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 November 30, 2022 and May 31, 2022

(Unaudited)

(in millions, except per share data)November 30, 2022May 31, 2022
ASSETS
Current assets:
Cash and cash equivalents$6,813$21,383
Marketable securities537519
Trade receivables, net of allowances for credit losses of $403 and $362 as of November 30, 2022 and May 31, 2022, respectively6,1975,953
Prepaid expenses and other current assets4,0143,778
Total current assets17,56131,633
Non-current assets:
Property, plant and equipment, net14,3519,716
Intangible assets, net11,5931,440
Goodwill, net61,51343,811
Deferred tax assets12,09112,782
Other non-current assets11,3609,915
Total non-current assets110,90877,664
Total assets$128,469$109,297
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable and other borrowings, current$9,746$3,749
Accounts payable1,6471,317
Accrued compensation and related benefits1,7801,944
Deferred revenues8,7058,357
Other current liabilities5,2284,144
Total current liabilities27,10619,511
Non-current liabilities:
Notes payable and other borrowings, non-current81,17372,110
Income taxes payable11,12812,210
Deferred tax liabilities7,1656,031
Other non-current liabilities5,6735,203
Total non-current liabilities105,13995,554
Commitments and contingencies
Oracle Corporation stockholders' deficit:
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: 2,695 shares and 2,665 shares as of November 30, 2022 and May 31, 2022, respectively28,14826,808
Accumulated deficit(30,617)(31,336)
Accumulated other comprehensive loss(1,777)(1,692)
Total Oracle Corporation stockholders' deficit(4,246)(6,220)
Noncontrolling interests470452
Total stockholders' deficit(3,776)(5,768)
Total liabilities and stockholders' deficit$128,469$109,297

See notes to condensed consolidated financial statements.

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Six Months Ended November 30, 2022 and 2021

(Unaudited)

Three Months Ended November 30,Six Months Ended November 30,
(in millions, except per share data)2022202120222021
Revenues:
Cloud services and license support$8,598$7,554$17,015$14,925
Cloud license and on-premise license1,4351,2372,3392,049
Hardware8507671,6131,530
Services1,3928022,7531,583
Total revenues12,27510,36023,72020,087
Operating expenses:
Cloud services and license support(1)1,8911,2593,6262,472
Hardware(1)286229536474
Services(1)1,1816712,2331,315
Sales and marketing(1)2,2161,9544,3933,808
Research and development2,1581,7544,2513,438
General and administrative366319777618
Amortization of intangible assets9072991,826603
Acquisition related and other624,6671034,687
Restructuring1373228170
Total operating expenses9,20411,18418,02617,485
Operating income (loss)3,071(824)5,6942,602
Interest expense(856)(679)(1,643)(1,384)
Non-operating (expenses) income, net(71)7(251)(34)
Income (loss) before income taxes2,144(1,496)3,8001,184
(Provision for) benefit from income taxes(403)249(511)25
Net income (loss)$1,741$(1,247)$3,289$1,209
Earnings (loss) per share:
Basic$0.65$(0.46)$1.22$0.44
Diluted$0.63$(0.46)$1.20$0.43
Weighted average common shares outstanding:
Basic2,6952,6942,6902,731
Diluted2,7462,6942,7472,823
(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 (LOSS)

For the Three and Six Months Ended November 30, 2022 and 2021

(Unaudited)

Three Months Ended November 30,Six Months Ended November 30,
(in millions)2022202120222021
Net income (loss)$1,741$(1,247)$3,289$1,209
Other comprehensive income (loss), net of tax:
Net foreign currency translation gains (losses)95(222)(194)(445)
Net unrealized gains (losses) on defined benefit plans—2(1)4
Net unrealized gains on cash flow hedges93—110—
Total other comprehensive income (loss), net188(220)(85)(441)
Comprehensive income (loss)$1,929$(1,467)$3,204$768

See notes to condensed consolidated financial statements.

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

For the Three and Six Months Ended November 30, 2022 and 2021

(Unaudited)

Three Months Ended November 30,Six Months Ended November 30,
(in millions, except per share data)2022202120222021
Common stock and additional paid in capital
Balance, beginning of period$27,224$25,534$26,808$26,533
Common stock issued146157661305
Stock-based compensation9096811,6591,226
Repurchases of common stock(61)(711)(134)(1,583)
Other, net(70)(70)(846)(890)
Balance, end of period$28,148$25,591$28,148$25,591
Accumulated deficit
Balance, beginning of period$(31,134)$(25,679)$(31,336)$(20,120)
Repurchases of common stock(361)(6,289)(847)(13,417)
Cash dividends declared(863)(861)(1,723)(1,748)
Net income (loss)1,741(1,247)3,2891,209
Balance, end of period$(30,617)$(34,076)$(30,617)$(34,076)
Other stockholders' deficit, net
Balance, beginning of period$(1,539)$(985)$(1,240)$(461)
Other comprehensive income (loss), net188(220)(85)(441)
Other, net443218(271)
Balance, end of period$(1,307)$(1,173)$(1,307)$(1,173)
Total stockholders' deficit$(3,776)$(9,658)$(3,776)$(9,658)
Cash dividends declared per common share$0.32$0.32$0.64$0.64

See notes to condensed consolidated financial statements.

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended November 30, 2022 and 2021

(Unaudited)

Six Months Ended November 30,
(in millions)20222021
Cash flows from operating activities:
Net income$3,289$1,209
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation1,138913
Amortization of intangible assets1,826603
Deferred income taxes(852)(820)
Stock-based compensation1,6591,226
Other, net289(176)
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net516789
Decrease in prepaid expenses and other assets121263
Decrease in accounts payable and other liabilities(785)(918)
Decrease in income taxes payable(327)(849)
Increase (decrease) in deferred revenues369(531)
Net cash provided by operating activities7,2431,709
Cash flows from investing activities:
Purchases of marketable securities and other investments(603)(9,631)
Proceeds from sales and maturities of marketable securities and other investments46221,617
Acquisitions, net of cash acquired(27,799)(50)
Capital expenditures(4,154)(1,987)
Net cash (used for) provided by investing activities(32,094)9,949
Cash flows from financing activities:
Payments for repurchases of common stock(1,000)(15,001)
Proceeds from issuances of common stock661305
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards(895)(890)
Payments of dividends to stockholders(1,723)(1,748)
Proceeds from issuances of commercial paper, net of repayments1,880—
Proceeds from issuances of senior notes and other borrowings, net of issuance costs28,280—
Repayments of senior notes and other borrowings(16,692)(5,750)
Other, net(56)(437)
Net cash provided by (used for) financing activities10,455(23,521)
Effect of exchange rate changes on cash and cash equivalents(174)(297)
Net decrease in cash and cash equivalents(14,570)(12,160)
Cash and cash equivalents at beginning of period21,38330,098
Cash and cash equivalents at end of period$6,813$17,938
Non-cash financing activities:
Fair values of stock awards assumed in connection with acquisitions$55$—

See notes to condensed consolidated financial statements.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

November 30, 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, 2022.

The comparability of our condensed consolidated financial statements during the second quarter and first half of fiscal 2023 compared to the corresponding prior year periods was impacted by $4.7 billion of certain litigation related charges during the fiscal 2022 periods presented. Refer to Note 16 to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended May 31, 2022 for additional information.

On June 8, 2022, we completed our acquisition of Cerner Corporation (Cerner), a provider of digital information systems used within hospitals and health systems, by means of a merger of one of our wholly owned subsidiaries with and into Cerner such that Cerner became an indirect, wholly owned subsidiary of Oracle. Through our acquisition of Cerner, we enhanced our offerings of each of our three existing businesses, cloud and license, hardware and services. The condensed consolidated financial statements included in this Quarterly Report include the financial results of Cerner prospectively from the date of acquisition. Refer to Note 2 below for additional details regarding our acquisition of Cerner.

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, 2023.

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, 2022 that had a significant impact on our condensed consolidated financial statements or notes thereto as of and for the six months ended November 30, 2022.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

Use of Estimates

Our condensed consolidated financial statements are prepared in accordance with GAAP as set forth in the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification, and we consider various staff accounting bulletins and other applicable guidance issued by the SEC. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent that there are differences between these estimates, judgments or assumptions and actual results, our consolidated financial statements will be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result.

During the first quarter of fiscal 2023, we completed an assessment of the useful lives of our servers and increased the estimate of the useful lives from four years to five years effective at the beginning of fiscal 2023. Based on the carrying value of our servers as of May 31, 2022, this change in accounting estimate decreased our total operating expenses by $114 million and $245 million for the second quarter and first half of fiscal 2023, respectively.

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 November 30, 2022 and May 31, 2022 and our condensed consolidated statements of cash flows for the six months ended November 30, 2022 and 2021 was nominal.

Remaining Performance Obligations from Contracts with Customers

Trade receivables, net of allowance for credit losses, and deferred revenues are reported net of related uncollected deferred revenues in our condensed consolidated balance sheets as of November 30, 2022 and May 31, 2022. The revenues recognized during the six months ended November 30, 2022 and 2021, respectively, that were included in the opening deferred revenues balances as of May 31, 2022 and 2021, respectively, were approximately $6.2 billion and $6.5 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 six months ended November 30, 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, 2022, were $61.2 billion as of November 30, 2022, approximately 48% of which we expect to recognize as revenues over the next twelve months, 35% 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 $265 million and $1.2 billion for the three and six months ended November 30, 2022, respectively, and $351 million and $1.0 billion for the three and six months ended November 30, 2021, respectively.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

Non-Marketable Investments

Our non-marketable debt investments and equity securities and related instruments totaled $2.0 billion and $1.2 billion as of November 30, 2022 and May 31, 2022, respectively, and are included in other non-current assets in the accompanying consolidated balance sheets and are subject to periodic impairment reviews. Certain of these non-marketable equity securities and related instruments are adjusted for observable price changes from orderly transactions. The majority of the non-marketable investments 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 June 2025 and we could obtain control of that entity should such options be exercised.

Acquisition Related and Other Expenses

Acquisition related and other expenses primarily 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 fiscal 2022 periods presented, acquisition related and other expenses included certain litigation related charges.

Three Months Ended November 30,Six Months Ended November 30,
(in millions)2022202120222021
Transitional and other employee related costs$21$2$38$4
Business combination adjustments, net3184
Other, net384,664574,679
Total acquisition related and other expenses$62$4,667$103$4,687

Non-Operating (Expenses) Income, net

Non-operating (expenses) income, 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), net gains and losses related to equity investments including losses attributable to equity method investments and net other income and expenses, including net unrealized gains and losses from our investment portfolio related to our deferred compensation plan, and non-service net periodic pension income and losses.

Three Months Ended November 30,Six Months Ended November 30,
(in millions)2022202120222021
Interest income$52$21$90$40
Foreign currency losses, net(55)(46)(125)(81)
Noncontrolling interests in income(41)(42)(79)(89)
(Losses) gains from equity investments, net(40)80(126)59
Other gains (losses), net13(6)(11)37
Total non-operating (expenses) income, net$(71)$7$(251)$(34)

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

Recent Accounting Pronouncements

Financial Instruments: In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04) 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. We do not expect our adoption of Topic 848 to have a material impact on our consolidated financial statements.

2.ACQUISITIONS

Acquisition of Cerner Corporation

On December 20, 2021, we entered into an Agreement and Plan of Merger (Merger Agreement) with 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 dated January 19, 2022, and the related Letter of Transmittal.

On June 8, 2022, pursuant to the terms of the tender offer and applicable Delaware law, we acquired all the outstanding Cerner shares and effectuated the merger of Cerner with and into a wholly-owned subsidiary of Oracle and Cerner became an indirect, wholly-owned subsidiary of Oracle. Vested equity awards outstanding immediately prior to the consummation of the merger were cancelled in exchange for the right to receive an amount in cash based on a formula contained in the Merger Agreement. The unvested equity awards to acquire Cerner common stock that were outstanding immediately prior to the conclusion of the merger were converted into equity awards denominated in shares of Oracle common stock based on formulas contained in the Merger Agreement. We have included the financial results of Cerner in our consolidated financial statements from the date of acquisition. For the second quarter and first half of fiscal 2023, Cerner contributed $1.5 billion and $3.0 billion to our total revenues, respectively.

The total preliminary purchase price for Cerner was approximately $28.2 billion, which consisted of approximately $28.2 billion in cash and $55 million for the fair values of restricted stock-based awards and stock options assumed. Pursuant to our business combinations accounting policy, we estimated the preliminary fair values of net tangible and intangible assets acquired, and the excess of the consideration transferred over the aggregate of such fair values was recorded as goodwill. The preliminary fair values of net tangible assets and intangible assets acquired were based on preliminary valuations, and our estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). The primary areas that remain preliminary relate to the fair values of intangible assets acquired, certain tangible assets and liabilities acquired, certain legal matters, income and non-income based taxes and residual goodwill. We expect to continue to obtain information to assist us in determining the fair values of the net assets acquired during the measurement period. The following table summarizes the estimated preliminary fair values of net tangible and intangible assets acquired from Cerner:

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

(in millions)
Cash and marketable securities$769
Trade receivables, net843
Property, plant and equipment, net1,514
Intangible assets11,972
Goodwill17,777
Other assets837
Accounts payable and other liabilities(979)
Deferred revenues(297)
Senior notes and other borrowings(1,600)
Deferred tax liabilities, net(2,611)
Total$28,225

All of the $1.6 billion of senior notes and other borrowings assumed through our Cerner acquisition were paid during the first half of fiscal 2023. Refer to Note 5 below for more information. We do not expect the goodwill recognized as a part of our acquisition of Cerner to be deductible for income tax purposes.

Other Fiscal 2023 and 2022 Acquisitions

During the first half of fiscal 2023 and full year fiscal 2022, 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.

Unaudited Pro Forma Financial Information

The unaudited pro forma financial information in the table below summarizes the combined results of operations for Oracle and Cerner. The unaudited pro forma financial information for all periods presented included the business combination accounting effects resulting from this acquisition, including amortization charges from acquired intangible assets (certain of which are preliminary), stock-based compensation charges for unvested restricted stock-based awards and stock options assumed and the related tax effects as though Cerner was combined as of the beginning of fiscal 2022. The unaudited pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2022.

The unaudited pro forma financial information for the three and six months ended November 30, 2022 and 2021 combined the historical results of Oracle for the three and six months ended November 30, 2022 and 2021, respectively, the historical results of Cerner for the three and six months ended September 30, 2022 and 2021, respectively, (adjusted due to differences in reporting periods and considering the date we acquired Cerner) and the effects of the pro forma adjustments listed above. The unaudited pro forma financial information was as follows:

Three Months Ended November 30,Six Months Ended November 30,
(in millions, except per share data)2022202120222021
Total revenues$12,275$11,820$23,831$22,998
Net income (loss)$1,741$(1,649)$3,242$203
Basic earnings (loss) per share$0.65$(0.61)$1.21$0.07
Diluted earnings (loss) per share$0.63$(0.61)$1.18$0.07

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

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.

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):

November 30, 2022May 31, 2022
Fair Value Measurements Using Input TypesFair Value Measurements Using Input Types
(in millions)Level 1Level 2TotalLevel 1Level 2Total
Assets:
Money market funds$460$—$460$12,842$—$12,842
Time deposits and other170376546240280520
Commercial paper debt securities—1010———
Derivative financial instruments—110110———
Total assets$630$496$1,126$13,082$280$13,362
Liabilities:
Derivative financial instruments$—$148$148$—$97$97

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

Our marketable securities investments consist of money market funds, time deposits 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. We classify our marketable debt securities as available-for-sale debt securities at the time of purchase and reevaluate such classification as of each balance sheet date. As of November 30, 2022 and May 31, 2022, 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 $89.0 billion and $75.9 billion of senior notes and other borrowings and the related fair value hedges that we had outstanding as of November 30, 2022 and May 31, 2022, respectively, the estimated fair values of the senior notes and other borrowings and the related fair value hedges using Level 2 inputs at November 30, 2022 and May 31, 2022 were $78.7 billion and $67.0 billion, respectively.

4.INTANGIBLE ASSETS AND GOODWILL

The changes in intangible assets for fiscal 2023 and the net book value of intangible assets as of November 30, 2022 and May 31, 2022 were as follows:

Intangible Assets, GrossAccumulated AmortizationIntangible Assets, NetWeighted Average Useful Life(2)
(Dollars in millions)May 31, 2022Additions & Adjustments, net(1)November 30, 2022May 31, 2022ExpenseNovember 30, 2022May 31, 2022November 30, 2022
Developed technology$3,966$2,379$6,345$(3,660)$(449)$(4,109)$306$2,2364
Cloud services and license support agreements and related relationships5,2604,3189,578(4,194)(749)(4,943)1,0664,6357
Cloud license and on-premise license agreements and related relationships3562,4372,793(343)(225)(568)132,2257
Other8652,8453,710(810)(403)(1,213)552,4974
Total intangible assets, net$10,447$11,979$22,426$(9,007)$(1,826)$(10,833)$1,440$11,593
(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 2023.

As of November 30, 2022, estimated future amortization expenses related to intangible assets were as follows (in millions):

Remainder of fiscal 2023$1,755
Fiscal 20242,995
Fiscal 20252,283
Fiscal 20261,620
Fiscal 2027664
Fiscal 2028635
Thereafter1,641
Total intangible assets, net$11,593

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

The changes in the carrying amounts of goodwill, net, which is generally not deductible for tax purposes, for our operating segments for the six months ended November 30, 2022 were as follows:

(in millions)Cloud and LicenseHardwareServicesTotal Goodwill, net
Balances as of May 31, 2022$39,938$2,367$1,506$43,811
Goodwill from acquisitions16,4603461,06517,871
Goodwill adjustments, net(1)(54)—(115)(169)
Balances as of November 30, 2022$56,344$2,713$2,456$61,513
(1)Pursuant to our business combinations accounting policy, we recorded goodwill adjustments for the effects on goodwill of changes to net assets acquired during the period that such a change is identified, provided that any such change is within the measurement period (up to one year from the date of the acquisition). Amounts also include any changes in goodwill balances for the period presented that resulted from foreign currency translations.
5.NOTES PAYABLE AND OTHER BORROWINGS

Delayed Draw Term Loan Credit Agreement

On June 8, 2022, we borrowed $15.7 billion under a delayed draw term loan credit agreement (Bridge Credit Agreement) that we entered into in March 2022 to partly finance our acquisition of Cerner. The Bridge Credit Agreement provides that, subject to certain exceptions, net cash proceeds received by us from certain debt and equity issuances shall result in mandatory prepayments under the Bridge Credit Agreement. All amounts borrowed under the Bridge Credit Agreement will become due on March 7, 2023, unless settled earlier pursuant to the terms of the Bridge Credit Agreement. Interest is based on either (a) a Term Secured Overnight Financing Rate (SOFR)-based formula plus a margin of 100.0 basis points to 137.5 basis points, depending on the credit rating assigned to our long-term senior unsecured debt, or (b) a Base Rate formula plus a margin of 0.0 basis points to 37.5 basis points, depending on the same such credit rating, each as set forth in the Bridge Credit Agreement. The effective interest rate for the second quarter and first half of fiscal 2023 was 4.40% and 3.39%, respectively. We repaid $12.6 billion borrowed under the Bridge Credit Agreement during the first half of fiscal 2023.

Five-Year Term Loan Credit Agreement

On August 16, 2022, we entered into a $4.4 billion term loan credit agreement (Term Loan Credit Agreement), which provides for a total term loan commitment of $4.4 billion, comprised of a $3.6 billion term loan (Term Loan 1 Facility) and a $790 million term loan (Term Loan 2 Facility and, together with the Term Loan 1 Facility, the Term Loan Facilities). The proceeds of the Term Loan Facilities may only be used to refinance indebtedness incurred under the Bridge Credit Agreement and to pay related fees and expenses.

On November 2, 2022, the total term loan commitment was increased by $1.3 billion, comprised of $1.1 billion under the Term Loan 1 Facility and $170 million under the Term Loan 2 Facility pursuant to the terms of the Term Loan Credit Agreement.

We may request additional commitments under the Term Loan Credit Agreement up to a maximum of $6.0 billion (each, an Incremental Borrowing). The use of proceeds of any Incremental Borrowing will be specified at the time of such borrowing and may include working capital purposes and other general corporate purposes.

We initially borrowed $4.4 billion on August 16, 2022, and we borrowed an incremental $1.3 billion on November 2, 2022, each under the Term Loan Facilities. We used the net proceeds of the borrowings under the Term Loan Credit Agreement to reduce the amount of indebtedness outstanding under the Bridge Credit Agreement. The effective interest rate for these borrowings during the second quarter and first half of fiscal 2023 was 4.86% and 4.74%, respectively.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

The Term Loan Credit Agreement provides for repayment of borrowings under the Term Loan Facilities as follows:

•an amount equal to the amount borrowed reduced by any prepayments multiplied by 1.25% on September 30, 2024 and quarterly thereafter until June 30, 2026;
•an amount equal to the amount borrowed reduced by any prepayments multiplied by 2.50% on September 30, 2026 and quarterly thereafter until June 30, 2027; and
•any remaining unpaid principal balance under the Term Loan 1 Facility will become fully due and payable on August 16, 2027 and any remaining unpaid principal balance under the Term Loan 2 Facility will become fully due and payable on August 16, 2025 (subject to any extension of the Term Loan 2 Facility termination date, as set out below), unless the outstanding loans are prepaid earlier at the request of Oracle or accelerated by the lenders if an event of default occurs.

The termination date of the Term Loan 2 Facility may be extended at our sole option by up to 2 years. The termination date of each Term Loan Facility may also be further extended at each lender’s option by up to 2 years.

Interest is based on either (a) a Term SOFR-based formula plus a margin of 147.5 basis points to 197.5 basis points, depending on the credit rating assigned to our long-term senior unsecured debt, or (b) a Base Rate formula plus a margin of 47.5 basis points to 97.5 basis points, depending on the same such credit rating, each as set forth in the Term Loan Credit Agreement.

The Term Loan Credit Agreement 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 Term Loan Credit Agreement) 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 Term Loan Credit Agreement is effective. If an event of default occurs under the Term Loan Credit Agreement and is not cured within the applicable grace period or waived, any unpaid amounts under the Term Loan Credit Agreement may be declared immediately due and payable. We were in compliance with such covenants as of November 30, 2022.

The summary above does not purport to be complete and is qualified in its entirety by reference to the full text of the Term Loan Credit Agreement.

Senior Notes

In November 2022, we issued $7.0 billion, par value, of fixed-rate senior notes comprised of the following as of November 30, 2022:

November 30, 2022
(Dollars in millions)AmountEffective Interest Rate
$1,000, 5.80%, due November 2025$1,0005.93%
$1,250, 6.15%, due November 20291,2506.21%
$2,250, 6.25%, due November 20322,2506.32%
$2,500, 6.90%, due November 20522,5006.94%
Total fixed rate senior notes$7,000
Unamortized discount/issuance costs(33)
Total fixed-rate senior notes, net$6,967

We used the net proceeds from the issuance of the senior notes to reduce the amount of indebtedness outstanding under the Bridge Credit Agreement. The interest is payable semi-annually. We may redeem some or all of the senior notes of each series prior to their maturity, subject to certain restrictions, and the payment of an applicable make-whole premium in certain instances.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

The senior notes rank pari passu with any other existing and future unsecured and unsubordinated indebtedness of Oracle. All existing and future indebtedness and liabilities of the subsidiaries of Oracle are or will be effectively senior to the senior notes. We were in compliance with all senior notes-related covenants at November 30, 2022. The material terms and conditions of the senior notes are set forth in, and the foregoing description of the senior notes is qualified in its entirety by reference to, the Officers’ Certificate filed herewith as Exhibit 4.01 and incorporated by reference herein.

Cash Flow Hedge —Interest Rate Swap Agreements

In August 2022, we entered into certain interest rate swap agreements to manage the related interest rate risk of $4.4 billion borrowings under the Term Loan Credit Agreement by effectively converting the floating-rate to fixed-rate. The economic effect of the swap agreements was to eliminate the uncertainty of the cash flows associated with floating-rate interest payments of the Term Loan Credit Agreement by a fixed annual interest rate of 3.07%, plus a margin depending on the credit rating assigned to our long-term senior unsecured debt as mentioned above. We have designated these interest rate swap agreements as qualifying hedging instruments and are accounting for these as cash flow hedges pursuant to ASC 815, Derivatives and Hedging.

The fair values of these interest rate swap agreements are recognized either as non-current assets or non-current liabilities in our consolidated balance sheets. Changes in the fair values of these interest rate swap agreements are reported in accumulated other comprehensive loss in our consolidated balance sheets and an amount is reclassified out of accumulated other comprehensive loss into non-operating income or expense, net in the same period that corresponding interest expense is recognized.

We do not use any interest rate swap agreements for trading purposes.

Cerner Senior Notes and Other Borrowings

In connection with our acquisition of Cerner, we assumed:

•$1.0 billion par value of legacy Cerner senior notes. The acquisition triggered a mandatory offer to prepay such senior notes in accordance with the terms of the underlying note purchase agreements. Holders of $931 million par value of senior notes exercised the option for prepayment, and accordingly, such notes together with accrued interest were redeemed on June 8, 2022, and the remaining outstanding senior notes together with accrued interest were redeemed during the second quarter of fiscal 2023; and
•$600 million of principal amount of revolving credit loans. The entire loan along with accrued interest was settled and the credit facility was terminated on June 8, 2022.

Commercial Paper Program and Commercial Paper Notes

During the first half of fiscal 2023, our commercial paper program was increased to $6.0 billion. Our commercial paper program allows us to issue and sell unsecured short-term promissory notes pursuant to a private placement exemption from the registration requirements under federal and state securities laws pursuant to dealer agreements with various banks and an Issuing and Paying Agency Agreement with Deutsche Bank Trust Company Americas.

There were $1.9 billion of outstanding commercial paper notes as of November 30, 2022 (none outstanding as of May 31, 2022) that mature at various dates through March 2023. The effective interest rate, including issuance costs for the second quarter and first half of fiscal 2023, was 4.48%. We use the net proceeds from the issuance of commercial paper for general corporate purposes.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

There have been no other significant changes in our notes payable or other borrowing arrangements that were disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2022.

6**.**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). In the first half of fiscal 2023, our management supplemented the 2022 Restructuring Plan to reflect additional actions that we expect to take. The total estimated restructuring costs associated with the 2022 Restructuring Plan are up to $927 million and will be recorded to the restructuring expense line item within our condensed consolidated statements of operations as they are incurred. We recorded $284 million and $92 million of restructuring expenses in connection with the 2022 Restructuring Plan in the first half of fiscal 2023 and 2022, respectively. We expect to incur the majority of the estimated remaining $420 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, 2022(2)Six Months Ended November 30, 2022Accrued November 30, 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$34$156$2$(109)$(1)$82$246$529
Hardware710—(8)(1)82132
Services915—(10)(1)133136
Other101001(74)(1)36209330
Total 2022 Restructuring Plan$60$281$3$(201)$(4)$139$507$927
Total other restructuring plans(6)$71$—$(3)$(13)$(2)$53
Total restructuring plans$131$281$—$(214)$(6)$192
(1)Restructuring costs recorded to each of the operating segments presented primarily related to employee severance costs. Other restructuring costs represented employee severance costs not related to our operating segments and certain other restructuring plan costs.
(2)As of November 30, 2022 and May 31, 2022, 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 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 non-cash adjustments.
(6)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)

November 30, 2022

(Unaudited)

7**.**DEFERRED REVENUES

Deferred revenues consisted of the following:

(in millions)November 30, 2022May 31, 2022
Cloud services and license support$7,758$7,406
Hardware495555
Services401360
Cloud license and on-premise license5136
Deferred revenues, current8,7058,357
Deferred revenues, non-current (in other non-current liabilities)773753
Total deferred revenues$9,478$9,110

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.

8**.**STOCKHOLDERS’ DEFICIT

Common Stock Repurchases

Our Board of Directors has approved a program for us to repurchase shares of our common stock. As of November 30, 2022, approximately $8.5 billion remained available for stock repurchases pursuant to our stock repurchase program. We repurchased 13.6 million shares for $981 million during the six months ended November 30, 2022 and 170.9 million shares for $15.0 billion during the six months ended November 30, 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.

Dividends on Common Stock

In December 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 January 24, 2023 to stockholders of record as of the close of business on January 10, 2023. 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 2023 Stock‑Based Awards Activity and Compensation Expense

During the first half of fiscal 2023, we issued 73 million restricted stock-based units (RSUs), substantially all of which were part of our annual stock-based award process, and assumed 5 million RSUs in connection with our acquisition of Cerner. All issued and assumed RSUs are subject to service-based vesting restrictions. These fiscal

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

2023 stock-based award issuances were partially offset by stock-based award forfeitures and cancellations of 7 million shares during the first half of fiscal 2023.

The RSUs that were granted during the six months ended November 30, 2022 have similar vesting restrictions and contractual lives and were valued using methodologies of a similar nature as those described in Note 12 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2022.

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

Three Months Ended November 30,Six Months Ended November 30,
(in millions)2022202120222021
Cloud services and license support$113$50$204$90
Hardware5497
Services35186032
Sales and marketing151120275215
Research and development510423932767
General and administrative9566179115
Total stock-based compensation$909$681$1,659$1,226
9**.**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 the tax 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. Our effective tax rates were 18.8% and 13.4% for the three and six months ended November 30, 2022, respectively, and our effective tax benefit rates were (16.6%) and (2.1%) for the three and six months ended November 30, 2021, respectively.

Our net deferred tax assets were $4.9 billion and $6.8 billion as of November 30, 2022 and May 31, 2022, 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 2021. Our U.S. federal income tax returns have been examined for all years prior to fiscal 2011 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 or have examined returns of Oracle and various acquired entities for years through fiscal 2022. Many of the relevant tax years are at an advanced stage in examination or subsequent controversy resolution processes. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal 2001.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

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 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.

10**.**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.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

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.

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 November 30,Six Months Ended November 30,
(in millions)2022202120222021
Cloud and license:
Revenues$10,033$8,791$19,354$16,974
Cloud services and license support expenses1,7471,1843,3672,337
Sales and marketing expenses1,9341,6963,8643,322
Margin(1)$6,352$5,911$12,123$11,315
Hardware:
Revenues$850$767$1,613$1,530
Hardware products and support expenses279221522459
Sales and marketing expenses8388162177
Margin(1)$488$458$929$894
Services:
Revenues$1,392$802$2,753$1,583
Services expenses1,1116312,1181,240
Margin(1)$281$171$635$343
Totals:
Revenues$12,275$10,360$23,720$20,087
Expenses5,1543,82010,0337,535
Margin(1)$7,121$6,540$13,687$12,552
(1)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 income or expenses, net. Refer to the table below for a reconciliation of our total margin for operating segments to our income (loss) before income taxes as reported per our condensed consolidated statements of operations.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

The following table reconciles total operating segment margin to income (loss) before income taxes:

Three Months Ended November 30,Six Months Ended November 30,
(in millions)2022202120222021
Total margin for operating segments$7,121$6,540$13,687$12,552
Research and development(2,158)(1,754)(4,251)(3,438)
General and administrative(366)(319)(777)(618)
Amortization of intangible assets(907)(299)(1,826)(603)
Acquisition related and other(62)(4,667)(103)(4,687)
Restructuring(137)(32)(281)(70)
Stock-based compensation for operating segments(304)(192)(548)(344)
Expense allocations and other, net(116)(101)(207)(190)
Interest expense(856)(679)(1,643)(1,384)
Non-operating (expenses) income, net(71)7(251)(34)
Income (loss) before income taxes$2,144$(1,496)$3,800$1,184

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

Three Months Ended November 30,Six Months Ended November 30,
(in millions)2022202120222021
Americas$7,786$5,736$14,978$11,056
EMEA(1)2,8952,9535,5865,737
Asia Pacific1,5941,6713,1563,294
Total revenues$12,275$10,360$23,720$20,087
(1)Comprised of Europe, the Middle East and Africa

The following table presents our cloud services and license support revenues by offerings:

Three Months Ended November 30,Six Months Ended November 30,
(in millions)2022202120222021
Cloud services$3,813$2,667$7,392$5,128
License support4,7854,8879,6239,797
Total cloud services and license support revenues$8,598$7,554$17,015$14,925

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

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

Three Months Ended November 30,Six Months Ended November 30,
(in millions)2022202120222021
Applications cloud services and license support$4,080$3,149$8,096$6,190
Infrastructure cloud services and license support4,5184,4058,9198,735
Total cloud services and license support revenues$8,598$7,554$17,015$14,925
11.EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) 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 should Oracle have net income for the particular reporting period. The following table sets forth the computation of basic and diluted earnings (loss) per share:

Three Months Ended November 30,Six Months Ended November 30,
(in millions, except per share data)2022202120222021
Net income (loss)$1,741$(1,247)$3,289$1,209
Weighted average common shares outstanding2,6952,6942,6902,731
Dilutive effect of employee stock plans51—5792
Dilutive weighted average common shares outstanding2,7462,6942,7472,823
Basic earnings (loss) per share$0.65$(0.46)$1.22$0.44
Diluted earnings (loss) per share$0.63$(0.46)$1.20$0.43
Shares subject to anti-dilutive restricted stock-based awards and stock options excluded from calculation(1)641216831
(1)These weighted shares relate to anti-dilutive restricted service based stock-based awards as calculated using the treasury stock method and contingently issuable shares pursuant to Performance Stock Options arrangements. Such shares could be dilutive in the future.
12.LEGAL PROCEEDINGS

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)

November 30, 2022

(Unaudited)

On May 4, 2018, our Board of Directors established a Special Litigation Committee (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.

On December 23, 2021, the Board member defendant brought a motion for summary judgment, and on May 20, 2022, the court granted this motion in part and denied this motion in part. This Board member remains a defendant in this case. Trial commenced on July 18, 2022, and has concluded. On November 18, 2022, the court held a final hearing on the parties’ post-trial briefing. The court has not yet issued a decision.

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. On October 8, 2021, plaintiffs filed a motion for class certification, which the court granted on May 9, 2022. On May 23, 2022, defendants filed a petition in the Ninth Circuit Court of Appeals for permission to appeal the court’s order granting class certification, and plaintiffs filed an opposition on June 2, 2022. On June 3, 2022, the District Court “So Ordered” a stipulation by the parties, which vacated all dates in this case because the parties had reached an agreement to settle this action, subject to the court’s approval. On June 8, 2022, the Ninth Circuit Court of Appeals granted defendants’ unopposed motion to stay the petition for permission to appeal in light of the proposed settlement. On September 15, 2022, the District Court granted plaintiffs’ motion for preliminary

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

November 30, 2022

(Unaudited)

approval of the proposed settlement, under which the Company will pay $17,500,000 to settle this matter. This sum includes all fees and costs. A final approval hearing is scheduled for January 12, 2023.

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 the parties were scheduled to participate in a mediation on October 14, 2022, that mediation was canceled. On October 28, 2022, the District Court “So Ordered” a stipulation extending the stay in this case until November 30, 2022, and on December 7, 2022, the court signed a second stipulation, extending the stay until January 31, 2023.

While Oracle continues to evaluate these claims, we do not believe these matters 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.

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