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Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2008
Year Ended May 31,
(in millions) 2008 2007 2006
In-process research and development $ 24 $ 151 $ 78
Transitional employee related costs 32 24 30
Stock-based compensation 112 9 18
Professional fees 7 8 11
Business combination contingency adjustments 6 (52) —
Gain on sale of property (57) — —
Total acquisition related and other expenses $ 124 $ 140 $ 137
In December 2007, we sold certain of our land and buildings for $153 million in cash. Concurrent with the sale, we
leased the property back from the buyer for a period of up to three years. We have accounted for this transaction in
accordance with FASB Statement No. 28, Accounting for Sales with Leasebacks, FASB Statement No. 66,
Accounting for Sales of Real Estate, and FASB Statement No. 98, Accounting for Leases, et al. We deferred
$19 million of the gain on the sale representing the present value of the operating lease commitment and recognized a
gain of approximately $57 million for the year ended May 31, 2008. The deferred portion of the gain will be
recognized as a reduction of rent expense over the operating lease term.
For fiscal 2007, acquisition related and other expenses included a benefit related to the settlement of a lawsuit filed
against PeopleSoft, Inc. 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 benefit to our
consolidated statement of operations for fiscal 2007.
Non-Operating Income, net
Non-operating income, net consists primarily of interest income, net foreign currency exchange gains, the minority
owners’ shares in the net profits of our majority-owned subsidiaries (i-flex solutions limited and Oracle Japan), and
other income including net realized gains related to our investments.
Year Ended May 31,
(in millions) 2008 2007 2006
Interest income $ 337 $ 295 $ 170
Foreign currency gains, net 40 45 39
Minority interests (60) (71) (41)
Other, net 67 86 75
Total non-operating income, net $ 384 $ 355 $ 243
Income Taxes
We account for income taxes in accordance with FASB Statement No. 109, Accounting for Income Taxes. Deferred
income taxes are recorded for the expected tax consequences of temporary differences between the tax bases of assets
and liabilities for financial reporting purposes and amounts recognized for income tax purposes. We record a
valuation allowance to reduce our deferred tax assets to the amount of future tax benefit that is more likely than not
to be realized.
78
Source: ORACLE CORP, 10-K, July 02, 2008 Powered by Morningstar® Document Research℠