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Financial News Details

Oracle Reports GAAP EPS up 5% to 56 Cents, Non-GAAP EPS up 7% to 69 Cents

December 18, 2013
TTM Operating Cash Flow Increases to Record $15.2 Billion, TTM Free Cash Flow up 14%

REDWOOD SHORES, CA -- (Marketwired) -- 12/18/13 -- Oracle Corporation (NYSE: ORCL) today announced that both fiscal 2014 Q2 GAAP and non-GAAP total revenues were up 2% to $9.3 billion. GAAP new software licenses and cloud software subscriptions revenues were unchanged at $2.4 billion, while non-GAAP new software licenses and cloud software subscriptions revenues were down 1% to $2.4 billion. Both GAAP and non-GAAP software license updates and product support revenues were up 6% to $4.5 billion. Hardware Systems revenues, including hardware systems products and hardware systems support, were unchanged at $1.3 billion. Hardware systems products revenues were down 3% to $714 million. GAAP operating income was down 2% to $3.4 billion, and the GAAP operating margin was 37%. Non-GAAP operating income was down 1% at $4.2 billion, and the non-GAAP operating margin was 46%. GAAP net income was down 1% to $2.6 billion, while non-GAAP net income was up 1% to $3.2 billion. GAAP earnings per share were up 5% to $0.56, while non-GAAP earnings per share were up 7% to $0.69. GAAP operating cash flow on a trailing twelve-month basis was $15.2 billion.

Without the impact of the US dollar strengthening compared to foreign currencies, Oracle's reported Q2 GAAP earnings per share would have been up 7% and non-GAAP earnings per share would have been up 9%. GAAP and non-GAAP total revenues also would have been up 3%; GAAP and non-GAAP new software licenses and cloud software subscriptions revenues would have been up 1%. Hardware Systems revenues, including hardware systems products and hardware systems support, would have been up 2%.

"We're very pleased with our results as new software license and cloud software subscription revenue grew 1% in constant currency over the 18% growth reported last year," said Oracle President and CFO, Safra Catz . "Software revenue grew 5% helping drive our tremendous cash flow and for the first time ever, we generated more than $15 billion in operating cash flow over four quarters."

"Our hardware business, including support, grew 2% in constant currency this quarter driven by double-digit revenue growth in Exadata, Exalogic and Exalytics," said Oracle President Mark Hurd . "The SPARC SuperCluster and Big Data Appliance were even better, with triple-digit growth and we expect hardware products will show growth next quarter."

"Our billion dollar SaaS business delivered overall bookings growth of 35% in the quarter," said Oracle CEO, Larry Ellison . "Our fastest growing cloud services were Fusion Human Capital Management and Fusion Salesforce Automation, each growing bookings at a triple-digit rate."

The Board of Directors declared a quarterly cash dividend of $0.12 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on January 7, 2014, with a payment date of January 28, 2014.

Q2 Fiscal 2014 Earnings Conference Call and Webcast

Oracle will hold a conference call and webcast today to discuss these results at 2:00 p.m. Pacific. You may listen to the call by dialing (913) 312-9303, Passcode: 493332. To access the live webcast of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. In addition, Oracle's Q2 results and Fiscal 2014 financial tables are available on the Oracle Investor Relations website.

A replay of the conference call will also be available by dialing (719) 457-0820 or (888) 203-1112, Passcode: 1722810.

About Oracle
Oracle engineers hardware and software to work together in the cloud and in your data center. For more information about Oracle (NYSE: ORCL), visit www.oracle.com or contact Investor Relations at investor_us@oracle.com or (650) 506-4073.

Trademarks
Oracle and Java are registered trademarks of Oracle 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 future plans, expectations, beliefs, intentions and prospects, including statements regarding expected future growth in Oracle's hardware business, 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 current European economic crisis and slowing economic conditions in other parts of the world, can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (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 support contracts. (3) Our hardware systems revenues and profitability could decline further, and we may fail to achieve our financial forecasts with respect to this business. (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) Our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses. (6) Our periodic workforce restructurings, including reorganizations of our sales force, can be disruptive. (7) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our products and support services in a timely manner or to position and/or price our products and services to meet market demand, customers may not buy new software licenses, cloud software subscriptions or hardware systems products or purchase or renew support contracts. 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 press release is current as of December 18, 2013. Oracle undertakes no duty to update any statement in light of new information or future events.

                             ORACLE CORPORATION

                      Q2 FISCAL 2014 FINANCIAL RESULTS
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                   ($ in millions, except per share data)


                      Three Months Ended November 30,
                     ---------------------------------
                                                                       %
                                                                   Increase
                                                                  (Decrease)
                                                                      in
                                                       % Increase  Constant
                               % of             % of   (Decrease)  Currency
                      2013   Revenues  2012   Revenues  in US $       (1)
                     ------  -------- ------  -------- ---------- ----------
REVENUES
  New software
   licenses and
   cloud software
   subscriptions     $2,380     25%   $2,389     26%       0%         1%
  Software license
   updates and
   product support    4,516     49%    4,260     47%       6%         7%
                     ------  -------- ------  --------
    Software
     Revenues         6,896     74%    6,649     73%       4%         5%
                     ------  -------- ------  --------
  Hardware systems
   products             714     8%       734     8%       (3%)       (2%)
  Hardware systems
   support              609     6%       587     7%        4%         5%
                     ------  -------- ------  --------
    Hardware Systems
     Revenues         1,323     14%    1,321     15%       0%         2%
                     ------  -------- ------  --------
    Services
     Revenues         1,056     12%    1,124     12%      (6%)       (5%)
                     ------  -------- ------  --------
      Total Revenues  9,275    100%    9,094    100%       2%         3%
                     ------  -------- ------  --------

OPERATING EXPENSES
  Sales and
   marketing          1,965     21%    1,773     20%       11%        12%
  Software license
   updates and
   product support      285     3%       270     3%        6%         8%
  Hardware systems
   products             369     4%       367     4%        1%         2%
  Hardware systems
   support              214     2%       227     3%       (6%)       (4%)
  Services              851     9%       930     10%      (8%)       (7%)
  Research and
   development        1,273     14%    1,199     13%       6%         7%
  General and
   administrative       262     3%       263     3%       (1%)        1%
  Amortization of
   intangible assets    577     6%       584     6%       (1%)       (1%)
  Acquisition
   related and other
   (2)                   17     0%      (121)   (1%)      113%       114%
  Restructuring          52     1%       131     1%       (60%)      (61%)
                     ------  -------- ------  --------
      Total
       Operating
       Expenses       5,865     63%    5,623     62%       4%         6%
                     ------  -------- ------  --------

OPERATING INCOME      3,410     37%    3,471     38%      (2%)        0%
  Interest expense     (230)   (2%)     (195)   (2%)       18%        18%
  Non-operating
   income, net           23     0%         4     0%       508%       964%
                     ------  -------- ------  --------

INCOME BEFORE
 PROVISION FOR
 INCOME TAXES         3,203     35%    3,280     36%      (2%)        0%
                     ------  -------- ------  --------
  Provision for
   income taxes         650     7%       699     8%       (7%)       (5%)
                     ------  -------- ------  --------

NET INCOME           $2,553     28%   $2,581     28%      (1%)        1%
                     ======  ======== ======  ========

EARNINGS PER SHARE:
  Basic              $ 0.56           $ 0.54
  Diluted            $ 0.56           $ 0.53

WEIGHTED AVERAGE
 COMMON SHARES
 OUTSTANDING:
  Basic               4,535            4,792
  Diluted             4,600            4,868

(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 rates in effect on May 31, 2013, which was the last day of our
     prior fiscal year, rather than the actual exchange rates in effect
     during the respective periods. Movements in international currencies
     relative to the United States dollar during the three months ended
     November 30, 2013 compared with the corresponding prior year period
     decreased our revenues by 1 percentage point, operating expenses by 2
     percentage points and operating income by 2 percentage points.

(2)  Acquisition related and other expenses for the three months ended
     November 30, 2012 included a net benefit of $145 million due to an
     acquisition related item.



                             ORACLE CORPORATION

                      Q2 FISCAL 2014 FINANCIAL RESULTS
      RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
                    ($in millions, except per share data)

                                Three Months Ended November 30,
                   --------------------------------------------------------
                     2013               2013      2012               2012
                     GAAP      Adj.   Non-GAAP    GAAP      Adj.   Non-GAAP
                   --------  -------  --------  --------  -------  --------

TOTAL REVENUES (3)
 (4)               $  9,275  $     8  $  9,283  $  9,094  $    19  $  9,113

TOTAL SOFTWARE
 REVENUES (3)      $  6,896  $     4  $  6,900  $  6,649  $    16  $  6,665
  New software
   licenses and
   cloud software
   subscriptions
   (3)                2,380        3     2,383     2,389       12     2,401
  Software license
   updates and
   product support    4,516        1     4,517     4,260        4     4,264

TOTAL HARDWARE
 SYSTEMS REVENUES
 (4)               $  1,323  $     4  $  1,327  $  1,321  $     3  $  1,324
  Hardware systems
   products             714        -       714       734        -       734
  Hardware systems
   support (4)          609        4       613       587        3       590

TOTAL OPERATING
 EXPENSES          $  5,865  $  (828) $  5,037  $  5,623  $  (782) $  4,841
  Stock-based
   compensation
   (5)                  182     (182)        -       188     (188)        -
  Amortization of
   intangible
   assets (6)           577     (577)        -       584     (584)        -
  Acquisition
   related and
   other                 17      (17)        -      (121)     121         -
  Restructuring          52      (52)        -       131     (131)        -

OPERATING INCOME   $  3,410  $   836  $  4,246  $  3,471  $   801  $  4,272

OPERATING MARGIN %       37%                46%       38%                47%

INCOME TAX EFFECTS
 (7)               $    650  $   234  $    884  $    699  $   260  $    959

NET INCOME         $  2,553  $   602  $  3,155  $  2,581  $   541  $  3,122

DILUTED EARNINGS
 PER SHARE         $   0.56           $   0.69  $   0.53           $   0.64

DILUTED WEIGHTED
 AVERAGE COMMON
 SHARES
 OUTSTANDING          4,600        -     4,600     4,868        -     4,868



                                        % Increase (Decrease)
                  % Increase (Decrease)  in Constant Currency
                         in US $                 (2)
                  --------------------- ---------------------
                     GAAP     Non-GAAP     GAAP     Non-GAAP
                  ---------- ---------- ---------- ----------

TOTAL REVENUES (3)
 (4)                  2%         2%         3%         3%

TOTAL SOFTWARE
 REVENUES (3)         4%         4%         5%         5%
  New software
   licenses and
   cloud software
   subscriptions
   (3)                0%        (1%)        1%         1%
  Software license
   updates and
   product support    6%         6%         7%         7%

TOTAL HARDWARE
 SYSTEMS REVENUES
 (4)                  0%         0%         2%         2%
  Hardware systems
   products          (3%)       (3%)       (2%)       (2%)
  Hardware systems
   support (4)        4%         4%         5%         5%

TOTAL OPERATING
 EXPENSES             4%         4%         6%         5%
  Stock-based
   compensation
   (5)               (3%)         *        (3%)         *
  Amortization of
   intangible
   assets (6)        (1%)         *        (1%)         *
  Acquisition
   related and
   other             113%         *        114%         *
  Restructuring      (60%)        *        (61%)        *

OPERATING INCOME     (2%)       (1%)        0%         1%

OPERATING MARGIN % (141) bp.  (115) bp.  (128) bp.  (114) bp.

INCOME TAX EFFECTS
 (7)                 (7%)       (8%)       (5%)       (6%)

NET INCOME           (1%)        1%         1%%        3%

DILUTED EARNINGS
 PER SHARE            5%         7%         7%         9%

DILUTED WEIGHTED
 AVERAGE COMMON
 SHARES
 OUTSTANDING         (6%)       (6%)       (6%)       (6%)


(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 rates in effect on May 31, 2013, 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 November 30, 2013, approximately $8 million and $3 million in
     estimated revenues related to assumed cloud software subscriptions
     contracts will not be recognized for the remainder of fiscal 2014 and
     fiscal 2015, respectively, due to business combination accounting
     rules.

(4)  As of November 30, 2013, approximately $2 million in estimated revenues
     related to hardware systems support contracts will not be recognized
     for each of the remainder of fiscal 2014 and fiscal 2015 due to
     business combination accounting rules.

(5)  Stock-based compensation was included in the following GAAP operating
     expense categories:

                              Three Months Ended       Three Months Ended
                               November 30, 2013        November 30, 2012
                           ------------------------ ------------------------
                                              Non-                     Non-
                             GAAP    Adj.     GAAP    GAAP    Adj.     GAAP
                           ------- -------  ------- ------- -------  -------
     Sales and marketing   $    39 $   (39) $     - $    43 $   (43) $     -
     Software license
      updates and product
      support                    5      (5)       -       5      (5)       -
     Hardware systems
      products                   1      (1)       -       1      (1)       -
     Hardware systems
      support                    1      (1)       -       1      (1)       -
     Services                    7      (7)       -       8      (8)       -
     Research and
      development               87     (87)       -      89     (89)       -
     General and
      administrative            42     (42)       -      41     (41)       -
                           ------- -------  ------- ------- -------  -------
       Subtotal                182    (182)       -     188    (188)       -
                           ------- -------  ------- ------- -------  -------
     Acquisition related
      and other                  1      (1)       -       4      (4)       -
                           ------- -------  ------- ------- -------  -------
       Total stock-based
        compensation       $   183 $  (183) $     - $   192 $  (192) $     -
                           ======= =======  ======= ======= =======  =======

(6)  Estimated future annual amortization expense related to intangible
     assets as of November 30, 2013 was as follows:

     Remainder of Fiscal
      2014                 $ 1,086
     Fiscal 2015             1,807
     Fiscal 2016             1,235
     Fiscal 2017               660
     Fiscal 2018               528
     Fiscal 2019               429
     Thereafter                727
                           -------
       Total intangible
        assets subject to
        amortization         6,472
     In-process research
      and development           49
                           -------
       Total intangible
        assets, net        $ 6,521
                           =======

(7)  Income tax effects were calculated reflecting an effective GAAP tax
     rate of 20.3% and 21.3% in the second quarter of fiscal 2014 and 2013,
     respectively, and an effective non-GAAP tax rate of 21.9% and 23.5% in
     the second quarter of fiscal 2014 and 2013, respectively. The
     differences between our GAAP and non-GAAP tax rates in the second
     quarters of fiscal 2014 and 2013 were primarily due to the net tax
     effects of acquisition related items, including the tax effects of
     amortization of intangible assets.

*    Not meaningful



                             ORACLE CORPORATION

                Q2 FISCAL 2014 YEAR TO DATE FINANCIAL RESULTS
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                   ($ in millions, except per share data)

                        Six Months Ended November 30,
                     -----------------------------------
                                                                       %
                                                                    Increase
                                                                  (Decrease)
                                                             %         in
                                                          Increase  Constant
                                % of              % of   (Decrease) Currency
                       2013   Revenues   2012   Revenues  in US $     (1)
                     -------  -------- -------  -------- --------- ---------
REVENUES
  New software
   licenses and
   cloud software
   subscriptions     $ 4,032     23%   $ 3,963     23%       2%        4%
  Software license
   updates and
   product support     8,948     50%     8,400     49%       7%        8%
                     -------  -------- -------  --------
    Software
     Revenues         12,980     73%    12,363     72%       5%        6%
                     -------  -------- -------  --------
  Hardware systems
   products            1,383     8%      1,513     9%       (9%)      (8%)
  Hardware systems
   support             1,201     7%      1,161     6%        3%        5%
                     -------  -------- -------  --------
    Hardware Systems
     Revenues          2,584     15%     2,674     15%      (3%)      (2%)
                     -------  -------- -------  --------
    Services
     Revenues          2,083     12%     2,238     13%      (7%)      (5%)
                     -------  -------- -------  --------
      Total Revenues  17,647    100%    17,275    100%       2%        4%
                     -------  -------- -------  --------

OPERATING EXPENSES
  Sales and
   marketing           3,673     21%     3,319     19%      11%       12%
  Software license
   updates and
   product support       573     3%        553     3%        4%        6%
  Hardware systems
   products              699     4%        751     4%       (7%)      (6%)
  Hardware systems
   support               423     2%        451     3%       (6%)      (5%)
  Services             1,657     9%      1,814     10%      (9%)      (7%)
  Research and
   development         2,510     14%     2,400     14%       5%        6%
  General and
   administrative        522     3%        538     3%       (3%)      (2%)
  Amortization of
   intangible assets   1,172     7%      1,203     7%       (3%)      (3%)
  Acquisition
   related and other
   (2)                    27     0%       (380)   (2%)      107%      107%
  Restructuring          108     1%        276     2%      (61%)     (62%)
                     -------  -------- -------  --------
      Total
       Operating
       Expenses       11,364     64%    10,925     63%       4%        5%
                     -------  -------- -------  --------

OPERATING INCOME       6,283     36%     6,350     37%      (1%)       1%
  Interest expense      (446)   (3%)      (382)   (2%)      17%       17%
  Non-operating
   income, net            29     0%         14     0%       101%      225%
                     -------  -------- -------  --------

INCOME BEFORE
 PROVISION FOR
 INCOME TAXES          5,866     33%     5,982     35%      (2%)       0%
                     -------  -------- -------  --------
  Provision for
   income taxes        1,122     6%      1,367     8%      (18%)     (16%)
                     -------  -------- -------  --------

NET INCOME           $ 4,744     27%   $ 4,615     27%       3%        5%
                     =======  ======== =======  ========

EARNINGS PER SHARE:
  Basic              $  1.04           $  0.96
  Diluted            $  1.02           $  0.94

WEIGHTED AVERAGE
 COMMON SHARES
 OUTSTANDING:
  Basic                4,571             4,829
  Diluted              4,637             4,904


(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 rates in effect on May 31, 2013, which was the last day of our
     prior fiscal year, rather than the actual exchange rates in effect
     during the respective periods. Movements in international currencies
     relative to the United States dollar during the six months ended
     November 30, 2013 compared with the corresponding prior year period
     decreased our revenues by 2 percentage points, operating expenses by 1
     percentage point and operating income by 2 percentage points.

(2)  Acquisition related and other expenses for the six months ended
     November 30, 2012 included a benefit of $306 million related to certain
     litigation and a net benefit of $129 million due to an acquisition
     related item.



                             ORACLE CORPORATION

                Q2 FISCAL 2014 YEAR TO DATE FINANCIAL RESULTS
      RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
                    ($in millions, except per share data)

                                 Six Months Ended November 30,
                   --------------------------------------------------------
                     2013               2013      2012               2012
                     GAAP      Adj.   Non-GAAP    GAAP      Adj.   Non-GAAP
                   --------  -------  --------  --------  -------  --------

TOTAL REVENUES (3)
 (4)               $ 17,647  $    18  $ 17,665  $ 17,275  $    47  $ 17,322

TOTAL SOFTWARE
 REVENUES (3)      $ 12,980  $     8  $ 12,988  $ 12,363  $    39  $ 12,402
  New software
   licenses and
   cloud software
   subscriptions
   (3)                4,032        7     4,039     3,963       31     3,994
  Software license
   updates and
   product support    8,948        1     8,949     8,400        8     8,408

TOTAL HARDWARE
 SYSTEMS REVENUES
 (4)               $  2,584  $    10  $  2,594  $  2,674  $     8  $  2,682
  Hardware systems
   products           1,383        -     1,383     1,513        -     1,513
  Hardware systems
   support (4)        1,201       10     1,211     1,161        8     1,169

TOTAL OPERATING
 EXPENSES          $ 11,364  $(1,685) $  9,679  $ 10,925  $(1,464) $  9,461
  Stock-based
   compensation
   (5)                  378     (378)        -       365     (365)        -
  Amortization of
   intangible
   assets (6)         1,172   (1,172)        -     1,203   (1,203)        -
  Acquisition
   related and
   other                 27      (27)        -      (380)     380         -
  Restructuring         108     (108)        -       276     (276)        -

OPERATING INCOME   $  6,283  $ 1,703  $  7,986  $  6,350  $ 1,511  $  7,861

OPERATING MARGIN %       36%                45%       37%                45%

INCOME TAX EFFECTS
 (7)               $  1,122  $   531  $  1,653  $  1,367  $   390  $  1,757

NET INCOME         $  4,744  $ 1,172  $  5,916  $  4,615  $ 1,121  $  5,736

DILUTED EARNINGS
 PER SHARE         $   1.02           $   1.28  $   0.94           $   1.17

DILUTED WEIGHTED
 AVERAGE COMMON
 SHARES
 OUTSTANDING          4,637        -     4,637     4,904        -     4,904




                                        % Increase (Decrease)
                  % Increase (Decrease)  in Constant Currency
                         in US $                 (2)
                  --------------------- ---------------------
                     GAAP     Non-GAAP     GAAP     Non-GAAP
                  ---------- ---------- ---------- ----------

TOTAL REVENUES (3)
 (4)                  2%         2%         4%         3%

TOTAL SOFTWARE
 REVENUES (3)         5%         5%         6%         6%
  New software
   licenses and
   cloud software
   subscriptions
   (3)                2%         1%         4%         3%
  Software license
   updates and
   product support    7%         6%         8%         8%

TOTAL HARDWARE
 SYSTEMS REVENUES
 (4)                 (3%)       (3%)       (2%)       (2%)
  Hardware systems
   products          (9%)       (9%)       (8%)       (8%)
  Hardware systems
   support (4)        3%         4%         5%         5%

TOTAL OPERATING
 EXPENSES             4%         2%         5%         4%
  Stock-based
   compensation
   (5)                4%          *         4%          *
  Amortization of
   intangible
   assets (6)        (3%)         *        (3%)         *
  Acquisition
   related and
   other             107%         *        107%         *
  Restructuring      (61%)        *        (62%)        *

OPERATING INCOME     (1%)        2%         1%         3%

OPERATING MARGIN % (116) bp.  (17) bp.   (98) bp.   (12) bp.

INCOME TAX EFFECTS
 (7)                 (18%)      (6%)       (16%)      (4%)

NET INCOME            3%         3%         5%         5%

DILUTED EARNINGS
 PER SHARE            9%         9%         11%        11%

DILUTED WEIGHTED
 AVERAGE COMMON
 SHARES
 OUTSTANDING         (5%)       (5%)       (5%)       (5%)



(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 rates in effect on May 31, 2013, 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 November 30, 2013, approximately $8 million and $3 million in
     estimated revenues related to assumed cloud software subscriptions
     contracts will not be recognized for the remainder of fiscal 2014 and
     fiscal 2015, respectively, due to business combination accounting
     rules.

(4)  As of November 30, 2013, approximately $2 million in estimated revenues
     related to hardware systems support contracts will not be recognized
     for each of the remainder of fiscal 2014 and fiscal 2015 due to
     business combination accounting rules.

(5)  Stock-based compensation was included in the following GAAP operating
     expense categories:

                               Six Months Ended         Six Months Ended
                               November 30, 2013        November 30, 2012
                           ------------------------ ------------------------
                                              Non-                     Non-
                             GAAP    Adj.     GAAP    GAAP    Adj.     GAAP
                           ------- -------  ------- ------- -------  -------
     Sales and marketing   $    81 $   (81) $     - $    81 $   (81) $     -
     Software license
      updates and product
      support                   11     (11)       -      10     (10)       -
     Hardware systems
      products                   3      (3)       -       1      (1)       -
     Hardware systems
      support                    3      (3)       -       2      (2)       -
     Services                   13     (13)       -      17     (17)       -
     Research and
      development              184    (184)       -     172    (172)       -
     General and
      administrative            83     (83)       -      82     (82)       -
                           ------- -------  ------- ------- -------  -------
       Subtotal                378    (378)       -     365    (365)       -
                           ------- -------  ------- ------- -------  -------
     Acquisition related
      and other                  4      (4)       -      21     (21)       -
                           ------- -------  ------- ------- -------  -------
       Total stock-based
        compensation       $   382 $  (382) $     - $   386 $  (386) $     -
                           ======= =======  ======= ======= =======  =======

(6)  Estimated future annual amortization expense related to intangible
     assets as of November 30, 2013 was as follows:

     Remainder of Fiscal
      2014                 $ 1,086
     Fiscal 2015             1,807
     Fiscal 2016             1,235
     Fiscal 2017               660
     Fiscal 2018               528
     Fiscal 2019               429
     Thereafter                727
                           -------
       Total intangible
        assets subject to
        amortization         6,472
     In-process research
      and development           49
                           -------
       Total intangible
        assets, net        $ 6,521
                           =======

(7)  Income tax effects were calculated reflecting an effective GAAP tax
     rate of 19.1% and 22.9% in the first half of fiscal 2014 and 2013,
     respectively, and an effective non-GAAP tax rate of 21.9% and 23.5% in
     the first half of fiscal 2014 and 2013, respectively. The difference
     between our GAAP and non-GAAP tax rates in the first half of fiscal
     2014 was primarily due to the net tax effects of acquisition related
     items, including the tax effect of amortization of intangible assets.
     The difference between our GAAP and non-GAAP tax rates in the first
     half of fiscal 2013 was primarily due to the net tax effects of
     acquisition related items, including the tax effect of amortization of
     intangible assets, partially offset by the disproportionate tax rate
     impact of certain discrete items for the period.

*    Not meaningful



                             ORACLE CORPORATION

                      Q2 FISCAL 2014 FINANCIAL RESULTS
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                               ($ in millions)

                                                  November 30,    May 31,
                                                      2013          2013
                                                 ------------- -------------
ASSETS
  Current Assets:
    Cash and cash equivalents                    $      14,894 $      14,613
    Marketable securities                               22,080        17,603
    Trade receivables, net                               4,192         6,049
    Inventories                                            234           240
    Deferred tax assets                                    963           974
    Prepaid expenses and other current assets            1,889         2,213
                                                 ------------- -------------
      Total Current Assets                              44,252        41,692
  Non-Current Assets:
    Property, plant and equipment, net                   3,039         3,053
    Intangible assets, net                               6,521         6,640
    Goodwill                                            28,269        27,343
    Deferred tax assets                                    760           766
    Other assets                                         2,397         2,318
                                                 ------------- -------------
      Total Non-Current Assets                          40,986        40,120
                                                 ------------- -------------
TOTAL ASSETS                                     $      85,238 $      81,812
                                                 ============= =============
LIABILITIES AND EQUITY
  Current Liabilities:
    Notes payable, current and other current
     borrowings                                  $       1,525 $           -
    Accounts payable                                       408           419
    Accrued compensation and related benefits            1,566         1,851
    Income taxes payable                                   543           911
    Deferred revenues                                    6,667         7,118
    Other current liabilities                            2,401         2,573
                                                 ------------- -------------
      Total Current Liabilities                         13,110        12,872
  Non-Current Liabilities:
    Notes payable and other non-current
     borrowings                                         22,641        18,494
    Income taxes payable                                 3,950         3,899
    Other non-current liabilities                        1,471         1,402
                                                 ------------- -------------
      Total Non-Current Liabilities                     28,062        23,795
  Equity                                                44,066        45,145
                                                 ------------- -------------
TOTAL LIABILITIES AND EQUITY                     $      85,238 $      81,812
                                                 ============= =============



                             ORACLE CORPORATION

                      Q2 FISCAL 2014 FINANCIAL RESULTS
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              ($ in millions)

                                                         Six Months Ended
                                                           November 30,
                                                       --------------------
                                                          2013       2012
                                                       ---------  ---------
Cash Flows From Operating Activities:
  Net income                                           $   4,744  $   4,615
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation                                             302        261
    Amortization of intangible assets                      1,172      1,203
    Deferred income taxes                                   (207)       (40)
    Stock-based compensation                                 382        386
    Tax benefits on the exercise of stock options and
     vesting of restricted stock-based awards                129        179
    Excess tax benefits on the exercise of stock
     options and vesting of restricted stock-based
     awards                                                  (71)       (95)
    Other, net                                                51         80
    Changes in operating assets and liabilities, net
     of effects from acquisitions:
      Decrease in trade receivables, net                   1,989      2,038
      Decrease in inventories                                 13          -
      Decrease (increase) in prepaid expenses and
       other assets                                          247       (213)
      Decrease in accounts payable and other
       liabilities                                          (533)      (790)
      Decrease in income taxes payable                      (343)      (559)
      Decrease in deferred revenues                         (437)      (599)
                                                       ---------  ---------

        Net cash provided by operating activities          7,438      6,466
                                                       ---------  ---------

Cash Flows From Investing Activities:
  Purchases of marketable securities and other
   investments                                           (18,558)   (17,314)
  Proceeds from maturities and sales of marketable
   securities and other investments                       13,955     15,263
  Acquisitions, net of cash acquired                      (1,748)      (660)
  Capital expenditures                                      (279)      (351)
                                                       ---------  ---------

        Net cash used for investing activities            (6,630)    (3,062)
                                                       ---------  ---------

Cash Flows From Financing Activities:
  Payments for repurchases of common stock                (5,801)    (6,072)
  Proceeds from issuances of common stock                    765        752
  Payments of dividends to stockholders                   (1,099)      (583)
  Proceeds from borrowings, net of issuance costs          5,566      4,974
  Repayments of borrowings                                     -     (1,700)
  Excess tax benefits on the exercise of stock options
   and vesting of restricted stock-based awards               71         95
  Distributions to noncontrolling interests                  (28)       (31)
                                                       ---------  ---------

        Net cash used for financing activities              (526)    (2,565)
                                                       ---------  ---------

Effect of exchange rate changes on cash and cash
 equivalents                                                  (1)       118
                                                       ---------  ---------

Net increase in cash and cash equivalents                    281        957
                                                       ---------  ---------

Cash and cash equivalents at beginning of period          14,613     14,955
                                                       ---------  ---------

Cash and cash equivalents at end of period             $  14,894  $  15,912
                                                       =========  =========


                             ORACLE CORPORATION
                      Q2 FISCAL 2014 FINANCIAL RESULTS
                  FREE CASH FLOW - TRAILING 4-QUARTERS (1)
                               ($in millions)

                             Fiscal 2013                Fiscal 2014
                   ------------------------------- -------------------- ----
                      Q1      Q2      Q3      Q4      Q1      Q2    Q3   Q4
                   ------- ------- ------- ------- ------- ------- ---- ----

GAAP Operating
 Cash Flow         $13,993 $13,533 $13,717 $14,224 $14,845 $15,196

Capital
 Expenditures (2)     (627)   (710)   (684)   (650)   (664)   (578)
                   ------- ------- ------- ------- ------- ------- ---- ----

Free Cash Flow     $13,366 $12,823 $13,033 $13,574 $14,181 $14,618
                   ======= ======= ======= ======= ======= ======= ==== ====

% Growth over
 prior year              8%      2%      1%      4%      6%     14%
                   ------- ------- ------- ------- ------- ------- ---- ----


GAAP Net Income    $10,175 $10,564 $10,571 $10,925 $11,082 $11,054

Free Cash Flow as
 a % of Net Income     131%    121%    123%    124%    128%    132%



(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)  Derived from capital expenditures as reported in cash flows from
     investing activities as per our consolidated statements of cash flows
     presented in accordance with GAAP.



                             ORACLE CORPORATION
                      Q2 FISCAL 2014 FINANCIAL RESULTS
          SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
                               ($in millions)

                                          Fiscal 2013
                     -----------------------------------------------------
                         Q1         Q2         Q3         Q4       TOTAL
                     ---------  ---------  ---------  ---------  ---------
REVENUES
  New software
   licenses and cloud
   software
   subscriptions     $   1,574  $   2,389  $   2,332  $   4,026  $  10,321
  Software license
   updates and
   product support       4,140      4,260      4,340      4,402     17,142
                     ---------  ---------  ---------  ---------  ---------
    Software Revenues    5,714      6,649      6,672      8,428     27,463

  Hardware systems
   products                779        734        671        849      3,033
  Hardware systems
   support                 574        587        570        582      2,313
                     ---------  ---------  ---------  ---------  ---------
    Hardware Systems
     Revenues            1,353      1,321      1,241      1,431      5,346

    Services Revenues    1,114      1,124      1,045      1,088      4,371

                     ---------  ---------  ---------  ---------  ---------
      Total Revenues $   8,181  $   9,094  $   8,958  $  10,947  $  37,180
                     =========  =========  =========  =========  =========

AS REPORTED REVENUE
 GROWTH RATES
  New software
   licenses and cloud
   software
   subscriptions             5%        17%        (2%)        1%         4%
  Software license
   updates and
   product support           3%         7%         7%         6%         6%
    Software Revenues        4%        10%         4%         4%         5%

  Hardware systems
   products                (24%)      (23%)      (23%)      (13%)      (21%)
  Hardware systems
   support                 (11%)       (6%)       (6%)       (3%)       (7%)
    Hardware Systems
     Revenues              (19%)      (16%)      (16%)       (9%)      (15%)

    Services Revenues       (6%)       (5%)       (8%)       (9%)       (7%)

      Total Revenues        (2%)        3%        (1%)        0%         0%

CONSTANT CURRENCY
 GROWTH RATES (2)
  New software
   licenses and cloud
   software
   subscriptions            10%        18%         0%         2%         6%
  Software license
   updates and
   product support           8%         8%         8%         8%         8%
    Software Revenues        9%        11%         5%         5%         7%

  Hardware systems
   products                (21%)      (23%)      (22%)      (12%)      (19%)
  Hardware systems
   support                  (6%)       (5%)       (5%)       (1%)       (4%)
    Hardware Systems
     Revenues              (15%)      (16%)      (15%)       (8%)      (13%)

    Services Revenues        0%        (3%)       (7%)       (8%)       (5%)

      Total Revenues         3%         5%         0%         2%         2%

                     ---------  ---------  ---------  ---------  ---------

GEOGRAPHIC REVENUES

  REVENUES
    Americas         $   4,324  $   4,787  $   4,698  $   5,911  $  19,719
    Europe, Middle
     East & Africa       2,383      2,701      2,745      3,328     11,158
    Asia Pacific         1,474      1,606      1,515      1,708      6,303
                     ---------  ---------  ---------  ---------  ---------
      Total Revenues $   8,181  $   9,094  $   8,958  $  10,947  $  37,180
                     =========  =========  =========  =========  =========


HEADCOUNT

  GEOGRAPHIC AREA
    Americas            49,145     49,584     50,402     51,519
    Europe, Middle
     East & Africa      22,584     22,594     22,592     22,860
    Asia Pacific        44,170     45,051     45,663     45,855
                     ---------  ---------  ---------  ---------  ---------
        Total Company  115,899    117,229    118,657    120,234
                     =========  =========  =========  =========  =========



                                    Fiscal 2014
                     -----------------------------------------
                         Q1         Q2      Q3   Q4    TOTAL
                     ---------  ---------  ---- ---- ---------
REVENUES
  New software
   licenses and cloud
   software
   subscriptions     $   1,653  $   2,380            $   4,032
  Software license
   updates and
   product support       4,431      4,516                8,948
                     ---------  ---------  ---- ---- ---------
    Software Revenues    6,084      6,896               12,980

  Hardware systems
   products                669        714                1,383
  Hardware systems
   support                 592        609                1,201
                     ---------  ---------  ---- ---- ---------
    Hardware Systems
     Revenues            1,261      1,323                2,584

    Services Revenues    1,027      1,056                2,083

                     ---------  ---------  ---- ---- ---------
      Total Revenues $   8,372  $   9,275            $  17,647
                     =========  =========  ==== ==== =========

AS REPORTED REVENUE
 GROWTH RATES
  New software
   licenses and cloud
   software
   subscriptions             5%         0%                   2%
  Software license
   updates and
   product support           7%         6%                   7%
    Software Revenues        6%         4%                   5%

  Hardware systems
   products                (14%)       (3%)                 (9%)
  Hardware systems
   support                   3%         4%                   3%
    Hardware Systems
     Revenues               (7%)        0%                  (3%)

    Services Revenues       (8%)       (6%)                 (7%)

      Total Revenues         2%         2%                   2%

CONSTANT CURRENCY
 GROWTH RATES (2)
  New software
   licenses and cloud
   software
   subscriptions             7%         1%                   4%
  Software license
   updates and
   product support           8%         7%                   8%
    Software Revenues        8%         5%                   6%

  Hardware systems
   products                (13%)       (2%)                 (8%)
  Hardware systems
   support                   5%         5%                   5%
    Hardware Systems
     Revenues               (6%)        2%                  (2%)

    Services Revenues       (6%)       (5%)                 (5%)

      Total Revenues         4%         3%                   4%

                     ---------  ---------  ---- ---- ---------

GEOGRAPHIC REVENUES

  REVENUES
    Americas         $   4,517  $   4,995            $   9,512
    Europe, Middle
     East & Africa       2,439      2,817                5,256
    Asia Pacific         1,416      1,463                2,879
                     ---------  ---------  ---- ---- ---------
      Total Revenues $   8,372  $   9,275            $  17,647
                     =========  =========  ==== ==== =========


HEADCOUNT

  GEOGRAPHIC AREA
    Americas            53,465     53,073
    Europe, Middle
     East & Africa      23,349     23,178
    Asia Pacific        45,513     45,617
                     ---------  ---------  ---- ---- ---------
        Total Company  122,327    121,868
                     =========  =========  ==== ==== =========


(1)  The sum of the quarterly financial information may vary from year-to-
     date financial information due to rounding.

(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 rates in effect on May 31, 2013 and 2012 for the fiscal 2014
     and fiscal 2013 constant currency growth rate calculations presented,
     respectively, rather than the actual exchange rates in effect during
     the respective periods.



                             ORACLE CORPORATION
                      Q2 FISCAL 2014 FINANCIAL RESULTS
                SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1)
                                ($in millions)

                                          Fiscal 2013
                     -----------------------------------------------------
                         Q1         Q2         Q3         Q4       TOTAL
                     ---------  ---------  ---------  ---------  ---------

AMERICAS

  New software
   licenses and
   cloud software
   subscriptions     $     814  $   1,253  $   1,205  $   2,194  $   5,465
                     =========  =========  =========  =========  =========
  Hardware systems
   products          $     380  $     370  $     307  $     439  $   1,495
                     =========  =========  =========  =========  =========

AS REPORTED GROWTH
 RATES
  New software
   licenses and
   cloud software
   subscriptions            12%        22%        (2%)        3%         7%
  Hardware systems
   products                (20%)      (25%)      (25%)      (12%)      (20%)

CONSTANT CURRENCY
 GROWTH RATES (2)
  New software
   licenses and
   cloud software
   subscriptions            14%        22%        (1%)        4%         8%
  Hardware systems
   products                (19%)      (25%)      (25%)      (12%)      (20%)

                     ---------  ---------  ---------  ---------  ---------

EUROPE / MIDDLE EAST
 / AFRICA

  New software
   licenses and
   cloud software
   subscriptions     $     403  $     641  $     690  $   1,224  $   2,959
                     =========  =========  =========  =========  =========
  Hardware systems
   products          $     214  $     198  $     201  $     228  $     842
                     =========  =========  =========  =========  =========

AS REPORTED GROWTH
 RATES
  New software
   licenses and
   cloud software
   subscriptions            (8%)       10%         0%         5%         3%
  Hardware systems
   products                (38%)      (27%)      (24%)      (12%)      (26%)

CONSTANT CURRENCY
 GROWTH RATES (2)
  New software
   licenses and
   cloud software
   subscriptions             1%        12%         1%         5%         5%
  Hardware systems
   products                (30%)      (25%)      (24%)      (11%)      (23%)

                     ---------  ---------  ---------  ---------  ---------

ASIA PACIFIC

  New software
   licenses and
   cloud software
   subscriptions     $     357  $     495  $     437  $     608  $   1,897
                     =========  =========  =========  =========  =========
  Hardware systems
   products          $     185  $     166  $     163  $     182  $     696
                     =========  =========  =========  =========  =========

AS REPORTED GROWTH
 RATES
  New software
   licenses and
   cloud software
   subscriptions             8%        13%        (3%)      (12%)       (1%)
  Hardware systems
   products                (12%)      (10%)      (16%)      (17%)      (14%)

CONSTANT CURRENCY
 GROWTH RATES (2)
  New software
   licenses and
   cloud software
   subscriptions            12%        13%         1%        (7%)        3%
  Hardware systems
   products                (10%)      (12%)      (14%)      (14%)      (12%)

                     ---------  ---------  ---------  ---------  ---------

TOTAL COMPANY

  New software
   licenses and
   cloud software
   subscriptions     $   1,574  $   2,389  $   2,332  $   4,026  $  10,321
                     =========  =========  =========  =========  =========
  Hardware systems
   products          $     779  $     734  $     671  $     849  $   3,033
                     =========  =========  =========  =========  =========

AS REPORTED GROWTH
 RATES
  New software
   licenses and
   cloud software
   subscriptions             5%        17%        (2%)        1%         4%
  Hardware systems
   products                (24%)      (23%)      (23%)      (13%)      (21%)

CONSTANT CURRENCY
 GROWTH RATES (2)
  New software
   licenses and
   cloud software
   subscriptions            10%        18%         0%         2%         6%
  Hardware systems
   products                (21%)      (23%)      (22%)      (12%)      (19%)



                                   Fiscal 2014
                    -----------------------------------------
                        Q1         Q2      Q3   Q4    TOTAL
                    ---------  ---------  ---- ---- ---------

AMERICAS

  New software
   licenses and
   cloud software
   subscriptions    $     926  $   1,295            $   2,220
                    =========  =========  ==== ==== =========
  Hardware systems
   products         $     335  $     381            $     716
                    =========  =========  ==== ==== =========

AS REPORTED GROWTH
 RATES
  New software
   licenses and
   cloud software
   subscriptions           14%         3%                   7%
  Hardware systems
   products               (12%)        3%                  (4%)

CONSTANT CURRENCY
 GROWTH RATES (2)
  New software
   licenses and
   cloud software
   subscriptions           15%         5%                   9%
  Hardware systems
   products               (11%)        4%                  (4%)

                    ---------  ---------  ---- ---- ---------

EUROPE / MIDDLE EAST
 / AFRICA

  New software
   licenses and
   cloud software
   subscriptions    $     388  $     675            $   1,063
                    =========  =========  ==== ==== =========
  Hardware systems
   products         $     177  $     184            $     361
                    =========  =========  ==== ==== =========

AS REPORTED GROWTH
 RATES
  New software
   licenses and
   cloud software
   subscriptions           (4%)        5%                   2%
  Hardware systems
   products               (18%)       (7%)                (13%)

CONSTANT CURRENCY
 GROWTH RATES (2)
  New software
   licenses and
   cloud software
   subscriptions           (5%)        3%                   0%
  Hardware systems
   products               (20%)       (8%)                (14%)

                    ---------  ---------  ---- ---- ---------

ASIA PACIFIC

  New software
   licenses and
   cloud software
   subscriptions    $     339  $     410            $     749
                    =========  =========  ==== ==== =========
  Hardware systems
   products         $     157  $     149            $     306
                    =========  =========  ==== ==== =========

AS REPORTED GROWTH
 RATES
  New software
   licenses and
   cloud software
   subscriptions           (5%)      (17%)                (12%)
  Hardware systems
   products               (15%)      (10%)                (13%)

CONSTANT CURRENCY
 GROWTH RATES (2)
  New software
   licenses and
   cloud software
   subscriptions            5%       (10%)                 (4%)
  Hardware systems
   products               (10%)       (6%)                 (8%)

                    ---------  ---------  ---- ---- ---------

TOTAL COMPANY

  New software
   licenses and
   cloud software
   subscriptions    $   1,653  $   2,380            $   4,032
                    =========  =========  ==== ==== =========
  Hardware systems
   products         $     669  $     714            $   1,383
                    =========  =========  ==== ==== =========

AS REPORTED GROWTH
 RATES
  New software
   licenses and
   cloud software
   subscriptions            5%         0%                   2%
  Hardware systems
   products               (14%)       (3%)                 (9%)

CONSTANT CURRENCY
 GROWTH RATES (2)
  New software
   licenses and
   cloud software
   subscriptions            7%         1%                   4%
  Hardware systems
   products               (13%)       (2%)                 (8%)


(1)  The sum of the quarterly financial information may vary from year-to-
     date financial information due to rounding.

(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 rates in effect on May 31, 2013 and 2012 for the fiscal 2014
     and fiscal 2013 constant currency growth rate calculations presented,
     respectively, rather than the actual exchange rates in effect during
     the respective periods.



                                                                  APPENDIX A

                             ORACLE CORPORATION
                      Q2 FISCAL 2014 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:

  • New software licenses and cloud software subscriptions, software license updates and product support and hardware systems support deferred revenues: Business combination accounting rules require us to account for the fair values of cloud software subscriptions contracts, software license updates and product support contracts and hardware systems support contracts assumed in connection with our acquisitions. Because these contracts are generally one year in duration, our GAAP revenues generally for the one year period subsequent to our acquisition of a business do not reflect the full amount of revenues on these assumed cloud software subscriptions contracts and support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment to our new software licenses and cloud software subscriptions revenues, software license updates and product support revenues and hardware systems support revenues is intended to include, and thus reflect, the full amount of such revenues. We believe the adjustment to these revenues is useful to investors as a measure of the ongoing performance of our business. We have historically experienced high renewal rates on our software license updates and product support contracts and our objective is to increase the renewal rates on acquired and new cloud software subscriptions and hardware systems support contracts; however, we cannot be certain that our customers will renew our cloud software subscriptions contracts, software license updates and product support contracts or our hardware systems support 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 our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods.

  • Acquisition related and other expenses; and restructuring expenses: We have excluded the effect of acquisition related and other expenses and the effect of restructuring expenses from our non-GAAP operating expenses and net income measures. 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 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 including adjustments after the measurement period has ended and certain other operating items, 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 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 generally diminish over time with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions.
Contact:
Ken Bond
Oracle Investor Relations
1.650.607.0349
Email Contact

Deborah Hellinger
Oracle Corporate Communications
1.212.508.7935
Email Contact

Source: Oracle Corporation

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