Oracle 2006 Annual Report Download - page 57

Table of Contents
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or
future effect on our financial condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are material to investors.
Recent Financing Activities
Commercial Paper Program
In February 2006, we entered into dealer agreements with various financial institutions and an Issuing and
Paying Agency Agreement with JPMorgan Chase Bank, National Association, relating to a $3.0 billion
commercial paper program (CP Program). Under the CP Program, we may issue and sell unsecured
short-term promissory notes pursuant to a private placement exemption from the registration requirements
under federal and state securities laws. In fiscal 2007, we issued approximately $2.1 billion of short-term
promissory notes (Commercial Paper Notes) pursuant to our CP Program, of which $1.4 billion remained
outstanding and $1.6 billion remained as additional capacity under our CP Program as of May 31, 2007. The
maturities of the Commercial Paper Notes ranged between two weeks and three months and the weighted
average yield, including issuance costs, was 5.33% at May 31, 2007. We did not have any outstanding
borrowings under our CP Program at May 31, 2006.
Senior Notes Payable
In May 2007, we issued $2.0 billion of floating rate senior notes, of which $1.0 billion is due May 2009 (New
2009 Notes) and $1.0 billion is due May 2010 (2010 Notes). We issued the New 2009 Notes and 2010 Notes
to fund the redemption of the $1.5 billion of senior floating rate notes that we issued in fiscal 2006 (see
below) and for general corporate purposes. The New 2009 Notes and 2010 Notes bear interest at a rate of
three-month USD LIBOR plus 0.02% and 0.06%, respectively, and interest is payable quarterly. The New
2009 Notes and 2010 Notes may not be redeemed prior to their maturity.
In January 2006, we issued $5.75 billion of senior notes consisting of $1.5 billion of floating rate senior notes
due 2009 (Original 2009 Notes), $2.25 billion of 5.00% senior notes due 2011 (2011 Notes) and $2.0 billion
of 5.25% senior notes due 2016 (2016 Notes and together with the Original 2009 Notes and the 2011 Notes,
Original Senior Notes) to finance the Siebel acquisition and for general corporate purposes. On June 16, 2006,
we completed a registered exchange offer of the Original Senior Notes for registered senior notes with
substantially identical terms to the Original Senior Notes.
In May 2007 we redeemed the Original 2009 Notes for their principal amount plus accrued and unpaid
interest. Our 2011 Notes and 2016 Notes may also be redeemed at any time, subject to payment of a
make-whole premium. The 2011 Notes and 2016 Notes bear interest at the rate of 5.00% and 5.25% per year,
respectively. Interest is payable semi-annually for the 2011 notes and 2016 notes.
The effective interest yields of the New 2009 Notes, 2010 Notes, 2011 Notes and 2016 Notes (collectively,
the Senior Notes) at May 31, 2007 were 5.38%, 5.42%, 5.09% and 5.33%, respectively.
The Senior Notes rank pari passu with the Commercial Paper Notes and all existing and future senior
indebtedness of Oracle Corporation. All existing and future liabilities of the subsidiaries of Oracle
Corporation will be effectively senior to the Senior Notes and the Commercial Paper Notes.
We believe that our current cash and cash equivalents, marketable securities and cash generated from
operations will be sufficient to meet our working capital, capital expenditures and contractual obligations. In
addition, we believe we could fund acquisitions, including the Agile acquisition, and repurchase common
stock with our internally available cash and investments, cash generated from operations, amounts available
under our credit facilities, additional borrowings or from the issuance of additional securities.
Quarterly Results of Operations
Quarterly revenues and expenses have historically been affected by a variety of seasonal factors, including
sales compensation plans. These seasonal factors are common in the software industry. These factors have
caused a
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Source: ORACLE CORP, 10-K, June 29, 2007 Powered by Morningstar® Document Research℠