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Financial News Details

Oracle Application Sales Up 61%, CRM Sales Up 161% Adjusted Net Income Up 76%, Operating Margin Reaches 41%

June 20, 2000

Oracle passes SAP to become the world's largest applications software company

REDWOOD SHORES, Calif. 20-JUN-2000 06:00 AM Today, Oracle Corporation announced that in its fiscal fourth quarter (Q4) adjusted net income increased 76% to $926 million, or $0.31 per share, while revenue grew to $3.4 billion. This compares to $2.9 billion in revenue, $527 million in adjusted net income, and $0.18 per share in Q4 last year.

Fiscal year 2000 adjusted net income increased 61% to $2.1 billion, or $0.69 per share, while revenue grew to $10.1 billion. Last year revenue was $8.8 billion and adjusted net income was $1.3 billion, or $0.43 per share.

For the quarter, total net income, which includes investment gains, increased to $4.9 billion, or $1.63 per share. This compares with $527 million in total net income, or $0.18 per share in Q4 last year. The investment gains primarily came from the sale of 12% of Oracle's holdings in Oracle Japan, of which Oracle Corporation now owns 74%. This equity reduction was necessary for Oracle Japan to comply with the listing requirements of the Tokyo Stock Exchange (TSE1).

Applications software sales increased 61% to $447 million in Q4, led by CRM sales which grew at a 161% rate. Database software sales increased 12% to $1.2 billion. Consulting, education and support revenues increased 7% to $1.5 billion.

"This past quarter Oracle sold more application software than SAP, $447 million vs. $352 million," said Oracle CEO, Larry Ellison. "Applications Release 11i -- the Oracle e-Business suite -- hurtled us into the number one position in the applications software business. Our e-Business suite is the first complete and integrated set of applications that automate all aspects of a business. The Oracle e-Business suite competes in marketing with Broadvision, sales with Siebel, service with Clarify, supply chain with I2, Internet procurement with Ariba, exchanges with Commerce One, manufacturing and accounting with SAP, and in human resources with Peoplesoft. So, customers can buy all these applications from all these different vendors, and then hire a consulting firm to assemble the different applications and try to make them work together. Or, customers can buy the Oracle e-Business suite, where all the applications already work together -- on the Internet."

"One year ago Oracle set out to save one billion dollars annually by using our own Internet e-Business applications. We did that -- and more," said Oracle Chief Financial Officer, Jeff Henley. "A billion dollars in annual savings translates to a 10 point improvement in our margins. In Q4 our operating margin improved 13.7 points -- from 27.4% to 41.1% percent. As we enter the second year of our e-Business transformation, we are beginning to benefit from the sales and marketing productivity gains that will accelerate revenue growth in fiscal 2001."

Oracle Corporation is the world's second largest software company. With annual sales of more than $10 billion, Oracle provides the software that powers the Internet. For more information about Oracle, please call Investor Relations at 650-506-4073 or visit Oracle on the web at 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, especially on a quarterly basis, 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) Delays in product delivery or closing of sales can cause quarterly revenues and income to fall significantly short of anticipated levels. (4) Oracle is introducing new products, such as internet procurement and supply chain management software, customer relationship management applications and application hosting services; the market acceptance and contribution to Oracle's revenues of these products cannot be assured. (5) Oracle has recently changed 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. (6) Oracle is assisting its customers in forming exchanges for a number of business procurement needs; the market acceptance and contribution to Oracle's revenues of these exchanges cannot be assured. 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 http://www.oracle.com.

                              ORACLE CORPORATION


 

CONSOLIDATED STATEMENTS OF OPERATIONS

($ in thousands, except per share data)

(unaudited)


4th Quarter Ended Twelve Months Ended
May 31, May 31,
----------------------- -----------------------
2000 1999 2000 1999
REVENUES
Licenses and other $1,840,609 $1,512,735 $4,446,795 $3,688,366
Services 1,533,701 1,430,543 5,683,333 5,138,886
---------- ---------- ---------- ----------
Total Revenues 3,374,310 2,943,278 10,130,128 8,827,252

---------- ---------- ---------- ----------
OPERATING EXPENSES
Sales and marketing 852,194 953,792 2,616,749 2,622,379
Cost of services 725,498 812,988 2,942,679 3,064,148
Research and
development 270,229 243,307 1,009,882 841,406
General and
administrative 137,878 126,892 480,658 426,438
---------- ---------- ---------- ----------
Total Operating
Expenses 1,985,799 2,136,979 7,049,968 6,954,371
---------- ---------- ---------- ----------



OPERATING INCOME 1,388,511 806,299 3,080,160 1,872,881



Net investment gains
related to
marketable
securities (1) 6,521,496 -- 6,936,955 24,457
Other income
(expense), net 48,372 20,721 106,319 84,740
---------- ---------- ---------- ----------

INCOME BEFORE TAXES 7,958,379 827,020 10,123,434 1,982,078

Provision for
income taxes (1) 3,045,972 299,600 3,826,631 692,320
---------- ---------- ---------- ----------

NET INCOME $4,912,407 $527,420 $6,296,803 $1,289,758
========== ========== ========== ==========


EARNINGS PER SHARE (2)
Basic $1.74 $0.18 $2.22 $0.45
Diluted $1.63 $0.18 $2.10 $0.43

SHARES OUTSTANDING
Basic 2,818,928 2,873,796 2,839,419 2,891,176
Diluted 3,004,793 2,965,618 2,997,921 2,968,449

(1) Net investment gains related to marketable securities in the quarter
ended May 31, 2000 of $6,521,496 relate to the gain on sale of
existing shares in Oracle Japan in connection with its Secondary
Public Offering, gains on sales of other marketable securities, and
the Company's equity share in the results of non-consolidated
subsidiaries. Excluding the effect of these transactions, the
effective income tax rate and provision for income taxes would have
been 35.6% and $510,984, respectively, and net income and fully

diluted earnings per share would have been $925,899 and $0.31,
respectively.

Net investment gains related to marketable securities in the fiscal
year ended May 31, 2000 of $6,936,955 relate to the gain on sale of
existing shares in Liberate Technologies and Oracle Japan in
connection with Secondary Public Offerings, gains on sales of other
marketable securities, and the Company's equity share in the results
of non-consolidated subsidiaries. Excluding the effect of these
transactions, the effective tax rate and provision for income taxes
would have been 35.5% and $1,131,199, respectively, and net income
and fully diluted earnings per share for the fiscal year ended May
31, 2000 would have been $2,055,280 and $0.69, respectively.

Net investment gains related to marketable securities in the fiscal
year ended May 31, 1999 of $24,457 relate to the gain on sale of
shares in existing shares in Oracle Japan in connection with their
Initial Public Offering.
 

(2) All earnings per share and shares outstanding amounts have been
adjusted to reflect a 2:1 stock split during the quarter ended
February 2000.
 

ORACLE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)

May 31, May 31,
2000 1999
---- ----
(unaudited)

ASSETS

Current Assets

Cash and short term investments $7,761,998 $2,562,764
Trade receivables, net 2,533,964 2,238,204
Prepaid and refundable income taxes 212,829 299,670
Other current assets 374,543 346,636
---------- ----------
Total Current Assets 10,883,334 5,447,274
---------- ----------
Long-term cash investments 110,000 249,547
Property and equipment, net 934,455 987,482
Computer software development costs, net 94,609 98,870
Other assets 1,054,381 476,481
---------- ----------
TOTAL ASSETS $13,076,779 $7,259,654
=========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Notes payable, including current maturities $2,691 $3,638
Accounts payable 287,495 283,896

Income taxes 2,821,776 277,700
Customer advances and unearned revenues 1,133,482 1,007,149
Other current liabilities 1,616,794 1,474,040
---------- ----------

Total Current Liabilities 5,862,238 3,046,423
---------- ----------

Long-term debt 298,770 304,140

Long-term liabilities 188,178 77,937

Deferred income taxes 266,130 135,887

Stockholders' equity 6,461,463 3,695,267
---------- ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $13,076,779 $7,259,654
=========== ==========



 

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