Oracle 2005 Annual Report Download - page 42

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Table of Contents
renewal. To the extent these underlying support contracts are renewed, we will recognize the revenue for the full value of the contracts over the support periods,
the majority of which are one year.
Software license updates and product support expenses increased primarily due to higher salary and benefits associated with increased headcount to support the
expansion of our customer base and higher bonuses as a result of increased revenue levels. The software license updates and product support margin as a
percentage of revenues decreased primarily due to incremental amortization of intangible assets.
Fiscal 2005 Compared to Fiscal 2004: Excluding the effect of currency rate fluctuations, software license updates and product support revenues increased as a
result of the renewal of a substantial majority of the subscription base eligible for renewal, the addition of software license updates and product support revenues
associated with new software license revenues recognized in fiscal 2005, more timely contract renewals, as well as $258 million in revenues from the expansion
of our customer base resulting from the acquisition of PeopleSoft. Excluding the effect of currency rate fluctuations, the Americas contributed 53% to the growth
in software license updates and product support revenues, EMEA contributed 32% and Asia Pacific contributed 15%.
Excluding the effect of currency rate fluctuations, software license updates and product support expenses increased primarily due to higher personnel costs
associated with increased headcount, higher discretionary bonuses and facility expenses. The total software license updates and product support margin as a
percentage of revenues decreased in fiscal 2005 primarily due to the amortization of intangible assets.
Services
Services consist of consulting, On Demand and education.
Consulting: Consulting revenues are earned by providing services to customers in the design, implementation, deployment and upgrade of our database,
middleware and applications software. The cost of providing consulting services consists primarily of personnel related expenditures.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2006 Actual Constant 2005 Actual Constant 2004
Consulting Revenues:
Americas $ 1,157 21% 20% $ 956 11% 11% $ 859
EMEA 771 8% 13% 716 23% 15% 581
Asia Pacific 192 39% 42% 138 -7% -12% 149
Total revenues 2,120 17% 19% 1,810 14% 12% 1,589
Expenses:
Cost of services(1) 1,878 21% 22% 1,549 15% 11% 1,347
Stock-based compensation 7 9% 9% 6 * * —
Amortization of intangible assets(2)
4 * * 1 * * —
Total expenses 1,889 21% 23% 1,556 16% 11% 1,347
Total Margin $ 231 -9% -7% $ 254 5% 1% $ 242
Total Margin % 11% 14% 15%
% Revenues by Geography:
Americas 55% 53% 54%
EMEA 36% 39% 37%
Asia Pacific 9% 8% 9%
(1) Excluding stock-based compensation
(2) Included as a component of ‘Amortization of Intangible Assets’ in our consolidated statements of operations
* not meaningful
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Source: ORACLE CORP, 10-K, July 21, 2006 Powered by Morningstar® Document Research℠