Oracle 2008 Annual Report Download - page 58

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Table of Contents
Fiscal 2008 Compared to Fiscal 2007: Acquisition related and other expenses decreased during fiscal 2008
due to lower in-process research and development acquired as a part of our fiscal 2008 acquisitions in
comparison to our fiscal 2007 acquisitions and a gain on a property sale. These decreases to acquisition
related and other expenses were partially offset by higher transitional employee related expenses and
increased stock-based compensation expenses due to the acceleration of certain acquired employee stock
options, primarily Hyperion and BEA, pursuant to the terms of those options. Total operating expenses in
fiscal 2007 were also reduced by a $52 million benefit as a result of a settlement of an acquired legal
contingency from PeopleSoft for less than the amount accrued as of the end of the purchase price allocation
period (see Note 1 of Notes to Consolidated Financial Statements for further discussion).
Restructuring expenses: Restructuring expenses consist primarily of Oracle employee severance costs and
may also include charges for duplicate facilities in order to improve our Oracle-based cost structure
prospectively. For additional information regarding our Oracle-based restructuring plans, as well as
restructuring activities of our acquired companies, please see Note 8 of Notes to Consolidated Financial
Statements.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2009 Actual Constant 2008 Actual Constant 2007
Restructuring expenses $ 117 187% 212% $ 41 113% 95% $ 19
Fiscal 2009 Compared to Fiscal 2008: During the third quarter of fiscal 2009, our management approved,
committed to and initiated a plan to restructure and further improve efficiencies in our Oracle-based
operations (2009 Plan). The total estimated restructuring costs associated with the 2009 Plan are $241 million
and will be recorded to restructuring expenses in our consolidated statements of operations as they are
recognized. In fiscal 2009, we recorded $85 million of restructuring expenses in connection with the 2009
Plan. We expect to incur the majority of the remaining $156 million during fiscal 2010. Our estimated costs
are preliminary and may be subject to change in future periods.
During the second quarter of fiscal 2008, our management approved, committed to and initiated a plan to
restructure and improve efficiencies in our Oracle-based operations as a result of certain management and
organizational changes and our recent acquisitions (the 2008 Plan). The 2008 Plan was amended in the fourth
quarter of fiscal 2008 to include the Oracle-based effects resulting from our acquisition of BEA. The total
costs associated with the 2008 Plan were approximately $80 million, of which expenses of $39 million and
$41 million were incurred during fiscal 2009 and 2008, respectively.
In connection with any acquisition that we close in fiscal 2010 and prospective periods, we will record
involuntary termination and other exit costs associated with such acquisition to restructuring expenses in our
consolidated statement of operations 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).
Fiscal 2008 Compared to Fiscal 2007: We incurred restructuring expenses of $41 million in fiscal 2008
pursuant to the 2008 Plan as described above. Restructuring expenses in fiscal 2007 relate to Oracle employee
severance and facility closures that were recorded in those periods and were a part of a restructuring plan
initiated in the third quarter of fiscal 2006.
Interest Expense:
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2009 Actual Constant 2008 Actual Constant 2007
Interest expense $ 630 60% 60% $ 394 15% 15% $ 343
Fiscal 2009 Compared to Fiscal 2008: Interest expense increased in fiscal 2009 due to higher average
borrowings resulting from our issuance of $5.0 billion of senior notes in April 2008.
Fiscal 2008 Compared to Fiscal 2007: Interest expense increased in fiscal 2008 due to higher average
borrowings resulting from the issuance of $5.0 billion of senior notes in April 2008, a net increase of
$500 million in additional
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Source: ORACLE CORP, 10-K, June 29, 2009 Powered by Morningstar® Document Research℠