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Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2007
because this method reflects our risk management strategies, the economics of those strategies in our financial
statements and better manages interest rate differentials between different countries. Under this method, the
change in fair value of the forward contract attributable to the changes in spot exchange rates (the effective
portion) is reported in stockholders’ equity to offset the translation results on the net investments. The
remaining change in fair value of the forward contract (the ineffective portion) is recognized in non-operating
income, net.
Net gains (losses) on investment hedges reported in stockholders’ equity prior to tax effects were $45 million,
$23 million and $(23) million in fiscal 2007, 2006 and 2005, respectively. The net gain on investment hedges
reported in non-operating income, net were $28 million, $24 million and $14 million in fiscal 2007, 2006 and
2005, respectively.
At May 31, 2007, we had one net investment hedge in Japanese Yen. The Yen investment hedge minimizes
currency risk arising from net assets held in Yen as a result of equity capital raised during the initial public
offering and secondary offering of Oracle Japan. The fair value of our Yen investment hedge was $0.2 million
as of both May 31, 2007 and 2006. As of May 31, 2007, the Yen investment hedge has a notional amount of
$548 million and an exchange rate of 120.22 Yen for each United States dollar.
Foreign Currency Forward Contracts
We transact business in various foreign currencies and have established a program that primarily utilizes
foreign currency forward contracts to offset the risk associated with the effects of certain foreign currency
exposures. Under this program, increases or decreases in our foreign currency exposures are offset by gains or
losses on the forward contracts, to mitigate the possibility of foreign currency transaction gains or losses.
These foreign currency exposures typically arise from intercompany sublicense fees and other intercompany
transactions. Our forward contracts generally have terms of 90 days or less. We do not use forward contracts
for trading purposes. All outstanding foreign currency forward contracts used in this program are marked to
market at the end of the period with unrealized gains and losses included in non-operating income, net. Our
ultimate realized gain or loss with respect to currency fluctuations depends upon the currency exchange rates
and other factors in effect as the contracts mature. Net foreign exchange transaction gains (losses) included in
non-operating income, net in the accompanying consolidated statements of operations were $17 million,
$15 million and $(28) million in fiscal 2007, 2006 and 2005, respectively. The unrealized gains (losses) of
our outstanding foreign currency forward contracts were $5 million and $(0.3) million at May 31, 2007 and
2006, respectively.
13. PROPERTY
Property consisted of the following:
Estimated May 31,
(in millions) Useful Lives 2007 2006
Computer and network equipment 2-5 years $ 1,379 $ 1,131
Buildings and improvements 1-50 years 1,350 1,274
Furniture and fixtures 3-10 years 385 369
Land — 204 200
Automobiles 5 years 5 11
Construction in progress — 136 66
Total property 1-50 years 3,459 3,051
Accumulated depreciation (1,856) (1,660)
Property, net $ 1,603 $ 1,391
100
Source: ORACLE CORP, 10-K, June 29, 2007 Powered by Morningstar® Document Research℠