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Redwood Shores, Calif.
18-JUN-2002 06:00 AM
Today, Oracle Corporation announced financial results for its fiscal fourth quarter and full year 2002.
Fourth quarter net income was $760 million, or $0.14 per share excluding an impairment charge related to Oracle's investment in Liberate Technologies. This compares to net income of $0.15 per share a year ago. Including this charge, net income on a GAAP basis was $656 million, or $0.12 per share. Operating margin in the quarter reached a record 44% versus 39% in the fourth quarter of 2001.
Fourth quarter revenue was $2.8 billion. New software license sales were $1.15 billion while software license update sales were $643 million. Product support revenue was $385 million, consulting revenue was $487 million, and education and other revenue was $109 million.
For the full fiscal year 2002, revenue was $9.7 billion, while net income and earnings per share excluding the impairment charge were $2.3 billion, and $0.41, respectively. Including the charge, net income on a GAAP basis was $2.2 billion, and earnings per share were $0.39. This compares to $11 billion in revenue and $2.6 billion in net income, or $0.44 per share, for fiscal year 2001. The annual operating margin was a record 37%, compared to the previous historical high of 35% in the prior fiscal year.
"The true test of a management team is how well it performs in tough times," said Oracle CFO Jeff Henley. "During the worst technology recession I've seen in more than 20 years, Oracle's operating income margins increased to record levels and our operating income declined only 6% this fiscal year. This management team proved it can preserve profits even when times are tough."
"Database is the foundation of our software business and our database market position has never been stronger," said Oracle CEO Larry Ellison. "The latest database user surveys confirm that Oracle is the database used with 72% to 81% of enterprise applications among Fortune 100 companies. In addition, Oracle remains the overwhelming choice of users for future development, being four times more popular than IBM's DB2. With this huge lead in usage intentions the Oracle database should continue to gain market share in the years to come." 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 /investor.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 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) The slow economic recovery will continue to adversely affect purchasing decisions for computer software and services throughout the world. 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. The economic, political and other uncertainties caused (or exacerbated) by terrorist attacks upon the United States add to this 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, such as Oracle 9i database, Oracle 9iAS application server, eBusiness Suite and application hosting services; the market acceptance and contribution to Oracle's revenues of these new versions or products cannot be assured. (4) Oracle has made changes to
its pricing model, which could lead to a decline or delay in sales as its sales force and customers adjust to the new pricing policies. 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 /investor.
ORACLE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
Three Months Ended Twelve Months Ended
May 31, May 31,
------------------ ------------------
2002 2001 2002 2001
---- ---- ---- ----
REVENUES
Licenses and other $1,172,620 $1,656,238 $3,512,954 $4,706,797
Services (1) 1,601,161 1,633,992 6,159,639 6,253,895
---------- ---------- ---------- ----------
Total revenues 2,773,781 3,290,230 9,672,593 10,960,692
---------- ---------- ---------- ----------
OPERATING EXPENSES
Sales and marketing 587,532 811,888 2,208,981 2,691,322
Cost of services (1) 568,244 744,896 2,405,511 2,897,060
Research and development 282,142 319,829 1,076,156 1,138,591
General and administrative 109,592 118,691 411,213 456,628
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Total operating
expenses 1,547,510 1,995,304 6,101,861 7,183,601
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OPERATING INCOME 1,226,271 1,294,926 3,570,732 3,777,091
Net investment gains
(losses) related to
equity securities (2) (229,316) 3,385 (243,515) (17,087)
Other income (loss), net (1,188) 27,364 80,987 211,226
---------- ---------- ---------- ----------
INCOME BEFORE TAXES 995,767 1,325,675 3,408,204 3,971,230
Provision for income taxes 339,846 470,781 1,184,199 1,410,134
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NET INCOME $655,921 $854,894 $2,224,005 $2,561,096
========== ========== ========== ==========
EARNINGS PER SHARE
Basic $0.12 $0.15 $0.40 $0.46
Diluted $0.12 $0.15 $0.39 $0.44
WEIGHTED SHARES OUTSTANDING
Basic 5,471,617 5,602,590 5,518,024 5,596,721
Diluted 5,610,626 5,800,032 5,688,960 5,864,806
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(1) On March 1, 2002, Oracle adopted Financial Accounting Standards Board
Emerging Issues Task Force No. 01-14, "Income Statement
Characterization of Reimbursements Received for 'Out-of-Pocket'
Expenses Incurred" ("EITF 01-14"). EITF 01-14 requires reimbursements
received for out-of-pocket expenses to be reflected as revenues and to
reclassify prior period financial statements to conform with the
current period presentation. Prior to the adoption of EITF 01-14,
reimbursable out-of-pocket expenses were reflected as net amounts in
"Cost of Services." Reimbursable out-of-pocket expenses reclassified
as revenues for the three months ending May 31, 2001, the twelve
months ended May 31, 2001, and the nine months ended February 28, 2002
were $26,346, $101,020 and $70,089, respectively.
(2) Net investment gains (losses) related to equity securities in the
quarter ended May 31, 2002 of $229,316 include a $173,452 impairment
charge related to Oracle's investment in Liberate Technologies.
Excluding the effect of this charge, the effective income tax rate and
provision for income taxes would have been 35% and $409,227,
respectively, and net income and diluted earnings per share would have
been $759,992 and $0.14, respectively. For the year ended May 31,
2002, the effective income tax rate and provision for income taxes
would have been 35% and $1,253,580, respectively, and net income and
diluted earnings per share would have been $2,328,076 and $0.41,
respectively.
ORACLE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Percentage of Revenues Percentage Change
--------------------------- ---------------------------
Twelve Months
FY02
Three Months Twelve Months Q4 FY02 vs.
Ended Ended vs. Twelve Months
May 31, May 31, Q4 FY01 FY01
------------- ------------- ------- -------
2002 2001 2002 2001
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REVENUES
Licenses and
other 42.3% 50.3% 36.3% 42.9% (29.2%) (25.4%)
Services 57.7% 49.7% 63.7% 57.1% (2.0%) (1.5%)
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Total
revenues 100.0% 100.0% 100.0% 100.0% (15.7%) (11.8%)
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OPERATING EXPENSES
Sales and
marketing 21.2% 24.7% 22.8% 24.6% (27.6%) (17.9%)
Cost of
services 20.5% 22.6% 24.9% 26.4% (23.7%) (17.0%)
Research and
development 10.2% 9.7% 11.1% 10.4% (11.8%) (5.5%)
General and
administrative 4.0% 3.6% 4.3% 4.2% (7.7%) (9.9%)
------ ------ ------ ------
Total
operating
expenses 55.8% 60.6% 63.1% 65.5% (22.4%) (15.1%)
------ ------ ------ ------
OPERATING INCOME 44.2% 39.4% 36.9% 34.5% (5.3%) (5.5%)
Net investment
gains (losses)
related to
equity
securities (8.3%) 0.1% (2.5%) (0.2%) nm nm
Other income
(loss), net 0.0% 0.8% 0.8% 1.9% (104.3%) (61.7%)
------ ------ ------ ------
INCOME BEFORE
TAXES 35.9% 40.3% 35.2% 36.2% (24.9%) (14.2%)
Provision for
income taxes 12.3% 14.3% 12.2% 12.9% (27.8%) (16.0%)
------ ------ ------ ------
NET INCOME 23.6% 26.0% 23.0% 23.4% (23.3%) (13.2%)
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ORACLE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
May 31, May 31,
2002 2001
---- ----
ASSETS
Current Assets
Cash and short term investments $5,841,178 $5,887,661
Trade receivables, net 2,034,996 2,432,131
Prepaid and refundable income taxes 451,994 272,742
Other current assets 399,776 370,616
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Total Current Assets 8,727,944 8,963,150
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Long-term cash investments 405,883 --
Property and equipment, net 986,970 974,751
Prepaid taxes 233,359 376,030
Other assets 446,206 716,229
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TOTAL ASSETS $10,800,362 $11,030,160
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable, including current maturities $450 $2,849
Accounts payable 226,943 270,112
Income taxes 1,091,293 767,087
Customer advances and unearned revenues 1,275,627 1,213,529
Other current liabilities 1,365,504 1,663,042
----------- ----------
Total Current Liabilities 3,959,817 3,916,619
----------- ----------
Long-term debt 298,391 300,847
Deferred income taxes 204,073 327,788
Other long-term liabilities 220,791 207,135
Stockholders' equity 6,117,290 6,277,771
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,800,362 $11,030,160
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