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Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2006
Year Ended May 31,
(in millions, except per share data) 2006 2005
Total revenues $ 15,259 $ 14,515
Net income $ 3,197 $ 1,996
Basic net income per share $ 0.60 $ 0.38
Diluted net income per share $ 0.59 $ 0.37
3. RESTRUCTURING ACTIVITIES
Fiscal 2006 Restructuring Plans
During the third quarter of fiscal 2006, management approved and initiated plans to restructure certain operations of Oracle and pre-merger Siebel to eliminate
redundant costs resulting from the acquisition of Siebel and improve efficiencies in operations. The cash restructuring charges recorded are based on
restructuring plans that have been committed to by management. We completed the substantial majority of our planned legal-entity mergers, information system
conversions and integration of Siebel’s operations in the fourth quarter of fiscal 2006 and expect to finalize all other planned integration activities in the next
three months.
The total estimated severance costs associated with the Fiscal 2006 Oracle Restructuring Plan are $102 million. We have incurred $74 million in restructuring
expenses to date and expect to incur the remaining $28 million in the next three months. Changes to the estimates of executing the Fiscal 2006 Oracle
Restructuring Plan will be reflected in our future results of operations.
The total estimated restructuring costs associated with exiting activities of Siebel is $590 million, consisting primarily of excess facilities obligations through
fiscal 2022 as well as severance and other restructuring costs. These costs were recognized as a liability assumed in the purchase business combination and
included in the allocation of the cost to acquire Siebel and, accordingly, have resulted in an increase to goodwill. Estimated restructuring expenses may change as
management executes the approved plan. Decreases to the estimates of executing the Siebel restructuring plan are recorded as an adjustment to goodwill
indefinitely, whereas increases to the estimates are recorded as an adjustment to goodwill during the purchase price allocation period (generally within one year
of the acquisition date) and as operating expenses thereafter.
Fiscal 2005 Restructuring Plans
During the third quarter of fiscal 2005, management approved and initiated plans to restructure the operations of Oracle, PeopleSoft and Retek. We have
completed our planned legal-entity mergers, information system conversions and integration of PeopleSoft’s and Retek’s operations as well as all Oracle exit
activities. Total estimated restructuring costs associated with the Fiscal 2005 Oracle Restructuring Plan are $158 million. Total estimated restructuring costs
associated with exiting activities of PeopleSoft and Retek are $403 million, consisting primarily of employee severance costs as well as excess facilities
obligations through fiscal 2013 and other restructuring costs.
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Source: ORACLE CORP, 10-K, July 21, 2006 Powered by Morningstar® Document Research℠