Oracle 2007 Annual Report Download - page 54

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Table of Contents
Fiscal 2007 Compared to Fiscal 2006: Restructuring expenses decreased in fiscal 2007 as we initiated the
majority of the actions pursuant to the Fiscal 2006 Oracle Restructuring Plan during fiscal 2006. Our
management did not initiate any new plans to restructure our Oracle-based operations during fiscal 2007.
Interest Expense:
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2008 Actual Constant 2007 Actual Constant 2006
Interest expense $ 394 15% 15% $ 343 103% 104% $ 169
Fiscal 2008 Compared to Fiscal 2007: Interest expense increased in fiscal 2008 due to higher average
borrowings resulting from the issuance of $5.0 billion of senior notes in April 2008, a net increase of
$500 million in additional senior notes outstanding for the majority of fiscal 2008 and our issuances of
short-term commercial paper in the fourth quarter of fiscal 2008 and fourth quarter of fiscal 2007 (we repaid
these commercial paper amounts during fiscal 2008).
Fiscal 2007 Compared to Fiscal 2006: Interest expense increased in fiscal 2007 due to higher average
borrowings in fiscal 2007 related to our $5.75 billion aggregate principal amount of senior notes issued in
January 2006 (of which $1.5 billion was redeemed by us in May 2007), our $2.1 billion of commercial paper
issuances (of which approximately $1.4 billion remained outstanding as of May 31, 2007) and our $2.0 billion
of senior notes issued in May 2007.
Non-Operating Income, net: Non-operating income, net consists primarily of interest income, net foreign
currency exchange gains, the minority owners’ share in the net profits of our majority-owned i-flex and
Oracle Japan subsidiaries, and other income including net gains related to our marketable securities and other
investments.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2008 Actual Constant 2007 Actual Constant 2006
Interest income $ 337 14% 9% $ 295 74% 72% $ 170
Foreign currency gains, net 40 -10% 3% 45 15% 19% 39
Minority interests (60) -15% -18% (71) 72% 70% (41)
Other, net 67 -22% -26% 86 15% 8% 75
Total non-operating
income, net $ 384 8% 5% $ 355 46% 45% $ 243
Fiscal 2008 Compared to Fiscal 2007: Non-operating income, net increased in fiscal 2008 primarily due to
an increase in interest income from higher weighted average cash and marketable securities balances during
fiscal 2008.
Fiscal 2007 Compared to Fiscal 2006: Non-operating income, net increased in fiscal 2007 primarily due to
higher interest income attributable to an increase in average interest rates (the weighted average interest rate
earned on cash, cash equivalents and marketable securities increased from 3.04% in fiscal 2006 to 3.97% in
fiscal 2007), partially offset by higher minority interests’ share in the net profits of i-flex and our Oracle
Japan majority-owned subsidiaries.
Provision for Income Taxes: The effective tax rate in all periods is the result of the mix of income earned in
various tax jurisdictions that apply a broad range of income tax rates. The provision for income taxes differs
from the tax computed at the U.S. federal statutory income tax rate due primarily to state taxes and earnings
considered as indefinitely reinvested in foreign operations. Future effective tax rates could be adversely
affected if earnings are lower than anticipated in countries where we have lower statutory rates, by
unfavorable changes in tax laws and regulations, or by adverse rulings in tax related litigation.
49
Source: ORACLE CORP, 10-K, July 02, 2008 Powered by Morningstar® Document Research℠