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Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2006
$150 Million Senior Notes
We have $150 million in 6.91% senior notes due in February 2007. In February 2002, we entered into an interest-rate swap agreement that has the economic
effect of modifying the interest obligations associated with these senior notes so that the interest payable on the senior notes effectively becomes variable based
on the three-month LIBOR set quarterly until maturity. Our interest rate swap increased the effective interest rate on the senior notes to 7.30% as of May 31,
2006. The fair value of the interest rate swap was $(0.7) million at May 31, 2006 and $3.1 million at May 31, 2005.
Short-Term Borrowings
In February 2006, we entered into dealer agreements with various financial institutions and an Issuing and Paying Agency Agreement with JPMorgan Chase
Bank, National Association, relating to a new $3.0 billion commercial paper program (the New CP Program). Under the New CP Program, we may issue and sell
unsecured short-term promissory notes pursuant to a private placement exemption from the registration requirements under federal and state securities laws. The
New CP Program replaces the $3.0 billion commercial paper program of Old Oracle which was established in April 2005 and was terminated in February 2006
(the Old CP Program). We did not have any outstanding borrowings under the New CP Program at May 31, 2006.
In May 2005, Oracle Technology Company (OTC), a wholly-owned subsidiary, entered into an unsecured $700 million loan facility (OTC Loan Facility) with
ABN AMRO Bank N.V. guaranteed by us. All amounts under the OTC Loan Facility were repaid as of May 31, 2006.
5-Year Revolving Credit Agreement
In March 2006, we entered into a new $3.0 billion, 5-Year Revolving Credit Agreement (New Credit Agreement) with Wachovia Bank, National Association,
Bank of America, N.A. and certain other lenders. The New Credit Agreement replaces the $3.0 billion 364-day Revolving Credit Agreement dated as of
March 18, 2005 (Old Credit Agreement), which otherwise would have expired on March 17, 2006. The New Credit Agreement provides for an unsecured
revolving credit facility which can be used to backstop any commercial paper that we may issue and for working capital and other general corporate purposes.
Subject to certain conditions stated in the New Credit Agreement, we may borrow, prepay and re-borrow amounts under the facility at any time during the term
of the New Credit Agreement. All amounts under the New Credit Agreement are due on March 14, 2011. Interest is based on either (a) a LIBOR-based formula
or (b) a formula based on Wachovia’s prime rate or on the federal funds effective rate.
The New Credit Agreement also provides that (i) standby letters of credit may be issued on behalf of Oracle up to $500 million; and (ii) any amounts borrowed
and letters of credit issued may be in Japanese Yen, Pounds Sterling and Euros up to $1.5 billion. We may also, upon the agreement of either then existing
lenders or of additional banks not currently party to the New Credit Agreement, increase the commitments under this facility up to $5.0 billion. The New Credit
Agreement contains certain customary representations and warranties, covenants and events of default, including the requirement that the total net debt to total
capitalization ratio of Oracle not exceed 45%. We have not borrowed any funds under the New Credit Agreement.
We were in compliance with all debt-related covenants at May 31, 2006, including the requirement under the New Credit Agreement that our total net debt to
total capitalization ratio not exceed 45%. Future principal payments of our borrowings at May 31, 2006 are as follows: $159 million in fiscal 2007, $4 million in
fiscal 2008, $1.5 billion in fiscal 2009, $2.25 billion in fiscal 2011 and $2.0 billion in fiscal 2016.
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Source: ORACLE CORP, 10-K, July 21, 2006 Powered by Morningstar® Document Research℠