Oracle 2008 Annual Report Download - page 84

Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2009
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Oracle Corporation develops, manufactures, markets, distributes and services database and middleware
software, as well as applications software, that help organizations manage and grow their businesses.
Database and middleware software is used for the secure storage, retrieval and manipulation of all forms of
software-based data, and for developing and deploying applications on the internet and on corporate intranets.
Applications software is used to automate business processes and to provide business intelligence. We also
offer software license updates and product support (including support for the Linux Operating System), and
other services including consulting, On Demand, and education.
Basis of Financial Statements
Fiscal 2009 and Prior Periods
The consolidated financial statements include our accounts and the accounts of our wholly- and
majority-owned subsidiaries. We consolidate all of our majority-owned subsidiaries and reflect as minority
interests the portions of these entities that we do not own in other non-current liabilities on our consolidated
balance sheets. At May 31, 2009 and 2008, the liability related to minority interests was $355 million and
$369 million, respectively. Intercompany transactions and balances have been eliminated.
Certain prior year balances have been reclassified to conform to the current year presentation. Such
reclassifications did not affect total revenues, operating income or net income.
Fiscal 2010
In fiscal 2010, we will adopt Financial Accounting Standards Board (FASB) Statement No. 160,
Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. As a result,
we will retrospectively classify noncontrolling (minority) interest positions of consolidated entities as a
separate component of consolidated stockholders’ equity from the equity attributable to Oracle’s stockholders
for all periods presented. Net income and comprehensive income will be attributed to Oracle stockholders and
the noncontrolling interests. In addition, Statement 160 requires that any change in our ownership of a
majority-owned subsidiary be prospectively accounted for as an equity transaction provided that we retain
control of the subsidiary.
Use of Estimates
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting
principles (GAAP). These accounting principles require us to make certain estimates, judgments and
assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable
based upon information available to us at the time that these estimates, judgments and assumptions are made.
These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the
date of the financial statements as well as the reported amounts of revenues and expenses during the periods
presented. To the extent there are material differences between these estimates, judgments or assumptions and
actual results, our consolidated financial statements will be affected. In many cases, the accounting treatment
of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in
its application. There are also areas in which management’s judgment in selecting among available
alternatives would not produce a materially different result.
Revenue Recognition
We derive revenues from the following sources: (1) software, which includes new software license and
software license updates and product support revenues, and (2) services, which include consulting, On
Demand and education revenues.
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Source: ORACLE CORP, 10-K, June 29, 2009 Powered by Morningstar® Document Research℠