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A Tale of Two Companies

Justin Pearlman

Senior Director, Global Trade Compliance

Oracle Buys Sun

REDWOOD SHORES, Calif., April 20, 2009 -- Oracle Corporation (NASDAQ: ORCL) and Sun

Microsystems (NASDAQ: JAVA) announced today they have entered into a definitive agreement under

which Oracle will acquire Sun common stock for $9.50 per share in cash. The transaction is valued at

approximately $7.4 billion, or $5.6 billion net of Sun’s cash and debt. “We expect this acquisition to be

accretive to Oracle’s earnings by at least 15 cents on a non-GAAP basis in the first full year after closing.

We estimate that the acquired business will contribute over $1.5 billion to Oracle’s non-GAAP operating

profit in the first year, increasing to over $2 billion in the second year. This would make the Sun

acquisition more profitable in per share contribution in the first year than we had planned for the

acquisitions of BEA, PeopleSoft and Siebel combined,” said Oracle President Safra Catz.

“The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and

mission-critical computing systems,” said Oracle CEO Larry Ellison. “Oracle will be the only company

that can engineer an integrated system – applications to disk – where all the pieces fit and work together

so customers do not have to do it themselves. Our customers benefit as their systems integration costs go

down while system performance, reliability and security go up.”

“It was the best of times, it was the

worst of times…”

• - Charles Dickens, A Tale of Two Cities

• Sun is a paradigm shift – change in basic assumptions

• Increased complexity and risk

• Opportunity to improve and extend trade compliance automation

strategy

• Business/compliance process re-engineering

4

*GAAP revenue reported in USD as of May 31, 2011

Scale

• $13.8B in revenue (2007-2008)

• 47,000 customers

• 34,000 employees

Innovation and Investment

• Leading provider of standards-based computing infrastructure,

including enterprise computing systems, software and storage

• Products included servers and workstations based on its own

SPARC processors; storage systems; and, a suite of software

products (including Solaris), as well as Java, MySQL, and NFS

• Main manufacturing facilities were located in Hillsboro, Oregon and

Linlithgow, Scotland

Sun Microsystems

*GAAP revenue reported in USD as of May 31, 2011

Scale

• $35.6B in revenue on a trailing twelve-month basis*

• #1 in 50 product or industry categories

• 370,000 customers

• 20,000 partners

• 108,000 employees

• 10 million developers in Oracle online communities

Innovation and Investment

• 15,500 customer support specialists, speaking 27 languages

• 20,000 implementation consultants

• 1.5 million students supported annually

• 870 independent Oracle user groups with 355,000 members

Oracle Corporation

Two Companies

Sun

• 32 Trade Compliance FTE (30k employees globally)

• >$4M annual operating budget

• Combined Export and Customs Functions

• Reporting through Legal Compliance & Ethics

• More operationally focused

• Combination of SAP GTS global trade application, customized and manual solutions

• Compliance disclosures

Oracle

• 2 Trade Compliance FTE (80k employees globally)

• <2M annual operating budget

• Separate Export and Customs Functions

• Reporting through Chief Corporate Architect and Tax, respectively

• Concentrate on compliance oversight

• Oracle ITM Adapter, 3rd party compliance content, customized solutions

• Clean compliance record

Two Compliance Challenges

Sun (Complex and Decentralized)

• Export from US, UK, NL

• Importer of record in >15 countries ($1.5B in imports in 2008)

• Hardware, firmware, software...

• Global R&D Centers

• Global Spares Hubs

• Global Supplier Network, Internal and 3rd Party Manufacturing

• Multiple instances: 10.7, 11i, Soleil…

• >24 download sites

• Extensive ITAR portfolio (SunFed, Sub Labs, Test Facilities)

Oracle (Less Complex and Centralized)

• Export from US, IE

• Few imports

• Software distribution

• Global Single Instance

• Source code access controls

• 3 download sites: EPD, OTN, MOS

• Limited ITAR portfolio

End State Objective

• Decommission SAP GTS, implement Oracle GTM

• Enable ongoing fulfillment in a compliant manner

• Meet Sun’s legacy functionality/integration, extend to Oracle business

• GTM must have better or same performance as SAP GTS

• GTM must handle high volumes, including web client screening

• Accuracy of compliance control for license determination and RPLS

• Improve screening efficiency by proper configuration of RPLS engine

• Right-size staff (14 FTE, >50% reduction)

Integration, Assimilation, & Indoctrination

2008 Pre-Acquisition Sun/Oracle GTM Collaboration

Apr ‘09 Acquisition of Sun Announced

Oct ‘09 GTM Team Hands-on Work (Phase 1)

Nov ’09 Business Requirement Gathering

• GTM Application Set-up & Configuration

Jan ’10 Oracle/Sun Legal Entity Combination

Jun ’10 GTM Phase 1

• Beta Environment, Validating Set-ups, Items,

Parties, Shipsets, UAT, Bugs, etc.

Aug ’10 GTM (6.1) Phase 1 Go-Live

Jan ’11 GTM Phase 2 Go-Live

Jun ’11 GTM (6.2) Phase 3 Go-Live

• Aug/Dec ’11 Extend GTM to Spares and Oracle E-Delivery

Internal Implementation ProjectTimeline

Oracle‟s Trade Compliance AxiomsInternal GTM Automation Requirements

• Must assist with compliance objective

• Must support from anywhere to everywhere demands

• Must be agile and adaptive to business and regulatory change

• Must enable and support efficient and effective compliance program

• Must be business friendly, accessible, and available

• Must help make the complex simple

“Thoughtomation”

• It’s the data, stupid. Or, better yet: it’s the stupid data!

Quality (garbage in = garbage out)

Availability/Access

Centralize, Standardize, Automate

• Automating bad business process leads to automated

bad business process

• Configurability essential to meeting changing business,

regulatory, and technology challenges

• Setup changes to be made by business user, minimizing

IT dependency

Automation RoadmapCurrent Status and Next Steps

Phase 2 (Live 01/07/11)

o Bi-directional integration with Oracle GSI R12.1.3 using BPEL

o Support Oracle’s trade compliance processes for hardware transactions

o Restricted party screening of customers and suppliers

o Schedule B/Harmonized system upload

Phase 3 (Jun „11)

o Upgrade/patching to GTM 6.2 and integration with Oracle GSI R12.1.3 –

remove dependency on ITM adaptor

o Apply Restricted Party Screening to Oracle Software orders

o Automatic re-screening of change orders (end-use, end-user, bill to, ship to,

sold to, quantity, ship from inventory org.)

o Manual export re-screening and hold functions

o Return-to-Vendor handling (RTV)/Return Material Authorization (RMA)

o Flat file/batch screening

o Extend automation to spares/repairs, document management, E-Delivery

Global StatisticsScope:

• All domestic and international hardware, software, and web client orders

• Multiple distribution points

• GTM export licensing logic applied to all countries/territories

Volumes:

• Daily volume averages:

o 2,500 software transactions per day

o Between 8k and 10k transaction lines per day (sales order lines)

o Hundreds of hardware transactions per day

o Thousands of Spares transactions per day

• Significant volume through web clients (tens of thousands per day)

• Achieving a target RPLS hit rate of <2%, permitting better visibility to transactions of interest and driving significant operational efficiency.

• 700-1500 GTM updates (item synchronization) per day

• 2k parties updated per hour (every 10 minutes) – account/ supplier parties and addresses created/updated in GSI and synchronized with GTM

• Daily RPLS upload to ensure current and accurate screening data

• >130 Red Flag words

Value Delivered

Operational ROI:

• Centralized, Standardized,

Automated

Product Classification

Restricted Party List Screening

(RPLS)

License Determination

• Improved service

• Reduced operating costs

• From reactive to proactive

• Actionable intelligence

• Redefined cost-center value

proposition

Supply Chain Value:

• Trade compliance automation critical

to efficient fulfillment

• Does not enable bad supply chain

process, assists in identifying and

addressing it

• Product classification and license

determination required for fulfillment

process

• Greater supply chain/business

process visibility and collaboration

• Compliance is not a process

constraint

Questions & Answers