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Table of Contents
We also record a provision for estimated sales returns and allowances on product and service related sales.
These estimates are based on historical sales returns, the volume and size of our larger transactions and other
known factors. If the historical data we use to calculate these estimates do not properly reflect future returns,
then a change in the allowances would be made in the period in which such a determination is made and
revenues in that period could be materially affected.
Results of Operations
The comparability of our operating results in fiscal 2007 compared to fiscal 2006 is impacted by our
acquisition of Siebel in the third quarter of fiscal 2006, the consolidation of i-flex beginning June 1, 2006
(beginning of fiscal 2007) and, to a lesser extent, the acquisition of Hyperion in our fourth quarter of fiscal
2007. The comparability of our operating results in fiscal 2006 compared to fiscal 2005 is also impacted by
acquisitions, principally our acquisition of PeopleSoft in the third quarter of fiscal 2005, and, to a lesser
extent, the acquisitions of Siebel in the third quarter of fiscal 2006 and Retek, Inc. in the fourth quarter of
fiscal 2005.
In our discussion of changes in our results of operations from fiscal 2007 compared to fiscal 2006, and fiscal
2006 compared to fiscal 2005, we quantify the contribution of our acquired products to growth in new
software license revenues, the amount of revenues associated with software license updates and product
support as well as On Demand services, and present supplemental disclosure related to acquisition accounting
and stock-based compensation where applicable. Although certain revenue contributions from our
acquisitions are quantifiable, we are unable to identify the following:
• The contribution of consulting and education services revenues from acquired companies in fiscal 2007
and 2006 (with the exception of i-flex and Hyperion consulting revenues and Hyperion education
revenues for which we disclose the impact in fiscal 2007 in comparison to fiscal 2006) as the
significant majority of these services have been fully integrated into our existing operations.
• The contribution of expenses associated with acquired products and services in fiscal 2007 and 2006
(with the exception of certain i-flex and Hyperion operating expenses for which we disclose the impact
in fiscal 2007 in comparison to fiscal 2006) as the significant majority of these services have been fully
integrated into our existing operations.
We caution readers that, while pre- and post-acquisition comparisons as well as the quantified amounts
themselves may provide indications of general trends, the information has inherent limitations for the
following reasons:
• The quantifications cannot address the substantial effects attributable to our sales force integration
efforts, in particular the effect of having a single sales force offer similar products. The commissions
earned by our integrated sales force generally do not vary based on the application product sold. We
believe that if our sales forces had not been integrated, the relative mix of products sold would have
been different.
• The significant majority of our acquisitions in the periods presented did not result in our entry into a
new line of business or product category. Therefore, we provided multiple products with substantially
similar features and functionality.
• Although substantially all of our customers, including customers from acquired companies, renew their
software license updates and product support contracts when the contracts are eligible for renewal,
amounts shown as support deferred revenue in our supplemental disclosure related to acquisition
accounting and stock-based compensation are not necessarily indicative of revenue improvements we
will achieve upon contract renewal to the extent customers do not renew.
Constant Currency Presentation
We compare the percent change in the results from one period to another period in this annual report using
constant currency disclosure. We present constant currency information to provide a framework for assessing
how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To
present this information, current and comparative prior period results for entities reporting in currencies other
than United States dollars are converted into United States dollars at the exchange rate in effect on May 31,
2006, which was the
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Source: ORACLE CORP, 10-K, June 29, 2007 Powered by Morningstar® Document Research℠