Oracle : Quarterly Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

• QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2019

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: 001-35992

Oracle Corporation

	(Exact name of registrant as specified in its charter)
Delaware		54-2185193
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
500 Oracle Parkway
Redwood City, California		94065
(Address of principal executive offices)		(Zip Code)
	[phone]
	(Registrant's telephone number, including area code)
	Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	OrCl	New york Stock Exchange
2.25% senior notes due January 2021	-	New york Stock Exchange
3.125% senior notes due July 2025	-	New york Stock Exchange

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	☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to rule 405	of regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). yes	☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in rule 12b-2 of the Exchange Act.

large Accelerated Filer	☒	Accelerated Filer ☐
Non-Accelerated Filer	☐	Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). yes ☐ No ☒ The number of shares of registrant's common stock outstanding as of September 10, 2019 was: 3,288,330,000.

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ORACLE CORPORATION

FORM 10-Q QUARTERLY REPORT

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PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of August 31, 2019 and May 31, 2019
	Condensed Consolidated Statements of Operations for the Three Months Ended August 31, 2019 and 2018
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended August 31, 2019 and 2018
	Condensed Consolidated Statements of Equity for the Three Months Ended August 31, 2019 and 2018
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended August 31, 2019 and 2018
	Notes to Condensed Consolidated Financial Statements
Item 2.	Management's Discussion and Analysis of Financial Condition and results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market risk
Item 4.	Controls and Procedures
PART II.	OTHER INFORMATION
Item 1.	legal Proceedings
Item 1A.	risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.	Exhibits
	Signatures

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Cautionary Note on Forward-Looking Statements

For purposes of this Quarterly report, the terms "Oracle," "we," "us" and "our" refer to Oracle Corporation and its consolidated subsidiaries. This Quarterly report on Form 10-Q contains statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities litigation reform Act of 1995. These include, among other things, statements regarding:

• our expectation that we may acquire companies, products, services and technologies to further our corporate strategy as compelling opportunities become available;
• our expectation that, on a constant currency basis, our total cloud and license revenues generally will continue to increase due to expected growth in our cloud services and our license support offerings, and continued demand for our cloud license and on-premise license offerings;
• our belief that our Oracle Cloud Software-as-a-Service and Infrastructure-as-a-Service (SaaS and IaaS, respectively, and collectively, Oracle Cloud Services) offerings are opportunities for us to expand our cloud and license business, and that demand for our Oracle Cloud Services will continue to increase;
• our expectation that substantially all of our customers will renew their license support contracts annually;
• our expectation that our hardware business will have lower operating margins as a percentage of revenues than our cloud and license business;
• our expectation that we will continue to make significant investments in research and development, and our belief that research and development efforts are essential to maintaining our competitive position;
• our expectation that our international operations will continue to provide a significant portion of our total revenues and expenses;
• the sufficiency of our sources of funding for working capital, capital expenditures, contractual obligations, acquisitions, dividends, stock repurchases, debt repayments and other matters;
• our belief that we have adequately provided under U.S. generally accepted accounting principles for outcomes related to our tax audits and that the final outcome of our tax related examinations, agreements or judicial proceedings will not have a material effect on our results of operations, and our belief that our net deferred tax assets will be realized in the foreseeable future;
• our belief that the outcome of certain legal proceedings and claims to which we are a party will not, individually or in the aggregate, result in losses that are materially in excess of amounts already recognized, if any;
• the possibility that certain legal proceedings to which we are a party could have a material impact on our future cash flows and results of operations;
• our expectations regarding the timing and amount of expenses relating to the Fiscal 2019 Oracle restructuring Plan and the improved efficiencies in our operations that such a plan will create;
• the timing and amount of future cash dividend payments and stock repurchases, including our expectation that the levels of our future stock repurchase activity may be modified in comparison to past periods in order to use available cash for other purposes;
• our expectations regarding the impact of recent accounting pronouncements on our consolidated financial statements;

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• our expectation that, to the extent customers renew support contracts or cloud SaaS and IaaS contracts from companies that we have acquired, we will recognize revenues for the full contracts' values over the respective renewal periods;
• our ability to predict quarterly hardware revenues;
• the percentage of remaining performance obligations that we expect to recognize as revenues over the next twelve months;

as well as other statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements may be preceded by, followed by or include the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "strives," "estimates," "will," "should," "is designed to" and similar expressions. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities litigation reform Act of 1995 for all forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about our business that could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in "risk Factors" included in documents we file from time to time with the U.S. Securities and Exchange Commission (the SEC), including our Annual report on Form 10-k for our fiscal year ended May 31, 2019 and our other Quarterly reports on Form 10-Q to be filed by us in our fiscal 2020, which runs from June 1, 2019 to May 31, 2020.

We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or risks, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. New information, future events or risks could cause the forward-looking events we discuss in this Quarterly report not to occur. you should not place undue reliance on these forward-looking statements, which reflect our expectations only as of the date of this Quarterly report.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

ORACLE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

As of August 31, 2019 and May 31, 2019

(Unaudited)

(in millions, except per share data)

ASSETS

Current assets:

Cash and cash equivalents

Marketable securities

Trade receivables, net of allowances for doubtful accounts of $383 and $371 as of August 31, 2019 and May 31, 2019, respectively Prepaid expenses and other current assets

Total current assets

Non-current assets:

Property, plant and equipment, net

Intangible assets, net

Goodwill, net

Deferred tax assets

Other non-current assets

Total non-current assets

Total assets

LIABILITIES AND EQUITY

Current liabilities:

Notes payable, current

Accounts payable

Accrued compensation and related benefits

Deferred revenues

Other current liabilities

Total current liabilities

Non-current liabilities:

Notes payable and other borrowings, non-current

Income taxes payable

Other non-current liabilities

Total non-current liabilities

Commitments and contingencies

Oracle Corporation stockholders' equity:

Preferred stock, $0.01 par value-authorized: 1.0 shares; outstanding: none

Common stock, $0.01 par value and additional paid in capital-authorized: 11,000 shares; outstanding: 3,296 shares and 3,359 shares as of August 31, 2019 and May 31, 2019, respectively

Accumulated deficit

Accumulated other comprehensive loss

Total Oracle Corporation stockholders' equity

Noncontrolling interests

Total equity

Total liabilities and equity

	August 31,		May 31,
	2019		2019
$	31,083	$	20,514
	4,621		17,313
	3,820		5,134
	2,860		3,425
	42,384		46,386
	6,264		6,252
	4,861		5,279
	43,733		43,779
	2,654		2,696
	6,333		4,317
	63,845		62,323
$	106,229	$	108,709
$	3,748	$	4,494
	486		580
	1,261		1,628
	10,089		8,374
	3,291		3,554
	18,875		18,630
	50,692		51,673
	13,501		13,295
	4,142		2,748
	68,335		67,716
	-		-
	26,450		26,909
	(6,446)		(3,496)
	(1,571)		(1,628)
	18,433		21,785
	586		578
	19,019		22,363
$	106,229	$	108,709

See notes to condensed consolidated financial statements.

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