Oracle 2008 Annual Report Download - page 40

Table of Contents
Fiscal 2010
In fiscal 2010, we will adopt FASB Statement No. 141 (revised 2007), Business Combinations. For any
business combination that is consummated pursuant to Statement 141(R), including our proposed acquisition
of Sun described above, we will recognize separately from goodwill, the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interests in the acquiree generally at their acquisition date fair
values as defined by FASB Statement No. 157, Fair Value Measurements. Goodwill as of the acquisition date
is measured as the excess of consideration transferred, which is also generally measured at fair value, and the
net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed.
The determination of fair value will require our management to make significant estimates and assumptions,
with respect to intangible assets acquired, support obligations assumed, and pre-acquisition contingencies.
The assumptions and estimates used in determining the fair values of these items will be substantially similar
upon our adoption of Statement 141(R) as they were under Statement 141 (see above).
The below discussion lists those areas of Statement 141(R) that we believe, upon our adoption, require us to
apply additional, significant estimates and assumptions.
Upon our adoption of Statement 141(R), any changes to deferred tax asset valuation allowances and liabilities
related to uncertain tax positions will be recorded in current period income tax expense, unless any such
changes are identified during the measurement period (defined as the period, not to exceed one year, in which
we may adjust the provisional amounts recognized for a business combination) and relate to new information
obtained about facts and circumstances that existed as of the acquisition date. Our estimates for the ultimate
outcome of income tax matters are based on the best information available to us as of the acquisition date and
corresponding measurement period. Additional information may become available subsequent to the
acquisition date and corresponding measurement period, which may require us to revise our estimates for
these income tax matters. Such estimate revisions that do not qualify as measurement period adjustments will
be recorded to our provision for income taxes in our consolidated statement of operations in the period the
revision is made and could have a material impact on our results of operations and financial position.
Upon our adoption of Statement 141(R), we will account for one-time termination and exit costs associated
with prospective acquisitions pursuant to FASB Statement No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. Statement 146 requires that a liability for a cost associated with an exit or disposal
activity be recognized and measured initially at its fair value in the period in which the liability is incurred. In
order to incur a liability pursuant to Statement 146, our management must have established and approved a
plan of restructuring in sufficient detail. A liability for a cost associated with involuntary termination benefits
is recorded when benefits have been communicated and a liability for a cost to terminate an operating lease or
other contract are incurred when the contract has been terminated in accordance with the contract terms or we
have ceased using the right conveyed by the contract, such as vacating a leased facility. Statement 146
requires the use of assumptions and estimates, including estimated sub-lease payments to be received, which
can differ materially from actual results. This may require us to revise our estimated liabilities and may
materially affect our results of operations and financial position in the period the revision is made. In addition,
the recognition of liabilities pursuant to Statement 146 are subject to certain criteria being met, such as the
communication of benefits to be paid to employees and the cessation of benefits received under existing
contracts, amongst others. These criteria can cause variability in the timing of recognition of restructuring
liabilities, which could cause us to incur expenses in periods we had not expected and could materially affect
our results of operations and financial position.
If the initial accounting for a business combination that is accounted for pursuant to Statement 141(R) is
incomplete by the end of the reporting period in which the business combination occurs, we will report the
provisional amounts for such items in our consolidated financial statements. During the measurement period,
we will adjust the provisional amounts recognized at the acquisition date to reflect new information obtained
about facts and circumstances that existed as of the acquisition date that, if known, would have affected the
measurement of the amounts recognized as of that date and record those adjustments to our consolidated
financial statements. Those measurement period adjustments that we determine to be significant will be
applied retrospectively to comparative information in our consolidated financial statements, including
adjustments to depreciation, amortization, or other income effects recognized in the initial accounting.
Identifying changes to the initial accounting requires our
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Source: ORACLE CORP, 10-K, June 29, 2009 Powered by Morningstar® Document Research℠