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Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2006
17. GUARANTEES
Our software license agreements generally include certain provisions for indemnifying customers against liabilities if our software products infringe a third
party’s intellectual property rights. To date, we have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities
related to such obligations in our consolidated financial statements. Certain of our software license agreements also include provisions indemnifying customers
against liabilities in the event we breach confidentiality or service level requirements.
Our software license agreements also generally include a warranty that our software products will substantially operate as described in the applicable program
documentation for a period of one year after delivery. We also warrant that services we perform will be provided in a manner consistent with industry standards
for a period of 90 days from performance of the service. To date, we have not incurred any material costs associated with these warranties.
18. COMMITMENTS
Lease Commitments
We lease certain facilities and furniture and equipment under operating leases. As of May 31, 2006, future minimum annual operating lease payments and future
minimum payments to be received from non-cancelable subleases were as follows:
(in millions)
Year Ended
May 31,
2007 $ 414
2008 227
2009 195
2010 157
2011 117
Thereafter 306
Future minimum operating lease payments 1,416
Less: Minimum payments to be received from non-cancelable subleases (120)
Total, net $ 1,296
Lease commitments include future minimum rent payments for facilities that we have vacated pursuant to our restructuring and merger integration activities, as
discussed in Note 3. We have approximately $559 million in facility obligations, net of estimated sublease income and other costs, in accrued restructuring for
these locations in our consolidated balance sheet at May 31, 2006.
Rent expense was $175 million, $174 million and $192 million for fiscal years 2006, 2005 and 2004, respectively, net of sublease income of approximately $23
million, $10 million and $10 million, respectively. Certain lease agreements contain renewal options providing for an extension of the lease term.
Property Commitment
In March 2006, one of our subsidiaries signed a definitive agreement to purchase land and buildings for approximately $342 million, of which approximately $66
million was paid in fiscal 2006. Future remaining commitments are approximately $69 million in fiscal 2007 and $207 million in fiscal 2008.
98
Source: ORACLE CORP, 10-K, July 21, 2006 Powered by Morningstar® Document Research℠