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Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2007
4. ACQUISITION RELATED CHARGES
Acquisition related charges primarily consist of in-process research and development expenses,
integration-related professional services, stock-compensation expenses and personnel related costs for
transitional employees. Stock-based compensation included in acquisition related charges resulted from
unvested options assumed from acquisitions whose vesting was fully accelerated upon termination of the
employees pursuant to the terms of these options.
Year Ended May 31,
(in millions) 2007 2006 2005
In-process research and development $ 151 $ 78 $ 46
Transitional employee related costs 24 30 52
Stock-based compensation 9 18 47
Professional fees 8 11 63
PeopleSoft pre-acquisition legal contingency accrual (52) — —
Total acquisition related charges $ 140 $ 137 $ 208
For the year ended May 31, 2007, acquisition related charges included a benefit related to the settlement of a
lawsuit filed against PeopleSoft, Inc. on behalf of the U.S. government. This lawsuit was filed in October
2003, prior to our acquisition of PeopleSoft. The lawsuit alleged PeopleSoft made defective pricing
disclosures to the General Services Administration. This lawsuit represented a pre-acquisition contingency
that we identified and assumed in connection with the PeopleSoft acquisition. On October 10, 2006, we
agreed to pay the U.S. government $98 million to settle this lawsuit. Business combination accounting
standards require that after the end of the purchase price allocation period, any adjustment to amounts
recorded that relate to a pre-acquisition contingency should be included as an element of net income in the
period of settlement, versus an adjustment to the original purchase price allocation. Since the purchase price
allocation period for PeopleSoft ended in the third quarter of our fiscal year 2006, the favorable difference of
$52 million between the estimated exposure recorded for this lawsuit during the purchase price allocation
period and the actual settlement amount has been included in our consolidated statement of operations for the
year ended May 31, 2007.
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Source: ORACLE CORP, 10-K, June 29, 2007 Powered by Morningstar® Document Research℠