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Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2007
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Oracle Corporation develops, manufactures, markets, distributes and services database, middleware and
applications software that helps organizations manage and grow their businesses. Database and middleware
software is used for developing and deploying applications on the internet and on corporate intranets.
Applications software can be used to automate business processes and to provide business intelligence. We
also offer software license updates and product support (including support for the Linux Operating System),
and other services including consulting, On Demand, and education.
Oracle Corporation is a holding corporation with ownership of its direct and indirect subsidiaries, which
include Oracle Systems Corporation (Old Oracle), Siebel Systems, Inc. (Siebel) and each of their domestic
and foreign subsidiaries around the world. Oracle Corporation, or Oracle, was initially formed as a direct
wholly-owned subsidiary of Old Oracle. Prior to January 31, 2006, Oracle’s name was Ozark Holding Inc.
and Old Oracle’s name was Oracle Corporation. On January 31, 2006, in connection with the acquisition of
Siebel, which is described in Note 2, a wholly-owned subsidiary of Oracle was merged with and into Old
Oracle, with Old Oracle surviving as a wholly-owned subsidiary of Oracle (the Reorganization). In addition,
another wholly-owned subsidiary of Oracle was merged with and into Siebel, with Siebel surviving as a
wholly-owned subsidiary of Oracle. As a result, Oracle became the parent company of Old Oracle and Siebel,
and the changes to the names of Oracle and Old Oracle were effected.
Basis of Financial Statements
The consolidated financial statements include our accounts and the accounts of our wholly- and
majority-owned subsidiaries. We consolidate all of our majority-owned subsidiaries and reflect as minority
interest the portion of these entities that we do not own in other long-term liabilities on our consolidated
balance sheets. At May 31, 2007 and 2006, the balance of minority interests was $316 million and
$209 million, respectively. Intercompany transactions and balances have been eliminated. Certain prior year
balances have been reclassified to conform to the current year presentation. Such reclassifications did not
affect total revenues, operating income or net income.
Use of Estimates
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting
principles (GAAP). These accounting principles require us to make certain estimates, judgments and
assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable
based upon information available to us at the time that these estimates, judgments and assumptions are made.
These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the
date of the financial statements as well as the reported amounts of revenues and expenses during the periods
presented. To the extent there are material differences between these estimates, judgments or assumptions and
actual results, our financial statements will be affected. In many cases, the accounting treatment of a
particular transaction is specifically dictated by GAAP and does not require management’s judgment in its
application. There are also areas in which management’s judgment in selecting among available alternatives
would not produce a materially different result.
Revenue Recognition
We derive revenues from the following sources: (1) software, which includes new software license and
software license updates and product support revenues, and (2) services, which include consulting, On
Demand and education revenues.
New software license revenues represent fees earned from granting customers licenses to use our database,
middleware and applications software, and exclude revenues derived from software license updates, which
are included in software license updates and product support. While the basis for software license revenue
recognition is substantially governed by the provisions of Statement of Position No. 97-2, Software Revenue
Recognition, issued
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Source: ORACLE CORP, 10-K, June 29, 2007 Powered by Morningstar® Document Research℠