Oracle 2006 Annual Report Download - page 46

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Table of Contents
include $16 million in incremental expenses from i-flex and Hyperion. Total software license updates and
product support margin as a percentage of revenues was flat as intangible asset amortization expense and
stock-based compensation grew much faster than revenues and offset the lower growth in other operating
expenses.
Fiscal 2006 Compared to Fiscal 2005: Excluding the effect of currency rate fluctuations, software license
updates and product support revenues increased for similar reasons as noted above. Software license updates
and product support revenues in fiscal 2006 include incremental revenues of $797 million from PeopleSoft
contracts and $90 million from Siebel contracts. Excluding the effect of currency rate fluctuations, the
Americas contributed 72% to the growth in software license updates and product support revenues, EMEA
contributed 20% and Asia Pacific contributed 8%. Software license updates and product support revenues in
the Americas, specifically in the United States, increased at a faster rate than in other regions primarily due to
the relative geographical mix of revenues and existing support contract bases of our acquired companies.
Software license updates and product support expenses increased primarily due to higher salary and benefits
associated with increased headcount to support the expansion of our customer base and higher bonuses as a
result of increased revenue levels. The software license updates and product support margin as a percentage
of revenues decreased primarily due to incremental amortization of intangible assets.
Services
Services consist of consulting, On Demand and education.
Consulting: Consulting revenues are earned by providing services to customers in the design,
implementation, deployment and upgrade of our database and middleware as well as applications software
products. The cost of providing consulting services consists primarily of personnel related expenditures.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2007 Actual Constant 2006 Actual Constant 2005
Consulting Revenues:
Americas $ 1,534 33% 32% $ 1,157 21% 20% $ 956
EMEA 1,033 34% 24% 771 8% 13% 716
Asia Pacific 302 57% 52% 192 39% 42% 138
Total revenues 2,869 35% 31% 2,120 17% 19% 1,810
Expenses:
Cost of services(1) 2,477 32% 27% 1,878 21% 22% 1,549
Stock-based compensation 9 36% 36% 7 9% 9% 6
Amortization of intangible
assets(2) 30 585% 579% 4 226% 226% 1
Total expenses 2,516 33% 29% 1,889 21% 23% 1,556
Total Margin $ 353 53% 47% $ 231 -9% -7% $ 254
Total Margin % 12% 11% 14%
% Revenues by Geography:
Americas 53% 55% 53%
EMEA 36% 36% 39%
Asia Pacific 11% 9% 8%
(1) Excluding stock-based compensation
(2) Included as a component of ’Amortization of Intangible Assets’ in our consolidated statements of
operations
Fiscal 2007 Compared to Fiscal 2006: Excluding the effect of currency rate fluctuations, consulting
revenues increased primarily due to an increase in application product implementations resulting from higher
new application software license revenues over the last year, $359 million of incremental revenues from
i-flex, which we
42
Source: ORACLE CORP, 10-K, June 29, 2007 Powered by Morningstar® Document Research℠