 casts ballots for their
favorite software products in a variety of categories including ERP/MRP.
Oracle is the only major ERP vendor to offer applications to meet the specific
needs of both the discrete and process manufacturing industries.
* Oracle announced strategic marketing and technology relationships with
the world's top four Linux vendors, Red Hat Software, VA Research, SuSE, and
Pacific HiTech. The availability of Oracle8 and Oracle Applications on Linux
will enable current Linux users to deploy enterprise-class applications with
unparalleled performance at the lowest possible cost. Linux is an open UNIX
operating system that is available for download from the Internet at no charge
and is a strong leader in the Internet service provider (ISP) market. It is
also the fastest growing UNIX platform in the enterprise market with an
estimated 7 million users, according to Linux Online.
* Oracle announced Y2K solutions for new mid-sized and Fortune 1000
customers. For mid-sized companies, Oracle is offering FastForward Financials
Y2K, a fixed-price solution that includes financial accounting software,
consulting, education and support. Several customers including Impac Hotels,
Propeller, Inc., Rhythms NetConnections and 1-800-FLOWERS have already
implemented Oracle Y2K compliant financial accounting systems in less than
60 days.
"This was a critical transition quarter for us that tested a more focused
and productive organization," said Ray Lane, Oracle's President and Chief
Operating Officer. "We continued to grow in the database business with
outstanding results in the U.S. and Europe, we really focused our applications
business and achieved several significant competitive wins, and our services
business continues to set new records ... all around, a quarter that exceeded
our expectations."
"The phenomenal growth of the Internet is driving demand for our database
technology," said Lawrence J. Ellison, Oracle's Chairman and CEO. "Today,
Oracle is the foundation of every popular Internet site from Amazon.com to
Yahoo!"
Oracle Corporation is the world's leading supplier of software for
information management, and the world's second largest independent software
company. With annual revenues of over $7.5 billion, the company offers its
database, tools and application products, along with related consulting,
education, and support services, in more than 145 countries around the world.
For more information about Oracle, please call Oracle Investor Relations
at 650-506-4073 or see Oracle's World Wide Web page: http://www.oracle.com
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act
1995:
Information in this release relating to Oracle's future prospects 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) Management's ability to
manage growth, continuously hire and retain significant numbers of qualified
employees, forecast revenues and control expenses continues to be a challenge.
An unexpected decline in the growth rate of revenues without a corresponding
and timely slowdown in expense growth could have a material adverse effect on
results of operations. (2) 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. (3) Intense competition
in the various markets in which Oracle competes may put pressure on Oracle to
reduce prices on certain products, particularly in the departmental database
marketplace. (4) Delays in product delivery or closing of sales can cause
quarterly revenues and income to fall significantly short of anticipated
levels. (5) Oracle is introducing new products, such as web applications
servers and network computing software; the market acceptance and contribution
to Oracle's revenues of these products cannot be assured. (6) A significant
amount of current demand for applications software may be generated by
customers in the process of replacing and upgrading applications in order to
accommodate the change in date to the year 2000. Once such customers have
completed such preparations, the software industry and Oracle may experience a
significant deceleration from the strong annual growth rates recently
experienced in the applications software marketplace. In addition, Oracle may
generally experience increased expenses in addressing issues associated with
the transition to software that is year 2000 compliant. 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/.
NOTE: Oracle is a registered trademark of Oracle Corporation. All other
trademarks are property of their respective holders.
ORACLE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share data)
(unaudited)
1st
1st Quarter Ended Quarter
August 31, 1997
------------------ Excluding
Acquisition
1998 1997 Charges (a)
---- ---- --------
REVENUES
Licenses and other $ 582,464 $ 530,642 $ 530,642
Services 1,166,646 838,187 838,187
--------- --------- ---------
Total Revenues 1,749,110 1,368,829 1,368,829
--------- --------- ---------
OPERATING EXPENSES
Sales and marketing 510,076 449,451 449,451
Cost of services 679,290 468,167 468,167
Research and development (b) 187,623 159,667 159,667
General and administrative 94,284 75,514 75,514
Acquired in-process
research and development (a) $ -- 167,054 $ --
--------- --------- ---------
Total Operating Expenses 1,471,273 1,319,853 1,152,799
--------- --------- ---------
OPERATING INCOME 277,837 48,976 216,030
Other income (expense) (a) 22,166 39,974 14,248
--------- --------- ---------
INCOME BEFORE TAXES 300,003 88,950 230,278
Provision for income taxes 105,001 80,479 80,479
--------- --------- ---------
NET INCOME (a) $ 195,002 $ 8,471 $ 149,799
--------- --------- ---------
--------- --------- ---------
EARNINGS PER SHARE (a)
Basic $ 0.20 $ 0.01 $ 0.15
Diluted $ 0.20 $ 0.01 $ 0.15
Shares Outstanding
Basic 972,894 979,285 979,285
Diluted 989,149 1,006,266 1,006,266
(a) Acquisition charges for the period ended August 31, 1997 included
in-process research and development charges of $91,500 and $75,554,
respectively, for the Treasury Services Corporation and Navio
Communications, Inc. merger transactions that closed in August, 1997.
Excluding the effect of these transactions, which also included a
credit of $25,726 for minority interest in other income (expense),
the provision for income taxes would have been 35% and net income and
earnings per share for the quarter ended August 31, 1997 would have
been $149,799 and $0.15 per share, respectively.
(b) In accordance with Statement of Financial Accounting Standards
No. 86, $7,140 and $4,442 of software development costs were
capitalized in the quarters ended August 31, 1998 and 1997,
respectively. Amortization of capitalized software development
costs were $7,321 and $4,485 in the quarters ended August 31, 1998
and 1997, respectively.
ORACLE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
August 31, May 31,
1998 1998
(unaudited)
ASSETS
Current Assets
Cash and short term investments $ 2,301,896 $ 1,919,199
Trade receivables, net 1,351,416 1,857,480
Prepaid and refundable income taxes 254,615 260,624
Other current assets 226,449 285,747
--------- ---------
Total Current Assets 4,134,376 4,323,050
--------- ---------
Long-term cash investments 196,935 186,511
Property and equipment, net 952,849 934,350
Computer software development costs, net 98,832 99,012
Other assets 308,471 276,088
--------- ---------
TOTAL ASSETS $ 5,691,463 $ 5,819,011
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable, including
current maturities $ 3,600 $ 2,924
Accounts payable 246,004 239,698
Income taxes 116,614 181,354
Customer advances and unearned revenues 956,370 877,087
Other current liabilities 912,177 1,183,102
--------- ---------
Total Current Liabilities 2,234,765 2,484,165
--------- ---------
Long-term debt 304,204 304,337
Long-term liabilities 55,727 57,095
Deferred income taxes 15,568 15,856
Stockholders' equity 3,081,199 2,957,558
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 5,691,463 $ 5,819,011
--------- ---------
--------- ---------
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