Oracle 2006 Annual Report Download - page 41

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Table of Contents
Our results of operations include the following business combination accounting entries and expenses related
to acquisitions as well as other expenses including stock-based compensation:
Year Ended May 31,
(in millions) 2007 2006 2005
Support deferred revenue(1) $ 212 $ 391 $ 320
Amortization of intangible assets(2) 878 583 219
Acquisition related charges(3)(5) 140 137 208
Restructuring(4) 19 85 147
Stock-based compensation(5) 198 31 25
Income tax effect(6) (414) (362) (264)
$ 1,033 $ 865 $ 655
(1) In connection with purchase price allocations related to our acquisitions, we have estimated the fair values
of the support obligations assumed. Due to our application of business combination accounting rules, we
did not recognize software license updates and product support revenues related to support contracts that
would have otherwise been recorded by the acquired businesses as independent entities, in the amounts of
$212 million, $391 million and $320 million in fiscal 2007, fiscal 2006 and fiscal 2005, respectively.
Approximately $120 million of estimated software license updates and product support revenues related
to support contracts assumed will not be recognized in fiscal 2008 that would have otherwise been
recognized by the acquired businesses as independent entitles, due to the application of business
combination accounting rules. To the extent customers renew these support contracts, we expect to
recognize revenues for the full contract value over the support renewal period.
(2) Represents the amortization of intangible assets acquired in connection with acquisitions, primarily
PeopleSoft, Siebel, Hyperion and i-flex. Estimated future amortization expense related to intangible assets
is as follows (in millions):
Year Ended
May 31,
2008 $ 1,114
2009 1,101
2010 976
2011 756
2012 620
Thereafter 1,397
Total $ 5,964
(3) Acquisition related charges primarily consist of in-process research and development expenses,
integration-related professional services, stock-based compensation expenses and personnel related costs
for transitional employees. For fiscal 2007, acquisition related charges also included a $52 million benefit
related to the settlement of a pre-acquisition lawsuit filed against PeopleSoft on behalf of the U.S.
government.
(4) Restructuring expenses relate to Oracle employee severance and facility closures in connection with
restructuring plans initiated in the third quarters of fiscal 2006 and 2005. In fiscal 2007, our restructuring
expenses relate to notifications made pursuant to the Fiscal 2006 Oracle Restructuring Plan.
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Source: ORACLE CORP, 10-K, June 29, 2007 Powered by Morningstar® Document Research℠