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Financial News Details

Oracle Corporation Reports Record Fourth Quarter and Fiscal Year End Results Fourth Quarter EPS $0.41

June 17, 1998
REDWOOD SHORES, Calif., June 17, 1998 -- Oracle Corporation (Nasdaq: ORCL) today announced record fiscal year results for the period ended May 31, 1998. Oracle's two businesses, database and applications, totaled $7.1 billion in annual revenues. The database business, including database, tools and related services, reported $5.3 billion for fiscal year 1998, and grew at 17 percent compared to the prior year, continuing its position as the largest database business in the world. The applications business and related services grew 58 percent for the year, totaling $1.8 billion in annual revenues, continuing its position as the second largest applications business in the world.

Revenues for the fourth quarter increased 24 percent (28 percent in local currencies) to $2.4 billion from $1.9 billion in the same period last year. Net income for the period increased to $403 million, or $0.41 per share, compared to net income of $360 million, or $0.36 per share, in the same period last year.

For the total fiscal year 1998, revenues grew 26 percent (31 percent in local currencies) to $7.1 billion. Net income for the period increased to $955 million, or $0.96 per share, excluding charges related to acquired in-process research and development from Treasury Services Corporation and Navio Communications, Inc., in Oracle's first quarter. This compares to net income of $845 million, or $0.84 per share, for fiscal year 1997, excluding the $24 million after tax charge in Oracle's fiscal 1997 third quarter for the purchase of Datalogix, Inc.

Overall license and other related revenue in the fourth quarter grew by 10 percent year-over-year reflecting continued demand for Oracle's core products in the fourth fiscal quarter. In particular, database in the Americas increased 24 percent, leading overall license performance. Services revenue increased 43 percent, year-over-year, which continued a four year trend of consistent 40 plus percent growth.

Oracle Americas led sales growth by geographic region, up 33 percent, followed by EMEA (Europe, Middle East and Africa), up 23 percent (27 percent in local currencies), versus the same period last year. Asia Pacific was down 17 percent in reported dollars (down 2 percent in local currencies) versus the same period last year, reflecting continued weak economic conditions in Asia Pacific.

During the fiscal year, Oracle delivered new versions of each of its major products: -- Oracle8, launched in June 1997, received high appraisal from key industry publications throughout the world by winning the following awards:

* InfoWorld - Product of the Year * InfoWorld - Best of Test Center * Networking Solutions - Product of the Year * Datamation - Product of the Year * Windows NT Magazine - Most Influential Database on NT * Information Week - One of the Most Important Products of the Year * PC Magazine - Finalist Fourteenth Annual Awards for Technical InfoWorld named for technical excellence * Data News (Belgium IT Magazine) - Database Management Software of the Year * Network News (Italian IT Magazine) - Best Database of the Year * Network and Communications (Swedish IT Magazine) - Best in Test

-- In May 1998, Oracle officially launched its most advanced release of its applications suite, Applications Release 11. With this release, Oracle Applications significantly advanced its functionality and technological offering across the manufacturing & supply chain, financials, human resources, and front office families. Fully integrated into Oracle Applications is an all new Business Intelligence System, which provides fast answers to tough questions throughout the business. Offering information relevant to both senior executives and line managers, Release 11 enables companies to respond far more quickly to changing business conditions.

-- As part of the Oracle Web Developer Suite, Oracle announced Oracle(R) Designer/2000(TM) Release 2.1 and Oracle Developer/2000(TM) Release 2.1, enabling dramatically increased productivity for the database application developer. The new features of Oracle's flagship application development environment allows developers, for the first time, to model with business process reengineering (BPR) and automatically generating 100 percent of their applications. Developer/2000 Release 2.1 dramatically reduces administration costs by deploying applications to professionally managed application servers where they can be accessed by any PC or network computer capable of running a standard Internet browser.

"Every several years the market tests you ... tests your strategy, tests your products and tests your management team. This year we've passed this test and strengthened the company," said Ray Lane, President and Chief Operating Officer. "We have repositioned for Asia, we have introduced new releases of all our products (Oracle 8, Applications Release 11, NCA Tools) and we have simplified our organizational structure. We expect to continue to be a leader in each of our key markets in fiscal year 1999."

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 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, call Oracle Investor Relations at 415-506-4073 or see Oracle's World Wide Web page: (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 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, 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.
   
                              ORACLE CORPORATION
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                   ($ in thousands, except per share data)
                                 (unaudited)

                                   4th Quarter Ended       Fiscal Year Ended
                                         May 31,                 May 31,

                                   1998         1997        1998        1997
    REVENUES
      Licenses and other       $ 1,242,960 $ 1,129,603 $ 3,193,490 $ 2,896,696
      Services                   1,169,593     818,428   3,950,376   2,787,640
                                ----------  ----------  ----------  ----------

            Total Revenues       2,412,553   1,948,031   7,143,866   5,684,336
                                ----------  ----------  ----------  ----------
    OPERATING EXPENSES
      Sales and marketing          825,746     695,495   2,371,306   1,970,394
      Cost of services             670,412     435,435   2,273,607   1,550,466
      Research and development (a) 192,153     164,440     719,143     555,476
      General and administrative   119,298      92,866     368,556     308,215
      Acquired in-process
       research and development         --          --     167,054      36,800
                                ----------  ----------  ----------  ----------
         Total Operating
          Expenses               1,807,609   1,388,236   5,899,666   4,421,351
                                ----------  ----------  ----------  ----------
    OPERATING INCOME               604,944     559,795   1,244,200   1,262,985

      Other income (expense) (b)    14,782       2,607      83,619      20,542
                                ----------  ----------  ----------  ----------
    INCOME BEFORE TAXES            619,726     562,402   1,327,819   1,283,527

      Provision for income taxes   216,904     202,465     514,124     462,070
                                ----------  ----------  ----------  ----------
    NET INCOME                  $  402,822  $  359,937  $  813,695  $  821,457
                                ----------  ----------  ----------  ----------
                                ----------  ----------  ----------  ----------
    EARNINGS PER SHARE (b)
      Basic                     $     0.41  $     0.37  $     0.83  $     0.83
      Diluted                   $     0.41  $     0.36  $     0.81  $     0.81

    Shares Outstanding
      Basic                        973,674     980,116     977,599     984,197
      Diluted                      992,436   1,002,762     999,725   1,009,295
    (a) In  accordance with  Statement of  Financial  Accounting  Standards
        No. 86, $8,216 and $5,640 were capitalized in the quarters and $38,079
        and $28,064 were capitalized in the fiscal years ended May 31, 1998
        and 1997, respectively.  Amortization of capitalized software costs
        was $8,008 and $5,551 in the quarters and $38,035 and $28,156 in the
        fiscal May 31, 1998 and 1997, respectively.
    (b) Acquired in-process research and development 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.  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 diluted earnings per share for the year ended May
        31, 1998 would have been $955,023 and $0.96 per share, respectively.
        Acquired in-process research and development for the year ended May
        31, 1997 represents charges of $36,800 related to the acquisition of
        Datalogix International, Inc.

                              ORACLE CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                               ($ in thousands)

                                                     May 31,        May 31,
                                                      1998           1997

    ASSETS

    Current Assets
     Cash and short term investments               $ 1,919,199   $ 1,213,190
     Trade receivables, net                          1,857,480     1,540,470
     Prepaid and refundable income taxes               260,624       274,366
     Other current assets                              285,747       243,070
                                                    ----------    ----------
           Total Current Assets                      4,323,050     3,271,096
                                                    ----------    ----------
    Long-term cash investments                         186,511       116,337
    Property and equipment, net                        934,350       868,948
    Computer software development costs, net            99,012        98,981
    Other assets                                       276,088       268,953
                                                    ----------    ----------
    TOTAL ASSETS                                   $ 5,819,011   $ 4,624,315
                                                    ----------    ----------
                                                    ----------    ----------
    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities
     Notes payable, including current maturities   $     2,924   $     3,361
     Accounts payable                                  239,698       185,444
     Income taxes                                      181,354       203,646
     Customer advances and unearned revenues           877,087       602,862
     Other current liabilities                       1,183,102       926,826
                                                    ----------    ----------
           Total Current Liabilities                 2,484,165     1,922,139
                                                    ----------    ----------
    Long-term debt                                     304,337       300,836

    Long-term liabilities                               57,095        24,226

    Deferred income taxes                               15,856         7,402

    Stockholders' equity                             2,957,558     2,369,712
                                                    ----------    ----------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $ 5,819,011   $ 4,624,315
                                                    ----------    ----------
                                                    ----------    ----------

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