Oracle 2008 Annual Report Download - page 44

Table of Contents
declaration date, we used an annualized dividend yield based on the per share dividend declared by our Board
of Directors. The aforementioned inputs entered into the option valuation model we use to fair value our stock
awards are subjective estimates and changes to these estimates will cause the fair value of our stock awards
and related stock-based compensation expense we record to vary.
We record deferred tax assets for stock-based awards that result in deductions on our income tax returns,
based on the amount of stock-based compensation recognized and the statutory tax rate in the jurisdiction in
which we will receive a tax deduction. Because the deferred tax assets we record are based upon the
stock-based compensation expenses in a particular jurisdiction, the aforementioned inputs that affect the fair
value of our stock awards may also indirectly affect our income tax expense. In addition, differences between
the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on
our income tax returns are recorded in additional paid-in capital. If the tax deduction is less than the deferred
tax asset, such shortfalls reduce our pool of excess tax benefits. If the pool of excess tax benefits is reduced to
zero, then subsequent shortfalls would increase our income tax expense. Our pool of excess tax benefits is
computed in accordance with the alternative transition method as prescribed under FASB Staff Position
FAS 123R-3, Transition Election to Accounting for the Tax Effects of Share-Based Payment Awards.
To the extent we change the terms of our employee stock-based compensation programs, experience market
volatility in the pricing of our common stock that increases the implied volatility calculation of our publicly
traded, longest-term options or refine different assumptions in future periods such as forfeiture rates that
differ from our current estimates, amongst other potential impacts, the stock-based compensation expense that
we record in future periods and the tax benefits that we realize may differ significantly from what we have
recorded in previous reporting periods.
Allowances for Doubtful Accounts
We make judgments as to our ability to collect outstanding receivables and provide allowances for the portion
of receivables when collection becomes doubtful. Provisions are made based upon a specific review of all
significant outstanding invoices. For those invoices not specifically reviewed, provisions are provided at
differing rates, based upon the age of the receivable, the collection history associated with the geographic
region that the receivable was recorded and current economic trends. If the historical data we use to calculate
the allowances for doubtful accounts does not reflect the future ability to collect outstanding receivables,
additional provisions for doubtful accounts may be needed and our future results of operations could be
materially affected.
Results of Operations
Impact of Acquisitions
The comparability of our operating results in fiscal 2009 compared to fiscal 2008 is impacted by our
acquisitions, primarily the acquisition of BEA Systems, Inc. in our fourth quarter of fiscal 2008.
The comparability of our operating results in fiscal 2008 compared to fiscal 2007 is primarily impacted by our
acquisition of Hyperion Solutions Corporation in our fourth quarter of fiscal 2007 and our acquisition of BEA
in our fourth quarter of fiscal 2008.
In our discussion of changes in our results of operations from fiscal 2009 compared to fiscal 2008, and fiscal
2008 compared to fiscal 2007, we quantify the contribution of our acquired products to the growth in new
software license revenues and to the growth in software license updates and product support revenues for the
one year period subsequent to the acquisition date. We also present supplemental disclosure related to certain
charges and gains. Although certain revenue and expense contributions from our acquisitions are quantifiable,
we are unable to identify the following:
• the contribution of the significant majority of our services revenues from acquired companies in fiscal
2009, 2008 and 2007 as the significant majority of these services had been fully integrated into our
existing operations; and
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Source: ORACLE CORP, 10-K, June 29, 2009 Powered by Morningstar® Document Research℠