Oracle 8K Results of Operations and Financial Condition | ORCL 18 Dec 08

Exhibit 99.1

For Immediate Release


Contact:	Roy Lobo	Deborah Hellinger
	Oracle Investor Relations	Oracle Corporate Communications
	1.650.506.4073	1.650.506.5158
	investor_us@oracle.com	deborah.hellinger@oracle.com

ORACLE REPORTS Q2 GAAP EPS OF 25 CENTS, NON-GAAP EPS OF 34 CENTS
Strengthening US Dollar Reduces GAAP EPS by 4 Cents and Reduces Non-GAAP EPS by 3 Cents

REDWOOD SHORES, Calif., December 18, 2008 — Oracle Corporation (NASDAQ: ORCL) today announced fiscal 2009 Q2 GAAP earnings per share were $0.25, in line with GAAP earnings per share in Q2 of last year. Second quarter GAAP total revenues were up 6% to $5.6 billion, while quarterly GAAP net income was down 1% to $1.3 billion. GAAP software revenues were up 8% to $4.5 billion with new software license revenues down 3% to $1.6 billion. GAAP software license updates and product support revenues were up 14% to $2.9 billion. GAAP services revenues were down 2% to $1.1 billion. GAAP operating income was up 11% to $2.0 billion and GAAP operating margin was up 166 basis points to 35%. GAAP operating cash flow on a trailing twelve month basis was $8.1 billion, up 16%.

Without the $0.04 per share impact of the US dollar strengthening compared to foreign currencies, Oracle’s reported Q2 GAAP earnings per share would have been up 11% to $0.29, with total GAAP revenues up 12%, quarterly GAAP net income up 10%, GAAP software revenues up 14%, GAAP new software license revenues up 5%, GAAP software license updates and product support revenues up 20%, GAAP services revenues up 5%, and GAAP operating income up 20%.

Second quarter non-GAAP earnings per share were up 9% to $0.34, and non-GAAP net income was up 8% to $1.7 billion, compared to the same quarter last year. Non-GAAP total revenues were up 6% to $5.7 billion. Non-GAAP software revenues were up 8% to $4.6 billion and non-GAAP software license updates and product support revenues were up 15% to $2.9 billion.

Without the $0.03 per share impact of the US dollar strengthening compared to foreign currencies, Oracle’s reported Q2 non-GAAP earnings per share would have been up 18% to $0.37, with non-GAAP net income up 17%, non-GAAP total revenues up 13%, non-GAAP total software revenues up 15%, and non-GAAP software license updates and product support revenues up 21%.

“Our non-GAAP operating income grew 25% in constant currency to $2.6 billion in Q2, resulting in operating margins of 46%,” said Oracle Executive Vice President and CFO, Jeff Epstein. “In addition, Oracle generated $7.6 billion in free cash flow in the past twelve months, up 15% over the same period last year.”

“We signed our largest on-demand sales force automation contract this quarter,” said Oracle CEO, Larry Ellison. “This was just one of several recent wins over salesforce.com. We also sold our first database machine, launching an all new and important business for Oracle.”

Q2 Earnings Conference Call and Webcast

Oracle will hold a conference call and web broadcast today to discuss these results at 2:00 p.m. (PST) / 5:00 p.m. (EST). To access the live web broadcast of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. Please hold down your control key while pressing refresh to ensure that the web link is visible.

Supplemental Financial Tables

Supplemental financial materials regarding these results are available on our Investor Relations website at: http://www.oracle.com/investor. To receive these supplemental financial tables and other Investor Relations alerts directly, please subscribe to Oracle’s RSS feeds via the RSS link on our website.

About Oracle

Oracle Corporation is the world’s largest enterprise software company. For more information about Oracle, please visit our Web site at oracle.com or call Investor Relations at (650) 506-4073.

# # #

Trademarks

Oracle is a registered trademark of Oracle Corporation 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 and prospects 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 global economic crisis) could adversely affect our revenue growth and profitability through reductions in IT budgets and expenditures. (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 software license updates and product support. (3) We cannot assure market acceptance of new products or services or new versions of existing or acquired products or services. (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) Periodic changes to our pricing model and sales organization could temporarily disrupt operations and cause a decline or delay in sales. (6) Intense competitive forces demand rapid technological advances and frequent new product introductions, and could require us to reduce prices or cause us to lose customers. 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 athttp://www.oracle.com/investor. All information set forth in this release is current as of December 18, 2008. Oracle undertakes no duty to update any statement in light of new information or future events.

ORACLE CORPORATION

Q2 FISCAL 2009 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)


																% Increase
	Three Months Ended November 30,												% Increase			(Decrease)
				% of						% of			(Decrease)			in Constant
	2008			Revenues			2007			Revenues			in US $			Currency (1)


REVENUES
New software licenses	$	1,626			29	%	$	1,668			31	%		(3	%)		5	%
Software license updates and product support		2,850			51	%		2,491			47	%		14	%		20	%

Software Revenues		4,476			80	%		4,159			78	%		8	%		14	%

Services		1,131			20	%		1,154			22	%		(2	%)		5	%

Total Revenues		5,607			100	%		5,313			100	%		6	%		12	%


OPERATING EXPENSES
Sales and marketing		1,146			20	%		1,095			21	%		5	%		11	%
Software license updates and product support		257			5	%		246			5	%		4	%		11	%
Cost of services		939			17	%		992			19	%		(5	%)		2	%
Research and development		651			12	%		674			12	%		(3	%)		0	%
General and administrative		174			3	%		206			4	%		(16	%)		(11	%)
Amortization of intangible assets		427			8	%		290			5	%		47	%		47	%
Acquisition related and other		21			0	%		22			0	%		0	%		1	%
Restructuring		17			0	%		6			0	%		196	%		260	%

Total Operating Expenses		3,632			65	%		3,531			66	%		3	%		8	%


OPERATING INCOME		1,975			35	%		1,782			34	%		11	%		20	%
Interest expense		(157	)		(3	%)		(89	)		(2	%)		76	%		76	%
Non-operating income, net		8			0	%		122			2	%		(94	%)		(78	%)

INCOME BEFORE PROVISION FOR INCOME TAXES		1,826			32	%		1,815			34	%		1	%		11	%

Provision for income taxes		530			9	%		512			9	%		3	%		14	%

NET INCOME	$	1,296			23	%	$	1,303			25	%		(1	%)		10	%

EARNINGS PER SHARE:
Basic	$	0.25					$	0.25
Diluted	$	0.25					$	0.25
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		5,127						5,125
Diluted		5,187						5,232


(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 rate in effect on May 31, 2008, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. The United States dollar strengthened relative to most major international currencies in the three months ended November 30, 2008 compared with the corresponding prior year period, reducing 6 percentage points of revenue, 5 percentage points of operating expense and 9 percentage points of operating income growth.

ORACLE CORPORATION

Q2 FISCAL 2009 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)

($ in millions, except per share data)


	Three Months Ended November 30,																		% Increase (Decrease) in US $						% Increase (Decrease) in Constant Currency (2)
	2008						2008			2007						2007
	GAAP			Adj.			Non-GAAP			GAAP			Adj.			Non-GAAP			GAAP			Non-GAAP			GAAP			Non-GAAP


TOTAL REVENUES (3)	$	5,607		$	80		$	5,687		$	5,313		$	51		$	5,364			6	%		6	%		12	%		13	%

TOTAL SOFTWARE REVENUES (3)	$	4,476		$	80		$	4,556		$	4,159		$	51		$	4,210			8	%		8	%		14	%		15	%
New software licenses		1,626			—			1,626			1,668			—			1,668			(3	%)		(3	%)		5	%		5	%
Software license updates and product support (3)		2,850			80			2,930			2,491			51			2,542			14	%		15	%		20	%		21	%

TOTAL OPERATING EXPENSES	$	3,632		$	(554	)	$	3,078		$	3,531		$	(381	)	$	3,150			3	%		(2	%)		8	%		4	%
Stock-based compensation (4)		89			(89	)		—			63			(63	)		—			42	%		*			42	%		*
Amortization of intangible assets (5)		427			(427	)		—			290			(290	)		—			47	%		*			47	%		*
Acquisition related and other		21			(21	)		—			22			(22	)		—			0	%		*			1	%		*
Restructuring		17			(17	)		—			6			(6	)		—			196	%		*			260	%		*

OPERATING INCOME	$	1,975		$	634		$	2,609		$	1,782		$	432		$	2,214			11	%		18	%		20	%		25	%

OPERATING MARGIN %		35	%					46	%		34	%					41	%		166	bp		460	bp		234	bp		465	bp

INCOME TAX EFFECTS (6)	$	530		$	184		$	714		$	512		$	122		$	634			3	%		13	%		14	%		21	%

NET INCOME	$	1,296		$	450		$	1,746		$	1,303		$	310		$	1,613			(1	%)		8	%		10	%		17	%

DILUTED EARNINGS PER SHARE	$	0.25					$	0.34		$	0.25					$	0.31			0	%		9	%		11	%		18	%

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		5,187			—			5,187			5,232			1			5,233			(1	%)		(1	%)		(1	%)		(1	%)


(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 rate in effect on May 31, 2008, 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, 2008, approximately $71 million and $20 million in estimated revenues related to assumed support contracts will not be recognized during the remainder of fiscal 2009 and 2010, respectively, due to business combination accounting rules.

(4)		Stock-based compensation is included in the following GAAP operating expense categories:


	Three Months Ended							Three Months Ended
	November 30, 2008							November 30, 2007
	GAAP		Adj.			Non-GAAP		GAAP		Adj.			Non-GAAP

Sales and marketing	$	16	$	(16	)	$	—	$	13	$	(13	)	$	—
Software license updates and product support		3		(3	)		—		3		(3	)		—
Cost of services		3		(3	)		—		3		(3	)		—
Research and development		45		(45	)		—		25		(25	)		—
General and administrative		22		(22	)		—		19		(19	)		—

Subtotal		89		(89	)		—		63		(63	)		—

Acquisition related and other		6		(6	)		—		4		(4	)		—

Total stock-based compensation	$	95	$	(95	)	$	—	$	67	$	(67	)	$	—


(5)		Estimated future annual amortization expense related to intangible assets as of November 30, 2008 is as follows:


Remainder of Fiscal 2009	$	886
Fiscal 2010		1,645
Fiscal 2011		1,356
Fiscal 2012		1,209
Fiscal 2013		1,077
Fiscal 2014		876
Thereafter		1,052

Total	$	8,101


(6)		Income tax effects were calculated reflecting an effective GAAP and non-GAAP tax rate of 29.0% in the second quarter of fiscal 2009 and 28.2% in the second quarter of fiscal 2008.

*		Not meaningful

ORACLE CORPORATION

Q2 FISCAL 2009 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)


																% Increase
	Six Months Ended November 30,												% Increase				(Decrease)
				% of						% of			(Decrease)			in Constant
	2008			Revenues			2007			Revenues			in US $			Currency (1)


REVENUES
New software licenses	$	2,863			26	%	$	2,756			28	%		4	%		7	%
Software license updates and product support		5,785			53	%		4,873			50	%		19	%		19	%

Software Revenues		8,648			79	%		7,629			78	%		13	%		15	%

Services		2,290			21	%		2,213			22	%		3	%		6	%

Total Revenues		10,938			100	%		9,842			100	%		11	%		13	%


OPERATING EXPENSES
Sales and marketing		2,258			21	%		2,070			21	%		9	%		10	%
Software license updates and product support		539			5	%		474			5	%		14	%		15	%
Cost of services		1,965			18	%		1,922			20	%		2	%		4	%
Research and development		1,360			12	%		1,326			13	%		3	%		4	%
General and administrative		379			3	%		402			4	%		(6	%)		(4	%)
Amortization of intangible assets		839			8	%		575			6	%		46	%		46	%
Acquisition related and other		71			1	%		68			0	%		4	%		6	%
Restructuring		31			0	%		6			0	%		429	%		495	%

Total Operating Expenses		7,442			68	%		6,843			69	%		9	%		10	%


OPERATING INCOME		3,496			32	%		2,999			31	%		17	%		19	%
Interest expense		(317	)		(3	%)		(183	)		(2	%)		74	%		74	%
Non-operating income, net		90			1	%		199			2	%		(55	%)		(45	%)

INCOME BEFORE PROVISION FOR INCOME TAXES		3,269			30	%		3,015			31	%		8	%		12	%

Provision for income taxes		896			8	%		871			9	%		3	%		6	%

NET INCOME	$	2,373			22	%	$	2,144			22	%		11	%		14	%

EARNINGS PER SHARE:
Basic	$	0.46					$	0.42
Diluted	$	0.46					$	0.41
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		5,140						5,117
Diluted		5,211						5,224


(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 rate in effect on May 31, 2008, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. The United States dollar strengthened relative to most major international currencies in the six months ended November 30, 2008 compared with the corresponding prior year period, reducing 2 percentage points of revenue, 1 percentage point of operating expense and 2 percentage points of operating income growth.

ORACLE CORPORATION

Q2 FISCAL 2009 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)


																			% Increase						% Increase in
	Six Months Ended November 30,																		in US $						Constant Currency (2)
	2008						2008			2007						2007
	GAAP			Adj.			Non-GAAP			GAAP			Adj.			Non-GAAP			GAAP			Non-GAAP			GAAP			Non-GAAP


TOTAL REVENUES (3)	$	10,938		$	171		$	11,109		$	9,842		$	115		$	9,957			11	%		12	%		13	%		13	%

TOTAL SOFTWARE REVENUES (3)	$	8,648		$	171		$	8,819		$	7,629		$	115		$	7,744			13	%		14	%		15	%		16	%
New software licenses		2,863			—			2,863			2,756			—			2,756			4	%		4	%		7	%		7	%
Software license updates and product support (3)		5,785			171			5,956			4,873			115			4,988			19	%		19	%		19	%		20	%

TOTAL OPERATING EXPENSES	$	7,442		$	(1,116	)	$	6,326		$	6,843		$	(780	)	$	6,063			9	%		4	%		10	%		6	%
Stock-based compensation (4)		175			(175	)		—			131			(131	)		—			33	%		*			33	%		*
Amortization of intangible assets (5)		839			(839	)		—			575			(575	)		—			46	%		*			46	%		*
Acquisition related and other		71			(71	)		—			68			(68	)		—			4	%		*			6	%		*
Restructuring		31			(31	)		—			6			(6	)		—			429	%		*			495	%		*

OPERATING INCOME	$	3,496		$	1,287		$	4,783		$	2,999		$	895		$	3,894			17	%		23	%		19	%		25	%

OPERATING MARGIN %		32	%					43	%		31	%					39	%		149	bp		394	bp		167	bp		392	bp

INCOME TAX EFFECTS (6)	$	896		$	353		$	1,249		$	871		$	259		$	1,130			3	%		10	%		6	%		13	%

NET INCOME	$	2,373		$	934		$	3,307		$	2,144		$	636		$	2,780			11	%		19	%		14	%		21	%

DILUTED EARNINGS PER SHARE	$	0.46					$	0.63		$	0.41					$	0.53			11	%		19	%		14	%		22	%

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		5,211			—			5,211			5,224			3			5,227			0	%		0	%		0	%		0	%


(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 rate in effect on May 31, 2008, 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, 2008, approximately $71 million and $20 million in estimated revenues related to assumed support contracts will not be recognized during the remainder of fiscal 2009 and 2010, respectively, due to business combination accounting rules.

(4)		Stock-based compensation is included in the following GAAP operating expense categories:


	Six Months Ended							Six Months Ended
	November 30, 2008							November 30, 2007
	GAAP		Adj.			Non-GAAP		GAAP		Adj.			Non-GAAP

Sales and marketing	$	35	$	(35	)	$	—	$	26	$	(26	)	$	—
Software license updates and product support		6		(6	)		—		7		(7	)		—
Cost of services		6		(6	)		—		8		(8	)		—
Research and development		82		(82	)		—		52		(52	)		—
General and administrative		46		(46	)		—		38		(38	)		—

Subtotal		175		(175	)		—		131		(131	)		—

Acquisition related and other		11		(11	)		—		37		(37	)		—

Total stock-based compensation	$	186	$	(186	)	$	—	$	168	$	(168	)	$	—


(5)		Estimated future annual amortization expense related to intangible assets as of November 30, 2008 is as follows:


Remainder of Fiscal 2009	$	886
Fiscal 2010		1,645
Fiscal 2011		1,356
Fiscal 2012		1,209
Fiscal 2013		1,077
Fiscal 2014		876
Thereafter		1,052

Total	$	8,101


(6)		Income tax effects were calculated reflecting an effective GAAP and non-GAAP tax rate of 27.4% in the first half of fiscal 2009 and 28.9% in the first half of fiscal 2008.

*		Not meaningful

ORACLE CORPORATION

Q2 FISCAL 2009 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)


	November 30,		May 31,
	2008		2008

ASSETS

Current Assets:
Cash and cash equivalents	$	7,353	$	8,262
Marketable securities		3,293		2,781
Trade receivables, net		3,253		5,127
Deferred tax assets		634		853
Prepaid expenses and other current assets		605		1,080

Total Current Assets		15,138		18,103

Non-Current Assets:
Property, net		1,907		1,688
Intangible assets, net		8,101		8,395
Goodwill		18,587		17,991
Other assets		1,069		1,091

Total Non-Current Assets		29,664		29,165


TOTAL ASSETS	$	44,802	$	47,268


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Notes payable, current and other current borrowings	$	1,002	$	1,001
Accounts payable		346		383
Accrued compensation and related benefits		1,062		1,770
Deferred revenues		3,881		4,492
Other current liabilities		1,672		2,383

Total Current Liabilities		7,963		10,029

Non-Current Liabilities:
Notes payable and other non-current borrowings		10,236		10,235
Income taxes payable		1,680		1,566
Deferred tax liabilities		1,062		1,218
Other non-current liabilities		1,040		1,195

Total Non-Current Liabilities		14,018		14,214

Stockholders’ Equity		22,821		23,025


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	44,802	$	47,268

ORACLE CORPORATION

Q2 FISCAL 2009 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)


	Six Months Ended November 30,
	2008			2007

Cash Flows From Operating Activities:
Net income	$	2,373		$	2,144
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		134			137
Amortization of intangible assets		839			575
Deferred income taxes		(151	)		(72	)
Minority interests in income		35			29
Stock-based compensation		186			168
Tax benefit on the exercise of stock options		121			262
Excess tax benefits on the exercise of stock options		(79	)		(187	)
In-process research and development		6			7
Other gains, net		(2	)		(2	)
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net		1,642			937
Decrease in prepaid expenses and other assets		388			27
Decrease in accounts payable and other liabilities		(1,022	)		(551	)
Decrease in income taxes payable		(273	)		(241	)
(Decrease) increase in deferred revenues		(207	)		70

Net cash provided by operating activities		3,990			3,303


Cash Flows From Investing Activities:
Purchases of marketable securities and other investments		(5,105	)		(1,953	)
Proceeds from maturities and sales of marketable securities and other investments		4,362			1,273
Acquisitions, net of cash acquired		(1,065	)		(651	)
Capital expenditures		(399	)		(156	)

Net cash used for investing activities		(2,207	)		(1,487	)


Cash Flows From Financing Activities:
Payments for repurchases of common stock		(2,344	)		(1,023	)
Proceeds from issuances of common stock		371			682
Repayments of borrowings		(4	)		(1,362	)
Excess tax benefits on the exercise of stock options		79			187
Distributions to minority interests		(30	)		(28	)

Net cash used for financing activities		(1,928	)		(1,544	)


Effect of exchange rate changes on cash and cash equivalents		(764	)		243


Net (decrease) increase in cash and cash equivalents		(909	)		515


Cash and cash equivalents at beginning of period		8,262			6,218

Cash and cash equivalents at end of period	$	7,353		$	6,733

ORACLE CORPORATION

Q2 FISCAL 2009 FINANCIAL RESULTS
FREE CASH FLOW — TRAILING 4-QUARTERS (1)

($ in millions)


	Fiscal 2008												Fiscal 2009
	Q1			Q2			Q3			Q4			Q1			Q2			Q3	Q4


GAAP Operating Cash Flow	$	6,598		$	6,957		$	7,322		$	7,402		$	7,941		$	8,089

Capital Expenditures (2)		(357	)		(369	)		(331	)		(243	)		(479	)		(486	)


Free Cash Flow	$	6,241		$	6,588		$	6,991		$	7,159		$	7,462		$	7,603


% Growth over prior year		40	%		50	%		48	%		38	%		20	%		15	%



GAAP Net Income	$	4,444		$	4,781		$	5,088		$	5,521		$	5,758		$	5,750

Free Cash Flow as a % of Net Income		140	%		138	%		137	%		130	%		130	%		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)		Represents capital expenditures as reported in cash flows from investing activities on our cash flow statements presented in accordance with GAAP.

ORACLE CORPORATION

Q2 FISCAL 2009 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)

($ in millions)


	Fiscal 2008															Fiscal 2009
	Q1			Q2			Q3			Q4			TOTAL			Q1			Q2			Q3	Q4	TOTAL


REVENUES
New software licenses	$	1,087		$	1,668		$	1,616		$	3,144		$	7,515		$	1,237		$	1,626				$	2,863
Software license updates and product support		2,383			2,491			2,624			2,830			10,328			2,935			2,850					5,785

Software Revenues		3,470			4,159			4,240			5,974			17,843			4,172			4,476					8,648

Consulting		801			877			843			957			3,477			865			842					1,708
On Demand		158			167			174			194			694			195			189					384
Education		100			110			92			114			416			99			100					198

Services Revenues		1,059			1,154			1,109			1,265			4,587			1,159			1,131					2,290


Total Revenues	$	4,529		$	5,313		$	5,349		$	7,239		$	22,430		$	5,331		$	5,607				$	10,938


AS REPORTED REVENUE GROWTH RATES
New software licenses		35	%		38	%		16	%		27	%		28	%		14	%		(3	%)				4	%
Software license updates and product support		23	%		24	%		25	%		25	%		24	%		23	%		14	%				19	%
Software Revenues		26	%		29	%		21	%		26	%		26	%		20	%		8	%				13	%

Consulting		25	%		23	%		21	%		17	%		21	%		8	%		(4	%)				2	%
On Demand		27	%		20	%		23	%		29	%		25	%		23	%		13	%				18	%
Education		24	%		17	%		16	%		9	%		16	%		(2	%)		(9	%)				(6	%)
Services Revenues		25	%		22	%		21	%		18	%		21	%		9	%		(2	%)				3	%

Total Revenues		26	%		28	%		21	%		24	%		25	%		18	%		6	%				11	%

CONSTANT CURRENCY GROWTH RATES
New software licenses		32	%		31	%		9	%		20	%		21	%		10	%		5	%				7	%
Software license updates and product support		19	%		18	%		18	%		18	%		18	%		18	%		20	%				19	%
Software Revenues		23	%		23	%		15	%		19	%		19	%		16	%		14	%				15	%

Consulting		20	%		15	%		14	%		11	%		15	%		5	%		4	%				5	%
On Demand		23	%		15	%		17	%		23	%		19	%		19	%		19	%				19	%
Education		20	%		10	%		9	%		2	%		10	%		(6	%)		(3	%)				(4	%)
Services Revenues		21	%		15	%		14	%		12	%		15	%		6	%		5	%				6	%

Total Revenues		22	%		21	%		15	%		18	%		19	%		14	%		12	%				13	%



GEOGRAPHIC REVENUES

REVENUES
Americas	$	2,375		$	2,674		$	2,707		$	3,574		$	11,330		$	2,687		$	2,904				$	5,591
Europe, Middle East & Africa		1,530			1,865			1,871			2,679			7,945			1,830			1,881					3,711
Asia Pacific		624			774			771			986			3,155			814			822					1,636

Total Revenues	$	4,529		$	5,313		$	5,349		$	7,239		$	22,430		$	5,331		$	5,607				$	10,938




HEADCOUNT (2)

GEOGRAPHIC AREA
Americas		30,455			30,654			30,624			32,608						32,993			33,526
Europe, Middle East & Africa		15,985			16,140			16,383			17,110						17,096			17,184
Asia Pacific		31,212			32,855			33,212			34,515						35,099			35,947

Total Company		77,652			79,649			80,219			84,233						85,188			86,657


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

(2)		Headcount has increased primarily due to our acquisitions.

ORACLE CORPORATION

Q2 FISCAL 2009 FINANCIAL RESULTS
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)

($ in millions)


	Fiscal 2008															Fiscal 2009
	Q1			Q2			Q3			Q4			TOTAL			Q1			Q2			Q3	Q4	TOTAL


APPLICATIONS REVENUES

New software licenses	$	376		$	553		$	451		$	989		$	2,369		$	331		$	469				$	799
Software license updates and product support		886			929			974			1,044			3,833			1,043			1,015					2,059

Software Revenues	$	1,262		$	1,482		$	1,425		$	2,033		$	6,202		$	1,374		$	1,484				$	2,858


AS REPORTED GROWTH RATES
New software licenses		65	%		63	%		7	%		36	%		38	%		(12	%)		(15	%)				(14	%)
Software license updates and product support		26	%		28	%		27	%		25	%		26	%		18	%		9	%				13	%
Software Revenues		36	%		39	%		20	%		30	%		31	%		9	%		0	%				4	%

CONSTANT CURRENCY GROWTH RATES
New software licenses		61	%		56	%		2	%		31	%		33	%		(14	%)		(9	%)				(11	%)
Software license updates and product support		22	%		21	%		20	%		19	%		20	%		13	%		15	%				14	%
Software Revenues		32	%		32	%		14	%		24	%		25	%		5	%		6	%				6	%



DATABASE & MIDDLEWARE REVENUES

New software licenses	$	711		$	1,115		$	1,165		$	2,155		$	5,146		$	906		$	1,157				$	2,064
Software license updates and product support		1,497			1,562			1,650			1,786			6,495			1,892			1,835					3,726

Software Revenues	$	2,208		$	2,677		$	2,815		$	3,941		$	11,641		$	2,798		$	2,992				$	5,790


AS REPORTED GROWTH RATES
New software licenses		23	%		29	%		20	%		23	%		24	%		27	%		4	%				13	%
Software license updates and product support		21	%		22	%		23	%		24	%		23	%		26	%		17	%				22	%
Software Revenues		22	%		25	%		22	%		23	%		23	%		27	%		12	%				19	%

CONSTANT CURRENCY GROWTH RATES
New software licenses		20	%		22	%		13	%		15	%		17	%		23	%		12	%				16	%
Software license updates and product support		17	%		16	%		17	%		17	%		17	%		22	%		24	%				23	%
Software Revenues		18	%		18	%		15	%		16	%		17	%		22	%		19	%				20	%


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

ORACLE CORPORATION

Q2 FISCAL 2009 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE REVENUE ANALYSIS (1)

($ in millions)


	Fiscal 2008															Fiscal 2009
	Q1			Q2			Q3			Q4			TOTAL			Q1			Q2			Q3	Q4	TOTAL


AMERICAS

Database & Middleware	$	300		$	446		$	484		$	928		$	2,157		$	354		$	471				$	825
Applications		199			306			252			552			1,310			182			280					461

New Software License Revenues	$	499		$	752		$	736		$	1,480		$	3,467		$	536		$	751				$	1,286


AS REPORTED GROWTH RATES
Database & Middleware		27	%		33	%		24	%		15	%		22	%		18	%		5	%				11	%
Applications		58	%		57	%		1	%		33	%		33	%		(9	%)		(9	%)				(9	%)
New Software License Revenues		38	%		42	%		15	%		21	%		26	%		7	%		0	%				3	%

CONSTANT CURRENCY GROWTH RATES
Database & Middleware		26	%		31	%		21	%		13	%		20	%		17	%		10	%				13	%
Applications		57	%		54	%		(1	%)		32	%		31	%		(10	%)		(6	%)				(7	%)
New Software License Revenues		37	%		39	%		13	%		19	%		24	%		6	%		3	%				4	%



EUROPE / MIDDLE EAST / AFRICA

Database & Middleware	$	255		$	424		$	448		$	884		$	2,011		$	326		$	431				$	758
Applications		123			174			141			317			755			94			126					220

New Software License Revenues	$	378		$	598		$	589		$	1,201		$	2,766		$	420		$	557				$	978


AS REPORTED GROWTH RATES
Database & Middleware		34	%		23	%		23	%		41	%		32	%		28	%		2	%				12	%
Applications		77	%		72	%		14	%		41	%		46	%		(23	%)		(28	%)				(26	%)
New Software License Revenues		45	%		34	%		21	%		41	%		35	%		11	%		(7	%)				0	%

CONSTANT CURRENCY GROWTH RATES
Database & Middleware		26	%		11	%		11	%		26	%		19	%		20	%		16	%				18	%
Applications		69	%		58	%		6	%		31	%		35	%		(26	%)		(16	%)				(20	%)
New Software License Revenues		37	%		21	%		10	%		27	%		23	%		5	%		7	%				6	%



ASIA PACIFIC

Database & Middleware	$	156		$	245		$	233		$	343		$	978		$	226		$	255				$	481
Applications		54			73			58			120			304			55			63					118

New Software License Revenues	$	210		$	318		$	291		$	463		$	1,282		$	281		$	318				$	599


AS REPORTED GROWTH RATES
Database & Middleware		4	%		32	%		9	%		6	%		12	%		45	%		4	%				20	%
Applications		67	%		66	%		18	%		37	%		43	%		1	%		(13	%)				(7	%)
New Software License Revenues		15	%		38	%		10	%		12	%		18	%		34	%		0	%				13	%

CONSTANT CURRENCY GROWTH RATES
Database & Middleware		1	%		25	%		(1	%)		(3	%)		4	%		38	%		8	%				20	%
Applications		60	%		57	%		5	%		27	%		33	%		(1	%)		(2	%)				(2	%)
New Software License Revenues		11	%		31	%		0	%		3	%		10	%		28	%		5	%				15	%



TOTAL COMPANY

Database & Middleware	$	711		$	1,115		$	1,165		$	2,155		$	5,146		$	906		$	1,157				$	2,064
Applications		376			553			451			989			2,369			331			469					799

New Software License Revenues	$	1,087		$	1,668		$	1,616		$	3,144		$	7,515		$	1,237		$	1,626				$	2,863


AS REPORTED GROWTH RATES
Database & Middleware		23	%		29	%		20	%		23	%		24	%		27	%		4	%				13	%
Applications		65	%		63	%		7	%		36	%		38	%		(12	%)		(15	%)				(14	%)
New Software License Revenues		35	%		38	%		16	%		27	%		28	%		14	%		(3	%)				4	%

CONSTANT CURRENCY GROWTH RATES
Database & Middleware		20	%		22	%		13	%		15	%		17	%		23	%		12	%				16	%
Applications		61	%		56	%		2	%		31	%		33	%		(14	%)		(9	%)				(11	%)
New Software License Revenues		32	%		31	%		9	%		20	%		21	%		10	%		5	%				7	%


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

APPENDIX A

ORACLE CORPORATION
Q2 FISCAL 2009 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:

•		Support deferred revenue: Business combination accounting rules require us to account for the fair value of support contracts assumed in connection with our acquisitions. Because these are typically one-year contracts, our GAAP revenues for the one year period subsequent to our acquisition of a business do not reflect the full amount of software license updates and product support revenues on assumed support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment is intended to reflect the full amount of such revenues. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business because we have historically experienced high renewal rates on support contracts, although we cannot be certain that customers will renew these 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 revenues earned during the periods presented and will contribute to future period revenues as well. Amortization of intangible assets will recur in future periods.

•		Acquisition related and other expenses, and restructuring expenses: 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 in-process research and development expenses, personnel related costs for transitional employees, stock-based compensation expenses (in addition to the stock-based compensation expenses described above), integration related professional services, certain business combination adjustments after the purchase price allocation period has ended, and certain other operating expenses, 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 Oracle 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 are not recurring with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions.

Oracle (ORCL) 8-KResults of Operations and Financial Condition