Oracle 2005 Annual Report Download - page 47

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Table of Contents
Fiscal 2005 Compared to Fiscal 2004: Acquisition related charges increased due to in-process research and development charges, transitional employee related
costs and stock-based compensation charges associated with the PeopleSoft acquisition. In addition, professional fees, which primarily relates to tender offer
costs for PeopleSoft prior to the agreement date, increased in fiscal 2005.
Restructuring: Restructuring expenses consist of Oracle employee severance costs and Oracle duplicate facilities closures which were initiated to improve our
cost structure as a result of acquisitions. For additional information regarding the Oracle restructuring plans, as well as restructuring activities of our acquired
companies, please see Note 3 of Notes to Consolidated Financial Statements.
Year Ended May 31,
(Dollars in millions) 2006 Change 2005 Change 2004
Severance costs $ 85 -33% $ 126 * $ —
Excess facilities — * 21 * —
Total restructuring charges $ 85 -42% $ 147 * $ —
* not meaningful
Fiscal 2006 Compared to Fiscal 2005: Restructuring expenses decreased in fiscal 2006 due to lower headcount terminations and related severance costs.
Additionally, the restructuring program in fiscal 2005 included $21 million of facility exit and termination costs.
Fiscal 2005 Compared to Fiscal 2004: Restructuring expenses increased in fiscal 2005 due to Oracle employee severance and facility closures associated with
plans initiated in the third quarter of 2005. No restructuring plans were initiated in fiscal 2004.
Interest Expense:
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2006 Actual Constant 2005 Actual Constant 2004
Interest expense $ 169 25% 26% $ 135 543% 543% $ 21
Fiscal 2006 Compared to Fiscal 2005: Interest expense increased in fiscal 2006 compared to fiscal 2005 due to higher average borrowings related to the $5.75
billion senior notes issued in January 2006 as well as outstanding balances under our commercial paper program and unsecured loan facility, both of which were
repaid in fiscal 2006. We expect interest expense to increase in fiscal 2007, which will reflect a full year of interest on the $5.75 billion senior notes.
Fiscal 2005 Compared to Fiscal 2004: Interest expense increased in fiscal 2005 primarily due to borrowings in December 2004 of $9.2 billion under a $9.5
billion unsecured term loan agreement, which we repaid in various installments from February 2005 through May 2005. In the fourth quarter of fiscal 2005, we
borrowed $2.0 billion under a commercial paper program and $700 million under a 364-day unsecured loan facility that are outstanding at May 31, 2005. Interest
expense in fiscal 2004 included $5.5 million in commitment fees related to an unused $1.5 billion revolving credit facility that expired in December 2004 and
additional interest associated with our $150 million senior notes that matured in February 2004.
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Source: ORACLE CORP, 10-K, July 21, 2006 Powered by Morningstar® Document Research℠