Oracle 2007 Annual Report Download - page 53

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Table of Contents
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2008 Actual Constant 2007 Actual Constant 2006
In-process research and development $ 24 -84% -84% $ 151 94% 94% $ 78
Transitional employee related
expenses 32 34% 33% 24 -20% -20% 30
Stock-based compensation 112 1,144% 1,144% 9 -50% -50% 18
Professional fees 7 -13% -13% 8 -27% -27% 11
Business combination contingency
adjustments 6 111% 111% (52) * * —
Gain on sale of property (57) * * — * * —
Total acquisition related and other
expenses $ 124 -11% -12% $ 140 2% 2% $ 137
* Not meaningful
Fiscal 2008 Compared to Fiscal 2007: Acquisition related and other expenses decreased during fiscal 2008
due to lower in-process research and development acquired as a part of our fiscal 2008 acquisitions in
comparison to our fiscal 2007 acquisitions and a $57 million gain on a property sale in December 2007 (see
Note 1 to Notes to Consolidated Financial Statements for additional information). These decreases to
acquisition related and other expenses were partially offset by higher transitional employee related expenses
and increased stock-based compensation expenses due to the acceleration of certain acquired employee stock
options pursuant to the terms of those options. Business combination contingency adjustments in fiscal 2007
included a $52 million benefit relating to the settlement of a lawsuit filed against PeopleSoft on behalf of the
U.S. government. This lawsuit was filed in October 2003, prior to our acquisition of PeopleSoft, and
represented a pre-acquisition contingency that we identified and assumed in connection with our acquisition
of PeopleSoft. We settled this lawsuit in October 2006, which was subsequent to the purchase price allocation
period, for approximately $98 million. Accordingly, we included the difference between the amount accrued
as of the end of the purchase price allocation period and the settlement amount as a $52 million benefit to our
consolidated statement of operations for fiscal 2007.
Fiscal 2007 Compared to Fiscal 2006: Acquisition related charges increased primarily due to in-process
research and development charges resulting from our acquisitions of Hyperion, i-flex and others in fiscal
2007. This increase was almost entirely offset by a $52 million benefit as described above.
Restructuring expenses: Restructuring expenses consist of Oracle employee severance costs and Oracle
duplicate facilities closures that were initiated to improve our cost structure as a result of acquisitions. For
additional information regarding the Oracle restructuring plans, as well as restructuring activities of our
acquired companies, please see Note 7 of Notes to Consolidated Financial Statements.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2008 Actual Constant 2007 Actual Constant 2006
Restructuring expenses $ 41 113% 95% $ 19 -78% -78% $ 85
Fiscal 2008 Compared to Fiscal 2007: During the second quarter of fiscal 2008, our management with the
appropriate level of authority approved, committed to, and initiated the Oracle Fiscal 2008 Restructuring Plan
(2008 Plan) as a result of certain management and operational changes that are intended to improve
efficiencies in our Oracle-based operations. Our 2008 Plan was amended in the fourth quarter of fiscal 2008
to include the expected effects resulting from our acquisition of BEA. The total estimated costs associated
with the 2008 Plan are approximately $111 million and are primarily related to employee severance. The
majority of these estimated costs are expected to be incurred over the course of fiscal 2009. Our estimated
costs are preliminary and may be subject to change in future periods. We incurred restructuring expenses of
$41 million in fiscal 2008, pursuant to the 2008 Plan (see Note 7 to Notes to Consolidated Financial
Statements for additional information). Restructuring expenses in fiscal 2007 relate to Oracle employee
severance and facility closures that were recorded in those periods and were a part of a restructuring plan
initiated in the third quarter of fiscal 2006.
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Source: ORACLE CORP, 10-K, July 02, 2008 Powered by Morningstar® Document Research℠