Oracle 2007 Annual Report Download - page 51

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Table of Contents
Fiscal 2007 Compared to Fiscal 2006: Excluding the effect of currency rate fluctuations, education revenues
grew in fiscal 2007 primarily due to an increase in customer training on the use of our application products, as
well as $5 million of incremental revenues from Hyperion. The Americas contributed 46%, EMEA
contributed 26% and Asia Pacific contributed 28% to the increase in education revenues.
Excluding the effects of currency rate fluctuations, education expenses increased in fiscal 2007 due to
incremental headcount and associated personnel related expenditures, as well as higher third party contractor
expenses and royalty fees associated with increased revenues. Education expenses also included $3 million of
incremental expenses from Hyperion. Total education margin as a percentage of revenues decreased as
expenses grew at a higher rate than revenues.
Research and Development Expenses: Research and development expenses consist primarily of personnel
related expenditures. We intend to continue to invest significantly in our research and development efforts
because, in our judgment, they are essential to maintaining our competitive position.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2008 Actual Constant 2007 Actual Constant 2006
Research and development(1) $ 2,627 24% 22% $ 2,110 14% 11% $ 1,859
Stock-based compensation 114 35% 35% 85 541% 541% 13
Amortization of intangible
assets(2) — -100% -100% 10 -47% -47% 17
Total expenses $ 2,741 25% 22% $ 2,205 17% 16% $ 1,889
% of Total Revenues 12% 12% 13%
(1) Excluding stock-based compensation
(2) Included as a component of ‘Amortization of Intangible Assets’ in our consolidated statements of operations
Fiscal 2008 Compared to Fiscal 2007: Excluding the effect of currency rate fluctuations, research and
development expenses increased in fiscal 2008 due to higher employee related expenses associated with
higher headcount levels, including higher stock-based compensation expenses, and $46 million of increased
expenses pertaining to certain legal-related matters. Our growth in research and development expenses
included $15 million from BEA in fiscal 2008. The increase in our headcount was the combined result of our
recent acquisitions and our hiring of additional resources to develop new functionality for our existing
products. Research and development headcount as of the end of fiscal 2008 increased by approximately
2,550 employees in comparison to fiscal 2007, and included approximately 950 employees from BEA.
Fiscal 2007 Compared to Fiscal 2006: Excluding the effect of currency rate fluctuations, research and
development expenses increased due to higher salary and benefits expenses associated with higher headcount
levels, increased stock-based compensation expenses due to our adoption of Statement 123(R) at the
beginning of fiscal 2007, and increased external contractor expenses. Our growth in research and
development expenses was impacted by our acquisitions, including $25 million from i-flex and $19 million
from Hyperion. Research and development headcount increased by approximately 3,600 employees in
comparison to fiscal 2006, and included approximately 1,200 employees from i-flex and 600 employees from
Hyperion.
General and Administrative Expenses: General and administrative expenses primarily consist of personnel
related expenditures for information technology, finance, legal and human resources support functions.
46
Source: ORACLE CORP, 10-K, July 02, 2008 Powered by Morningstar® Document Research℠