Exhibit 99.1

 

For Immediate Release

 

Contact:		Ken Bond		Deborah Hellinger
		Oracle Investor Relations		Oracle Corporate Communications
		1.650.607.0349		1.212.508.7935
		ken.bond@oracle.com		deborah.hellinger@oracle.com

ORACLE DOUBLES DIVIDEND; CLOUD SAAS REVENUES UP 50%, ENGINEERED SYSTEMS UP 45%

Q4 GAAP EPS Up 17% to 80 CENTS, NON-GAAP EPS Up 5% to 87 CENTS

REDWOOD SHORES, Calif., June 20, 2013 — Oracle Corporation (NASDAQ: ORCL) today announced that fiscal 2013 Q4 GAAP total revenues were unchanged at $10.9 billion, while non-GAAP total revenues were unchanged at $11.0 billion. Both GAAP and non-GAAP new software licenses and cloud software subscriptions revenues were up 1% to $4.0 billion. Software license updates and product support revenues were up 6% to $4.4 billion. Hardware systems products revenues were $849 million. GAAP operating income was up 9% to $5.0 billion, and GAAP operating margin was 46%. Non-GAAP operating income was up 1% to $5.6 billion, and non-GAAP operating margin was 51%. GAAP net income was up 10% to $3.8 billion, while non-GAAP net income was down 1% to $4.1 billion. GAAP earnings per share were up 17% to $0.80, while non-GAAP earnings per share were up 5% to $0.87. GAAP operating cash flow on a trailing twelve-month basis was $14.2 billion.

Without the impact of the US dollar strengthening compared to foreign currencies, Oracle’s reported Q4 GAAP earnings per share would have been approximately $0.01 higher at $0.81, up 19%; and Q4 non-GAAP earnings per share would have been approximately $0.01 higher. GAAP total revenues also would have been up 2%, non-GAAP total revenue would have been up 1%, and new software licenses and cloud software subscription revenues would have been up 2%.

For fiscal year 2013, GAAP total revenues were unchanged at $37.2 billion, while non-GAAP total revenues were unchanged at $37.3 billion. GAAP new software licenses and cloud software subscriptions revenues were up 4% to $10.3 billion, while non-GAAP new software licenses and cloud software subscriptions revenues were up 4% to $10.4 billion. GAAP software license updates and product support revenues were up 6% to $17.1 billion, while non-GAAP software license updates and product support revenues were up 6% to

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$17.2 billion. Hardware systems products revenues were $3.0 billion. GAAP operating income was up 7% to $14.7 billion, and GAAP operating margin was 39%. Non-GAAP operating income was up 2% to $17.6 billion, and non-GAAP operating margin was 47%. GAAP net income was up 9% to $10.9 billion, while non-GAAP net income was up 3% to $13.0 billion. GAAP earnings per share were $2.26, up 15% compared to last year while non-GAAP earnings per share were $2.68, up 9%.

“A record level non-GAAP operating margin of 47% in FY13 enabled us to generate over $14 billion in operating cash flow during the year,” said Oracle President and CFO, Safra Catz. “We returned almost 90% of that to shareholders through dividends and share repurchases while increasing the cash on our balance sheet to $32 billion. Consistently increasing our margins, cash flow and cash balance has allowed us to double our current quarterly dividend.”

“Oracle’s HCM Cloud, CRM Cloud and ERP Cloud grew 50% as we added over 500 new SaaS customers in Q4 alone,” said Oracle President Mark Hurd. “Our annualized SaaS revenue run rate is over $1 billion, making us a strong number two in cloud applications – we are larger than SAP and Workday combined. Furthermore, in Q4 our HCM cloud alone generated more SaaS revenue and added more new Fusion HCM customers than Workday added HCM and ERP customers combined in their most recent quarter.”

“Exadata, Exalogic, Exalytics, SPARC SuperCluster and our other engineered systems grew at a rate of 45% in Q4 as we took considerable market share from our primary competitor – IBM P-Series – which declined 32% in their most recent quarter,” said Oracle CEO, Larry Ellison. “We sold over 1,200 engineered systems in the quarter and over 3,000 during the year. Our fast growing engineered systems business is now more than one-third of our overall hardware business which is one of the reasons we believe hardware will be a growth story in Oracle’s FY14.”

Oracle also announced that its Board of Directors declared a quarterly cash dividend of $0.12 per share of outstanding common stock, reflecting a 100% increase over the current quarterly dividend of $0.06. Oracle’s CEO and largest stockholder did not participate in the deliberation or the vote on this matter. This increased dividend will be paid to stockholders of record as of the close of business on July 12, 2013, with a payment date of August 2, 2013.

Oracle also announced that its Board of Directors authorized the repurchase of up to an additional $12.0 billion of common stock under its existing share repurchase program in future quarters.

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Oracle also announced that it has applied to list its common stock on the New York Stock Exchange under its current symbol “ORCL”. After careful consideration and deliberation, the Board of Directors of Oracle determined that the proposed transfer of Oracle’s common stock listing to the New York Stock Exchange would be in the best interests of its stockholders, customers and partners. Subject to the approval by the NYSE of Oracle’s listing application, Oracle expects that its common stock will begin trading on the NYSE on July 15, 2013. Until the transfer is completed, Oracle will continue to trade on the NASDAQ Stock Market under the symbol “ORCL”.

Q4 Fiscal 2013 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) 312-9303, Passcode: 849181. 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 Q4 results and Fiscal 2013 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: 2970367.

About Oracle

Oracle engineers hardware and software to work together in the cloud and in your data center. For more information about Oracle (NASDAQ: ORCL), visit www.oracle.com or contact Investor Relations at investor_us@oracle.com 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.

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“Safe Harbor” Statement: Statements in this press release relating to Oracle’s future plans, expectations, beliefs, intentions and prospects, including statements regarding hardware being a growth story in FY14 and when Oracle’s common stock will begin trading on the NYSE, 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 June 20, 2013. Oracle undertakes no duty to update any statement in light of new information or future events.

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ORACLE CORPORATION

Q4 FISCAL 2013 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)

 

		Three Months Ended May 31,																% Increase				% Increase (Decrease)
		2013				% of Revenues				2012				% of Revenues				(Decrease) in US $				in Constant Currency (1)
REVENUES
New software licenses and cloud software subscriptions		$	4,026				37%			$	3,985				37%				1%				2%
Software license updates and product support			4,402				40%				4,152				38%				6%				8%
Software Revenues			8,428				77%				8,137				75%				4%				5%
Hardware systems products			849				8%				977				9%				(13%	)			(12%	)
Hardware systems support			582				5%				600				5%				(3%	)			(1%	)
Hardware Systems Revenues			1,431				13%				1,577				14%				(9%	)			(8%	)
Services Revenues			1,088				10%				1,202				11%				(9%	)			(8%	)
Total Revenues			10,947				100%				10,916				100%				0%				2%
OPERATING EXPENSES
Sales and marketing			2,208				20%				2,100				19%				5%				6%
Software license updates and product support			316				3%				327				3%				(4%	)			(2%	)
Hardware systems products			413				4%				476				4%				(13%	)			(12%	)
Hardware systems support			220				2%				248				2%				(11%	)			(10%	)
Services			879				8%				955				9%				(8%	)			(7%	)
Research and development			1,264				12%				1,226				11%				3%				4%
General and administrative			274				2%				278				3%				(1%	)			0%
Amortization of intangible assets			596				5%				640				6%				(7%	)			(7%	)
Acquisition related and other (2)			(257	)			(2%	)			(7	)			0%				(3,524%	)			(3,515%	)
Restructuring			34				0%				77				1%				(56%	)			(56%	)
Total Operating Expenses			5,947				54%				6,320				58%				(6%	)			(5%	)
OPERATING INCOME			5,000				46%				4,596				42%				9%				11%
Interest expense			(210	)			(2%	)			(194	)			(2%	)			9%				9%
Non-operating income (expense), net			35				0%				(20	)			0%				280%				281%
INCOME BEFORE PROVISION FOR INCOME TAXES			4,825				44%				4,382				40%				10%				12%
Provision for income taxes			1,018				9%				931				8%				9%				11%
NET INCOME		$	3,807				35%			$	3,451				32%				10%				12%
EARNINGS PER SHARE:
Basic		$	0.81							$	0.70
Diluted		$	0.80							$	0.69
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic			4,684								4,950
Diluted			4,756								5,027

 

(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, 2012, 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 May 31, 2013 compared with the corresponding prior year period decreased our revenues by 2 percentage points, operating expenses by 1 percentage point and operating income by 2 percentage points.

 

(2)	Acquisition related and other expenses for the quarter ended May 31, 2013 included a net benefit of $269 million due to an acquisition related item.

 

1

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ORACLE CORPORATION

Q4 FISCAL 2013 FINANCIAL RESULTS

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)

($ in millions, except per share data)

 

		Three Months Ended May 31,																								% Increase (Decrease) in US $								% Increase (Decrease) in Constant Currency (2)
		2013 GAAP				Adj.				2013 Non-GAAP				2012 GAAP				Adj.				2012 Non-GAAP				GAAP				Non-GAAP				GAAP				Non-GAAP
TOTAL REVENUES (3) (4)		$	10,947			$	14			$	10,961			$	10,916			$	34			$	10,950				0%				0%				2%				1%
TOTAL SOFTWARE REVENUES (3)		$	8,428			$	10			$	8,438			$	8,137			$	30			$	8,167				4%				3%				5%				5%
New software licenses and cloud software subscriptions (3)			4,026				8				4,034				3,985				22				4,007				1%				1%				2%				2%
Software license updates and product support			4,402				2				4,404				4,152				8				4,160				6%				6%				8%				8%
TOTAL HARDWARE SYSTEMS REVENUES (4)		$	1,431			$	4			$	1,435			$	1,577			$	4			$	1,581				(9%	)			(9%	)			(8%	)			(8%	)
Hardware systems products			849				—				849				977				—				977				(13%	)			(13%	)			(12%	)			(12%	)
Hardware systems support (4)			582				4				586				600				4				604				(3%	)			(3%	)			(1%	)			(1%	)
TOTAL OPERATING EXPENSES		$	5,947			$	(559	)		$	5,388			$	6,320			$	(882	)		$	5,438				(6%	)			(1%	)			(5%	)			0%
Stock-based compensation (5)			186				(186	)			—				172				(172	)			—				8%				*				8%				*
Amortization of intangible assets (6)			596				(596	)			—				640				(640	)			—				(7%	)			*				(7%	)			*
Acquisition related and other			(257	)			257				—				(7	)			7				—				(3,524%	)			*				(3,515%	)			*
Restructuring			34				(34	)			—				77				(77	)			—				(56%	)			*				(56%	)			*
OPERATING INCOME		$	5,000			$	573			$	5,573			$	4,596			$	916			$	5,512				9%				1%				11%				3%
OPERATING MARGIN %			46%								51%				42%								50%				357 bp.				51 bp.				375 bp.				59 bp.
INCOME TAX EFFECTS (7)		$	1,018			$	266			$	1,284			$	931			$	224			$	1,155				9%				11%				11%				13%
NET INCOME		$	3,807			$	307			$	4,114			$	3,451			$	692			$	4,143				10%				(1%	)			12%				1%
DILUTED EARNINGS PER SHARE		$	0.80							$	0.87			$	0.69							$	0.82				17%				5%				19%				7%
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING			4,756				—				4,756				5,027				—				5,027				(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, 2012, 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 May 31, 2013, approximately $6 million in estimated revenues related to assumed cloud software subscriptions contracts will not be recognized for fiscal 2014 due to business combination accounting rules.

 

(4)	As of May 31, 2013, approximately $6 million in estimated revenues related to hardware systems support contracts will not be recognized for fiscal 2014 due to business combination accounting rules.

 

(5)	Stock-based compensation was included in the following GAAP operating expense categories:

 

		Three Months Ended May 31, 2013												Three Months Ended May 31, 2012
		GAAP				Adj.				Non-GAAP				GAAP				Adj.				Non-GAAP
Sales and marketing		$	35			$	(35	)		$	—			$	35			$	(35	)		$	—
Software license updates and product support			5				(5	)			—				5				(5	)			—
Hardware systems products			1				(1	)			—				—				—				—
Hardware systems support			1				(1	)			—				1				(1	)			—
Services			8				(8	)			—				7				(7	)			—
Research and development			93				(93	)			—				82				(82	)			—
General and administrative			43				(43	)			—				42				(42	)			—
Subtotal			186				(186	)			—				172				(172	)			—
Acquisition related and other			4				(4	)			—				12				(12	)			—
Total stock-based compensation		$	190			$	(190	)		$	—			$	184			$	(184	)		$	—

 

(6)	Estimated future annual amortization expense related to intangible assets as of May 31, 2013 was as follows:

 

Fiscal 2014		$	2,123
Fiscal 2015			1,656
Fiscal 2016			1,094
Fiscal 2017			523
Fiscal 2018			397
Thereafter			802
Total intangible assets subject to amortization			6,595
In-process research and development			45
Total intangible assets, net		$	6,640

 

(7)

Income tax effects were calculated reflecting an effective GAAP tax rate of 21.1% and 21.2% in the fourth quarter of fiscal 2013 and 2012, respectively, and an effective non-GAAP tax rate of 23.8% and 21.8% in the fourth quarter of fiscal 2013 and 2012, respectively. The difference between our GAAP and non-GAAP tax rates in the fourth 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. The difference between our GAAP and non-GAAP tax rates in the fourth quarter of fiscal 2012 was primarily due to the disproportionate rate impact of certain discrete items, differences in jurisdictional tax rates and related tax benefits attributable to our restructuring expenses, and income tax effects related to acquired tax exposures in the period.

 

*	Not meaningful

 

2

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ORACLE CORPORATION

FISCAL 2013 YEAR TO DATE FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)

 

		Year Ended May 31,																% Increase				% Increase (Decrease)
		2013				% of Revenues				2012				% of Revenues				(Decrease) in US $				in Constant Currency (1)
REVENUES
New software licenses and cloud software subscriptions		$	10,321				28%			$	9,906				27%				4%				6%
Software license updates and product support			17,142				46%				16,210				43%				6%				8%
Software Revenues			27,463				74%				26,116				70%				5%				7%
Hardware systems products			3,033				8%				3,827				10%				(21%	)			(19%	)
Hardware systems support			2,313				6%				2,475				7%				(7%	)			(4%	)
Hardware Systems Revenues			5,346				14%				6,302				17%				(15%	)			(13%	)
Services Revenues			4,371				12%				4,703				13%				(7%	)			(5%	)
Total Revenues			37,180				100%				37,121				100%				0%				2%
OPERATING EXPENSES
Sales and marketing			7,328				20%				7,127				19%				3%				5%
Software license updates and product support			1,175				3%				1,226				3%				(4%	)			(2%	)
Hardware systems products			1,501				4%				1,843				5%				(19%	)			(17%	)
Hardware systems support			890				2%				1,046				3%				(15%	)			(13%	)
Services			3,547				10%				3,743				10%				(5%	)			(3%	)
Research and development			4,850				13%				4,523				12%				7%				8%
General and administrative			1,072				3%				1,126				3%				(5%	)			(3%	)
Amortization of intangible assets			2,385				7%				2,430				7%				(2%	)			(2%	)
Acquisition related and other (2)			(604	)			(2%	)			56				0%				(1,183%	)			(1,200%	)
Restructuring			352				1%				295				1%				19%				23%
Total Operating Expenses			22,496				61%				23,415				63%				(4%	)			(2%	)
OPERATING INCOME			14,684				39%				13,706				37%				7%				10%
Interest expense			(797	)			(2%	)			(766	)			(2%	)			4%				4%
Non-operating income, net			11				0%				22				0%				(49%	)			4%
INCOME BEFORE PROVISION FOR INCOME TAXES			13,898				37%				12,962				35%				7%				10%
Provision for income taxes			2,973				8%				2,981				8%				0%				3%
NET INCOME		$	10,925				29%			$	9,981				27%				9%				13%
EARNINGS PER SHARE:
Basic		$	2.29							$	1.99
Diluted		$	2.26							$	1.96
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic			4,769								5,015
Diluted			4,844								5,095

 

(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, 2012, 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 year ended May 31, 2013 compared with the corresponding prior year period decreased our revenues by 2 percentage points, operating expenses by 2 percentage points and operating income by 3 percentage points.

 

(2)	Acquisition related and other expenses for the year ended May 31, 2013 included a benefit of $306 million related to certain litigation and a net benefit of $387 million due to an acquisition related item.

 

3

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ORACLE CORPORATION

FISCAL 2013 YEAR TO DATE FINANCIAL RESULTS

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)

($ in millions, except per share data)

 

		Year Ended May 31,																								% Increase (Decrease) in US $								% Increase (Decrease) in Constant Currency (2)
		2013 GAAP				Adj.				2013 Non-GAAP				2012 GAAP				Adj.				2012 Non-GAAP				GAAP				Non-GAAP				GAAP				Non-GAAP
TOTAL REVENUES (3) (4)		$	37,180			$	73			$	37,253			$	37,121			$	100			$	37,221				0%				0%				2%				2%
TOTAL SOFTWARE REVENUES (3)		$	27,463			$	59			$	27,522			$	26,116			$	70			$	26,186				5%				5%				7%				7%
New software licenses and cloud software subscriptions (3)			10,321				45				10,366				9,906				22				9,928				4%				4%				6%				6%
Software license updates and product support			17,142				14				17,156				16,210				48				16,258				6%				6%				8%				8%
TOTAL HARDWARE SYSTEMS REVENUES (4)		$	5,346			$	14			$	5,360			$	6,302			$	30			$	6,332				(15%	)			(15%	)			(13%	)			(14%	)
Hardware systems products			3,033				—				3,033				3,827				—				3,827				(21%	)			(21%	)			(19%	)			(19%	)
Hardware systems support (4)			2,313				14				2,327				2,475				30				2,505				(7%	)			(7%	)			(4%	)			(5%	)
TOTAL OPERATING EXPENSES		$	22,496			$	(2,855	)		$	19,641			$	23,415			$	(3,407	)		$	20,008				(4%	)			(2%	)			(2%	)			0%
Stock-based compensation (5)			722				(722	)			—				626				(626	)			—				16%				*				16%				*
Amortization of intangible assets (6)			2,385				(2,385	)			—				2,430				(2,430	)			—				(2%	)			*				(2%	)			*
Acquisition related and other			(604	)			604				—				56				(56	)			—				(1,183%	)			*				(1,200%	)			*
Restructuring			352				(352	)			—				295				(295	)			—				19%				*				23%				*
OPERATING INCOME		$	14,684			$	2,928			$	17,612			$	13,706			$	3,507			$	17,213				7%				2%				10%				4%
OPERATING MARGIN %			39%								47%				37%								46%				257 bp.				103 bp.				277 bp.				106 bp.
INCOME TAX EFFECTS (7)		$	2,973			$	896			$	3,869			$	2,981			$	967			$	3,948				0%				(2%	)			3%				0%
NET INCOME		$	10,925			$	2,032			$	12,957			$	9,981			$	2,540			$	12,521				9%				3%				13%				6%
DILUTED EARNINGS PER SHARE		$	2.26							$	2.68			$	1.96							$	2.46				15%				9%				18%				11%
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING			4,844				—				4,844				5,095				—				5,095				(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, 2012, 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 May 31, 2013, approximately $6 million in estimated revenues related to assumed cloud software subscriptions contracts will not be recognized for fiscal 2014 due to business combination accounting rules.

 

(4)	As of May 31, 2013, approximately $6 million in estimated revenues related to hardware systems support contracts will not be recognized for fiscal 2014 due to business combination accounting rules.

 

(5)	Stock-based compensation was included in the following GAAP operating expense categories:

 

		Year Ended May 31, 2013												Year Ended May 31, 2012
		GAAP				Adj.				Non-GAAP				GAAP				Adj.				Non-GAAP
Sales and marketing		$	147			$	(147	)		$	—			$	122			$	(122	)		$	—
Software license updates and product support			20				(20	)			—				18				(18	)			—
Hardware systems products			3				(3	)			—				1				(1	)			—
Hardware systems support			5				(5	)			—				5				(5	)			—
Services			31				(31	)			—				23				(23	)			—
Research and development			352				(352	)			—				295				(295	)			—
General and administrative			164				(164	)			—				162				(162	)			—
Subtotal			722				(722	)			—				626				(626	)			—
Acquisition related and other			33				(33	)			—				33				(33	)			—
Total stock-based compensation		$	755			$	(755	)		$	—			$	659			$	(659	)		$	—

 

(6)	Estimated future annual amortization expense related to intangible assets as of May 31, 2013 was as follows:

 

Fiscal 2014		$	2,123
Fiscal 2015			1,656
Fiscal 2016			1,094
Fiscal 2017			523
Fiscal 2018			397
Thereafter			802
Total intangible assets subject to amortization			6,595
In-process research and development			45
Total intangible assets, net		$	6,640

 

(7)

Income tax effects were calculated reflecting an effective GAAP tax rate of 21.4% and 23.0% in fiscal 2013 and 2012, respectively, and an effective non-GAAP tax rate of 23.0% and 24.0% in fiscal 2013 and 2012, respectively. The differences between our GAAP and non-GAAP tax rates in fiscal 2013 were 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 fiscal 2012 was primarily due to the disproportionate rate impact of certain discrete items, income tax effects related to acquired tax exposures, and differences in jurisdictional tax rates and related tax benefits attributable to our restructuring expenses in the period.

 

*	Not meaningful

 

4

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ORACLE CORPORATION

FISCAL 2013 FINANCIAL RESULTS

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)

 

		May 31, 2013				May 31, 2012
ASSETS
Current Assets:
Cash and cash equivalents		$	14,613			$	14,955
Marketable securities			17,603				15,721
Trade receivables, net			6,049				6,377
Inventories			240				158
Deferred tax assets			974				877
Prepaid expenses and other current assets			2,213				1,935
Total Current Assets			41,692				40,023
Non-Current Assets:
Property, plant and equipment, net			3,053				3,021
Intangible assets, net			6,640				7,899
Goodwill			27,343				25,119
Deferred tax assets			766				595
Other assets			2,318				1,670
Total Non-Current Assets			40,120				38,304
TOTAL ASSETS		$	81,812			$	78,327
LIABILITIES AND EQUITY
Current Liabilities:
Notes payable, current and other current borrowings		$	—			$	2,950
Accounts payable			419				438
Accrued compensation and related benefits			1,851				2,002
Income taxes payable			911				528
Deferred revenues			7,118				7,035
Other current liabilities			2,573				2,435
Total Current Liabilities			12,872				15,388
Non-Current Liabilities:
Notes payable and other non-current borrowings			18,494				13,524
Income taxes payable			3,899				3,759
Other non-current liabilities			1,402				1,569
Total Non-Current Liabilities			23,795				18,852
Equity			45,145				44,087
TOTAL LIABILITIES AND EQUITY		$	81,812			$	78,327

 

5

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ORACLE CORPORATION

FISCAL 2013 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

 

		Year Ended May 31,
		2013				2012
Cash Flows From Operating Activities:
Net income		$	10,925			$	9,981
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			546				486
Amortization of intangible assets			2,385				2,430
Deferred income taxes			(117	)			9
Stock-based compensation			755				659
Tax benefits on the exercise of stock options and vesting of restricted stock-based awards			410				182
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards			(241	)			(97	)
Other, net			155				84
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net			385				84
(Increase) decrease in inventories			(66	)			150
Increase in prepaid expenses and other assets			(555	)			(51	)
Decrease in accounts payable and other liabilities			(541	)			(720	)
Increase in income taxes payable			35				54
Increase in deferred revenues			148				492
Net cash provided by operating activities			14,224				13,743
Cash Flows From Investing Activities:
Purchases of marketable securities and other investments			(32,160	)			(38,625	)
Proceeds from maturities and sales of marketable securities and other investments			30,159				35,594
Acquisitions, net of cash acquired			(3,305	)			(4,702	)
Capital expenditures			(650	)			(648	)
Net cash used for investing activities			(5,956	)			(8,381	)
Cash Flows From Financing Activities:
Payments for repurchases of common stock			(11,021	)			(5,856	)
Proceeds from issuances of common stock			1,527				733
Payments of dividends to stockholders			(1,433	)			(1,205	)
Proceeds from borrowings, net of issuance costs			4,974				1,700
Repayments of borrowings			(2,950	)			(1,405	)
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards			241				97
Distributions to noncontrolling interests			(31	)			(163	)
Other, net			193				—
Net cash used for financing activities			(8,500	)			(6,099	)
Effect of exchange rate changes on cash and cash equivalents			(110	)			(471	)
Net decrease in cash and cash equivalents			(342	)			(1,208	)
Cash and cash equivalents at beginning of period			14,955				16,163
Cash and cash equivalents at end of period		$	14,613			$	14,955

 

6

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ORACLE CORPORATION

FISCAL 2013 FINANCIAL RESULTS

FREE CASH FLOW—TRAILING 4-QUARTERS (1)

($ in millions)

 

		Fiscal 2012																Fiscal 2013
		Q1				Q2				Q3				Q4				Q1				Q2				Q3				Q4
GAAP Operating Cash Flow		$	12,818			$	13,129			$	13,463			$	13,743			$	13,993			$	13,533			$	13,717			$	14,224
Capital Expenditures (2)			(492	)			(500	)			(509	)			(648	)			(627	)			(710	)			(684	)			(650	)
Free Cash Flow		$	12,326			$	12,629			$	12,954			$	13,095			$	13,366			$	12,823			$	13,033			$	13,574
% Growth over prior year			46%				45%				36%				22%				8%				2%				1%				4%
GAAP Net Income		$	9,035			$	9,356			$	9,738			$	9,981			$	10,175			$	10,564			$	10,571			$	10,925
Free Cash Flow as a % of Net Income			136%				135%				133%				131%				131%				121%				123%				124%

 

(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

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ORACLE CORPORATION

FISCAL 2013 FINANCIAL RESULTS

SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)

($ in millions)

 

		Fiscal 2012																				Fiscal 2013
		Q1				Q2				Q3				Q4				TOTAL				Q1				Q2				Q3				Q4				TOTAL
REVENUES
New software licenses and cloud software subscriptions		$	1,498			$	2,048			$	2,374			$	3,985			$	9,906			$	1,574			$	2,389			$	2,332			$	4,026			$	10,321
Software license updates and product support			4,022				3,986				4,051				4,152				16,210				4,140				4,260				4,340				4,402				17,142
Software Revenues			5,520				6,034				6,425				8,137				26,116				5,714				6,649				6,672				8,428				27,463
Hardware systems products			1,029				953				869				977				3,827				779				734				671				849				3,033
Hardware systems support			645				625				604				600				2,475				574				587				570				582				2,313
Hardware Systems Revenues			1,674				1,578				1,473				1,577				6,302				1,353				1,321				1,241				1,431				5,346
Services Revenues			1,180				1,180				1,141				1,202				4,703				1,114				1,124				1,045				1,088				4,371
Total Revenues		$	8,374			$	8,792			$	9,039			$	10,916			$	37,121			$	8,181			$	9,094			$	8,958			$	10,947			$	37,180
AS REPORTED REVENUE GROWTH RATES
New software licenses and cloud software subscriptions			17%				2%				7%				7%				7%				5%				17%				(2%	)			1%				4%
Software license updates and product support			17%				9%				8%				5%				10%				3%				7%				7%				6%				6%
Software Revenues			17%				7%				8%				6%				9%				4%				10%				4%				4%				5%
Hardware systems products			(5%	)			(14%	)			(16%	)			(16%	)			(13%	)			(24%	)			(23%	)			(23%	)			(13%	)			(21%	)
Hardware systems support			4%				(2%	)			(4%	)			(11%	)			(3%	)			(11%	)			(6%	)			(6%	)			(3%	)			(7%	)
Hardware Systems Revenues			(1%	)			(10%	)			(11%	)			(14%	)			(9%	)			(19%	)			(16%	)			(16%	)			(9%	)			(15%	)
Services Revenues			10%				0%				0%				(4%	)			1%				(6%	)			(5%	)			(8%	)			(9%	)			(7%	)
Total Revenues			12%				2%				3%				1%				4%				(2%	)			3%				(1%	)			0%				0%
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses and cloud software subscriptions			11%				3%				8%				11%				8%				10%				18%				0%				2%				6%
Software license updates and product support			10%				9%				9%				8%				9%				8%				8%				8%				8%				8%
Software Revenues			11%				7%				9%				10%				9%				9%				11%				5%				5%				7%
Hardware systems products			(11%	)			(14%	)			(16%	)			(13%	)			(14%	)			(21%	)			(23%	)			(22%	)			(12%	)			(19%	)
Hardware systems support			(3%	)			(3%	)			(3%	)			(7%	)			(4%	)			(6%	)			(5%	)			(5%	)			(1%	)			(4%	)
Hardware Systems Revenues			(8%	)			(10%	)			(11%	)			(11%	)			(10%	)			(15%	)			(16%	)			(15%	)			(8%	)			(13%	)
Services Revenues			5%				0%				1%				0%				1%				0%				(3%	)			(7%	)			(8%	)			(5%	)
Total Revenues			5%				2%				4%				5%				4%				3%				5%				0%				2%				2%
GEOGRAPHIC REVENUES
REVENUES
Americas		$	4,226			$	4,532			$	4,707			$	5,771			$	19,236			$	4,324			$	4,787			$	4,698			$	5,911			$	19,719
Europe, Middle East & Africa			2,704				2,756				2,787				3,314				11,561				2,383				2,701				2,745				3,328				11,158
Asia Pacific			1,444				1,504				1,545				1,831				6,324				1,474				1,606				1,515				1,708				6,303
Total Revenues		$	8,374			$	8,792			$	9,039			$	10,916			$	37,121			$	8,181			$	9,094			$	8,958			$	10,947			$	37,180
HEADCOUNT
GEOGRAPHIC AREA
Americas			46,338				46,672				47,884				48,901								49,145				49,584				50,402				51,519
Europe, Middle East & Africa			22,210				22,725				22,852				22,957								22,584				22,594				22,592				22,860
Asia Pacific			40,840				41,901				42,908				43,308								44,170				45,051				45,663				45,855
Total Company			109,388				111,298				113,644				115,166								115,899				117,229				118,657				120,234

 

(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, 2012 and 2011 for the fiscal 2013 and fiscal 2012 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.

 

8

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ORACLE CORPORATION

FISCAL 2013 FINANCIAL RESULTS

SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1)

($ in millions)

 

		Fiscal 2012																				Fiscal 2013
		Q1				Q2				Q3				Q4				TOTAL				Q1				Q2				Q3				Q4				TOTAL
AMERICAS
New software licenses and cloud software subscriptions		$	727			$	1,027			$	1,228			$	2,126			$	5,107			$	814			$	1,253			$	1,205			$	2,194			$	5,465
Hardware systems products		$	475			$	496			$	410			$	498			$	1,880			$	380			$	370			$	307			$	439			$	1,495
AS REPORTED GROWTH RATES
New software licenses and cloud software subscriptions			10%				0%				11%				14%				10%				12%				22%				(2%	)			3%				7%
Hardware systems products			(12%	)			(17%	)			(19%	)			(17%	)			(16%	)			(20%	)			(25%	)			(25%	)			(12%	)			(20%	)
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses and cloud software subscriptions			9%				1%				11%				16%				11%				14%				22%				(1%	)			4%				8%
Hardware systems products			(13%	)			(17%	)			(18%	)			(16%	)			(16%	)			(19%	)			(25%	)			(25%	)			(12%	)			(20%	)
EUROPE / MIDDLE EAST / AFRICA
New software licenses and cloud software subscriptions		$	440			$	584			$	693			$	1,166			$	2,884			$	403			$	641			$	690			$	1,224			$	2,959
Hardware systems products		$	344			$	272			$	265			$	260			$	1,140			$	214			$	198			$	201			$	228			$	842
AS REPORTED GROWTH RATES
New software licenses and cloud software subscriptions			25%				2%				(1%	)			(5%	)			1%				(8%	)			10%				0%				5%				3%
Hardware systems products			2%				(17%	)			(20%	)			(24%	)			(15%	)			(38%	)			(27%	)			(24%	)			(12%	)			(26%	)
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses and cloud software subscriptions			15%				3%				1%				2%				4%				1%				12%				1%				5%				5%
Hardware systems products			(11%	)			(17%	)			(18%	)			(18%	)			(16%	)			(30%	)			(25%	)			(24%	)			(11%	)			(23%	)
ASIA PACIFIC
New software licenses and cloud software subscriptions		$	331			$	437			$	453			$	693			$	1,915			$	357			$	495			$	437			$	608			$	1,897
Hardware systems products		$	210			$	185			$	194			$	219			$	807			$	185			$	166			$	163			$	182			$	696
AS REPORTED GROWTH RATES
New software licenses and cloud software subscriptions			20%				11%				13%				8%				12%				8%				13%				(3%	)			(12%	)			(1%	)
Hardware systems products			6%				2%				(3%	)			1%				1%				(12%	)			(10%	)			(16%	)			(17%	)			(14%	)
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses and cloud software subscriptions			9%				8%				11%				13%				11%				12%				13%				1%				(7%	)			3%
Hardware systems products			(5%	)			(1%	)			(6%	)			1%				(3%	)			(10%	)			(12%	)			(14%	)			(14%	)			(12%	)
TOTAL COMPANY
New software licenses and cloud software subscriptions		$	1,498			$	2,048			$	2,374			$	3,985			$	9,906			$	1,574			$	2,389			$	2,332			$	4,026			$	10,321
Hardware systems products		$	1,029			$	953			$	869			$	977			$	3,827			$	779			$	734			$	671			$	849			$	3,033
AS REPORTED GROWTH RATES
New software licenses and cloud software subscriptions			17%				2%				7%				7%				7%				5%				17%				(2%	)			1%				4%
Hardware systems products			(5%	)			(14%	)			(16%	)			(16%	)			(13%	)			(24%	)			(23%	)			(23%	)			(13%	)			(21%	)
CONSTANT CURRENCY GROWTH RATES (2)
New software licenses and cloud software subscriptions			11%				3%				8%				11%				8%				10%				18%				0%				2%				6%
Hardware systems products			(11%	)			(14%	)			(16%	)			(13%	)			(14%	)			(21%	)			(23%	)			(22%	)			(12%	)			(19%	)

 

(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, 2012 and 2011 for the fiscal 2013 and fiscal 2012 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.

 

9

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APPENDIX A

ORACLE CORPORATION

Q4 FISCAL 2013 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 non-GAAP 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 non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

 

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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.

 

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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.

 

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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.

 

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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 changes in fair value of contingent consideration payable, 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.

 

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