Oracle 2005 Annual Report Download - page 50

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Table of Contents
license updates and product support revenues are generally billed one year in advance, while the revenues are recognized ratably over the annual contract period.
Software license updates and product support revenues as a percent of total revenues increased, resulting in higher cash collections and lower days sales
outstanding.
Year Ended May 31,
(Dollars in millions) 2006 Change 2005 Change 2004
Cash provided by operating activities $ 4,541 28% $ 3,552 11% $ 3,195
Cash used for investing activities $ (3,359) -42% $ (5,753) 126% $ (2,548)
Cash provided by (used for) financing activities $ 1,527 -19% $ 1,884 243% $ (1,320)
Cash flows from operating activities: Our largest source of operating cash flows is cash collections from our customers following the purchase and renewal of
their software license updates and product support agreements. Payments from customers for software license updates and product support are generally received
by the beginning of the contract term, which is generally one year in length. We also generate significant cash from new software license sales and, to a lesser
extent, services. Our primary uses of cash from operating activities are for personnel related expenditures, payment of taxes, facilities and technology costs.
Fiscal 2006 Compared to Fiscal 2005: Cash flows provided by operating activities increased in fiscal 2006 primarily due to higher sales volumes and higher net
income, excluding non-cash charges, partially offset by increased accounts receivables due to fourth quarter fiscal 2006 revenue growth.
Fiscal 2005 Compared to Fiscal 2004: Cash flows from operating activities increased in fiscal 2005 primarily due to higher net income, excluding non-cash
charges, and increases in non-acquisition related deferred revenues, partially offset by the payment of liabilities assumed in connection with the PeopleSoft
acquisition.
Cash flows from investing activities: The changes in cash flows from investing activities primarily relate to acquisitions and the timing of purchases and
maturities of marketable securities. We also use cash to invest in capital and other assets to support our growth.
Fiscal 2006 Compared to Fiscal 2005: Cash used for investing activities decreased in fiscal 2006 primarily due to lower cash payments for acquisitions, net of
cash acquired as well as proceeds from property sales. Investing cash outflows in fiscal 2005 include cash paid for our acquisition of PeopleSoft, whereas
investing cash outflows in fiscal 2006 primarily relates to our acquisition of Siebel Systems and our equity investment purchases in i-flex.
Fiscal 2005 Compared to Fiscal 2004: Cash used for investing activities increased in fiscal 2005 primarily due to cash paid to acquire PeopleSoft. The increase
was partially offset by higher proceeds from maturities of marketable securities, net of purchases.
Cash flows from financing activities: The changes in cash flows from financing activities primarily relate to borrowings and payments under debt obligations as
well as stock repurchase activity.
Fiscal 2006 Compared to Fiscal 2005: Cash provided by financing activities decreased in fiscal 2006 primarily due to higher stock repurchases, partially offset
by higher net borrowings. We increased our share repurchases in fiscal 2006 due to the issuance of approximately 141 million shares of common stock in
connection with our Siebel acquisition. We intend to continue to repurchase shares under our stock repurchase programs.
47
Source: ORACLE CORP, 10-K, July 21, 2006 Powered by Morningstar® Document Research℠