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Table of Contents
and the related weighted average interest rates for our investment portfolio at May 31, 2007. The cash, cash
equivalent and marketable securities balances approximate fair value at May 31, 2007:
Amortized Weighted Average
(Dollars in millions) Principal Amount Interest Rate
Cash and cash equivalents $ 6,218 4.08%
Marketable securities 802 2.89%
Total cash, cash equivalents and marketable securities $ 7,020 3.95%
The following table includes the United States dollar equivalent of cash, cash equivalents and marketable
securities denominated in foreign currencies. See discussion of our foreign currency risk below for a
description of how we hedge net assets of certain international subsidiaries from foreign currency exposure.
Amortized
Principal
Amount at
May 31,
(in millions) 2007
Euro $ 892
Japanese Yen 681
British Pound 371
Chinese Renminbi 336
Canadian Dollar 237
Australian Dollar 218
South African Rand 118
Other currencies 1,359
Total cash, cash equivalents and marketable securities denominated in foreign
currencies $ 4,212
Interest Expense Rate Risk. Borrowings as of May 31, 2007 were $7.6 billion, consisting of $5.6 billion of
fixed rate borrowings and $2.0 billion of variable rate borrowings. Our variable rate borrowings were as
follows at May 31, 2007:
(Dollars in millions) Borrowings Effective Interest Rate
Floating rate senior notes due May 2009(1) $ 1,000 5.38%
Floating rate senior notes due May 2010(1) 1,000 5.42%
Total borrowings subject to variable interest rate
fluctuations $ 2,000
(1) The 2009 and 2010 Notes bear interest at a floating rate equal to three-month LIBOR plus 0.02% per year
and 0.06% per year, respectively.
Interest expense for fiscal 2007 was $343 million. Based on effective interest rates at May 31, 2007, a
50 basis point increase in interest rates on our borrowings subject to variable interest rate fluctuations would
increase our interest expense by approximately $17 million annually.
Foreign Currency Transaction Risk. We transact business in various foreign currencies and have
established a program that primarily utilizes foreign currency forward contracts to offset the risks associated
with the effects of certain foreign currency exposures. Under this program, increases or decreases in our
foreign currency exposures are offset by gains or losses on the forward contracts, to mitigate the possibility of
foreign currency transaction gains or losses. These foreign currency exposures typically arise from
intercompany sublicense fees and other intercompany transactions. Our forward contracts generally have
terms of 90 days or less. We do not use forward contracts for trading purposes. All outstanding foreign
currency forward contracts (excluding our Yen equity hedge described below) are marked to market at the
end of the period with unrealized gains and losses included in non-operating income, net. Our ultimate
realized gain or loss with respect to currency fluctuations will depend on the currency exchange rates and
other factors in effect as the contracts mature. Net foreign exchange transaction gains
56
Source: ORACLE CORP, 10-K, June 29, 2007 Powered by Morningstar® Document Research℠