Oracle 2007 Annual Report Download - page 56

Download and view the complete annual report

Please find page 56 of the 2007 Oracle annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

Table of Contents
Payments from customers for software license updates and product support agreements are generally received near
the beginning of the contract term, which is generally one year in length. We also generate significant cash from new
software license sales and, to a lesser extent, services. Our primary uses of cash from operating activities are for
personnel related expenditures as well as payments related to taxes and leased facilities.
Fiscal 2008 Compared to Fiscal 2007: Net cash provided by operating activities increased in fiscal 2008 primarily
due to higher net income, partially offset by increased accounts receivable due to fourth quarter fiscal 2008 revenue
growth.
Fiscal 2007 Compared to Fiscal 2006: Cash flows provided by operating activities increased in fiscal 2007
primarily due to higher net income, partially offset by increased accounts receivable due to fourth quarter fiscal 2007
revenue growth, cash payments to terminate leases associated with excess facilities assumed in the Siebel acquisition,
and the settlement of a pre-acquisition lawsuit filed against PeopleSoft.
Cash flows from investing activities: The changes in cash flows from investing activities primarily relate to
acquisitions and the timing of purchases, maturities and sales of our investments in marketable securities. We also
use cash to invest in capital and other assets to support our growth.
Fiscal 2008 Compared to Fiscal 2007: Net cash used for investing activities increased in fiscal 2008 due to an
increase in cash used for acquisitions (primarily BEA), net of cash acquired and an increase in cash used to purchase
marketable securities (net of proceeds received from maturities).
Fiscal 2007 Compared to Fiscal 2006: Net cash used for investing activities increased in fiscal 2007 due to an
increase in cash used for acquisitions, net of cash acquired. We paid cash to purchase a number of companies in fiscal
2007 including Hyperion, Stellent, MetaSolv, and Portal Software, and to purchase additional equity securities in
i-flex. Cash outflows in fiscal 2006 primarily relate to our acquisition of Siebel and our equity investment purchases
in i-flex.
Cash flows from financing activities: The changes in cash flows from financing activities primarily relate to
borrowings and payments under debt obligations as well as stock repurchases and proceeds from stock option
exercise activity.
Fiscal 2008 Compared to Fiscal 2007: Net cash provided by financing activities in fiscal 2008 increased in
comparison to cash used by financing activities in fiscal 2007 due to the issuance of $5.0 billion of long-term senior
notes in April 2008, additional proceeds from stock option exercises, excess tax benefits realized from stock-based
compensation arrangements, and decreased spending on stock repurchases, and were partially offset by $1.4 billion
of net repayments of short-term commercial paper notes.
Fiscal 2007 Compared to Fiscal 2006: Net cash used for financing activities in fiscal 2007 primarily relates to an
increase in stock repurchases and lower borrowings, net of repayments, when compared with fiscal 2006.
Free cash flow: To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP
measures of cash flows on a trailing 4-quarter basis to analyze cash flows generated from our operations. We believe
free cash flow is also useful as one of the bases for comparing our performance with our competitors. The
presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income
as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of
liquidity. We calculate free cash flows as follows:
Year Ended May 31,
(Dollars in millions) 2008 Change 2007 Change 2006
Cash provided by operating activities $ 7,402 34% $ 5,520 22% $ 4,541
Capital expenditures(1) $ (243) -24% $ (319) 35% $ (236)
Free cash flow $ 7,159 38% $ 5,201 21% $ 4,305
Net income $ 5,521 29% $ 4,274 26% $ 3,381
Free cash flow as a percent of net income 130% 122% 127%
(1) Represents capital expenditures as reported in cash flows from investing activities in our consolidated statements of cash
flows presented in accordance with U.S. generally accepted accounting principles.
51
Source: ORACLE CORP, 10-K, July 02, 2008 Powered by Morningstar® Document Research℠