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Financial News Details

Oracle Reports Fiscal Second Quarter Results Earnings per Share $0.10; 35% Operating Margin

December 13, 2001

REDWOOD SHORES, Calif. 13-DEC-2001 06:00 AM Today, Oracle Corporation announced second quarter revenues of $2.4 billion and net income of $549 million. Earnings per share of $0.10 compares with $0.11 in Q2 last year. Second quarter operating margins were 35% versus 36% last year. New software license sales were down 27%, while software license renewals and product support services were up 8% and 12%, respectively. Services revenue was flat with the prior year.

"For Oracle, this quarter included the September 11th tragedy and its impact on an already weak economy," said Oracle CFO, Jeff Henley. "In a difficult economy we are gratified that our business automation has allowed us to continuously take cost out of our business while expanding our engineering capacity."

"It was our toughest quarter in a decade, but we still made over $800 million dollars in operating profit and a 35% operating margin. When the economy improves, we will earn a lot more," said Oracle CEO Larry Ellison. "With over 1000 customers live on the E-Business Suite, more and more of the world's most profitable businesses are benefiting from dramatic productivity improvements."

"We remain very enthusiastic about our new Oracle 9i database and 9i Application Server. We see continued market share gains in our platform business as over 25% of our new customers in the General Business space are replacements of IBM DB2 and Microsoft SQL Server. Our Application Server growth remains strong at 52%."

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 /investor.

"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) 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 recent terrorist attacks upon the United States add to this challenge. An unexpected decline in the growth rate of revenues without a corresponding and timely slowdown in expense growth could have a material adverse effect on results of operations. (2) 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. (3) Delays in product delivery or closing of sales can cause quarterly revenues and income to fall significantly short of anticipated levels. (4) 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. (5) 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. 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          Six Months Ended
                               November 30,                November 30,
                            2001          2000         2001          2000


    REVENUES
     Licenses and
      other               $819,324    $1,118,238   $1,550,756    $1,925,476
     Services            1,538,011     1,541,308    3,048,624     2,995,945
                         ---------     ---------    ---------     ---------
      Total revenues     2,357,335     2,659,546    4,599,380     4,921,421
                         ---------     ---------    ---------     ---------


    OPERATING EXPENSES
     Sales and
      marketing            571,152       640,865    1,106,633     1,213,829
     Cost of services      609,838       694,998    1,219,711     1,368,876
     Research and
      development          257,484       266,280      510,783       517,307
     General and

      administrative        98,917       111,402      196,531       217,367
                           -------       -------      -------       -------
      Total operating
       expenses          1,537,391     1,713,545    3,033,658     3,317,379
                         ---------     ---------    ---------     ---------
    OPERATING INCOME       819,944       946,001    1,565,722     1,604,042

     Net investment
      gains (losses)

      related to equity
      securities           (3,388)      (13,468)      (6,689)         1,965
     Other income, net      28,770        33,348       71,904       136,117
                           -------      --------     --------      --------
    INCOME BEFORE TAXES    845,326       965,881    1,630,937     1,742,124

    Provision for
     income taxes          295,864       343,069      570,828       618,635
                          --------      --------   ----------    ----------
    NET INCOME            $549,462      $622,812   $1,060,109    $1,123,489

                          --------      --------   ----------    ----------
                          --------      --------   ----------    ----------
    EARNINGS PER SHARE
     Basic                   $0.10         $0.11        $0.19         $0.20
     Diluted                 $0.10         $0.11        $0.18         $0.19

    WEIGHTED SHARES
     OUTSTANDING
     Basic               5,528,372     5,584,428    5,554,092     5,594,243
     Diluted             5,695,860     5,874,987    5,737,940     5,903,929



                              ORACLE CORPORATION

                    CONDENSED CONSOLIDATED BALANCE SHEETS
                               ($ in thousands)

                                                  November 30,     May 31,
                                                     2001           2001
                                                  (unaudited)
    ASSETS

    Current Assets

     Cash and short term investments              $4,959,528     $5,887,661
     Trade receivables, net                        1,812,618      2,432,131
     Prepaid and refundable income taxes             449,385        272,742
     Other current assets                            365,115        370,616
                                                   ---------      ---------
      Total Current Assets                         7,586,646      8,963,150
                                                   ---------      ---------
    Long-term cash investments                       580,471             --
    Property and equipment, net                    1,009,371        974,751
    Prepaid taxes                                    398,153        376,030
    Other assets                                     710,819        716,229
                                                   ---------      ---------
    TOTAL ASSETS                                 $10,285,460    $11,030,160

                                                 -----------    -----------
                                                 -----------    -----------
    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities
     Notes payable, including current maturities      $1,238         $2,849
     Accounts payable                                265,725        270,112
     Income taxes                                  1,028,545        767,087
     Customer advances and unearned revenues       1,084,715      1,213,529
     Other current liabilities                     1,352,477      1,663,042
                                                   ---------      ---------
      Total Current Liabilities                    3,732,700      3,916,619
                                                   ---------      ---------
    Long-term debt                                   300,731        300,847

    Deferred income taxes                            332,417        327,788
    Other long-term liabilities                      214,480        207,135
    Stockholders' equity                           5,705,132      6,277,771
                                                   ---------      ---------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $10,285,460    $11,030,160
                                                 -----------    -----------
                                                 -----------    -----------

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