Earnings Press Releases
Oracle Corporation Reports First Quarter 1998 Results, EPS $0.15, Excluding One-Time Charges
Oracle Applications Related Business Up 112%
REDWOOD SHORES, Calif., Sept. 16, 1997 -- Oracle Corporation
(Nasdaq: ORCL) today reported results for the quarter ended August 31, 1997.
Revenues increased 30 percent (36 percent in local currencies) to
$1.369 billion from $1.052 billion in the same period last year. Net income
for the period increased 33 percent to $149.8 million, or $0.15 per share
(excluding one-time charges in connection with current quarter acquisitions),
compared to net income of $113 million, or $0.11 per share, in the first
quarter of fiscal 1997. Giving effect to the one-time charges, net income for
the quarter was $40.5 million, or $0.04 per share. All of the share and
per-share amounts in this release have been adjusted to reflect the
3-for-2 stock split effective August 15, 1997.
Applications license revenue led overall license growth at 96 percent,
confirming the continued strong demand for Oracle's flexible, easy to
implement, end-user business applications. Overall license and other sales
grew 15 percent year-to-year in the first fiscal quarter. Oracle Services,
which includes support, consulting and education, grew 42 percent during the
same period.
Geographically, Oracle experienced a 6 percentage point negative impact on
worldwide revenue growth for the first fiscal quarter. EMEA (Europe, Middle
East and Africa) had the greatest currency impact reporting revenue growth at
20 percent, or 33 percent in local currencies. Asia Pacific reported revenue
growth at 32 percent, or 43 percent in local currencies. Americas reported
revenue growth, up 36 percent, or 37 percent in local currencies, versus the
same period last year.
Oracle made a number of significant announcements during the quarter:
* Oracle officially launched Oracle8(TM) -- the Database for Network
Computing(TM), Oracle's most advanced version of its flagship product offers a
ten-fold improvement in performance and a ten-fold increase in the number of
users versus its previous version. Oracle8 is a versatile information platform
that enables high-speed transactions, better business decisions, and
sophisticated object-relational applications.
* Oracle and Netscape announced the merger of their two high-profile,
industry-leading affiliates, Navio Communications, Inc. and Network Computer,
Inc. The new company, called Network Computer, Inc. plans to accelerate the
adoption of network computers in the consumer, corporate and educational
markets and make the power of the Internet available to everyone. The one-time
after-tax net charge for the write-off of in-process research and development
expenses for this transaction in the first quarter of 1998 was $49.8 million,
or $0.05 per share.
* Oracle and British Petroleum announced they have completed a transaction
for Oracle to acquire and distribute the downstream oil commercial processing
software application developed by BP called ISP. Oracle's existing suite of
oil and gas offerings, most notably for oil and gas exploration and
production, are further strengthened with the addition of the ISP solution for
refining and distribution.
* Oracle broadened its financial services vertical application leadership
position with the acquisition of Treasury Services Corporation, the leading
provider of profitability and risk analysis applications for large financial
institutions. The combined applications solution will provide financial
institutions worldwide with the only full range of enterprise-wide,
vertically-integrated offerings for large financial institutions. The
acquisition was structured as a purchase transaction valued at approximately
$120 million. The one-time after-tax net charge for the write-off of
in-process research and development expenses for this transaction in the first
quarter of 1998 was $59.5 million, or $0.06 per share.
* Oracle and Sun Microsystems announced a joint agreement to target the
workgroup database market with versions of Oracle8 for Sun's new two-processor
and four-processor Ultra Enterprise servers. By combining Oracle's
high-performance Oracle8 database with Sun's new server line, the two
companies are providing a very compelling alternative to Windows-NT based
solutions in the workgroup space. Oracle is encouraging a market of multiple
vendors and operating systems competing in the workgroup and medium-size
business arena, while at the same time maintaining its own aggressive NT
solution.
* Oracle unveiled results from an independent study by Business Research
Group (BRG) comparing total cost of ownership (TCO) for Windows NT databases.
The study found that Oracle database software on Windows NT provides the
lowest TCO per customer site and more than twice the economies of scale over
Microsoft's SQL Server database software.
"We were pleased with our overall performance, led by strong growth in
Applications and Services," said Raymond J. Lane, Oracle's president and chief
operating officer. "Areas where we focused management attention last year,
such as EMEA, verticals and NT, are showing good results. Looking ahead to the
remainder of the fiscal year, Oracle8 and our Web Applications Server,
position us well to gain marketshare."
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 $6 billion, the company offers its database,
tools and application products, along with related consulting, education, and
support services, in more than 140 countries around the world.
For more information about Oracle, call Oracle Investor Relations at
650-506-4073. Oracle's World Wide Web address is (URL) 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 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
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, refer to the "Risk Factors" section of Oracle Corporation's SEC
filings, including, but not limited to, its annual report on Form 10-K for the
year ended May 31, 1997, copies of which may be obtained by contacting Oracle
Corporation's Investor Relations Department at 415-506-4073 or Oracle's
Fax-on-Demand service 800-ORCL-NOW (672-5669).
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 Quarter Ended
August 31,
------------------------
1997 1996
---- ----
REVENUES
Licenses and other $ 530,642 $ 461,848
Services 838,187 590,472
--------- ---------
Total Revenues 1,368,829 1,052,320
OPERATING EXPENSES
Sales and marketing 449,451 359,850
Cost of services 468,167 336,107
Research and development (1) 159,667 117,209
General and administrative 75,514 70,279
Acquired in-process research and
development (2) 167,054 --
--------- ---------
Total Operating Expenses 1,319,853 883,445
--------- ---------
OPERATING INCOME 48,976 168,875
Other income (expense) (3) 39,974 7,330
--------- ---------
INCOME BEFORE TAXES 88,950 176,205
Provision for income taxes 48,454 63,434
--------- ---------
NET INCOME $ 40,496 $ 112,771
--------- ---------
--------- ---------
EARNINGS PER SHARE (2) $ 0.04 $ 0.11
Common and common equivalent shares 1,006,266 1,010,715
(1) In accordance with Statement of Financial Accounting Standards
No. 86, $4,442 and $9,508 were capitalized in the quarters ended August 31,
1997 and 1996, respectively. Amortization of capitalized software costs was
$4,485 and $9,618 in the quarters ended August 31, 1997 and 1996,
respectively.
(2) Represents charges of $91,500 and $75,554, respectively, for the
Treasury Services Corporation and Navio Communications, Inc. merger
transactions that closed in August, 1997. Including the tax effects of the
transactions, as well as the minority interest's share of the one-time charge,
earnings per share for the first quarter of fiscal 1998 would have been
$0.15 per share.
(3) As a result of the merger and the resultant minority interest in the
combined entity, the minority interest's share of the one-time charge was
$25,726 which is included in Other income (expense) for the quarter ended
August 31, 1997.
ORACLE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
August 31, May 31,
1997 1997
---- ----
(unaudited)
ASSETS
Current Assets
Cash and short-term investments $1,488,326 $1,213,190
Trade receivables, net 1,183,408 1,540,470
Prepaid and refundable income taxes 265,785 274,366
Other current assets 197,326 243,070
--------- ---------
Total Current Assets 3,134,845 3,271,096
--------- ---------
Long-term cash investments 180,740 116,337
Property and equipment, net 882,018 868,948
Computer software development costs, net 98,938 98,981
Other assets 300,524 268,953
--------- ---------
TOTAL ASSETS $4,597,065 $4,624,315
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable, including current maturities $ 4,913 $ 3,361
Accounts payable 173,955 185,444
Income taxes 121,149 203,646
Customer advances and unearned revenues 694,123 602,862
Other current liabilities 787,307 926,826
--------- ---------
Total Current Liabilities 1,781,447 1,922,139
--------- ---------
Long-term debt 300,742 300,836
Long-term liabilities 29,649 24,226
Deferred income taxes 7,910 7,402
Stockholders' equity 2,477,317 2,369,712
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,597,065 $4,624,315
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Web site: http://www.oracle.com/
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