Operating Margin Improves Two Percentage Points
Redwood Shores, Calif. 14-MAR-2002 01:00 PM Today, Oracle Corporation announced third quarter revenues of $2.2 billion and net income of $508 million. Earnings per share of $0.09 compares with $0.10 in Q3 last year. Third quarter operating margin improved two percentage points to 35% versus 33% the prior year. New software license sales were down 30%, while software license renewals grew 5%. Overall services revenues were down 7%, with support revenues flat with the prior year.
"While the overall economy may have begun its recovery, technology spending is lagging," said Oracle CFO Jeff Henley. "In addition, certain industries such as telecommunications, financial services and high-tech manufacturing, where Oracle has been particularly strong, continue to be under stress. As a result, our sales to companies in these industries have slowed markedly compared to a year ago. As the recovery becomes more broad based, we expect technology spending to increase and our software sales to improve."
"It's clear that tight IT budgets are making customers more price sensitive," said Oracle CEO Larry Ellison. "Our aggressively priced products are actually selling quite well in this economic climate. For example, our application server sales grew 35% this quarter while sales of competitive products declined year over year. Sales of the lower priced standard edition of our database were up 14% this quarter. As the economy improves, many of these Standard Edition customers should upgrade to Enterprise Edition."
"Many of the world's best managed and most profitable business are now running their businesses using Oracle's E-business Suite," Ellison continued. "This past quarter Emerson, one of America's most admired companies, decided to standardize on our integrated suite of CRM and ERP applications. We also had many other competitive wins including France Telecom, AT&T, The Babcock & Wilcox Company, UK National Health Service and Guangzhou Metro. Today, more than 1400 companies are live on the E-business Suite."
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 http://www.oracle.com.
"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) 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. The economic, political and other uncertainties caused (or exacerbated) by terrorist attacks upon the United States add to this 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 introducing new products, such as Oracle 9i database and 9i application server, 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. (4) Oracle has recently made changes to 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. (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..
ORACLE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
February 28, February 28,
------------------- -------------------
2002 2001 2002 2001
---- ---- ---- ----
REVENUES
Licenses and other $789,578 $1,125,083 $2,340,334 $3,050,559
Services 1,439,765 1,549,284 4,488,389 4,545,229
---------- ---------- ---------- ----------
Total revenues 2,229,343 2,674,367 6,828,723 7,595,788
---------- ---------- ---------- ----------
OPERATING EXPENSES
Sales and marketing 514,816 665,605 1,621,449 1,879,434
Cost of services 547,467 708,614 1,767,178 2,077,490
Research and development 283,231 301,455 794,014 818,762
General and administrative 105,090 120,570 301,621 337,937
---------- ---------- ---------- ----------
Total operating expenses 1,450,604 1,796,244 4,484,262 5,113,623
---------- ---------- ---------- ----------
OPERATING INCOME 778,739 878,123 2,344,461 2,482,165
Net investment gains (losses)
related to equity securities (7,510) (22,437) (14,199) (20,472)
Other income, net 10,271 47,745 82,175 183,862
---------- ---------- ---------- ----------
INCOME BEFORE TAXES 781,500 903,431 2,412,437 2,645,555
Provision for income taxes 273,525 320,718 844,353 939,353
---------- ---------- ---------- ----------
NET INCOME $507,975 $582,713 $1,568,084 $1,706,202
========== ========== ========== ==========
EARNINGS PER SHARE
Basic $0.09 $0.10 $0.28 $0.30
Diluted $0.09 $0.10 $0.27 $0.29
WEIGHTED SHARES OUTSTANDING
Basic 5,492,297 5,595,808 5,533,493 5,594,765
Diluted 5,669,334 5,851,333 5,715,071 5,886,397
ORACLE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
February 28, May 31,
2002 2001
---- ----
(unaudited)
ASSETS
Current Assets
Cash and short term investments $5,610,974 $5,887,661
Trade receivables, net 1,621,413 2,432,131
Prepaid and refundable income taxes 457,719 272,742
Other current assets 331,890 370,616
----------- -----------
Total Current Assets 8,021,996 8,963,150
----------- -----------
Long-term cash investments 329,775 --
Property and equipment, net 984,766 974,751
Prepaid taxes 396,373 376,030
Other assets 642,012 716,229
----------- -----------
TOTAL ASSETS $10,374,922 $11,030,160
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable, including current maturities $2,059 $2,849
Accounts payable 238,297 270,112
Income taxes 972,162 767,087
Customer advances and unearned revenues 1,013,778 1,213,529
Other current liabilities 1,338,324 1,663,042
----------- -----------
Total Current Liabilities 3,564,620 3,916,619
----------- -----------
Long-term debt 300,890 300,847
Deferred income taxes 310,173 327,788
Other long-term liabilities 209,538 207,135
Stockholders' equity 5,989,701 6,277,771
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,374,922 $11,030,160
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