<PAGE> 1
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED FEBRUARY 28, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER: 0-14376
ORACLE SYSTEMS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 94-2871189
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
500 ORACLE PARKWAY
REDWOOD CITY, CALIFORNIA 94065
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(415) 506-7000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES /X/ NO / /
Number of shares of registrant's common stock outstanding as of February 28,
1995: 431,243,430.
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE> 2
ORACLE SYSTEMS CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at February 28, 1995 and May 31,
1994..................................................................... 3
Condensed Consolidated Statements of Operations for the three months and
nine months ended February 28, 1995 and 1994............................. 4
Condensed Consolidated Statements of Cash Flows for the nine months ended
February 28, 1995 and 1994............................................... 5
Notes to Condensed Consolidated Financial Statements....................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders........................ 10
Item 6. Exhibits and Reports on Form 8-K........................................... 10
Signatures................................................................. 11
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ORACLE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FEBRUARY 28, MAY 31,
1995 1994
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................................... $ 276,916 $ 404,810
Short-term cash investments....................................... 125,631 59,948
Trade receivables, net of allowance for doubtful accounts of
$47,611 and $39,777, respectively.............................. 558,659 455,884
Prepaid and refundable income taxes............................... 89,196 53,765
Other current assets.............................................. 105,621 101,205
---------- ----------
Total current assets........................................... 1,156,023 1,075,612
---------- ----------
PROPERTY, net....................................................... 487,606 378,483
COMPUTER SOFTWARE DEVELOPMENT COSTS, net of accumulated amortization
of $73,292 and $107,087, respectively............................. 100,538 100,329
OTHER ASSETS........................................................ 166,242 40,560
---------- ----------
Total assets................................................... $1,910,409 $1,594,984
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to banks............................................ $ 5,764 $ 551
Current maturities of long-term debt.............................. 4,183 6,347
Accounts payable.................................................. 115,174 95,799
Income taxes...................................................... 63,516 62,591
Accrued compensation and related benefits......................... 122,744 136,488
Customer advances and unearned revenues........................... 262,140 227,118
Value added tax and sales tax payable............................. 37,458 44,781
Other accrued liabilities......................................... 162,437 108,426
---------- ----------
Total current liabilities...................................... 773,416 682,101
---------- ----------
LONG-TERM DEBT...................................................... 81,889 82,845
OTHER LONG-TERM LIABILITIES......................................... 8,805 12,139
DEFERRED INCOME TAXES............................................... 26,476 38,916
PUT WARRANTS........................................................ 76,804 38,430
STOCKHOLDERS' EQUITY................................................ 943,019 740,553
---------- ----------
Total liabilities and stockholders' equity..................... $1,910,409 $1,594,984
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
ORACLE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED FEBRUARY 28, 1995 AND 1994
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
---------------------- -------------------------
1995 1994 1995 1994
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Licenses and other....................... $390,687 $276,488 $1,048,440 $ 745,481
Services................................. 331,558 206,302 900,559 587,533
-------- -------- ---------- ----------
Total revenues........................ 722,245 482,790 1,948,999 1,333,014
-------- -------- ---------- ----------
OPERATING EXPENSES:
Sales and marketing...................... 261,314 172,738 723,303 503,624
Cost of services......................... 196,683 127,408 540,784 343,784
Research and development................. 67,363 48,496 179,746 140,929
General and administrative............... 42,034 30,278 124,840 94,131
-------- -------- ---------- ----------
Total operating expenses.............. 567,394 378,920 1,568,673 1,082,468
-------- -------- ---------- ----------
OPERATING INCOME........................... 154,851 103,870 380,326 250,546
Other income (expense), net.............. 1,533 240 7,499 2,062
-------- -------- ---------- ----------
INCOME BEFORE PROVISION FOR INCOME TAXES... 156,384 104,110 387,825 252,608
Provision for income taxes............... 51,607 34,362 127,982 83,375
-------- -------- ---------- ----------
NET INCOME................................. $104,777 $ 69,748 $ 259,843 $ 169,233
======== ======== ========= =========
EARNINGS PER SHARE......................... $ 0.24 $ 0.16 $ 0.59 $ 0.38
======== ======== ========= =========
COMMON AND COMMON EQUIVALENT SHARES
OUTSTANDING (See Note 3)................. 443,025 443,655 443,235 443,858
======== ======== ========= =========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
ORACLE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FEBRUARY 28,
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................................... $ 259,843 $ 169,233
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................. 102,255 75,296
Provision for doubtful accounts............................... 35,857 22,707
Increase in trade receivables................................. (119,586) (65,995)
(Increase) decrease in prepaid and refundable income taxes.... (34,848) 1,840
Increase in other current assets.............................. (3,258) (3,595)
Increase in accounts payable.................................. 16,948 19,707
Increase in income taxes...................................... 16,603 19,458
Increase (decrease) in customer advances and unearned
revenues..................................................... 28,972 (1,716)
Increase (decrease) in other accrued liabilities.............. 34,050 (5,979)
Increase (decrease) in other long-term liabilities............ (3,334) 939
Increase (decrease) in deferred income taxes.................. (16,006) 12,709
--------- ---------
Net cash provided by operating activities.......................... 317,496 244,604
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in cash investments....................... (65,683) 26,911
Capital expenditures, net..................................... (179,653) (197,847)
Capitalization of computer software development costs......... (34,681) (27,802)
Increase in other assets...................................... (131,041) (20,619)
--------- ---------
Net cash used for investing activities............................. (411,058) (219,357)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) on debt obligations................. 689 (6,020)
Proceeds from common stock issued............................. 32,346 22,090
Repurchase of common stock.................................... (75,859) (65,130)
--------- ---------
Net cash used for financing activities............................. (42,824) (49,060)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH.............................. 8,492 (6,349)
--------- ---------
Net decrease in cash and cash equivalents.......................... (127,894) (30,162)
CASH AND CASH EQUIVALENTS:
Beginning of period................................................ 404,810 284,560
--------- ---------
End of period...................................................... $ 276,916 $ 254,398
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
ORACLE SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. However, the Company believes that the
disclosures are adequate to make the information presented not misleading. These
condensed consolidated financial statements should be read in conjunction with
the financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended May 31, 1994.
The unaudited condensed consolidated financial statements included herein
reflect all adjustments (which include only normal, recurring adjustments) which
are, in the opinion of management, necessary to state fairly the results for the
nine month period ended February 28, 1995. The results for the nine month period
ended February 28, 1995 are not necessarily indicative of the results expected
for the full fiscal year.
2. PROPERTY
During the third quarter of fiscal 1994, the Company purchased land to be used
for its UK subsidiary's headquarters for approximately $31 million. During the
first quarter of fiscal 1995, the Company sold a significant portion of this
land for approximately $27 million. After consideration of the cost of the land,
including certain required improvements, and expense provisions related to other
UK facilities, the net gain realized on the sale of the land was not
significant. The Company believes that the remaining land is sufficient to meet
the requirements for its UK subsidiary's headquarters.
3. EARNINGS PER SHARE
On January 24, 1995, the Company announced a three-for-two stock split in the
form of a common stock dividend distributed February 22, 1995 to stockholders of
record as of February 6, 1995. All per share data and numbers of common shares,
where appropriate, have been retroactively adjusted to reflect the stock split.
Earnings per share was computed based on the weighted average number of common
and common equivalent shares outstanding during the period. Common equivalent
shares are calculated using the treasury stock method, and represent shares
issuable upon the exercise of outstanding stock options.
4. ACQUISITION
On November 30, 1994, the Company completed the acquisition of the Rdb database
and repository businesses of Digital Equipment Corporation, including all
related software products and customer support services for $108 million in
cash. Intangible assets, with an assigned value of approximately $107 million,
have been included in Other Assets in the accompanying condensed consolidated
balance sheet. These intangible assets, which relate to the value assigned to
the Rdb database and repository businesses installed base, as well as the
related technologies, are being amortized over a seven year period. Amortization
expense of approximately $4 million was charged to cost of services in the
accompanying condensed consolidated statement of operations in the third quarter
of fiscal 1995.
5. PUT WARRANTS
During fiscal 1994 and the first nine months of fiscal 1995, the Company sold
3,835,000 put warrants that entitle the holder to sell one share of Common Stock
to the Company at prices between $16.125 and $25.625. Additionally, the Company
purchased 2,397,000 call options that entitle the Company to buy one share of
Common Stock at prices between $20.625 and $31.625. These put and call options
expire between July and
6
<PAGE> 7
ORACLE SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
expire between July and October 1995. At no future stock price will the
Company's combined repurchases of Common Stock from the puts and call options
exceed 3,835,000 shares at a maximum cost of $76,804,000. In the event that the
Company's stock price is above $31.625, and the Company exercises all of its
call options, the repurchase of 2,397,000 shares will cost $60,356,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Domestic revenues increased 57% and 53% from the third quarter and first nine
months of fiscal 1994, respectively, while international revenues increased 45%
and 42% in the third quarter and first nine months of fiscal 1995, respectively,
when compared to the corresponding periods in fiscal 1994. International
revenues were favorably affected in the third quarter and first nine months of
fiscal 1995 when compared to the corresponding periods of the prior year as a
result of the weakening of the U.S. dollar against certain major international
currencies. International revenues expressed in local currency increased in the
third quarter and first nine months of fiscal 1995 by approximately 35% and 34%,
respectively, from the corresponding periods of fiscal 1994. International
revenues constituted approximately 59% and 61% of total revenues in the third
quarters of fiscal 1995 and 1994, respectively, and 60% and 61% of total
revenues in the first nine months of fiscal 1995 and 1994, respectively.
Management expects that the Company's international operations will continue to
provide a significant portion of total revenues. However, international revenues
will be adversely affected if the U.S. dollar strengthens against certain major
international currencies.
REVENUES:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- --------------------------------
FEB 28, FEB 28, FEB 28, FEB 28,
1995 CHANGE 1994 1995 CHANGE 1994
-------- ------ -------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
License and other................ $390,687 41% $276,488 $1,048,440 41% $ 745,481
Percentage of revenues........... 54.1% 57.3% 53.8% 55.9%
Services......................... $331,558 61% $206,302 $ 900,559 53% $ 587,533
Percentage of revenues........... 45.9% 42.7% 46.2% 44.1%
Total revenues.............. $722,245 50% $482,790 $1,948,999 46% $1,333,014
</TABLE>
LICENSE AND OTHER REVENUES. License revenues represent fees earned for granting
customers licenses to use the Company's software products. License revenues also
include revenues from the Company's systems integration business and other
revenues, which include documentation revenues, certain software development
revenues, as well as other miscellaneous revenues. The Company believes that the
strong revenue growth rate in the first nine months of fiscal 1995 is primarily
due to an overall increase in market demand for database and related products
and increased market acceptance of the Company's relational DBMS.
SERVICE REVENUES. Support, consulting and education services revenues each
increased from the corresponding periods of fiscal 1994. The Company's support
revenues continued to constitute the largest portion of service revenues in the
third quarter and first nine months of fiscal 1995. Support revenues grew 59%
and 48% in the third quarter and first nine months of fiscal 1995 reflecting the
continued increase in the installed base of the Company's products under support
contracts, as well as support revenues associated with the newly acquired Rdb
and repository businesses of Digital Equipment Corporation. Consulting and
education services grew 63% and 57% in the third quarter and first nine months
of fiscal 1995 when compared to the corresponding periods in fiscal 1994 as the
Company continued to expand its services to assist customers in the use and
implementation of applications based on the Company's products.
7
<PAGE> 8
OPERATING EXPENSES:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
FEB 28, FEB 28, FEB 28, FEB 28,
1995 CHANGE 1994 1995 CHANGE 1994
-------- ------ -------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Sales and marketing.................. $261,314 51% $172,738 $723,303 44% $503,624
Percentage of revenues............... 36.2% 35.8% 37.1% 37.8%
Cost of services..................... $196,683 54% $127,408 $540,784 57% $343,784
Percentage of revenues............... 27.2% 26.4% 27.7% 25.8%
Research and development(1).......... $ 67,363 39% $ 48,496 $179,746 28% $140,929
Percentage of revenues............... 9.3% 10.0% 9.2% 10.6%
General and administrative........... $ 42,034 39% $ 30,278 $124,840 33% $ 94,131
Percentage of revenues............... 5.8% 6.3% 6.4% 7.1%
</TABLE>
- - ---------------
(1) Pursuant to Statement of Financial Accounting Standards No. 86, the Company
capitalized software development costs equal to 1.7% and 2.1% of total
revenues during the third quarters of fiscal 1995 and 1994, respectively,
and 1.8% and 2.1% of total revenues in the first nine months of fiscal 1995
and 1994, respectively.
International expenses were unfavorably affected in the third quarter and first
nine months of fiscal 1995 when compared to the corresponding periods in the
prior year due to changes in the value of the U. S. dollar against certain major
international currencies.
SALES AND MARKETING EXPENSES. The Company continues to place significant
emphasis, both domestically and internationally, on direct sales through its own
sales force. However, the Company also continues to emphasize marketing its
products through indirect channels in order to increase market share, while
reducing distribution costs. As a percentage of total revenues, sales and
marketing expenses increased in the third quarter of fiscal 1995 when compared
to the corresponding period of fiscal 1994 primarily as a result of aggressive
hiring of sales personnel and marketing program expenditures. As a percentage of
total revenues, sales and marketing expenses decreased in the first nine months
of fiscal 1995 when compared to the corresponding period in fiscal 1994
primarily as a result of higher revenue levels. Included in sales and marketing
expenses is the amortization of capitalized software development costs (see
below).
COST OF SERVICES. The cost of providing services consists largely of
consulting, education, and support personnel expenses. As a percentage of
service revenues, cost of services was 59% and 62% of revenues in the third
quarters of fiscal 1995 and 1994, respectively, and increased to 60% in the
first nine months of fiscal 1995 from 59% in the same corresponding period in
fiscal 1994. The Company's service margins for the first nine months of fiscal
1995 have been negatively affected versus the prior year period due, in part, to
a higher percentage of service revenues being comprised of consulting and
education revenues, which have lower margins than the support business, as well
as the impact of higher headcount levels to support anticipated future growth.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses for the
third quarters of fiscal 1995 and 1994 would have been 11.0% and 12.0%,
respectively, of revenues without the capitalization of software development
costs in accordance with Statement of Financial Accounting Standards No. 86.
Before considering the impact of software capitalization, research and
development expenses increased 35% from the third quarter of fiscal 1994 and 27%
from the first nine months of fiscal 1994 to the corresponding periods of fiscal
1995 (39% and 28% after the adjustment for software capitalization). The Company
capitalized approximately $12,095,000 and $10,193,000 during the third quarters
of fiscal 1995 and 1994, respectively, and $34,681,000 and $27,802,000 in the
corresponding nine month periods. Amortization of capitalized software
development costs is charged to sales and marketing expenses and totaled
$11,773,000 and $10,710,000 in the third quarters of fiscal 1995 and 1994,
respectively, and $34,471,000 and $28,533,000 in the corresponding nine month
periods. The Company expects the amount of amortization of capitalized software
development costs to continue to increase in fiscal 1995 over fiscal 1994, as a
result of the introduction of new products and the commencement of the related
amortization. The Company believes that research and development
8
<PAGE> 9
expenditures are essential to maintaining its competitive position and expects
these costs to continue to constitute a significant percentage of revenues.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses as a
percentage of revenues decreased in the third quarter and first nine months of
fiscal 1995 as compared to the corresponding periods in fiscal 1994, primarily
as a result of higher revenue levels.
OTHER INCOME (EXPENSE):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------- --------------------------------
FEB 28, FEB 28, FEB 28, FEB 28,
1995 CHANGE 1994 1995 CHANGE 1994
-------- ------ ------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Other income (expense).... $ 1,533 539% $ 240 $ 7,499 264% $ 2,062
Percentage of revenues.... 0.2% 0.0% 0.4% 0.2%
</TABLE>
Changes in non-operating expenses primarily reflect fluctuations in interest
income and expense related to changes in cash and debt balances and interest
rates, as well as foreign exchange and other miscellaneous income and expense
items. Additionally, during the first quarter of fiscal 1995, the Company
realized a gain of approximately $1.8 million related to the sale of certain
marketable securities.
PROVISION FOR INCOME TAXES:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------- --------------------------------
FEB 28, FEB 28, FEB 28, FEB 28,
1995 CHANGE 1994 1995 CHANGE 1994
-------- ------ ------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Provision for income
taxes................... $ 51,607 50% $34,362 $127,982 54% $ 83,375
Percentage of revenues.... 7.1% 7.1% 6.6% 6.3%
</TABLE>
The Company's estimated effective tax rate for the third quarter and first nine
months of both fiscal 1995 and 1994 was 33%.
NET INCOME AND EARNINGS PER SHARE:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------- --------------------------------
FEB 28, FEB 28, FEB 28, FEB 28,
1995 CHANGE 1994 1995 CHANGE 1994
-------- ------ ------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Net income................ $104,777 50% $69,748 $259,843 54% $169,233
Percentage of revenues.... 14.5% 14.4% 13.3% 12.7%
Earnings per share........ $ 0.24 50% $ 0.16 $ 0.59 55% $ 0.38
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------------
FEB 28, FEB 28,
1995 CHANGE 1994
--------- ------ ---------
<S> <C> <C> <C>
Working capital..................................... $ 382,607 36% $ 280,467
Cash and cash investments........................... $ 402,547 21% $ 331,978
Cash provided by operating activities............... $ 317,496 30% $ 244,604
Cash used for investing activities.................. $(411,058) 87% $(219,357)
Cash used for financing activities.................. $ (42,824) (13)% $ (49,060)
</TABLE>
Working capital increased in the first nine months of fiscal 1995 over the
corresponding prior year period, primarily due to increased cash flow from
operations, which resulted in higher cash levels.
The Company generated higher positive cash flows from operations in the first
nine months of fiscal 1995 over fiscal 1994, primarily due to improved
profitability.
9
<PAGE> 10
Cash used for investing activities increased in the first nine months of fiscal
1995 as compared to the corresponding period of the prior year, primarily due to
the acquisition of the Rdb database and repository businesses of Digital
Equipment Corporation for $108 million in cash. During the first quarter of
fiscal 1995, the Company sold land in the UK for proceeds of approximately $27
million, partially offsetting the effect of this acquisition.
The Company's Board of Directors has approved the repurchase of up to 18 million
shares of Common Stock on the open market to reduce the dilutive effect of the
Company's stock plans. Pursuant to this repurchase program, the Company
repurchased approximately 2,801,000 shares of the Company's Common Stock for
$75,859,000 during the first nine months of fiscal 1995. To date, the Company
has repurchased a total of 11,759,000 shares of the Company's Common Stock for
approximately $200,645,000. The Company has used cash flow from operations to
repurchase the Company's Common Stock, and to invest in working capital and
other assets to support its growth.
In December 1991, the Company entered into an $80 million subordinated debt
agreement with Nippon Steel Corporation ("NSC"). In connection with this
agreement, the Company also entered into a strategic relationship with NSC to
target major customers and industries in Japan. The subordinated debt agreement
has a maturity date of December 9, 1998. Interest is charged at LIBOR plus
three-quarters of one percent, payable semi-annually in arrears. The Company is
required to maintain certain financial covenants under the agreement. NSC has
committed to purchase from the Company an ownership position of up to
twenty-five percent of Oracle Corporation Japan, an indirect wholly owned
subsidiary of the Company, in the event that shares in Oracle Corporation Japan
are sold to the public as a part of an initial public offering. The per share
price of the stock would be the same as that offered in the initial public
offering. NSC has agreed not to acquire shares of Oracle Corporation Japan
beyond the twenty-five percent interest, nor any shares of the Company, subject
to certain exceptions.
At February 28, 1995, the Company also had outstanding debt of approximately
$11,836,000 (in addition to the NSC subordinated debt) primarily in the form of
other notes payable and capital leases.
The Company anticipates that current cash balances, as well as anticipated cash
flows from operations, will be sufficient to meet its working capital needs at
least through the next twelve months.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On January 6, 1995, the Company held a Special Meeting of Stockholders. At the
meeting, the stockholders approved an amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares of the Company's Common
Stock from 400,000,000 to 800,000,000 (with 242,054,990 affirmative votes,
14,843,446 negative votes, 223,809 votes withheld and no broker non-votes).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Oracle
Systems Corporation has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
ORACLE SYSTEMS CORPORATION
Dated: April 5, 1995 By: /s/ LAWRENCE J. ELLISON
------------------------------------
Lawrence J. Ellison,
President and Chief Executive
Officer
Dated: April 5, 1995 By: /s/ JEFFREY O. HENLEY
------------------------------------
Jeffrey O. Henley,
Executive Vice President and
Chief Financial Officer
Dated: April 5, 1995 By: /s/ THOMAS A. WILLIAMS
------------------------------------
Thomas A. Williams,
Chief Accounting Officer
11
<PAGE> 12
ORACLE SYSTEMS CORPORATION
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT # EXHIBIT TITLES PAGE
- - --------- -------------------------------------------------------------------------- -----
<C> <S> <C>
27.1 Financial Data Schedule................................................... 13
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> FEB-28-1995
<EXCHANGE-RATE> 1
<CASH> 276,916
<SECURITIES> 125,631
<RECEIVABLES> 606,270
<ALLOWANCES> 47,611
<INVENTORY> 10,275
<CURRENT-ASSETS> 1,156,023
<PP&E> 787,319
<DEPRECIATION> 299,713
<TOTAL-ASSETS> 1,910,409
<CURRENT-LIABILITIES> 773,416
<BONDS> 0
<COMMON> 4,818
0
0
<OTHER-SE> 938,201
<TOTAL-LIABILITY-AND-EQUITY> 1,910,409
<SALES> 0
<TOTAL-REVENUES> 722,245
<CGS> 0
<TOTAL-COSTS> 196,683
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,594
<INTEREST-EXPENSE> 1,666
<INCOME-PRETAX> 156,384
<INCOME-TAX> 51,607
<INCOME-CONTINUING> 104,777
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 104,777
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
