Oracle 2005 Annual Report Download - page 45

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Table of Contents
Education expenses increased due to incremental headcount and associated personnel related expenditures related to Siebel education employees and higher
external contractor costs.
Fiscal 2005 Compared to Fiscal 2004: Education revenues increased due to revenues related to PeopleSoft. Excluding the effect of currency rate fluctuations, the
Americas contributed 127%, EMEA contributed 7%, while Asia Pacific contributed a negative 34% to the overall increase in education revenues.
Excluding the effect of currency rate fluctuations, the increase in education expenses is primarily due to fees paid to education partners that provide training to
our customers.
Research and Development Expenses: Research and development expenses consist primarily of personnel related expenditures. We intend to continue to invest
significantly in our research and development efforts because, in our judgment, they are essential to maintaining our competitive position.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2006 Actual Constant 2005 Actual Constant 2004
Research and development(1) $ 1,859 25% 24% $ 1,481 18% 17% $ 1,254
Stock-based compensation 13 31% 31% 10 * * —
Amortization of intangible assets(2)
17 -49% -38% 32 39% 39% 23
Total expenses $ 1,889 24% 24% $ 1,523 19% 18% $ 1,277
% of Total Revenues 13% 13% 13%
(1) Excluding stock-based compensation
(2) Included as a component of ‘Amortization of Intangible Assets’ in our consolidated statements of operations
* not meaningful
Fiscal 2006 Compared to Fiscal 2005: Research and development headcount increased by approximately 1,300 in fiscal 2006, which represented a 13% increase
in the database and middleware divisions and a 5% increase in the applications division. The increase in database and middleware headcount was primarily due
to hiring of resources outside the United States, while the increase in applications headcount was primarily due to Siebel resources acquired. Research and
development expenses increased due to incremental salary and benefits for the additional headcount, higher discretionary bonus expenditures and higher facility
and technology costs, partially offset by lower external contractor costs.
Fiscal 2005 Compared to Fiscal 2004: Excluding the effect of currency rate fluctuations, research and development expenses increased in fiscal 2005 due to
higher external contractor costs, as well as higher personnel and related expenditures related to the increase in headcount. In fiscal 2005, total research and
development headcount increased by 2,656 employees or 25%. The database and middleware technology division has continued to hire engineers, resulting in a
6% headcount increase in fiscal 2005. Applications research and development headcount increased 45% in fiscal 2005 as a result of the hiring of former
PeopleSoft engineers.
General and Administrative Expenses: General and administrative expenses primarily consist of personnel related expenditures for information technology,
finance, legal and human resources support functions.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2006 Actual Constant 2005 Actual Constant 2004
General and administrative $ 555 1% 3% $ 550 8% 6% $ 508
% of Total Revenues 4% 5% 5%
42
Source: ORACLE CORP, 10-K, July 21, 2006 Powered by Morningstar® Document Research℠