Oracle 2008 Annual Report Download - page 51

Table of Contents
the cost of providing the support services, largely personnel related expenses, and the amortization of our
intangible assets associated with software support contracts and customer relationships obtained from our
acquisitions.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2009 Actual Constant 2008 Actual Constant 2007
Software License Updates and
Product Support Revenues:
Americas $ 6,462 16% 18% $ 5,587 19% 17% $ 4,698
EMEA 3,850 10% 21% 3,503 32% 20% 2,653
Asia Pacific 1,442 17% 20% 1,238 27% 18% 978
Total revenues 11,754 14% 19% 10,328 24% 18% 8,329
Expenses:
Software license updates and
product support(1) 1,075 9% 14% 987 19% 13% 831
Stock-based compensation 13 35% 35% 10 -6% -6% 11
Amortization of intangible
assets(2) 841 41% 41% 596 27% 27% 470
Total expenses 1,929 21% 24% 1,593 21% 18% 1,312
Total Margin $ 9,825 12% 18% $ 8,735 24% 18% $ 7,017
Total Margin % 84% 85% 84%
% Revenues by Geography:
Americas 55% 54% 57%
EMEA 33% 34% 32%
Asia Pacific 12% 12% 11%
(1) Excluding stock-based compensation
(2) Included as a component of ‘Amortization of Intangible Assets’ in our consolidated statements of operations
Fiscal 2009 Compared to Fiscal 2008: The growth in our software license updates and product support
revenues was unfavorably affected by foreign currency rate fluctuations of 5 percentage points in fiscal 2009.
Excluding the effect of currency rate fluctuations, software license updates and product support revenues
increased in fiscal 2009 as a result of new software licenses sold with substantially all customers electing to
purchase support contracts during fiscal 2009, the renewal of substantially all of the customer base eligible for
renewal in the current fiscal year and incremental revenues from the expansion of our customer base from our
acquisitions. Excluding the effect of currency rate fluctuations, the Americas contributed 49%, EMEA
contributed 38% and Asia Pacific contributed 13% to the increase in software license updates and product
support revenues.
In reported currency, software license updates and product support revenues in fiscal 2009 include
incremental revenues of $540 million from BEA, $20 million from Primavera and $49 million from other
recently acquired companies. As a result of our acquisitions, we recorded adjustments to reduce support
obligations assumed to their estimated fair values at the acquisition dates. Due to our application of business
combination accounting rules, software license updates and product support revenues related to support
contracts in the amounts of $243 million, $179 million and $212 million that would have been otherwise
recorded by our acquired businesses as independent entities, were not recognized in fiscal 2009, 2008 and
2007, respectively. Historically, substantially all of our customers, including customers from acquired
companies, renew their support contracts when such contracts are eligible for renewal. To the extent these
underlying support contracts are renewed, we will recognize the revenues for the full value of these contracts
over the support periods, the substantial majority of which are one year.
Total software license updates and product support expenses were favorably impacted by 3 percentage points
of currency variations during fiscal 2009. Excluding the effect of currency rate fluctuations, software license
updates and product support expenses increased due to higher salary expenses associated with increased
headcount to support the expansion of our customer base and higher amortization expenses resulting from
additional intangible assets acquired since the beginning of fiscal 2008, both of which were primarily
attributable to our acquisition of BEA in the fourth quarter of fiscal 2008.
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Source: ORACLE CORP, 10-K, June 29, 2009 Powered by Morningstar® Document Research℠