Oracle Corporation et al v. SAP AG et al

Filing 783

Declaration of Holly A. House in Support of 781 MOTION No. 1: To Exclude Testimony of Defendants' Expert Stephen Clarke filed byOracle EMEA Limited, Oracle International Corporation, Oracle USA Inc., Siebel Systems, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J, # 11 Exhibit K, # 12 Exhibit L, # 13 Exhibit M, # 14 Exhibit N, # 15 Exhibit O, # 16 Exhibit P, # 17 Exhibit Q, # 18 Exhibit R)(Related document(s) 781 ) (House, Holly) (Filed on 8/19/2010)

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Oracle Corporation et al v. SAP AG et al Doc. 783 Att. 12 EXHIBIT L Dockets.Justia.com Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations We are the world's largest enterprise software company. We are organized into two businesses, software and services, which are further divided into five operating segments. Each of these operating segments has unique characteristics and faces different opportunities and challenges. Although we report our actual results in United States dollars, we conduct a significant number of transactions in currencies other than United States dollars. Therefore, we present constant currency information to provide a framework for assessing how our underlying business performed excluding the effect of foreign currency rate fluctuations. An overview of our five operating segments follows. Software Business Our software business is comprised of two operating segments: (1) new software license revenues and (2) software license updates and product support revenues. We expect that our software business revenues will continue to increase, which should allow us to improve margins and profits and continue to make investments in research and development. New Software Licenses: We license our database and middleware as well as our applications software to businesses of many sizes, government agencies, educational institutions and resellers. The growth in new software license revenues is affected by the strength of general economic and business conditions, governmental budgetary constraints, the competitive position of our software products and acquisitions. The new software license business is also characterized by long sales cycles. The timing of a few large software license transactions can substantially affect our quarterly new software license revenues. Since our new software license revenues in a particular quarter can be difficult to predict as a result of the timing of a few large software license transactions, we believe that analysis of new software revenues on a trailing 4-quarter period provides more visibility into the underlying fundamental performance of our software revenues than analysis of quarterly revenues. New software license revenues represented 33% of our total revenues in fiscal 2007. Our new software license margins have been affected by the amortization of intangible assets associated with companies we have acquired. Competition in the software business is intense. Our goal is to maintain a first or second position in each of our software product categories and certain industry segments as well as to grow our software revenues faster than our competitors. We believe that the features and functionality of our software products are as strong as they have ever been. We have focused on lowering the total cost of ownership of our software products by improving integration, decreasing installation times, lowering administration costs and improving the ease of use. Reducing the total cost of ownership of our products provides our customers with a higher return on their investment, which we believe will create more demand for our products and services and provide us with a competitive advantage. We have also continued to focus on improving the overall quality of our software products and service levels. We believe this will lead to higher customer satisfaction and loyalty and help us achieve our goal of becoming our customers' leading technology advisor. Software License Updates and Product Support: Customers that purchase software license updates and product support are granted rights to unspecified product upgrades and maintenance releases issued during the support period, as well as technical support assistance. In fiscal 2007, we also introduced Oracle Unbreakable Linux Support, which provides enterprise level support for the Linux operating system. Substantially all of our customers renew their software license updates and product support contracts annually. The growth of software license updates and product support revenues is influenced by three factors: (1) the support contract base of companies acquired, (2) the renewal rate of the support contract base and (3) the amount of new support contracts sold in connection with the sale of new software licenses. Software license updates and product support revenues, which represent approximately 46% of our total revenues in fiscal 2007, are our highest margin business unit. Support margins during fiscal 2007 were 90%, and accounted for 76% of our total margins over the same respective period. We believe that software license updates and product support revenues and margins will continue to grow for the following reasons: Acquisitions over the past three years have significantly increased our support contract base, as well as the portfolio of products available to be licensed. 25 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on June 29, 2007. ORACLE CORPORATION By: /s/ LAWRENCE J. ELLISON Lawrence J. Ellison, Chief Executive Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the date indicated. Name Title Date /s/ LAWRENCE J. ELLISON Lawrence J. Ellison /s/ SAFRA A. CATZ Safra A. Catz /s/ WILLIAM COREY WEST William Corey West /s/ JEFFREY O. HENLEY Jeffrey O. Henley /s/ JEFFREY BERG Jeffrey Berg /s/ H. RAYMOND BINGHAM H. Raymond Bingham /s/ MICHAEL J. BOSKIN Michael J. Boskin /s/ HECTOR GARCIA-MOLINA Hector Garcia-Molina /s/ JACK F. KEMP Jack F. Kemp /s/ DONALD L. LUCAS Donald L. Lucas /s/ CHARLES E. PHILLIPS, JR. Charles E. Phillips, Jr. /s/ NAOMI O. SELIGMAN Naomi O. Seligman Chief Executive Officer and Director (Principal Executive Officer) Chief Financial Officer and Director (Principal Financial Officer) Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer) Chairman of the Board of Directors June 29, 2007 June 29, 2007 June 29, 2007 June 29, 2007 Director June 29, 2007 Director June 29, 2007 Director June 29, 2007 Director June 29, 2007 Director June 29, 2007 Director June 29, 2007 Director June 29, 2007 Director June 29, 2007 111 ORACLE CORPORATION INDEX OF EXHIBITS Exhibit No. Exhibit Titles 21.01 23.01 31.01 31.02 32.01 Subsidiaries of the Registrant Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm Certification Pursuant to Section 302 of the Sarbanes-Oxley Act--Lawrence J. Ellison Certification Pursuant to Section 302 of the Sarbanes-Oxley Act--Safra A. Catz Certification Pursuant to Section 906 of the Sarbanes-Oxley Act

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