REDWOOD SHORES, Calif., June 15, 1999 -- Oracle Corporation
(Nasdaq: ORCL), the world's second largest software company, today announced
record fourth quarter and fiscal year end results for the period ended May 31,
1999. For fiscal year 1999, revenue grew 24% to $8.8 billion while net income
increased 35% to $1.3 billion, or $0.87 per share. This compares to revenue
of $7.1 billion and net income of $955 million, or $0.64 per share, for fiscal
year 1998, excluding one-time charges.
For the fourth quarter revenue increased 22% to $2.9 billion from
$2.4 billion in the same period last year. Net income for the period
increased 31% to $527 million, or $0.36 per share, compared to net income of
$403 million, or $0.27 per share, in the same period last year.
Overall, Q4 software license revenue grew 22% year-over-year.
Specifically, database software sales increased 25%, applications software
sales increased 28%, while services revenue increased 22%, versus Q4 last
year.
These results solidify Oracle's position as the world's number one
supplier of database software. In fact, the latest survey from IDC reports
that Oracle's overall relational database market share is now more than double
that of the Company's closest competitor, IBM DB2. IDC shows Oracle with a
40.4% share, IBM DB2 with a 17.8% share and Microsoft SQL Server with a 5.1%
share. (This independent research study dramatically contradicts reports
circulating in the media that IBM DB2 has taken a narrow lead over Oracle in
the database market.)
In the rapidly growing UNIX and Windows NT relational database markets,
Oracle's lead over IBM DB2 is much greater. On UNIX, Dataquest reports that
Oracle has a 61.1% share, over 8 times larger than the IBM DB2 share of 7.4%.
On Windows NT, Dataquest shows Oracle with a 47.3% share, again far larger
than the IBM DB2 share of 9.9%.
"We view the database survey results on UNIX and Windows NT as most
telling," said Larry Ellison, Oracle Corporation founder and CEO. "These are
the operating systems that power the Internet. This is the growth segment of
the market."
"Oracle's applications software license growth rate of 28% is especially
impressive when you consider the following two facts," Ellison continued.
"Y2K is just around the corner. And every other ERP vendor -- SAP,
Peoplesoft, BAAN and JD Edwards -- has reported declines of software sales in
their most recent quarter. Furthermore, our CRM software business grew so
fast in the fourth quarter that we passed all but one of our CRM competitors.
"The reason that our ERP and CRM application software businesses are
growing much faster than our competitors' is because we offer 100% pure
Internet server based applications," Ellison explained. "All you need to use
any Oracle application is a standard Internet browser. In contrast, all of
our competitors (with the exception of Ariba) still sell older, more costly
client-server technology."
"We've now shown four consecutive quarters of consistent margin
improvement," said Jeffrey O. Henley, Executive Vice President and Chief
Financial Officer. "This kind of margin expansion over the next couple of
years will be possible principally through continued productivity gains, as we
transform our business to an e-business."
During the 1999 fiscal year, Oracle delivered 100% Internet enabled
versions of its major product lines:
- * On March 1, 1999, Oracle announced the immediate availability of
Oracle8i, the world's first Internet database and the core of Oracle's
Internet Platform. Oracle 8i was built on 20 years of experience in
providing scalable, reliable and secure database systems. Oracle's
Internet Platform, comprised of Oracle8i, Oracle(R) Application Server
and Oracle's Internet development tools, uniquely delivers the
technology required to move an entire business to the Web. In just six
months more than 250,000 Internet developers have joined Oracle's online
resource for Internet development, increasing the membership by more
than 300%.
- * On May 26, 1999, Oracle announced the availability of Oracle CRM 3i, the
third generation of Oracle's customer relationship management
applications, and the first 100% Internet-enabled marketing, sales and
service applications. By integrating all front office applications,
Oracle CRM3i manages all aspects of customer relations necessary for an
effective e-business through channels including the web, direct sales
forces and call centers. Oracle CRM 3i offers solutions for both
business-to-business and business-to-consumer web stores, Internet bill,
payment and presentment and Internet marketing.
- * During the 1999 fiscal year, Oracle announced the successful completion
of the Oracle Business OnLine(TM) pilot program, the world's leading
Internet application software hosting service. During the pilot phase,
Oracle proved that it could run mission-critical applications software
for its customers more economically and efficiently on Oracle(R)
Applications. With their financial, manufacturing or human resources
software systems up and running in record time, the first three pilot
phase customers -- Core Technology Group, Robert Mondavi Corp. and
Triton Network Systems -- substantially reduced their IT costs. Since
the completion of the pilot program, Oracle Business OnLine continues to
build momentum, with a total of 15 customers signed on to date.
Oracle Corporation is the world's second largest software company. With
annual revenues of more than $8.8 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 web
applications servers and Internet computing software; 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 and to a lesser extent on an ongoing basis, demand for applications
software may have been and continue to 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 previously 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, 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)
4th Quarter Ended Fiscal Year Ended
May 31, May 31,
------------------- -------------------
1999 1998 1999 1998
----- ----- ----- -----
(unaudited)
REVENUES
Licenses and
other $1,512,735 $1,242,960 $3,688,366 $3,193,490
Services 1,430,543 1,169,593 5,138,886 3,950,376
----------- ----------- ---------- -----------
Total Revenues 2,943,278 2,412,553 8,827,252 7,143,866
----------- ----------- ---------- -----------
OPERATING EXPENSES
Sales and marketing 953,792 825,746 2,622,379 2,371,306
Cost of services 812,988 670,412 3,064,148 2,273,607
Research and
development (a) 243,307 192,153 841,406 719,143
General and
administrative 126,892 119,298 426,438 368,556
Acquired in-process
research and
development (b) -- -- -- 167,054
----------- ----------- ---------- -----------
Total Operating
Expenses 2,136,979 1,807,609 6,954,371 5,899,666
----------- ----------- ---------- -----------
OPERATING INCOME 806,299 604,944 1,872,881 1,244,200
Other income
(expense) (b)(c) 20,721 14,782 109,197 83,619
----------- ----------- ---------- -----------
INCOME BEFORE TAXES 827,020 619,726 1,982,078 1,327,819
Provision for income
taxes 299,600 216,904 692,320 514,124
----------- ----------- ---------- -----------
NET INCOME (b) $527,420 $402,822 $1,289,758 $813,695
----------- ----------- ---------- -----------
EARNINGS PER SHARE (b)(d)
Basic $0.37 $0.28 $0.89 $0.55
Diluted $0.36 $0.27 $0.87 $0.54
Shares Outstanding
Basic 1,436,898 1,460,511 1,445,588 1,466,399
Diluted 1,482,809 1,488,654 1,484,225 1,499,588
(a) In accordance with Statement of Financial Accounting Standards No. 86,
$8,669 and $8,216 were capitalized in the quarters and $32,855 and
$38,079 were capitalized in the fiscal years ended May 31, 1999 and
1998, respectively. Amortization of capitalized software costs was
$8,791 and $8,008 in the quarters and $33,000 and $38,035 in the
fiscal years ended May 31, 1999 and 1998, respectively.
(b) Acquisition charges incurred in the first quarter of fiscal 1998
included in-process research and development 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 twelve months ended May 31, 1998
would have been $955,023 and $0.64 per share, respectively.
(c) Other income (expense) includes a gain on sale of existing shares in
Oracle Japan in the amount of $24,457 during Q3 fiscal 1999.
(d) All earnings per share and shares outstanding amounts have been
adjusted to reflect a 3:2 stock split during Q3 fiscal 1999.
ORACLE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
May 31, May 31,
1999 1998
---- ----
ASSETS
Current Assets
Cash and short term investments $2,562,764 $1,919,199
Trade receivables, net 2,238,204 1,857,480
Prepaid and refundable income taxes 299,670 260,624
Other current assets 346,636 285,747
---------- ----------
Total Current Assets 5,447,274 4,323,050
---------- ----------
Long-term cash investments 249,547 186,511
Property and equipment, net 987,482 934,350
Computer software development costs,
net 98,870 99,012
Other assets 476,481 276,088
---------- ----------
TOTAL ASSETS $7,259,654 $5,819,011
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable, including current
maturities $3,638 $2,924
Accounts payable 283,896 239,698
Income taxes 277,700 181,354
Customer advances and unearned
revenues 1,007,149 877,087
Other current liabilities 1,474,040 1,183,102
---------- ----------
Total Current Liabilities 3,046,423 2,484,165
---------- ----------
Long-term debt 304,140 304,337
Long-term liabilities 77,937 57,095
Deferred income taxes 135,887 15,856
Stockholders' equity 3,695,267 2,957,558
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $7,259,654 $5,819,011
---------- ----------