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Financial News Details

Oracle Reports $0.16 Cents Per Share in Q1, Net Income Increases 21%

September 14, 1999

REDWOOD SHORES, Calif., September 14, 1999 -- Oracle Corporation (Nasdaq: ORCL) today announced record first quarter results for the period ended August 31, 1999. For the quarter, revenue grew 13% to $2.0 billion while net income increased 21% to $237 million, or $0.16 per share. This compares to revenue of $1.7 billion and net income of $195 million, or $0.13 per share, for the same period a year ago.

Overall, Q1 software license and other revenue grew 9% year-over-year. Specifically, database software sales increased 8% to $443 million and applications software sales increased 11%, to $109 million, versus Q1 last year. Total services revenue increased 16% versus Q1 last year, to $1,352 million.

Oracle reported continued growth in Americas and EMEA (Europe, Middle East and Africa) and significant improvement in Asia Pacific. Americas revenue was up 12% (14% in local currencies) year-over-year and EMEA was up 9% (13% in local currencies) year-over-year. Asia Pacific reported 34% growth (15% in local currencies) year-over-year, reflecting improvement in economic conditions in the Asia Pacific region.

"Based on our current pipelines the entire management team believes that the overall year should be very strong," said Larry Ellison, CEO and Chairman, Oracle Corporation. "Specifically we expect that Oracle's software sales will grow faster this year than last. And margins should continue to improve as well."

"Oracle is quickly turning into an e-business. We are using our own software to improve the way we sell to and service our customers," said Jeff Henley, Chief Financial Officer, Oracle Corporation. "This quarter we just opened Oracle's new Internet store. Within 18 months we expect as much as 80% of Oracle's revenue will go through our new web store. This is another example of using our own technology and applications to become an e-business. When we complete transforming our business into an e-business, we expect to save $1 billion per year."

Oracle made a number of significant announcements during the quarter:

  • -- On July 28, 1999 -- Oracle announced the Oracle Exchange, the world's first open business-to-business online marketplace. Oracle Exchange will provide an e-business procurement community where any company can buy business goods and services over the Internet, using any purchasing technique. Unlike competitive offerings that can only link customers with those suppliers who use the same proprietary software, Oracle Exchange, similar to current online auction sites, will be available to any company and does not require Oracle software.
  • -- On August 31, 1999 -- Oracle introduced the Oracle .com Suite, a software and services offering designed to help early stage Internet companies lay sophisticated technology foundations on day one. The Oracle .com Suite is a bundled solution that includes Oracle8i, Oracle Application Server, Oracle JServer, JDeveloper, and WebDB at a starting price of $9,995. This brings together Oracle's Internet Platform technology in an affordable package to smoothly carry start-ups through the rapid growth stage into mature .com enterprise players.
  • -- On July 19, 1999 -- Oracle announced the general availability of Oracle8i on Linux, after a successful early adopter's program. Since Oracle announced Oracle8 on Linux, there have been over 50,000 downloads from Oracle Technology Network (http://technet.oracle.com/ ). Now, after the announcement of Oracle8i, there have been nearly 20,000 registrants for early access in the first few weeks. Outside the development community, Oracle has also seen overwhelming customer adoption with an excess of 800 paying customers today -- over half of these orders from enterprise accounts and the remainder from small to mid-sized businesses and organizations.
  • -- On June 28, 1999 -- Oracle announced plans to deliver the first and only Internet-based Advanced Planning and Scheduling (APS) solution to optimize e-business processes for planning and scheduling across the extended supply chain. The solution is expected to allow implementation in as little as one day, enabling businesses to begin realizing return on their APS investment immediately. APS is intended to enable businesses to optimize their supply chains in order to maximize revenues, minimize expenses and make full use of all assets.

Oracle Corporation is the world's second largest software company. With annual revenues of more than $9.1 billion, Oracle 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: (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. (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 Internet computing software, customer relationship management applications and application hosting services; the market acceptance and contribution to Oracle's revenues of these products cannot be assured. (6) As the year 2000 approaches, many companies have been testing and modifying their systems to ensure their ability to accommodate the change in date to the year 2000. Oracle expects that many companies will postpone the purchase of new software products until after the year 2000, in order to assure the continuing ability of their information systems to handle the year 2000 date change. This could cause the software industry and Oracle to experience a significant decrease in the demand for new products. In prior quarters, demand for database and applications software may have been generated by customers in the process of replacing and upgrading their software in order to accommodate the change in date to the year 2000. As customers complete such preparations, the software industry and Oracle may experience a significant deceleration from the growth rates previously experienced in the database and 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, 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/.

                              ORACLE CORPORATION

                    CONSOLIDATED STATEMENTS OF OPERATIONS
                   ($ in thousands, except per share data)
                                 (unaudited)

                                                           1st Quarter Ended
                                                             August 31,
                                                       -----------------------
                                                           1999         1998
                                                           ----         ----
    REVENUES
      Licenses and other                               $  632,181   $  582,464
      Services                                          1,352,336    1,166,646
                                                       ----------   ----------
        Total Revenues                                  1,984,517    1,749,110
                                                       ----------   ----------

    OPERATING EXPENSES
      Sales and marketing                                 538,426      510,076
      Cost of services                                    756,750      679,290
      Research and development (1)                        235,941      187,623
      General and administrative                          107,537       94,284
                                                     ----------   ----------
        Total Operating Expenses                        1,638,654    1,471,273
                                                       ----------   ----------

    OPERATING INCOME                                      345,863      277,837

    Other income                                           18,347       22,166
                                                       ----------   ----------

    INCOME BEFORE TAXES                                   364,210      300,003

    Provision for income taxes                            127,474      105,001
                                                       ----------   ----------

    NET INCOME                                         $  236,736   $  195,002
                                                       ==========   ==========

    EARNINGS PER SHARE (2)
      Basic                                            $     0.17   $     0.13
      Diluted                                          $     0.16   $     0.13

    Shares Outstanding
      Basic                                             1,430,460    1,459,341
      Diluted                                           1,491,201    1,483,724

    (1) In accordance with Statement of Financial Accounting Standards  No.
        86, $3,807 and $7,140 were capitalized in the quarters ended August
        31, 1999 and 1998, respectively.  Amortization of capitalized software
        costs was $3,485 and $7,321 in the quarters ended August 31, 1999 and
        1998, respectively.
    (2) All earnings per share and shares outstanding amounts have been
        adjusted to reflect a 3:2 stock split during Q3 fiscal 1999.


                              ORACLE CORPORATION

                    CONDENSED CONSOLIDATED BALANCE SHEETS
                               ($ in thousands)

                                                     August 31,       May 31,
                                                       1999            1999
                                                       ----            ----
                                                    (unaudited)
    ASSETS

    Current Assets
      Cash and short term investments              $  2,721,749   $  2,562,764
      Trade receivables, net                          1,514,095      2,238,204
      Prepaid and refundable income taxes               296,471        299,670
      Other current assets                              304,181        346,636
                                                     ----------     ----------

        Total Current Assets                          4,836,496      5,447,274
                                                     ----------     ----------

    Long-term cash investments                          208,475        249,547
    Property and equipment, net                         966,098        987,482
    Computer software development costs, net             99,192         98,870
    Other assets                                        469,138        476,481
                                                     ----------     ----------

    TOTAL ASSETS                                   $  6,579,399   $  7,259,654
                                                   ============   ============

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities
      Notes payable, including current maturities  $      3,580   $      3,638
      Accounts payable                                  255,369        283,896
      Income taxes                                      157,267        277,700
      Customer advances and unearned revenues         1,089,684      1,007,149
      Other current liabilities                       1,043,422      1,474,040
                                                     ----------     ----------

        Total Current Liabilities                     2,549,322      3,046,423
                                                     ----------     ----------

    Long-term debt                                      300,806        304,140

    Long-term liabilities                                71,151         77,937

    Deferred income taxes                               157,645        135,887

    Stockholders' equity                              3,500,475      3,695,267
                                                     ----------     ----------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $  6,579,399   $  7,259,654
                                                   ============   ============




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