Oracle 2008 Annual Report Download - page 48

Download and view the complete annual report

Please find page 48 of the 2008 Oracle annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 150

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150

Table of Contents
businesses as independent entities, in the amounts of $243 million, $179 million and $212 million in fiscal 2009, fiscal
2008 and fiscal 2007, respectively. Approximately $21 million of estimated software license updates and product
support revenues related to support contracts assumed will not be recognized in fiscal 2010 that would otherwise be
recognized by the acquired businesses as independent entities due to the application of these business combination
accounting rules. To the extent customers renew these support contracts, we expect to recognize revenues for the full
contract value over the support renewal period.
(2) Represents the amortization of intangible assets acquired in connection with our acquisitions, primarily BEA,
Hyperion, Siebel and PeopleSoft. As of May 31, 2009, estimated future amortization expenses related to intangible
assets, excluding the impact of additional intangible assets through any subsequent acquisitions, such as from our
proposed acquisition of Sun, are as follows (in millions):
Fiscal 2010 $ 1,669
Fiscal 2011 1,364
Fiscal 2012 1,217
Fiscal 2013 1,084
Fiscal 2014 881
Thereafter 1,054
Total $ 7,269
(3) Acquisition related and other expenses primarily consist of in-process research and development expenses,
stock-based compensation expenses, integration related professional services, personnel related costs for transitional
and other employees, certain business combination adjustments after the purchase price allocation period has ended,
and certain other operating expenses (income), net. For fiscal 2008, acquisition related and other expenses include a
gain on property sale of $57 million and, for fiscal 2007, acquisition related and other expenses include a benefit of
$52 million related to the settlement of a pre-acquisition lawsuit against PeopleSoft (see Note 1 of Notes to
Consolidated Financial Statements for further information). In fiscal 2010, certain of the items that we record to
acquisition related and other expenses will change as a result of our adoption of Statement 141(R), which could
materially impact our consolidated financial statements (see further discussion in “Critical Accounting Policies and
Estimates” above).
(4) Restructuring expenses during fiscal 2009 and 2008 relate to Oracle employee severance in connection with our Fiscal
2009 Oracle Restructuring Plan that was initiated in the third quarter of fiscal 2009 and our Fiscal 2008 Oracle
Restructuring Plan that was initiated in the second quarter, and amended in the fourth quarter of fiscal 2008.
Restructuring costs during fiscal 2007 relate to an Oracle-based restructuring plan initiated in the third quarter of fiscal
2006 for which additional expenses were recorded during fiscal 2007. In connection with any acquisition that we close
in fiscal 2010, we will record involuntary termination and other exit costs associated with the acquisition to
restructuring expenses as a result of our adoption of Statement 141(R), which is a change from current practice
pursuant to existing accounting standards and could materially impact our consolidated financial statements (see
further discussion in “Critical Accounting Policies and Estimates” above).
(5) Stock-based compensation is included in the following operating expense line items of our consolidated statements of
operations (in millions):
2009 2008 2007
Sales and marketing $ 67 $ 51 $ 38
Software license updates and product support 13 10 11
Cost of services 12 13 15
Research and development 155 114 85
General and administrative 93 69 49
Subtotal 340 257 198
Acquisition related and other 15 112 9
Total $ 355 $ 369 $ 207
Stock-based compensation included in acquisition related and other expenses resulted from unvested options assumed
from acquisitions whose vesting was accelerated upon termination of the employees pursuant to the terms of those
options.
(6) The income tax effects presented were calculated as if the above described charges were not included in our results of
operations for each of the respective periods presented. Income tax effects were calculated reflecting an effective tax
rate of 28.7% for fiscal 2009 instead of 28.6%, which represented our effective tax rate as derived per our
consolidated statement of operations, due to the exclusion of the effect of an adjustment to our non-current deferred
tax liability associated with acquired intangible assets. The income tax effects presented for fiscal 2008 and 2007 were
calculated based on our effective tax rates of 29.5% and 28.6%, respectively.
43
Source: ORACLE CORP, 10-K, June 29, 2009 Powered by Morningstar® Document Research℠