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Financial News Details

Oracle Reports Q4 EPS of $0.19 VS. $0.16 Last Year

June 15, 2004

Database New Software License Revenue Up 15% for Second Quarter in a Row

Redwood Shores, Calif., June 15, 2004--[http://www.oracle.com/tellmemore/?3167712] Today, Oracle Corporation announced financial results for its fiscal fourth quarter and for its full fiscal year 2004.

Fourth quarter net income increased 15% to $990 million, or $0.19 per share, compared to $858 million and $0.16 per share last year. Total revenue increased 9% to $3.1 billion in the quarter with software revenue up 12% to $2.5 billion, and services revenue down 4% to $558 million. The Q4 operating margin was 46%, an all time high.

For the full fiscal year 2004 net income was up 16% to $2.7 billion while earnings per share increased from $0.43 to $0.50. Total revenue increased 7% to $10.2 billion for the year with software revenue up 12% to $8.1 billion while services revenue was down 8% to $2.1 billion. Operating margin for the year was 38%, also an all time record.

“Operating income was $1.4 billion in the fourth quarter and $3.9 billion for the full year,” said Oracle Chairman and CFO, Jeff Henley. “That’s the best operating profit we’ve ever delivered; even better than our best year during the Internet bubble. We had a very strong finish to a very good year.”

“Since we introduced Grid technology six months ago, our database new license sales have been growing at a rate of 15%,” said Oracle CEO, Larry Ellison. “We’re still early on in the adoption cycle but the Oracle 10g database is off to a fast start. The market is just beginning the move to databases and application servers running on Grids of low cost computers and Oracle is leading the way.”

-more -

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 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, delays in product delivery, or a decline in our renewal rates for software license updates and product support can cause quarterly revenues and income to fall 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 continues 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, Oracle Customer Data Hub and On Demand. 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

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

 

 

Three Months Ended

 

 

 

Year Ended

 

 

 

May 31,

 

 

 

May 31,

 

REVENUES

 

2004

 

 

2003

 

 

2004

 

 

2003

 

 

 

 

 

 

 

 

 

 

 

New software licenses

$

1,313

$

1,187

$

3,541

$

3,270

Software license updates and product support

 

1,205

 

 

1,065

 

 

4,529

 

 

3,929

Software Revenues

 

2,518

 

 

2,252

 

 

8,070

 

 

7,199

Services

 

558

 

 

580

 

 

2,086

 

 

2,276

Total Revenues

 

3,076

 

 

2,832

 

 

10,156

 

 

9,475

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

620

 

 

567

 

 

2,136

 

 

2,072

Software license updates and product support

 

140

 

 

119

 

 

547

 

 

474

Cost of services

 

434

 

 

461

 

 

1,770

 

 

1,868

Research and development

 

328

 

 

298

 

 

1,278

 

 

1,180

General and administrative (1)

 

148

 

 

116

 

 

561

 

 

441

Total Operating Expenses

 

1,670

 

 

1,561

 

 

6,292

 

 

6,035

OPERATING INCOME

 

1,406

 

 

1,271

 

 

3,864

 

 

3,440

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

 

-

 

 

(3)

 

 

29

 

 

(111)

Other income, net (3)

 

13

 

 

6

 

 

52

 

 

96

INCOME BEFORE TAXES

 

1,419

 

 

1,274

 

 

3,945

 

 

3,425

Provision for income taxes (4)

 

429

 

 

416

 

 

1,264

 

 

1,118

NET INCOME

$

990

$

858

$

2,681

$

2,307

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.19

$

0.16

$

0.51

$

0.44

Diluted

$

0.19

$

0.16

$

0.50

$

0.43

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

Basic

 

5,185

 

 

5,240

 

 

5,215

 

 

5,302

Diluted

 

5,283

 

 

5,356

 

 

5,326

 

 

5,418

(1)General and administrative expenses for the three months and year ended May 31, 2004 include $10.8 million and $54.2 million of professional fees associated with our tender offer for PeopleSoft, Inc.

(2)Net investment gains (losses) related to equity securities for the year ended May 31, 2003 includes $87.1 million of impairment charges 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.

(3)Other income, net for the three months and year ended May 31, 2004 includes $0.5 million and $5.5 million of commitment fees for a revolving credit facility associated with our tender offer for PeopleSoft, Inc.

(4)Our effective income tax rate for the year ended May 31, 2004 was 32%. Through February 29, 2004, we had estimated our rate to be 33%.

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA

 

Percentage of Revenues

 

Percentage of Revenues

 

Percentage Change

 

Percentage Change

 

Three Months Ended

 

 

 

 

 

 

Three Months FY04

 

FY04

 

 

Year Ended

 

vs.

 

vs.

 

 

May 31,

 

 

May 31,

 

Three Months FY03

 

FY03

REVENUES

2004

2003

2004

2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New software licenses

43%

42%

35%

35%

11%

8%

Software license updates and product support

39%

 

 

38%

 

44%

 

 

41%

13%

15%

Software Revenues

82%

80%

79%

76%

12%

12%

Services

18%

 

 

20%

 

21%

 

 

24%

(4%)

(8%)

Total Revenues

100%

100%

100%

100%

9%

7%

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

20%

20%

21%

22%

9%

3%

Software license updates and product support

4%

4%

5%

5%

18%

15%

Cost of services

14%

16%

17%

20%

(6%)

(5%)

Research and development

11%

11%

13%

12%

10%

8%

General and administrative

5%

 

 

4%

 

6%

 

 

5%

28%

27%

Total Operating Expenses

54%

 

 

55%

 

62%

 

 

64%

7%

4%

OPERATING INCOME

46%

45%

38%

36%

11%

12%

Net investment gains (losses) related to equity securities

0%

0%

0%

(1%)

*

*

Other income, net

0%

 

 

0%

 

1%

 

 

1%

*

*

INCOME BEFORE TAXES

46%

45%

39%

36%

11%

15%

Provision for income taxes

14%

 

 

15%

 

13%

 

 

12%

3%

13%

NET INCOME

32%

 

 

30%

 

26%

 

 

24%

15%

16%

* not meaningful

ORACLE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS ($ in millions)

 

 

May 31,

 

 

May 31,

 

 

 

2004

 

 

2003

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

$

4,138

 

$

4,737

 

Short-term investments

 

4,449

 

 

1,782

 

Trade receivables, net

 

2,012

 

 

1,920

 

Deferred tax assets

 

301

 

 

381

 

Other current assets

 

436

 

 

407

 

Total Current Assets

 

11,336

 

 

9,227

 

Investments in debt securities

 

-

 

 

233

 

Property, net

 

1,068

 

 

1,062

*

Deferred tax assets

 

92

*

 

100

Other assets

 

267

 

 

345

 

TOTAL ASSETS

$

12,763

*

$

10,967

*

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Current portion of long-term debt

$

9

 

$

153

 

Accounts payable

 

191

 

 

228

 

Income taxes payable

 

950

 

 

891

 

Other current liabilities

 

1,625

 

 

1,477

 

Deferred revenues

 

1,497

 

 

1,409

 

Total Current Liabilities

 

4,272

 

 

4,158

 

Long-term debt

 

163

 

 

175

*

Deferred tax liabilities

 

59

*

 

89

Other long-term liabilities

 

274

 

 

225

 

Stockholders' equity

 

7,995

 

 

6,320

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

12,763

*

$

10,967

*

 

 

 

 

 

 

 

*These items were revised after our press release dated June 15, 2004 to reclassify certain deferred tax assets and deferred tax liabilities.

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in millions)

Year Ended

May 31,

 

 

2004

 

 

2003

Cash Flows From Operating Activities:

 

 

 

 

 

Net income

$

2,681

$

2,307

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

 

 

 

 

 

Depreciation

 

198

 

 

243

Amortization of intangible assets

 

36

 

 

84

Provision for trade receivable allowances

 

173

 

 

128

Net investment (gains) losses related to equity securities

 

(29)

 

 

111

Deferred income taxes

 

58

 

 

90

Changes in assets and liabilities:

 

 

 

 

 

(Increase) decrease in trade receivables

 

(245)

 

 

119

(Increase) decrease in other assets

 

(17)

 

 

41

Increase (decrease) in accounts payable and other current liabilities

 

25

 

 

(88)

Increase (decrease) in income taxes payable

 

200

 

 

(81)

Increase in deferred revenues

 

83

 

 

65

Increase in other long-term liabilities

 

14

 

 

4

Net cash provided by operating activities

 

3,177

 

 

3,023

Cash Flows From Investing Activities:

 

 

 

 

 

Purchases of investments

 

(10,310)

 

 

(4,713)

Proceeds from maturities and sale of investments

 

8,009

 

 

5,942

Capital expenditures

 

(189)

 

 

(291)

Increase in other assets

 

(71)

 

 

(43)

Net cash provided by (used for) investing activities

 

(2,561)

 

 

895

Cash Flows From Financing Activities:

 

 

 

 

 

Payments for repurchase of common stock

 

(1,499)

 

 

(2,653)

Proceeds from issuance of common stock

 

354

 

 

356

Borrowings (payments) of long-term debt

 

(144)

 

 

9

Settlement of forward contract

 

-

 

 

(166)

Net cash used for financing activities

 

(1,289)

 

 

(2,454)

Effect of exchange rate changes on cash and cash equivalents

 

74

 

 

178

Net increase (decrease) in cash and cash equivalents

 

(599)

 

 

1,642

Cash and cash equivalents at beginning of period

 

4,737

 

 

3,095

Cash and cash equivalents at end of period

$

4,138

 

$

4,737

 

 

 

 

 

 

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