Oracle 2006 Annual Report Download - page 50

Table of Contents
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2007 Actual Constant 2006 Actual Constant 2005
Research and development(1) $ 2,110 14% 11% $ 1,859 25% 24% $ 1,481
Stock-based compensation 85 541% 541% 13 31% 31% 10
Amortization of intangible
assets(2) 10 -47% -47% 17 -49% -38% 32
Total expenses $ 2,205 17% 16% $ 1,889 24% 24% $ 1,523
% of Total Revenues 12% 13% 13%
(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, research and
development expenses increased due to higher salary and benefits expenses associated with higher headcount
levels, increased stock-based compensation expenses due to the adoption of Statement 123R and increased
external contractor expenses. Research and development expenses include incremental expenses of
$25 million from i-flex and $19 million from Hyperion. Research and development headcount increased by
approximately 3,600 employees, consisting of a 33% increase in personnel in our applications products
divisions and a 14% increase in personnel in our database and middleware products division. The increase in
applications headcount includes approximately 1,200 employees acquired from i-flex and 200 from Hyperion,
while the increase in database and middleware headcount includes approximately 400 employees acquired
from Hyperion.
Fiscal 2006 Compared to Fiscal 2005: Research and development headcount increased by approximately
1,300, which represented a 13% increase in personnel in our database and middleware products division and a
5% increase in personnel in our applications products division. The increase in database and middleware
headcount was primarily due to hiring of resources outside the United States, while the increase in
applications headcount was primarily due to Siebel resources acquired. Research and development expenses
increased due to incremental salary and benefits for the additional headcount, higher discretionary bonus
expenditures and higher facility and technology costs, partially offset by lower external contractor costs.
General and Administrative Expenses: General and administrative expenses primarily consist of personnel
related expenditures for information technology, finance, legal and human resources support functions.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2007 Actual Constant 2006 Actual Constant 2005
General and Administrative(1) $ 643 16% 13% $ 555 1% 3% $ 550
Stock-based compensation 49 * * — * * —
Total expenses $ 692 25% 22% $ 555 1% 3% $ 550
% of Total Revenues 4% 4% 5%
(1) Excluding stock-based compensation
* Not meaningful
Fiscal 2007 Compared to Fiscal 2006: Excluding the effect of currency rate fluctuations, general and
administrative expenses increased during fiscal 2007 as a result of higher personnel related costs associated
with increased headcount to support our expanding operations, the recognition of stock-based compensation
expenses due to the adoption of Statement 123R and increased professional services fees, primarily litigation
related expenses. General and administrative expenses include incremental expenses of $25 million from
i-flex and $10 million from Hyperion.
46
Source: ORACLE CORP, 10-K, June 29, 2007 Powered by Morningstar® Document Research℠