Item 1. Financial Statements (Unaudited)

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Item 1. Financial Statements (Unaudited)

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ORACLE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

As of February 28, 2022 and May 31, 2021

(Unaudited)

(in millions, except per share data)February 28, 2022May 31, 2021
ASSETS
Current assets:
Cash and cash equivalents$22,682$30,098
Marketable securities70716,456
Trade receivables, net of allowances for doubtful accounts of $367 and $373 as of February 28, 2022 and May 31, 2021, respectively4,5885,409
Prepaid expenses and other current assets3,6983,604
Total current assets31,67555,567
Non-current assets:
Property, plant and equipment, net8,6097,049
Intangible assets, net1,6882,430
Goodwill, net43,83343,935
Deferred tax assets13,10913,636
Other non-current assets9,7308,490
Total non-current assets76,96975,540
Total assets$108,644$131,107
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Notes payable, current$6,248$8,250
Accounts payable1,124745
Accrued compensation and related benefits1,6262,017
Deferred revenues7,8718,775
Other current liabilities3,9644,377
Total current liabilities20,83324,164
Non-current liabilities:
Notes payable and other borrowings, non-current72,16575,995
Income taxes payable12,16812,345
Deferred tax liabilities6,4627,864
Other non-current liabilities5,2274,787
Total non-current liabilities96,022100,991
Commitments and contingencies
Oracle Corporation stockholders’ (deficit) equity:
Preferred stock, $0.01 par value—authorized: 1.0 shares; outstanding: none——
Common stock, $0.01 par value and additional paid in capital—authorized: 11,000 shares; outstanding: 2,668 shares and 2,814 shares as of February 28, 2022 and May 31, 2021, respectively26,12926,533
Accumulated deficit(33,147)(20,120)
Accumulated other comprehensive loss(1,678)(1,175)
Total Oracle Corporation stockholders’ (deficit) equity(8,696)5,238
Noncontrolling interests485714
Total stockholders’ (deficit) equity(8,211)5,952
Total liabilities and stockholders’ (deficit) equity$108,644$131,107

See notes to condensed consolidated financial statements.

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Nine Months Ended February 28, 2022 and 2021

(Unaudited)

Three Months Ended February 28,Nine Months Ended February 28,
(in millions, except per share data)2022202120222021
Revenues:
Cloud services and license support$7,637$7,252$22,562$21,311
Cloud license and on-premise license1,2891,2763,3393,254
Hardware7988202,3282,478
Services7897372,3712,209
Total revenues10,51310,08530,60029,252
Operating expenses:
Cloud services and license support(1)1,3051,0643,7783,139
Hardware(1)244230718719
Services6696211,9841,875
Sales and marketing(1)2,0041,9155,8115,605
Research and development1,8161,6215,2544,812
General and administrative335330953949
Amortization of intangible assets2793478821,037
Acquisition related and other20134,707107
Restructuring196689337
Total operating expenses6,6916,20724,17618,580
Operating income3,8223,8786,42410,672
Interest expense(667)(585)(2,051)(1,799)
Non-operating expenses, net(315)(17)(348)(30)
Income before income taxes2,8403,2764,0258,843
(Provision for) benefit from income taxes(521)1,745(497)871
Net income$2,319$5,021$3,528$9,714
Earnings per share:
Basic$0.87$1.72$1.30$3.26
Diluted$0.84$1.68$1.26$3.19
Weighted average common shares outstanding:
Basic2,6702,9132,7112,977
Diluted2,7542,9942,8003,049
(1)Exclusive of amortization of intangible assets, which is shown separately.

See notes to condensed consolidated financial statements.

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three and Nine Months Ended February 28, 2022 and 2021

(Unaudited)

Three Months Ended February 28,Nine Months Ended February 28,
(in millions)2022202120222021
Net income$2,319$5,021$3,528$9,714
Other comprehensive (loss) income, net of tax:
Net foreign currency translation (losses) gains(63)132(508)504
Net unrealized gains on defined benefit plans110566
Net unrealized losses on marketable securities—(4)—(1)
Net unrealized losses on cash flow hedges—(7)—(8)
Total other comprehensive (loss) income, net(62)131(503)561
Comprehensive income$2,257$5,152$3,025$10,275

See notes to condensed consolidated financial statements.

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

For the Three and Nine Months Ended February 28, 2022 and 2021

(Unaudited)

Three Months Ended February 28,Nine Months Ended February 28,
(in millions, except per share data)2022202120222021
Common stock and additional paid in capital
Balance, beginning of period$25,591$26,298$26,533$26,486
Common stock issued52143357915
Stock-based compensation6744791,9001,395
Repurchases of common stock(65)(567)(1,648)(1,922)
Other, net(123)(92)(1,013)(613)
Balance, end of period$26,129$26,261$26,129$26,261
Accumulated deficit
Balance, beginning of period$(34,076)$(17,095)$(20,120)$(12,696)
Repurchases of common stock(535)(3,433)(13,952)(11,078)
Cash dividends declared(855)(699)(2,603)(2,146)
Net income2,3195,0213,5289,714
Balance, end of period$(33,147)$(16,206)$(33,147)$(16,206)
Other stockholders’ (deficit) equity, net
Balance, beginning of period$(1,173)$(587)$(461)$(1,073)
Other comprehensive (loss) income, net(62)131(503)561
Other, net4238(229)94
Balance, end of period$(1,193)$(418)$(1,193)$(418)
Total stockholders’ (deficit) equity$(8,211)$9,637$(8,211)$9,637
Cash dividends declared per common share$0.32$0.24$0.96$0.72

See notes to condensed consolidated financial statements.

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended February 28, 2022 and 2021

(Unaudited)

Nine Months Ended February 28,
(in millions)20222021
Cash flows from operating activities:
Net income$3,528$9,714
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation1,4091,127
Amortization of intangible assets8821,037
Deferred income taxes(983)(2,475)
Stock-based compensation1,9001,395
Other, net82227
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net6521,089
Decrease in prepaid expenses and other assets71609
Decrease in accounts payable and other liabilities(683)(247)
Decrease in income taxes payable(661)(1,181)
Decrease in deferred revenues(643)(250)
Net cash provided by operating activities5,55411,045
Cash flows from investing activities:
Purchases of marketable securities and other investments(10,134)(26,775)
Proceeds from sales and maturities of marketable securities and other investments25,73519,035
Acquisitions, net of cash acquired(132)(29)
Capital expenditures(3,088)(1,418)
Net cash provided by (used for) investing activities12,381(9,187)
Cash flows from financing activities:
Payments for repurchases of common stock(15,654)(12,958)
Proceeds from issuances of common stock357915
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards(1,011)(597)
Payments of dividends to stockholders(2,603)(2,146)
Repayments of borrowings(5,750)(2,631)
Other, net(439)241
Net cash used for financing activities(25,100)(17,176)
Effect of exchange rate changes on cash and cash equivalents(251)400
Net decrease in cash and cash equivalents(7,416)(14,918)
Cash and cash equivalents at beginning of period30,09837,239
Cash and cash equivalents at end of period$22,682$22,321
Non-cash financing activities:
Change in unsettled repurchases of common stock$(54)$42

See notes to condensed consolidated financial statements.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

February 28, 2022

(Unaudited)

1.BASIS OF PRESENTATION, RECENT ACCOUNTING PRONOUNCEMENTS AND OTHER

Basis of Presentation

We have prepared the condensed consolidated financial statements included herein pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures herein are adequate to ensure the information presented is not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2021.

We believe that all necessary adjustments, which consisted only of normal recurring items, have been included in the accompanying financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for our fiscal year ending May 31, 2022.

The comparability of our condensed consolidated financial statements as of and for the nine months ended February 28, 2022 was impacted by $4.7 billion of certain litigation related charges that are more fully described in Note 11 below. The comparability of our condensed consolidated financial statements for the three and nine months ended February 28, 2021 was impacted by a $2.3 billion net income tax benefit related to the partial realignment of our legal entity structure that resulted in the intra-group transfer of certain intellectual property rights (refer to Notes 1 and 14 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended May 31, 2021 for additional information).

During the first nine months of fiscal 2022, we adopted Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes; and ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, neither of which had a material impact to our condensed consolidated financial statements as of and for the nine months ended February 28, 2022. There have been no changes to our significant accounting policies as disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2021 that had a significant impact on our condensed consolidated financial statements or notes thereto as of and for the nine months ended February 28, 2022.

Cash, Cash Equivalents and Restricted Cash

Restricted cash that was included within cash and cash equivalents as presented within our condensed consolidated balance sheets as of February 28, 2022 and May 31, 2021 and our condensed consolidated statements of cash flows for the nine months ended February 28, 2022 and 2021 was nominal.

Remaining Performance Obligations from Contracts with Customers

Trade receivables, net of allowance for doubtful accounts, and deferred revenues are reported net of related uncollected deferred revenues in our condensed consolidated balance sheets as of February 28, 2022 and May 31, 2021. The revenues recognized during the nine months ended February 28, 2022 and 2021, respectively, that were included in the opening deferred revenues balances as of May 31, 2021 and 2020, respectively, were approximately $8.1 billion and $7.4 billion, respectively. Revenues recognized from performance obligations satisfied in prior periods and impairment losses recognized on our receivables were immaterial in each of the three and nine months ended February 28, 2022 and 2021, respectively.

Remaining performance obligations, as defined in Note 1 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2021, were $38.5 billion as of February 28,

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

2022, approximately 59% of which we expect to recognize as revenues over the next twelve months, 30% over the subsequent month 13 to month 36, and the remainder thereafter.

Sales of Financing Receivables

We offer certain of our customers the option to acquire certain of our cloud and license, hardware and services offerings through separate long-term payment contracts. We generally sell these contracts that we have financed for our customers on a non-recourse basis to financial institutions within 90 days of the contracts’ dates of execution. We record the transfers of amounts due from customers to financial institutions as sales of financing receivables because we are considered to have surrendered control of these financing receivables. Financing receivables sold to financial institutions were $352 million and $1.4 billion for the three and nine months ended February 28, 2022, respectively, and $338 million and $1.3 billion for the three and nine months ended February 28, 2021, respectively.

Non-Marketable Investments

Our non-marketable debt investments and equity securities and related instruments totaled $1.3 billion and $971 million as of February 28, 2022 and May 31, 2021, respectively, and are included either in other current assets or in other non-current assets in the accompanying consolidated balance sheets and are subject to periodic impairment reviews. Certain of these instruments are adjusted for observable price changes from orderly transactions. The substantial majority of the non-marketable debt investments and equity securities and related instruments held as of these dates were with a related party entity for which we follow the equity method of accounting. We are also a counterparty to certain options to acquire additional equity interests in that entity at various times through December 2023 and we could obtain control of that entity should such options be exercised.

Acquisition Related and Other Expenses

Acquisition related and other expenses consist of personnel related costs for transitional and certain other employees, certain business combination adjustments, including adjustments after the measurement period has ended, and certain other operating items, net. For the nine months ended February 28, 2022, acquisition related and other expenses included certain litigation related charges that we generally do not expect to recur as further described in Note 11 below.

Three Months Ended February 28,Nine Months Ended February 28,
(in millions)2022202120222021
Transitional and other employee related costs$2$1$6$4
Business combination adjustments, net5283
Other, net13104,693100
Total acquisition related and other expenses$20$13$4,707$107

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

Non-Operating Expenses, net

Non-operating expenses, net consists primarily of interest income, net foreign currency exchange losses, the noncontrolling interests in the net profits of our majority-owned subsidiaries (primarily Oracle Financial Services Software Limited and Oracle Corporation Japan) and net other income and expenses, including net realized gains and losses related to all of our investments, net unrealized gains and losses related to the small portion of our investment portfolio related to our deferred compensation plan, net unrealized gains and losses related to equity securities, losses attributable to equity method investments, and non-service net periodic pension income and losses.

Three Months Ended February 28,Nine Months Ended February 28,
(in millions)2022202120222021
Interest income$16$23$56$80
Foreign currency losses, net(29)(18)(109)(84)
Noncontrolling interests in income(42)(46)(131)(127)
Other, net(260)24(164)101
Total non-operating expenses, net$(315)$(17)$(348)$(30)

Recent Accounting Pronouncements

Financial Instruments: In March 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and also issued subsequent amendments to the initial guidance (collectively, Topic 848). Topic 848 provides optional guidance for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. We will adopt Topic 848 when our relevant contracts are modified upon transition to alternative reference rates and expect this to occur through December 31, 2022. We do not expect our adoption of Topic 848 to have a material impact on our consolidated financial statements.

2.ACQUISITIONS

Proposed Acquisition of Cerner Corporation

On December 20, 2021, we entered into an Agreement and Plan of Merger (Merger Agreement) with Cerner Corporation (Cerner), a provider of digital information systems used within hospitals and health systems that are designed to enable medical professionals to deliver better healthcare to individual patients and communities.

On January 19, 2022, pursuant to the Merger Agreement, we commenced a tender offer to purchase all of the issued and outstanding shares of common stock of Cerner at a purchase price of $95.00 per share, net to the seller in cash, without interest thereon, based upon the terms and subject to the conditions set forth in the Offer to Purchase (Offer) dated January 19, 2022, and the related Letter of Transmittal. The tender offer period is scheduled to expire on March 16, 2022; however, the parties anticipate extending the tender offer period to allow additional time for the satisfaction of the remaining conditions to the tender offer. The consummation of the Offer is subject to the valid tender of a majority of the aggregate number of issued and outstanding Cerner shares. On February 23, 2022, the waiting period expired under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, but the consummation of the Offer remains conditioned on: (i) receipt of certain regulatory approvals and, if applicable, approval under certain other foreign antitrust laws; and (ii) other customary conditions. After the consummation of the Offer and the satisfaction of certain conditions, a wholly-owned subsidiary of Oracle will merge with and into Cerner. In addition, the unvested equity awards to acquire Cerner common stock that were outstanding immediately prior to the consummation of the merger will generally be assumed by Oracle and

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

converted into equity awards denominated in shares of Oracle common stock based on formulas contained in the Merger Agreement. Vested equity awards outstanding immediately prior to the consummation of the merger generally will be cancelled in exchange for the right to receive an amount in cash based on a formula contained in the Merger Agreement. The preliminary estimated total purchase price for Cerner is approximately $28.5 billion.

Other Fiscal 2022 and 2021 Acquisitions

During the first nine months of fiscal 2022 and full year fiscal 2021, we acquired certain other companies and purchased certain technology and development assets primarily to expand our products and services offerings. These acquisitions were not significant individually or in the aggregate to our condensed consolidated financial statements.

3.FAIR VALUE MEASUREMENTS

We perform fair value measurements in accordance with FASB Accounting Standards Codification (ASC) 820, Fair Value Measurement. ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at their fair values, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions and risk of nonperformance.

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value:

•Level 1: quoted prices in active markets for identical assets or liabilities;
•Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or
•Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Our assets and liabilities measured at fair value on a recurring basis consisted of the following (Level 1 and Level 2 inputs are defined above):

February 28, 2022May 31, 2021
Fair Value Measurements Using Input TypesFair Value Measurements Using Input Types
(in millions)Level 1Level 2TotalLevel 1Level 2Total
Assets:
Money market funds$12,877$—$12,877$12,263$—$12,263
Corporate debt securities and other2754407151,2508,2209,470
Commercial paper debt securities————11,71211,712
Derivative financial instruments————7373
Total assets$13,152$440$13,592$13,513$20,005$33,518
Liabilities:
Derivative financial instruments$—$33$33$—$—$—

We classify our marketable debt securities as available-for-sale securities at the time of purchase and reevaluate such classification as of each balance sheet date. Our marketable securities investments consist of money market funds, Tier 1 commercial paper debt securities, corporate debt securities and certain other securities. Marketable securities as presented per our condensed consolidated balance sheets included debt securities with original maturities at the time of purchase greater than three months and the remainder of the debt securities were included in cash and cash equivalents. As of February 28, 2022 and May 31, 2021, substantially all of our marketable debt securities investments mature within one year. Our valuation techniques used to measure the fair values of our instruments that were classified as Level 1 in the table above were derived from quoted market prices and active markets for these instruments that exist. Our valuation techniques used to measure the fair values of Level 2 instruments listed in the table above were derived from the following: non-binding market consensus prices that were corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data including reference rate yield curves, among others.

Based on the trading prices of the $78.4 billion and $84.2 billion of senior notes and the related fair value hedges that we had outstanding as of February 28, 2022 and May 31, 2021, respectively, the estimated fair values of the senior notes and the related fair value hedges using Level 2 inputs at February 28, 2022 and May 31, 2021 were $76.6 billion and $89.6 billion, respectively.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

4.INTANGIBLE ASSETS AND GOODWILL

The changes in intangible assets for fiscal 2022 and the net book value of intangible assets as of February 28, 2022 and May 31, 2021 were as follows:

Intangible Assets, GrossAccumulated AmortizationIntangible Assets, NetWeighted Average Useful Life(2)
(Dollars in millions)May 31, 2021Additions & Adjustments, net(1)February 28, 2022May 31, 2021ExpenseFebruary 28, 2022May 31, 2021February 28, 2022
Developed technology$4,237$145$4,382$(3,621)$(364)$(3,985)$616$3973
Cloud services and license support agreements and related relationships5,497(5)5,492(3,834)(455)(4,289)1,6631,203N.A.
Other1,269—1,269(1,118)(63)(1,181)15188N.A.
Total intangible assets, net$11,003$140$11,143$(8,573)$(882)$(9,455)$2,430$1,688
(1)Amounts also included any changes in intangible asset balances for the periods presented that resulted from foreign currency translations.
(2)Represents weighted-average useful lives (in years) of intangible assets acquired during fiscal 2022.

As of February 28, 2022, estimated future amortization expenses related to intangible assets were as follows (in millions):

Remainder of fiscal 2022$267
Fiscal 2023744
Fiscal 2024501
Fiscal 2025142
Fiscal 202624
Fiscal 20276
Thereafter4
Total intangible assets, net$1,688

The changes in the carrying amounts of goodwill, net, which is generally not deductible for tax purposes, for our operating segments for the nine months ended February 28, 2022 were as follows:

(in millions)Cloud and LicenseHardwareServicesTotal Goodwill, net
Balances as of May 31, 2021$39,786$2,367$1,782$43,935
Goodwill adjustments, net(1)165—(267)(102)
Balances as of February 28, 2022$39,951$2,367$1,515$43,833
(1)Amounts include any changes in goodwill balances for the period presented that resulted from foreign currency translations and the realignment of an operating segment component.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

5.RESTRUCTURING ACTIVITIES

Fiscal 2022 Oracle Restructuring Plan

During fiscal 2022, our management approved, committed to and initiated plans to restructure and further improve efficiencies in our operations due to our acquisitions and certain other operational activities (2022 Restructuring Plan). The total estimated restructuring costs associated with the 2022 Restructuring Plan are up to $353 million and will be recorded to the restructuring expense line item within our condensed consolidated statements of operations as they are incurred. We recorded $117 million of restructuring expenses in connection with the 2022 Restructuring Plan in the first nine months of fiscal 2022 and we expect to incur the majority of the estimated remaining $236 million through the end of fiscal 2023. Any changes to the estimates or timing of executing the 2022 Restructuring Plan will be reflected in our future results of operations.

Summary of All Plans

Accrued May 31, 2021(2)Nine Months Ended February 28, 2022Accrued February 28, 2022(2)Total Costs Accrued to DateTotal Expected Program Costs
(in millions)Initial Costs(3)Adj. to Cost(4)Cash PaymentsOthers(5)
2022 Restructuring Plan(1)
Cloud and license$—$69$(1)$(37)$(1)$30$68$247
Hardware—71(4)—4826
Services—11—(5)—61137
Other(6)—31(1)(19)1123043
Total 2022 Restructuring Plan$—$118$(1)$(65)$—$52$117$353
Total other restructuring plans(7)$225$—$(28)$(94)$(11)$92
Total restructuring plans$225$118$(29)$(159)$(11)$144
(1)Restructuring costs recorded for individual line items primarily related to employee severance costs.
(2)As of February 28, 2022 and May 31, 2021, substantially all restructuring liabilities have been recorded in other current liabilities within our condensed consolidated balance sheets.
(3)Costs recorded for the respective restructuring plans during the current period presented.
(4)All plan adjustments were changes in estimates whereby increases and decreases in costs were generally recorded to operating expenses in the period of adjustments.
(5)Represents foreign currency translation and certain other adjustments.
(6)Represents employee related severance costs for functions that are not included within our operating segments and certain other restructuring costs.
(7)Other restructuring plans presented in the table above included condensed information for other Oracle based plans and other plans associated with certain of our acquisitions whereby we continued to make cash outlays to settle obligations under these plans during the period presented but for which the periodic impact to our condensed consolidated statements of operations was not significant.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

6.DEFERRED REVENUES

Deferred revenues consisted of the following:

(in millions)February 28, 2022May 31, 2021
Cloud services and license support$6,911$7,728
Hardware505618
Services398399
Cloud license and on-premise license5730
Deferred revenues, current7,8718,775
Deferred revenues, non-current (in other non-current liabilities)743679
Total deferred revenues$8,614$9,454

Deferred cloud services and license support revenues and deferred hardware revenues substantially represent customer payments made in advance for cloud or support contracts that are typically billed in advance with corresponding revenues generally being recognized ratably or based upon customer usage over the respective contractual periods. Deferred services revenues include prepayments for our services business and revenues for these services are generally recognized as the services are performed. Deferred cloud license and on-premise license revenues typically resulted from customer payments that related to undelivered products and services or specified enhancements.

7**.**STOCKHOLDERS’ (DEFICIT) EQUITY

Common Stock Repurchases

Our Board of Directors has approved a program for us to repurchase shares of our common stock. On December 9, 2021, we announced that our Board of Directors approved an expansion of our stock repurchase program by an additional $10.0 billion. As of February 28, 2022, approximately $10.0 billion remained available for stock repurchases pursuant to our stock repurchase program. We repurchased 177.9 million shares for $15.6 billion during the nine months ended February 28, 2022 (including 0.2 million shares for $13 million that were repurchased but not settled) and 222.2 million shares for $13.0 billion during the nine months ended February 28, 2021 under the stock repurchase program.

Our stock repurchase authorization does not have an expiration date and the pace of our repurchase activity will depend on factors such as our working capital needs, our cash requirements for acquisitions and dividend payments, our debt repayment obligations or repurchases of our debt, our stock price, and economic and market conditions. Our stock repurchases may be effected from time to time through open market purchases or pursuant to a Rule 10b5-1 plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

Dividend****s on Common Stock

In March 2022, our Board of Directors declared a quarterly cash dividend of $0.32 per share of our outstanding common stock. The dividend is payable on April 21, 2022 to stockholders of record as of the close of business on April 8, 2022. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of our Board of Directors.

Fiscal 2022 Stock‑Based Awards Activity and Compensation Expense

During the first nine months of fiscal 2022, we issued 58 million restricted stock-based units (RSUs), the significant majority of which were issued as a part of our annual stock-based award process and are subject to service-based vesting restrictions. These fiscal 2022 stock-based award issuances were partially offset by stock-based award forfeitures and cancellations of 7 million shares during the first nine months of fiscal 2022.

The RSUs that were granted during the nine months ended February 28, 2022 have similar vesting restrictions and contractual lives and were valued using methodologies of a similar nature as those described in Note 13 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2021.

Further, during the first nine months of fiscal 2022, the Compensation Committee of our Board of Directors approved an amendment to the terms of the performance-based stock options (PSOs) granted on July 20, 2017 to our Chief Executive Officer and Chief Technology Officer. The amendment extends the term of the performance period for each of the six tranches of the PSOs that require the attainment of both a performance metric and a market capitalization metric by three additional fiscal years from May 31, 2022 to May 31, 2025. A seventh PSO tranche that was based upon a market-based metric was achieved and accordingly the tranche vested in the first nine months of fiscal 2022 without any amendment. If any of the remaining operational and market capitalization performance goals are achieved before May 31, 2025 additional tranches may vest. Upon amendment, we estimated the revised fair values of the six unvested tranches of the PSOs using a Monte Carlo simulation approach. We are recognizing incremental stock-based compensation expense related to these amended awards for any of the remaining unvested tranches that are probable of achievement over the longer of the (a) estimated implicit service period for performance-metric achievement, or (b) derived service period for market-based metric achievement. We have preliminarily estimated service periods for those tranches that have been deemed probable of achievement as of the amendment date to be approximately three to four years.

Stock-based compensation expense is included in the following operating expense line items in our condensed consolidated statements of operations:

Three Months Ended February 28,Nine Months Ended February 28,
(in millions)2022202120222021
Cloud services and license support$55$33$145$99
Hardware42118
Services17154941
Sales and marketing11382328233
Research and development4213071,188897
General and administrative6440179117
Total stock-based compensation$674$479$1,900$1,395

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

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8**.**INCOME TAXES

Our effective tax rates for each of the periods presented are the result of the mix of income and losses earned in various tax jurisdictions that apply a broad range of income tax rates. Our (provision for) benefit from income taxes varied from that computed at the U.S. federal statutory income tax rate for the periods presented primarily due to earnings in foreign operations, state taxes, the U.S. research and development tax credit, settlements with tax authorities, the tax effects of stock-based compensation, the Foreign Derived Intangible Income deduction and the tax effect of Global Intangible Low-Taxed Income. In addition, for the three and nine months ended February 28, 2021, our benefit from income taxes varied from the tax computed at the U.S. federal statutory income tax rate primarily due to a total net deferred tax benefit of $2.3 billion as a result of a partial realignment of our legal entity structure that resulted in the intra-group transfer of certain intellectual property rights (refer to Notes 1 and 14 in Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended May 31, 2021 for additional information). Our effective tax rates were 18.4% and 12.3% for the three and nine months ended February 28, 2022, respectively, and our effective tax benefit rates were (53.3%) and (9.8%) for the three and nine months ended February 28, 2021, respectively.

In November 2021, the U.S. House of Representatives passed the “Build Back Better Act” budget reconciliation bill (the Bill). To date, the Bill has failed to advance in the Senate. If the Bill as currently drafted (or a modified version containing similar revenue provisions) were enacted, it would substantially increase U.S. taxes on corporations, including, among other changes, raising the level of U.S. tax on profits earned outside the U.S. and further restricting the deductibility of interest expense. Such changes, if enacted, likely would have a material adverse impact on our future tax liabilities and consolidated financial results.

Our net deferred tax assets were $6.6 billion and $5.8 billion as of February 28, 2022 and May 31, 2021, respectively. We believe that it is more likely than not that the net deferred tax assets will be realized in the foreseeable future. Realization of our net deferred tax assets is dependent upon our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credit carryforwards. The amount of net deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change.

Domestically, U.S. federal and state taxing authorities are currently examining income tax returns of Oracle and various acquired entities for years through fiscal 2020. Our U.S. federal income tax returns have been examined for all years prior to fiscal 2010 and, with some exceptions, we are no longer subject to audit for those periods. Our U.S. state income tax returns, with some exceptions, have been examined for all years prior to fiscal 2007, and we are no longer subject to audit for those periods.

Internationally, tax authorities for numerous non-U.S. jurisdictions are also examining returns affecting our unrecognized tax benefits. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal 2001.

We are under audit by the IRS and various other domestic and foreign tax authorities with regards to income tax and indirect tax matters and are involved in various challenges and litigation in a number of countries, including, in particular, Australia, Brazil, Canada, India, Indonesia, Israel, Italy, Mexico, New Zealand, Pakistan, Saudi Arabia, South Korea and Spain, where the amounts under controversy are significant. In some, although not all, cases, we have reserved for potential adjustments to our provision for income taxes and accrual of indirect taxes that may result from examinations by, or any negotiated agreements with, these tax authorities or final outcomes in judicial proceedings, and we believe that the final outcome of these examinations, agreements or judicial proceedings will not have a material effect on our results of operations. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of benefits in the period we determine

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

the liabilities are no longer necessary. If our estimates of the federal, state, and foreign income tax liabilities and indirect tax liabilities are less than the ultimate assessment, it could result in a further charge to expense.

We believe that we have adequately provided under GAAP for outcomes related to our tax audits. However, there can be no assurances as to the possible outcomes or any related financial statement effect thereof.

9**.**SEGMENT INFORMATION

ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision makers (CODMs) are our Chief Executive Officer and Chief Technology Officer. We are organized by line of business and geographically. While our CODMs evaluate results in a number of different ways, the line of business management structure is the primary basis for which the allocation of resources and financial results are assessed. The tabular information below presents financial information that is provided to our CODMs for their review and assists our CODMs with evaluating the company’s performance and allocating company resources.

We have three businesses—cloud and license, hardware and services—each of which is comprised of a single operating segment. All three of our businesses market and sell our offerings globally to businesses of many sizes, government agencies, educational institutions and resellers with a worldwide sales force positioned to offer the combinations that best meet customer needs.

Our cloud and license business engages in the sale, marketing and delivery of our enterprise applications and infrastructure technologies through cloud and on-premise deployment models including our cloud services and license support offerings; and our cloud license and on-premise license offerings. Cloud services and license support revenues are generated from offerings that are typically contracted with customers directly, billed to customers in advance, delivered to customers over time with our revenue recognition occurring over the contractual terms, and renewed by customers upon completion of the contractual terms. Cloud services and license support contracts provide customers with access to the latest updates to the applications and infrastructure technologies as they become available and for which the customer contracted and also include related technical support services over the contractual term. Cloud license and on-premise license revenues represent fees earned from granting customers licenses, generally on a perpetual basis, to use our database and middleware and our applications software products within cloud and on-premise IT environments. We generally recognize revenues at the point in time the software is made available to the customer to download and use, which typically is immediate upon signature of the license contract. In each fiscal year, our cloud and license business’ contractual activities are typically highest in our fourth fiscal quarter and the related cash flows are typically highest in the following quarter (i.e., in the first fiscal quarter of the next fiscal year) as we receive payments from these contracts.

Our hardware business provides infrastructure technologies including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to support diverse IT environments. Our hardware business also offers hardware support, which provides customers with software updates for the software components that are essential to the functionality of their hardware products and can also include product repairs, maintenance services and technical support services that are typically delivered and recognized ratably over the contractual term.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

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Our services business provides services to customers and partners to help maximize the performance of their investments in Oracle applications and infrastructure technologies.

We do not track our assets for each business. Consequently, it is not practical to show assets by operating segment.

The following table presents summary results for each of our three businesses:

Three Months Ended February 28,Nine Months Ended February 28,
(in millions)2022202120222021
Cloud and license:
Revenues(1)$8,926$8,529$25,901$24,567
Cloud services and license support expenses1,2311,0113,5682,977
Sales and marketing expenses1,7601,6945,0834,947
Margin(2)$5,935$5,824$17,250$16,643
Hardware:
Revenues$798$820$2,328$2,478
Hardware products and support expenses237223696698
Sales and marketing expenses8895265287
Margin(2)$473$502$1,367$1,493
Services:
Revenues$789$737$2,371$2,209
Services expenses6335871,8731,767
Margin(2)$156$150$498$442
Totals:
Revenues(1)$10,513$10,086$30,600$29,254
Expenses3,9493,61011,48510,676
Margin(2)$6,564$6,476$19,115$18,578
(1)Cloud and license revenues and total revenues presented for management reporting for the fiscal 2021 periods presented included revenues related to cloud and license obligations that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in our condensed consolidated statements of operations due to business combination accounting rules that were applicable to acquisitions closed prior to fiscal 2022. The table below provides a reconciliation of our total operating segment revenues to our total revenues as reported in our condensed consolidated statements of operations for all periods presented.
(2)The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of research and development, general and administrative and certain other allocable expenses, net. Additionally, the margins reported above do not reflect amortization of intangible assets, acquisition related and other expenses, restructuring expenses, stock-based compensation, interest expense or certain other non-operating expenses, net.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

The following table reconciles total operating segment revenues to total revenues as well as total operating segment margin to income before income taxes:

Three Months Ended February 28,Nine Months Ended February 28,
(in millions)2022202120222021
Total revenues for operating segments$10,513$10,086$30,600$29,254
Cloud and license revenues(1)—(1)—(2)
Total revenues$10,513$10,085$30,600$29,252
Total margin for operating segments$6,564$6,476$19,115$18,578
Cloud and license revenues(1)—(1)—(2)
Research and development(1,816)(1,621)(5,254)(4,812)
General and administrative(335)(330)(953)(949)
Amortization of intangible assets(279)(347)(882)(1,037)
Acquisition related and other(20)(13)(4,707)(107)
Restructuring(19)(66)(89)(337)
Stock-based compensation for operating segments(189)(132)(533)(381)
Expense allocations and other, net(84)(88)(273)(281)
Interest expense(667)(585)(2,051)(1,799)
Non-operating expenses, net(315)(17)(348)(30)
Income before income taxes$2,840$3,276$4,025$8,843
(1)Cloud and license revenues presented for management reporting for the fiscal 2021 periods presented included revenues related to cloud and license obligations that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in our condensed consolidated statements of operations due to business combination accounting rules that were applicable to acquisitions closed prior to fiscal 2022. This table includes a reconciliation of our total operating segment revenues to our total revenues as reported in our condensed consolidated statements of operations for all periods presented.

Disaggregation of Revenues

We have considered information that is regularly reviewed by our CODMs in evaluating financial performance, and disclosures presented outside of our financial statements in our earnings releases and used in investor presentations to disaggregate revenues to depict how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. The principal category we use to disaggregate revenues is the nature of our products and services as presented in our condensed consolidated statements of operations, the total of which is reconciled to revenues from our reportable segments as per the preceding tables of this footnote.

The following table is a summary of our total revenues by geographic region.

Three Months Ended February 28,Nine Months Ended February 28,
(in millions)2022202120222021
Americas$5,849$5,424$16,905$15,751
EMEA(1)3,0142,9818,7518,571
Asia Pacific1,6501,6804,9444,930
Total revenues$10,513$10,085$30,600$29,252
(1)Comprised of Europe, the Middle East and Africa

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

The following table presents our cloud services and license support revenues by applications and infrastructure ecosystems.

Three Months Ended February 28,Nine Months Ended February 28,
(in millions)2022202120222021
Applications cloud services and license support$3,187$2,952$9,377$8,669
Infrastructure cloud services and license support4,4504,30013,18512,642
Total cloud services and license support revenues$7,637$7,252$22,562$21,311
10.EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income for the period by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income for the period by the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding restricted stock-based awards, stock options, and shares issuable under the employee stock purchase plan as applicable pursuant to the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended February 28,Nine Months Ended February 28,
(in millions, except per share data)2022202120222021
Net income$2,319$5,021$3,528$9,714
Weighted average common shares outstanding2,6702,9132,7112,977
Dilutive effect of employee stock plans84818972
Dilutive weighted average common shares outstanding2,7542,9942,8003,049
Basic earnings per share$0.87$1.72$1.30$3.26
Diluted earnings per share$0.84$1.68$1.26$3.19
Shares subject to anti-dilutive restricted stock-based awards and stock options excluded from calculation(1)33363236
(1)Substantially all of these weighted shares related to contingently issuable shares pursuant to PSO arrangements that could be dilutive in the future.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

11.LEGAL PROCEEDINGS

Hewlett-Packard Company Litigation

On June 15, 2011, Hewlett-Packard Company, now Hewlett Packard Enterprise Company (HP), filed a complaint in the California Superior Court, County of Santa Clara against Oracle Corporation alleging numerous causes of action including breach of contract, breach of the covenant of good faith and fair dealing, defamation, intentional interference with prospective economic advantage and violation of the California Unfair Business Practices Act. The complaint alleged that when Oracle announced on March 22 and 23, 2011 that it would no longer develop future versions of its software to run on HP’s Itanium-based servers, it breached a settlement agreement signed on September 20, 2010 (the HP Settlement Agreement), resolving litigation between HP and one of Oracle’s former CEOs who had previously acted as HP’s chief executive officer and chairman of HP’s board of directors. HP sought a judicial declaration of the parties’ rights and obligations under the HP Settlement Agreement and other equitable and monetary relief. Oracle answered the complaint and filed cross-claims.

After a bench trial on the meaning of the HP Settlement Agreement, the court found that the HP Settlement Agreement required Oracle to continue to develop certain of its software products for use on HP’s Itanium-based servers at no cost to HP. The case proceeded to a jury trial in May 2016. On June 30, 2016, the jury returned a verdict in favor of HP on its claims for breach of contract and breach of the implied covenant of good faith and fair dealing and against Oracle on its cross-claims. The jury awarded HP $3.0 billion in damages. Under the court’s rulings, HP is entitled to post-judgment interest, but not pre-judgment interest, on this award.

After the trial court denied Oracle’s motion for a new trial, Oracle filed a notice of appeal on January 17, 2017. On February 2, 2017, HP filed a notice of appeal of the trial court’s denial of pre-judgment interest. Oral argument was held on May 27, 2021. On June 14, 2021, the Court of Appeal affirmed both the judgment against Oracle noted above, and the denial of pre-judgment interest. On June 29, 2021, Oracle filed a Petition for Rehearing with the Court of Appeal, which was denied on July 8, 2021. On July 26, 2021, Oracle filed a Petition for Review with the California Supreme Court, which was denied on September 29, 2021.

During the nine months ended February 28, 2022, Oracle remitted the entirety of the $3.0 billion judgment and related $1.7 billion of accrued post-judgment interest and awarded costs and recorded such amounts as acquisition related and other expenses as presented per our condensed consolidated statements of operations.

We continue to believe that errors were made in the proceedings. On January 27, 2022, Oracle filed a Petition for a Writ of Certiorari with the U.S. Supreme Court to challenge the judgment amount awarded to HP. Litigation is inherently unpredictable, and the outcome of any actions we pursue related to this action is uncertain.

Derivative Litigation Concerning Oracle’s NetSuite Acquisition

On May 3 and July 18, 2017, two alleged stockholders filed separate derivative lawsuits in the Court of Chancery of the State of Delaware, purportedly on Oracle’s behalf. Thereafter, the court consolidated the two derivative cases and designated the July 18, 2017 complaint as the operative complaint. The consolidated lawsuit was brought against all the then-current members and one former member of our Board of Directors, and Oracle as a nominal defendant. Plaintiff alleged that the defendants breached their fiduciary duties by causing Oracle to agree to purchase NetSuite Inc. (NetSuite) at an excessive price. The complaint sought (and the operative complaint continues to seek) declaratory relief, unspecified monetary damages (including interest), and attorneys’ fees and costs. The defendants filed a motion to dismiss, which the court denied on March 19, 2018.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

On May 4, 2018, our Board of Directors established a Special Litigation Committee (the SLC) to investigate the allegations in this derivative action. Three non-employee directors served on the SLC. On August 15, 2019, the SLC filed a letter with the court, stating that the SLC believed that plaintiff should be allowed to proceed with the derivative litigation on behalf of Oracle. After the SLC advised the Board that it had fulfilled its duties and obligations, the Board withdrew the SLC’s authority, except that the SLC maintained certain authority to respond to discovery requests in the litigation.

After plaintiff filed the July 18, 2017 complaint, an additional plaintiff joined the case. Plaintiffs filed several amended complaints, and filed their most recent amended complaint on December 11, 2020. The operative complaint asserts claims for breach of fiduciary duty against our Chief Executive Officer, our Chief Technology Officer, the estate of Mark Hurd (our former Chief Executive Officer who passed away on October 18, 2019), and two other members of our Board of Directors. Oracle is named as a nominal defendant. On December 11, 2020, the estate of Mark Hurd and the two other members of our Board of Directors moved to dismiss this complaint, and a hearing on this motion was held on February 16, 2021. On June 21, 2021, the court granted this motion as to the estate of Mark Hurd and one Board member and denied the motion as to the other Board member, who filed an answer to the complaint on August 9, 2021. On December 28, 2020, our Chief Executive Officer, our Chief Technology Officer, and Oracle as a nominal defendant filed answers to the operative complaint.

Expert discovery has concluded. On December 23, 2021, the Board-member defendant brought a motion for summary judgment. A hearing on this motion is scheduled for March 11, 2022. Trial is scheduled to commence on July 18, 2022.

While Oracle continues to evaluate these claims, we do not believe this litigation will have a material impact on our financial position or results of operations.

Securities Class Action and Derivative Litigation Concerning Oracle’s Cloud Business

On August 10, 2018, a putative class action, brought by an alleged stockholder of Oracle, was filed in the U.S. District Court for the Northern District of California against us, our Chief Technology Officer, our then-two Chief Executive Officers, two other Oracle executives, and one former Oracle executive. As noted above, Mr. Hurd, one of our then-two Chief Executive Officers, passed away on October 18, 2019. On March 8, 2019, plaintiff filed an amended complaint. Plaintiff alleges that the defendants made or are responsible for false and misleading statements regarding Oracle’s cloud business. Plaintiff further alleges that the former Oracle executive engaged in insider trading. Plaintiff seeks a ruling that this case may proceed as a class action, and seeks damages, attorneys’ fees and costs, and unspecified declaratory/injunctive relief. On April 19, 2019, defendants moved to dismiss plaintiff’s amended complaint. On December 17, 2019, the court granted this motion, giving plaintiffs an opportunity to file an amended complaint, which plaintiff filed on February 17, 2020. On April 23, 2020, defendants filed a motion to dismiss, and the court held a hearing on this motion on September 24, 2020. On March 22, 2021, the court granted in part and denied in part this motion. The court dismissed the action as to one Oracle executive and the former Oracle executive. The court permitted plaintiff to proceed with only a narrow omissions theory against the remaining defendants. On April 21, 2021, defendants filed an answer to the complaint. The parties are currently conducting discovery. On October 8, 2021, plaintiffs filed a motion for class certification, which is scheduled for hearing on March 24, 2022. The parties participated in a court-ordered mediation on February 18, 2022, which did not resolve this case. Trial is scheduled to commence on November 6, 2023. We believe that we have meritorious defenses against this action, and we will continue to vigorously defend it.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

On February 12 and May 8, 2019, two stockholder derivative lawsuits were filed in the United States District Court for the Northern District of California. The cases were consolidated, and on July 8, 2019, a single plaintiff filed a consolidated complaint. The consolidated complaint brought various claims relating to the 10b-5 class action described immediately above. The parties agreed to stay the derivative case pending resolution of defendants’ motion to dismiss the securities case, which the court granted in part and denied in part on March 22, 2021.

Plaintiff filed an amended complaint on June 4, 2021. The derivative suit is brought by an alleged stockholder of Oracle, purportedly on Oracle’s behalf, against our Chief Technology Officer, our Chief Executive Officer, and the estate of Mark Hurd. Plaintiff claims that the alleged actions described in the class action discussed above caused harm to Oracle, and that defendants violated their fiduciary duties of candor, good faith, loyalty, and due care by failing to prevent this alleged harm. Plaintiff also brings derivative claims for violations of federal securities laws. Plaintiffs seek a ruling that this case may proceed as a derivative action, a finding that defendants are liable for breaching their fiduciary duties, damages, an order directing defendants to enact corporate reforms, attorneys’ fees and costs, and unspecified relief. On June 14, 2021, the court “so ordered” a stipulation from the parties, staying this case pending resolution of the 10b-5 action.

While Oracle continues to evaluate these claims, we do not believe this litigation will have a material impact on our financial position or results of operations.

Other Litigation

We are party to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business, including proceedings and claims that relate to acquisitions we have completed or to companies we have acquired or are attempting to acquire. While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already recognized, if any.

12.SUBSEQUENT EVENTS

On March 8, 2022, Oracle entered into the following two credit agreements:

•a $6.0 billion, five-year revolving credit agreement (the Revolving Credit Agreement), which provides for an unsecured $6.0 billion, five-year revolving credit facility (the Revolving Facility) to Oracle for working capital purposes and for other general corporate purposes. Subject to certain conditions stated in the Revolving Credit Agreement, Oracle may borrow, prepay and reborrow amounts under the Revolving Facility during the term of the Revolving Credit Agreement. All amounts borrowed under the Revolving Credit Agreement will become due on March 8, 2027, unless the commitments are terminated earlier either at the request of Oracle or, if an event of default occurs, by the lenders (or automatically in the case of certain bankruptcy-related events). Interest is based on either (a) a Term Secured Overnight Financing Rate (SOFR)-based formula plus a margin of 87.5 basis points to 150.0 basis points, depending on the credit rating assigned to Oracle’s long-term senior unsecured debt, or (b) a Base Rate formula plus a margin of 0.0 basis point to 50.0 basis points, depending on the same such credit rating, each as set forth in the Revolving Credit Agreement; and
•a $15.7 billion delayed draw term loan credit agreement (the Bridge Credit Agreement), which provides for an unsecured $15.7 billion, 364-day term loan commitment (the Bridge Facility) to Oracle, subject to the satisfaction of certain customary conditions. The Bridge Credit Agreement provides that, subject to certain exceptions, net cash proceeds received by Oracle from certain debt and equity issuances shall result in mandatory prepayments or commitment reductions under the Bridge Credit Agreement. The proceeds of borrowings under the Bridge Facility may be used to finance the acquisition of Cerner,

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

February 28, 2022

(Unaudited)

Oracle’s refinancing of indebtedness in connection with such acquisition and to pay related fees and expenses. All amounts borrowed under the Bridge Credit Agreement will become due on March 7, 2023, unless the commitments are terminated earlier either at the request of Oracle, or by the lenders if a payment event of default occurs. Interest is based on either (a) a Term SOFR-based formula plus a margin of 100.0 basis points to 137.5 basis points, depending on the credit rating assigned to Oracle’s long-term senior unsecured debt, or (b) a Base Rate formula plus a margin of 0.0 basis point to 37.5 basis points, depending on the same such credit rating, each as set forth in the Bridge Credit Agreement.

Each of the abovementioned credit agreements contains certain customary representations and warranties, covenants and events of default, including the requirement that the ratio of “Consolidated EBITDA” to “Consolidated Net Interest Expense” (each term as defined in the respective credit agreements) of Oracle and its subsidiaries shall not be less than 3.0 to 1.0 at the end of any fiscal quarter during the period that the credit agreement is effective. If an event of default occurs under one of the credit agreements and is not cured within applicable grace periods or waived, any unpaid amounts under the applicable credit agreement may be declared immediately due and payable and the commitments under that agreement may be terminated.

At this time, Oracle has not borrowed any funds under either of the credit agreements.

The description above is a summary and is qualified in its entirety by reference to the full text of the Revolving Credit Agreement and Bridge Credit Agreement, which are filed as Exhibit 10.16 and 10.17, respectively, to this Quarterly Report on Form 10-Q.

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