Oracle 2007 Annual Report Download - page 110

Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2008
benefits, could decrease (whether by payment, release, or a combination of both) by as much as $152 million
($74 million net of offsetting tax benefits) in the next 12 months, related primarily to transfer pricing and a
technical matter of corporate restructuring, which would be affected by the possible passage of favorable
legislation. With some exceptions, we are generally no longer subject to tax examinations in
non-U.S. jurisdictions for years prior to fiscal 1998.
We believe that we have adequately provided for any reasonably foreseeable outcomes related to our tax
audits and that any settlement will not have a material adverse effect on our consolidated financial position or
results of operations. However, there can be no assurances as to the possible outcomes.
We previously negotiated three unilateral Advance Pricing Agreements with the IRS that cover many of our
intercompany transfer pricing issues and preclude the IRS from making a transfer pricing adjustment within
the scope of these agreements. These agreements are effective for fiscal years through May 31, 2006. We
have submitted to the IRS a request for renewal of this Advance Pricing Agreement for the years ending
May 31, 2007 through May 31, 2011. However, these agreements do not cover all elements of our transfer
pricing and do not bind tax authorities outside the United States. We have finalized one bilateral Advance
Pricing Agreement, which was effective for the years ending May 31, 2002 through May 31, 2006 and we
have submitted a renewal for the years ending May 31, 2007 through May 31, 2011. We currently are
negotiating an additional bilateral agreement to cover the period from June 1, 2001 through May 31, 2008.
There can be no guarantee that such negotiations will result in an agreement.
13. SEGMENT INFORMATION
FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information, establishes
standards for reporting information about operating segments. Operating segments are defined as components
of an enterprise about which separate financial information is available that is evaluated regularly by the chief
operating decision maker, or decision making group, in deciding how to allocate resources and in assessing
performance. Our chief operating decision maker is our Chief Executive Officer. We are organized
geographically and by line of business. While our Chief Executive Officer evaluates results in a number of
different ways, the line of business management structure is the primary basis for which the allocation of
resources and financial results are assessed. We have two businesses, software and services, which are further
divided into five operating segments. Our software business is comprised of two operating segments: (1) new
software licenses and (2) software license updates and product support. Our services business is comprised of
three operating segments: (1) consulting, (2) On Demand and (3) education.
The new software license line of business is engaged in the licensing of database and middleware software as
well as applications software. Database and middleware software includes database management software,
application server software, business intelligence software, identification and access management software,
analytics software, content management software, development tools and data integration software.
Applications software provides enterprise information that enables companies to manage their business cycles
and provide intelligence in functional areas such as customer relationship management, financials, human
resources, maintenance management, manufacturing, marketing, order fulfillment, product lifecycle
management, procurement, projects, sales, services, enterprise resource planning and supply chain planning.
The software license updates and product support line of business provides customers with rights to
unspecified software product upgrades and maintenance releases, internet access to technical content, as well
as internet and telephone access to technical support personnel during the support period. In addition, the
software license updates and product support line of business offers customers Oracle Unbreakable Linux
Support, which provides enterprise level support for the Linux operating system, and also offers support for
Oracle VM server virtualization software.
The consulting line of business provides services to customers in business strategy and analysis, business
process optimization, and the implementation, deployment and upgrade of our database, middleware and
applications
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Source: ORACLE CORP, 10-K, July 02, 2008 Powered by Morningstar® Document Research℠