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ORACLE CORPORATION Q3 FISCAL 2013 FINANCIAL RESULTS CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ($ in millions, except per share data) Three Months Ended ------------------------------------ % Increase % (Decrease) Increase in (Decrease) Constant February % of February % of in US Currency 28, 2013 Revenues 29, 2012 Revenues $ (1) -------- -------- -------- -------- -------- --------REVENUES New software licenses and cloud software subscriptions $ 2,332 26% $ 2,374 26% (2%) 0% Software license updates and product support 4,340 48% 4,051 45% 7% 8% -------- -------- -------- -------- Software Revenues 6,672 74% 6,425 71% 4% 5% -------- -------- -------- -------- Hardware systems products 671 8% 869 10% (23%) (22%) Hardware systems support 570 6% 604 6% (6%) (5%) -------- -------- -------- -------- Hardware Systems Revenues 1,241 14% 1,473 16% (16%) (15%) -------- -------- -------- -------- Services Revenues 1,045 12% 1,141 13% (8%) (7%) -------- -------- -------- -------- Total Revenues 8,958 100% 9,039 100% (1%) 0% -------- -------- -------- --------OPERATING EXPENSES Sales and marketing 1,802 20% 1,700 19% 6% 7% Software license updates and product support 306 3% 305 3% 1% 2% Hardware systems products 337 4% 424 5% (21%) (20%) Hardware systems support 219 2% 257 3% (15%) (14%) Services 854 10% 922 10% (7%) (6%) Research and development 1,186 13% 1,145 13% 4% 4% General and administrative 260 3% 261 3% 0% 1% Amortization of intangible assets 586 7% 606 7% (3%) (3%) Acquisition related and other 32 0% 38 0% (16%) (17%) Restructuring 42 1% 64 0% (35%) (36%) -------- -------- -------- -------- Total Operating Expenses 5,624 63% 5,722 63% (2%) (1%) -------- -------- -------- --------OPERATING INCOME 3,334 37% 3,317 37% 1% 2% Interest expense (205) (2%) (190) (2%) 8% 8% Non-operating (expense) income, net (39) (1%) 21 0% 284% 298% -------- -------- -------- --------INCOME BEFORE PROVISION FOR INCOME TAXES 3,090 34% 3,148 35% (2%) 0% -------- -------- -------- -------- Provision for income taxes 586 6% 650 7% (10%) (8%) -------- -------- -------- --------NET INCOME $ 2,504 28% $ 2,498 28% 0% 2% ======== ======== ======== ========EARNINGS PER SHARE: Basic $ 0.53 $ 0.50 Diluted $ 0.52 $ 0.49WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 4,735 5,007 Diluted 4,812 5,080(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, 2012, 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 February 28, 2013 compared with the corresponding prior year period decreased our revenues by 1 percentage point, operating expenses by 1 percentage point and operating income by 1 percentage point. ORACLE CORPORATION Q3 FISCAL 2013 FINANCIAL RESULTS RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) ($ in millions, except per share data) Three Months Ended -------------------------------------------------------- February February February February 28, 2013 28, 2013 29, 2012 29, 2012 GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP --------- ----- --------- --------- ----- ---------TOTAL REVENUES (3) (4) (5) $ 8,958 $ 12 $ 8,970 $ 9,039 $ 23 $ 9,062TOTAL SOFTWARE REVENUES (3) (4) $ 6,672 $ 10 $ 6,682 $ 6,425 $ 17 $ 6,442 New software licenses and cloud software subscriptions (3) 2,332 6 2,338 2,374 - 2,374 Software license updates and product support (4) 4,340 4 4,344 4,051 17 4,068TOTAL HARDWARE SYSTEMS REVENUES (5) $ 1,241 $ 2 $ 1,243 $ 1,473 $ 6 $ 1,479 Hardware systems products 671 - 671 869 - 869 Hardware systems support (5) 570 2 572 604 6 610TOTAL OPERATING EXPENSES $ 5,624 $(832) $ 4,792 $ 5,722 $(865) $ 4,857 Stock-based compensation (6) 172 (172) - 157 (157) - Amortization of intangible assets (7) 586 (586) - 606 (606) - Acquisition related and other 32 (32) - 38 (38) - Restructuring 42 (42) - 64 (64) -OPERATING INCOME $ 3,334 $ 844 $ 4,178 $ 3,317 $ 888 $ 4,205OPERATING MARGIN % 37% 47% 37% 46%INCOME TAX EFFECTS (8) $ 586 $ 240 $ 826 $ 650 $ 258 $ 908NET INCOME $ 2,504 $ 604 $ 3,108 $ 2,498 $ 630 $ 3,128DILUTED EARNINGS PER SHARE $ 0.52 $ 0.65 $ 0.49 $ 0.62DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 4,812 - 4,812 5,080 - 5,080 % Increase (Decrease) % Increase (Decrease) in Constant Currency in US $ (2) ----------------------- ----------------------- GAAP Non-GAAP GAAP Non-GAAP ---------- ---------- ---------- ----------TOTAL REVENUES (3) (4) (5) (1%) (1%) 0% 0%TOTAL SOFTWARE REVENUES (3) (4) 4% 4% 5% 5% New software licenses and cloud software subscriptions (3) (2%) (2%) 0% 0% Software license updates and product support (4) 7% 7% 8% 8%TOTAL HARDWARE SYSTEMS REVENUES (5) (16%) (16%) (15%) (15%) Hardware systems products (23%) (23%) (22%) (22%) Hardware systems support (5) (6%) (6%) (5%) (5%)TOTAL OPERATING EXPENSES (2%) (1%) (1%) 0% Stock-based compensation (6) 9% * 9% * Amortization of intangible assets (7) (3%) * (3%) * Acquisition related and other (16%) * (17%) * Restructuring (35%) * (36%) *OPERATING INCOME 1% (1%) 2% 0%OPERATING MARGIN % 52 bp. 17 bp. 65 bp. 17 bp.INCOME TAX EFFECTS (8) (10%) (9%) (8%) (8%)NET INCOME 0% (1%) 2% 1%DILUTED EARNINGS PER SHARE 6% 5% 8% 6%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, 2012, 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 February 28, 2013, approximately $7 million and $6 million in estimated revenues related to assumed cloud software subscriptions contracts will not be recognized for the remainder of fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules.(4) As of February 28, 2013, approximately $3 million and $2 million in estimated revenues related to assumed software support contracts will not be recognized for the remainder of fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules.(5) As of February 28, 2013, approximately $2 million in estimated revenues related to hardware systems support contracts will not be recognized for each of the remainder of fiscal 2013 and fiscal 2014 due to business combination accounting rules.(6) Stock-based compensation was included in the following GAAP operating expense categories: Three Months Ended Three Months Ended February 28, 2013 February 29, 2012 -------------------------- -------------------------- GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP -------- ------- -------- -------- ------- -------- Sales and marketing $ 32 $ (32) $ - $ 30 $ (30) $ - Software license updates and product support 5 (5) - 5 (5) - Hardware systems products 1 (1) - - - - Hardware systems support 1 (1) - 1 (1) - Services 7 (7) - 6 (6) - Research and development 86 (86) - 74 (74) - General and administrative 40 (40) - 41 (41) - -------- ------- -------- -------- ------- -------- Subtotal 172 (172) - 157 (157) - -------- ------- -------- -------- ------- -------- Acquisition related and other 8 (8) - 18 (18) - -------- ------- -------- -------- ------- -------- Total stock- based compensation $ 180 $ (180) $ - $ 175 $ (175) $ - ======== ======= ======== ======== ======= ========(7) Estimated future annual amortization expense related to intangible assets as of February 28, 2013 was as follows: Remainder of Fiscal 2013 $ 582 Fiscal 2014 2,043 Fiscal 2015 1,582 Fiscal 2016 1,020 Fiscal 2017 450 Fiscal 2018 324 Thereafter 661 -------- Total intangible assets, net $ 6,662 ========(8) Income tax effects were calculated reflecting an effective GAAP tax rate of 19.0% and 20.7% in the third quarter of fiscal 2013 and 2012, respectively, and an effective non-GAAP tax rate of 21.0% and 22.5% in the third quarter of fiscal 2013 and 2012, respectively. The difference between our GAAP and non-GAAP tax rates in the third quarter of fiscal 2013 was primarily due to the net tax effects of acquisition related items, including the tax effect of amortization of intangible assets, and the disproportionate rate impact of discrete items for the quarter. The difference between our GAAP and non-GAAP tax rates in the third quarter of fiscal 2012 was primarily due to income tax effects related to acquired tax exposures, the differences in jurisdictional tax rates and related tax benefits attributable to our restructuring expenses, and the disproportionate rate impact of discrete items for the quarter.* Not meaningful ORACLE CORPORATION Q3 FISCAL 2013 YEAR TO DATE FINANCIAL RESULTS CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ($ in millions, except per share data) Nine Months Ended ------------------------------------ % Increase % (Decrease) Increase in (Decrease) Constant February % of February % of in US Currency 28, 2013 Revenues 29, 2012 Revenues $ (1) -------- -------- -------- -------- -------- --------REVENUES New software licenses and cloud software subscriptions $ 6,295 24% $ 5,921 23% 6% 9% Software license updates and product support 12,740 49% 12,058 46% 6% 8% -------- -------- -------- -------- Software Revenues 19,035 73% 17,979 69% 6% 8% -------- -------- -------- -------- Hardware systems products 2,185 8% 2,851 11% (23%) (22%) Hardware systems support 1,730 7% 1,874 7% (8%) (5%) -------- -------- -------- -------- Hardware Systems Revenues 3,915 15% 4,725 18% (17%) (15%) -------- -------- -------- -------- Services Revenues 3,283 12% 3,501 13% (6%) (3%) -------- -------- -------- -------- Total Revenues 26,233 100% 26,205 100% 0% 2% -------- -------- -------- --------OPERATING EXPENSES Sales and marketing 5,120 19% 5,027 19% 2% 4% Software license updates and product support 860 3% 899 3% (4%) (2%) Hardware systems products 1,087 4% 1,367 5% (20%) (19%) Hardware systems support 670 3% 798 3% (16%) (14%) Services 2,668 10% 2,788 11% (4%) (1%) Research and development 3,586 14% 3,297 13% 9% 10% General and administrative 798 3% 848 3% (6%) (4%) Amortization of intangible assets 1,789 7% 1,790 7% 0% 0% Acquisition related and other (2) (347) (1%) 63 0% (652%) (660%) Restructuring 318 1% 217 1% 46% 52% -------- -------- -------- -------- Total Operating Expenses 16,549 63% 17,094 65% (3%) (1%) -------- -------- -------- --------OPERATING INCOME 9,684 37% 9,111 35% 6% 10% Interest expense (588) (2%) (574) (2%) 2% 3% Non-operating (expense) income, net (24) 0% 42 0% 158% 166% -------- -------- -------- --------INCOME BEFORE PROVISION FOR INCOME TAXES 9,072 35% 8,579 33% 6% 9% -------- -------- -------- -------- Provision for income taxes 1,953 8% 2,050 8% (5%) (1%) -------- -------- -------- --------NET INCOME $ 7,119 27% $ 6,529 25% 9% 13% ======== ======== ======== ========EARNINGS PER SHARE: Basic $ 1.48 $ 1.30 Diluted $ 1.46 $ 1.28WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 4,798 5,037 Diluted 4,873 5,118(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, 2012, 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 nine months ended February 28, 2013 compared with the corresponding prior year period decreased our revenues by 2 percentage points, operating expenses by 2 percentage points and operating income by 4 percentage points.(2) Acquisition related and other expenses for the nine months ended February 28, 2013 included a benefit of $306 million related to certain litigation and a net benefit of $118 million due to an acquisition related item. ORACLE CORPORATION Q3 FISCAL 2013 YEAR TO DATE FINANCIAL RESULTS RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) ($ in millions, except per share data) Nine Months Ended -------------------------------------------------------- February February February February 28, 2013 28, 2013 29, 2012 29, 2012 GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP -------- ------- -------- -------- ------- --------TOTAL REVENUES (3) (4) (5) $ 26,233 $ 59 $ 26,292 $ 26,205 $ 66 $ 26,271TOTAL SOFTWARE REVENUES (3) (4) $ 19,035 $ 49 $ 19,084 $ 17,979 $ 40 $ 18,019 New software licenses and cloud software subscriptions (3) 6,295 37 6,332 5,921 - 5,921 Software license updates and product support (4) 12,740 12 12,752 12,058 40 12,098TOTAL HARDWARE SYSTEMS REVENUES (5) $ 3,915 $ 10 $ 3,925 $ 4,725 $ 26 $ 4,751 Hardware systems products 2,185 - 2,185 2,851 - 2,851 Hardware systems support (5) 1,730 10 1,740 1,874 26 1,900TOTAL OPERATING EXPENSES $ 16,549 $(2,296) $ 14,253 $ 17,094 $(2,523) $ 14,571 Stock-based compensation (6) 536 (536) - 453 (453) - Amortization of intangible assets (7) 1,789 (1,789) - 1,790 (1,790) - Acquisition related and other (347) 347 - 63 (63) - Restructuring 318 (318) - 217 (217) -OPERATING INCOME $ 9,684 $ 2,355 $ 12,039 $ 9,111 $ 2,589 $ 11,700OPERATING MARGIN % 37% 46% 35% 45%INCOME TAX EFFECTS (8) $ 1,953 $ 630 $ 2,583 $ 2,050 $ 740 $ 2,790NET INCOME $ 7,119 $ 1,725 $ 8,844 $ 6,529 $ 1,849 $ 8,378DILUTED EARNINGS PER SHARE $ 1.46 $ 1.81 $ 1.28 $ 1.64DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 4,873 - 4,873 5,118 - 5,118 % Increase (Decrease) % Increase (Decrease) in Constant Currency in US $ (2) ---------------------- ---------------------- GAAP Non-GAAP GAAP Non-GAAP ---------- ---------- ---------- ----------TOTAL REVENUES (3) (4) (5) 0% 0% 2% 2%TOTAL SOFTWARE REVENUES (3) (4) 6% 6% 8% 8% New software licenses and cloud software subscriptions (3) 6% 7% 9% 9% Software license updates and product support (4) 6% 5% 8% 8%TOTAL HARDWARE SYSTEMS REVENUES (5) (17%) (17%) (15%) (16%) Hardware systems products (23%) (23%) (22%) (22%) Hardware systems support (5) (8%) (8%) (5%) (6%)TOTAL OPERATING EXPENSES (3%) (2%) (1%) 0% Stock-based compensation (6) 18% * 18% * Amortization of intangible assets (7) 0% * 0% * Acquisition related and other (652%) * (660%) * Restructuring 46% * 52% *OPERATING INCOME 6% 3% 10% 5%OPERATING MARGIN % 215 bp. 125 bp. 238 bp. 127 bp.INCOME TAX EFFECTS (8) (5%) (7%) (1%) (5%)NET INCOME 9% 6% 13% 8%DILUTED EARNINGS PER SHARE 15% 11% 18% 14%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, 2012, 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 February 28, 2013, approximately $7 million and $6 million in estimated revenues related to assumed cloud software subscriptions contracts will not be recognized for the remainder of fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules.(4) As of February 28, 2013, approximately $3 million and $2 million in estimated revenues related to assumed software support contracts will not be recognized for the remainder of fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules.(5) As of February 28, 2013, approximately $2 million in estimated revenues related to hardware systems support contracts will not be recognized for each of the remainder of fiscal 2013 and fiscal 2014 due to business combination accounting rules.(6) Stock-based compensation was included in the following GAAP operating expense categories: Nine Months Ended Nine Months Ended February 28, 2013 February 29, 2012 -------------------------- -------------------------- GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP -------- ------- -------- -------- ------- -------- Sales and marketing $ 112 $ (112) $ - $ 86 $ (86) $ - Software license updates and product support 15 (15) - 13 (13) - Hardware systems products 2 (2) - 1 (1) - Hardware systems support 3 (3) - 4 (4) - Services 24 (24) - 16 (16) - Research and development 258 (258) - 213 (213) - General and administrative 122 (122) - 120 (120) - -------- ------- -------- -------- ------- -------- Subtotal 536 (536) - 453 (453) - -------- ------- -------- -------- ------- -------- Acquisition related and other 30 (30) - 21 (21) - -------- ------- -------- -------- ------- -------- Total stock- based compensation $ 566 $ (566) $ - $ 474 $ (474) $ - ======== ======= ======== ======== ======= ========(7) Estimated future annual amortization expense related to intangible assets as of February 28, 2013 was as follows: Remainder of Fiscal 2013 $ 582 Fiscal 2014 2,043 Fiscal 2015 1,582 Fiscal 2016 1,020 Fiscal 2017 450 Fiscal 2018 324 Thereafter 661 -------- Total intangible assets, net $ 6,662 ========(8) Income tax effects were calculated reflecting an effective GAAP tax rate of 21.5% and 23.9% in the first nine months of fiscal 2013 and 2012, respectively, and an effective non-GAAP tax rate of 22.6% and 25.0% in the first nine months of fiscal 2013 and 2012, respectively. The differences between our GAAP and non-GAAP tax rates in the first nine months of fiscal 2013 were 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 nine months of fiscal 2012 was primarily due to income tax effects related to acquired tax exposures, the differences in jurisdictional tax rates and related tax benefits attributable to our restructuring expenses, and the disproportionate rate impact of discrete items for the first nine months of fiscal 2012.* Not meaningful ORACLE CORPORATION Q3 FISCAL 2013 FINANCIAL RESULTS CONDENSED CONSOLIDATED BALANCE SHEETS ($ in millions) February 28, May 31, 2013 2012 ------------- -------------ASSETSCurrent Assets: Cash and cash equivalents $ 16,101 $ 14,955 Marketable securities 17,306 15,721 Trade receivables, net 4,169 6,377 Inventories 211 158 Deferred tax assets 829 877 Prepaid expenses and other current assets 2,070 1,935 ------------- ------------- Total Current Assets 40,686 40,023Non-Current Assets: Property, plant and equipment, net 3,034 3,021 Intangible assets, net 6,662 7,899 Goodwill 26,102 25,119 Deferred tax assets 651 595 Other assets 2,315 1,670 ------------- ------------- Total Non-Current Assets 38,764 38,304 ------------- -------------TOTAL ASSETS $ 79,450 $ 78,327 ============= =============LIABILITIES AND EQUITYCurrent Liabilities: Notes payable, current and other current borrowings $ 1,250 $ 2,950 Accounts payable 361 438 Accrued compensation and related benefits 1,557 2,002 Deferred revenues 6,278 7,035 Other current liabilities 2,470 2,963 ------------- ------------- Total Current Liabilities 11,916 15,388Non-Current Liabilities: Notes payable and other non-current borrowings 18,502 13,524 Income taxes payable 3,775 3,759 Other non-current liabilities 1,467 1,569 ------------- ------------- Total Non-Current Liabilities 23,744 18,852Equity 43,790 44,087 ------------- -------------TOTAL LIABILITIES AND EQUITY $ 79,450 $ 78,327 ============= ============= ORACLE CORPORATION Q3 FISCAL 2013 FINANCIAL RESULTS CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in millions) Nine Months Ended -------------------------- February 28, February 29, 2013 2012 ------------ ------------Cash Flows From Operating Activities: Net income $ 7,119 $ 6,529 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 400 350 Amortization of intangible assets 1,789 1,790 Deferred income taxes 108 (200) Stock-based compensation 566 474 Tax benefits on the exercise of stock options and vesting of restricted stock- based awards 372 123 Excess tax benefits on the exercise of stock options and vesting of restricted stock- based awards (220) (71) Other, net 120 67 Changes in operating assets and liabilities, net of effects from acquisitions: Decrease in trade receivables, net 2,269 2,028 (Increase) decrease in inventories (48) 139 (Increase) decrease in prepaid expenses and other assets (241) 87 Decrease in accounts payable and other liabilities (912) (1,353) (Decrease) increase in income taxes payable (853) 259 Decrease in deferred revenues (809) (536) ------------ ------------ Net cash provided by operating activities 9,660 9,686 ------------ ------------Cash Flows From Investing Activities: Purchases of marketable securities and other investments (24,027) (29,745) Proceeds from maturities and sales of marketable securities and other investments 22,359 26,472 Acquisitions, net of cash acquired (1,592) (2,833) Capital expenditures (467) (431) ------------ ------------ Net cash used for investing activities (3,727) (6,537) ------------ ------------Cash Flows From Financing Activities: Payments for repurchases of common stock (8,204) (3,457) Proceeds from issuances of common stock 1,300 513 Payments of dividends to stockholders (1,433) (909) Proceeds from borrowings, net of issuance costs 4,974 - Repayments of borrowings (1,700) (1,405) Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards 220 71 Distributions to noncontrolling interests (31) (163) ------------ ------------ Net cash used for financing activities (4,874) (5,350) ------------ ------------Effect of exchange rate changes on cash and cash equivalents 87 (181) ------------ ------------Net increase (decrease) in cash and cash equivalents 1,146 (2,382) ------------ ------------Cash and cash equivalents at beginning of period 14,955 16,163 ------------ ------------Cash and cash equivalents at end of period $ 16,101 $ 13,781 ============ ============ ORACLE CORPORATION Q3 FISCAL 2013 FINANCIAL RESULTS FREE CASH FLOW - TRAILING 4-QUARTERS (1) ($ in millions) Fiscal 2012 Fiscal 2013 ------------------------------- ---------------------------- Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ------- ------- ------- ------- ------- ------- ------- ----GAAP Operating Cash Flow $12,818 $13,129 $13,463 $13,743 $13,993 $13,533 $13,717Capital Expenditures (2) (492) (500) (509) (648) (627) (710) (684) ------- ------- ------- ------- ------- ------- ------- ----Free Cash Flow $12,326 $12,629 $12,954 $13,095 $13,366 $12,823 $13,033 ======= ======= ======= ======= ======= ======= ======= ====% Growth over prior year 46% 45% 36% 22% 8% 2% 1% ------- ------- ------- ------- ------- ------- ------- ----GAAP Net Income $ 9,035 $ 9,356 $ 9,738 $ 9,981 $10,175 $10,564 $10,571Free Cash Flow as a % of Net Income 136% 135% 133% 131% 131% 121% 123% ------- ------- ------- ------- ------- ------- ------- ----(1) To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures of cash flows on a trailing 4-quarter basis to analyze cash flow generated from operations. We believe free cash flow is also useful as one of the bases for comparing our performance with our competitors. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity.(2) Derived from capital expenditures as reported in cash flows from investing activities as per our consolidated statements of cash flows presented in accordance with GAAP. ORACLE CORPORATION Q3 FISCAL 2013 FINANCIAL RESULTS SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1) ($in millions) Fiscal 2012 ------------------------------------------------ Q1 Q2 Q3 Q4 TOTAL -------- -------- -------- -------- --------REVENUESNew software licenses and cloud software subscriptions $ 1,498 $ 2,048 $ 2,374 $ 3,985 $ 9,906Software license updates and product support 4,022 3,986 4,051 4,152 16,210 -------- -------- -------- -------- -------- Software Revenues 5,520 6,034 6,425 8,137 26,116Hardware systems products 1,029 953 869 977 3,827Hardware systems support 645 625 604 600 2,475 -------- -------- -------- -------- -------- Hardware Systems Revenues 1,674 1,578 1,473 1,577 6,302 Services Revenues 1,180 1,180 1,141 1,202 4,703 -------- -------- -------- -------- -------- Total Revenues $ 8,374 $ 8,792 $ 9,039 $ 10,916 $ 37,121 ======== ======== ======== ======== ========AS REPORTED REVENUE GROWTH RATESNew software licenses and cloud software subscriptions 17% 2% 7% 7% 7%Software license updates and product support 17% 9% 8% 5% 10% Software Revenues 17% 7% 8% 6% 9%Hardware systems products (5%) (14%) (16%) (16%) (13%)Hardware systems support 4% (2%) (4%) (11%) (3%) Hardware Systems Revenues (1%) (10%) (11%) (14%) (9%) Services Revenues 10% 0% 0% (4%) 1% Total Revenues 12% 2% 3% 1% 4%CONSTANT CURRENCY GROWTH RATES (2)New software licenses and cloud software subscriptions 11% 3% 8% 11% 8%Software license updates and product support 10% 9% 9% 8% 9% Software Revenues 11% 7% 9% 10% 9%Hardware systems products (11%) (14%) (16%) (13%) (14%)Hardware systems support (3%) (3%) (3%) (7%) (4%) Hardware Systems Revenues (8%) (10%) (11%) (11%) (10%) Services Revenues 5% 0% 1% 0% 1% Total Revenues 5% 2% 4% 5% 4% -------- -------- -------- -------- --------GEOGRAPHIC REVENUESREVENUES Americas $ 4,226 $ 4,532 $ 4,707 $ 5,771 $ 19,236 Europe, Middle East & Africa 2,704 2,756 2,787 3,314 11,561 Asia Pacific 1,444 1,504 1,545 1,831 6,324 -------- -------- -------- -------- -------- Total Revenues $ 8,374 $ 8,792 $ 9,039 $ 10,916 $ 37,121 ======== ======== ======== ======== ========HEADCOUNTGEOGRAPHIC AREA Americas 46,338 46,672 47,884 48,901 Europe, Middle East & Africa 22,210 22,725 22,852 22,957 Asia Pacific 40,840 41,901 42,908 43,308 -------- -------- -------- -------- -------- Total Company 109,388 111,298 113,644 115,166 ======== ======== ======== ======== ======== Fiscal 2013 ------------------------------------------- Q1 Q2 Q3 Q4 TOTAL -------- -------- -------- ---- --------REVENUESNew software licenses and cloud software subscriptions $ 1,574 $ 2,389 $ 2,332 $ 6,295Software license updates and product support 4,140 4,260 4,340 12,740 -------- -------- -------- ---- -------- Software Revenues 5,714 6,649 6,672 19,035Hardware systems products 779 734 671 2,185Hardware systems support 574 587 570 1,730 -------- -------- -------- ---- -------- Hardware Systems Revenues 1,353 1,321 1,241 3,915 Services Revenues 1,114 1,124 1,045 3,283 -------- -------- -------- ---- -------- Total Revenues $ 8,181 $ 9,094 $ 8,958 $ 26,233 ======== ======== ======== ==== ========AS REPORTED REVENUE GROWTH RATESNew software licenses and cloud software subscriptions 5% 17% (2%) 6%Software license updates and product support 3% 7% 7% 6% Software Revenues 4% 10% 4% 6%Hardware systems products (24%) (23%) (23%) (23%)Hardware systems support (11%) (6%) (6%) (8%) Hardware Systems Revenues (19%) (16%) (16%) (17%) Services Revenues (6%) (5%) (8%) (6%) Total Revenues (2%) 3% (1%) 0%CONSTANT CURRENCY GROWTH RATES (2)New software licenses and cloud software subscriptions 10% 18% 0% 9%Software license updates and product support 8% 8% 8% 8% Software Revenues 9% 11% 5% 8%Hardware systems products (21%) (23%) (22%) (22%)Hardware systems support (6%) (5%) (5%) (5%) Hardware Systems Revenues (15%) (16%) (15%) (15%) Services Revenues 0% (3%) (7%) (3%) Total Revenues 3% 5% 0% 2% -------- -------- -------- ---- --------GEOGRAPHIC REVENUESREVENUES Americas $ 4,324 $ 4,787 $ 4,698 $ 13,808 Europe, Middle East & Africa 2,383 2,701 2,745 7,829 Asia Pacific 1,474 1,606 1,515 4,596 -------- -------- -------- ---- -------- Total Revenues $ 8,181 $ 9,094 $ 8,958 $ 26,233 ======== ======== ======== ==== ========HEADCOUNTGEOGRAPHIC AREA Americas 49,145 49,584 50,402 Europe, Middle East & Africa 22,584 22,594 22,592 Asia Pacific 44,170 45,051 45,663 -------- -------- -------- ---- -------- Total Company 115,899 117,229 118,657 ======== ======== ======== ==== ========(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, 2012 and 2011 for the fiscal 2013 and fiscal 2012 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. ORACLE CORPORATION Q3 FISCAL 2013 FINANCIAL RESULTS SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1) ($in millions) Fiscal 2012 -------------------------------------- Q1 Q2 Q3 Q4 TOTAL ------ ------ ------ ------ ------AMERICAS New software licenses and cloud software subscriptions $ 727 $1,027 $1,228 $2,126 $5,107 ====== ====== ====== ====== ====== Hardware systems products $ 475 $ 496 $ 410 $ 498 $1,880 ====== ====== ====== ====== ======AS REPORTED GROWTH RATES New software licenses and cloud software subscriptions 10% 0% 11% 14% 10% Hardware systems products (12%) (17%) (19%) (17%) (16%)CONSTANT CURRENCY GROWTH RATES (2) New software licenses and cloud software subscriptions 9% 1% 11% 16% 11% Hardware systems products (13%) (17%) (18%) (16%) (16%)EUROPE / MIDDLE EAST / AFRICA New software licenses and cloud software subscriptions $ 440 $ 584 $ 693 $1,166 $2,884 ====== ====== ====== ====== ====== Hardware systems products $ 344 $ 272 $ 265 $ 260 $1,140 ====== ====== ====== ====== ======AS REPORTED GROWTH RATES New software licenses and cloud software subscriptions 25% 2% (1%) (5%) 1% Hardware systems products 2% (17%) (20%) (24%) (15%)CONSTANT CURRENCY GROWTH RATES (2) New software licenses and cloud software subscriptions 15% 3% 1% 2% 4% Hardware systems products (11%) (17%) (18%) (18%) (16%)ASIA PACIFIC New software licenses and cloud software subscriptions $ 331 $ 437 $ 453 $ 693 $1,915 ====== ====== ====== ====== ====== Hardware systems products $ 210 $ 185 $ 194 $ 219 $ 807 ====== ====== ====== ====== ======AS REPORTED GROWTH RATES New software licenses and cloud software subscriptions 20% 11% 13% 8% 12% Hardware systems products 6% 2% (3%) 1% 1%CONSTANT CURRENCY GROWTH RATES (2) New software licenses and cloud software subscriptions 9% 8% 11% 13% 11% Hardware systems products (5%) (1%) (6%) 1% (3%)TOTAL COMPANY New software licenses and cloud software subscriptions $1,498 $2,048 $2,374 $3,985 $9,906 ====== ====== ====== ====== ====== Hardware systems products $1,029 $ 953 $ 869 $ 977 $3,827 ====== ====== ====== ====== ======AS REPORTED GROWTH RATES New software licenses and cloud software subscriptions 17% 2% 7% 7% 7% Hardware systems products (5%) (14%) (16%) (16%) (13%)CONSTANT CURRENCY GROWTH RATES (2) New software licenses and cloud software subscriptions 11% 3% 8% 11% 8% Hardware systems products (11%) (14%) (16%) (13%) (14%) Fiscal 2013 ----------------------------------- Q1 Q2 Q3 Q4 TOTAL ------ ------ ------ ---- ------AMERICAS New software licenses and cloud software subscriptions $ 814 $1,253 $1,205 $3,271 ====== ====== ====== ==== ====== Hardware systems products $ 380 $ 370 $ 307 $1,056 ====== ====== ====== ==== ======AS REPORTED GROWTH RATES New software licenses and cloud software subscriptions 12% 22% (2%) 10% Hardware systems products (20%) (25%) (25%) (24%)CONSTANT CURRENCY GROWTH RATES (2) New software licenses and cloud software subscriptions 14% 22% (1%) 11% Hardware systems products (19%) (25%) (25%) (23%)EUROPE / MIDDLE EAST / AFRICA New software licenses and cloud software subscriptions $ 403 $ 641 $ 690 $1,734 ====== ====== ====== ==== ====== Hardware systems products $ 214 $ 198 $ 201 $ 615 ====== ====== ====== ==== ======AS REPORTED GROWTH RATES New software licenses and cloud software subscriptions (8%) 10% 0% 1% Hardware systems products (38%) (27%) (24%) (30%)CONSTANT CURRENCY GROWTH RATES (2) New software licenses and cloud software subscriptions 1% 12% 1% 5% Hardware systems products (30%) (25%) (24%) (27%)ASIA PACIFIC New software licenses and cloud software subscriptions $ 357 $ 495 $ 437 $1,290 ====== ====== ====== ==== ====== Hardware systems products $ 185 $ 166 $ 163 $ 514 ====== ====== ====== ==== ======AS REPORTED GROWTH RATES New software licenses and cloud software subscriptions 8% 13% (3%) 6% Hardware systems products (12%) (10%) (16%) (13%)CONSTANT CURRENCY GROWTH RATES (2) New software licenses and cloud software subscriptions 12% 13% 1% 8% Hardware systems products (10%) (12%) (14%) (12%)TOTAL COMPANY New software licenses and cloud software subscriptions $1,574 $2,389 $2,332 $6,295 ====== ====== ====== ==== ====== Hardware systems products $ 779 $ 734 $ 671 $2,185 ====== ====== ====== ==== ======AS REPORTED GROWTH RATES New software licenses and cloud software subscriptions 5% 17% (2%) 6% Hardware systems products (24%) (23%) (23%) (23%)CONSTANT CURRENCY GROWTH RATES (2) New software licenses and cloud software subscriptions 10% 18% 0% 9% Hardware systems products (21%) (23%) (22%) (22%)(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, 2012 and 2011 for the fiscal 2013 and fiscal 2012 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. APPENDIX A ORACLE CORPORATION Q3 FISCAL 2013 FINANCIAL RESULTS EXPLANATION OF NON-GAAP MEASURES
