Oracle 2007 Annual Report Download - page 62

Table of Contents
The following table includes the U.S. Dollar equivalent of cash, cash equivalents and marketable securities
denominated in foreign currencies. See discussion of our foreign currency risk below for a description of how
we hedge net assets of certain international subsidiaries from foreign currency exposure.
U.S. Dollar
Equivalent at
(in millions) May 31, 2008
Euro $ 1,941
Japanese Yen 801
British Pound 705
Chinese Renminbi 477
Indian Rupee 357
Canadian Dollar 275
Australian Dollar 258
Other foreign currencies 1,629
Total cash, cash equivalents and marketable securities denominated in foreign
currencies $ 6,443
Our borrowings as of May 31, 2008 were $11.2 billion, consisting of $9.2 billion of fixed rate borrowings and
$2.0 billion of variable rate borrowings. Our variable rate borrowings were as follows at May 31, 2008:
(Dollars in millions) Borrowings Interest Rate
Floating rate senior notes due May 2009(1) $ 1,000 2.70%
Floating rate senior notes due May 2010(1) 1,000 2.74%
Total borrowings subject to variable interest rate fluctuations $ 2,000
(1) The 2009 and 2010 Notes bear interest at a floating rate equal to three-month LIBOR plus 0.02% per year and 0.06%
per year, respectively. In September 2007, we entered into two interest-rate swap agreements that have the economic
effect of modifying the variable interest obligations associated with our floating rate senior notes due May 2009 and
May 2010 so that the interest payable on the senior notes effectively becomes fixed at a rate of 4.62% and 4.59%,
respectively. The critical terms of the interest rate swap agreements and the senior notes that the swap agreements
pertain to match, including the notional amounts, interest rate reset dates, maturity dates and underlying market
indices. The fair values of the aforementioned interest rate swaps totaled an unrealized loss of $24 million, net of tax
effects, at May 31, 2008. We are accounting for these swaps as hedges pursuant to FASB Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities. The unrealized losses are included in accumulated
other comprehensive income and the corresponding fair value payables are included in other current and long-term
liabilities in our condensed consolidated balance sheet.
Foreign Currency Transaction Risk: We transact business in various foreign currencies and have
established a program that primarily utilizes foreign currency forward contracts to offset the risks associated
with the effects of certain foreign currency exposures. Under this program, increases or decreases in our
foreign currency exposures are offset by gains or losses on the foreign currency forward contracts that we
enter into to mitigate the possibility of foreign currency transaction gains or losses. These foreign currency
exposures typically arise from intercompany sublicense fees and other intercompany transactions. Our
forward contracts generally have terms of 90 days or less. We do not use forward contracts for trading
purposes. All outstanding foreign currency forward contracts are marked to market at the end of the period
with unrealized gains and losses resulting from fair value changes included in non-operating income, net (the
effective portion of our Yen equity hedge described below is included in stockholders’ equity). Our ultimate
realized gain or loss with respect to currency fluctuations will depend on the currency exchange rates and
other factors in effect as the contracts mature. Net foreign exchange transaction gains included in
non-operating income, net in the accompanying consolidated statements of operations were $17 million,
$17 million and $15 million in fiscal 2008, 2007 and 2006, respectively. The net unrealized gains of our
outstanding foreign currency forward contracts were $3 million and $5 million at May 31, 2008 and 2007,
respectively.
The tables below present the notional amounts (at contract exchange rates) and the weighted average
contractual foreign currency exchange rates for our outstanding forward contracts as of May 31, 2008 and
exclude our net
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Source: ORACLE CORP, 10-K, July 02, 2008 Powered by Morningstar® Document Research℠