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Financial News Details

Oracle Reports Q1 GAAP Earnings of $0.08 Per Share, Up from $0.06, Net Income Up 28% to $440 Million, Operating Cash Flow Increases to $1.25 Billion

September 12, 2003

Redwood Shores, Calif., September 12, 2003

Today, Oracle Corporation announced that first quarter net income was up 28% to $440 million while revenues were up 2% to $2.1 billion as compared to the first quarter last year. Earnings per share was $0.08 compared with $0.06 last year, which included a one cent impairment charge relating to Oracle’s investment in Liberate.

New software license sales were down 7% to $525 million while software license updates and product support were up 14% to $1,034 million. First quarter operating margin was 30% versus 29% last year.

“Once again, the quarter showed positive growth in total revenues, and we expect to see continued improvement in total revenue and new license growth in Q2 led by North America. In addition, Oracle generated over $1.25 billion in cash as our profitability continues to hit record levels,” said Oracle CFO Jeff Henley.

“We’re all very excited about the announcement of the next version of our database and application server called Oracle 10g,” said Oracle CEO Larry Ellison. “Oracle 10g is the first database designed to run on a grid of 64 to 128 low-cost Linux Intel servers. An Oracle 10g enterprise grid runs more than 10 times faster than the largest server. That means every existing Oracle application – SAP, PeopleSoft, Siebel, custom systems – will run faster and more reliably on an Oracle 10g enterprise grid. But if you want to run on an Oracle grid of Lintel servers – you have to be willing to spend less.”

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

www.oracle.com/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) Economic, political and market conditions could continue to adversely affect purchasing decisions for computer software and services throughout the world. The war on terrorism and the potential for other hostilities in various parts of the world continues to contribute to a climate of uncertainty that could adversely affect revenues. 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. 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 continuing to introduce new or enhanced versions of its products and services, such as Oracle Database 10g, Oracle Application Server 10g, Oracle E-Business Suite, Oracle Collaboration Suite and Outsourcing; the market acceptance and contribution to Oracle's revenues of these new versions or products and services cannot be assured. (4) Oracle periodically has made changes to its pricing model and sales organization, which could lead to a decline or delay in sales as its sales force and customers adjust to the new pricing policies and organizational changes. 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 http://www.oracle.com/investor.

ORACLE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data)

Three Months Ended

 

 

August 31,

 

 

 

 

2003

 

 

2002

 

REVENUES

 

 

 

 

 

 

New software licenses and other

$

525

$

563

 

Software license updates and product support

 

1,034

 

 

905

 

Services

 

513

 

 

560

 

Total Revenues

 

2,072

 

 

2,028

 

OPERATING EXPENSES

 

 

 

 

 

 

Sales and marketing

 

464

 

 

471

 

Software license updates and product support

 

121

 

 

117

 

Cost of services

 

442

 

 

472

 

Research and development

 

298

 

 

286

 

General and administrative (1)

 

131

 

 

102

 

Total Operating Expenses

 

1,456

 

 

1,448

 

OPERATING INCOME

 

616

 

 

580

 

Net investment gains (losses) related to equity securities (2)

 

36

 

 

(81)

 

Other income, net (1)

 

12

 

 

23

 

INCOME BEFORE TAXES

 

664

 

 

522

 

Provision for income taxes

 

224

 

 

179

 

NET INCOME

$

440

$

343

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.08

$

0.06

 

Diluted

$

0.08

$

0.06

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

Basic

 

5,230

 

 

5,399

 

Diluted

 

5,347

 

 

5,515

 

 

 

 

 

 

 

 

(1)General and administrative expenses for the three months ended August 31, 2003 includes $14.6 million of expenditures associated with our tender offer for PeopleSoft, Inc. Other income, net for the three months ended August 31, 2003 includes $5.0 million relating to a commitment fee for a revolving credit facility associated with our tender offer for PeopleSoft, Inc.

(2)Net investment gains (losses) related to equity securities for the three months ended August 31, 2002 includes a $72.1 million impairment charge related to Oracle’s investment in Liberate Technologies. In June 2003, we sold all of our common shares in Liberate Technologies to a third-party for approximately $83.5 million and recognized a $35.4 million gain on the sale.

ORACLE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS DATA

 

Percentage of Revenues

Percentage Change

 

Three Months

Three Months FY04

 

Ended

 

vs.

 

August 31,

 

Three Months FY03

 

2003

 

 

2002

 

REVENUES

 

 

 

 

 

New software licenses and other

25%

 

 

28%

(7%)

Software license updates and product support

50%

 

 

45%

14%

Services

25%

 

 

27%

(8%)

Total Revenues

100%

 

 

100%

2%

OPERATING EXPENSES

 

 

 

 

 

Sales and marketing

22%

 

 

23%

(1%)

Software license updates and product support

6%

 

 

6%

3%

Cost of services

22%

 

 

23%

(6%)

Research and development

14%

 

 

14%

4%

General and administrative

6%

 

 

5%

28%

Total Operating Expenses

70%

 

 

71%

1%

OPERATING INCOME

30%

 

 

29%

6%

Net investment gains (losses) related to equity securities

2%

 

 

(4%)

144%

Other income, net

0%

 

 

1%

(48%)

INCOME BEFORE TAXES

32%

 

 

26%

27%

Provision for income taxes

11%

 

 

9%

25%

NET INCOME

21%

 

 

17%

28%

 

 

 

 

 

 

ORACLE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS ($ in millions)

 

 

August 31,

 

 

May 31,

 

 

2003

 

 

2003

ASSETS

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

4,240

$

4,737

Short-term investments

 

3,164

 

 

1,782

Trade receivables, net

 

1,346

 

 

1,920

Deferred tax assets

 

371

 

 

381

Other current assets

 

292

 

 

407

Total Current Assets

 

9,413

 

 

9,227

Long-term investments

 

283

 

 

233

Property, net

 

1,081

 

 

1,062

Deferred tax assets

 

197

 

 

197

Intangible and other assets

 

241

 

 

345

TOTAL ASSETS

$

11,215

$

11,064

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Current portion of long-term debt

$

152

$

153

Accounts payable

 

225

 

 

228

Income taxes payable

 

986

 

 

891

Other current liabilities

 

1,220

 

 

1,477

Deferred revenues

 

1,603

 

 

1,409

Total Current Liabilities

 

4,186

 

 

4,158

Long-term debt

 

168

 

 

175

Deferred tax liabilities

 

150

 

 

186

Other long-term liabilities

 

209

 

 

225

Stockholders' equity

 

6,502

 

 

6,320

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

11,215

$

11,064

 

 

 

 

 

 

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in millions)

 

 

Three Months Ended

 

 

August 31,

 

 

 

2003

 

 

2002

Cash Flows From Operating Activities:

 

 

 

 

 

Net income

$

440

$

343

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

50

 

 

62

Amortization of intangible assets

 

11

 

 

22

Net investment (gains) losses related to equity securities

 

(36)

 

 

81

Deferred income taxes

 

(26)

 

 

(36)

Changes in assets and liabilities:

 

 

 

 

 

Decrease in trade receivables

 

544

 

 

688

Decrease in prepaid expenses and other assets

 

109

 

 

88

Decrease in accounts payable and other current liabilities

 

(183)

 

 

(164)

Increase (decrease) in income taxes payable

 

130

 

 

(109)

Increase in deferred revenues

 

228

 

 

255

Decrease in other long-term liabilities

 

(16)

 

 

(12)

Net cash provided by operating activities

 

1,251

 

 

1,218

Cash Flows From Investing Activities:

 

 

 

 

 

Purchases of investments

 

(2,471)

 

 

(662)

Proceeds from maturities and sale of investments

 

1,068

 

 

1,070

Capital expenditures

 

(76)

 

 

(43)

Increase in other assets

 

(12)

 

 

(94)

Net cash provided by (used for) investing activities

 

(1,491)

 

 

271

Cash Flows From Financing Activities:

 

 

 

 

 

Payments for repurchase of common stock

 

(200)

 

 

(768)

Proceeds from issuance of common stock

 

41

 

 

30

Net cash used for financing activities

 

(159)

 

 

(738)

Effect of exchange rate changes on cash and cash equivalents

 

(98)

 

 

29

Net increase (decrease) in cash and cash equivalents

 

(497)

 

 

780

Cash and cash equivalents at beginning of period

 

4,737

 

 

3,095

Cash and cash equivalents at end of period

$

4,240

 

$

3,875

 

 

 

 

 

 

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