Expert Witness Zmijewski - Demonstratives

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Slide 1 UNITED STATES OF AMERICA, ET AL.
vs
ORACLE CORPORATION,

No. C 04-0807 VRW
San Francisco, California



Mark E. Zmijewski

July 1,2004



CHICAGO PARTNERS
A LIMITED LIABILITY COMPANY

140 South Dearborn Street
Chicago, Illinois 60603


Slide 2

DOJ Requests

  • Document and summarize Oracle's "July 2003 Model" and the calculation of Oracle's Alleged Efficiencies
  • Evaluate the reasonableness of the factual foundation and methodologies of the calculation of the Alleged Efficiencies (Verify Oracle's calculation)

Slide 3

Criteria Used to Verify Oracle's Calculation of the Alleged Efficiencies

  • Documentation: If I can identify the documentation that allows one to understand Oracle's calculation (e.g., arithmetic) of the Alleged Efficiencies, I conclude that it has reasonable calculation documentation.
  • Factual Foundation: If Oracle has provided factual bases for the assumptions and inputs into the calculation of the Alleged Efficiencies such that it is verifiable, I conclude that it has reasonable factual foundation.
  • Methodologies and Analyses: If Oracle used standard, widely accepted methodologies and analyses to measure the Alleged Efficiencies and employed these methodologies and analyses appropriately, I conclude that it used reasonable methodologies and analyses.

Slide 4

These Criteria Are Pervasive

They are consistent with the principles used by:

  • Accountants1
  • Financial economists and empirical researchers
  • U.S. Securities and Exchange Commission2
  • Other government agencies3


1 Financial Accounting Standards Board, "Qualitative Characteristics of Accounting Information," Statement of Financial Accounting Concepts No. 2. (1980).

2 Securities and Exchange Commission, "Final Data Quality Assurance Guidelines," (http://www.scc.gov/about/dataqualityguide.html).

3 For example, Office of Management and Budget, "Guidelines for Ensuring and Maximizing the Quality, Objectivity, Utility, and Integrity of Information Disseminated by Federal Agencies," 2001, (http://www.whitehouse.gov/omb/fedreg/reproducible.html). These guidelines implement Section 515 of the Treasury and General Government Appropriations Act for Fiscal Year 2001 (Public Law 106-554; H.R. 5658).


Slide 5

Opinions

  • Oracle's calculation of the Alleged Efficiencies is not verifiable.
  • Oracle did not exclude potential efficiencies attainable as a result of the July 2003 PeopleSoft and J.D. Edwards merger.
  • Oracle did not provide factual bases showing that the Alleged Efficiencies are independent of the projected decline in PeopleSoft and J.D. Edwards' output.

Slide 6

Summary of Oracle's
Alleged Efficiencies Calculation

($ in millions)

  PeopleSoft: R&D G&A S&M Total

 FY03 "Baseline" Costs $340 $125 $505 $969
- FY05 Projected Costs 141 21 0 162
 
= Alleged Efficiencies 199 104 505 807
 
  J.D. Edwards: R&D G&A S&M Total

 FY03 "Baseline" Costs $127 $89 $265 $481
- FY05 Projected Costs 60 17 34 111
 
= Alleged Efficiencies 67 73 231 371
 
  Combined: R&D G&A S&M Total

 FY03 "Baseline" Costs $467 $214 $769 $1,450
- FY05 Projected Costs 201 37 34 273
 
= Alleged Efficiencies 266 177 735 1,178
 

Slide 7

PeopleSoft:
July 2003 Model Assumptions for Alleged Efficiencies Calculation

OPERATING EXPENSE BUILDUP
  Pepper Quarterly Data
Pepper Fiscal Year Ending May 31,
  Mar-02A Jun-02A Sep-02A Dec-02A Mar-03A Jun-03E Aug-03E Nov-03E PF Adj. Feb-04E May-04E 2H FY04E FY05E FY06E FY07E FY08E
RESEARCH &
DEVELOPMENT COSTS
Number of Persons ? ? ? ? ? ? 2,370 2,370 ? ? ? ? ? ? ? ?
Average Salary per R&D Person ($000s) ? ? ? ? ? ? $0.0 $0.0   ? ? ? $97.5 $95.1 $92.7 $90.4
Other Costs per Employee ($000s) ? ? ? ? ? ? $0.0 $0.0   ? ? ? $15.7 $15.3 $14.9 $14.5
Total People's Costs $68.9 $69.6 $68.9 $69.1 $68.2 $68.8 $0.0 $0.0   $29.0 $29.0 $68.1 $113.2 $104.8 $99.5 $94.4
Other R&D Costs ? ? ? ? ? ? $0.0 $0.0   ? ? $14.0 $28.0 $26.0 ? $22.0
Total R&D Costs $82.3 $87.5 $83.0 $88.3 $83.7 $85.0 $0.0 $0.0   $36.0 $36.0 $72.1 $141.2 $130.8 $123.5 $116.4
 
SALES AND
MARKETING COSTS
Number of Quota Reps ? ? ? ? ? ? 437 437 ? 0 0 0 0 ? ? 0
Average Salary per Sales Rep ($000s) $40.0 $40.0 $40.0 $68.8 $40.0 $40.0 $0.0 $0.0   $40.0 $40.0 $160.0 $160.0 $160.0 $160.0 $160.0
Total Direct Sales Costs $18.6 $19.4 $18.6 $30.9 $17.0 $17.5 $0.0 $0.0   $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
 
Number of Other Sales & Marketing ? ? ? ? ? ? 1,080 1,080 ? 0 ? 0 0 ? ? ?
Average Salary per Other S&M ($000s) $28.5 $28.5 $28.5 $28.5 $28.5 $28.5 $0.0 $0.0   $28.5 ? $114.0 $114.0 $114.0 $114.0 $114.0
Total Other Sales Personnel Costs $34.7 $35.6 $32.1 $31.7 $30.2 $30.8 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
 
Other Costs per Employee ($000s) $3.6 $3.6 $3.6 $3.6 $3.6 $3.6 $0.0 $0.0   $3.6 $3.6 ? $14.4 $14.4 $14.4 $14.4
Total S&M Employees 1,682 1,735 1,590 1,564 1,485 1,517 1,517 1,517   0 0 0 0 0 0 0
Total Other People Costs $6.1 $6.2 $5.7 $5.6 $5.3 $5.5 $0.0 $0.0   $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
 
Total People Costs $59.3 $61.3 $56.4 $68.3 $52.6 $53.7 $0.0 $0.0   $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Other S&M Costs $65.3 $64.9 $71.2 $68.1 $67.0 $67.3 $0.0 $0.0   $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Total S&M Costs $124.6 $126.2 $127.6 $136.4 $119.6 $121.0 $0.0 $0.0   $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
 
GENERAL &
ADMINISTRATIVE COSTS
Number of Persons 920 910 895 869 860 865 865 865 (715) 150 150 150 125 100 90 80
Average Salary per G&A Person ($000s) $23.0 $23.0 $23.0 $23.0 $23.0 $23.0 $0.0 $0.0   $23.0 $23.0 $92.0 $92.0 $92.0 $92.0 $92.0
Other Costs per Employee ($000s) $3.7 $3.7 $3.7 $3.7 $3.7 $3.7 $0.0 $0.0   $3.7 $3.7 $7.5 $15.0 $15.0 $15.0 $15.0
Total People Costs $24.6 $24.3 $23.9 $23.2 $23.0 $23.1 $0.0 $0.0   $4.0 $4.0 $8.0 $13.4 $10.7 $9.6 $8.6
Other G&A Costs $5.6 $3.1 $3.3 $9.0 $10.1 $8.9 $0.0 $0.0   $2.0 $2.0 $4.0 $7.5 $6.5 $6.0 $5.5
Writedown of A/R $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0   $62.5 $0.0 $62.5 $0.0 $0.0 $0.0 $0.0
Total G&A Costs $30.2 $27.4 $27.2 $32.2 $33.1 $32.0 $0.0 $0.0   $68.5 $6.0 $74.5 $20.9 $17.2 $15.6 $14.1
 
HEADCOUNT SUMMARY
Customer Support 660 685 690 696 705 715 715 715 (365) 350 340 345 300 280 270 250
Professional Services 2,875 2,850 2,790 2,785 2,780 2,850 2,850 2,850 (1,650 1,200 800 1,000 400 450 450 450
Research & Development 2,375 2,399 2,375 2,379 2,350 2,370 2,370 2,370 (1,370) 1,000 1,000 1,000 1,000 950 925 900
Sales Quota Reps 465 485 465 450 425 437 437 437 (437) 0 0 0 0 0 0 0
Other Sales & Marketing 1,217 1,250 1,125 1,114 1,060 1,080 1,080 1,080 (1,080) 0 0 0 0 0 0 0
General & Administrative 920 910 895 869 860 865 865 865 (715) 150 150 150 125 100 90 80
Total Headcount 8,512 8,579 8,340 8,293 8,180 8,317 8,317 8,317 (5,617) 2,700 2,290 2,495 1,825 1,780 1,735 1,660
 

Note: Average salaries and other costs per employee have been estimated by corporate development.

Source: July 2003 Model, [PSFT Op Model] worksheet (Plaintiffs' Exhibit 3004, page 41).


Slide 8

J.D. Edwards:
July 2003 Model Assumptions for Alleged Efficiencies Calculation

OPERATING EXPENSE BUILDUP
  Jalapeno Quarterly Data
Jalapeno Fiscal Year Ending Pril 30,
  Apr-03A Aug-03E Nov-03E PF Adj. Feb-04E May-04E 2H FY04E FY05E FY06E FY07E FY08E
RESEARCH &
DEVELOPMENT COSTS
Number of Persons ? 1,282 1,282 ? 700 ? 680 575 558 ? ?
Average Salary per R&D Person ($000s)   $0.0 $0.0   $20.0 ? $80.0 $80.0 $80.0 $80.0 $80.0
Other Costs per Employee ($000s)   $0.0 $0.0   $3.5 $3.5 $7.5 $14.0 $14.0 $14.0 $14.0
Total People Costs   $0.0 $0.0   $16.5 $15.5 $32.0 $54.1 $52.5 $51.2 $50.5
Other R&D Costs   $0.0 $0.0   $1.5 $1.5 $3.0 $6.0 $5.8 $5.6 $5.4
Total R&D Costs   $0.0 $0.0   $18.0 $17.0 $35.0 $60.1 $58.3 $56.8 $55.9
 
SALES &
MARKETING COSTS
Number of Quota Reps ? 273 273 ? 80 80 80 75 ? ? ?
Average Salary per Sales Rep   $0.0 $0.0   $40.0 $40.0 $160.0 $160.0 $160.0 $160.0 $160.0
Total Direct Sales Costs   $0.0 $0.0   $3.2 $3.2 $6.4 $12.0 $10.7 $9.6 $8.5
 
Number of Other Sales & Marketing   811 811   20 20 20 17 ? ? ?
Average Salary per Other S&M ($000s)   $0.0 $0.0   $23.8 $23.8 $95.0 $95.0 $95.0 $95.0 $95.0
Total Other Sales Personnel Costs   $0.0 $0.0   $0.5 $0.5 $1.0 $1.6 $1.5 $1.4 $1.2
 
Other Costs per Employee ($000s)   $0.0 $0.0   $3.0 $3.0 $12.0 $12.0 $12.0 $12.0 $12.0
Total S&M Employees   1,084 1,084   100 100 100 92 83 75 66
Total Other People Costs   $0.0 $0.0   $0.3 $0.3 $0.6 $1.1 $1.0 $0.9 $0.8
 
Total People Costs   $0.0 $0.0   $4.0 $4.0 $8.0 $14.7 $13.2 $11.9 $10.5
Commissions on Oracle Migrations (20% of License)   $0.0 $0.0   $0.0 $0.0 $0.0 $6.8 $8.4 $6.4 $5.0
Other S&M Costs   $0.0 $0.0   $2.5 $2.5 $5.0 $12.5 $11.0 $10.0 $8.0
Total S&M Costs   $0.0 $0.0   $6.5 $6.5 $13.0 $34.0 $32.6 $28.3 $23.5
 
GENERAL &
ADMINISTRATIVE COSTS
Number of Persons 672 672 672 (587) 85 82 84 70 67 63 60
Average Salary per G&A Person ($000s)   $0.0 $0.0   $20.0 $20.0 $80.0 $80.0 $80.0 $80.0 $80.0
Other Costs per Employee ($000s)   $0.0 $0.0   $3.3 $3.3 $6.5 $13.0 $13.0 $13.0 $13.0
Total People Costs   $0.0 $0.0   $2.0 $1.9 $3.9 $6.5 $6.2 $5.9 $5.6
Other G&A Costs   $0.0 $0.0   $3.0 $3.0 $6.0 $10.0 $9.5 $9.5 $9.0
Writedown of A/R   $0.0 $0.0   $35.9 $0.0 $35.9 $0.0 $0.0 $0.0 $0.0
Total G&A Costs   $0.0 $0.0   $40.9 $4.9 $45.8 $16.5 $15.7 $15.4 $14.6
 
HEADCOUNT SUMMARY
Customer Support 541 541 541 (91) 450 400 425 290 280 270 260
Professional Services 1,371 1,371 1,371 (741) 630 500 565 360 375 335 300
Research & Development 1,282 1,282 1,282 (582) 700 660 680 575 558 545 537
Sales Quota Reps 273 273 273 (193) 80 80 80 75 67 60 53
Other Sales & Marketing 811 811 811 (791) 20 20 20 17 16 15 13
General & Administrative 672 672 672 (587) 85 82 84 70 67 63 60
Total Headcount 4,950 4,950 4,950 (2,985) 1,965 1,742 1,854 1,387 1,363 1,288 1,223
 

Note: Average salaries and other costs per employee have been estimated by corporate development.

Source: July 2003 Model, [JDEC Op Model] worksheet (Plaintiffs' Exhibit 3004, page 41).


Slide 9

PeopleSoft (Excluding J.D. Edwards):
Calculation of Alleged Efficiencies in R&D

RESEARCH & DEVELOPMENT COSTS
($ in millions unless noted)
FY03 FY05E Delta FY05
Assumption
Number of Persons 2,370 1,000 (1,370) Yes
Average Salary per R&D Person ($000s)   x [$98]   Yes
Other Costs per Employee ($000s)   [$16]   Yes
Total People Costs   = $113    
Other R&D Costs ____ $28 _____ Yes
Total R&D Costs $340 = $141 ($199)  

Slide 10 - Missing


Slide 11 - Missing


Slide 12

Examples of Factual Bases

  • Types of Information - use business records about:
    • Output and level of activity
    • Capacity utilization, labor efficiency and utilization rates
    • Performance variances (actual versus budget)
    • Customer reports - sales reports, bid reports
  • Analyses - use the above factual bases to identify and/or measure:
    • cost-volume-profit relations, relation of various costs to various measures of activity (fixed costs, variable costs)
    • measure average costs (central tendency), growth rates, utilization rates, redundancies

Slide 13 - Missing


Slide 14

Opinion: Oracle did not exclude potential efficiencies attainable as a result of the July 2003 PeopleSoft and J.D. Edwards merger

  PeopleSoft FY03 "Baseline" R&D, S&M, G&A Costs$ 0.97 billion
+ J.D. Edwards FYQ3 "Baseline" R&D, S&M, G&A Costs$ 0.48 billion
  Combined FY03 "Baseline" R&D, S&M, G&A Costs$ 1.45 billion
-Efficiencies that did/will result from the PSFT/JDE Merger??
= Corrected FY03 "Baseline" R&D, S&M, G&A Costs??

Slide 15

Opinion: Oracle did not provide factual bases showing that the Alleged Efficiencies are independent of the projected decline in PeopleSoft and J.D. Edwards' output


Slide 16

PeopleSoft and J.D. Edwards Combined:
Oracle's Projection of Decline in New Customers

July 2003 Model of Oracle's Projection of Decline in New Customers for PeopleSoft and J.D. Edwards combined[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004). For EY03 J.D. Edwards numbers, source is Oracle spreadsheet dated July 7, 2003 (Plaintiffs' Exhibit 901).


Slide 17

PeopleSoft and J.D. Edwards Combined:
Oracle's Projection of Decline in Customers

July 2003 Model of Oracle's Projection of Decline in Customers for PeopleSoft and J.D. Edwards combined[D]

Notes: Customers numbers shown are end of period numbers. "Oracle migrations" are customers that switch from PeopleSoft/J.D. Edwards to Oracle products. Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004).


Slide 18

PeopleSoft and J.D. Edwards Combined:
Oracle's Projection of Decline in Total License Transactions

July 2003 Model of Oracle's Projection of Decline in Total License Transactions for PeopleSoft and J.D. Edwards combined[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004). For FY03 J.D. Edwards numbers, source is Oracle spreadsheet dated July 7, 2003 (Plaintiffs' Exhibit 901).


Slide 19

PeopleSoft and J.D. Edwards Combined:
Oracle's Projection of Declines in R&D, S&M, G&A Costs

July 2003 Model of Oracle's Projection of Decline in R&D, S&M, G&A Costs for PeopleSoft and J.D. Edwards combined[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004).


Slide 20

PeopleSoft and J.D. Edwards Combined:
Oracle's Projection of Declines in License, Maintenance, and Professional Services Costs

July 2003 Model of Oracle's Projection of Declines in License, Maintenance, and Professional Services Costs for PeopleSoft and J.D. Edwards combined[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004). For FY03 J.D. Edwards numbers, source is Oracle spreadsheet dated July 7, 2003 (Plaintiffs' Exhibit 901).
* See "Acquisition Efficiencies Analysis" summary chart (Defendants' Exhibit 7132).


Slide 21

Oracle's Projection of Declines in Total Headcounts

July 2003 Model of Oracle's Projection of Declines in Total Headcounts for PeopleSoft and J.D. Edwards combined[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004).


Slide 22

PeopleSoft and J.D. Edwards Combined:
Oracle's Projection of Declines in Headcounts by Types of Costs

July 2003 Model of Oracle's Projection of Declines in Headcounts by Types of Costs for PeopleSoft and J.D. Edwards combined[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004).


Slide 23

PeopleSoft and J.D. Edwards Combined:
Oracle's Projection of % Declines in Output and Costs

July 2003 Model of Oracle's Projection of Percent Declines in Output and Costs for PeopleSoft and J.D. Edwards combined[D]

Notes: Total customers shown are end of period numbers. Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004). For certain FY03 J.D. Edwards numbers, source is Oracle spreadsheet dated July 7, 2003 (Plaintiffs' Exhibit 901).


Slide 24

Summary of July 2003 Model Projected % Declines in "Output/" Costs, and Headcount
(From FY03 to FY05)

  PeopleSoft J.D. Edwards Combined

Output:
 
   New Customers -100% -13% -67%
   Total Customers -100% -8% -42%
   Total License Transactions -100% -11% -56%
 
Costs:  
   Components of the Alleged Efficiencies
   R&D Costs -58% -53% -57%
   S&M Costs -100% -87% -96%
   G&A Costs -83% -82% -83%
 
   Total R&D, S&M, G&A Costs -83% -77% -81%
 


   License Costs: -80% -77% -78%
   Maintenance Costs: -64% -47% -58%
   Professional Services Costs: -86% -75% -82%
 
   Total License, Maintenance, Prof Services Costs -81% -69% -77%
 


Total Headcount: -78% -72% -76%
 

Notes: Output numbers include Oracle migration customers. Total customers are end of period numbers.
Source: July 2003 Model (Plaintiffs' Exhibit 3004). For certain FY03 J.D. Edwards numbers, source is Oracle spreadsheet dated July 7, 2003 (Plaintiffs' Exhibit 901).


Slide 25

Summary of July 2003 Model Projected % Declines in "Output," Costs, and Headcount
(From FY03 to FY08)

  PeopleSoft J.D. Edwards Combined

Output:
 
   New Customers -100% -23% -63%
   Total Customers -100% -17% -58%
   Total License Transactions -100% -20% -61%
 
Costs:  
   Components of the Alleged Efficiencies
   R&D Costs -66% -100% -89%
   S&M Costs -56% -91% -84%
   G&A Costs -63% -97% -87%
 
   Total R&D, S&M, G&A Costs -87% -80% -85%
 


   License Costs: -77% -70% -86%
   Maintenance Costs: -85% -52% -79%
   Professional Services Costs: -81% -64% -83%
 
   Total License, Maintenance, Prof Services Costs -82% -74% -79%
 


Total Headcount: -80% -75% -78%
 

Notes: Output numbers include Oracle migration customers. Total customers are end of period numbers.
Source: July 2003 Model (Plaintiffs' Exhibit 3004). For certain FY03 J.D. Edwards numbers, source is Oracle spreadsheet dated July 7, 2003 (Plaintiffs' Exhibit 901).


Slide 26

Additional Charts


Slide 27

PeopleSoft (Excluding J.D. Edwards):
Oracle's Projection of Decline in New Customers

July 2003 Model of Oracle's Projection of Decline in New Customers for PeopleSoft (excluding J.D. Edwards)[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004).


Slide 28

PeopleSoft (Excluding J.D. Edwards):
Oracle's Projection of Decline in Customers

July 2003 Model of Oracle's Projection of Decline in Customers for PeopleSoft (excluding J.D. Edwards)[D]

Notes: Customers numbers shown are end of period numbers. "Oracle migrations" are customers that switch from PeopleSoft to Oracle products.
Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004).


Slide 29

PeopleSoft (Excluding J.D. Edwards):
Oracle's Projection of Decline in Total License Transactions

July 2003 Model of Oracle's Projection of Decline in Total License Transactions for PeopleSoft (excluding J.D. Edwards)[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004).


Slide 30

PeopleSoft (Excluding J.D. Edwards):
Oracle's Projection of Declines in R&D, S&M, G&A Costs

July 2003 Model of Oracle's Projection of Declines in R&D, S&M, G&A Costs for PeopleSoft (excluding J.D. Edwards)[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs1 Exhibit 3004).


Slide 31

PeopleSoft (Excluding J.D. Edwards):
Oracle's Projection of Declines in License, Maintenance, and Professional Services Costs

July 2003 Model of Oracle's Projection of Declines in License, Maintenance, and Professional Services Costs for PeopleSoft (excluding J.D. Edwards)[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004).
* See "Acquisition Efficiencies Analysis" summary chart (Defendants' Exhibit 7132).


Slide 32

PeopleSoft (Excluding J.D. Edwards):
Oracle's Projection of Declines in Headcounts by Types of Costs

July 2003 Model of Oracle's Projection of Declines in Headcounts by Types of Costs for PeopleSoft (excluding J.D. Edwards)[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004).


Slide 33

PeopleSoft (Excluding J.D. Edwards):
Oracle's Projection of % Declines in Output and Costs

July 2003 Model of Oracle's Projection of Percentage Declines in Output and Costs for PeopleSoft (excluding J.D. Edwards)[D]

Notes: Total customers shown are end of period numbers. Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004).


Slide 34

J.D. Edwards:
Oracle's Projection of Decline in New Customers

July 2003 Model of Oracle's Projection of Decline in New Customers for J.D. Edwards[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004). For FY03 J.D. Edwards numbers, source is Oracle spreadsheet dated July 7, 2003 (Plaintiffs' Exhibit 901).


Slide 35

J.D. Edwards:
Oracle's Projection of Decline in Customers

July 2003 Model of Oracle's Projection of Decline in Customers for J.D. Edwards[D]

Notes: Customers numbers shown are end of period numbers. "Oracle migrations" are customers that switch from J.D. Edwards to Oracle products.
Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004).


Slide 36

J.D. Edwards:
Oracle's Projection of Decline in Total License Transactions

July 2003 Model of Oracle's Projection of Decline in Total License Transactions for J.D. Edwards[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004). For FY03 J.D. Edwards numbers, source is Oracle spreadsheet dated July 7, 2003 (Plaintiffs' Exhibit 901).


Slide 37

J.D. Edwards:
Oracle's Projection of Declines in R&D, S&M, G&A Costs

July 2003 Model of Oracle's Projection of Declines in R&D, S&M, G&A Costs for J.D. Edwards[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004).


Slide 38

J.D. Edwards:
Oracle's Projection of Declines in License, Maintenance, and Professional Services Costs

July 2003 Model of Oracle's Projection of Declines in License, Maintenance, and Professional Services Costs for J.D. Edwards[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004). For FY03 J.D. F.dwards numbers, source is Oracle spreadsheet dated July 7, 2003 (Plaintiffs' Exhibit 901).
* See "Acquisition Efficiencies Analysis" summary chart (Defendants' Exhibit 7132).


Slide 39

J.D. Edwards:
Oracle's Projection of Declines in Headcounts by Types of Costs

July 2003 Model of Oracle's Projection of Declines in Headcounts by Types of Costs for J.D. Edwards[D]

Notes: Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004).


Slide 40

J.D. Edwards:
Oracle's Projection of % Declines in Output and Costs

July 2003 Model of Oracle's Projection of Percent Declines in Output and Costs for J.D. Edwards[D]

Notes: Total customers shown are end of period numbers. Charts exclude FY04 since the July 2003 Model only provides partial year forecast for FY04.
Source: July 2003 Model (Plaintiffs' Exhibit 3004). For certain FY03 J.D. Fdwards numbers, source is Oracle spreadsheet dated July 7, 2003 (Plaintiffs' Exhibit 901).


Slide 41

J.D. Edwards:
Calculation of Alleged Efficiencies in R&D

RESEARCH & DEVELOPMENT COSTS
($ in millions unless noted)
FY03   FY05E Delta FY05
Assumption
 
Number of Persons 1,282   575 (707) Yes
Average Salary per R&D Person ($000s)   X [$80]   Yes
Other Costs per Employee ($000s)   [$14]   Yes
Total People Costs   = $54    
Other R&D Costs ____ + $6 ____ Yes
Total R&D Costs $127 = $60 ($67)  

Slide 42

J.D. Edwards:
Calculation of Alleged Efficiencies in G&A

GENERAL & ADMINISTRATIVE COSTS
($ in millions unless noted)
FY03   FY05E Delta FY05
Assumption
 
Number of Persons 672   70 (602) Yes
Average Salary per R&D Person ($000s)   X [$80]   Yes
Other Costs per Employee ($000s)   [$14]   Yes
Total People Costs   = $7    
Other G&A Costs   + $10   Yes
Writedown of A/R ____ + $0 ____ Yes
Total G&A Costs $89 = $17 ($73)  

Slide 43

J.D. Edwards:
Calculation of Alleged Efficiencies in S&M

SALES AND MARKETING COSTS
($ in millions unless noted)
FY03   FY05E Delta FY05
Assumption
 
Number of Quota Reps     75   Yes
Average Salary per Sales Rep ($000s)   X $160   Yes
Total Direct Sales Costs   $12   Yes
 
Number of Other Sales & Marketing     17   Yes
Average Salary per Other S&M ($000s)   X $95   Yes
Total Other Sales Personnel Costs   = $2    
 
Other Costs per Employee ($000s)     $12   Yes
Total S&M Employees 1,084 X 92 (992)  
Total Other People Costs   = $1    
 
Total People Costs     $15    
Commissions on Oracle Migrations (20% of License)   + $7   Yes
Other S&M Costs ____ + $13 ____  
Total S&M Costs $265 = $34 ($231)  
Updated August 14, 2015

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