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Oracle Reports Q4 GAAP EPS of 38 Cents, Non-GAAP EPS of 46 Cents
Q4 GAAP Operating Margin Up to 42%; Non-GAAP Operating Margin Up to a Record 51%
REDWOOD SHORES, Calif.,
(Logo: http://www.newscom.com/cgi-bin/prnh/20020718/ORCLLOGO)
Fourth quarter non-GAAP earnings per share were down 1% to
For fiscal year 2009, GAAP earnings per share were up 3% to
Fiscal year 2009 non-GAAP earnings per share were up 11% year over year to
In addition, Oracle's Board of Directors declared a cash dividend of
"Adjusted for the substantial movement in the US dollar exchange rate this fiscal year, which is beyond our control, we grew non-GAAP earnings per share by 19 percent for the year," said Oracle President
"We executed substantially better than we expected on both the top and bottom line for the quarter," said Oracle CFO
"We grew faster and took market share from SAP in every region around the world," said Oracle President
"The Exadata Database Machine is well on its way to being the most successful new product launch in Oracle's 30 year history," said Oracle CEO
Q4 Earnings Conference Call and Webcast
Oracle will hold a conference call and web broadcast today to discuss these results at
Supplemental Financial Tables
Supplemental financial materials regarding these results are available on our Investor Relations website at: http://www.oracle.com/investor. To receive these supplemental financial tables and other Investor Relations alerts directly, please subscribe to Oracle's RSS feeds via the RSS link on our website.
About Oracle
Oracle is the world's largest enterprise software company. For more information about Oracle, please visit our web site at oracle.com or call Investor Relations at (650) 506-4073.
Trademarks
Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners.
"Safe Harbor" Statement: Statements in this press release relating to Oracle's or its Board of Directors' future plans, intentions and prospects are "forward-looking statements" and are subject to material risks and uncertainties. Many factors could affect our current expectations and our actual results, and could cause actual results to differ materially. We presently consider the following to be among the important factors that could cause actual results to differ materially from expectations: (1) Economic, political and market conditions, including the recent global economic and financial crisis, could adversely affect our business, operating results or financial condition, including our revenue growth and profitability, through reductions in customer IT budgets and expenditures and through the general tightening of access to credit. (2) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, unanticipated fluctuations in currency exchange rates, delays in delivery of new products or releases or a decline in our renewal rates for software license updates and product support. (3) We cannot assure market acceptance of new products or services or new versions of existing or acquired products or services. (4) We have an active acquisition program and our acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. (5) Periodic changes to our pricing model and sales organization could temporarily disrupt operations and cause a decline or delay in sales. (6) Intense competitive forces demand rapid technological advances and frequent new product introductions and could require us to reduce prices or cause us to lose customers. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online from the SEC or by contacting Oracle Corporation's Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracle's Investor Relations website at http://www.oracle.com/investor. All information set forth in this release is current as of
ORACLE CORPORATION
Q4 FISCAL 2009 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Three Months Ended May 31, % Increase
---------------------------------- % Increase (Decrease)
% of % of (Decrease) in Constant
2009 Revenues 2008 Revenues in US $ Currency(1)
---------------------------------------------------------
REVENUES
New software
licenses $2,744 40% $3,144 44% (13%) (4%)
Software
license
updates and
product
support 3,052 44% 2,830 39% 8% 18%
----------------------------------
Software
Revenues 5,796 84% 5,974 83% (3%) 6%
----------------------------------
Services 1,065 16% 1,265 17% (16%) (7%)
----------------------------------
Total
Revenues 6,861 100% 7,239 100% (5%) 4%
----------------------------------
OPERATING
EXPENSES
Sales and
marketing 1,326 19% 1,526 21% (13%) (5%)
Software
license
updates and
product
support 293 4% 269 4% 9% 19%
Cost of
services 886 13% 1,072 15% (17%) (9%)
Research and
development 731 11% 733 10% 0% 4%
General and
administrative 214 3% 201 3% 6% 13%
Amortization of
intangible
assets 437 7% 344 5% 27% 27%
Acquisition
related and
other 19 0% 96 1% (81%) (80%)
Restructuring 71 1% 27 0% 167% 180%
----------------------------------
Total
Operating
Expenses 3,977 58% 4,268 59% (7%) 0%
----------------------------------
OPERATING
INCOME 2,884 42% 2,971 41% (3%) 9%
Interest
expense (159) (2%) (130) (1%) 23% 23%
Non-operating
income, net 29 0% 101 1% (71%) (72%)
----------------------------------
INCOME BEFORE
PROVISION FOR
INCOME TAXES 2,754 40% 2,942 41% (6%) 6%
----------------------------------
Provision for
income taxes 863 12% 905 13% (5%) 8%
----------------------------------
NET INCOME $1,891 28% $2,037 28% (7%) 5%
==================================
EARNINGS PER
SHARE:
Basic $0.38 $0.40
Diluted $0.38 $0.39
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 4,995 5,150
Diluted 5,043 5,233
(1) We compare the percent change in the results from one period to
another period using constant currency disclosure. We present constant
currency information to provide a framework for assessing how our
underlying businesses performed excluding the effect of foreign
currency rate fluctuations. To present this information, current
and comparative prior period results for entities reporting in
currencies other than United States dollars are converted into
United States dollars at the exchange rate in effect on May 31, 2008,
which was the last day of our prior fiscal year, rather than the
actual exchange rates in effect during the respective periods. The
United States dollar strengthened relative to most major international
currencies in the three months ended May 31, 2009 compared with the
corresponding prior year period, reducing revenues by 9 percentage
points, operating expenses by 7 percentage points and operating
income by 12 percentage points.
ORACLE CORPORATION
Q4 FISCAL 2009 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Three Months Ended May 31,
-------------------------------------------
2009 2009 2008 2008
Non- Non-
GAAP Adj. GAAP GAAP Adj. GAAP
-------------------------------------------
TOTAL REVENUES (3) $6,861 $20 6,881 $7,239 $42 $7,281
TOTAL SOFTWARE REVENUES (3) $5,796 $20 5,816 $5,974 $42 $6,016
New software licenses 2,744 - 2,744 3,144 - 3,144
Software license updates and
product support (3) 3,052 20 3,072 2,830 42 2,872
TOTAL OPERATING EXPENSES $3,977 (609) $3,368 $4,268 $(531) $3,737
Stock-based compensation (4) 82 (82) - 64 (64) -
Amortization of intangible
assets (5) 437 (437) - 344 (344) -
Acquisition related and other 19 (19) - 96 (96) -
Restructuring 71 (71) - 27 (27) -
OPERATING INCOME $2,884 $629 $3,513 $2,971 $573 $3,544
OPERATING MARGIN % 42% 51% 41% 49%
INCOME TAX EFFECTS (6) $863 $197 $1,060 $905 $176 $1,081
NET INCOME $1,891 $432 $2,323 $2,037 $397 $2,434
DILUTED EARNINGS PER SHARE $0.38 $0.46 $0.39 $0.47
DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 5,043 - 5,043 5,233 (3) 5,230
% Increase
% Increase (Decrease) in
(Decrease) Constant
in US $ Currency (2)
-----------------------------------
GAAP Non-GAAP GAAP Non-GAAP
-----------------------------------
TOTAL REVENUES (3) (5%) (5%) 4% 3%
TOTAL SOFTWARE REVENUES (3) (3%) (3%) 6% 6%
New software licenses (13%) (13%) (4%) (4%)
Software license updates and product
support (3) 8% 7% 18% 17%
TOTAL OPERATING EXPENSES (7%) (10%) 0% (2%)
Stock-based compensation (4) 28% * 28% *
Amortization of intangible assets (5) 27% * 27% *
Acquisition related and other (81%) * (80%) *
Restructuring 167% * 180% *
OPERATING INCOME (3%) (1%) 9% 9%
OPERATING MARGIN % 100 bp 240 bp 210 bp 280 bp
INCOME TAX EFFECTS (6) (5%) (2%) 8% 8%
NET INCOME (7%) (5%) 5% 6%
DILUTED EARNINGS PER SHARE (4%) (1%) 9% 9%
DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING (4%) (4%) (4%) (4%)
(1) This presentation includes non-GAAP measures. Our non-GAAP measures
are not meant to be considered in isolation or as a substitute for
comparable GAAP measures, and should be read only in conjunction with
our consolidated financial statements prepared in accordance with
GAAP. For a detailed explanation of the adjustments made to
comparable GAAP measures, the reasons why management uses these
measures, the usefulness of these measures and the material
limitations on the usefulness of these measures, please see
Appendix A.
(2) We compare the percent change in the results from one period to
another period using constant currency disclosure. We present constant
currency information to provide a framework for assessing how our
underlying businesses performed excluding the effect of foreign
currency rate fluctuations. To present this information, current and
comparative prior period results for entities reporting in currencies
other than United States dollars are converted into United States
dollars at the exchange rate in effect on May 31, 2008, which was the
last day of our prior fiscal year, rather than the actual exchange
rates in effect during the respective periods.
(3) As of May 31, 2009, approximately $21 million in estimated revenues
related to assumed support contracts will not be recognized for fiscal
2010 due to business combination accounting rules.
(4) Stock-based compensation is included in the following GAAP operating
expense categories:
Three Months Ended Three Months Ended
May 31, 2009 May 31, 2008
---------------------------------------
Non- Non-
GAAP Adj. GAAP GAAP Adj. GAAP
---------------------------------------
Sales and marketing $16 $(16) $- $13 $(13) $-
Software license updates and
product support 4 (4) - 2 (2) -
Cost of services 3 (3) - 4 (4) -
Research and development 34 (34) - 30 (30) -
General and administrative 25 (25) - 15 (15) -
----- ----- ----- ----- ----- -----
Subtotal 82 (82) - 64 (64) -
----- ----- ----- ----- ----- -----
Acquisition related and other 1 (1) - 72 (72) -
----- ----- ----- ----- ----- -----
Total stock-based
compensation $83 $(83) $- $136 $(136) $-
===== ===== ===== ===== ===== =====
(5) Estimated future annual amortization expense related to intangible
assets as of May 31, 2009 is as follows:
Fiscal 2010 $1,669
Fiscal 2011 1,364
Fiscal 2012 1,217
Fiscal 2013 1,084
Fiscal 2014 881
Thereafter 1,054
------
Total $7,269
======
(6) Income tax effects were calculated reflecting an effective GAAP and
non-GAAP tax rate of 31.3% and 30.8% in the fourth quarter of fiscal
2009 and 2008, respectively.
* Not meaningful
ORACLE CORPORATION
FISCAL 2009 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Year Ended May 31, % Increase
---------------------------------- % Increase (Decrease)
% of % of (Decrease) in Constant
2009 Revenues 2008 Revenues in US $ Currency(1)
---------------------------------------------------------
REVENUES
New software
licenses $7,123 31% $7,515 34% (5%) 1%
Software
license
updates and
product
support 11,754 50% 10,328 46% 14% 19%
----------------------------------
Software
Revenues 18,877 81% 17,843 80% 6% 12%
----------------------------------
Services 4,375 19% 4,587 20% (5%) 1%
----------------------------------
Total
Revenues 23,252 100% 22,430 100% 4% 10%
----------------------------------
OPERATING
EXPENSES
Sales and
marketing 4,638 20% 4,679 21% (1%) 4%
Software
license
updates and
product
support 1,088 4% 997 4% 9% 14%
Cost of
services 3,706 16% 3,984 18% (7%) (1%)
Research and
development 2,767 12% 2,741 12% 1% 4%
General and
administrative 785 3% 808 4% (3%) 1%
Amortization of
intangible
assets 1,713 7% 1,212 5% 41% 42%
Acquisition
related and
other 117 1% 124 1% (6%) (4%)
Restructuring 117 1% 41 0% 187% 212%
----------------------------------
Total
Operating
Expenses 14,931 64% 14,586 65% 2% 7%
----------------------------------
OPERATING
INCOME 8,321 36% 7,844 35% 6% 15%
Interest
expense (630) (3%) (394) (2%) 60% 60%
Non-operating
income, net 143 1% 384 2% (63%) (54%)
----------------------------------
INCOME BEFORE
PROVISION FOR
INCOME TAXES 7,834 34% 7,834 35% 0% 9%
----------------------------------
Provision for
income taxes 2,241 10% 2,313 10% (3%) 6%
----------------------------------
NET INCOME $5,593 24% $5,521 25% 1% 11%
==================================
EARNINGS PER
SHARE:
Basic $1.10 $1.08
Diluted $1.09 $1.06
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 5,070 5,133
Diluted 5,130 5,229
(1) We compare the percent change in the results from one period to
another period using constant currency disclosure. We present
constant currency information to provide a framework for assessing
how our underlying businesses performed excluding the effect of
foreign currency rate fluctuations. To present this information,
current and comparative prior period results for entities reporting
in currencies other than United States dollars are converted into
United States dollars at the exchange rate in effect on May 31, 2008,
which was the last day of our prior fiscal year, rather than the
actual exchange rates in effect during the respective periods.
The United States dollar strengthened relative to most major
international currencies in the year ended May 31, 2009 compared
with the corresponding prior year period, reducing revenues by
6 percentage points, operating expenses by 5 percentage points and
operating income by 9 percentage points.
ORACLE CORPORATION
FISCAL 2009 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($in millions, except per share data)
Year Ended May 31,
---------------------------------------------------
2009 2009 2008 2008
Non- Non-
GAAP Adj. GAAP GAAP Adj. GAAP
---------------------------------------------------
TOTAL REVENUES (3) $23,252 $243 $23,495 $22,430 $179 $22,609
TOTAL SOFTWARE
REVENUES (3) $18,877 $243 $19,120 $17,843 $179 $18,022
New software
licenses 7,123 - 7,123 7,515 - 7,515
Software license
updates and
product
support (3) 11,754 243 11,997 10,328 179 10,507
TOTAL OPERATING
EXPENSES $14,931 $(2,287) $12,644 $14,586 $(1,634) $12,952
Stock-based
compensation (4) 340 (340) - 257 (257) -
Amortization of
intangible
assets (5) 1,713 (1,713) - 1,212 (1,212) -
Acquisition related
and other 117 (117) - 124 (124) -
Restructuring 117 (117) - 41 (41) -
OPERATING INCOME $8,321 $2,530 $10,851 $7,844 $1,813 $9,657
OPERATING MARGIN % 36% 46% 35% 43%
INCOME TAX
EFFECTS (6) $2,241 $730 $2,971 $2,313 $535 $2,848
NET INCOME $5,593 $1,800 $7,393 $5,521 $1,278 $6,799
DILUTED EARNINGS
PER SHARE $1.09 $1.44 $1.06 $1.30
DILUTED WEIGHTED
AVERAGE COMMON SHARES
OUTSTANDING 5,130 - 5,130 5,229 1 5,230
% Increase
% Increase (Decrease) in
(Decrease) Constant
in US $ Currency (2)
-----------------------------------
GAAP Non-GAAP GAAP Non-GAAP
-----------------------------------
TOTAL REVENUES (3) 4% 4% 10% 10%
TOTAL SOFTWARE REVENUES (3) 6% 6% 12% 12%
New software licenses (5%) (5%) 1% 1%
Software license updates and product
support (3) 14% 14% 19% 19%
TOTAL OPERATING EXPENSES 2% (2%) 7% 3%
Stock-based compensation (4) 33% * 33% *
Amortization of intangible assets (5) 41% * 42% *
Acquisition related and other (6%) * (4%) *
Restructuring 187% * 212% *
OPERATING INCOME 6% 12% 15% 19%
OPERATING MARGIN % 80 bp 350 bp 170 bp 380 bp
INCOME TAX EFFECTS (6) (3%) 4% 6% 12%
NET INCOME 1% 9% 11% 16%
DILUTED EARNINGS PER SHARE 3% 11% 13% 19%
DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING (2%) (2%) (2%) (2%)
(1) This presentation includes non-GAAP measures. Our non-GAAP measures
are not meant to be considered in isolation or as a substitute for
comparable GAAP measures, and should be read only in conjunction with
our consolidated financial statements prepared in accordance with
GAAP. For a detailed explanation of the adjustments made to
comparable GAAP measures, the reasons why management uses these
measures, the usefulness of these measures and the material
limitations on the usefulness of these measures, please see
Appendix A.
(2) We compare the percent change in the results from one period to
another period using constant currency disclosure. We present
constant currency information to provide a framework for assessing
how our underlying businesses performed excluding the effect of
foreign currency rate fluctuations. To present this information,
current and comparative prior period results for entities reporting
in currencies other than United States dollars are converted into
United States dollars at the exchange rate in effect on May 31, 2008,
which was the last day of our prior fiscal year, rather than the
actual exchange rates in effect during the respective periods.
(3) As of May 31, 2009, approximately $21 million in estimated revenues
related to assumed support contracts will not be recognized during
fiscal 2010 due to business combination accounting rules.
(4) Stock-based compensation is included in the following GAAP operating
expense categories:
Year Ended Year Ended
May 31, 2009 May 31, 2008
---------------------------------------
Non- Non-
GAAP Adj. GAAP GAAP Adj. GAAP
---------------------------------------
Sales and marketing $67 $(67) $- $51 $(51) $-
Software license updates and
product support 13 (13) - 10 (10) -
Cost of services 12 (12) - 13 (13) -
Research and development 155 (155) - 114 (114) -
General and administrative 93 (93) - 69 (69) -
----- ----- ----- ----- ----- -----
Subtotal 340 (340) - 257 (257) -
----- ----- ----- ----- ----- -----
Acquisition related and other 15 (15) - 112 (112) -
----- ----- ----- ----- ----- -----
Total stock-based
compensation $355 $(355) $- $369 $(369) $-
===== ===== ===== ===== ===== =====
(5) Estimated future annual amortization expense related to intangible
assets as of May 31, 2009 is as follows:
Fiscal 2010 $1,669
Fiscal 2011 1,364
Fiscal 2012 1,217
Fiscal 2013 1,084
Fiscal 2014 881
Thereafter 1,054
------
Total $7,269
======
(6) Income tax effects were calculated reflecting an effective GAAP tax
rate of 28.6% and 29.5% in fiscal 2009 and 2008, respectively and an
effective Non-GAAP tax rate of 28.7% and 29.5% in fiscal 2009 and
2008, respectively. Our non-GAAP tax rate in fiscal 2009 excludes the
effect of an adjustment to our non-current deferred tax liability
associated with acquired intangible assets.
* Not meaningful
ORACLE CORPORATION
FISCAL 2009 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
May 31, May 31,
2009 2008
---------------
ASSETS
Current Assets:
Cash and cash equivalents $8,995 $8,262
Marketable securities 3,629 2,781
Trade receivables, net 4,430 5,127
Deferred tax assets 661 853
Prepaid expenses and other current assets 866 1,080
---------------
Total Current Assets 18,581 18,103
Non-Current Assets:
Property, net 1,922 1,688
Intangible assets, net 7,269 8,395
Goodwill 18,842 17,991
Other assets 802 1,091
---------------
Total Non-Current Assets 28,835 29,165
---------------
TOTAL ASSETS $47,416 $47,268
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable, current and other current
borrowings $1,001 $1,001
Accounts payable 271 383
Accrued compensation and related benefits 1,409 1,770
Deferred revenues 4,592 4,492
Other current liabilities 1,876 2,383
---------------
Total Current Liabilities 9,149 10,029
Non-Current Liabilities:
Notes payable and other non-current borrowings 9,237 10,235
Income taxes payable 2,423 1,566
Deferred tax liabilities 480 1,218
Other non-current liabilities 1,037 1,195
---------------
Total Non-Current Liabilities 13,177 14,214
Stockholders' Equity 25,090 23,025
---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $47,416 $47,268
===============
ORACLE CORPORATION
FISCAL 2009 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
Year Ended
May 31,
---------------
2009 2008
---------------
Cash Flows From Operating Activities:
Net income $5,593 $5,521
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 263 268
Amortization of intangible assets 1,713 1,212
Deferred income taxes (395) (135)
Minority interests in income 84 60
Stock-based compensation 355 369
Tax benefits on the exercise of stock options 252 588
Excess tax benefits on the exercise of stock
options (97) (454)
In-process research and development 10 24
Other gains, net (6) (66)
Changes in operating assets and liabilities, net
of effects from acquisitions:
Decrease (increase) in trade receivables, net 454 (661)
Decrease (increase) in prepaid expenses and
other assets 145 (191)
Decrease in accounts payable and other
liabilities (691) (153)
Increase in income taxes payable 142 368
Increase in deferred revenues 433 652
---------------
Net cash provided by operating activities 8,255 7,402
---------------
Cash Flows From Investing Activities:
Purchases of marketable securities and other
investments (9,315) (5,624)
Proceeds from maturities and sales of marketable
securities and other investments 8,404 4,281
Acquisitions, net of cash acquired (1,159) (7,643)
Capital expenditures (529) (243)
Proceeds from sale of property - 153
---------------
Net cash used for investing activities (2,599) (9,076)
---------------
Cash Flows From Financing Activities:
Payments for repurchases of common stock (3,972) (2,023)
Proceeds from issuances of common stock 760 1,288
Payment of dividends to stockholders (250) -
Proceeds from borrowings, net of issuance costs - 6,171
Repayments of borrowings (1,004) (2,560)
Excess tax benefits on the exercise of stock options 97 454
Distributions to minority interests (53) (49)
---------------
Net cash (used for) provided by financing
activities (4,422) 3,281
---------------
Effect of exchange rate changes on cash and cash
equivalents (501) 437
---------------
Net increase in cash and cash equivalents 733 2,044
--------------
Cash and cash equivalents at beginning of period 8,262 6,218
---------------
Cash and cash equivalents at end of period $8,995 $8,262
===============
ORACLE CORPORATION
FISCAL 2009 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
Fiscal 2008
-------------------------------
Q1 Q2 Q3 Q4
-------------------------------
GAAP Operating
Cash Flow $6,598 $6,957 $7,322 $7,402
Capital
Expenditures (2) (357) (369) (331) (243)
-------------------------------
Free Cash Flow $6,241 $6,588 $6,991 $7,159
===============================
% Growth over
prior year 40% 50% 48% 38%
-------------------------------
GAAP Net Income $4,444 $4,781 $5,088 $5,521
Free Cash Flow
as a % of Net
Income 140% 138% 137% 130%
Fiscal 2009
-------------------------------
Q1 Q2 Q3 Q4
-------------------------------
GAAP Operating
Cash Flow $7,941 $8,089 $8,542 $8,255
Capital
Expenditures (2) (479) (486) (539) (529)
-------------------------------
Free Cash Flow $7,462 $7,603 $8,003 $7,726
===============================
% Growth over
prior year 20% 15% 14% 8%
-------------------------------
GAAP Net Income $5,758 $5,750 $5,739 $5,593
Free Cash Flow
as a % of Net
Income 130% 132% 139% 138%
(1) To supplement our statements of cash flows presented on a GAAP
basis, we use non-GAAP measures of cash flows on a trailing
4-quarter basis to analyze cash flow generated from operations. We
believe free cash flow is also useful as one of the bases for
comparing our performance with our competitors. The presentation of
non-GAAP free cash flow is not meant to be considered in isolation or
as an alternative to net income as an indicator of our performance, or
as an alternative to cash flows from operating activities as a measure
of liquidity.
(2) Represents capital expenditures as reported in cash flows from
investing activities on our cash flow statements presented in
accordance with GAAP.
APPENDIX A
ORACLE CORPORATION
FISCAL 2009 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES
To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the tables, which exclude certain business combination accounting entries and expenses related to acquisitions, as well as other significant expenses including stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:
- Support deferred revenue: Business combination accounting rules require us to account for the fair value of support contracts assumed in connection with our acquisitions. Because these are typically one-year contracts, our GAAP revenues for the one year period subsequent to our acquisition of a business do not reflect the full amount of software license updates and product support revenues on assumed support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment is intended to reflect the full amount of such revenues. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business because we have historically experienced high renewal rates on support contracts, although we cannot be certain that customers will renew these contracts.
- Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.
- Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP operating expenses and net income measures. Amortization of intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well. Amortization of intangible assets will recur in future periods.
- Acquisition related and other expenses, and restructuring expenses: We incurred significant expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related and other expenses consist of in-process research and development expenses, personnel related costs for transitional employees, other acquired employee related costs, stock-based compensation expenses (in addition to the stock-based compensation expenses described above), integration related professional services, certain business combination adjustments after the purchase price allocation period has ended, and certain other operating expenses, net. Substantially all of the stock-based compensation expenses included in acquisition related and other expenses resulted from unvested options assumed in acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the original terms of those options. Restructuring expenses consist of Oracle employee severance and other exit costs. We believe it is useful for investors to understand the effects of these items on our total operating expenses. Although acquisition related expenses and restructuring expenses are not recurring with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions.
For the year ended
SOURCE Oracle Corporation