Oracle 2008 Annual Report Download - page 103

Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2009
The Senior Notes rank pari passu with any Commercial Paper Notes that we may issue and all existing and
future senior indebtedness of Oracle Corporation. All existing and future liabilities of the subsidiaries of
Oracle Corporation will be effectively senior to the Senior Notes and any Commercial Paper Notes that we
issue.
We were in compliance with all debt-related covenants at May 31, 2009. Future principal payments of our
borrowings at May 31, 2009 are as follows: $1.0 billion in fiscal 2010, $2.25 billion in fiscal 2011,
$1.25 billion in fiscal 2013, and $5.75 billion thereafter.
Commercial Paper Program
In March 2008, we increased our commercial paper program to $5.0 billion from $3.0 billion (the CP
Program). The original dealer agreements that we entered into in February 2006 with Banc of America
Securities LLC and JP Morgan Securities Inc., and the Issuing and Paying Agency Agreement entered into in
February 2006 with JPMorgan Chase Bank, National Association, remain in effect and were not changed.
Under the CP Program, we may issue and sell unsecured short-term promissory notes (Commercial Paper
Notes) pursuant to a private placement exemption from the registration requirements under federal and state
securities laws. We did not issue any Commercial Paper Notes in fiscal 2009 and we issued $1.2 billion in
fiscal 2008, of which none remained outstanding as of May 31, 2009 and 2008. If we are required to issue
Commercial Paper Notes in the future, we would most likely use our revolving credit agreements (see below)
as a back-stop to these notes and we therefore consider that we have $4.9 billion of capacity pursuant to this
program available to us as of May 31, 2009.
Revolving Credit Agreements
In March 2009, we entered into a $2.0 billion, 364-Day Revolving Credit Agreement with certain lenders
named in the agreement (2009 Credit Agreement). The 2009 Credit Agreement supplements our existing
$3.0 billion, five-year Revolving Credit Agreement with certain lenders that we entered into in March 2006
(the 2006 Credit Agreement, and together with the 2009 Credit Agreement, the Credit Agreements). The
Credit Agreements provide for unsecured revolving credit facilities, which can also be used to back-stop any
Commercial Paper Notes (see above) that we may issue and for working capital and other general corporate
purposes. Subject to certain conditions stated in the Credit Agreements, we may borrow, prepay and
re-borrow amounts under the facilities at any time during the terms of the Credit Agreements. Interest for the
2009 Credit Agreement is based on, at our election, either (x) the sum of (A) adjusted LIBOR plus (B) a
margin equal to the published 30-day moving average credit default swap mid-rate spread for Oracle for a
one-year period, subject to a maximum and minimum rate based on our credit rating, or (y) a “base rate”
calculated as the highest of (I) Wachovia Bank National Association’s prime rate, (II) the federal funds
effective rate plus 0.50% and (III) adjusted LIBOR plus a margin determined in the manner described in
clause (x)(B) above. Interest for the 2006 Credit Agreements is based on either (a) a LIBOR-based formula or
(b) a formula based on Wachovia’s prime rate or on the federal funds effective rate. Any amounts drawn
pursuant to the 2009 Credit Agreement are due on March 16, 2010 (we may, upon the agreement of a
combination of then existing lenders and additional banks not currently party to the 2009 Credit Agreement,
extend the termination date of the 2009 Credit Agreement by an additional 364 days). Any amounts drawn
pursuant to the 2006 Credit Agreement are due on March 14, 2011. No amounts were outstanding pursuant to
the Credit Agreements as of May 31, 2009 and 2008. A total of $4.9 billion remained available pursuant to
the Credit Agreements at May 31, 2009, which is less than the $5.0 billion described above due to the
insolvency of one of the parties to the 2006 Credit Agreement. We would most likely use the Credit
Agreements to back-stop any Commercial Paper Notes (described above) that we may issue in the future.
The Credit Agreements contain certain customary representations and warranties, covenants and events of
default, including the requirement that our total net debt to total capitalization ratio not exceed 45%. If any of
the events of default occur and are not cured within applicable grace periods or waived, any unpaid amounts
under the Credit Agreements may be declared immediately due and payable and the Credit Agreements may
be terminated. We were in compliance with the Credit Agreements’ covenants as of May 31, 2009.
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Source: ORACLE CORP, 10-K, June 29, 2009 Powered by Morningstar® Document Research℠