22 November 2004
PeopleSoft Comments on Oracle’s Unsolicited Tender Offer Results
PeopleSoft, Inc. (Nasdaq: PSFT) today responded to Oracle Corporation’s (Nasdaq: ORCL) announcement of the results of
their unsolicited $24 per share tender offer.
PeopleSoft’s Board of Directors has met and considered the results of Oracle’s unsolicited tender offer and unanimously
reaffirmed its previous conclusion that Oracle’s latest offer is inadequate and that the Company is worth substantially
more than the $24 per share offered by Oracle. The Board reiterated that it will not sell the Company for less than it
is really worth and that the Company’s business plan creates superior value for stockholders.
A. George “Skip” Battle, Chairman of the Transaction Committee of independent directors, said, “Based on the numerous
conversations we have had with our largest stockholders over the past ten days, the Board believes that a majority of
our stockholders agree that Oracle’s $24 offer is inadequate and does not reflect PeopleSoft’s real value. This majority
is comprised of stockholders who did not tender their shares, as well as stockholders who tendered but told us that they
believe PeopleSoft is worth more than $24 per share. We are confident that in the time leading to our 2005 Annual
Meeting we will continue to demonstrate PeopleSoft’s superior value to our stockholders.”
On November 10th, prior to announcing that the Board had concluded that Oracle’s offer is inadequate, members of the
Transaction Committee contacted Oracle and advised them that the Company would be willing to discuss an offer made by
Oracle at an appropriate price – but not $24. The Transaction Committee members told Oracle that its price must reflect
both PeopleSoft’s intrinsic value and the fact that PeopleSoft is materially more valuable to Oracle now than it was
when Oracle made its inadequate $26 per share offer.
Oracle’s only response has been to repeatedly state that its $24 per share offer is “best and final” and that it will
not pay a penny more to PeopleSoft stockholders.
In making its recommendation, the Board considered, among other things:
Substantial sequential growth forecast for fourth quarter 2004: PeopleSoft continues to demonstrate strong sales
execution and entered the fourth quarter with a robust pipeline. The Company anticipates substantial sequential growth
in license revenue and pro forma and GAAP earnings per share. Specifically, PeopleSoft anticipates that licence revenue
will be in the range of $175 million to $185 million with total revenue between $700 million and $715 million. Operating
margin for the quarter is expected to be in the range of 16% to 18% (pro forma) and 11% to 13% (GAAP). The Company
expects to report pro forma and GAAP earnings per share between $0.20 and $0.22 and between $0.14 and $0.16,
respectively. For the full year 2004, the Company expects total license revenue between $600 million and $610 million
with record total revenue of approximately $2.7 billion.
Strong momentum reflected in guidance for 2005: The Company expects strong momentum in 2005 due primarily to continued
growth in licence revenue; a growing maintenance revenue stream; focusing on operating efficiency and lowering costs;
and the full year benefit of the cost and revenue synergies from the J.D. Edwards acquisition. For 2005, the Company
expects licence revenue of $640 million to $655 million, an increase of 5% to 10% and total revenue of $2.8 billion to
$2.9 billion, representing 4% to 8% growth. The Company also anticipates pro forma operating margins for the year in
excess of 20% and GAAP operating margins in excess of 16%. 2005 pro forma earnings per share are expected to be between
$1.05 and $1.10 and GAAP earnings per share are expected to be in the range of $0.82 to $0.87. Guidance for 2005 does
not include any potential benefit from the elimination of the Oracle overhang.
Alameda lawsuit against Oracle seeking damages in excess of $1 billion goes to trial in January: PeopleSoft claims
compensatory damages of more than $1 billion plus punitive damages in the Company’s lawsuit against Oracle, which is
scheduled to go to trial before a jury in Oakland, California, on January 10, 2005. PeopleSoft’s complaint alleges that
Oracle has engaged in unfair business practices, including a deliberate campaign to mislead PeopleSoft’s customers and
disrupt its business.
The Board reaffirms that PeopleSoft is a vibrant, strong Company with a focused, motivated management team and employee
base dedicated to executing on the Company’s plan. PeopleSoft will continue to deliver shareholder value by extending
its current product leadership, building new products, entering new markets and continuing to deliver the very best
customer service in the industry.
About PeopleSoft PeopleSoft (Nasdaq: PSFT) is the world’s second largest provider of enterprise application software
with 12,750 customers in more than 25 industries and 150 countries. For more information, visit us at
Forward-Looking Statements This press release may contain forward-looking statements that state PeopleSoft’s intentions,
beliefs, expectations, or predictions for the future. Forward-looking statements often include use of the future tense,
words such as “will”, “intends”, “anticipates”, “expects”, and similar conditional or forward-looking words and phrases.
You are cautioned that these statements are only predictions and may differ materially from actual future events or
results. All forward-looking statements are only as of the date they are made and PeopleSoft undertakes no obligation to
update or revise them. Forward-looking statements in this press release include those relating to PeopleSoft’s
anticipated future revenues, operating margins and earnings per share and other statements relating to the Company’s
future prospects, actions and performance and the lawsuit against Oracle scheduled to go to trial in January 2005.
Forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause actual
results to differ materially from those projected in such forward-looking statements. These risks, assumptions and
uncertainties include, but are not limited to: the costs and disruption to PeopleSoft’s business arising from the Oracle
tender offer and related litigation; the Company’s ability to successfully complete the integration of J.D. Edwards into
PeopleSoft and to achieve anticipated synergies; economic and political conditions in the U.S. and abroad; the ability
to complete and deliver products and services within currently estimated time frames and budgets; the ability to manage
expenses effectively; the ability to achieve revenue from products and services that are under development; competitive
and pricing pressures; and other risks referenced from time to time in PeopleSoft’s most recent annual report on Form
10-K and subsequently filed quarterly reports on Form 10-Q, each as filed with the SEC and available without charge at
www.sec.gov and www.peoplesoft.com.
Important Additional Information PeopleSoft’s Board of Directors will be soliciting proxies for use at the 2005 Annual
Meeting of Stockholders, and any adjournment or postponement thereof, to vote in favor of a slate of directors to be
nominated by the Board of Directors and to vote on any other matters that properly come before the 2005 Annual Meeting.
Promptly after filing its definitive proxy statement for the 2005 Annual Meeting with the SEC, PeopleSoft will mail the
2005 Proxy Statement and a WHITE Proxy Card to each PeopleSoft stockholder entitled to vote at the Annual Meeting.
PeopleSoft has engaged Innisfree M Incorporated to assist it in soliciting proxies from its stockholders. PeopleSoft has agreed to pay customary
compensation to Innisfree M Incorporated for such services and to indemnify Innisfree M Incorporated and certain related persons against certain liabilities relating to or arising out of the engagement.
Certain representatives of Citigroup Global Markets Inc. and Goldman, Sachs & Co., financial advisors to PeopleSoft, and directors, officers and employees of PeopleSoft may solicit proxies for the
2005 Annual Meeting, although no additional compensation will be paid in connection with any such solicitation.
PeopleSoft has filed a Solicitation/Recommendation Statement on Schedule 14D-9 regarding Oracle’s tender offer that
contains information regarding the potential interests of members of the Board of Directors and members of management in
the tender offer. Information regarding securities ownership by certain members of the Board of Directors and certain
members of management as of February 10, 2004 is contained in PeopleSoft’s definitive proxy statement for the 2004
Annual Meeting of Stockholders, dated February 20, 2004. PeopleSoft stockholders should read the Schedule 14D-9 and the
2005 Proxy Statement when it is filed with the SEC (including any amendments to such documents) because these documents
contain (or will contain) important information. The 2005 Proxy Statement (when filed), the 2004 Proxy Statement, the
Schedule 14D-9 and other public filings made by PeopleSoft with the SEC are available without charge from the SEC’s
website at www.sec.gov and from PeopleSoft at www.peoplesoft.com.
Non-GAAP Financial Measures The Company utilises financial measures that are not prepared in accordance with generally
accepted accounting principles in analysing financial results because the Company believes that they are useful to
investors and management in evaluating the Company’s ongoing financial performance. These non-GAAP financial measures
may be different from non-GAAP financial measures used by other companies.
These non-GAAP financial measures facilitate making historical comparisons by excluding the impact of certain events,
such as the costs associated with responding to Oracle’s hostile tender offer and the purchase accounting impact of the
acquisition of J.D. Edwards. These events might otherwise obscure the results of our ongoing business activities when
compared to our competitors or our own historical performance. In addition, presentation of these non-GAAP financial
measures enables investors to evaluate the Company’s performance under both the GAAP and pro forma measures that
management and the Board of Directors use to evaluate the Company’s performance.
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP. Where non-GAAP financial measures have been included in this press
release, the Company has reconciled GAAP as currently in effect to the non-GAAP measures in the table below. These
non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.